Shipping firms to pay pipeline company nearly $100 million in O.C. oil spill

A year and a half after a ruptured oil pipeline sent thousands of gallons of crude gushing into the waters off Southern California, the legal blame game is starting to wind down.

A group of international shipping companies and their subsidiaries tentatively agreed Wednesday to pay $96.5 million to Houston-based Amplify Energy Corp. to dismiss one of the last remaining lawsuits over the oil spill, which sent at least 25,000 gallons of crude into the waters off Huntington Beach in October 2021.

Amplify’s lawsuit, filed last year, accused the shipping companies of improperly allowing their container ships, the MSC Danit and Cosco Beijing, to drag their anchors across the sea floor near the pipeline.

The ships were anchored near the San Pedro Bay pipeline during a storm in January 2021, about nine months before the oil spill. Movement data transmitted by the vessels showed that the vessels crossed over the pipeline repeatedly during the storm, driven by winds of up to 63 mph and waves of up to 17 feet, Amplify’s lawyers said.

The lawsuit alleged the shipping companies should have notified authorities about the pipeline damage but did not. Investigators later said the massive anchors moving across the sea floor and striking or dragging the oil pipeline could have weakened the conduit by stripping away its concrete casing and making it more vulnerable to future damage.

“We are eager to move forward and turn the page on this unfortunate and preventable event,” said Martyn Willsher, Amplify’s president and chief executive, in a statement.

The tentative settlement agreement will require approval from U.S. District Judge David O. Carter, who has been overseeing the sprawling litigation into the 2021 spill.

The agreement comes as the parties prepared for a first phase of trial next month that would have determined whether Amplify was solely responsible for the oil spill and whether the seaworthiness of the container ships or any negligence by the crews or owners caused the pipeline damage or the oil spill.

In an order setting parameters for the trial, Carter wrote that if evidence proved the vessel owners or operators were at fault, then they would be able to evade liability only if there were “extraordinary negligence by Amplify.”

The Mediterranean Shipping Co., the Swiss firm that operates the Danit, said Wednesday that the tentative settlement agreement does not include an admission of liability and that the firm plans to prove in “the remaining legal proceedings with Amplify’s insurers” that the ship was not responsible for the spill.

The company said its experts have concluded the Danit “maneuvered safely, and that Amplify simply failed to properly maintain and inspect the pipeline.” It was “reasonable” for the crew to believe the container ship “had not been involved in a marine casualty reportable to the Coast Guard,” a representative for MSC said.

Representatives for Capetanissa Maritime Corp. of Greece and COSCO Container Lines of China, which own and operate the Beijing, did not respond to a request seeking comment Wednesday, nor did lawyers representing the shipping companies.

The Marine Exchange of Southern California, which monitors and directs traffic in the busy San Pedro Bay, also agreed to settle with Amplify Energy Wednesday for “non-monetary terms,” the company said in a release. Amplify had alleged in its lawsuit that the nonprofit organization should have been aware of the anchor drags and should have notified the company.

It is not clear what the Marine Exchange agreed to as part of the settlement. Kip Louttit, executive director of the organization, said Wednesday that, while their attorneys finalized the settlement details over the weekend, he hasn’t seen the official document and was not prepared to comment.

Last month, the same group of international shipping firms agreed to pay $45 million to settle a lawsuit brought by business owners and coastline property owners over the effects of the spill.

Amplify settled with the same business owners and property owners last fall for $50 million. That settlement agreement disbursed $34 million to commercial fishermen, $9 million to coastal property owners and $7 million to companies that rely on waterfront tourism, including surf schools and bait shops.

The oil spill occurred about four miles offshore and sent crude oil washing ashore in Huntington Beach and along other parts of the California coastline.

Though the spill was less severe than initially feared, beaches were closed for a week and fisheries for a month.

The spill also threatened coastal wetlands and affected local wildlife: Environmental scientists said last year that in the wake of the spill, they had recovered 82 dead birds and six dead mammals, including a bottlenose dolphin, three California sea lions and a wide array of birds, including coots and grebes.

Amplify Energy also agreed to plead no contest to state environmental charges and pay $4.9 million in fines and penalties in the aftermath of the spill last year. About $3.45 million of those fines were earmarked for the state and the rest for the county.

Under the agreement with prosecutors, Amplify was placed on a yearlong probation and was required to install a new leak detection system in the pipeline. The company was also mandated to train employees to immediately notify regulators of potential spills and conduct other operational safety measures, including biannual visual inspections of the pipeline.

Amplify and its subsidiaries also agreed to plead guilty to federal criminal environmental charges and pay nearly $13 million in connection with the oil spill.