South of Refugio State beach the day after the oil spill (May 20, 2015)

One of the big surprises to emerge out of the most dramatic oil spill to hit the South Coast this century is that the pipeline owned by Plains All American Pipeline is the only one in all of Santa Barbara County not to have an automatic shut-off valve. Not coincidentally, it happens to be the only pipeline over which the county Energy Division has no safety and inspection oversight authority.

“We’re flying blind,” said county Energy Division czar Kevin Drude. That’s because more than 20 years ago, All American Pipeline (Plains hadn’t bought it yet) took Santa Barbara County to court to restrict the county’s legal authority to inspect X-rays of the pipeline welds. It won. The consequences of that victory appear to be bearing bitter fruit. Because the county was denied the regulatory authority to require that Plains equip its pipeline with an automatic shut-down valve in case of a rupture, The Santa Barbara Independent has discovered, the Plains pipeline is the only pipeline in the county without this key safety feature. Instead, the Plains pipeline must be shut down manually in case of such emergencies.

According to Drude, the equipment the county requires — known as SCADA — of other pipeline operators is so sensitive it can detect the loss of 20 barrels of oil over a 20-hour period. By contrast, the Plains pipeline leaked about 2,500 barrels worth of oil in a matter of a few hours before the company’s crew manually shut it down.

SCADA stands for supervisory control and data acquisition. It’s a very expensive, high-tech, computerized feature that continuously monitors the temperature, velocity, and pressure conditions inside a crude-oil pipeline. If there are changes above and beyond normal expectations, the SCADA is programmed to issue an automatic warning. If the problem persists or exceeds certain safety thresholds, it’s programmed to shut the pipeline down automatically. Moreover, such systems are programmed to resist operator efforts to restart the pipeline until proper protocols have been followed.

Exactly how and why the All American Pipeline — by far the biggest in the county — was built without this critical safety feature remains uncertain. The few people still on the scene who were involved back then have, at best, hazy recollections. What is clear is the vehemence with which All American Pipeline fought any intrusion of county oversight.

This isn’t to say the Plains pipeline has operated free of regulatory oversight. Since its inception in 1987, the pipeline has been subject to federal inspections. The feds farmed this function — via contract — out to the California Office of the State Fire Marshal, but in 2013, The Santa Barbara Independent has learned, the Fire Marshal’s office informed the Department of Transportation it would not renew its contract. Increasingly, the Fire Marshal’s office reported that it had been finding it difficult to retain or recruit experienced pipeline inspectors. Because the Fire Marshal’s office regarded its federal inspection work ancillary to its primary mission, it turned this duty back to the federal Department of Transportation, which in turn, gave it over to a relatively new and obscure federal agency called the Pipeline and Hazardous Materials Safety Administration — better known as PHMSA (pronounced “pimsa”), which then had to resume its function of inspecting all of California’s oil and gas pipelines.

Organizations like Pipeline Safety Trust — which bird-dogs pipeline companies from an environmental safety vantage point — have expressed concern that PHMSA is too underfunded and understaffed to absorb so monumental a new burden. (In the last few months, Congress authorized the agency to hire 100 new pipeline inspectors. How many have been hired since then remains unclear.) In addition, Pipeline Safety Trust — which publishes a blog called The Smart Pig, the name of a key pipeline safety inspection process — reported there have been 175 “incidents” involving Plains All American pipelines throughout the United States — 11 in California — in the past 10 years. No deaths were caused and no injuries were reported from these incidents, but nearly $24 million in property damage was inflicted.

Reports vary as to the fines collected by PHMSA, but they range from $185,000-$284,000. “In terms of the fines they impose, it’s really a lot less than they are authorized,” said Samya Lutz with the Pipeline Safety Trust. She added that the number of investigations launched by the federal pipeline safety agency was quite low in relation to the number of incidents. An incident is defined as any occurrence leading to loss of life, an injury requiring hospitalization, or property damage in excess of $50,000. If more than five barrels are spilled — or five gallons escapes the property lines — that, too, constitutes an incident. While there are recent reports of a half-gallon leak on the Plains pipeline by Refugio, that’s too small to be deemed an “incident.” Of the 11 Plains incidents that occurred in California, it remains unclear if any involved the Refugio pipeline.

Cleanup at Refugio State beach the day after the oil spill (May 20, 2015)

In addition, the Environmental Protection Agency ordered Plains to pay $41 million in remediation costs associated with 10 pipeline spills occurring in Texas, Kansas, Louisiana, and Oklahoma between 2004-2007 that wound up putting 6,510 barrels of crude – 273,420 gallons – into nearby waterways. The culprit in most of these instances was typically corroded pipeline pipes.

More comically, perhaps, last year this time, a Plains pipeline ruptured by a pump station in an industrial neighborhood in Los Angeles, causing crude to spray 40 feet into the air and shower the roof of the strip club next door. Neither the strippers nor customers were injured, but two people working at a medical store nearby got so sick from the fumes they had themselves hospitalized. In that instance, 450 barrels escaped. Among the many tools used in the cleanup effort were absorbent diapers.

Even more incriminating is information provided by Plains All American in its most recent Securities and Exchange Commission report. That report itemizes $82 million in environmental liabilities. The EPA dinged the company $6 million for a 120-barrel spill in Bay Springs, Mississippi, in February 2013. The Canadian government assessed the company $15 million in cleanup costs for two spills in June 2013. And this February, a Canadian National Energy Board audit levied a $76 million penalty on the company for slipshod environmental safety practices.

