Plains All American (“Plains”), a Houston based pipeline company, was found guilty of nine criminal charges for its role in the worst oil spill to occur on the California coast in the past 25 years. Contrary to what many may assume, it is well-established that a corporation, rather than individuals, can be convicted of criminal charges. For a high-profile example, BP, formerly the British Petroleum Company, plead guilty to eleven counts of voluntary manslaughter following the Deepwater Horizon disaster where they were ordered to pay $4.5 billion in penalties and fines. In the same vein as the BP case, a Santa Barbara County jury convicted Plains on nine of the fifteen criminal charges brought by the Attorney General of California including one felony count of failing to properly maintain its pipeline and eight misdemeanor charges. The misdemeanor charges included destruction of protected wildlife, such as marine mammals and seabirds.
The pipeline breach occurred just a few weeks before Memorial Day in 2015, and the resulting oil spill forced multiple beaches and campgrounds to shut down for two months. The pipeline breach was caused by corrosion in the line, and resulted in at least 123,000 gallons of crude oil flooding the Refugio State Beach. The incident also put a damper on the local tourist economy and fishing industry. The surrounding oil industry was also stifled by the breach because the pipeline supported local refineries by transporting crude oil from seven offshore rigs. The rigs have remained idle since the spill.
Plains pleaded not guilty to the charges stating that it believed its operation of the pipeline met or exceeded both industry and legal standards. The company’s view is that the jury incorrectly decided the case, and it points to the fact that, despite the guilty verdict, the jury did not find any knowing misconduct by the company. Plains has stated that it accepts full responsibility for the accident, and is in the process of exploring all of its post-conviction legal options.
Federal inspectors however, assert that the company committed several preventable errors. Plains operates the pipeline from a control room in Texas which is over 1,000 miles away. Prior to the incident, operators in the Texas control room had disabled an alarm which would have signaled a leak. As a result, the operators were unaware that a spill had occurred when they restarted the pipeline. The preventable restart of the already ruptured line caused the incident to compound in scope.
Plains has formally apologized for the spill and paid for cleaning and restoration efforts. So far, the spill has cost the company $335 million in clean-up, not including lost revenue, according to the company’s annual report. Despite the incident, the company is already seeking approval to repair or rebuild corroded pipelines. It has also filed an application to construct a new pipeline in the same location.
Plains is scheduled to be sentenced on December 13. Because Plains is a company and not an individual person, it faces only fines. The severity of the fines Plains could face is unclear. Whatever the trial court imposes, this case is only the beginning of Plains’ legal issues related to this accident. The U.S. Government has yet to weigh in on the issue, and could decide to impose additional fines. Further, Plains faces a federal class-action lawsuit. The plaintiffs in that case are the owners of beachfront properties, fishing boat operators, the oil industry, and oil workers who have lost jobs due to the accident.
What this means for the average landowner is that despite the assurances of pipeline companies that preventative measures are in place to prevent spills, accidents still occur. Landowners with pipelines constructed across their properties are forced to live with this risk.
Written by Christopher Chan and Graham Taylor