Pipeline operators agree to plead guilty in Orange County oil spill and pay nearly $13 million
Three Texas companies agreed Friday to plead guilty to federal environmental charges and pay nearly $13 million in connection with the crude oil spill that fouled Southern California’s coastline last fall.
Despite hours of signals that their 17.3-mile oil pipeline may have been leaking, Houston-based Amplify Energy Co. and two subsidiaries continued to negligently pump crude oil into the waters off Huntington Beach in violation of the Clean Water Act, prosecutors wrote in court documents filed Friday.
The companies have agreed to pay a $7.1-million criminal fine and reimburse federal agencies for an estimated $5.8 million spent responding to the spill, which sent 25,000 gallons of crude gushing into San Pedro Bay in early October.
“This oil spill affected numerous people, businesses and organizations who use the Southern California coastal waters,” acting U.S. Atty. Stephanie Christensen said in a statement. “The companies involved are now accepting their responsibility for criminal conduct and are required to make significant improvements that will help prevent future oil spills.”
Amplify Energy and its two subsidiaries — Beta Operating Co. and San Pedro Bay Pipeline Co. — also have agreed to a four-year probationary period during which they will be subject to stricter regulatory scrutiny, according to the plea agreements.
The firms would be required to install a new leak detection system in the pipeline, notify regulators of every leak detection alarm, and contract with a group that can detect oil on the surface of the water at night or in low-light conditions.
“We believe this resolution, which is subject to court review and approval, reflects the commitments we made immediately following the incident to impacted parties and is in the best interest of Amplify and its stakeholders,” said Martyn Willsher, Amplify’s president and chief executive. “We are committed to safely operating in a way that ensures the protection of the environment and the surrounding communities.”
A federal grand jury accused Amplify Energy Corp. and two subsidiary firms of illegally discharging oil from a pipeline they operated off Huntington Beach.
Representatives for the three firms are expected to appear in federal court in Santa Ana in “the near future” to formally enter their guilty pleas, the U.S. attorney’s office said. If U.S. District Judge David O. Carter does not accept the terms of the plea, any of the parties could withdraw and the case would go to trial.
“It sends a message to all of the coastal oil companies that this administration is taking this issue very seriously and the Justice Department will prosecute,” said Orange County Supervisor Katrina Foley of the plea agreement. “These companies have to be responsible because we cannot continue to allow this kind of damage.”
Amplify Energy and its subsidiaries were indicted by a federal grand jury in December. The underwater pipeline, which runs between a production and processing platform and the Port of Long Beach, was being operated by “an understaffed and fatigued crew” that “had not been provided sufficient training regarding the pipeline’s automated leak detection system,” the indictment said.
The indictment described a scene of confusion that began Oct. 1, as crews on the offshore platform attempted to deal with a series of alarms from the rig’s leak detection system. .
The first alarm sounded about five minutes after the pipeline ruptured on the afternoon of Friday, Oct. 1, prosecutors said. The crew shut down the pipeline an hour after that, then started pumping again a half-hour later. Between 4 p.m. and midnight, the crew shut down the pipeline seven times, “incorrectly assessed” that there was no crude oil leak, and then restarted operations, prosecutors said.
Platform workers incorrectly believed that the alarms were caused not by a leak but by a “higher-than-normal” amount of water mixed in with the oil in the pipeline, prosecutors wrote.
The crew turned the pipeline back on overnight to manually measure the flow of oil to try to determine whether there was a leak, prosecutors wrote. Their readings at 12:50 a.m. and 1:20 a.m. showed that “10 barrels more was being pumped into the pipeline at Platform Elly than was arriving onshore, further indicating a potential leak.”
In all, prosecutors wrote, 588 barrels of crude oil — nearly 25,000 gallons — spilled into the water over a 14-hour period.
The oil spill required more than a week of cleanup, disrupted activity along the coast and forced the cancellation of the Pacific Airshow in Huntington Beach, one of the city’s most popular annual events.
“This is a stunning announcement,” Huntington Beach Councilwoman Kim Carr said of the plea. “When the spill happened, you just had this sense that [Amplify] knew what they did was wrong and they knew they made substantial errors, but they weren’t willing to admit it. We had to pay the price.”
Carr, who is running for state Senate and has spoken in support of decommissioning offshore oil rigs, said the spill was devastating for hotels, small business and individuals who make a living on the water.
“This situation clearly demonstrates how we need to make sure these companies are held accountable and that people in Sacramento are not just paying lip service when it comes to accountability,” she said. “They need to take steps to make sure this never happens again.”
On Thursday, Amplify tentatively agreed to settle more than a dozen lawsuits brought by business owners and residents, including Laguna Beach coastal property owners, a Huntington Beach surf school, a Seal Beach bait and tackle store, and several groups of fishing and seafood sales companies. The terms of the settlement have not been disclosed and still need to be approved by the court.
Willsher, Amplify’s chief executive, said the firm is still “vigorously” pursuing a lawsuit against the companies that own and operate two container ships that have been accused of dragging their anchors across the sea floor and damaging the pipeline, months before the oil spill.
In the plea agreement Friday, prosecutors acknowledged that the anchor drags may have weakened the pipeline and may have been one cause of the spill.
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