Oil companies to pay $7.4 million for wrongly tapping state cleanup fund

Three major oil companies have agreed to repay Minnesota $7.4 million after an investigation found they tapped a state fund to pay for underground tank cleanups while also getting reimbursed by their insurance carriers, the state Commerce Department said Tuesday.

The department said Chevron, ExxonMobil and ConocoPhillips agreed to return the money to the Petroleum Tank Release Cleanup Fund, also known as the Petrofund, that helps pay for cleaning up property contaminated by underground storage tanks.

"The big oil companies, in essence, double-dipped by getting Petrofund dollars as well as the insurance proceeds," Commerce Commissioner Mike Rothman said in an interview.

The companies denied any wrongdoing, including misrepresentation, saying they were "factually and legally entitled" to payments from the state fund regardless of any insurance recoveries, according to the settlement.

Chevron spokesman Brent Tippen rejected the commissioner's claim that the company double-dipped, saying in an e-mail that the company acted in good faith.

Phillips 66, which recently was spun off from Conoco­Phillips, agreed to pay the most, $4.9 million. Chevron agreed to pay $1.97 million, and ExxonMobil $550,000. Phillips 66 said only that it had resolved the matter. Exxon­Mobil did not respond to a request to comment.

Rothman said Petrofund officials, who are part of the Commerce Department, first suspected that companies were getting double reimbursements for cleaning up property polluted by leaking gas station storage tanks.

The investigation found that the companies were sometimes collecting twice and not disclosing insurance coverage. Applicants are required to disclose whether they have insurance for such environmental damage.

"In the application process, they were not forthright with reporting whether they had insurance coverage," Rothman said.

The companies voluntarily engaged in negotiations to settle the civil case.

The Petrofund is funded through an intermittent fee of 2 cents per gallon on petroleum products. One effect of the settlement is that the Petrofund Board will be able to postpone imposition of the fee, a savings to consumers.

The fund, created in 1987, has helped gas stations and others pay for investigating and cleaning up more than 13,000 petroleum-contaminated sites and removing more than 300 abandoned underground petroleum storage tanks across Minnesota.