July 2015, Vol. 242, No. 7

Web Exclusive

Judge Orders Colorado Oilman to Pay $16.8 million in Legal Fees

Ben Neary

CHEYENNE, Wyo. (AP) — A Colorado oilman must pay $16.8 million to reimburse energy companies for legal fees they incurred defending his unsuccessful lawsuits against them, a federal judge has ordered.

Jack Grynberg received national attention when he filed scores of lawsuits against natural gas and pipeline companies around the West in the late 1990s.

Grynberg claimed the companies had under-reported energy production from federal lands by billions of dollars and claimed he was due a share of the funds as a whistleblower under the federal False Claims Act. He stood to collect up to 30 percent of any award, but said he intended to donate proceeds to charity if he was successful.

Wyoming officials had declined Grynberg’s invitation to join him in pursuing an investigation against the energy companies.

Former U.S. District Judge William Downes of Casper rejected Grynberg’s claims in 2006, dismissing 73 lawsuits he had filed.

Downes concluded most of Grynberg’s knowledge of the companies’ gas-measurement techniques was second-hand or speculative. Federal law requires a person must show the government new information about the fraud they allege in order to collect a bounty.

“Grynberg deliberately chose to make sweeping allegations of fraud against nearly the entire industry, based in large part on rank speculation,” Downes wrote. The judge’s finding that Grynberg’s claims were frivolous made him responsible for legal fees and costs the companies incurred in defending against his claims.

Grynberg had pledged to appeal Downes’ sweeping dismissal of his claims, but has been barred from doing so while the legal fee issue was pending.

U.S. District Judge Alan B. Johnson of Cheyenne inherited the case after Downes retired a few years ago. Johnson retained a special master to review all the energy companies’ claims and sort out how much each was due. Of the 35 companies in the special master’s report, eight reached independent settlements with Grynberg before Johnson signed his order on fees last week.

Roger Jatko, a lawyer for Grynberg, said this week that Grynberg will appeal the dismissals and the legal fee ruling.

Casper lawyer Tom Reese is liaison counsel for the energy companies, meaning he coordinates action on the legal fee issue. Reese said Tuesday he couldn’t speak for all the companies about the case.

“But just personally, I think it’s been a long process, and I believe the judge ruled correctly and that his decision will be upheld on appeal,” Reese said.

Meanwhile, federal regulators continue to seek to collect a civil penalty of over $46,000 against Grynberg on a citation issued last year alleging he failed to report production on federal leases in Wyoming, Colorado and New Mexico. Patrick Etchart, spokesman for the Office of Natural Resources Revenue in Colorado, said Wednesday the agency has turned the matter over to the Treasury Department for collection.

Gene Webb, a spokesman for Grynberg, said recently that Grynberg has asked federal officials for a hearing on the penalty and characterized the situation as a misunderstanding.

The federal agency announced a separate civil penalty of over $11,500 against Grynberg Petroleum Co. in March, alleging failure to report production on federal leases in Wyoming and New Mexico. Etchart said the company has requested a hearing.

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