Louisiana Coast Oil Spill Leads to $9 Million Penalty for Company in 2023
This week, pipeline safety regulators imposed their largest fine ever against Third Coast, the company responsible for leaking 1.1 million gallons of oil into the Gulf off the coast of Louisiana in 2023. The hefty $9.6 million fine, however, is unlikely to significantly impact Third Coast’s financial standing.
This single penalty is nearly equivalent to the typical annual total of $8 million to $10 million in fines that the Pipeline and Hazardous Materials Safety Administration (PHMSA) issues each year. Notably, Third Coast operates approximately 1,900 miles of pipelines and recently announced securing a nearly $1 billion loan in September.
Bill Caram, Executive Director of Pipeline Safety Trust, commented on the situation, stating that the spill “resulted from a company-wide systemic failure, indicating the operator’s fundamental inability to implement pipeline safety regulations.” He believes that the record fine is both appropriate and necessary.
“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 noted. “True deterrence requires penalties that make noncompliance more expensive than compliance.”
According to the agency, Third Coast failed to establish proper emergency procedures, which contributed to the National Transportation Safety Board’s (NTSB) finding that operators did not shut down the pipeline for nearly 13 hours after their gauges indicated a problem. PHMSA also criticized the company for not adequately assessing risks or maintaining the 18-inch Main Pass Oil Gathering pipeline.
The agency highlighted that Third Coast “failed to perform new integrity analyses or evaluations following changes in circumstances that identified new and elevated risk factors” for the pipeline.
This assessment aligns with the NTSB’s final report from June, which stated that “Third Coast missed several opportunities to evaluate how geohazards may threaten the integrity of their pipeline.” The report pointed out that information readily available within the industry indicated that land movement related to hurricane activity posed a threat to pipelines.
The NTSB concluded that the leak off the Louisiana coast was caused by underwater landslides, a hazard that Third Coast, as the pipeline owner, failed to address despite the well-known risks in the industry.
A spokesperson for Third Coast expressed surprise at some of the details included in the allegations and the size of the fine. “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 spokesperson stated.
While the amount of oil spilled in this incident was significantly less than the 2010 BP oil disaster—where 134 million gallons were released following an oil rig explosion—the NTSB indicated that the spill could have been minimized if workers in the Third Coast control room had acted more swiftly.
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This week, pipeline safety regulators imposed their largest fine ever against Third Coast, the company responsible for leaking 1.1 million gallons of oil into the Gulf off the coast of Louisiana in 2023. The hefty $9.6 million fine, however, is unlikely to significantly impact Third Coast’s financial standing.
This single penalty is nearly equivalent to the typical annual total of $8 million to $10 million in fines that the Pipeline and Hazardous Materials Safety Administration (PHMSA) issues each year. Notably, Third Coast operates approximately 1,900 miles of pipelines and recently announced securing a nearly $1 billion loan in September.
Bill Caram, Executive Director of Pipeline Safety Trust, commented on the situation, stating that the spill “resulted from a company-wide systemic failure, indicating the operator’s fundamental inability to implement pipeline safety regulations.” He believes that the record fine is both appropriate and necessary.
“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 noted. “True deterrence requires penalties that make noncompliance more expensive than compliance.”
According to the agency, Third Coast failed to establish proper emergency procedures, which contributed to the National Transportation Safety Board’s (NTSB) finding that operators did not shut down the pipeline for nearly 13 hours after their gauges indicated a problem. PHMSA also criticized the company for not adequately assessing risks or maintaining the 18-inch Main Pass Oil Gathering pipeline.
The agency highlighted that Third Coast “failed to perform new integrity analyses or evaluations following changes in circumstances that identified new and elevated risk factors” for the pipeline.
This assessment aligns with the NTSB’s final report from June, which stated that “Third Coast missed several opportunities to evaluate how geohazards may threaten the integrity of their pipeline.” The report pointed out that information readily available within the industry indicated that land movement related to hurricane activity posed a threat to pipelines.
The NTSB concluded that the leak off the Louisiana coast was caused by underwater landslides, a hazard that Third Coast, as the pipeline owner, failed to address despite the well-known risks in the industry.
A spokesperson for Third Coast expressed surprise at some of the details included in the allegations and the size of the fine. “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 spokesperson stated.
While the amount of oil spilled in this incident was significantly less than the 2010 BP oil disaster—where 134 million gallons were released following an oil rig explosion—the NTSB indicated that the spill could have been minimized if workers in the Third Coast control room had acted more swiftly.
Copyright 2026 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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