Utah Claims Settled by Phillips 66 for $2 Million

Oil refiner Phillips 66 has paid $2 million to settle allegations it helped itself to a state fund for cleaning up damage from leaking fuel storage tanks even though it had insurance to cover the cleanups.

Phillips 66 is among three major oil companies accused of double-dipping by Utah. Chevron Corp. has paid the state $1.8 million, and a similar lawsuit is pending against BP Amoco.

Phillips said last week it didn’t actually double-dip on insurance claims and inherited the dispute from predecessor company ConocoPhillips.

The company “denies that it took an insurance payment for a clean-up” financed by Utah’s Petroleum Storage Tank Fund, said Janet D. Grothe, senior adviser for health, safety and environment for Houston-based Phillips 66.

A state official says the fact oil companies had insurance coverage for underground tank spills means they never should have turned to the state fund. Phillips was said to have relied on the fund for cleanups at 82 service stations.

“Consistently, these guys were saying, ‘No, we don’t have any insurance,” said Therron Blatter, a branch manager for underground storage tanks at the Utah Division of Environmental Response and Remediation. “Clearly, they did have the insurance.”

Many oil companies reached settlements with insurance companies more than a decade ago that provided coverage for leaking storage tanks, triggering a series of lawsuits by regulators across the country who said the companies had helped themselves to benefits from state funds, he said.

Utah law provides no fund coverage for cleanups that are independently insured, even though the oil companies are paying into the state fund, he said.

The companies pay Utah’s Petroleum Storage Tank Fund $50 to $150 per tank depending on the tank’s size, plus 1/2 cent for every gallon of gas sold from it, he said.

Topics Claims Energy Oil Gas