BP sued by Minnesota for fraud over $25 million in tank cleanups

  • Article by: DAVID SHAFFER , Star Tribune
  • Updated: February 11, 2014 - 1:19 PM

Minnesota’s $25 million case alleges that the oil giant lied about having insurance coverage to clean up leaking underground tanks.

The Minnesota Commerce Department on Monday sued BP PLC, alleging that it has fraudulently collected more than $25 million from a state fund while also being reimbursed by insurers for cleaning up leaking underground petroleum tanks.

The lawsuit alleges BP violated the Minnesota’s False Claims Act, which carries the risk of triple damages.

The state also accuses the oil company of misrepresentation, fraud and unjust enrichment.

“They lied on their applications,” said Minnesota Commerce Commissioner Mike Rothman, whose department sued BP in Ramsey County District Court seeking reimbursement and other damages, civil penalties and interest.

BP denied wrongdoing and said its dealings with the storage tank funds have been proper.

“BP acted at all times in good faith, and believes its dealings with the Minnesota state underground storage tank fund have been proper,” spokesman Jason Ryan said in an e-mail. “BP plans to defend itself against the allegations in the complaint.”

The lawsuit, filed in Ramsey County District Court, is the fourth and largest case the state has brought against an oil company for allegedly double dipping from the state Petroleum Tank Release Cleanup Fund and private insurers.

Last July, Chevron, ExxonMobil and ConocoPhillips agreed to settlements, paying $7.4 million to the fund, also known as the Petrofund. The fund was created by the Legislature in 1987, and it is supported by fees on petroleum products.

Minnesota is one of several states to accuse oil companies of double dipping on tank cleanups. Montana in 2011 also brought a lawsuit against BP over that state’s tank cleanup program. A Montana official said the case is still pending.

Rothman said the Minnesota Department of Commerce still is investigating one other oil company for alleged double dipping. He declined to identify the company because the case is under investigation. He said the investigations began after state officials learned that oil companies had been caught in other states engaging in similar misconduct.

The amount of damages sought in the BP case dwarfs that of the other companies investigated in Minnesota.

Rothman said BP built a vast U.S. retail presence through acquisitions, resulting in the need to clean up many tank leaks. BP’s retail network includes former Standard, Amoco and Arco stations across the state.

Minnesota state agencies have worked for decades to clean up more than 18,000 leaking underground petroleum tanks.

The Minnesota Pollution Control Agency handles the technical work and the Commerce Department oversees reimbursements from the Petrofund.

From 1988 until now, BP submitted 1,407 applications to the fund for cleanups of underground storage tanks around the state, the suit alleged. In each case, the suit said, BP was required to say whether it had insurance to cover the cleanup.

In every case, the suit alleges, BP had insurance coverage that it concealed from the five-member Petrofund board.

BP and its predecessor, Amoco, even went to court against insurers to collect on policies through settlements of nearly $300 million, the suit said.

 

David Shaffer • 612-673-7090 • @ShafferStrib

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