CLAIM SUMMARY / RECOMMENDATION FORM 

Date : 12/03/09 

Claim Number : E04902-001 & E04902-003

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 

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”. 33 USC § 

2701 (31).

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, Gregory S. Miral, Sr., 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 and determined that the majority of all 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. Analysis: 

1. Cannery Hamilton’s Status As a Claimant.

Under the OPA, an owner of an onshore facility is liable as a responsible party for any actual 

discharge of oil or any substantial threat of oil discharge onto navigable waters. 33 U.S.C. §§ 

2701 (32) and 2702. Even though they are initially liable, responsible parties may seek 

reimbursement from the OSLTF for their uncompensated removal costs and damages upon 

establishing a third-party defense under 33 U.S.C. § 2703 (a)(3). As explained below, the 

NPFC has determined that Cannery Hamilton is not a responsible party because it did not 

own or operate the Krik Well. Moreover, even if ownership of the well reverted to the 

surface estate, Cannery Hamilton would still be entitled to recover its uncompensated 

removal costs and damages because it has a third-party defense in this case. 

In an effort to avoid liability for this incident, . argued that ownership of 

the well transferred to the landowner after the oil and gas lease expired in 1997. The NPFC 

agrees that the Krik Well was a trade fixture. McGreevy v. Constitution Life Ins. Co., 238 

Cal.App.2d 364, 369 (Fifth Dist. 1965). The NPFC further agrees that if trade fixtures are 

not removed during a lease’s term or within a reasonable time thereafter, the trade fixtures 

remain part of the land. U.S. v. Certain Parcels of Land, 131 F.Supp. 65, 70 (S.D. Ca. 

1955)(quoting, Trabue Pittman Corp. v. Los Angeles County, 29 Cal.2d 385, 175 P.2d 512, 

518 (1946)). Consistent with this rule, California law holds that when a person affixes a 

fixture to the property of another without an agreement to remove it, the landowner owns the 

fixture unless the landowner elects to require the fixture’s removal or the person who affixed 

the fixture elects to remove it. Ca. Civil Code § 1013. 

Notwithstanding the above, a lessee may retain its ownership of a trade-fixture if the lessee 

continues to possess the property after the lease’s termination with the lessor’s consent to the 

continued possession. If a tenant remains on the property after the lease terminates with the 

consent of the lessor, then the tenant’s right to remove its trade fixtures is extended until the 

lessor withdraws its consent. In such a case, the tenant has until the expiration of a 

reasonable amount of time after the lessor’s withdrawal of consent to remove the trade 

fixtures. Restatement (Second) of Property, Landlord & Tenant § 12.3 cmt. K (1977)(“If the 
tenant remains on the lease property after termination of the lease with the consent of the 

landlord, the lease is not terminated for purposes of this section [time to remove annexation] 

until the consent is withdrawn.”).

In this case, . at a minimum exercised constructive possession of the 

well and his rights under the Lease by allowing Myles Equipment to use the area surrounding 

the well. Although it’s not clear whether they expressly consented to this use, the lessors 

appear to have at least acquiesced to the lessees’ continued use of the property. Based on the 

rule established by comment k to Restatement (Second) of Property § 12.3, the NPFC finds 

that the time period for removing the Krik Well from the premises had not yet begun to run 

because the lessors apparently consented to lessees’ continued use of the property. Because 

the deadline for removing the well from the property had not yet expired, ownership of the 

well could not have reverted to the landowner.

Consistent with the above, the lease expressly gave the lessee the right to remove the well 

provided that “such removal shall be completed within a reasonable time after the 

termination of the lease”. Paragraph 19 of the Lease. In Stevens v. Iverson, 179 Okla. 401, 

66 P.2d 12 (1937) the court concluded that the facts of each case should control how much 

time should be considered a reasonable amount of time for a lessee to remove its fixtures. In 

Stevens, the court held that it was proper to consider whether the fixture had been abandoned 

by the lessee when determining if the lessee had lost its right to remove the wells. Because 

the lessee in that case had continued to exercise dominion and control over the fixtures 

without objection from the lessors, the court held that the lessee’s right to remove the casing 

had not lapsed even though one of the leases had terminated nine years before the casing was 

sold by the lessee to a third-party. 

