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Oil companies are accused in Oklahoma, other states of profiting from pollution

Two huge multinational oil companies are accused of profiting off pollution and defrauding taxpayers out of millions of dollars in civil lawsuits pending in Oklahoma and other states.
by Randy Ellis Modified: October 12, 2012 at 8:06 pm •  Published: October 12, 2012

Two huge multinational oil companies profited off pollution and defrauded taxpayers out of millions of dollars in Oklahoma and other states, lawsuits allege.

ConocoPhillips and BP, along with their predecessor companies and subsidiaries, filed false statements to get insurance companies and taxpayers to double-pay them for the cleanup of fuel leaking from underground storage tanks located beneath filling stations, the civil lawsuits claim.

ConocoPhillips' attorneys also resorted to bribery, blackmail, threats, extortion, corruption and legislative pressure to get Oklahoma Corporation Commissioners to tap the Petroleum Storage Tank Release Indemnity Fund to pay the company millions of dollars for ineligible expenses, documents filed in one lawsuit claim.

“There is no doubt the payment of this money is morally wrong,” then-Corporation Commission attorney Charles Wright said in an Aug. 12, 2003, memo to Ben Jackson, who was the commission's acting general administrator at the time. “Phillips is not owed the money. … There is no doubt that the program is the victim of a conspiracy, conducted by Phillips and associated parties, that threatens the destruction of the program if the money is not paid. In short, we are paying protection.”

ConocoPhillips' attorneys filed an answer to the allegations in court on Oct 4. In that answer, the company said it had “insurance polices of various types at various times” but denied engaging in fraudulent conduct.

Janet Grothe, spokeswoman for Phillips 66, which spun off from ConocoPhillips last April, declined to elaborate on the company's position beyond what its attorneys have stated in the lawsuit.

“As a matter of policy, we don't comment on legal matters,” she said.

Sued by other states

Records show the FBI conducted a criminal investigation, but FBI spokesman Rick Rains declined to confirm the existence of the investigation or say whether it was ever completed. No criminal charges have been filed.

Wright joined forces with fellow former Corporation Commission attorneys William Burkett and Rachel Mor, former Corporation Commissioner Ed Apple and others to file a taxpayers group lawsuit against ConocoPhillips after efforts by Corporation Commission staff attorneys to halt payments to the company failed.

ConocoPhillips also is being sued by the states of Montana, Colorado and Utah, while BP is being sued by Oklahoma Attorney General Scott Pruitt.

ConocoPhillips and BP are accused in those lawsuits of “double-dipping” and profiting from pollution by billing state environmental cleanup funds for costs of cleaning up underground storage tank leaks that already had been paid by insurance companies.

In Oklahoma, the environmental cleanup fund is called the Petroleum Storage Tank Release Indemnity Fund and is financed by a penny-per-gallon tax on the sale of motor fuel.

The fund is supposed to be used to pay for the cleanup of sites that were not covered by insurance.

BP and its related companies “knowingly double-dipped by collecting reimbursements for corrective action environmental remediation costs for sites they polluted from both the Indemnity Fund and their insurance carriers in violation of Oklahoma Law,” Pruitt alleges.

As part of a “fraudulent insurance scheme,” officials with BP and related companies falsified their State Indemnity Fund applications by stating they were “self-insured and had no insurance coverage” when, in fact, they “maintained multiple insurance polices,” the lawsuit alleges.

BP and its related companies received “hundreds of millions of dollars” from insurance companies based on claims filed regarding fuel leaks in Oklahoma and other states, but failed to disclose that to Oklahoma officials and improperly collected millions more from the Indemnity Fund, Pruitt alleges.

Brett Clanton, spokesman for BP America Inc., declined to discuss the issue, saying, “We don't comment on pending litigation.”

In Oklahoma

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by Randy Ellis
Investigative Reporter
For the past 30 years, staff writer Randy Ellis has exposed public corruption and government mismanagement in news articles. Ellis has investigated problems in Oklahoma's higher education institutions and wrote stories that ultimately led to two...
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