Greg Armstrong, CEO of Plains All American Pipeline, answers questions at a press conference following the May 19 oil spill. (May 20, 2015)

To put this into perverse context, Plains All American CEO Greg L. Armstrong, who received $5.5 million in total compensation last year – is guaranteed an $87 million golden parachute severance package whether he’s terminated with or without cause.

The huge irony here is that at the time of its inception in 1987, the Plains All American Pipeline now unleashing torrents of criticism was considered by environmentalists to be a major breakthrough in environmental sanity. A massive amount of oil development was slated to occur in the Santa Barbara Channel in the mid-1980s as Santa Barbara was regarded by the oil industry to be one of the most petrochemically bountiful places to drill in the United States. All along the Gaviota Coast, big oil companies, like Chevron and Exxon, were proposing massive industrial sites to store and process oil drilled from state and federal waters off the coast.

Waves off Refugio Beach churn and move the oil spill along the coastline (May 19, 2015)

In response, the South Coast environmental community insisted that any processing that took place had to be consolidated into as few spots as possible to minimize the industrialization of the coast. It was a hard fight. The oil companies resisted. In addition, the environmentalists pushed for the creation of a pipeline that all the oil companies could and should use. In the days before Plains All American Pipeline, the oil companies moved their cargo via large tanker ships that would park along the coast. Not only did tankers emit unacceptable volumes of air pollution, but the prospect of an oil spill from an offshore tanker posed immense containment challenges. Again, the oil companies resisted. It was not in their DNA to share equipment with competitors.

In that context, the development of the Plains All American pipeline was an enormous breakthrough. If one accepted the inevitability of a spill, better from a pipeline where it could be contained, the thinking went, than in the open seas. Little wonder that it was a former administrative assistant to then-county supervisor Bill Wallace — the most effective and determined foe, at least among elected officials, the oil industry has ever faced in Santa Barbara — who spearheaded the pipeline project to completion. John Stahl, Wallace’s “just do it” political consigliere, jumped ship from the county to work for Plains All American Pipeline. And he got the project approved.

An estimated 21,000 gallon oil spill just North of Refugio State Beach coating 4 miles of the shoreline and a sheen 50-100 yards wide (May 19, 2015)..

But when county energy planners, such as former county Energy Division czar Rob Almy, insisted the county have access to safety inspection records for the pipeline welds, Plains All American balked — big time. The pipeline, the company argued, was an interstate project. As such it insisted, only the federal government had the legal authority to conduct inspections and hold the project’s feet to the regulatory fire. The matter went to court and essentially the county lost. As part of a settlement agreement, the county would be given authority to inspect and regulate the soil and vegetation on the ground above the pipeline, but anything underneath was the federal government’s responsibility.

How and why Plains All American was approved without an automatic shutoff valve remains unclear at this time. A media consultant for the company told The Independent that the information was not immediately available. For Drude this reality came as a shock. “I just found out,” he said. “We had no regulatory authority.” When asked if such equipment was required of other operators in the county, Drude stated, “Absolutely.”

In addition to automatic shutoff valves, most Santa Barbara pipelines are equipped to automatically issue alarms if the pressure level changes beyond certain industry norms. To the extent such were in place and functioning also remains unclear.

Drude noted that his department meets on a monthly basis with the operators of other oil pipelines to discuss safety concerns and address them. When the California Fire Marshal had oversight over Plains All American, the company’s representatives were not regular attendees at such meetings. Since the federal agency known as PHMSA took over, they have not shown up either. “They don’t come to our meetings.”

Drude is not one to throw stones at other regulators. “Everybody could have been doing their jobs the best their jobs could be done,” he said. “The pipe itself could have just given way. It happens. We just don’t know.” That’s one of the reasons, he said, he’d really like to see what the hole in the pipeline looks like.

As always in such matters, the $64 billion question is what Plains All American knew and when did they know it. In other words, when did the company know — or should have known — there was a leak, and how long did it take for the company to act? In either case, Plains All American will be on the hook for millions in damages. But if it can be shown the company acted negligently or with disregard for safety procedures, the penalties could be staggering. Dispatched to the scene were representatives from the U.S. Attorney’s Office in Los Angeles, specializing in the prosecution of environmental crimes. One was seen walking along the beach with oil on his hands this Wednesday, as were representatives with the California Attorney General’s Office, who specialize in environmental prosecutions. Santa Barbara District Attorney Joyce Dudley was also on hand accompanied by her chief investigator Dave Saunders. Although the track record of the Santa Barbara prosecutor’s office has been anemic to nonexistent when it’s come to environmental crime for decades, Saunders has some experience in this regard from his days with the Ventura County District Attorney’s Office.

At this point, many key details of what happened remain unknown. But the morning the spill happened, County Fire Department investigator Chris Olmstead was already close by. He just happened to be conducting an oil spill containment drill with representatives of another oil company, which owns a facility two miles north of Plains All American’s. Olmstead received a dispatch that Engine 18, which operates out of Gaviota, was on its way in response to complaints about intense oily odors. Olmstead headed south, and by the time he and Engine 18 connected near the Refugio Beach, it was obvious a serious spill was underway. It was Olmstead who would track the leak back to “a gushing stream of sludge.” He would track it across the freeway and over a wire fence and finally to its source. When Olstead got there, two representatives from Plains All American — who’d been with him earlier — were already there. What time that was, Olmstead said, he didn’t record.

To date, county authorities say Plains has been exceptionally cooperative.


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