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Louisiana Energy Company to Pay Over $43 Million and Transfer $432 Million Trust Fund to the United States for Gulf of Mexico Oil Spill

Published December 22, 2021

Taylor Energy Company LLC (Taylor Energy), a Louisiana oil and gas company, has agreed to turn over all its remaining assets to the United States upon liquidation to resolve its liability for the oil spill at its former Gulf of Mexico offshore oil production facility — the source of the longest-running oil spill in U.S. history, ongoing since 2004.

Taylor Energy would send a $432 million trust fund to the Department of the Interior (DOI) as part of the proposed consent decree, which will be used to plug subsea oil wells, permanently decommission the facility, and remediate contaminated land. Taylor Energy is also required to pay over $43 million in civil penalties, removal costs, and natural resource damages under the consent decree (NRD). The state of Louisiana is a co-trustee for natural resources harmed by the spill, and the money from the NRD is a joint recovery by federal and state trustees.

The United States filed a civil complaint against Taylor Energy in the U.S. District Court in New Orleans on Oct. 23, 2020 — United States v. Taylor Energy Company LLC — seeking removal costs, civil penalties, and NRD under the Oil Pollution and Clean Water Acts arising from the discharge of oil from the company’s former oil production facility.Taylor Energy sued the US in several lawsuits between 2016 and 2020, including one challenging the Coast Guard’s decision to install a spill containment system and another appealing the Coast Guard’s denial of Taylor Energy’s $353 million spill-cost reimbursement claim to the US Oil Spill Liability Trust Fund. The agreement settles the US government’s environmental enforcement claims against Taylor Energy and compels the business to abandon its remaining cases against the US.

“Offshore operators cannot allow oil to spill into our nation’s waters,” said Assistant Attorney General Todd Kim for the Justice Department’s Environment and Natural Resources Division. “If an oil spill occurs, the responsible party must cooperate with the government to timely address the problem and pay for the cleanup. Holding offshore operators to account is vital to protecting our environment and ensuring a level industry playing field.”

“Despite being a catalyst for beneficial environmental technological innovation, the damage to our ecosystem caused by this 17-year-old oil spill is unacceptable,” said U.S. Attorney Duane A. Evans for the Eastern District of Louisiana. “The federal government will hold accountable businesses that violate our Nation’s environmental laws and ensure that any oil and gas company operating within our District meets their professional and legal responsibilities.”

“We are proud of and grateful to the outstanding interagency team of technical and legal experts from the Departments of the Interior and Justice, the U.S. Coast Guard and other agencies who have worked tirelessly for more than a decade to mitigate environmental impacts to the Gulf of Mexico ecosystem, hold the company accountable, and protect the American taxpayer,” said Deputy Secretary of the Interior Tommy Beaudreau.

“For the last three years, the Coast Guard, along with our federal partners, has committed to the challenging mission of containing and removing more than 800,000 gallons of oil discharging into the Gulf of Mexico,” said Captain Will Watson, Sector Commander of the Coast Guard New Orleans. “Containment and removal operations continue to this day. This settlement will provide significant financial resources for the Bureau of Safety and Environmental Enforcement, Bureau of Ocean Energy Management, National Oceanic and Atmospheric Administration (NOAA) and the Coast Guard to permanently secure the wells, protect the marine environment, preserve marine resources and ensure compliance with the Oil Pollution Act of 1990.”

“This settlement represents an important down payment to address impacts from the longest-running oil spill in U.S. history,” said Nicole LeBoeuf, Director of NOAA’s National Ocean Service. “Millions of Americans along the Gulf Coast depend on healthy coastal ecosystems. NOAA and our co-trustees look forward to working in partnership with the National Pollution Funds Center to ensure the region and the ecosystem can recover from this ongoing tragedy.”

Taylor Energy will pay over $43 million as part of the settlement, which includes all of the company’s remaining assets, which will be distributed as follows: The civil penalty is $15 million, the NRD is $16.5 million, and the Coast Guard disposal charges are over $12 million. Taylor Energy will also transfer $432 million currently held in a trust for decommissioning the Mississippi Canyon (MC)-20 site to the Department of Interior’s Bureau of Ocean and Energy Management (BOEM), and the company will be barred from interfering in any way with the BSEE’s decommissioning work. Taylor Energy may not interfere with the Coast Guard’s oil containment and removal efforts in any way. Taylor Energy will transfer any records (including data, studies, reports, and other materials) connected to the site to the Department of Interior and the Coast Guard to aid in the decommissioning and response activities. Taylor Energy will make a final payment to the United States of the value of its remaining assets when it liquidates when the settlement is approved by the court.

The settlement also requires the company to dismiss three lawsuits it filed against the United States, including two cases in the Eastern District of Louisiana—Taylor Energy Co. LLC v. Captain Kristi M. Luttrell, in her Official Capacity as Federal On-Scene Coordinator for the MC20 Unified Command and Taylor Energy Co. LLC v. U.S. Department of the Interior — a case pending in the District Court for the District of Columbia, Taylor Energy Co. LLC v. United States.

The leak began in 2004 when a Taylor Energy production platform about 10 miles off the coast of Louisiana in the Gulf of Mexico collapsed during Hurricane Ivan, resulting in an ongoing oil release that continues to this day. Since April 2019, a containment system erected and operated by the US Coast Guard through a contractor has effectively caught the vast bulk of the leaking oil. The Justice Department filed the settlement today on behalf of the Coast Guard, the Department of Interior, and the federal and state natural resource trustees. The US Department of Commerce, through the NOAA, and the US Department of Interior, through the US Fish and Wildlife Service, are the authorized government trustees for the natural resources harmed by Taylor Energy’s oil spill. The Louisiana Oil Spill Coordinator’s Office, Department of Public Safety and Corrections; the Louisiana Department of Natural Resources; the Louisiana Department of Environmental Quality; the Louisiana Department of Wildlife and Fisheries; and the Louisiana Coastal Protection and Restoration Authority are the designated state trustees.

The settlement was filed as a proposed consent decree and is subject to a 40-day public comment period and court review and approval. A copy of the consent decree is available on the Department of Justice website at www.justice.gov/enrd/Consent_Decrees.html.