$45M Settlement with Ships Accused of Causing California Oil Spill

ships settle California oil spill charges
Two containerships anchored off California were accused of causing damage to the pipeline in a winter storm (USCG photo)

Published Feb 10, 2023 11:39 AM by The Maritime Executive

A tentative settlement has been reached in which two containerships that were accused of causing damage by dragging their anchors across a southern California oil pipeline will pay $45 million which will be used to compensate fishermen, residents, and local businesses. It is the latest in a series of settlements stemming from an October 2021 oil spill that released 25,000 gallons of crude oil into the waters off Orange Country and near the San Pedro port complex.

The spill occurred on October 1, 2021, but later investigations showed that a pipeline had been displaced by more than 100 feet and that there were cracks in the outer casing. Investigators believed that containerships in the anchorage waiting for berth space had dragged their anchors across the pipeline causing the damage during a winter storm in January 2021. The U.S. Coast Guard said the damage to the pipeline could have made it more susceptible to environmental stresses and failure such as the 13-inch split that occurred approximately 10 months later.

During the storm, they determined that the winds reached 60 mph and 17-foot seas. While many vessels chose to head to sea to ride out the storm others remained in the anchorage and after the investigation, two vessels were identified as the ones that had likely impacted the pipeline. They were the MSC Danit (165,000 dwt) and the Beijing (107,500 dwt), a Costamare ship operating under charter to COSCO.

Class action lawyers representing the residents and businesses of Orange Country, California said on Thursday, February 9, that they have reached a tentative agreement with the shipping companies and their insurance companies. While the agreement still requires court approval, it calls for a payment of $45 million which will be combined with a previous $50 million settlement between Amplify Energy, the operator of the pipeline, and the same groups. The proceeds will be used to compensate the fishermen, residents of Orange Country, and businesses directly impacted by the spill.

The lawyers said they hoped the settlement would also contribute to ensuring that similar events did not occur in the future. The Marine Exchange of Southern California working with the Pacific shipping associations changed the rules for anchoring seeking to provide greater space between ships and reduce emissions from ships anchored near shore. Containerships are encouraged to register when departing for the Southern California ports and slow steam or hold further offshore until their berth is available. As of late 2022, the Marine Exchange announced that the backlog had been cleared with containerships rarely if ever waiting at anchor off Los Angeles and Long Beach for a berth.

Amplify Energy has also sued the two ships, their owners and operators, as well as the Marine Exchange of Southern California in federal court alleging that were anchored in a restricted area. They are seeking damages saying that the ships and the Marine Exchange also failed to notify Amplify after the incident. They contend that they would have surveyed the pipeline which could have possibly prevented the leak.

“We are pleased to see the ships that struck our pipeline take responsibility for the damages their negligence caused the community,” a spokesperson for Amplify said in a statement to the Associated Press. The company’s lawsuit against the shipping companies is scheduled to go to trial in April 2023.

In addition to its $50 million settlement with Orange County, Amplify also pleaded no contest to state environmental charges and paid $4.9 million in fines and penalties. The company has also agreed to pay nearly $13 million as part of a guilty plea to federal environmental charges. Amplify agreed to improve its monitoring of the pipelines and improve training after allegations that the company was slow to take responsibility for the oil leak and shut down the damaged pipeline.