Based upon the above, the NPFC finds that, even if the lease terminated in 1997 and the 

lessees’ right to remove its trade fixtures was not extended by comment k to Restatement 

(Second) Property § 12.3, the lessee’s right to remove the well under the terms of the lease 

had not lapsed when the well blew in 2004. That’s true even though a substantial amount of 

time may have passed between cessation of production and the incident. The Lease gave the 

lessee a reasonable amount of time after its termination to remove the well. Just like the 

lessee in Stevens, . exercised dominion and control over the property 

long after the well apparently stopped producing oil. Mr. actions show that he did 

not intend to abandon his interest in the property or the well and the lessors’ failure to object 

show that they at least acquiesced in his continued possession of the property. Based on the 

unique circumstances presented in this case, the NPFC finds that a reasonable amount of time 

for removing the well in this case had yet to expire when the incident occurred. Because his 

right to remove the well under the lease had not yet lapsed when the incident occurred, 

ownership of the well had not reverted to Cannery Hamilton. 

 

Notwithstanding the above, even if ownership of the well had passed to Cannery Hamilton 

before the incident, Cannery Hamilton would still be entitled to compensation from the 

OSLTF because it would have a third-party defense to liability under 33 U.S.C. § 2703 (a)(3) 

based on the lessees’ failure to properly plug and abandon the well. First, because the area’s 

mineral estate had been severed from the surface estate, Cannery Hamilton was not a party to 

the lease and had no contractual relationship with any of the lessees operating the well. 

Second, the evidence in this case shows that the well blew as a result of equipment failure 

and pressure. If the well had been properly plugged and abandoned as required by the 

California Department of Conservation, then the well would not have ruptured and this 

incident would not have occurred. As a result of the unique facts presented in this case, the 
NPFC finds that the failure to properly and timely plug and abandon the well was the sole 

cause of this incident. 

Lastly, the NPFC finds that Cannery Hamilton’s actions establish that it exercised due care 

towards the oil and took precautions against the foreseeable acts or omissions of the lessees. 

These findings are established only as a result of the unique facts of this case. Because 

Cannery Hamilton owned the surface estate that had been severed from the mineral estate, it 

had no reason to know whether the lease had terminated for lack of production or payment of 

royalties. Cannery Hamilton’s lack of knowledge regarding the status of the lease was further 

complicated by the fact that continued to use the property by allowing 

Myles Equipment to store equipment on the property. From Cannery Hamilton’s 

perspective, it had no reason to be put on notice that ownership of the well may have reverted 

to the surface owner after the lease’s termination. For all Cannery Hamilton knew, plugging 

and abandoning the well could have exposed it to liability for conversion or trespass. 

Moreover, even if it had a reason to know that the lease had terminated, under California law 

the mineral estate owners should have been held responsible for plugging and abandoning the 

well. Wells Fargo Bank v. Goldzband, 53 Cal.App.4th 596 (1997).1

 Given the unique facts 

of this case, there was no reason for Cannery Hamilton to believe that it had an obligation to 

address the well. As a result, Cannery Hamilton’s failure to plug and abandon the well was 

reasonable and satisfies the last two elements of the third-party defense. 

2. Cannery Hamilton’s Claim for Removal Damages:

 

NPFC CA reviewed the actual cost invoices and dailies to confirm that the claimant had 

incurred all costs claimed. The review 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 

 

1

 Cannery Hamilton relied on Wells Fargo to argue that it was not the owner of the well. However, when 

establishing liability under the OPA, the NPFC uses the applicable state’s property law to determine the issue of 

ownership. Wells Fargo analyzes whether a surface estate has an obligation to plug and abandon a well under the 

California Public Resources Code. Because the analysis in Wells Fargo focuses on whether a surface estate owner 

can be an owner of a well under the Public Resources Code instead of California’s property law, its precedent is 

not controlling here. Nevertheless, the discussion in Wells Fargo is still helpful. The court in Wells Fargo held 

that under California oil and gas law, when the mineral estate has been severed the owner of the surface estate 

does not have an obligation to plug and abandon a well that was abandoned by a lessee. The court explained: 

Finally, plaintiff claims that it should not be considered the owner of the wells because the surface owner, not 

plaintiff, now owns the wells. Plaintiff reasons that since [the lessee] did not remove the well casings, fixtures 

and other equipment on the leasehold within a reasonable time, the ownership of this property passed to the 

surface estate owners, the Haupts. Thus, argues plaintiff, the surface estate owners also became owners of the 

wells. Plaintiff’s argument fails because it confuses the right to claim personal property that has been 

abandoned on a leasehold with the right to claim the leasehold when it has been abandoned or released. 

