Orange County officials are gearing up for a potential lawsuit against oil pipeline operator Amplify Energy to cover costs for cleanup and response to last month’s oil spill, if the county isn’t reimbursed through the normal spill claims process.
In early October, the pipeline sent thousands of gallons of crude oil into the ocean and toward OC’s coasts and protected wetlands, with fishing grounds still closed off to the workers who rely on it for income.
Huntington Beach had to cancel the second day of the massive Pacific Airshow, impacting hotels, restaurants and other coastal businesses.
County officials are estimating the county government will be hit with about $1.5 million in costs over the next year because of the spill – ranging from public works cleanup crews to Sheriff’s Department harbor patrol to County Counsel attorney costs, according to figures a spokeswoman provided Voice of OC on Monday.
County supervisors have given direction to hire lawyers who specialize in oil spills – Jeff Ring and Kit Bobco of the Ring Bender firm – ”to assist the county in potential oil spill litigation,” County Counsel Leon Page announced after the supervisors met in closed session Oct. 19.
“Our goal is to avoid litigation, always,” said Supervisor Katrina Foley, who represents the beach communities closest to the spill, in an interview Monday.
“It’s a wait and see, because we have to gather all the information, submit a claim, and then wait to see if they pay the claim,” added Foley, who was the only supervisor to return calls.
“We still authorized moving forward with hiring someone for litigation purposes if necessary.”
The last time a major spill took place off the California coast – the Refugio spill in 2015 – Santa Barbara County did get reimbursed through the normal oil spill claims process, which avoids court battles.
But that county did end up suing the pipeline operator over $13 million in lost property tax revenue that the county attributed to the spill – something Orange County officials have been reading up on.
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In the case of the OC spill, more than a dozen lawsuits have been filed over the early October spill, which sent thousands of gallons of crude oil into the ocean and toward OC’s beaches and protected wetlands – and has closed fishing grounds to the workers who rely on it for income.
Such cases often take years to make their way through the courts before they’re resolved.
County officials in OC say there’s a range of spill-related costs they’ll be seeking reimbursement for.
That includes laying and moving spill berms and booms, securing wetlands areas, cleaning up oil, harbor patrol cleaning up oil, running the county’s emergency operations center and communications response, Foley said.
County officials plan to seek reimbursement for “anything we did, basically, that relates to the emergency response related to the oil spill, from the moment we started doing it until we finish,” Foley said.
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As cleanup costs and lawsuits pile up from businesses affected by the oil spill off Orange County, questions are mounting over whether the pipeline’s owner will be able to pay all the bills.
When asked, Houston-based Amplify Energy – which emerged from bankruptcy four years ago – says it’s committed to its responsibilities for cleanup and regulatory requirements, including following federal rules for insurance coverage.
But the company declined last week to say whether it has enough coverage for all of the spill costs.
And in past disclosures to investors, Amplify has said it can’t promise its insurance would cover all of its liabilities.
“We can provide no assurance that our coverage will adequately protect us against liability from all potential consequences, damages and losses,” the company wrote in its most recent annual 10-K report last December, before the spill.
After the Refugio oil spill off Santa Barbara, its owner declared bankruptcy in an effort to eliminate about $1 billion of debt linked in part to the pipeline’s closure.
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The law makes oil companies fully responsible for the financial impacts of spills from their facilities, in what’s known as “strict liability,” according to Foley.
If at some point Amplify wants to turn their attention to other parties to try to recover their own costs, they can, but Amplify is still responsible for making sure those impacted by the spill are reimbursed, she said.
Foley caused confusion when she announced at a news conference just after supervisors Oct. 5 meeting that “we also authorized litigation to make sure that we recover all the costs in the matter.”
That stood in contrast with the fact there was no public report-out from closed session, which is required under the state’s Ralph M. Brown Act if supervisors approve the initiation of litigation.
County officials gave no official announcement of spill-related litigation action by supervisors until Oct. 19, after they met again in closed session.
Foley says she misspoke on Oct. 5, and by authorizing litigation she meant getting lawyers to review whether or not to file a suit, not the actual initiation of a lawsuit.
“I misspoke. I should have been more clear,” Foley, who’s a lawyer, said in the Monday interview.
“When I say that, I mean something different from what people are interpreting, so it was a lesson learned. To me, authorizing litigation doesn’t mean the same as initiating litigation,” she added.
“I didn’t know they didn’t report out [publicly at the Oct. 5 meeting] because I had already left, and I had thought [Page] would report out. So he clarified to me what had happened there. He had decided to wait to report out until we decided to hire the lawyer,” Foley said.
“We have now reported out who we hired.”
Nick Gerda covers county government for Voice of OC. You can contact him at ngerda@voiceofoc.org.