More oil firms to sue US military over fuel supplies : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

More oil firms to sue US military over fuel supplies Monday November 20, 3:30 PM EST NEW YORK, Nov 20 (Reuters) - Up to three oil companies will file claims against the U.S. Department of Defense next month for alleged underpayment for jet fuel they supplied in the 1980s and 1990s, a lawyer representing the companies said Monday.

The claims would come in the wake of a $210 million filing in late September by independent oil refiner Coastal Corp. (CGP), which alleged that the DOD's fuel buying wing used unauthorized pricing indexes that allowed it to purchase jet fuel at 8 to 10 percent below market value.

Keith Burt of Washington-based McKenna & Cuneo LLP, which filed the Coastal claim, said the inital claims from these three companies -- whom he declined to name -- were about $200 million but similar claims by his and other law firms could reach billions of dollars.

"Just about every major oil company is looking at this, if they haven't already agreed to join," said Burt. "We expect our clients will file for about $1.5 billion in total."

Jet fuel sales to the DOD from 1981 to 1996 were about $94 billion, said Burt. At an underpayment rate of 8 percent, total industry claims could reach $7 billion, he said.

Burt said three oil companies have joined his list of clients since the Coastal claim, bringing the firm's list to 12, and more are expected to sign on.

In May, the U.S. Court of Federal Claims awarded independent refiner Pride Cos. LP (PRDE), also represented by McKenna & Cuneo, $60 million for DOD underpayments between 1987 and 1993.

-- Martin Thompson (, November 20, 2000

Moderation questions? read the FAQ