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SALT LAKE CITY — The state of Utah is getting $1.8 million from Chevron after a settlement was reached between the two in a case involving fraudulent collection of money for cleaning up leaking petroleum tanks.
Announced Thursday, the settlement marks the first resolution of legal claims initiated by the state against big oil companies accused of double-dipping — receiving money from a state fund for cleanup when private insurance should have picked up the costs.
Companies without that insurance are eligible to tap into the state's Petroleum Tank Fund, a pool of money used to cover the cost of cleaning up petroleum released from underground storage tanks.
The state established the fund in 1989 to help owners and operators of gas stations cover costs when a tank had a spill or release. Members of the fund are assessed a surcharge on the petroleum products dispensed from their gas stations to help pay for the expense of cleanup if a leak happens.
Regulated under the purview of the state Division of Environmental Response and Remediation, the fund requires gas station operators to pay the first $10,000 of the costs associated with cleanup. After that, the fund will pay up to $1 million or $2 million in costs, depending on when the leak happened.
At the time a claim is submitted, environmental regulators say companies are required to check a box on the paperwork indicating there is no insurance that would pay for that type of cleanup.
Brent Everett, division director, said Chevron agreed to a settlement absent taking the case to court. The division, state prosecutors and company officials met this summer, and the settlement agreement was recently crafted.
In the agreement, Chevron denied the state's allegations and contended it was legally entitled to payments from the fund. However, the agreement states both Chevron and the state wished to bring about an "amicable" resolution without having to resort to legal action.
The Utah Attorney General’s Office, on behalf of the environmental division, filed claims in 3rd District Court against ConocoPhillips earlier this year, and most recently BP Amoco, for similar allegations.
In the ConocoPhillips case, the state asserts the company used false claims to take $25 million from Utah over 14 years, filing at least 1,500 claims even though it had its own private insurance to cover the costs.
The suit involving BP Amoco alleges the company received nearly $1.5 million by filing fraudulent claims over a 12-year-period.
Utah is among several states across the county initiating legal action against big oil companies accused of bilking millions out of government-run funds designed to help cover the costs of cleanups.
Everett said the settlement moneys go into the Petroleum Storage Tank's cleanup fund.