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Oil Companies Secretly Got Paid Twice For Cleaning Up Toxic Fuel Leaks 113

Posted by Unknown Lamer
from the you-mean-double-profiting-from-pollution dept.
Hugh Pickens DOT Com writes "Mica Rosenberg reports at Reuters that major oil companies including Chevron, Exxon, ConocoPhillips, Phillips 66, and Sunoco were paid twice for dealing with leaks from underground fuel storage tanks — once from government funds and again, secretly, from insurance companies. Court documents show many of the cases and settlement agreements follow a similar pattern, accusing the oil companies of 'double-dipping' by collecting both special state funds and insurance money for the same tank cleanups. Some states say any insurance payouts should have gone to them since they covered the cost of the work. 'It appears this was a really common practice and it's very disconcerting,' says Colorado Attorney General John Suthers. 'Basically the companies were defrauding the state.' Approximately 40 states and the District of Columbia have special funds to cover the costs of removing and replacing the old tanks, excavating tainted dirt and pumping out dirty groundwater. Since 1988, there have been more than half a million leaky tanks reported across the country. Nearly 80,000 spills still are waiting to be cleaned up. The lawsuits against the oil companies allege fraud or other civil, not criminal, claims, which have a lower burden of proof and do not lead to jail time. Companies are largely cooperating to forge settlement deals and were interested in partnering with the states to clean up the legacy of petroleum leaks. For example Phillips 66 paid Utah $2 million to resolve allegations that the oil company defrauded a state fund to the tune of $25 million for cleanups associated with leaking underground tanks. Phillips sued myriad insurers over coverage for contamination arising from leaking tanks around the country and Phillips 66 wound up collecting $286 million from its insurers to resolve these disputes, but it never divulged any of this to Utah officials, the suit alleged. 'When I first saw these cases, I thought this is kind of incredible,' says New Mexico assistant attorney general Seth Cohen, who handled the lawsuit for the state. 'The oil companies have, in effect, profited off polluting.'"
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Oil Companies Secretly Got Paid Twice For Cleaning Up Toxic Fuel Leaks

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  • by Kazoo the Clown (644526) on Tuesday February 11, 2014 @08:11AM (#46216493)
    Why do you think gas is so cheap? In the good old US of A, industrial cleanup is simply not factored into the cost of doing business. Whether fossil fuel, nuclear, plastics or any chemistry based business, cleanup is "someone else's problem.". Even hard drive manufacture-- though that's no longer done in the US largely because of the dreaded "regulations" which at least for that, have caught up with them. I bought a bunch of file cabinets once from a liquidation sale of a hard drive company, that still had the files in it from the building maintenance guy-- it was an endless array of citations for dumping the nickel water from the plating operations-- you could see the entire history of what happened. They then started trucking it in tanker trucks offsite (all the bills for that were there), then they got cited for what they did with that, finally it got so expensive tomdeal with they went out of business. This was in the 1980s/1990s. Now they'd probably get some Republican asshole to whine about overregulation and get the regs removed while the neighbors start suffering the effects of nickel in their drinking water.
  • by laird (2705) <lairdp@gma i l .com> on Tuesday February 11, 2014 @08:38AM (#46216615) Journal

    If they defrauded the government of $25m, how is $2m a punishment that discourages fraud, since it leaves them $23m ahead? Shouldn't the penalty be, say, 3x the amount of the fraud, so that the cost of defrauding the government is far more than the benefit of committing fraud, enough more that the risk of getting caught and paying the penalty is far more than the benefit, and companies don't commit fraud because it's a bad risk?

  • by ErroneousBee (611028) <neil:neilhancock,co,uk> on Tuesday February 11, 2014 @08:43AM (#46216627) Homepage

    Because there is no reward for good behaviour.

    In BP's case, they made a decision to fund the cleanup and compensate people and businesses. And every fraud and shyster crawled out of the woodwork and started demanding compensation. They get no credit for putting their hands up, while US companies Transocean and Haliburton were busy hiding behind lawyers and shredding the evidence and getting away with it.

Gee, Toto, I don't think we're in Kansas anymore.