Rhode Island Employees' Retirement System, Providence, was named the lead plaintiff in two class-action lawsuits against fossil-fuel companies BP and Plains All American Pipeline for oil spills that harmed both investors and the environment, state Treasurer Seth Magaziner's office reported Thursday.
“To protect the pension investments of Rhode Islanders, we are seeking restitution for the financial harm caused to the pension system by Plains All American and BP's environmental recklessness,” Mr. Magaziner said in a news release.
Both lawsuits accuse the companies of reckless behavior, misrepresentation and fraud related to the spills.
Plains All American Pipeline is responsible for an oil spill off the coast of California in May. The BP oil spill in question relates to an incident in Prudhoe Bay, Alaska, in 2006.
After the Plains spill, the price of the company's securities declined by nearly 30%, causing Rhode Island's $8.3 billion pension fund to lose $3.9 million on its investment in Plains securities.
The suit against BP alleges the company intentionally failed to disclose the foreseeable risk that oil production at Prudhoe Bay 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 said 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% of its U.S. oil production. News of the shutdown caused oil prices to surge more than $2 a barrel, the news release said.
As a result of the BP spills, ERS lost about $150,000, said David Ortiz, spokesman for Mr. Magaziner's office.
BP spokesman David Nicholas and Plains spokesman Brad Leone could not be reached for comment by press time.