United States v. HVI Cat Canyon Inc.

• Decision Date: 25 February 2023
• Docket Number: CV 11-5097 FMO (SSx)
• Parties: UNITED STATES OF AMERICA, PEOPLE OF THE STATE OF CALIFORNIA, ex rel. CALIFORNIA DEPARTMENT OF FISH AND WILDLIFE, et al., Plaintiffs, v. HVI CAT CANYON, INC., f/k/a GREKA OIL & GAS, INC., Defendant.
• Court: U.S. District Court — Central District of California

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UNITED STATES OF AMERICA, PEOPLE OF THE STATE OF CALIFORNIA, ex rel. CALIFORNIA DEPARTMENT OF FISH AND WILDLIFE, et al., Plaintiffs,
v.
HVI CAT CANYON, INC., f/k/a GREKA OIL & GAS, INC., Defendant.

No. CV 11-5097 FMO (SSx)

United States District Court, C.D. California

February 25, 2023

FINDINGS OF FACT AND CONCLUSIONS OF LAW

Fernando M. Olguin United States District Judge

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INTRODUCTION

This is a joint action brought by the United States of America (the “United States”) and the State of California (“California” or the “State”), ex reI. California Department of Fish and Wildlife (“DFW”) and California Regional Water Quality Control Board (“Regional Board”) (collectively, “plaintiffs” or the “Government”), against defendant HVI Cat Canyon, Inc., formerly known as Greka Oil & Gas, Inc. (“defendant” or “HVI”), asserting claims for violations of the Clean Water Act (“CWA”), 33 U.S.C. §§ 1251, et seq.; the Oil Pollution Act of 1990 (“OPA”), 33 U.S.C. §§ 2701 et seq.; California Water Code §§ 13000 et seq.; and California Fish and Game Code §§ 5650, et seq. (See Dkt. 56, First Amended Complaint (“FAC”) at ¶¶ 1, 187-222).

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Before trial, the court granted in part and denied in part the United States' Motion for Partial Summary Judgment. (See Dkt. 307, Court's Order of May 20, 2018). The court granted the motion with respect to HVI's liability under § 311(b) of the CWA, 33 U.S.C. § 1321(b), and § 301(a) of the CWA, 33 U.S.C. § 1311(a), for 10 of the 12 oil spills at issue in the United States' complaint. (Id. at 38). The court also granted the motion with respect to HVI's liability under § 1002(a) of the OPA, 33 U.S.C. § 2702(a), in connection with three oil spills and one threatened spill, and ordered HVI to pay the United States $2,243,687 in removal costs. (Id.). The court denied the motion as to HVI's liability under the CWA for two oil spills at its Bell Facility on December 27, 2008, and May 1,2009, that reached Spring Canyon Tributary, and HVI's liability under the OPA for removal costs related to a threatened discharge of oil in April 2008, from the Bell Facility's Gato Ponds into Sisquoc Creek. (Id. at 37-38). Specifically, the court found triable issues as to whether Spring Canyon Tributary and Sisquoc Creek possess a significant nexus to a traditional navigable water (TNW), which determines whether the spills are within the CWA's jurisdiction. (See id. at 37-38).

A bench trial was held on the following federal claims: (1) liability for the two remaining spills and civil penalties for the 12 spills at the Bell and Zaca/Davis Facilities for violations of § 311(b) of the CWA, 33 U.S.C. § 1321(b); (2) liability and civil penalties for violations of 40 C.F.R. Part 112 requiring Spill Prevention, Control, and Countermeasure (“SPCC”) Plans at 11 facilities, and Facility Response Plans (“FRPs”) at the Bell and Zaca/Davis Facilities; and (3) liability for removal costs under § 1002(a) of the OPA, 33 U.S.C. § 2702(a), stemming from a spill at the Bell Facility on December 27, 2007, and the Gatos Ponds removal action in April 2008.^[1] (See Dkt. 442, PTO at 10 & 33-34). The bench trial also addressed the State's claims for violations of California Water Code § 13350 and California Fish & Game Code §§ 12016, 13013, and 5650 involving some of the same oil spills, as well as additional spills that did not reach waters of the United States. (See id. at 11-13 & 34).

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Having reviewed and considered all the evidence presented during the bench trial, and the contentions and arguments of counsel, the court hereby makes the following findings of fact and conclusions of law in accordance with Rule 52(a) of the Federal Rules of Civil Procedure.^[2]

Any finding of fact that more correctly constitutes a conclusion of law, and any conclusion of law that more correctly constitutes a finding of fact, should be treated as such.

FINDINGS OF FACT

I. HVI'S OIL PRODUCTION FACILITIES AND OPERATIONS IN SANTA BARBARA COUNTY.

1. HVI previously owned and/or operated^[3] the following 11 oil and gas production facilities that engaged in drilling, producing, gathering, or storing oil or oil products (collectively, the “11 Facilities”) in Santa Barbara County:

• Battles Facility, located at 1348 Battles Road, Santa Maria, from November 1999 to October 2020

• Bell Facility, located at 6780 Palmer Road, Santa Maria, from November 1999 to October 2020;

• Casmalia Facility, located at 5080 Black Road, Santa Maria, from November 1999 to October 2020;

• Escolle Facility, located at 7275 Graciosa Road, Santa Maria, from November 1999 to October 2020;

• Lakeview Facility, located at 2617 East Clark Avenue, Santa Maria, from August 2002 to October 2020;

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• Lloyd Facility, located at 5200 Dominion Road, Santa Maria, from August 2002 to October 2020;

• Los Flores Facility, located at 6151 Dominion Road, Santa Maria, from August 2002 to October 2020;

• Security Facility, located at 5200 Dominion Road, Santa Maria, from August 2002 to December 31,2008;

• U-Cal Facility, located at 6527 Dominion Road, Santa Maria, from August 2002 to December 31,2008;

• Williams B Facility, located on Cat Canyon Road, Santa Maria, from June 2000 to February 25, 2010; and

• Zaca/Davis Facility, located at 5017 Zaca Station Road, Los Olivos, from August 2002 to October 2020.

