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10th Circuit Dismisses Oilman's Claims of Royalties FraudA Denver-area oilman says he will continue his claims that energy and natural gas pipeline companies are cheating the federal government out of billions in royalties. A three-judge panel of the 10th U.S. Circuit Court of Appeals on Tuesday upheld a Wyoming federal judge's decision that threw out 73 lawsuits filed by Jack Grynberg, who runs a petroleum company in Colorado. The court cited a law that aims to give incentives to whistleblowers while discouraging "opportunistic plaintiffs."
2009-03-20 12:00:00 AM
A Denver-area oilman says he will continue his claims that energy and natural gas pipeline companies are cheating the federal government out of billions in royalties.
A three-judge panel of the 10th U.S. Circuit Court of Appeals in Denver on Tuesday upheld a Wyoming federal judge's decision that threw out 73 lawsuits filed by Jack Grynberg, who runs a petroleum company in Greenwood Village, Colo.
The appellate court cited a law that aims to provide incentives to whistle-blowers while discouraging "opportunistic plaintiffs" who have no original information to add. The False Claims Act allows whistle-blowers to collect a bounty so long as their claims are not filed based on publicly disclosed information.
Grynberg's lawsuits allege the companies use several techniques to knowingly underreport the heating content and volume of natural gas extracted from federal and American Indian lands, which results in the underpayment of royalties.
"Throughout the proceedings, the industry repeatedly showed that Mr. Grynberg had no basis for his claims of under-measurement," said Jon Haubert, a spokesman for the Independent Petroleum Association of Mountain States, adding that the industry is happy with the court's ruling.
Grynberg says the court didn't properly consider his claims and he will ask the full appellate court to review his case, and is prepared to go to the U.S. Supreme Court.
Grynberg estimates the government is due $900 billion in underpayments, going back to the 1980s, of which he says he could collect 25 percent -- which equates to $225 billion.
"I don't intend to keep it. I intend to give it to charity," Grynberg said in a telephone interview. "I don't need that money to make a living. I already spent $20 million in legal fees and experts."
In its ruling, the appellate court said Grynberg had "limited direct and independent information" regarding the companies he's suing that "is minimal in comparison to the broad scope of his allegations against them."
The court said that a U.S. Senate Select Committee on Indian Affairs in the 1980s had disclosed mis-measurement of oil and gas, and that enabled the government to identify wrongdoers. Other public disclosures included court documents and newspaper reports from lawsuits filed in 1995 by Grynberg against 44 natural gas pipeline companies in the District of Columbia. Those cases were dismissed in 1997.
"Yes, I'm the one who made it public," Grynberg said of his mid-1990s cases, which he said he was required to refile because of jurisdictional issues.
Grynberg said the court failed to examine each of the allegations in his lawsuits.
In a separate ruling Tuesday, the appellate court reversed a lower court's dismissal of seven Grynberg lawsuits concerning the undervaluing of carbon dioxide produced on federal and American Indian lands in order to pay less in royalties. The court ruled that a lower court improperly dismissed Grynberg's claims based on another lawsuit having been filed in court.
Two of those lawsuits have been voluntarily withdrawn, the court said.
Don Schultz, a Cheyenne, Wyo., lawyer representing Questar, one of the defendants in Grynberg's lawsuits, serves as a liaison for the energy companies. He said the next step would be for those named in the carbon dioxide claims to ask a judge to dismiss the lawsuits based on the court's natural gas ruling.
Schultz said the energy companies are also seeking millions in legal fees.
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