BP agrees to pay state $102 million in gas pricing suit

BP will shell out $102 million to the state of California more than five years after an employee blew the whistle on the company’s alleged scheme to overcharge the Golden State for natural gas.

On Thursday, Attorney General Xavier Becerra and Burlingame law firm Cotchett, Pitre & McCarthy announced the agreement, calling it the largest whistle-blower settlement in California history involving an oil company.

BP was accused of overcharging local jurisdictions, public agencies and universities for natural gas over the course of a decade by selling the state “exotic financial derivative products.” The reported overcharges were brought to light by former BP employee Chris Schroen, who filed a lawsuit under the protection of the California False Claims Act, which allows private citizens to file suit to expose nonpublic fraud against the government.

“BP thought it could get away with providing false and misleading information in order to line its own pockets,” Becerra said. “Today, we send a clear message: cheating the People of California will cost you more than it’s worth.”

Niall McCarthy, the lead attorney for Cotchett, Pitre & McCarthy, credited Schroen and other whistle-blowers for protecting taxpayers in a time when the defrauding of government has become a “growth industry.”

“While Trump is allowing oil companies to drill off the California coast, this oil company was stopped from drilling California’s pocketbook,” McCarthy said.

Brett Clanton, a spokesman for BP, disputed the attorney general and McCarthy’s characterization of the settlement in a statement.

“As BP has stated consistently, the state’s allegations were entirely without merit,” Clanton said. “BP strongly believes it honestly and fairly met its obligations under its contracts with the state. The state’s Department of General Services confirmed its agreement to the terms of each transaction, and the state never attempted to exercise its right to seek price quotes from alternative suppliers as a result of any price provided by BP.

“But given the cost of protracted litigation and the unpredictability of outcomes at trial, BP has agreed to this compromise settlement for an amount well below what the state demanded in its complaint. We believe resolving this dispute in this manner is in the best interest of BP and its shareholders.”

The settlement comes as a four-week jury trial was scheduled to begin this week in San Francisco.