Pipeline safety regulators on Monday assessed their largest fine ever against the company responsible for leaking 1.1 million gallons of oil into the Gulf off the coast of Louisiana in 2023. But the $9.6 million fine isn't likely to be a major burden for Third Coast to pay.
This single fine is close to the normal total of $8 million to $10 million in all fines that the Pipeline and Hazardous Materials Safety Administration hands out each year. But Third Coast has a stake in some 1,900 miles of pipelines, and in September, the Houston-based company announced that it had secured a nearly $1 billion loan.
Pipeline Safety Trust Executive Director Bill Caram said this spill ''resulted from a company-wide systemic failure, indicating the operator's fundamental inability to implement pipeline safety regulations,'' so the record fine is appropriate and welcome.
''However, even record fines often fail to be financially meaningful to pipeline operators. The proposed fine represents less than 3% of Third Coast Midstream's estimated annual earnings,'' Caram said. ''True deterrence requires penalties that make noncompliance more expensive than compliance.''
The agency said Third Coast didn't establish proper emergency procedures, which is part of why the National Transportation Safety Board found that operators failed to shut down the pipeline for nearly 13 hours after their gauges first hinted at a problem. PHMSA also said the company didn't adequately assess the risks or properly maintain the 18-inch Main Pass Oil Gathering pipeline.
The agency said the company ''failed to perform new integrity analyses or evaluations following changes in circumstances that identified new and elevated risk factors'' for the pipeline.
That echoed what the NTSB said in its final report in June, that ''Third Coast missed several opportunities to evaluate how geohazards may threaten the integrity of their pipeline. Information widely available within the industry suggested that land movement related to hurricane activity was a threat to pipelines.''
The NTSB said the leak off the coast of Louisiana was the result of underwater landslides, caused by hazards such as hurricanes, that Third Coast, the pipeline owner, failed to address despite the threats being well known in the industry.
