Alaska seeks funding to sue BP over shutdowns

Posted: Friday, February 29, 2008

The state of Alaska intends to sue BP for losses incurred by oil spills, pipeline leaks and shutdowns on the North Slope two years ago.

No lawsuit has been filed yet, but the state Department of Law has requested $4.7 million from lawmakers to pay for preparation work and possible litigation this year.

Officials didn't specify how much it would seek from BP, but estimated the state's losses from the leaks and aftermath at several hundred million dollars.

The House Finance Committee added the money to its operating budget; the House is expected to vote on that budget early next week.

The state, which relies on oil taxes and royalties for nearly 90 percent of its revenue, has been investigating BP for months.

"We have cooperated with the state's investigation," said BP spokesman Steve Rinehart, declining to speculate on claims in a case that has not been filed.

If approved, the appropriation would be used for "counsel, document management, experts and litigation costs," according to the request made by the Office of Management and Budget on behalf of Gov. Sarah Palin.

State Rep. Bill Stoltze, a Chugiak Republican who serves as the committee vice chairman, introduced the budget amendment.

"I have a high level of confidence in the attorney general (Talis Colberg), the team of lawyers working on this," Stoltze said. "It's not like we are taking a random amount of money and throwing it out there."

The state's law department placed the urgent call for the money, saying the statute of limitations for the lawsuit expires in September.

"Based upon information gathered to date, the Department of Law anticipates making a recommendation to commence litigation to recover the state's revenue losses, as well as civil penalties and damages under the state's environmental statutes," the request to lawmakers says.

"The department anticipates the litigation will last three to four years at least and that additional appropriations will be needed in the future," it says.

The budgetary request stems from a pair of 2006 spills, including a 201,000-gallon crude spill in March 2006 at Prudhoe Bay, the nation's largest oil field.

A smaller spill five months later ultimately prompted BP to halve production for several weeks.

Both leaks were traced to the failure of the company to regularly clean and inspect two of its pipelines over the course of several years, leading to corrosion.

The company last year pleaded guilty to a federal environmental crime related to one spill and agreed to a $20 million fine.

The company is currently replacing 16 miles of feeder pipeline which could cost up to $260 million.

It's not the first time the state Department of Law has asked lawmakers for funds for a lawsuit. Last year, it won approval to hire a New York law firm to sue the state's former actuary in a $1.8 billion lawsuit.

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