Judge Approves 2015 CA Oil Spill Settlement

THURSDAY, SEPTEMBER 29, 2022


Earlier this month, a federal judge gave final approval to a $230 million settlement by owners of the pipeline that ruptured near Santa Barbara, California, in 2015. The companies involved, including All American Pipeline, L.P. and Plains Pipeline, L.P., have not admitted liability.

The corroded undersea pipeline ruptured in May that year near Refugio State Beach, with an estimated 142,800 gallons spilled into the water. It was reportedly the worst California coastal oil spill since 1969.

About the Oil Spill

According to the U.S. Environmental Protection Agency, the spill took place on the Plains’ 24-inch diameter crude-oil pipeline, more commonly referred to as Line 901. The pipeline is approximately 10.7 miles long and connects the Los Flores Pump Station to the Gaviota Pump Station, in Santa Barbara County, California.

On the day of the incident, around 11 a.m., Line 901 reportedly ruptured and released 2,934 barrels of heavy crude oil before being contained. During the spill, the oil traveled through three discrete culverts where it reached the Refugio State Beach and entered the Pacific Ocean—a little over 700 feet from the pipeline’s break.

As a result of the spill, the Pacific Ocean, associated shorelines and beaches experienced widespread oiling, closures and adversely impacted natural resources. The oiling was so widespread, reports claim that it expanded past Los Angeles and into parts of Orange County, California.

In November, federal regulators ordered Plains to purge the system from its Line 903, though idle, of crude that remained in the lines.

The U.S. Department of Transportation's Pipeline and Hazardous Materials Safety Administration issued the order out of concern that the corrosion that led to the failure of Line 901 would also affect the neighboring Line 903, which was constructed and operated in the same way.

PHMSA indicated that Line 903 showed "similar corrosion characteristics" as Line 901. Additionally, the unprocessed crude in the line could contain corrosive elements that would lead to another break, especially as the rust inhibitor intended to prevent corrosion becomes less effective over time.

After completing an investigation in February, PHMSA formally identified external corrosion as the cause of the Line 901 spill in its Preliminary Findings Report. However, a final report is slated to be released in the spring.

According to the report, Lines 901 and 903, constructed in the late 1980s and hydrostatically tested in 1990, went into crude oil service in 1991.

The pipelines were coated with coal tar urethane and covered with foam insulation and a tape wrap over the insulation. The shrink-wrap sleeves, meant to provide a barrier between the steel pipeline and soil for corrosion prevention, were present at all the pipeline joints on Line 901 and multiple locations on Line 903, it read.

The report also indicated that the corroded section of pipe burst after pumps on the pipeline were shut down and restarted, sending a larger volume of oil through the pipe at higher pressure—a jump to 721 pounds per square inch from the earlier 677 psi.

Despite a low-pressure alarm indicating pressure had dropped below 200 psi after the break, the pipeline wasn’t shut down until more than 30 minutes later, contributing to the volume of oil released in the spill.

Additionally, the order also demanded a review the pipeline’s construction, operating, maintenance, and integrity management history; an expedited review of data from the May 5 in-line inspection (ILI); metallurgical evaluation of the failure site; repair of any integrity-threatening anomalies identified by the ILI survey; and a root cause failure analysis.

In May, PHMSA confirmed that external corrosion was the direct cause of the failure in a 510-page report.

"PHMSA's investigation reveals that a number of preventable errors led to this incident, and that the company's failures in judgment, including inadequate assessment of the safety of this line and faulty planning made matters worse," said former U.S. Transportation Secretary, Anthony Foxx, at the time.

"Millions of dollars have been spent to repair the substantial damage caused to the environment from this spill,” Foxx added. “It is completely unacceptable, and we will hold the company accountable for its actions."

The primary cause of the failure, the agency reported, was progressive external corrosion, which “thinned the pipe wall to a level where it ruptured suddenly and released heavy crude oil.”

The pipeline burst at approximately 56% of the maximum operating pressure, PHMSA stated. It added that even with “abnormal operational events” such as those reported the morning of the release, a rupture should not have happened “if the pipeline’s integrity had been maintained to federal standards.”

PHMSA also alleged Plains’ cathodic protection system was also ineffective, failing to prevent the corrosion beneath the coating and insulation system.

