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

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.'"

Oh my GOD!

[oscrivellodds]

'The oil companies have, in effect, profited off polluting.'

Doh!

Why gouv pay for it in the first place?

[JcMorin]

If an oil company do a mess, they are responsible to clean it. If they have insurance fine for them, why we gouv need to pay them for their messed up?

Re:Why gouv pay for it in the first place?

[hoboroadie]

Their investments in the legislative sector are paying off.

Crime pays, this is merely proof.

[canadiannomad]

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.

This is why corporate crime pays in the current world :S

Comment removed

[account_deleted]

Comment removed based on user account deletion

Re:In the US, cleanup costs are never factored in.

[amiga3D]

There you go getting all political. This is a bipartisan issue, the oil companies don't give a shit which party they bribe. Regulation isn't the answer. Enforcement is the answer. These assholes broke all kinds of laws but look, they aren't going to be punished for it! Making laws and regulations will do nothing if you can't even enforce the ones you have in place.

Re:Don't go after the companies

[JaredOfEuropa]

This. Being an executive means (or should mean) being personally responsible for your actions, and that includes criminal charges for pulling stunts like this. Without the option of course to buy your own arse out of a lawsuit using corporate (shareholders) funds

Re:Don't go after the companies

[amiga3D]

Exactly! Everyone is screaming for more regulation when the regulations in place now are totally ignored. Breaking the rules has to have consequences. If you just ignore all these infractions then why have regulations at all? Seriously, they're talking about making them pay back 10 cents on the dollar for what amounts to theft. The same legislative cocksuckers that rant about "stealing" movies. Download movies and go to jail, defraud millions and laugh all the way to the bank.

Re:Don't go after the companies

[laird]

Good point. Look at how when SOX made the officers of a company personally liable for incorrect financial statements that suddenly companies put financial controls in place. Personal liability is clearly a much better motivator than ethics or responsibility to shareholders.

Re:Crime pays, this is merely proof.

[bluefoxlucid]

Yeah I'm thinking this is backwards. You defrauded the state $25M? Well you owe the state $25M, plus interest, plus overhead, plus punitive damages for being a dickhead. A settlement would be $25M--break even--at the very least; you want it to be a little bit more so that a high incidence of getting caught can lead to a poor ROI (i.e. if you have a 1 in 50 chance of netting $25M and otherwise it costs you $2M, you're $73M short in the long run per 50 suits). This settlement is bullshit.

Re:Why gouv pay for it in the first place?

[Richard_at_work]

Its not their mess, its tanks owned by third parties:

Often built for gas stations during the 1950s and '60s highway construction boom, the tanks corroded over time, spilling gas and diesel with potentially cancer-causing chemicals under properties and into aquifers.

The oil companies are paid to clean up the pollution caused by these tanks constructed for, operated and owned by third parties. The oil companies are chosen because they already have extensive inhouse expertise on the subject, so they are ideal for doing it wholesale.

Chances are, most of these tanks have been abandoned and their original owners do not exist, which is why local government step in.