Bryan Cohen Dec. 28, 2012, 10:23pm

BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley announced a $1.7 million settlement on Wednesday with Chevron USA Inc. and Texaco Downstream Properties Inc. to resolve allegations related to improper reimbursement claims.

Chevron and Texaco, two gasoline companies that merged in 2001, allegedly received reimbursement payments from a state fund for gas station cleanup projects despite seeking and receiving payments from their insurers. The Massachusetts Underground Storage Tank Petroleum Product Cleanup Fund program requires that claimants disclose if they sought reimbursement from another source, such as insurance.

If claimants recover money from both insurance and the UST Fund for the same expenses, they are required to pay back the UST Fund.

"While the UST Fund program continues to be a great resource for our environment, it requires honesty from its participants in order to be effective and efficient," Coakley said. "We will continue our efforts to determine whether some oil companies may have sought or recovered money from their insurers without proper disclosure or reimbursement."

The $1.7 million settlement resolves allegations that Chevron and Texaco, both before and after the merger, failed to disclose to the UST Fund that they received payments from their respective insurance policies. Under the terms of the settlement, $825,000 will be paid to the state's UST Program Expendable Trust and $875,000 will be paid into the state's general fund.

Chevron fully cooperated with Coakley's office in this matter.

The fund was established to facilitate the cleanup of environmentally dangerous leaks from underground storage tanks. The fund reimburses owners and operators for eligible expenses incurred in cleaning up the leaks. The program is funded through tank registration and delivery fees.

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