Settlement in SoCal Pipeline Leak

California pipeline
Pipeline operates continues to seek damages from the shipping lines (USCG photo from October 2021 during clean-up)

Published Aug 26, 2022 1:21 PM by The Maritime Executive

Amplify Energy, the operator of the California pipeline that caused an oil spill off the coast of Southern California in October 2021, announced that it has reached an agreement in principle with plaintiffs in the class action to resolve all civil claims from local businesses and property owners that were impacted by the spill. This agreement comes after the company also reached an agreement with Orange Country, California, but the company is continuing to pursue legal claims against both MSC and COSCO, as well as the Marine Exchange of Southern California for their role in causing the leak.

More than 25,000 gallons of oil were believed to have spilled into the water near Huntington Beach, California. After an oil slick was spotted on the water, the USCG Guard identified the source as coming from an underwater pipeline operated by Amplify that carries oil from offshore platforms to a terminal in Long Beach. A survey of the pipeline with underwater cameras revealed that a 4,000-foot section of the pipeline had been displaced by upwards of 100 feet on the ocean floor and that a concrete casing around the pipeline had been broken off. 

While admitting that the displacement might have weakened the pipeline and made it more vulnerable to the elements, the U.S. Coast Guard was critical of the company saying it had been slow to turn off the pipeline after it received the initial alarms. The clean-up required more than three months.

Residents along the coastline as well as fishing companies, a bait and tackle store, a dive school, and others joined together into a class action suit against Amplify. After lengthy negotiations, the company and lawyers for the class action reached terms of a settlement. Amplify expects its insurance will pay for this settlement and the terms are due to be presented to the court in the coming days.

Amplify also reached an agreement with Orange County in July. The company paid nearly $1 million to cover the costs of the clean-up and related expenses and in exchange, the county has agreed not to sue Amplify.

“We are pleased to have reached an agreement in principle regarding the civil litigation resulting from the Southern California Pipeline Incident last October,” said Martyn Willsher, Amplify’s President and Chief Executive Officer. While saying the company had negotiated in good faith with the businesses and property owners, he also noted, “We will continue to vigorously pursue our substantial claims for damages against the ships that struck our pipeline, and the Marine Exchange of Southern California that failed to notify us of the anchor strikes.”

Amplify has filed suit against MSC and COSCO based on the investigation by the U.S. Coast Guard that reported the MSC Danit and the COSCO Beijing dragged their anchors across the pipeline during a January 2021 storm. In addition to contributing to the damage that weakened the pipeline, the company also charged that neither shipping company properly reported having drifted in the federally protected zone and dragging their anchors during the storm. A suit filed in February 2022 seeks punitive damages, reimbursement for the cost of the repairs, and lost revenues from MSC, Dordellas Finance Corp., (owners of the COSCO vessel), and COSCO.

The Marine Exchange of Southern California is also named in the suit with Amplify citing the organization for negligence in not reporting the incident. The company said in the suit it would have inspected the pipeline for potential damages if it had been informed of what had transpired during the storm. The suit seeks to require the Marine Exchange to notify companies of potential damage within 24 hours of an anchor dragging incident and for the Marine Exchange to block larger areas in the anchorage during potential bad weather to prevent damage to undersea property.