Xavier Becerra, attorney general of California. Photo: Diego M. Radzinschi/ALM

California Attorney General Xavier Becerra announced Thursday that BP Energy Co. and affiliates will pay $102 million over allegations that the company intentionally overcharged the state of California for natural gas.

“BP thought it could get away with providing false and misleading information in order to line its own pockets. Today, we send a clear message: cheating the people of California will cost you more than it's worth,” Becerra said in a news release. “My office is committed to holding accountable those who unscrupulously put profits ahead of people.”

BP provided the following statement in response:

“BP is the largest marketer of natural gas in North America, reliably and safely supplying energy to thousands of customers, including for many years California. As BP has stated consistently, the state's allegations were entirely without merit. 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 case involves natural gas the state purchased under three successive contracts from March 2003 to August 2012. The contracts allowed the California Department of General Services, which buys natural gas for numerous state agencies and political subdivisions, to cap the price it would pay BP for specific volumes of gas. Becerra alleged that BP regularly quoted and charged the state of California prices that violated this cap and concealed its overpricing by providing false and misleading information. These acts constitute violations of the California False Claims Act, Becerra said.

A former BP employee, Christopher Schroen, filed the lawsuit on July 3, 2012, alleging the overcharges. According to the complaint, BP knowingly quoted and charged prices in excess of the contractual price cap. Upon receiving the complaint, the California Attorney General's Office investigated and concluded that BP was liable for overpricing, Becerra said. The attorney general intervened in the case and took primary responsibility for prosecuting the action.

Under the settlement, BP will be required to pay $102 million in damages, which will be shared by the state and local agencies that purchased gas under the contracts, the former employee whistleblower, and the Attorney General's Office, Becerra said.

The whistleblower was represented by Cotchett, Pitre & McCarthy in Burlingame. Niall McCarthy served as lead attorney for Schroen.

“Fraud against the government is a growth industry,” McCarthy said in a news release from the firm Thursday. “Whistleblowers like Chris Schroen are vital to protecting taxpayers. Not only is BP paying over $100 million through this settlement, but with the conduct now stopped, taxpayers are saving millions of dollars more every year. While Trump is allowing oil companies to drill off the California coast, this oil company was stopped from drilling California's pocketbook.”

Another member of Schroen's legal team, Justin T. Berger at Cotchett Pitre, said, “The California False Claims Act was designed to foster successful private-public collaboration of just this type.”

Cotchett Pitre said attorneys at Steidley & Kelly of Houston served as co-counsel.