The Tennessee attorney general filed a lawsuit against Chevron for allegedly running a scheme to defraud a state-run cleanup fund for underground storage tank leaks.
According to the Tennessean, the state’s attorney general is accusing Chevron and its subsidiaries, including Texaco, of running a 30 year long “prolonged and costly scheme” to fraudulently obtain over $18 million from the cleanup fund.
Chevron is seeking to have the lawsuit dismissed and a company filing seen by the Tennessean said it “certainly did not double recover” funds.
Chevron added in its filing that the UST Fund payments were approved by state officials and that there is no state record of 25 gas stations cited in the attorney general’s lawsuit, the Tennessean said.
The Underground Storage Tank (UST) Fund was established in 1988 to help the owners and operators of gasoline service stations pay for remediation expenses tied to underground storage tank leaks.
However, tanker owners who have private insurance must first turn to their insurance companies to pay for cleanup costs before seeking money from the fund.
In a civil law enforcement complaint filed in August, the attorney general’s office alleges that Chevron “misled the State by failing to disclose that it had insurance or affirmatively stating that it did not have insurance” that would cover remediation costs for UST leaks.
The attorney general also alleges that Chevron carried out private legal proceedings to enforce its rights under about 1,500 insurance policies issued by over 125 providers for remediation costs and double-dipped by collecting money from both its private insurers and the UST Fund.
“Chevron presented exaggerated estimates for the cost of remediation to insurers in order to maximize its recovery and possibly recover in excess of the actual cost of corrective action,” the lawsuit said.
The attorney general claims that Chevron was able to collect more than $286.5 million from its insurers while Texaco is accused of collecting about $362 million from insurers and Unocal allegedly collected about $68.6 million from insurers.
Chevron is also accused of making “numerous false and misleading statements” in its applications to receive money from the UST Fund.
The attorney general is seeking a $18,275,490 restitution payment to the UST Fund from Chevron as well as a civil penalty of between $2,500 and $10,000 for each separate violation.
No court date has been set for Chevron’s motion to dismiss.