Colorado Sues Big Oil Co

DENVER (CN) - Colorado accused ConocoPhillips of profiting from its pollution of the state's oil and water while the taxpayers had to pay for the cleanup.

"In other words, defendants profited from polluting Colorado soil and water, while the state paid $70,662,558.87 to clean up defendant's contaminated sites," the state says bluntly in its complaint.

Colorado claims ConocoPhillips, the nation's third-largest energy company, "agreed to immediately pay to the state any monies it received from third parties for the same costs paid by the state, 'including insurance proceeds,'" then lied about getting insurance money.

Colorado created its Petroleum Storage Tank Fund in 1989 to cover cleanup costs and "protect the public health, safety, and welfare and to minimize environmental damage," from leaks from underground storage tanks, according to the complaint.

Conoco Phillips received $21.7 million in "direct reimbursement" from the fund to clean up 113 of its service stations, and another $48.9 million in "subsequent-owner reimbursement" for "corrective action costs" at 241 more stations, the state says.

The complaint states: "ConocoPhillips repeatedly represented to the state that it had not received and did not expect to receive compensation for the corrective action of UST contamination from any source, including 'lawsuits, settlement, [and] insurance.'

"In its contracts with the state, ConocoPhillips agreed to immediately pay to the state any monies it received from third parties for the same costs paid by the state, 'including insurance proceeds.'

"ConocoPhillips sued its insurers for the corrective action of environmental contamination, including corrective action of its UST leaks, and settled with its insurers for approximately $286 million.

"In violation of ConocoPhillips' contractual obligations to the State, ConocoPhillips never disclosed the terms of its insurance policies, never told the State that it had sued its insurers, never told the State it had settled with its insurers, and never repaid the State for the funds it was awarded by the Fund. ...

"In other words, defendants profited from polluting Colorado soil and water, while the state paid $70,662,558.87 to clean up defendant's contaminated sites."

ConocoPhillips began leasing or selling many of its Colorado service stations in the 1980s to duck millions of dollars in upgrade and replacement costs, and avoid long-term liability for its underground tanks, the state says.

In total, ConocoPhillips "made insurance claims for environmental liabilities totaling approximately $2.4 billion," the state says, some of it for underground storage tanks, and "settled with its insurers for approximately $286 million."

Colorado wants its $70.6 million back, plus costs and damages for breach of contract, nondisclosure and concealment, and unjust enrichment.

It is represented by Michael Plachy with Rothgerber Johnson & Lyons.

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