Three Companies Agree to Plead Guilty to Federal Offense and Pay Nearly $13 Million for Offshore Oil Spill

LOS ANGELES – A Texas-based oil company and two of its subsidiaries have agreed to plead guilty to violating the federal Clean Water Act, pay a $7.1 million criminal fine, and compensate federal programs approximately $5.8 million in connection with the discharge of approximately 25,000 gallons of crude oil last October during an offshore leak in the 17-mile-long San Pedro Bay Pipeline, according to plea agreements filed today.

Federal prosecutors Aug. 26, filed plea agreements for the Houston-based Amplify Energy Corp., Beta Operating Co. LLC (a wholly owned subsidiary of Amplify doing business as Beta Offshore), and San Pedro Bay Pipeline Co. (a wholly owned subsidiary of Amplify). All three companies were charged in an indictment returned by a federal grand jury in December 2021.

Representatives of the three companies are expected to appear in the near future in United States District Court in Santa Ana to formally enter the guilty pleas. Each company has agreed to plead guilty to one misdemeanor count of negligently discharging oil into San Pedro Bay during the oil spill on Oct. 1 and 2, 2021. The plea agreements are “binding” plea agreements, which means that the judge presiding over the case, United States District Judge David O. Carter, must accept or reject all aspects of the plea agreements. Should the court decide not to accept the plea agreements, any party may withdraw from the agreements and the case would proceed toward trial.

In addition to the payment of approximately $13 million in federal fines and costs, the companies have agreed to be placed on probation for a period of four years, during which time they are required to perform a series of actions and make operational improvements, including:

• reimbursing governmental agencies and entities that incurred direct and indirect expenses as the result of their response, including the U.S. Coast Guard and the oil spill liability trust fund, in an amount estimated to be $5,844,700;
• improving training for all operational employees and related management personnel in identifying and responding to potential pipeline leaks;
• installing a new leak detection system for the pipeline;
• requiring notification to regulators of all leak detection alarms;
• contracting with an oil spill response organization that has the capability to detect oil on the surface of the water at night or in low-light conditions that will promptly deploy upon request;
• conducting visual underwater inspections of the pipeline semiannually; and
• making modifications to their pipeline-related procedures that will require financial investment of at least $250,000.

The plea agreements filed Aug. 26 require that the $7.1 million fine in the federal case be paid in installments over the next three years. The defendants recently paid $656,500 of the estimated $5.8 million in costs incurred by the Coast Guard and the oil spill liability trust fund. Additionally, the defendants previously paid the vast majority of expenses related to the clean-up of the spill.