CLAIM SUMMARY / DETERMINATION FORM 

Date : 5/3/2010 

Claim Number : E04902-001

Claimant : Cannery Hamilton Properties, LLC 

Type of Claimant : Corporate (US) 

Type of Claim : Removal Costs 

Claim Manager : 

Amount Requested : $872,166.38

FACTS: 

1. Krik Well and Its History: This incident arose from a blowout of the Krik Well, 

which was located near the intersection of Magnolia and Hamilton Streets in Huntington 

Beach, California. The well was located on a 38-acre parcel of land that was formerly 

used as both a landfill and a oil field waste disposal site. Various owners operated the 

site from approximately 1938 until 1984. Numerous surface impoundments and pits 

were located on the site. From 1957 until 1971, the impoundments and pits were used to 

dispose of oil field wastes that included chromic acid, sulfuric acid, aluminum slag, fuel 

oils, and styrene. From 1971 to 1984, the site became a landfill for disposal of solid 

wastes like concrete, asphalt, wood, metal and abandoned vehicles. 

 

After the landfill stopped operating in 1984, several businesses purchased the property 

with the intention of developing it. Despite these intentions, these owners were unable to 

clean up the property and eventually declared bankruptcy. As the previous owners could 

not afford to clean up the property, the California Environmental Protection Agency 

ordered generators of hazardous wastes disposed of at the site to clean it up. These 

companies included Atlantic Richfield, Co., Chevron, U.S.A., Chevron Pipeline Co., 

Texaco, Inc., Conoco Inc., Phillips Petroleum Co., Dow Chemical Co., Exxon Mobil 

Corp., Shell Oil Co., Southern California Edison Co., and Northrop Grumman. These 

companies eventually formed Cannery Hamilton Properties, LLC (“Cannery Hamilton”) 

and Cannery Hamilton purchased the property’s surface estate to clean up the site. 

Production records identify Krik Company as the well’s last operator. The Krik 

Company operated the well under an assignment of an oil and gas lease that was initially 

executed in 1946. The lease gave the lessee the right to place an oil well and production 

equipment on the property. The lease also gave the lessee the right to remove these items 

within a reasonable time after the lease’s termination. In 1950, the mineral estate 

covering the well’s location was severed from the surface estate. 

After obtaining the lease and the well in 1990, the Krik Company produced oil from the 

well. State production records show that oil was produced from the well until at least 

March 1996. In 2002, the State Oil and Gas Supervisor ordered the Krik Company to 

plug and abandon the well as it was the last operator of the well. Despite this order, the 

well was not properly plugged and abandoned. 

On October 31, 1995, the Krik Company transferred to and 

 all the company’s interest in the lease along with “all appurtences situated on the 

premises and/or inventory owned by [Krik Company] and located thereon or used in 

connection with the operation thereof, including tubing, rods, casings or other equipment 

used in connection with the existing oil well located on said property.” , 

. allowed Myles Equipment to park equipment and vehicles on the property nearby the 
well. Representatives of Myles Equipment used a combination lock to enter the facility. 

Myles Equipment was using the property on the day when this incident occurred. 

2. Oil Spill Incident: On the morning of March 17, 2004, a blowout occurred at the 

Krik Well. When it blew, the well shot up a mixture of oil, gas, and produced water 

approximately 40 feet into the air for several hours. An unknown quantity of crude oil 

was released from the well. The oil spill impacted the area around the oil lease site, 

Magnolia Street and the adjacent sidewalk and an estimated 360 residential properties 

situated around the site. The impacted area was in close proximity to the Bolsa Chica 

Wetlands and the Pacific Ocean, a navigable waterway of the US. All drainage from the 

site leads directly to the ocean. The Orange County Health Care Agency advised that 

there was a high probability that oil had impacted the wetlands. The oil spill resulted in 

the closure of Magnolia Street between Hamilton and Bermuda Streets. 

Agencies that responded to the spill were Huntington Beach Fire Department, Huntington 

Beach Police Department, Huntington Beach Public Works, the California Department of 

Oil and Gas, the California Department of Toxic Substance Control, the California 

Department of Fish and Game, South Coast Air Quality Management District, the United 

States Coast Guard (USCG), Orange County Health Care Agency, and the United States 

Environmental Protection Agency (USEPA). Mr. of USEPA was the 

Federal On Scene Coordinator (FOSC) for this oil spill incident. 

