Oil Companies Get Paid Twice To Clean Up Leaks, Defrauding State Governments

Oil companies have been using state-allocated funds while also taking payments from insurance companies to clean up the same underground tank leaks, according to a report.

Former Environmental Protection Agency employee Thomas Schruben and lawyer Dennis Pantazis told Reuters they have hired a team of lawyers and are investigating 20 cases across the country over long-suspected fraud in the case of leaky steel oils tanks – the biggest single threat to groundwater in the country.

The tanks were often constructed for gas stations during the 1950s and 60s, but were never removed. Over time the corrode and spill toxic gas and diesel that makes its way into aquifers.

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In many cases, oil companies took state-allocated funds and insurance payouts, when the insurance money should have been given to the state to recoup expenses.

"It appears this was a really common practice and it's very disconcerting," Colorado Attorney General John Suthers told Reuters in an interview. "Basically the companies were defrauding the state."

In other instances, the companies told the state they had no insurance.

In 2006, Chevron reportedly received $19,000 from the state of New Mexico to clean up and monitor a leak at a small gas station in Artesia. A document to receive those funds says the company has no insurance.

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"When I first saw these cases, I thought this is kind of incredible," said New Mexico assistant attorney general Seth Cohen, who handled the state's lawsuit against Chevron. "The oil companies have, in effect, profited off polluting."

Court documents show some states have settled with oil companies for “double-dipping.”

Colorado settled with three companies for $35 million, according to court documents.

Despite large settlements of millions, the states spend more than a $1 million in attorney fees.

Lawsuits are currently pending in at least seven states.

Sources: The Wire, Reuters

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