Calif. gas leak seen as litigation gusher rivaling BP spill

By Jeremy P. Jacobs | 02/17/2016 01:25 PM EST

With the plugging of a monthslong methane leak at a natural gas well in Los Angeles last week, lawyers have turned their attention to litigation stemming from the environmental debacle.

With the plugging of a monthslong methane leak at a natural gas well in Los Angeles last week, lawyers have turned their attention to litigation stemming from the environmental debacle.

They are comparing Southern California Gas Co.’s handling of the gas leak to another environmental disaster: the 2010 Deepwater Horizon oil spill in the Gulf of Mexico.

The Aliso Canyon leak spewed more than 80,000 metric tons of methane — a powerful greenhouse gas — since it began on Oct. 23, 2015. Southern California Gas said last week it had halted the gas release, at least temporarily, and has begun pumping cement and other fluids into a relief well that reached the site of the leak.

Aliso Canyon
Attorneys are drawing legal parallels between the recent massive methane leak in Los Angeles and the 2010 Deepwater Horizon oil spill in the Gulf of Mexico. | Photo courtesy of AP Images.

If the utility manages to permanently seal the well, attention will pivot to environmental enforcement and legal action.

More than 10 regulatory entities are investigating the leak, and Energy Secretary Ernest Moniz and Pipeline and Hazardous Materials Safety Administration chief Marie Therese Dominguez visited the site with other officials and lawmakers yesterday (see related story). Southern California Gas is already facing a criminal lawsuit from the Los Angeles district attorney, as well as civil suits filed by the state. U.S. EPA is also investigating, which could lead to federal civil or criminal charges.

On top of that, lawyers expect hundreds — if not thousands — of personal injury lawsuits to be filed by the residents of the affluent Porter Ranch neighborhood claiming the gas’ toxic additives have made them sick and that the leak has lowered property values in the affluent area. Nearly 5,000 households moved out during the leak, and attorneys and activists — including Robert F. Kennedy Jr. and Erin Brockovich — have held town halls seeking to enlist clients. The company is facing at least 65 lawsuits, and that number is expected to grow.

Many attorneys said that despite some key statutory differences, the situation reminds them of the litigation onslaught that followed BP PLC’s Deepwater Horizon accident, which killed 11 workers and released millions of gallons of oil into the Gulf.

Attorney Frank Petosa of the firm Morgan & Morgan said there are "many parallels" between Deepwater Horizon and the Aliso Canyon leak, primarily in each company’s management of the wells and response to the accidents.

"What’s amazing is here we are — 5 ½ years later — and BP’s plan was no different from Southern California Gas’," said Petosa, who worked on the Deepwater Horizon litigation and also has clients in Porter Ranch.

"What is the unfortunate similarity is both corporations put profits ahead of safety and not taking the necessary steps to ensure safety — and then not having a plan in place."

A key similarity between the two accidents was the company’s management plans, said Robert Bea, the co-founder of the Center for Catastrophic Risk Management at the University of California, Berkeley.

Bea said Southern California Gas, like BP, failed to adequately prepare for an accident, which was surprising because the well at issue — one of 115 at the utilitiy’s sprawling San Fernando Valley facility — was drilled in the 1950s for oil development, then repurposed in the 1970s for natural gas storage.

"Risks were not properly assessed," said Bea, who has studied more than 600 oil and gas accidents around the world. "The risks were not properly managed."

A primary concern, Bea and several attorneys said, is the lack of a safety valve in the Aliso Canyon well. The valve was removed when it broke in 1979, and Southern California Gas never replaced it.

The valve wouldn’t have entirely prevented the leak, but it would have stopped the continued release of the fumes.

Several attorneys claim the valve is reminiscent of the Transocean Ltd.’s now-infamous blowout preventer, or BOP, that failed to stem the release of oil on the Deepwater Horizon rig.

Los Angeles District Attorney Jackie Lacey, who has filed criminal charges against the company, said that shows negligence.

"Had they repaired it in 1979, we wouldn’t even be talking about this story," she said in an interview. "But they chose not to."

Lacey’s lawsuit includes four criminal misdemeanor counts, including failing to report the release for three days. The lawsuit seeks about $125,000 in penalties, and she could seek prison time for some utility officials.

