PAA Plains All American Pipeline

Plains All American Pipeline LP failed to prevent a massive oil spill in California last year and its delayed response compounded the severity of the accident, federal regulators said Thursday.

The corroded oil pipeline, which moved crude along scenic Highway 1, broke open a year ago and spilled nearly 3,000 barrels of oil onto a beach and into the Pacific Ocean near Santa Barbara.

Anthony Foxx, U.S. Transportation Secretary, said the investigation revealed that "a number of preventable errors led to this incident, and that the company's failures in judgment, including inadequate assessment of the safety of this line and faulty planning made matters worse."

Plains said it is reviewing the report from the Pipeline and Hazardous Materials Safety Administration, which is a part of the Transportation Department, and wouldn't comment on it because of pending litigation.

Earlier this week the California Attorney General announced that a grand jury indicted the company on 46 counts related to the oil spill, four of them felonies. A Plains employee was also charged. Plains said the charges are meritless and the company will fight them.

The report, released exactly one year after the Plains oil spill, underscores the limitations of pipeline inspection tools and monitoring systems that energy companies say prevent leaks.

In the report, federal regulators said Plains didn't work hard enough to spot problems on its pipeline in advance of the spill. The report also said that Houston-based Plains didn't have adequate procedures and systems in place to keep such a spill from escalating into an emergency.

"Since the release, we have worked tirelessly and relentlessly to do the right thing and do it as quickly and effectively as possible by cleaning up the beaches and other affected areas, compensating those who were impacted by the release and working with the various governmental and other organizations responding to the incident," the company said in a written statement Thursday.

Now that PHMSA has concluded its investigation, the agency will focus on possible enforcement actions, and could impose civil penalties or refer the case for federal criminal prosecution.

"What happened is completely unacceptable and we will hold the company accountable for its actions," said Marie Therese Dominguez, PHMSA Administrator.

Federal regulators previously said the immediate cause of the spill was corrosion that thinned the walls of the pipeline. Plains had inspected the line, but when the broken pipe was excavated investigators found significantly worse corrosion than the testing predicted.

Today's report said Plains didn't properly analyze inspection results and would have had a better chance of early detection with a different inspection tool.

The report also said the company's leak detection system wasn't sensitive enough to alert control-room staff quickly when the pipeline broke, and operators didn't recognize that the pipe was leaking. An operator in the control room, who was dealing with another problem on the pipeline, inhibited an alarm that would have given earlier notice of the catastrophic failure.

Write to Alison Sider at alison.sider@wsj.com

(END) Dow Jones Newswires

May 19, 2016 18:35 ET (22:35 GMT)

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