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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.'"
'The oil companies have, in effect, profited off polluting.'
Doh!
Their investments in the legislative sector are paying off.
They feared that it could be used to suppress protest or support unpopular rule.
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.
Go after the executives. The executives who do this care more about themselves than the company. The only solution is to focus entirely on the leaders who do this and put them in prison. If Deepwater Horizon had resulted in the Obama Administration filing Felony Murder charges against the executives who directed the safety standards to be ignored (and resulted in 11 oilmen dying), any bets that safety standards wouldn't suddenly become top priority? Same deal here.
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
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.
**TODO** Steal someone elses sig.
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.
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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.
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.