As previously discussed, the ownership of mineral rights in California is considered an interest in real property 

in the nature of an “incorporeal hereditament.” [citation omitted]. This interest involves the exclusive right to 

drill and produce oil. [citation omitted]. Therefore, when [the lessee] released the leasehold back to plaintiff, it 

once again became the holder in interest. The fact the law permits the owner of the surface estate to claim any 

personal property or fixtures left behind by [the lessee] does not equate to ownership of the wells. In other 

words, while the surface estate owner could claim the fixtures and equipment left by [the lessee], it could not 

use them to operate the wells already in place. That right remained with plaintiff, along with the right to enter 

the property to operate the wells. [citation omitted]. The severance of the surface estate, therefore, had no 

effect on plaintiff’s liability for plugging and abandoning the wells.

Wells Fargo Bank v. Goldzband, 53 Cal.App.4th 596, 626-27 (1997). 
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 and reasonable. 

The Claims Manager confirmed that response activities performed by the claimant were 

ordered by the FOSC in accordance with the Administrative Order issued on or about March 

18, 2004. 

The NPFC has determined $246,780.61 of costs is denied. The itemized breakdown of denied 

costs is addressed in the attached Cannery Hamilton Summary of Removal Costs excel 

spreadsheet identified as Enclosure 1. Enclosure 1 is incorporated into this determination as 

if fully set forth herein. The overall denial summary is as follows: 

Aqua Wright Pool Service – denied $3,458.15 

Crawford and Company – denied $55,114.76 

Crawford and Company – denied $2,352.50 

Geosyntec Consultants – denied $7,204.66 

Geosyntec Consultants – denied $6,960.67 

Marine Spill Response – denied $29,410.94 

McDaniel Lambert – denied $8,350.00 

McDaniel Lambert- denied $239.25 

McKittrick Waste- denied $5,893.78 

PNL – Project Navigator- denied $605.00 

PNL – Project Navigator- denied $40.45

Surface Specialties- denied $266.53 

Surface Specialties- denied $87.61 

Surface Specialties- denied $255.20 

Surface Specialties- denied $440.00 

Surface Specialties- denied $1,044.82 

Surface Specialties- denied $1,130.74 

Surface Specialties- denied $411.53 

United Rentals- denied $9,401.19 

Urashima & Associates- denied $13,500.00 

Urashima & Associates- denied $5,005.00 

Urashima & Asscoiates- denied $2,200.00 

Urashima & Associates- denied $1,100.00 

Urashima & Associates- denied $220.00 

Western Oilfields Supply- denied $1,877.93 

Steve’s Detailing- denied $260.00 

Wright Auto Detailing- denied $260.00 

- denied $82.50 

- denied $822.11 

 denied $536.51 

- denied $9.08 

Serv. Eng & Tech- denied $12,970.00 

- denied $1,140.33 

- denied $316.78 

- denied $89.75 

Serv. Eng & Tech- denied $6,670.00 

NDGL Anderson- denied $21,070.00 

- denied $89.26 

- denied $1,046.75 
- denied $18.53 

- denied $93.83 

- denied $434.57 

- denied $55.00 

- denied $1,094.80 

- denied $82.14 

- denied $647.96 

- denied $49.40 

- denied $37.04 

Payroll Chg 0 CPL Lee- denied $3,361.81 

Env Taxes & Licenses- denied $5,760.00 

- denied $2,725.58 

- denied $1,404.57 

- denied $104.11 

- denied $90.00 

Serv. Eng & Tech- denied $10,364.36 

- denied $696.48 

- denied $50.00

NDGL Anderson- denied $1,182.50 

NDGL Anderson- denied $6,450.00 

- denied $690.37 

- denied $30.00 

Serv: ALL Other- denied $6,740.78 

Serv. Eng & Tech- denied $78.00 

NDGL Anderson- denied $1,075.00 

NDGL Anderson- denied $430.00 

Undocumented costs- denied $1,100.00 

With respect to the above, all costs denied are for no supporting documentation, missing 

invoices, illegible copies, no itemization or receipts provided or costs determined as nonOPA compensable removal costs; see the spreadsheet for line by line explanations. It is 

important to note that the NPFC has communicated with the claimant and provided them an 

advance copy of the intended denied costs thereby allowing the claimant to provide sufficient 

evidence in order to meet their burden for compensation. Because the claimant has not 

produced sufficient evidence or even replied to the NPFC’s request, these costs must be 

denied. Lastly, the NPFC spoke with Mr. FOSC, who confirmed verbally on 

March 6, 2008 that are activities performed by Cannery Hamilton were performed and 

monitored in accordance with his Administrative Order and therefore deemed consistent with 

the National Contingency Plan (NCP). 

