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The Almighty Buck Earth

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

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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  • Depends... (Score:2, Informative)

    by Anonymous Coward on Tuesday February 11, 2014 @07:49AM (#46216421)

    Some states require all insurance policies stack to cover an event, rather than there being "primary" and "secondary" insurance. Many times governments will take out insurance policies of their own to cover things like this, naming the oil company as the beneficiary. The oil company may also have its own insurance. Depending on the laws having jurisdiction over the event, one or both insurance companies must pay the full amount of the claim.

    If I buy two life insurance policies for myself, and I die, they both have to pay.

    Similarly, a policy of any kind underwritten in the US MUST pay even in the face of multiple other policies underwritten overseas.

  • by andydread ( 758754 ) on Tuesday February 11, 2014 @08:41AM (#46216625)

    And now folks you see why Lamar Smith wants to hobble the EPA. []

    Meanwhile in North Carolina you have 30 year Duke Energy vetran Governor Pat McCrory who has been using the power of the govt in NC to sheild Duke Energy [] from lawsuits [] as a result of massive pollution. Spilling things like arsenic, lead, mercury and other things into NC waterways. In every single lawsuit the McCrory administration intervened and shut the lawsuits down. Now you have the lastest massive spill []

  • Putting aside the issue of double dipping for a second, the liability for the cost of the clean-up still resides with the original insurer or chain of insurers who covered the facility (including the tank) in the first place.

    The oil companies were given the authority to carry out the clean up, which also grants them the authority to submit the costs to the insurance company - this isn't a simple case of the oil company doing something and then demanding money from a third party for it, there is a chain of liability, a chain of authority and both meet at the insurance companies door.

    Its very very similar to your car dumping oil all over the road, and the local authority towing your vehicle and paying for the environmental cleanup - you will definitely get a bill at the end of the day, and where I live that bill comes from the company the responsibility to do said actions is delegated to, not the local authority.

    In reality, it should have been the government chasing the insurance companies to force them to do the cleanup in the first place, but they didn't.

    And, as I said, the issue of double dipping is entirely not represented in this explanation - that's another issue entirely.

  • Re:Oh my GOD! (Score:4, Informative)

    by operagost ( 62405 ) on Tuesday February 11, 2014 @10:56AM (#46217525) Homepage Journal

    Lawyers have profited off lies and hyperbole.

    These aren't tanks at some Chevron or Sunoco refinery. These are tanks buried at the POS, i.e. a gas station. Most are over 40 years old, and far past their expected lifetime. They should have been removed before they became a problem, but I presume the parties in question abandoned the property or otherwise did not take responsibility. Therefore, the oil companies-- as experts in the area-- were contracted.

    So the oil companies are profiting off POLLUTION, but not profiting off "polluting", which implies they are somehow responsible. Regardless, if they're double-dipping I find it unlikely they are doing so inadvertently and thus they're still engaging in unethical activity.

Love may laugh at locksmiths, but he has a profound respect for money bags. -- Sidney Paternoster, "The Folly of the Wise"