Companies responsible for California oil spill agree to pay an additional $4.9 million

The Houston oil company behind last year’s spill off of the coast of Huntington Beach has agreed to plead no contest to six misdemeanors in Orange County Superior Court and pay $4.9 million in fines and penalties to the state and county for failing to promptly notify regulators of the ongoing leak, harming protected birds, and for polluting California waters, prosecutors said on Thursday, Sept. 8.

Amplify Energy — along with its two subsidiaries, Beta Operating Co. and San Pedro Bay Pipeline — will appear in Superior Court in Santa Ana on Friday, where they will be found guilty of the charges related to their failure to heed at least seven alarms that went off inside one of their three oil rigs out in the Pacific Ocean last October, warning them that 25,000 gallons of crude oil had leaked into the water from a busted pipeline over more than 16 hours.

The leak, which led to the cancellation of the Huntington Beach Air Show and closed much of the Orange County coastline for weeks, occurred when the decades-old pipeline suddenly ruptured on Friday, Oct. 1, 2021. Divers later found the pipeline had been pulled like a bent straw, likely the result of being dragged by the anchor of a passing ship above.

California Attorney General Rob Bonta and Orange County District Attorney Todd Spitzer on Thursday said Amplify should have known the pipeline was leaking when they first got an alarm at around 4 p.m. on Oct. 1. But the company did nothing to alert public officials until around 8:30 a.m. on Saturday, Oct. 2.

Both officials celebrated what they said was a record fine against a company accused of misdemeanor environmental crimes in Orange County.

“These are strong penalties, but let’s be clear here: This spill should not have happened in the first place,” Bonta said. “Amplify’s leak detection system worked, but Amplify failed to take appropriate action. No reports of a leak or potential leak were made for over 16 hours. Their actions were unacceptable. Amplify violated the law.”

The automatic leak detection system in the control center of Amplify’s oil rig detected the loss of flow in the pipeline as it occurred, both officials said.

According to a federal investigation into the leak, the rig crew shut down and then restarted the pipeline five times over the course of the first night of the leak. As a result, oil flowed through the pipeline for a total of three hours. In a statement after a grand jury indicted the company last December, Amplify said its workers thought the system was returning false alarms.

Prosecutors faulted the company for failing to notify the U.S. Coast Guard and other agencies despite multiple signs that the leak was occurring. Oil sheens were spotted on the water on Friday and Saturday. And thousands of people across Central Orange County smelled an intense odor of tar or gas both days.

Spitzer said the company should have known better.

“They had a state-of-the-art system and it did exactly what it was supposed to do,” Spitzer said. “They intentionally ignored it. They hit the snooze button.”

The charges Amplify agreed to plead no contest to include one count of failing to notify the California Office of Emergency Services about the spill, and one charge of releasing oil into state waters. The four remaining charges were for harming birds protected under California fish and game codes.

The state and county fines announced Thursday will pay back those agencies for attorneys fees and for environmental clean-up efforts that continued for weeks after the spill.

In a statement Thursday, Amplify Energy said the plea agreement would “resolve all criminal matters” with the state.

“This resolution with the State of California, which follows Amplify’s plea agreement with the U.S. Attorney’s office, further reflects the commitments we made immediately following the incident to the communities and environment impacted by the release,” Martyn Willsher, Amplify’s president and chief executive officer, said in a written statement. “We worked diligently to support the successful clean-up and remediation efforts, including deploying upwards of 1,800 oil spill response contractors, have paid covered claims as expeditiously as possible, and continue to work cooperatively with the various state and federal agencies investigating these matters.”

At the same time officials were announcing the settlement in the state and local case, a judge several blocks away at the federal courthouse in Santa Ana was signing off on the previously announced, nearly $13 million plea agreement to end a federal criminal case.

U.S. District Judge David O. Carter on Thursday afternoon approved the plea deal, which requires Amplify and the subsidiaries to pay $7.1 million in fines and $5.8 million to compensate for the costs incurred by the Coast Guard to clean up the spill.

The newly-finalized federal plea agreement — which required the companies to plead guilty to a misdemeanor charge of negligently discharging oil — also puts the company on four-year probation and requires them to install new leak-detection systems, improve training, perform visual underwater inspections and make other operational improvements.

Texas company to pay nearly $13 million in fines, compensation for 2021 oil spill in Huntington Beach

Federal prosecutors had alleged that despite multiple leak-detection alarms going off, pipeline employees shut off and then restarted the pipeline again, after incorrectly determining there was no leak.

Both the nearly $13 million federal court and $4.9 million state court plea deals come on top of a recent $1 million settlement Amplify reached with the county of Orange.

Amplify also recently reached a settlement in a civil, class action lawsuit brought by fishing companies, coastal businesses and property owners impacted by the oil spill.

The exact terms of the class action settlement are still being worked out, with a draft of the agreement expected to be prepared in time for an Oct. 17 status conference in Judge Carter’s courtroom at the federal courthouse in Santa Ana.

Carter, in the midst of approving the plea deals in the federal criminal case on Thursday afternoon, accused the federal government of holding up progress in the civil cases by delaying the ability of others to inspect the oil pipeline.

The pipeline inspections have been delayed by both the Army Corp of Engineers and Fisheries, Carter said. The judge set an Oct. 3 hearing for the government to provide answers about the pipeline inspection delays.