SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 8-K
Current Report
Pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of earliest event reported: August 31, 1998
SONAT INC.
(Exact name of registrant as specified in its charter)
Delaware 1-7179 63-0647939
(State of (Commission (IRS Employer
Incorporation) File Number) Identification No.)
AmSouth-Sonat Tower
Birmingham, Alabama 35203
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:
205-325-3800
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Item 5. Other events.
Southern Natural Gas Company, a wholly owned subsidiary of Sonat Inc.,
(Southern) received a letter from the United States Department of Justice on
August 31, 1998, enclosing a copy of a complaint that was filed, but not served,
by Jack J. Grynberg in 1997 against Southern, its wholly owned subsidiary, Sea
Robin Pipeline Company, and a number of affiliated companies, including Citrus
Corp., and its wholly owned subsidiary, Florida Gas Transmission Company, in the
United States District Court for the Eastern District of Louisiana. Grynberg
filed the suit on behalf of the United States Government under 31 U.S.C.
Ssection.3729, et seq., commonly known as the False Claims Act, alleging that
the methods used by the defendants to measure the heating content and volume of
gas purchased or transported by them have caused producers of natural gas to
underpay royalties owed by the producers to the United States. The complaint
also alleges that the defendants deprived the United States of appropriate
royalties by selling gas to affiliated companies at artificially low prices,
which were the basis for payment of royalties to the United States, and that the
affiliates resold the gas to third parties at higher prices. The complaint seeks
recovery of actual damages based upon the unpaid royalties owed, the amount of
which is not specified in the complaint. Such damages may be trebled under the
False Claims Act.
The complaint makes allegations similar to those in a 1995 complaint that
Grynberg filed under the False Claims Act against Southern, Sea Robin, and 68
other defendants in the United States District Court for the District of
Columbia, which was dismissed. Such dismissal is now on appeal. The Justice
Department has requested Southern to address the allegations in the complaint,
which Southern intends to do, in order for the Justice Department to determine
whether to intervene and take over the case as provided by the False Claims Act.
Southern believes that its and Sea Robin's measurement practices conformed to
the terms of the applicable tariffs, which are filed with the Federal Energy
Regulatory Commission. As a result, Southern believes that Southern and Sea
Robin have meritorious defenses to the complaint and intends to defend the suit
vigorously whenever it is served and the suit goes forward.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Sonat Inc.
By: /s/ William A.Smith
William A. Smith
Executive Vice President and
General Counsel
Dated: September 17, 1998
