MSC agrees to pay settlement over California oil spill

Swiss-based container shipping major MSC Mediterranean Shipping Company has accepted a proposal to jointly fund a settlement with claimants relating to the 2021 Orange County pipeline oil spill.

Image credit USCG

The oil spill resulted in the discharge of approximately 25,000 gallons of crude oil in October 2021 during an offshore leak in the 17-mile-long San Pedro Bay Pipeline.

The pipeline is linked to the Elly drilling platform off the coast to Long Beach Harbor.

MSC has been identified as the party of interest in the local investigation after its boxship MSC Danit dragged anchor near the underwater pipeline in January 2021. Another container shipping vessel was identified as dragging anchor in the area at the time, COSCO Beijing, which is operated by Costamare Shipping Co, during severe weather.

Amplify, owner of the pipeline, sued the two containership operators and Marine Exchange of Southern California claiming it failed to direct the ships to deeper waters and failing to inform Amplify of the anchor-dragging incidents.

Nevertheless, in August 2022, the U.S. Justice Department said that Houston-based Amplify Energy Corp., and its wholly-owned subsidiaries Beta Operating and San Pedro Bay Pipeline, 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 spill.

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.

The two shipping companies, MSC and Costamare, have also agreed to a settlement and will pay a total of $45 million that would go to Southern Californian fishermen, tour companies, and property owners who launched a lawsuit after the spill.

“Additional terms of a formal settlement are still being negotiated and once reached will have to be approved by the court,” MSC said in a statement.

“MSC looks forward to demonstrating in the continuing legal proceedings that the responsibility for the 2021 oil spill remains the responsibility of Amplify, the pipeline owner, who already has plead guilty to criminal negligence for the oil spill.”   

The company noted that the spill was not linked to its container vessel MSC Danit, as an investigation into the vessel’s maneuvering in the area in January 2021 showed that the ship:

“maneuvered in a reasonable and prudent manner despite adverse weather and intense marine traffic in January 2021, when it is believed that the pipeline was first damaged.”

Moreover, the MSC Danit took appropriate actions while at anchor and maintained constant communication with the U.S. Coast Guard and port authorities off the coast of California, MSC said.  

“MSC’s investigation has revealed that the pipeline did not comply with its original permit to be built sufficiently away from the federal anchorage zone in which the MSC Danit and other ships were anchored, and that the negligent conduct of Amplify Energy including its repeated failure to take reasonable preventative steps to better protect its pipeline and detect latent damage was the true cause of the oil spill,” the company statement reads.

“Despite becoming aware of increased marine traffic and activity near its pipeline past 2020, Amplify took no measures to mitigate the risk to their pipeline before, during or after January 2021, all of which led to an unnecessary pollution event in Southern California waters and beaches. These facts compelled Amplify to pled guilty to federal and state criminal charges for its discharge of the oil caused by its failure to properly detect and respond to the oil spill.” 

Nonetheless, MSC noted that it had agreed to jointly fund a settlement for the claimants in order to move forward in a “constructive and positive manner following this incident.”