May 11

Pipeline Lawsuit Leads to $2.5 Million in Attorney Fees

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Alaska Supreme Court upholds $2.5 million award

The Alaska Supreme Court issued a decision on May 9, 2014, upholding a lower court’s decision to award municipalities nearly $2.5 million in attorney’s fees and costs incurred during a lawsuit regarding the valuation of the trans-Alaska oil pipeline.

An article by Matt Buxton in the Fairbanks Daily News Miner discussed the decision in more detail.  As reported by Mr. Buxton, the lawsuit, which was lead by the Fairbanks North Star Borough and completed earlier this year, found the pipeline was substantially undervalued in 2006. Instead of the less than $1 billion the pipeline owners argued, the court found it was worth $9.98 billion.

For its efforts, the Fairbanks North Star Borough will recuperate $837,649.84. Valdez and the North Slope Borough will receive $478,519 and $628,586 respectively. The municipalities as a group will also receive $514,551 for costs of the trial, like hiring expert witnesses.

The oil companies had appealed the decision on the legal fees, arguing that the fees were either too high or improperly applied.

The Supreme Court, however, stood by the Superior Court’s reasoning behind the fees based on “the complexity of the litigation,” “the length of trial” and “the relationship between the amount of work performed and the significance of the matters at stake.”

The decision concerning fees and the underlying valuation decision only affect 2006’s appraisal and subsequent years are currently under legal review.

Pipeline valuation recently made headlines after Gov. Sean Parnell kicked members off the State Assessment Review Board after it set pipeline valuations higher than the court’s decision. Parnell then appointed two people with oil industry careers to the board, but one withdrew his name after scrutiny over his California residence.

The state’s assessors have slashed the pipeline’s value in half this year, a decision that the municipalities have appealed to the review board. If the board fails to change the valuation, the municipalities could take the issue to court.

If you need an attorney with experience in oil and gas litigation, contact the McGrady Law Firm.

Source: Matt Buxton, “Court Upholds $2.5 million in attorney fees and costs from pipeline lawsuit,”  Fairbanks Daily News-Miner, May 10, 2014.

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