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Oil Company to Pay $65 Million for 'Gross Negligence'

The company was responsible for 12 oil spills into U.S. waters.

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The U.S. District Court for the Central District of California last Thursday entered final judgment against HVI Cat Canyon Inc., formerly known as Greka Oil & Gas Inc., in a civil suit brought jointly by the United States, on behalf of the U.S. Environmental Protection Agency (EPA) and the U.S. Coast Guard, and by the State of California on behalf of the California Department of Fish and Wildlife (CDFW) and the California Regional Water Quality Control Board, Central Coast Region.

The United States and California filed the suit alleging that HVI Cat Canyon, which previously owned and operated multiple oil and gas production facilities in Santa Barbara County, California, was 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.

The court’s judgment follows an earlier 65-page opinion dated Feb. 25, in which the court awarded the United States and California the full amount of civil penalties, response costs, and damages that they sought at trial.

The court found that the 12 spills into waters of the United States, which occurred from 2005 through 2010, resulted from HVI Cat Canyon’s gross negligence.

"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,” the court wrote.

In total, the court found that the spills had discharged approximately 26,584 barrels of crude oil and produced water, a briny waste 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.

The court held HVI Cat Canyon liable to the United States for $40 million in civil penalties for the spills, $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.

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