Failure to report oil discharges and the False Claims Act

Friday, March 07, 2008
The US Court of Appeals for the Fifth Circuit ruled that an assertion by an employee that the employer failed to report illegal discharges of oil does not establish a right of action under the False Claims Act. In the instant case, plaintiff employee alleged that defendant employer, which operated offshore drilling units in the Gulf of Mexico under leases from the federal government, illegally dumped oil and other waste into waters of the Gulf and failed to report those discharges in its oil record book. The federal government declined to prosecute defendant for the alleged violations. Plaintiff filed an action against defendant under the False Claims Act, which allows a prevailing claimant to recover a portion of the false claim. The federal district court dismissed the action and plaintiff appealed. The appellate court held that plaintiff’s assertion filed to state a proper claim under the Act because: (1) the reporting requirements cited by plaintiff were not prerequisites to continuation of the leases; and (2) any fines that might arise from the alleged violations were wholly speculative. Marcy v. Rowan Companies, Inc., No. 06-31238 (5th Cir., March 5, 2008).

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