WORCESTER — The Better Business Bureau has revoked the accreditations of Peterson Oil and another company it runs, Cleghorn Oil, citing recent allegations of improper fuel deliveries the business settled in court.
The Worcester-based oil company recently agreed to pay $450,000 to settle civil allegations from Attorney General Maura T. Healey that it sold the state oil with higher-than-contracted levels of biodiesel.
Healey alleged — as have residential customers in a lawsuit filed in Worcester Superior Court — that the higher levels of biodiesel caused damage to heating equipment.
The Better Business Bureau action occurred on Wednesday
In an interview Thursday, Peterson Oil President Howard W. Peterson Jr. denied that the fuel, called bioheat, caused the problems, and said he planned to ask the BBB to reconsider its decision.
“We have taken the use of renewable biodiesel on. We feel it’s better for the environment,” he said, adding that his maintenance records show the same levels of service for customers using bioheat as opposed to traditional oil.
Torre Mastroianni, a former Peterson customer from Worcester, told the T&> he believes the oil damaged his equipment, and was not satisfied with the customer service the company provided.
“It’s not right what they’re doing,” he said, adding he had to pay another company to repair damage a technician there told him was caused by the bioheat.
Court records show that two former Peterson customers have been pursuing a class-action lawsuit against the company over similar allegations since 2019.
In the lawsuit, lawyers for the customers allege Peterson perpetrated fraud by failing to tell customers they were getting oil with far higher concentrations of biodiesel than recommended by regulators.
The lawsuit alleges Peterson stood to make a profit from using more biodiesel than conventional oil in its product, alleging it owns a facility in which it produces its own biodiesel fuel.
Peterson declined to comment on the ongoing lawsuit, but told the T&> that profit is not the motive behind his use of biodiesel.
He acknowledged that he has invested in his own biofuel manufacturing plant in New Hampshire, White Mountain Biodiesel, which he bought several years ago.
Peterson Oil’s website says that the company receives biodiesel from “our local refineries,” listing White Mountain and another refinery in Rhode Island.
White Mountain’s website does not mention Peterson; he said that’s because it hasn’t been updated following his purchase.
Peterson told the T&> he has long been a proponent of increasing the use of biodiesel in heating oil to help save the environment.
It’s a topic he has commented on over the years in the T&>, including in 2012, when he started using biodiesel as fuel in his trucks, and in 2015, when he told the paper he was using blends of as much as 20% biodiesel.
The lawsuit notes that federal regulators have found blends of 20% may not be suitable for very cold weather.
It alleges both plaintiffs had equipment break down after receiving Peterson’s oil. Testing of one sample procured by WBZ-TV, which did a report on the situation in 2019, revealed levels of biodiesel of 80%.
One of the plaintiffs, Nancy Carrigan, alleged in the suit that she had to pay $3,000 to replace her oil tank after the Peterson oil mix corrupted it.
Lawyers alleged the company that replaced the tank discovered the top valve of the tank was covered in chicken fat.
Peterson told the T&> cooking grease is used in the bioheat, but denied that the fuel he’s delivered is any harder on heating equipment than conventional oil.
Healey, in her news release, stated that several state entities that bought oil from Peterson “experienced performance issues” because of the high biodiesel content.
“Cities and towns relied on Peterson Oil to deliver heating fuel in accordance with its contract so they could stay warm, but they instead received noncompliant fuel that caused problems for many heating systems,” she said.
The legal agreement Healey and Peterson agreed on in court contains less blunt language, saying the performance issues “may” be attributed to the higher biodiesel amounts.
The agreement is called an “Assurance of Discontinuation” — meaning the attorney general was agreeing to stop its investigation in exchange for the payment. Peterson did not admit to wrongdoing.
The $450,000 Peterson agreed to pay the state will not be passed on to consumers, Healey’s office confirmed, since it is meant to settle the state’s contractual concerns.
The office confirmed it has received nine consumer complaints since March 2019, saying it has mediated many of them and gotten refunds or repairs.
It also noted that the customers’ separate civil lawsuit will be a potential means of recovery.
The lawsuit alleges the company’s own customer materials, updated after WBZ’s 2019 story, note that equipment adjustments may be needed if switching between “cleanheat” and petroleum.
A former technician for Cleghorn Oil by Peterson filed an affidavit in Worcester Superior Court that alleges he had to make frequent service calls because of issues caused by the biofuel blend.
The technician, Dana Fields, said customers were not properly informed they were receiving the blend. He said he quit in 2018 after getting “tired of lying” to customers about business practices he did not believe were right.
Fields said he did not have the same issues crop up when he worked for Cleghorn Oil prior to Peterson purchasing it.
Fields alleged he was offered a 20% raise, which he rejected, prior to quitting.
The lawsuit alleges that multiple technicians told plaintiffs that many customers had problems with equipment from the fuel. The lawsuit alleges there could be several thousand consumers who could qualify as plaintiffs should a class be certified by a judge.
One of the lawyers representing the plaintiffs, Jeffrey S. Strom, declined to comment on the suit.
Peterson told the T&> that he has been pioneering the use of biodiesel with good intentions. He said he believes mandated higher concentrations of biodiesel are coming in the industry.
Legislators in other states are looking to mandate increases in the percentage of biodiesel in heating fuel, he noted, including a push to require a 50% blend by 2030 in Rhode Island.
Peterson said his use of biofuel has netted him profit in some years, but not in others. He said government credits he’s able to sell for using the fuel fluctuate.
“I’ve decided climate change is real, and I believe there is a solution,” he said. “I would like to leave a cleaner environment.
“I’d like to say that when I’m dead, somebody will say, ‘We’re better because I was here.’”
Contact Brad Petrishen at firstname.lastname@example.org. Follow him on Twitter @BPetrishenTG.