BP Asks Judge to Toss Montana Lawsuit Over Cleanup

By MATT VOLZ | October 21, 2011

Lawyers for BP asked a judge Wednesday to dismiss a Montana lawsuit that alleges the oil giant and its subsidiaries collected millions of dollars in insurance money while letting the state foot the bill for cleaning soil and groundwater contaminated by their leaky storage tanks.

The state and the Montana Petroleum Tank Release Compensation Board filed the lawsuit in February, accusing the British company and its North American subsidiaries of fraud and negligence when it came to paying for the cleanup of decades of pollution from the storage tanks at service stations across the state.

BP and its subsidiaries “knowingly double-dipped” by collecting reimbursements for environmental remediation costs from both their insurers and the petroleum board, which administered a public fund to clean up such leaks, according to the lawsuit.

The state is seeking reimbursement for cleanup costs along with punitive and exemplary damages.

BP attorney Patrick Sullivan told District Judge Jeffrey Sherlock at a hearing Wednesday that a high standard is required to bring a fraud claim. The state’s lawsuit does not meet it because it contains no specific examples, he said.

That high standard prevents a “fishing expedition” from being filed under the guise of a lawsuit, Sullivan said.

“In large extent, that’s what we’re dealing with here,” Sullivan said. “You can’t just file a complaint and make allegations without having factual support.”

Attorneys hired by the state allege that BP and other companies it later bought out, such as Amoco and ARCO, for years contaminated hundreds of facilities and surrounding properties across Montana by using inadequate petroleum storage tanks at their service stations and convenience stores.

Attorney Bill Rossbach said state law does not require specific times, dates and places to bring a fraud claim. While the state does not know how many service stations BP and its subsidiaries and predecessors owned nor how many had leaky tanks, Rossbach said there were at least 10.

The legal process would allow the state to get a fuller understanding of the scope of the problem by examining the companies’ own records, he said.

The companies started selling the properties in the early 1980s to the independent operators they had been leasing them to after new federal and state regulations required service 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 contamination was found, the new owners applied to the state for cleanup money funded by a 75-cent-per-gallon fuel tax and administered by the petroleum board.

Meanwhile, 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 U.S., the lawsuit alleges.

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.

Sullivan said none of the defendants filed a claim with the state. The service stations by that time had been bought by independent operators that made the claims.

The petroleum board has paid $100 million to clean 1,800 sites in Montana, Rossbach said. Only $2 million has been reimbursed, he said.

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