Law360, New York (June 12, 2015, 7:22 PM ET) — Plains All American Pipeline LP was hit Thursday with another proposed class action over the ruptured Santa Barbara pipeline, this time by a clothing store that says the oil spill has kept tourists away and hurt local businesses like restaurants and recreation outfits that depend on travelers.
Savvy of Boulder LLC, owned by Erica Dahl, claims that Plains’ failure to follow statutory guidelines, inappropriate standard of care and negligence led to the May 19 spill that released more than 100,000 gallons of crude oil near Refugio State Beach less than a week before hordes of tourists were due to arrive for Memorial Day weekend.
Savvy, like other similar businesses in Santa Barbara County, rely on tourism, particularly between May and the end of summer, when the industry reaches its peak, the complaint says. But due to the continued presence of oil on still-closed beaches, fishing has been halted indefinitely and tourists are not visiting as often as expected.
“The full scope and extent of the contamination plume, both on and off shore, likely will not be adequately defined and delineated for some time, causing these on and off shore restrictions to remain in effect and continue to negatively impact the local economy,” the complaint says.
About 6.1 million people visit the Santa Barbara coast each year, a 2013 tourism report found, and those travelers spend at least $4 million, which supports about 12,000 jobs and at least $46 million in tax revenue.
Prior to the spill, tourism this year was on pace to surpass last year’s levels, the complaint says, citing information from the city of Santa Barbara.
Immediately after the incident, Dahl reported a noticeable decline in business at local establishments, including her own. She said that her May earnings were 20 to 25 percent lower than her earnings in May 2014, and that other businesses saw their Memorial Day weekend revenues drop by 50 percent or greater.
Included in the proposed class are any Santa Barbara County businesses that rely on tourism, including restaurants, bars, wineries and those involved in retail, hospitality or outdoor recreation.
The suit looks to recover any lost money and other damages and stop Plains from operating a pipeline without adequate safety and response measures.
Among the safety measures is an automatic shutoff valve that is required for other Santa Barbara County pipelines of a similar nature, according to Savvy, who says that because the line that broke, Line 901, is federally regulated, it’s the only major pipeline without the valve.
Although Plains does not comment on pending litigation, a spokeswoman for the company provided Law360 some valve-related information used by Rick McMichael, the company’s senior director of operations, in a May 2014 press conference.
At the time, McMichael said that Line 901 met federal standards and had one check valve and three remote-controlled valves along the pipeline’s 11-mile route from Las Flores Canyon to Gaviota. Check valves automatically close if oil reverses flow, and the remote valves are operated by a control center that gets real-time information via satellite and is monitored at all times.
McMichael said Plains did not feel it was prudent to install an automatic shutoff valve, because while it may be appropriate for stopping compressible gases, it may not be safe when used to stop incompressible fluids.
Automatically closing a valve on an oil pipeline increases the pressure, he said, comparing it to “slamming your car into ‘park’ when you are driving down the freeway.” Instead, it’s much safer for people who understand the line’s hydraulics to shut it down with a planned sequence of steps, he said.
Thursday’s suit also cited Plains’ in-line inspections, which turned up 13 areas of concern in 2007, 41 in 2012 and, 14 days before a 6-inch gash opened in the line’s belly, four areas that required immediate investigation and remediation.
The inspections and preliminary findings by the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration showed that Line 901 had areas of extensive external corrosion. PHMSA found that the wall thickness near the ruptured area had been degraded from 0.344 inches to 0.0625 inches.
Plains is also being sued by an urchin fisherman, who makes similar claims but seeks to represent a class including anyone who makes a living from harvesting marine life in county waters and any businesses dependent on coastal and marine resources that have lost profits as a result of the spill.
Savvy is represented by Abbas Kazerounian, S. Mohammad Kazerouni and Matthew M. Loker of the Kazerouni Law Group APC and Joshua B. Swigart of Hyde & Swigart. Counsel information for Plains was not available Friday.
The case is Savvy of Boulder LLC v. Plains All American Pipeline LP, case number 2:15-cv-04440, in the U.S. District Court for the Central District of California.
— Editing by Edrienne Su. Read the original published article here on Law360.