Pipeline safety regulators this week assessed their largest fine in 2023 against a company responsible for leaking 1.1 million gallons of oil into the Gulf off the coast of Louisiana. But a $9.6 million fine to pay a third coast isn’t a huge burden.
This single fine is among the usual $8 million to $10 million in fines that the Pipeline and Hazardous Materials Safety Administration issues each year. But Third Coast has a stake in about 1,900 miles of pipelines, and in September the Houston-based company announced it had secured nearly $1 billion in debt.
Bill Corm, executive director of the Pipeline Safety Trust, said the outbreak resulted from a systemic failure across the company, indicating a fundamental inability of the operator to enforce pipeline safety regulations, “so the record fine is appropriate and welcome.”
“However, even record fines often fail to make financial sense for pipeline operators. The proposed fine represents less than 3% of Third Coast Midstream’s estimated annual revenue,” Kerem said. “True deterrence requires penalties that make noncompliance more costly than compliance.”
The agency said Third Coast did not establish adequate emergency procedures, which is part of why the National Transportation Safety Board found that operators failed to shut down the pipeline for about 13 hours after their gauges indicated a problem. PHMSA also said the company did not adequately assess risks or properly maintain the 18-inch critical pass oil gathering pipeline.
The agency said the company failed to conduct new integrity analyzes or assessments “after changes in circumstances indicating new and elevated risk factors” for the pipeline.
This echoed what the NTSB said in its last report in June, that “Third Coast missed numerous opportunities to assess how geohazards could threaten the integrity of their pipeline. Widely available information within the industry suggested that ground movement related to hurricane activity posed a threat to pipelines.”
The NTSB said the landslide was the result of an underwater landslide off the coast of Louisiana, caused by a hurricane, despite well-known threats in the industry that the owner of this third coast, the pipeline, failed to address them.
A Third Coast spokeswoman said the company was working to address regulators’ concerns about the leak, so the agency withheld some details about the volume of its charges and fines.
“After constructive engagement with PHMSA over the past two years, we were surprised to see aspects of the recent allegations that we believe are false and established precedent. We will address these concerns as the agency moves forward,” a company spokesperson said.
The NTSB said the amount of oil in the incident was far less than the 2010 BP oil disaster, when 134 million gallons were released in the weeks after an oil rig exploded, but it could have been much smaller if workers in the third coast control room had acted more quickly.
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