Lawyers Find New Way To Make Big Money Off Major Oil Companies

Lawyers Find New Way To Make Big Money Off Major Oil Companies

A new wrinkle on the environmental cleanup angle
by John Pendleton  |   Wednesday, February 12, 2014
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Some of the biggest names in the oil business are under attack, accused of getting paid twice for the cost of cleaning up environmental hazards.

In gas stations across the country are aging fuel tanks, some of which were built as much as 50 years ago. Almost half a million leaking tanks have been detected since 1988, with about fifteen percent still to be addressed.

In California, the practice of requiring gas station owners to dig up the old steel tanks, haul away any contaminated soil and then install new tanks made of plastic. For small, mom-and-pop stations it was a death-blow. Very few individual station owners could afford the expense, so they just closed the doors and walked away. Essentially the only stations left in California are those owned by the large companies.

It was only after the damage was done that a study by the world-renowned University of California at Berkeley established that microbes in the soil would eventually break down the hydrocarbons in gasoline into harmless compounds. All that needed to be done was swap out the tanks. There was no need to do anything else and the cost of exchanging the tanks, without removing the soil and disposing of it was something that most of the station owners would have been able to afford.

Thomas Schruben, an "environmental engineer" and former EPA employee is spearheading the movement to charge oil companies with "double-dipping" when they receive payouts from state governments for the costs of cleaning up leaky tanks.

The Reuters news agency identified nine states that won settlements totaling more than $105 million against four companies in the past three years, specifically Chevron, Exxon, ConocoPhillips/Phillips 66 and Sunoco. None of those companies admitted to any kind of wrongdoing.

Schruben started to suspect fraud in spills cleanups and partnered with Dennis Pantazis, a lawyer specializing in environmental and civil rights cases, to create a team of investigators and experts that brought their findings to state governments, hoping to be hired as advisers or legal counsel. New Mexico paid more than $1 million in attorney fees after one $5.2 million settlement from Chevron last September.

Pantazis said. “In some instances you might say these were intentional actions. In some instances it may have been a case of the right hand not knowing what the left hand was doing." He was referring to cases such as the situation in which Chevron denied having insurance in its application for state funding in 2006. It then received $19,000 for handling of a gas tank leak in southern New Mexico town of Artesia.

Both Exxon and Chevron have demonstrated a willingness to settle the lawsuits out of court, paying out compensation. Exxon in fact said in 2004 it discovered by itself it received insurance payouts on top of state claims. The company informed 24 states of the “discovery” and voluntarily offered compensation to some of those.

In contrast, Phillips 66 has challenged the accusations in court, denying that its insurance policies covered underground storage tank leaks. A BP spokesman said, "The claims in the complaints are without merit, and BP plans to defend itself against the allegations."

The Schruben-Pantazis team says it is currently involved in around 20 state-versus-oil-company cases across the country.

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Tom Miller | Friday, February 14, 2014
Sorry but could lawyers ruin another industry? Yes they can.
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