The firm formerly known as Greka Oil & Gas has been ordered to pay $65 million after a federal court found gross negligence in a civil lawsuit filed jointly by the United States and California more than a decade ago.
Now known as HVI Cat Canyon, the company owned and operated multiple oil and gas production facilities in Santa Barbara County where several spills occurred over many years leading to the lawsuit filed in the U.S. District Court for the Central District of California.
Nine of the spills resulted from pipeline failures, and three resulted from tank and pond failures, according to the 65-page opinion by U.S. District Judge Fernando Olguin on Feb. 25.
“Based on the totality of the circumstances, the spills evinced a pattern of reckless disregard for good oilfield industry practices, and a series of negligent acts or omissions by HVI concerning oil spill prevention, and pipeline and facility inspection and maintenance,” Olguin said.
In total, the court determined the spills had discharged approximately 26,584 barrels of crude oil and produced water, a by-product of oil production.
The court also ruled that HVI Cat Canyon had committed a total of 60 violations of the federal regulations at 11 facilities for a total of 86,842 days of violation.
“If not for HVI’s reckless disregard for, and extreme departure from, good oilfield industry practices, the 12 spills could have been prevented or at least substantially reduced in size and impact,” Olguin added.
The ruling said the firm showed a reckless disregard for the need to have effective flow line maintenance programs, leading to at least six spills caused by corrosion at the Bell Facility.
Although the firm acquired some facilities in 1999, it had not completed mapping the flow line as of 2008, according to the court opinion.
The company also failed to repair alarms that monitored high fluid levels or, as an alternative, to maintain 24-hour coverage for its facilities if the alarms weren’t functioning.
The judge also cited a reckless disregard for preventative maintenance and failure to quickly repair equipment along with a lack of training for employees on preventing oil spills.
The United States, on behalf of the U.S. Coast Guard and U.S. Environmental Protection Agency, and the state, on behalf of the California Department of Fish and Wildlife (CDFW) and the California Regional Water Quality Control Board, Central Coast Region, filed the lawsuit in 2011.
Specifically, according to the U.S. Attorney’s Office, the judge found HVI liable for:
- 12 oil spills into waters of the United States in violation of the Clean Water Act;
- 17 oil spills into waters of the state in violation of state law;
- Reimbursement of the federal and state governments’ costs of cleaning up the oil spills;
- Natural resource damages under state law for harm to fish, plant, bird, or animal life and habitat; and
- Numerous violations of federal Oil Pollution Prevention Regulations identified in 16 EPA inspections across 11 facilities.
“We applaud the court’s decision to hold HVI Cat Canyon responsible for the full extent of the harm they caused,” said Assistant Attorney General Todd Kim of the Justice Department’s Environmental and Natural Resources Division. “This outcome is a prime example of strong federal and state partnership and persistence in pursuing justice against a company that long flouted its compliance obligations.”
“HVI Cat Canyon, formerly Greka, is being held accountable in their long history of multiple violations and ongoing non-compliance across many agencies,” said Regional Water Board Chair Jane Gray. “This judgment is a testament to the multi-year efforts of agencies and the legal system’s ability to provide justice for egregious actions perpetrated against the environment.”
Under the ruling, the firm is liable for $40 million in civil penalties for the spills to the United States, $15 million in civil penalties for the violations of federal regulations, and $2.5 million in cleanup costs.
The court also held HVI Cat Canyon liable to California for $7.7 million in civil penalties and nearly $200,000 in natural resource damages and cleanup costs.