PROVIDENCE, RI -- General Treasurer Seth Magaziner today announced the Employees' Retirement System of Rhode Island has pursued leadership roles in two class action lawsuits against fossil fuel industry giants BP and Plains All American for oil spills that harmed investors and hurt the environment.
Houston-based Plains All American Pipeline is responsible for the largest oil spill off the coast of California in 25 years; BP's 2006 oil spill in Prudhoe Bay was the largest ecological disaster caused by a failed pipeline in the history of oil exploration in Alaska. Both shareholder lawsuits accuse the companies of reckless behavior, misrepresentation and fraud related to the oil spills.
"To protect the pension investments of hardworking Rhode Islanders, we are seeking restitution for the financial harm caused to the pension system by Plains All American and BP's environmental recklessness," Treasurer Magaziner said. "Plains and BP misled their investors by telling us they were complying with environmental laws and regulations when they were not. After the environmental disasters they caused, both companies downplayed the extent of the destruction."
Plains All American is one of America's largest energy pipeline operators. In May, a Plains pipeline running along the coast of Santa Barbara ruptured, causing a spill that impacted several miles of some of the most environmentally sensitive and protected coastline in North America. The company had previously assured regulators that the pipeline was 'state of the art' and that an oil spill was 'extremely unlikely.'
After the oil spill, Plains executives said it was a small spill and estimated that not more than 2,400 barrels were released into the Pacific coastline. Investors later learned the spill was much larger, and the U.S. Department of Justice launched a criminal investigation.
After the spill, the price of Plains securities declined by nearly 30 percent. Rhode Island's pension system lost $3.9 millionon its investment in Plains securities from February 27, 2013 through August 4, 2015, according to papers filed with the court.
"Treasurer Magaziner and his staff recognize the economic impacts of the environmental damage caused by PB and Plains All American and we applaud them for these two class action lawsuits," said Meg Kerr, director of Clean Water Action Rhode Island.
The lawsuit against BP alleges that the company intentionally failed to disclose the foreseeable risk that oil production at Prudhoe Bay, Alaska would have to be shut down or curtailed because its pipelines were severely corroded as a result of BP's substandard maintenance and monitoring practices.
In 2006, BP discovered that a leak in a pipeline in Prudhoe Bay had caused a massive spill of more than 200,000 gallons of oil covering more than two acres of tundra. BP assured the public that the spill was an anomaly and announced measures to prevent another leak. Months later, BP announced multiple leaks in another Prudhoe Bay pipeline, spilling about 1,000 more gallons of oil.
BP then shut down its entire Prudhoe Bay operation, which represented 8 percent of U.S. oil production. News of the shutdown caused oil prices to surge more than $2 a barrel and the U.S. government to announce that it would tap its strategic oil reserves, if necessary. BP lost billions of dollars in market capitalization.