Pipeline safety regulators have issued a record $9.6 million fine to Third Coast Midstream after an oil spill into the Gulf of Mexico off the coast of Louisiana in 2023, the Associated Press reported. The U.S. Pipeline and Hazardous Materials Safety Administration said the leak involved 1.1 million gallons of oil and cited safety failures, including emergency procedure problems. The agency assessed the penalty Monday.
PHMSA said the company did not establish proper emergency procedures, an issue the National Transportation Safety Board tied to the response during the incident. The NTSB found operators failed to shut down the pipeline for nearly 13 hours after gauges first hinted at a problem.
The agency also said Third Coast did not adequately assess risks or properly maintain the 18-inch Main Pass Oil Gathering pipeline. PHMSA further said the company “failed to perform new integrity analyses or evaluations following changes in circumstances that identified new and elevated risk factors” for that pipeline.
In a June final report, the NTSB said the leak off Louisiana’s coast resulted from underwater landslides linked to hazards such as hurricanes. The board said Third Coast failed to address those threats despite them being well known in the industry, adding that it missed “several opportunities to evaluate how geohazards may threaten the integrity of their pipeline.”
The Pipeline Safety Trust executive director, Bill Caram, said the spill “resulted from a company-wide systemic failure, indicating the operator’s fundamental inability to implement pipeline safety regulations,” and that the record fine was “appropriate and welcome.” Caram also said “even record fines often fail to be financially meaningful to pipeline operators,” arguing that the proposed fine represented less than 3% of Third Coast Midstream’s estimated annual earnings. He said, “True deterrence requires penalties that make noncompliance more expensive than compliance.”
The AP reported that the $9.6 million penalty is close to the normal total of $8 million to $10 million in all fines that PHMSA hands out each year. It also said Third Coast has a stake in some 1,900 miles of pipelines, and that the Houston-based company announced in September it had secured a nearly $1 billion loan.
A Third Coast spokesperson said the company had been working to address regulators’ concerns about the leak, but the spokesperson said the company was taken aback by aspects of the agency’s allegations that the spokesperson said were inaccurate and exceeded established precedent. The spokesperson said the company would address those concerns with PHMSA moving forward.
The NTSB said the amount of oil released was far less than the 2010 BP oil disaster, when 134 million gallons were released after a rig explosion. But the board said the leak could have been much smaller if workers in the Third Coast control room had acted more quickly.