Mass. A.G. Says Hess Misused UST Cleanup Funds

Published in CSP Daily News

Seeks to recover “millions” for alleged fraudulent claims

BOSTON -- Alleging that millions of dollars was illegally obtained from a state fund for environmental cleanup projects at dozens of gasoline service stations throughout Massachusetts, Attorney General Martha Coakley has filed a lawsuit against the Hess Corp.

The Massachusetts Underground Storage Tank Petroleum Product Cleanup Fund program (UST Fund) was established to expedite the cleanup of environmentally dangerous leaks from underground storage tanks, such as those commonly found at gasoline stations, by reimbursing owners for eligible expenses incurred in their response. According to the fund's regulations, claimants must disclose if they sought reimbursement from another source, including insurance, for expenses they submit to the fund. If claimants do recover money from both insurance and the fund for the same expenses, they must pay back the UST Fund.

According to the complaint filed April 13 in Suffolk Superior Court, between 1998 and 2004, Hess and Merit Oil (acquired by Hess in 2000), reached settlements with insurers on environmental cleanup projects but continued to submit reimbursement claims to the UST Fund.

"We allege that Hess falsely claimed reimbursements from the UST Fund when it was also seeking restitution from insurance companies," Coakley said in a press release. "The UST Fund has several regulations to prevent this type of activity so that it may continue to help businesses keep our environment clean by assisting them with expensive projects that could otherwise shut them down."

The lawsuit alleges that Hess and Merit Oil also falsely certified to the UST Fund that their submissions were in compliance with the applicable regulations. The complaint seeks from Hess all of the funding it recovered from the UST Fund for the relevant stations, multiple damages, civil penalties, and investigative and litigation costs, which together total millions of dollars owed to the commonwealth.

Earlier this month, Coakley announced a $2.2 million settlement with Sunoco involving the company's claims to the UST Fund.

The matter is being handled by Assistant Attorney General Alex Klibaner and legal analyst Bella Zaslavsky with assistance from division chief Glenn Kaplan and deputy chief Monica Brookman from Coakley's Insurance and Financial Services Division.