Amplify Energy and subsidiaries charged with negligence in Orange County oil spill

A federal grand jury Wednesday charged three companies with criminal negligence in connection with the oil spill that tarred the Orange County coast in early October.

The three-page indictment alleges that Amplify Energy Corp. and two subsidiary firms, Beta Operating Co. and San Pedro Bay Pipeline Co., illegally discharged oil into federal waters from the pipeline they operated off Huntington Beach.

Though the size of the spill was initially overestimated at more than 100,000 gallons, the amount — more recently put at nearly 25,000 gallons — was “in a quantity that may be harmful to the public health, welfare and environment of the United States,” according to the charges.

The spill, whose exact cause remains unclear, has renewed calls for the government to take more aggressive action against the aging oil platforms and the infrastructure that dot the Southern California coast.

In a careful delineation of events beginning the afternoon of Oct. 1, the indictment presents a scene of confusion and disarray as crews, working on an offshore oil platform, attempted to respond to a series of alarms from the leak detection system while still trying to maintain the flow of oil through the pipeline. Those alarms, the indictment alleges, began nearly 16 hours before the time that Amplify Energy’s chief executive has said the company was aware of a leak.

Among the charges against the three companies is the allegation that the 17.3-mile underwater pipeline, running from a production and processing platform called Elly to the Port of Long Beach, was being operated by “an understaffed and fatigued crew,” who “had not been provided sufficient training regarding the pipeline’s automated leak detection system.”

“I am outraged by the complete and utter failure of Amplify Energy to do their job,” said Assemblywoman Cottie Petrie-Norris (D-Laguna Beach). “Their absolute negligence caused devastation in our coastal community. This was not a freak incident — someone here is to blame, and justice will be served.”

Amplify Energy owns Elly, Beta Operating Co. operates Elly, and San Pedro Bay Pipeline Co. runs the pipeline.

No individuals are named in the indictment, and the charge of negligently discharging oil, a misdemeanor, carries a statutory maximum penalty of five years of probation for a corporate defendant, as well as fines that potentially could total millions of dollars.

“This is the same charge as in Exxon Valdez,” said William W. Carter, a former federal prosecutor of environmental crimes, citing the oil tanker that went aground in Alaska, resulting in one of the largest oil spills in U.S. history. “This is a smart way for the federal government to proceed.”

Successful prosecution of the case would hurt the ability of the three companies to defend themselves in more than a dozen civil lawsuits that have been filed on behalf of homeowners, businesses and other groups. The plaintiffs include 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.

In the aftermath of the October spill, beaches and harbors from Huntington Beach to Dana Point were closed for a week and a half as cleanup efforts got underway.

In addition to the federal indictment, Orange County Dist. Atty. Todd Spitzer said he has an open criminal investigation into the spill.

The federal indictment makes clear that the crews overseeing the pipeline were aware of a problem in the system earlier — and on a more ongoing basis — than their companies had initially reported.

“It is very distressing that Amplify lied so many times to the public officials, the community and reporters,” said Orange County Supervisor Katrina Foley, who represents the affected area. “Many of us were questioning the veracity of their statements from the beginning. They will be held accountable. They can’t hide from their lies anymore.”

The National Response Center, an emergency call center staffed by the U.S. Coast Guard that monitors and responds to environmental emergencies, said it received an alert from Amplify Energy at 9:07 a.m. on Oct. 2 indicating that there had been “a release of crude oil in the vicinity of its pipeline” near Elly.

Martyn Willsher, president and chief executive of Amplify Energy, told The Times in October that the company first learned of the leak in the pipeline at 8:09 a.m. He denied that anyone at the firm was alerted to the leak earlier by an alarm.

“If we were aware of something on Friday night, I promise you — we would have immediately stopped all operations,” Willsher said at the time.

The indictment, however, tells a different story.

Prosecutors alleged the operators repeatedly failed to “properly respond” to a leak detection system that was activated eight times over 12 hours. The first alarm occurred at 4:10 p.m. on Friday, Oct. 1, just as some residents of Orange County began to notice the distinctive odor of petroleum near the coast.

The alarms repeated nearly every hour until 11:30 p.m. During this time, according to the charges, operators responded to five of the alarms by “shutting down and restarting” the flow of oil through the pipeline. As a result, oil was pumped through the damaged pipeline for “more than three hours during that time.”

Then, despite the alarm at 11:30 p.m. and the work of crew members conducting a manual leak detection test, oil continued to be pumped through the pipeline for three additional hours until “approximately 2:27 a.m.”

Finally, despite the eighth and final alarm at 5:28 a.m. the next day, crews allowed oil to pass through the pipeline for nearly an hour after a boat they had contacted failed “to locate an oil discharge from the pipeline in darkness in the middle of the night.”

Company spokeswoman Amy Conway said Wednesday that offshore platform workers and onshore pipeline workers for Amplify Energy tried to troubleshoot the leak detection system, which they believed was sending false alarms.

The leak detection system was “repeatedly and wrongly signaling a potential leak” at the company’s processing platform, where there was no leak visible, she said. “Had the crew known there was an actual oil spill in the water, they would have shut down the pipeline immediately.”

When the crew spotted a sheen in the water the morning of Oct. 2, Conway said, the company launched its oil spill response plan. Less than 24 hours later, oil began to wash onto beaches and marshland along the Huntington Beach coast. Within a week, the mile-wide slick was drifting off Laguna Beach.

Coast Guard investigators believe the spill was triggered by a ship’s anchor striking the pipeline during a storm in January. The Coast Guard said it had identified and boarded two container ships, the MSC Danit and the Cosco Beijing, at the Port of Long Beach and designated their owners as parties of interest in the investigation.

According to U.S. Coast Guard Capt. Jason Neubauer, who is leading the maritime investigation, divers have surveyed the pipeline and plan to lift the damaged section from the seafloor for a more detailed examination of the fracture.

No date has been given for its removal.