The FOSC, Mr. , was notified of the oil spill incident by the Emergency and 

Rapid Removal Service contractor. At approximately 1230 hours PST, the Department 

of Oil and Gas’s (DOG) contractor arrived on site and initiated closure of the well and 

cleanup of the area around the well. After the FOSC advised the landowner, Cannery 

Hamilton of their potential liability, the Unified Command requested a commitment to 

cleanup the release including all of the impacted properties with a deadline of 1700 hours 

that day. Cannery Hamilton stated that they were unwilling to meet the deadline so 

FOSC issued a Notice of Federal Interest (NOFI) to Cannery Hamilton. 

Subsequently, . arrived on scene and was also issued a NOFI. 

 committed to conduct cleanup at that time. However, he later 

denied responsibility for the incident under the theory that ownership of the well and 

equipment had passed to the landowner after the lease terminated due to non-production.

3. Description of removal actions performed: The claimant provided 3 binders of 

invoices and supporting documentation to support the $872,166.38 in response costs 

claimed. The NPFC claims manager reviewed each and every submitted invoice as well 

as every “daily” sheet submitted to substantiate the invoices. The review of the actual 

costs, invoices and dailies focused on (1) whether the actions were taken to prevent, 

minimize or mitigate the effects of the incident; (2) whether the costs were incurred as a 

result of these actions; (3) whether the actions taken were determined by the FOSC to be 

consistent with the NCP or directed by the FOSC, and (4) whether the costs were 

adequately documented. The claims manager reviewed the payment record against the 

claimed costs for each contractor/subcontractor. See Enclosure (1) for the summary 

spreadsheet of vendors that make up this determination and amount allowed for each 

invoice submitted. 

On March 18, 2004 in response to the Notice of Federal Interest (NOFI), Cannery 

Hamilton retained Advanced Cleanup Technologies (ACTI) and decontaminated the 

contaminated portion of Magnolia Street and its adjacent sidewalks. Cannery Hamilton 
responded to the NOFI promptly and agreed to fund all mitigation costs for both the well 

site and the nearby neighborhood that was directly impacted by the oil spill.

Additional air samples were collected and submitted for volatile organic analysis. The 

tank farm associated with the well was also sampled. Several local residents and one 

local oil lease operator informed the Unified Command that substances other than oil 

may have been stored in the tanks. DOG completed the removal of pooled crude oil from 

the soil around the well.

On March 19, 2004, Cannery Hamilton initiated a public assistance line in order to 

provide claim assistance to the community. Cannery Hamilton had the phone lines 

manned by claims adjusters. They also deployed claims adjusters to the field in order to 

evaluate the damage to the individual homes in order to determine the site cleanup that 

was necessary. Cannery Hamilton provided the FOSC with two interim work plans to 

address removal of contaminated soil from the well site and to allow for well 

abandonment equipment to be moved into place and to implement a program to wash the 

residents’ cars. The FOSC approved both plans. Cannery Hamilton prepared the well 

site so that it could accept the well abandonment rig including: scraping the site, 

stockpiling contaminated soil on site and covering the site with clean fill.

Sample analysis indicated no contaminants above the detection limit and the samples for 

the tanks indicated that the tanks did not contain pure crude oil. The analysis revealed 

that the tanks contained diesel, gasoline, and motor oil, chlorinated and non-chlorinated 

solvents. Additional sampling was scheduled to further define the contents in the tanks. 

On March 20, 2004, Cannery Hamilton began to deploy their claims adjusters to the 

impacted neighborhood. An automobile decontamination program was instituted at a 

local carwash.

On March 22, 2004, Cannery Hamilton completed the gross decontamination of the 

neighborhood. Claims adjusters continued to assess individual homeowner damage 

claims. Removal of contaminated vegetation at the well site continued. On March 24, 

2004, the Unified Command at the Edison Community Center was demobilized. A 

project office for cleanup and management of the residential claims was setup at the 

Pacific Pipeline facility. DOG continued the process of abandoning the well and on 

March 29, 2004 the plugging and abandonment of the well was completed. By April 9, 

2004, the profiling of contaminated soil and vegetation was completed. On April 12, 

2004, traffic control equipment that had been provided by the City was replaced with 

equipment from Cannery Hamilton.

