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.'"
Oh my GOD! (Score:5, Insightful)
'The oil companies have, in effect, profited off polluting.'
Doh!
Re: Oh my GOD! (Score:3)
This sounds like a job for Captain Planet!
Re: Oh my GOD! (Score:5, Funny)
Money!
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Laundry!
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So it's Mother Earth who gets violated, and Captain Planet who has to save her? You sexist motherfucker!
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No, it's analogous to a software firm that releases a virus and gets paid to clean it up.
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Re:Oh my GOD! (Score:4, Informative)
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.
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Please tell me how, if the oil companies are not responsible, they are able to collect from their insurance companies?
This is crony capitalism at its finest. This is taxpayers money being given to companies that should instead be compensating the taxpayer for the damage that they have done.
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Will nobody think of the accountants and corporate lawyers? Did they get their bonuses for doing their jobs (i.e. making as much money as possible for their employers)? Were they promoted.
This is business! It's business is to make money anywhere they can. Boiling babies down into soup? Not a problem! Ripping off taxpayers, state and national government? That'll do nicely.
Why gouv pay for it in the first place? (Score:4, Insightful)
Re:Why gouv pay for it in the first place? (Score:5, Insightful)
Their investments in the legislative sector are paying off.
Re:Why gouv pay for it in the first place? (Score:5, Insightful)
Its not their mess, its tanks owned by third parties:
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.
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Its not their mess, its tanks owned by third parties:
So why would they receive insurance settlements?
Re:Why gouv pay for it in the first place? (Score:5, Informative)
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.
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That does not explain the double dipping of being paid by the government then also collecting on insurance.
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Never said it did, as that was not what was asked.
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Actually yes, in most cases FEMA will expect money back if they give assistance and insurance also pays out.
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The majority of those stations were built and owned by the oil companies. They later moved to a different model and sold the stations to third parties. Once the issue of laking tanks was discovered, it turns out that many/most of those stations had negative value ( ie. the cost to clean-up was greater than the value of the gas station ). How convenient the oil companies had just completed divesting themselves of these stations when the problems were discovered.
The oil companies screw the American Public yet
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Everybody takes advantage of everyone else whenever and wherever they can, oil companies are no different in that respect.
I don't know why oil companies get kicked around like they do. If they all disappeared tomorrow we'd all be sitting in the dark wondering if we're going to starve to death before we freeze to death. People can talk about how we should not be burning oil but the fact is that we do. We will still be burning oil a century from now. We do that, and will continue to do so, because oil is
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Its not their mess, its tanks owned by third parties:
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.
Nonsense! They each outright own a large portion of such stations, either directly, or through secondary companies they set up. Not all of them are franchises.
Government paying for cleanup (Score:2)
This can be complicated. Off the top of my head, the EPA has vast powers to force cleanup, and funding in the form of the superfund. Of course, the superfund was mostly intended as a 'last ditch' cleanup program for when the business was or going to be out of business before finishing cleanup, sometimes for chemicals that were previously considered safe.
Somewhat paranoid, but I wonder if some of the tanks weren't actually that of the company that ended up doing the cleanup, or whether they were truly doub
Dennis Moore, Dennis Moore (Score:1)
He steals from the poor
And gives to the rich
Stupid bitch.
I thought (Score:1)
I thought we had reached an agreement as a species that this is what they were doing in the first place? Did anyone else read the last book Kurt Vonnegut wrote [wikipedia.org]?
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Or when the easily accessible oil runs out and there aren't any magic vehicles used by anybody.
Crime pays, this is merely proof. (Score:3, Insightful)
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
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I noticed that too. Steal $25 million dollars and only pay $2 million of it back. WTF! You know, fuck the money. Put the bastards in jail. Not a country club prison but an honest to god Federal Pen with a 300lb faggot named Bubba for a room buddy. How in hell can you ever expect this to stop if there are zero consequences?
Re:Crime pays, this is merely proof. (Score:5, Insightful)
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Did you read the details of the settlement? I didn't. But if they had good evidence to win, they probably would not have settled. A bought politician would not have brought the case at all.
So, without further details, I can only assume they settled for what they could get, instead of losing completely. Your math does not account for the probability of not having the evidence needed to win. No win, no repayment, no damages.
