A federal judge in Houston recently dismissed a securities fraud case against Plains All American Pipeline, the Houston-based oil and gas pipeline company, stemming from an oil spill in California that left a beach covered in crude oil.
Chief U.S. District Judge Lee H. Rosenthal rejected the claims of several pension funds that charged Plains and its financial advisers with falsely claiming the company had a comprehensive and effective environmental program to prevent and contain oil spills to boost the price of its securities.
The investors filed their lawsuit in August 2015, three months after a Plains pipeline ruptured along the coast of Santa Barbara, Calif., which caused thousand of gallons of crude oil to wash ashore and led California to file criminal charges last year against Plains for damages including wildlife loss in the environmentally sensitive area. The Department of Justice’s environmental crimes unit also launched an inquiry into whether Plains violated any federal criminal statutes, including federal clean water regulations, according to a February securities filing by Plains which reported the investigation is ongoing.
The investors were seeking compensation for the drop in value of Plains’ securities following the spill. They were also seeking class action status to represent other investors.
Rosenthal criticized Plains in her ruling, noting that “Plains’s response to the spill left much to be desired,” referring to the hours it took Plains to report the escaping oil to the U.S. Coast Guard’s National Response Center instead of the 30 minutes state law dictates.
But Rosenthal ultimately rejected the arguments of the investors, finding that none of the statements in Plains’s filings to the Securities and Exchange Commission were misleading.
Plains did not immediately respond to comment.
In a recent securities filing, Plains noted that it is paying the legal bills for its underwriters to defend their actions as part of Plains’ underwriting agreements. The company also said that it believes the criminal charges filed against the Plains in California are unwarranted and that neither the company nor any employees engaged in any criminal behavior at any time.