Record $9.6 million fine for Third Coast after substantial oil spill in the Gulf of Mexico

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. 

A Third Coast spokesperson said the allegations were a shock because the
company “consistently meets or exceeds regulatory requirements across
our operations.” 

“After constructive engagement with PHMSA over the last two years, we
were surprised to see aspects of the recent allegations that we believe
are inaccurate and exceed established precedent. We will address these
concerns with the agency moving forward,” the company spokesperson said. 

The amount of oil spilled in this incident was far less than the 2010 BP
oil disaster, when 134 million gallons were released in the weeks
following an oil rig explosion, but it could have been much smaller if
workers in the Third Coast control room had acted more quickly, the NTSB
said. 

https://www.ocregister.com/2026/01/05/us-gulf-pipeline-leak-fine/