Depends... (Score:2, Informative)
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 bo
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If I buy two life insurance policies for myself, and I die, they both have to pay.
But if you take out two insurance policies on your car, each covering the full value, and you try to collect both after your car gets "stolen", it's called fraud. That's been a principle of insurance for centuries.
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It depends on whether the insurance is a fixed payment, or a payment for damages. If you get a lump-sum payout on an event triggering the payout, it is usually stackable. If it is for damages to property or for cost to remedy a problem, then the policy usually is not stackable.
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If it is for damages to property or for cost to remedy a problem, then the policy usually is not stackable.
Which is the case we're talking about here.
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But it looks to me like the state funds in question didn't even consider this possibility (perhaps through some combination of lobbying and s
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Oil Executive Responses On This Should Be Quality (Score:1)
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Mod up if you remember being pissed at how smug they were about it, the British bastards...
As opposed to the American oil companies, which are always contrite and quick to admit fault?
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Government funds for clean ups? (Score:2)
Why do gigantic oil companies like that get government money to clean up the mess these companies themselves carelessly created in the first place? It is their fault these spills happened, they should be held fully responsible for what they did.
Re:Government funds for clean ups? (Score:5, Interesting)
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.
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They have been trying to have claims reviewed properly through the courts recently, and at every step they have been told to bugger off and stop complaining by US courts - they have been trying to stop claims like a certain hotel chains claim for loss of income from three hotels which had closed down 6 months prior to the spill 250 miles away from the coast.
The claims being approved by the US claims fund administrators have next to no scrutiny, so some really ridiculous stuff is being approved for payouts.
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And this ladies and gentlemen, is why moderates tend to view environmentalists as nutjobs.
Energy consumption will forever and always be on the uptick. Global Population will stabilize, but predicting WHEN this will occur is less than precise.
The irony of your post is that you're advocating lowering birthrates, which is fine. From past experiences we know that the best way to do that is .. increase the standard of living. But your screed amounts to "stop using energy!" which will absolutely LOWER the st
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They're SORRY! OK?
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Why do gigantic oil companies like that get government moneyto clean up the mess these companies themselves carelessly created in the first place?
The oil companies are no more responsible for causing the mess, than the airplane manufacturer Boeing was responsible for 9/11, no more responsible than Smith and Wesson is responsible if someone goes on a shooting spree, or Jack Daniels is responsible if someone drives drunk on their product and runs down some innocent pedestrians.
The oil companies are no
Welfare Queens (Score:3)
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They are Capitalist welfare queens, they made their donations, so that is OK. It is the *individual* welfare queens that will destroy America!
In the US, cleanup costs are never factored in. (Score:5, Interesting)
Re:In the US, cleanup costs are never factored in. (Score:5, Insightful)
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.
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I see your point although I don't fully agree. Aside from that though, look at what we have here. These companies have been caught red handed. And nothing is going to happen to them. Token fines, no jail at all. How is more taxes going to solve this? If someone is above the law then no amount of money will matter. It's time to outlaw corporate bribery but that's not going to happen. Take a walk around this site http://www.opensecrets.org/ [opensecrets.org] and see how pervasive it is. Non-partisan also. We keep pla
Sorry to get political, but... (Score:2)
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Except that the same party that opposes creation of regulations also opposes enforcement. The like to cut the EPA's budget, and appoint judges who favor businesses. They're the party who demand apologies [cbsnews.com] when the government does attempt to enforce regulations even after the fact.
The other party is certainly far from guiltless, but there's only one party that makes a point out of making enforcement harder and harder. Enforcement requires effort, generally taking many years to achieve, and is frequently fruit
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Re:Don't go after the companies (Score:5, Insightful)
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All that would do is create incentives for even more cover ups. As long as it isn't discovered while you are there, you'll probably be fine.
All the execs in this case have long since retired - fabulously wealthy of course.
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Also, I don't think the right way to prevent cover-ups is to give those responsible a free pass. That's like letting murderers walk free in exchange for a confession (there might be a reduced sentence in it for them, but no acquittal). Besides, it's not like the current soft approach has encouraged a lot of companies to come clean; those coverups will happen regardless of penal consequences (since there a
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A new slogan - putting the execute back into executive
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Go after the executives.
Right after they prosecute the bankers for control fraud in the global financial crisis. Case law and all has been established. See William K. Black for a detailed explanation.