 

On that basis, the Claims Manager hereby determines that the claimant did in fact incur 

$625,385.77 of uncompensated removal costs and that that amount is properly payable by the 

OSLTF. The claimant represents that all costs paid by the claimant are compensable removal 

costs, payable by the OSLTF as presented by the claimant. 

3. Cannery Hamilton’s Property Damage Claim.

Cannery Hamilton’s claim originally included a request for reimbursement for all its costs 

incurred when decontaminating the personal property that belonged to third-parties living 

nearby the site. After the NPFC initially reviewed the claim, these decontamination costs 

were separated out from the other removal costs and categorized as a claim for property 

damages. After analyzing the issue further, the NPFC advised the claimant that these costs 
could not be paid as a property damage claim because they represented “up stream damage”. 

In order to be reimbursable from the OSLTF, damages must have been caused by either an 

actual discharge onto a navigable waterway or a substantial threat of discharge onto a 

navigable waterway. The claimed damages must have a nexus to a navigable waterway or 

they must be denied. It’s NPFC’s policy that property damaged by oil before it enters the 

waterway is not compensable because it’s an “upstream damage”. In order to compensate 

for a substantial threat of discharge to a navigable waterway, the claimed damage must have 

been caused by the substantial threat of discharge. Property damage that results from 

something other than a substantial threat of discharge must be denied.

Cannery Hamilton responded to the NPFC’s withdrew its property damage claim. However, 

when submitting additional information relating to its removal cost claim, Cannery Hamilton 

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

claimed be adjusted to reflect the resubmitted proof of damages. As a result of this history, 

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

even though both claims are included in this determination. 

The NPFC has carefully reviewed these costs in an effort to determine if they can be paid as 

either removal costs or property damages. Consistent with NPFC’s previous advice to the 

claimant, any claim for reimbursement of the property damages must be denied because these 

damages occurred prior to oil reaching a protected waterway and they were not caused by a 

substantial threat of discharge. As such, these damages are “up-stream” damages that NPFC 

does not reimburse. Despite this issue, NPFC carefully analyzed the costs submitted by the 

claimant and determined that at least some of them could be paid as removal costs. The 

NPFC’s rationale for denying or reimbursing each specific cost is detailed in the attached 

Summary of Property Damages, which is identified as Enclosure 2. Enclosure 2 is hereby 

incorporated into this determination as if it were fully set forth herein. 

Moreover, even if the “up-stream” damages issue did not preclude reimbursement of most of 

the claimed property damages, the claimant’s failure to meet its burden of proof would still 

require the denial of most of the claimed costs. Several deficiencies in Cannery Hamilton’s 

proof kept reoccurring throughout the adjudication. In particular, the NPFC was frequently 

unable to determine why repair or replacement was required instead of simply cleaning the 

item. The field adjuster notes for each individual file were lacking in specificity with respect 

to the extent of the costs claimed and the circumstances justifying why payment should be 

made. There was frequently no basis to determine how some of the replacement costs were 

calculated. Additionally, in most cases there was no proof of the item’s age. Without that 

proof, the NPFC was unable to determine the appropriate depreciation of any item that was 

being replaced. The photos provided by the claimant were not legible and provided no direct 

support for the amounts claimed. Receipts were provided in some claim files, but not in 

others. As a result of these and other problems of proof, most of the property damages would 

have been denied for lack of proof even if they had not been denied as “up-stream” damages. 

Even though most of the claimed property damages were denied, the NPFC found that 

$21,731.81 of the claimed damages could be reimbursed by the OSLTF as removal costs 

because they were incurred in order to remove oil as opposed to repairing or replacing 

property. The claimant represents that all these damages were payable by the OSLTF. 

 
C. Determined Amount: 

The NPFC hereby determines that the OSLTF will pay $647,117.58 ($625,385.77 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. 

AMOUNT: $647,117.58

Claim Supervisor: 

Date of Supervisor’s review: 2/18/10

Supervisor Action: Approved 

Supervisor’s Comments: