In a recent environmental fraud settlement, British Petroleum (BP) has settled with the State of California for $7.9 million following allegations it double-billed for cleanup efforts after several of its Underground Storage Tanks (UST’s) began leaking. Under California law, a cleanup fund was established to help companies defray the cost of maintaining environmental-compliance during and after cleaning up affected areas. These funds are obviously provided by California taxpayers and come with several contingencies for companies looking to profit from their own cleanup efforts. Specifically, any company claiming reimbursement from the cleanup fund must agree to forgo filing an insurance claim for the same site and forgo seeking indemnification from third parties via civil litigation. In today’s case, BP is alleged to have applied for and received cleanup funds from the state while also receiving insurance payouts for the same UST area.
Details of BP’s double-billing scheme
According to the allegations, BP agreed to carry out the cleanup of 243 UST sites across California, each eligible for reimbursement of between $500,000 and $1.5 million. The reimbursements are offered by the State Water Resources Control Board, which was a party to the settlement negotiations between the company and the Attorney General’s office. In sum, BP is alleged to have defrauded California taxpayers out of millions of dollars by lying about its insurance coverage policies, which cover the costs of environmental cleanup in the event of a UST leak.
The punishment facing BP includes several components. First, it must repay $7.9 million wrongfully paid by the Board in violation of state laws. Second, it will face a levy of $25,400 against each of the remaining 153 cleanup sites eligible for reimbursement, thereby saving taxpayers another $3.9 million in payouts. Lastly, the company is deemed ineligible for environmental cleanup of another 90 sites, which is calculated to save taxpayers another $135 million in payouts from the cash-strapped Board.
In response, the Board stated, “The UST Cleanup Fund is a critical tool the State Water Board uses to protect public health and safety and the environment….It is imperative that claimants not engage in bad faith or fraud when accessing these vitally important public-benefit funds by submitting false or misleading statements.”
Of the total settlement, the whistleblowers involved in the case are to receive $1.38 million, along with another $250,000 in attorneys’ fees.
This settlement comes just weeks after the state of Ohio announced a similar $33 million settlement for similar misconduct. Shell Oil also faced similar allegations following its environmental cleanup efforts in the Commonwealth of Massachusetts.
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If you are aware of possible environmental fraud or misuse of taxpayer money, please contact Berger & Montague, P.C. as soon as possible to discuss your rights under the False Claims Act.