Petosa, the personal injury attorney, said there are other similarities in the two companies’ responses, as well.

Southern California Gas, like BP, lacked a prepared contingency plan for what to do after an accident. Ultimately, their responses have been eerily similar, he said: drill a relief well.

That, Petosa said, has led to the prolonged crisis. It took 87 days to cap BP’s well; the Southern California Gas leak stretched to beyond 100 days old.

And like BP, which hid from EPA and federal officials how much oil was escaping from the well and rig immediately after the accident, Southern California Gas did not act transparently once it learned of the leak, taking multiple days to report it to state regulators.

"It’s a matter of not taking the proper steps," Petosa said. "If you take short cuts, if you put profits ahead of safety, you can create an environmental catastrophe."

A Southern California Gas spokeswoman declined to comment on the lawsuits or comparisons to the Deepwater Horizon accident.

"We are reviewing all of these lawsuits and will allow the judicial process to take its course," the spokeswoman, Tammy Taylor, said in an email. "Today, our focus continues to be on working hard to stop the gas leak, mitigate the odors associated with the leak as quickly as safety allows, and address our neighbors’ concerns."

The utility said Friday it has "temporarily controlled" the gas flow from the leaking well. This week, it began injecting concrete to permanently cap the leak. Then regulators will then measure whether any gas is still leaking, a process that could take several days.

‘Careful coordination’

Procedurally, the major similarity between the Aliso Canyon lawsuits and those following Deepwater Horizon is that they are complex.

Hundreds, if not thousands, of personal injury lawsuits will be filed in Southern California against the utility.

And in addition to Lacey’s criminal charges, the company is also facing civil suits from the state — which claims the leak is hindering its ability to meet its climate change agenda, among other things — and potentially lawsuits from EPA and the Justice Department (E&ENews PM, Feb. 2).

"There will have to be some careful coordination," said Richard Frank, a law professor at the University of California, Davis.

Much like the multiple federal lawsuits against BP and the operators of Deepwater Horizon were consolidated and sent to federal district court Judge Carl Barbier in Louisiana, Frank anticipates that California’s Judicial Council will consolidate the civil lawsuits into one proceeding before a well-regarded state court judge with a record of handling complex matters. (The criminal charges are required to stay separate.)

Separately, the personal injury claims could be combined.

Whether EPA will pursue its own legal action against the company remains to be seen. A civil enforcement action under the Clean Air Act would be filed in federal district court. And the Justice Department could, on its own, pursue criminal charges against the company, also in federal court.

"That would require additional coordination between federal and state court proceedings," Frank said, calling that scenario "an additional complication."

No ‘big hammer’

For federal prosecutors and EPA, there are some important differences between the two accidents that will undoubtedly factor into their thinking about whether to pursue a lawsuit.

The critical difference could be what law applies. After the Deepwater Horizon spill, EPA primarily pursued penalties under the Clean Water Act. The water law mandates the responsible party for the spill must pay $4,300 per barrel if they acted in a "grossly negligent" manner leading up to the spill.

Once Barbier ruled BP was negligent, the company was on the hook for about $13.7 billion in those penalties alone. That helped lead to a landmark $18.7 billion settlement that included the Clean Water Act penalties, as well as natural resource damages under the Oil Pollution Act and other claims (Greenwire, July 2, 2015).

For the Aliso Canyon gas leak, the Clean Air Act applies, and it does not provide the same sort of per-barrel calculation for air emission penalties.

"They are very different," said David Pettit of the Natural Resources Defense Council, who has worked on both accidents. "The big hammer that the U.S. had in Deepwater Horizon was the Clean Water Act and its very specific penalties."

Pettit added that one lesson from the Deepwater Horizon litigation is how long these cases play out. With regard to the federal cases, it took more than five years for a settlement to be reached. And some of the personal injury claims are still ongoing.

He hopes the state can move more swiftly in enacting reforms to prevent another gas leak than the federal government did following Deepwater Horizon.

"The state is in a much better position to deal with the dangers of storing natural gas underground, especially in old oil wells," Pettit said. "I hope that they see that example and get going."