On April 15, 2004, crude oil impacted soil and vegetation from the site area was loaded 

into rolloff bins and end-dump semi trailers for hauling and disposal as non-hazardous 

waste. 31 loads were shipped off site for disposal. The shipment of all oil impacted soil 

and vegetation was completed on April 19, 2004. A sample of the carbon from a drum 

used on the exhaust of a vacuum truck was submitted for analysis profiling and off site 

disposal. Air monitoring continued and the results of total VOC monitoring along the 

fence indicated that the total VOC levels were similar to background concentrations. 

Cleanup of impacted residences continued.

On April 27, 2004, the FOSC issued a Notice of Completion to Cannery Hamilton 

advising them that the scope of work that USEPA required through the Unilateral 

Administrative Order that he issued has been determined complete.
4. The Claim: Cannery Hamilton submitted a removal cost claim to the National 

Pollution Funds Center (NPFC), for reimbursement of their uncompensated removal 

costs in the amount of $872,166.38 for the services provided as ordered by the FOSC. 

This claim is for removal costs based on the rate schedule in place at the time services 

were provided. 

This claim consists of copies of the invoicing and associated dailies, disposal manifests; 

NRC report, EPA Pollution Reports, internal email correspondence and proof of 

payment. The review of the actual cost invoicing and dailies focused on: (1) whether 

the actions taken were compensable “removal actions” under OPA and the claims 

regulations at 33 CFR 136 (e.g., actions to prevent, minimize, mitigate the effects of the 

incident); (2) whether the costs were incurred as a result of these actions; (3) whether the 

actions taken were consistent with the NCP or directed by the FOSC, and (4) whether the 

costs were adequately documented. 

Cannery Hamilton’s original claim included a request for compensation of both removal 

costs and property damages. After NPFC’s initial review of the claim, the removal costs 

were separated from the costs incurred to decontaminate property belonging to thirdparties living near the site. After Cannery Hamilton was advised that most of its property 

damage claim was not compensable as “up-stream” damage, it withdrew that portion of 

its claim. Despite its withdrawal of property damages, Cannery Hamilton resubmitted its 

proof underlying the property damage claim and requested that its sum certain for 

removal costs be adjusted to reflect its claim for these costs. As a result of this history, 

the claimant’s property damage claim was adjudicated separately from its removal cost 

claim even though both claims have been included in this determination. 

5. The USEPA Administrative Order: The FOSC, Mr. , issued an Order for 

removal mitigation or prevention of a substantial threat of oil discharge on March 18, 

2004. In summary, all interested parties were ordered to perform the following removal 

actions: ensure that oil from the site does not enter into navigable waters; all necessary 

steps were to be taken in order to remove the discharge or threat of discharge of oil into 

waters or adjacent shorelines to the site, including the removal of soils contaminated with 

petroleum hydrocarbons; remove and properly dispose of all oil discharged from the Krik 

Well ; decontaminate Magnolia Street adjacent to the site and properly dispose of any and 

all wash water; survey all contaminated real and/or personal property, both public and 

private, that is impacted or contaminated by the release of oil from the Krik Well, and 

appropriately clean the oil contaminated properties; and decontaminate all public 

vehicles. 

6. Initial Determination and Reconsideration Request: NPFC’s original determination 

of $625,385.77 was completed and emailed to the claimant on February 18, 2010, 

with disallowances for costs that were either missing documentation, determined to 

be non-OPA compensable, or some costs were denied because the claimant failed to 

meet their burden in substantiating the costs. 

The NPFC received the Claimant’s request for reconsideration letter on April 16, 

2010 via email and the hard copy letter was received on April 19, 2010. The 

Claimant’s assertions in support of reconsideration consist of the following:

 Crawford & Company - $57,467.26 – claimant states that Crawford provided 

personnel to assess damages for third party claims related to the spill. Time 

and labor charges for each individual performing damage assessment are 

included in the invoice on reconsideration. 
 Geosyntec Consultants - $14,165.33 – claimant states that Geosyntec provided 

environmental and technical consulting, environmental and industrial hygiene 

monitoring and related services for cleanup. Backup documentation for 

reimbursable expenses is enclosed on reconsideration.

