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The $1.8-million settlement marks the first resolution of claims made by the state against big oil companies accused of double-dipping, or receiving money from a state fund for cleanup when private insurance should have picked up the costs, according to the Desert News.
Companies without that insurance are able to tap into the state's Petroleum Tank Fund. The fund was established in 1989 to help owners and operators of gas stations cover costs when a tank has spills 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, the news outlet reported. The state Division of Environmental Response and Remediation regulates the fund.
Utah's Petroleum Tank 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, according to the newspaper.
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 wanted to bring about an "amicable" resolution without having to resort to legal action, the Desert News added.
The settlement money will go into the Petroleum Storage Tank's cleanup fund.
The Utah Attorney General's Office, on behalf of the environmental division, has also filed claims against ConocoPhillips and BP Amoco for similar allegations. In the BP Amoco case, the state alleges the company was not entitled to nearly $1.5 million for fraudulent claims submitted from 1995 to 2007, as CSNews Online previously reported. The suit also states that BP Amoco did not disclose its private insurance, which would have made it ineligible for reimbursement from the state.
Utah is not the only state looking to reclaim funds for cleanups. Earlier this year, Sunoco Inc. agreed to pay $2.2 million to settle allegations that it sought Massachusetts funds for hazardous waste cleanups, while at the same time, receiving insurance money for the same projects. Although it was lawful to seek state monies for the cleanup, Massachusetts Attorney General Martha Coakley said Sunoco did not disclose that it also received insurance settlements for the same purpose from 1997 to 2001. As part of the agreement, Sunoco will pay $970,000 to Massachusetts' cleanup fund and $1.23 million to the state's general fund.