Oil company says ship traffic jam may be culprit in spill

Litigation and government penalties are on the horizon for operators of an offshore platform that dumped more than 126,000 gallons of crude oil off the Orange County coast over the weekend, closed beaches and canceled the final day of the Pacific Air Show.

Potential legal actions are also clearly scaring investors of Amplify Energy Corp., which owns the oil platform, known as Elly, in Long Beach. Amplify Energy shares sunk 50% Monday. Beta Operating Co., a subsidiary of Amplify Energy, operates the pipeline.

Amplify Energy announced Monday in a news release that Beta Offshore first observed and notified the U.S. Coast Guard of an oil sheen about 4 miles off the coast on Saturday. All the company’s production and pipelines operations at the Beta Field have been halted.

During a news conference Monday, Amplify Energy Chief Executive Officer Martyn Willsher said that a vessel anchor might have struck the pipeline on the ocean floor. Cargo ships frequently enter the twin ports of Long Beach and Los Angeles. A queue of dozens of cargo ships have been anchored in the area because of a labor shortage at the port.

Wylie Aitken, partner at Aitken Aitken Cohen in Santa Ana, said it is plausible that other companies could have contributed to the disaster. Aitken, who owns property in Newport Beach, recalled seeing “an armada of tankers up and down the coast, waiting to dock for months.”

“It started out with one or two that were heading south toward Newport Beach and Huntington Beach. It now looks like there’s huge rush hour traffic in the ocean,” Aitken said. “It’s become another adverse effect of the pandemic, with no workers. Therefore, these ships can’t unload their tanks, so the tankers are waiting their turn, with no place to go.”

Aitken said his “phones have been ringing off the hook” from business owners fearing potential economic losses due to closures of the beach, and homeowners whose property values could be diminished. If lawsuits are filed, they would likely be coordinated into a single action, he predicted.

Willsher said the oil company is committed to cleaning up the coastline. Since Sunday, the company’s dive teams have examined more than 8,000 feet of pipe and have been able to isolate one area of significant interest, he said.

“Our employees live and work in this area as well, and we’re deeply concerned by what we’re seeing environmentally and with the fish and wildlife,” Willsher said. “We’re committed to fulfilling our duty here to help with recovery efforts as long as that may take.”

Orange County District Attorney Todd Spitzer on Monday called for an independent agency to investigate the pipelines. Spitzer’s spokeswoman, Kimberly Edds, said companies have an obligation to notify tankers and vessel operators to stay away from vulnerable pipelines.

“Put up buoys to let people know. The ocean is like a freeway,” Edds said. “The ships should know where the pipelines are, too.”

Aitken said the oil company might be trying to deflect attention by pointing to the cargo ships as a possible culprit. The law does recognize there can be more than one cause of an incident and more than one party’s failure to act or prepare for a disaster, “but the mere fact that it may have been struck by an anchor or somehow impacted by the tsunami or rush hour traffic of these tankers doesn’t absolve the company,” he said.

Daniel S. Robinson of Robinson Calcagnie often represents plaintiffs in tort actions. He said municipalities and private individuals could pursue claims for property damage, economic loss, costs to respond to the disaster, and indirect costs of increased public services.

“The best outcome here is if the Coast Guard is able to capture the oil so that there is minimal impact, but we’ll see what happens,” Robinson said.

Dan Abir of Abir Cohen Treyzon Salo LLP said his firm has been contacted by some people affected by the spill.

“It’s still a bit early because we need to know more about what happened, why it happened, to assess exactly what rights of our clients were impacted by the oil spill and possible damages,” Abir said. “There are lots of surf shops, restaurants that are likely to be affected, as this spill surrounds commercial areas that are touristy.”

Devorah Ancel, senior attorney at the Sierra Club, predicted the company could be on the hook for significant fines under state and federal laws, as well as the Endangered Species Act and Marine Mammal Protection Act for harm to other protected wildlife.

California has its own spill penalty law that was recently amended to increase potential criminal penalties, said Ancel, referring to Assembly Bill 3214. That bill doubled criminal fines, imposing fines of $10,000 to $1 million per incident, and up to $1,000 per gallon spilled.

“Amplify is engaged in extremely high risk activities and operating decades-old infrastructure built in the 1970s and ’80s. The company also has a history of safety and environmental violations cited by the federal government,” Ancel alleged.

Brettny Hardy, an attorney with Earthjustice in Oakland, said problems with the oil spill risks as a whole stem from federal agencies that lack robust oversight processes in underwater pipeline inspections as well as the subsequent decommissioning processes.

Companies like Amplify, which operate in federal waters, are subject to regulations by the U.S. Department of Interior and the Bureau of Safety and Environmental Enforcement. While the state did ban offshore oil drilling decades ago, and the Department of Interior hasn’t held any lease sales in California, platforms still operate from past sales leases, Hardy said. Once a company owns a lease, it continues to produce oil or gas until the term is extended or it stops producing and begin decommissioning. A term can be extended if the company continues to produce oil and gas.

“The trouble with these types of pipelines is that there can be really small leaks, but it takes a long time to even realize they’re there,” Hardy said. “These offshore platforms are really old. They’re on their last legs, and they keep trying to pull out oil and gas using fracking and other things. They’re ticking time bombs, and it’s clear from this we need to move away from expanding oil and gas development.”