The following month, PHMSA issued a third corrective action order to Plains, notifying the company that additional corrective actions—from leak detection to corrosion control measures—must be taken with Lines 901 and 903 before the pipeline system could be restarted.

Among the requirements spelled out in the 11-page document, the operator must implement advanced leak detection capabilities, make modifications to the existing alarm system, install additional safety valves and pressure sensors, and train staff regarding emergency response and shutdown procedures.

In terms of corrosion prevention requirements, PHMSA mandates Plains deliver a long-term plan regarding corrosion under insulation on Line 901. In order to correct what was considered inadequate handling of the issue, Plains must:

  • Replace the buried and insulated Line 901 pipeline;
  • Repair or recoat compromised portions of the coating on Line 901; or
  • Request a special permit at least four months prior to startup that includes a long-term, continuous monitoring plan addressing its ineffective inspection and CUI protection methods.

The terms and conditions of the report were effective immediately.

The company was indicted on 46 criminal counts by a Santa Barbara County grand jury. The indictment, returned May 16, accuses Plains of four felonies, including knowingly discharging a pollutant into state waters. The other 42 charges are said to be misdemeanors related to wildlife losses.

According to prosecutors at the time, Plains was facing up to $2.8 million in penalties, should they be convicted of all crimes.

Since the incident, Plains has apologized for the spill and has paid for cleanup costs. In 2017, the company released an annual report estimating that it lost roughly $335 million in relation to the spill. Although, that number did not include lost revenues.

Then, in March 2020, the EPA announced a civil settlement with Plains regarding federal pipeline safety laws and liability. At the time, Plains had not admitted any wrongdoing or liability in the consent decree that would end a lawsuit filed on behalf of federal and state agencies.

However, the company had agreed to operational changes and five years of federal and state scrutiny. Those measures had been taken to ensure the following of pollution and safety rules.

Plains was also ordered to pay $60 million to appease allegations regarding its safety law and Clean Water Act violations, as well as ordered to follow a consent decree which requires an injunction relief.

Under the civil decree, Plains would pay $24 million in penalties to various federal agencies, including $9.45 million in CWA penalties which breaks down to: $5.925 million to the EPA; $2.5 million to the California Central Coast Regional Water Quality Control Board; and $1.025 million to the California Department of Fish and Wildlife.

Latest Settlement

The class-action lawsuit settlement first agreed to in May earlier this year, arrived after seven years of legal proceedings. The $230 million will be split between fishermen and fish processors ($184 million) and coastal property owners ($46 million).

According to the settlement, the plaintiffs claimed that Plains caused an underground pipeline to rupture, resulting in the oil spill along the coast. Additionally, they claim that the oil spill caused the residents of coastal homes to lose the use and enjoyment of their homes, and caused damage to the fishing industry.

“Due to failed maintenance and extensive pipeline corrosion, the pipeline ruptured and spilled, devastating the fishing industry and soiling coastal properties from Santa Barbara County to Los Angeles County,” said a press statement from the law firms that filed the suit.

While the company did not admit liability in the agreement, according to the Associated Press, federal inspectors had found that Plains made several preventable errors, failed to quickly detect the pipeline rupture and responded too slowly as oil flowed toward the ocean. Plains has apologized for the spill and paid for the cleanup.

Plains has also reportedly applied for permission to build a new pipeline, but is “facing an uphill battle.” As of May, an environmental review of the pipeline plan was not expected until October.

The Fisher Class Settlement includes persons or businesses who owned or worked on a vessel that was in operation as of May 19, 2015, and that landed any commercial seafood in certain California Department of Fish and Wildlife fishing blocks or who purchased such commercial seafood directly from the Commercial Fishers and resold it at the retail or wholesale level

The Property Class Settlement encompasses those who owned or leased residential beachfront property or property with a private easement to a beach where oil from the 2015 Santa Barbara oil spill washed up and the oiling was categorized as heavy, moderate, or light.

Full eligibility details can be found here. Anyone who believes they may be entitled to some of the money have until Oct. 31 to submit a claim.

   

Tagged categories: Corrosion; Government; Laws and litigation; Lawsuits; NA; North America; Oil and Gas; Pipeline; Pipelines; Pipes; Program/Project Management

Join the Conversation:

Sign in to our community to add your comments.