(See Dkt. 62, Answer at ¶ 16); Dkt. 442, PTO at ¶¶ 5.b.-g., 5.l.-jj., 5.mm.-nn.); (Dkt. 532, Sale Notice).

2. HVI also operated an oil and gas production facility in Santa Barbara County known as Bradley 3-Island on or before January 10, 2008. (See Dkt. 62, Answer at ¶ 17); (Dkt. 442, PTO at ¶ 5.k.).

II. CHARACTERISTICS OF SPECIFIC WATER BODIES (PALMER ROAD CREEK, SISQUOC CREEK, CAT CANYON CREEK, AND SPRING CANYON TRIBUTARY).

3. With respect to the two remaining spills at HVI's Bell Facility on December 27, 2008, and May 1, 2009, and the substantial threat of a spill at the Bell Facility's Gato Ponds in April 2008, Dr. Lyndon Lee (“Dr. Lee”), an expert in river and wetland science, testified, based on data reviewed and his direct observations, that both the Sisquoc Creek and the Spring Canyon Tributary have clear and prominent channel beds, banks, ordinary high water marks, and regularly connect through the Cat Canyon Creek and Sisquoc River riverine systems to the Santa Maria Estuary, which flows into the shore waters of the Pacific Ocean. (See Dkt. 344-1, Declaration of Lyndon Lee (“Lee Decl.”) at ¶¶ 13-26); (Dkt. 469, October 24, 2018, Reporter's Transcript (“RT”)

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at 18-34) (Lee testimony).

4. Dr. Lee also testified that the contribution of Palmer Road Creek, Spring Canyon Tributary, and Cat Canyon Creek to the chemical, physical, and biological integrity of the Santa Maria Estuary is significant. (See Dkt. 344-1, Lee Decl. at ¶¶ 13-14, 16-19, 20-21,23-24); (Dkt. 469, October 24, 2018, RT at 18-34) (Lee testimony).

5. HVI's expert, Dr. Michael Josselyn (“Dr. Josselyn”), does not dispute that the Spring Canyon Tributary has ordinary high water marks and provides flow to a TNW. (See, generally, Dkt. 469, October 24, 2018, RT at 66-67) (Josselyn testimony). Dr. Josselyn also does not dispute that the Palmer Road Creek, which receives water flow from the Sisquoc Creek, provides flow to a TNW. (See, generally, id. at 67); (see id. at 22-24) (Dr. Lee testimony); (Dkt. 344-5, Lee Decl. at 7) (figure depicting Cat Canyon Creek Stream Order and Reach Lengths).

6. Based on Dr. Lee's testimony and related exhibits, the court finds that both the Sisquoc Creek and the Spring Canyon Tributary have a significant nexus to a TNW.

III. THE SPILLS AT HVI'S BELL AND ZACA/DAVIS FACILITIES RESULTED IN THE DISCHARGE OF APPROXIMATELY 26,584 BARRELS OF OIL, INCLUDING PRODUCED WATER.

7. With respect to the 12 spills at issue in the United States' complaint, the court previously concluded that HVI was liable under the CWA for the spills at the Bell Facility on June 8, 2005, July 13, 2005, August 11,2005, July 16, 2007, December 7, 2007, January 29, 2008, October 14, 2010, and December 21, 2010, and the spills at the Davis Facility on December 7, 2005, and January 5, 2008. (See Dkt. 307, MSJ II at 38). Having found that the Spring Canyon Tributary has a significant nexus to a TNW, the court also concludes that HVI is liable under the CWA for the remaining two spills at HVI's Bell Facility on December 27, 2008, and May 1,2009. See infra at § VIII.C.

8. Based on witness testimony, the opinions of the United States' expert witnesses, stipulations, HVI's self-reported information, and contemporaneous documentary evidence such as production data and waste disposal manifests, the 12 oil spills from HVI facilities resulted in the total discharge of approximately 26,584 barrels of crude oil and produced water. Produced water,

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also referred to by the parties as “wastewater,” is defined as “water (brine) brought up from the hydrocarbon-bearing strata during the extraction of oil and gas, and can include formation water, injection water, and any chemicals added downhole or during the oil/water separation process.” 40 C.F.R. § 435.41(bb).

9. For the four largest spills - the Zaca/Davis spills on December 7, 2005, and January 5, 2008; the Bell pipeline spill on July 16, 2007; and the Bell pond spill on December 7, 2007 - the United States relied on the expert testimony of C.E. Hackstedt (“Hackstedt”), a registered Professional Engineer (“P.E.”), to estimate the total volume of oil discharged. (See Dkt. 345-6, Declaration of C.E. Hackstedt (“Hackstedt Decl.”)); (Dkt. 467, October 23, 2018, A.M. Session, RT at 7-8) (Hackstedt testimony). Hackstedt's opinions are consistent with the estimates of the volume of oil recovered during cleanup developed by the United States' second expert, Dr. Terrence Johnson, Ph.D. (“Dr. Johnson”), and estimates provided by DFW and HVI. (See Dkt. 345-7, Declaration of...