 Marine Spill Response Corporation (MSRC) - $29,410.94 – claimant states 

MSRC provided staff, equipment, communications, mobile command center, 

and logistics for cleanup. The MSRC invoice and backup documentation is 

enclosed on reconsideration.

 McKittrick Waste - $5,893.78 – claimant states that McKittrick Waste 

Disposal Facility was the destination for solid and liquid waste generated from 

the oil-spill. The material covered under this invoice included oilcontaminated water removed from a small plastic-lined pit adjacent to the 

well. The Coast Guard indicated that the invoice originally submitted was not 

legible. Accordingly, a more legible copy of the invoice is enclosed on 

reconsideration.

 McDaniel Lambert - $8,350.00 – claimant states that McDaniel Lambert 

provided industrial hygiene and spill impact assessments which were 

performed specifically to assess the impacts and implications of the incident 

so that appropriate response activities could be performed and support 

services to those affected. Two invoices for McDaniel Lambert were 

submitted and invoice 942 was denied. McDaniel Lambert’s work for 

Cannery Hamilton was specific to the spill and not properly categorized by the 

NPFC as “CERCLA”. Therefore, we request that the denial of invoice 942 be 

reconsidered.

APPLICABLE LAW: 

Under OPA 90, at 33 USC § 2702(a), responsible parties are liable for removal costs and 

damages resulting from the discharge of oil into navigable waters and adjoining 

shorelines, as described in Section 2702(b) of OPA 90. A responsible party’s liability 

will include “removal costs incurred by any person for acts taken by the person which are 

consistent with the National Contingency Plan”. 33 USC § 2702(b)(1)(B).

"Oil" is defined in relevant part, at 33 USC § 2701(23), to mean “oil of any kind or in any 

form, including petroleum, fuel oil, sludge, oil refuse, and oil mixed with wastes other 

than dredged spoil”.

The Oil Spill Liability Trust Fund (OSLTF), which is administered by the NPFC, is 

available, pursuant to 33 USC §§ 2712(a)(4) and 2713 and the OSLTF claims 

adjudication regulations at 33 CFR Part 136, to pay claims for uncompensated removal 

costs that are determined to be consistent with the National Contingency Plan and 

uncompensated damages. Removal costs are defined as “the costs of removal that are 

incurred after a discharge of oil has occurred or, in any case in which there is a 

substantial threat of a discharge of oil, the costs to prevent, minimize, or mitigate oil 

pollution from an incident”.

Under 33 USC §2713(b)(2) and 33 CFR 136.103(d) no claim against the OSLTF may be 

approved or certified for payment during the pendency of an action by the claimant in 

court to recover the same costs that are the subject of the claim. See also, 33 USC 

§2713(c) and 33 CFR 136.103(c)(2) [claimant election]. 
33 U.S.C. §2713(d) provides that “If a claim is presented in accordance with this section, 

including a claim for interim, short-term damages representing less than the full amount 

of damages to which the claimant ultimately may be entitled, and full and adequate 

compensation is unavailable, a claim for the uncompensated damages and removal costs 

may be presented to the Fund.” 

Under 33 CFR 136.105(a) and 136.105(e)(6), the claimant bears the burden of providing 

to the NPFC, all evidence, information, and documentation deemed necessary by the 

Director, NPFC, to support the claim. 

Under 33 CFR 136.105(b) each claim must be in writing, for a sum certain for each 

category of uncompensated damages or removal costs resulting from an incident. In 

addition, under 33 CFR 136, the claimant bears the burden to prove the removal actions 

were reasonable in response to the scope of the oil spill incident, and the NPFC has the 

authority and responsibility to perform a reasonableness determination. Specifically, 

under 33 CFR 136.203, “a claimant must establish - 

(a) That the actions taken were necessary to prevent, minimize, or mitigate the effects of 

the incident; 

(b) That the removal costs were incurred as a result of these actions; 

(c) That the actions taken were determined by the FOSC to be consistent with the 

National Contingency Plan or were directed by the FOSC.”