Re:Don't go after the companies (Score:4, Insightful)
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 (Score:4, Insightful)
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.
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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.
Maybe.... but SOX was really just an irrational reaction to Enron (whose executives were prosecuted anyways), and the additional financial "controls" are mostly just lip service, with no real improvement. The SOX are ultimately stifling free enterprise and opportunities for Americans, and are a great example of poor, overreaching reg
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Off, I think that SOX is actually a rather elegant law. It's actually very simple, in that it doesn't tell companies how they do business, just that if they lie/provide incorrect information to investors, the officers of the company are personally liable. All of the complexity that I've seem related to SOX is because companies sometimes invent complex control mechanisms to try to prevent errors. But the SOX law is nice and simple establishment of responsibility.
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Pretty sure (Score:2)
"fraud or other civil, not criminal, claims, which have a lower burden of proof and do not lead to jail time."
"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"
Pretty sure if I defrauded the state out of $25 million from it would be a criminal, not civil claim and would lead to jail time and a fine of more than 8% of the original fraud amount.
How is $2m a settlement a punishment? (Score:4, Interesting)
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?
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Lamar Smith and the EPA (Score:5, Informative)
And now folks you see why Lamar Smith wants to hobble the EPA. [opensecrets.org]
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 [washingtonpost.com] from lawsuits [go.com] 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 [nbcnews.com]
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And now folks you see why Lamar Smith wants to hobble the EPA. [opensecrets.org]
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 [washingtonpost.com] from lawsuits [go.com] 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 [nbcnews.com]
Was covered on Rachel Maddow's show last night (Tuesday, 2/11/14, A disastrous toxic spill broke NC interference for governor’s former firm [rawstory.com]) and was shocking.
officials at the state Department of Environment and Natural Resources (DENR) invoked a provision in the federal Clean Water Act allowing them to step in as plaintiffs against Duke Energy when Duke was being sued by environmental activists over the toxic coal ash ponds at its facilities. [rawstory.com]
In N.C. for state residents (citizens) to sue, they have to give a 60 days written notice.
they kinda stole from themselves (Score:1)
The fund in question was funded by collecting from individual gas stations. I am not sure if the various states actually spent other funds on the cleanup, just that the funds that were "stolen" came from funds paid by the gas station operators.
You have to wonder which costs more... (Score:2)
You have to wonder which costs more... underground storage tanks which *don't leak*, or underground storage tanks which *leak*.
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They don't leak right away, so obviously the ones that leak later are cheaper. At least on the balance sheet at the end of the quarter that the tank was installed, which is all that matters in corporate finance.
If I did it, I'd be in jail (Score:3)
Insurance fraud is a big giant problem and more often criminal. But since this is another of those "too big to fail" organizations, we'll just have to let this one slip. The executives enabling and making this happen, of course, keep their bonuses and all that but there may be layoffs or raises may not come again this year.
Why do insurers pay? (Score:1)
Take the malevolent oil company out of it. (Score:2)
People this honest are rare. Notably, fudging one's tax return and bilking insurers isn't even the threshold where dishonesty begins for many.
Reintroduce the very likely morally defunct petro-executive: "Huh, so we can clean up this mess without jeopardizing 3rd quarter bonuses? He probably double-dipped for a relatively
Subrogation (Score:2)
The insurance companies most likely put a subrogation clause [wikipedia.org] in their contracts. Now that they know the oil companies received additional payouts from a third party, they can come in and claim that money.
It's all a stupid game (Score:1)
I'll shorten the discussion: blah blah blah, you're gonna pay for cleanup one way or another, either taxes or increased prices in the products.
Now go home and surf for Tay Tay, or Miley, or that Russian skater you perves.
Should be made an example of (Score:2)
Wherever there is money there is fraud (Score:2)
I hate to burst your anti-corporate bubble but wherever there is money to be made, there will be douchebags willing to subvert the original intentions of punitive damages for their own personal gain. There is a long list of plaintiffs filing claims against BP who have no presence in the Gulf region. There is an even longer list of obnoxious law firms e.g. the law offices of James suck-a-glove who will be the real beneficiaries of civil suit awards. If you think corporations charge too much for their prod
Lazy Buggers (Score:2)
"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."
Perhaps if there were more criminal claims there would be less corporate fraud (etc).