On December 21, 2017, the Civil Division of the U.S. Department of Justice (DOJ) released its annual statistics on False Claims Act recoveries, announcing that it had obtained more than $3.7 billion in settlements and judgments in Fiscal Year 2017. (A copy of DOJ’s press release is available here.) While False Claims Act recoveries in the past year are not record setting ($6.1 billion in FY 2014 still holds the record) and are less than the previous year ($4.7 billion), what was notable about FY 2017 was that DOJ pursued a number of actions resulting in recoveries against energy firms. The recoveries related to violations by energy-related firms include:
A number of AECOM entities agreed to pay $125 million to resolve allegations that they improperly charged the Department of Energy (DOE) for deliverables that failed to meet applicable quality standards and other regulatory violations.
Energy & Process Corporation agreed to pay $4.6 million to resolve allegations that it supplied materials that failed to meet applicable regulatory standards at a DOE nuclear waste treatment facility.
SolarCity Corporation agreed to pay $29.5 million to resolve allegations that it submitted inflated claims seeking government subsidies for its solar energy properties.
In addition, shortly after the close of FY 2017, DOJ announced a settlement with Citation Oil & Gas, in which the company agreed to pay $2.25 million related to understated royalty payments to the Department of Interior for natural gas produced from federal lands in Wyoming.
Although the False Claims Act was not designed to be a blunt instrument to enforce regulatory compliance it has long been used for that purpose. Companies that apply their commercial business practices to their government-related business can often find themselves on the wrong side of a False Claims Act action. DOJ’s recent enforcement activity is a reminder that federal regulations applicable to energy related companies can be complex and require special attention to ensure compliance.