Under 33 CFR 136.205 “the amount of compensation allowable is the total of 

uncompensated reasonable removal costs of actions taken that were determined by the 

FOSC to be consistent with the National Contingency Plan or were directed by the 

FOSC. Except in exceptional circumstances, removal activities for which costs are being 

claimed must have been coordinated with the FOSC.” [Emphasis added]. 

DETERMINATION OF LOSS: 

A. Overview: 

1. The FOSC coordination has been established under the Federal Project by way of EPA 

Pollution Reports and the Administrative Order issued by USEPA. 

2. The incident involved the discharge and continuing substantial threat of discharge of “oil” as 

defined in OPA 90, 33 U.S.C. § 2701(23), to navigable waters. 

3. In accordance with 33 CFR § 136.105(e)(12), the claimant has certified no suit has been filed 

in court for the claimed uncompensated removal costs. 

4. The claim was submitted on time. 

5. Presentment of costs to the RP, ., was made by the claimant, prior to the 

submission of the claim. 

6. The NPFC Claims Manager has thoroughly reviewed all documentation submitted with the 

claim, request for reconsideration and has determined some of the removal costs presented 

were for actions in accordance with the NCP and that the costs for these actions were indeed 

reasonable and allowable under OPA and 33 CFR § 136.205 with the exception of denied 

costs itemized in the attached Summary of Vendors spreadsheet: (See, Enclosure 1 –

Summary of Vendors). 
B. Reconsideration Determination:

NPFC CA has reviewed the documentation provided by the claimant on reconsideration 

under cover dated April 16, 2010. The NPFC has performed a de novo review upon 

reconsideration. The NPFC has determined that the new arguments and documentation 

presented on reconsideration for the Crawford & Company costs provided by the claimant on 

reconsideration in the amount of $57,467.26 remain denied. Third party claims 

adjudication/assessment costs are not OPA-compensable costs.

The NPFC has determined that the new arguments and documentation presented on 

reconsideration for the Geosyntec Consultant costs provided by the claimant on 

reconsideration in the amount of $14,165.33 are compensable in part. The NPFC has 

determined that $2,696.75 of invoice #234077 and $1,799.95 of invoice #234084 remains 

denied for a total denied amount of $4,496.70 and the NPFC has determined $9,668.63 of the 

costs are determined compensable. See the enclosed spreadsheet of costs for an itemization 

of approved and denied costs for this vendor.

The NPFC has determined that the new arguments and documents presented on 

reconsideration for Marine Spill Response Corporation (MSRC) provided by the claimant on 

reconsideration in the amount of $29,410.94 remains denied. Based on the invoicing and 

daily field logs in support of the invoicing, the daily field logs fail to address in detail what 

work specifically was being performed and under whose direction. The NPFC tried to cross 

check the information against EPA Pollution Reports and Weekly Status Reports but found 

those documents to be absent of information regarding MSRC and their response activities as 

reported by the claimant therefore the NPFC has determined that the claimant has not met its 

burden to establish what response tasks were being performed, on a given day and at given 

locations and at whose direction.

The NPFC has determined that the new arguments and documentation presented on 

reconsideration for McKittrick Waste in the amount of $5,893.78 are determined 

compensable. The NPFC has reviewed the documentation presented and has determined that 

the disposal costs claimed are supported by the backup documentation as valid disposal costs 

resulting from valid response actions as determined by the FOSC.

The NPFC has determined that the new arguments and documentation presented on 

reconsideration for McDaniel Lambert in the amount of $8,350.00 are determined 

compensable. The NPFC has reviewed the documentation presented and has determined that 

the services provided in association with oil spill response for residential homes resulted 

from the response actions determined by the FOSC to be consistent with the NCP.

C. Determined Amount:

The NPFC hereby determines that the OSLTF will pay $671,029.99 ($649,298.18 from the 

removal cost claim + $21,731.81 from the property damage claim) as full compensation for 

the reimbursable removal costs and damages incurred by the claimant as a result of this 

incident. All costs claimed are for charges paid for by the claimant for removal actions or 

damages under the OPA and, are compensable by the OSLTF as presented by the claimant. 
DETEMINED AMOUNT: $671,029.99

Claim Supervisor: 

Date of Supervisor’s Review: 

Supervisor Action: 

Supervisor’s Comments: