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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

ConocoPhillips is accused of similar fraudulent misconduct in the lawsuits filed by Oklahoma taxpayers and the states of Colorado, Montana and Utah.

The Oklahoma taxpayers group alleges ConocoPhillips received $7,541,170 in improper payments from the Indemnity Fund in connection with 46 environmental remediation cases.

The taxpayers group is seeking to recover those costs plus triple that amount in damages.

But the group's allegations against ConocoPhillips go way beyond double-collecting from insurance companies and the Indemnity Fund for cleanup expenses.

The group claims attorneys for Phillips Petroleum, before it became part of ConocoPhillips, used friends in the Oklahoma Legislature to coerce commissioners into inappropriately paying the company several million dollars from the fund.

They cite an April 2001 meeting between representatives of Phillips, then-state Sen. Kevin Easley and members of Petroleum Storage Tank Advisor Committee that took place in the conference room of then-Senate President Pro Tem Stratton Taylor.

Phillips attorneys emerged from the meeting claiming that a settlement agreement had been reached that would require the Corporation Commission to pay the company $2.5 million more than the $3,941,170 it already had received in connection with 27 reimbursement claims.

Corporation Commission officials refused to pay, saying commissioners and commission staff attorneys were not part of the negotiations and Easley had no authority to bind the commission to an agreement.

A bitter exchange of letters followed. Phillips' attorney, D. Kenyon Williams Jr., charged that the Commission had “dishonorably declined to complete the settlement.”

Burkett countered for the Corporation Commission by stating Williams' allegation was “libelous” and that Williams had engaged in “professional misconduct.”

Phillips' attorneys backed down.

2002 study

Adding fuel to the controversy was a 2002 study by the state auditor and inspector's office that concluded the $3,941,170 Phillips already had been paid was more than $1 million too much.

After the settlement was rejected, ConocoPhillips representatives “threatened” Corporation Commission employees that they would cause their “associates in the Legislature” to move administration of the Indemnity Fund from the commission to another agency if they were not paid more money, the taxpayers group alleges.

Easley and then-Sen. President Pro Tem Cal Hobson subsequently authored legislation in 2003 to take the Indemnity Fund away from the Corporation Commission and move it to the state Department of Environmental Quality.

The group claims the threat of such a move put pressure on Corporation Commissioners, who would have been forced to eliminate a number of agency jobs if the measure had gained legislative approval.

ConocoPhillips attorneys Shawn Fulkerson and Richard Parrish subsequently hosted a fundraiser for then-Commissioner Jeff Cloud in mid-2003.

During the fundraiser, the attorneys promised acting fund administrator Brooks Mitchell that the agency's problems at the Legislature would “go away” if ConocoPhillips was paid the money it demanded, the taxpayers group claims.

“This proposed bribe (and others) led to an agreement to settle ConocoPhillips claims” by paying the company an additional $3.6 million, even though the state auditor contended the company already had been paid more than $1 million too much, the taxpayers group alleges.

ConocoPhillips attorneys stated in court filings that one of its defenses to the allegations will be the oil company's “constitutional rights to free speech and to petition its government.”

The company contends the settlement was “valid, binding and legally enforceable.”

Cloud, who now works for Continental Resources, declined to comment on the events that took place.

“I'd love to talk about that, but I think we're getting ready to go to trial,” he said.

Easley, who is now chief executive officer of New Dominion LLC, did not return repeated calls to his office.

Hobson also could not be reached for comment.

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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