Judge Says Montana's Suit Against BP Can Proceed

Published in CSP Daily News

Complaint will "rise or fall" on specific examples offered during discovery phase

HELENA, Mont. -- A judge allowed a lawsuit filed by Montana against BP to go ahead, but cautioned that the state has a long way to go to prove its claims that the company committed fraud in collecting money to clean up spills from leaky storage tanks beneath its gas stations, reported the Associated Press.

Montana has accused the company, its subsidiaries and predecessors of "double-dipping" by allowing state money to be used to clean up contamination from the tanks without disclosing they had also collected insurance money for the same spills.

Attorneys for BP had asked District Judge Jeffrey Sherlock to dismiss the lawsuit, saying the state was on a fishing expedition. A high standard is required to bring a fraud claim, including specific examples, which the state did not have, BP attorneys argued.

Sherlock ruled Thursday that the state met the requirements to bring the complaint against BP, but said the future of the case hinges on whether actual proof is uncovered during the discovery phase.

"Whether the state will be able to prove the allegations at trial remains to be seen as it has failed thus far to provide the court with any proof that BP or its successors or subsidiaries actually 'double-dipped'," Sherlock wrote in his ruling. The "state's complaint will rise or fall based on discovery to be conducted by the parties."

Attorneys hired by the state allege BP and other companies it later bought out, such as Amoco and ARCO, for years contaminated hundreds of facilities and surrounding properties across Montana. The number of stations the companies owned was not immediately known, but attorneys for the state estimated it could have been up to a third of all stations in the state.

The companies started selling the properties in the early 1980s to independent operators after new federal and state regulations required station owners to upgrade the tanks, according to the lawsuit.

But the companies didn't tell the purchasers anything about the tanks' leak histories and sold the properties "as is," in an attempt to avoid liability for any cleanup, state prosecutors allege.

When the new owners found the contamination, they applied to the state for cleanup money funded by a 0.75-cent-per-gallon fuel tax.

At the same time, BP and its subsidiaries sought to have their insurers pay for the investigation and cleanup of the contamination caused by the storage tanks throughout the United States, the lawsuit alleged.

BP collected "as much as hundreds of millions of dollars" this way but made no effort to notify the state or the compensation board and never reimbursed the state for any cleanup costs that were incurred, the lawsuit said.

Rather, the company and its subsidiaries told the state and the compensation board that they were self-insured, the lawsuit said.

"BP believes there is no merit to the allegations in the complaint," BP spokesperson Scott Dean told CSP Daily News earlier this month.