On December 22, 2021, Taylor Energy Company LLC (“Taylor Energy”), a Louisiana based oil and gas company, and the United States Department of Justice reached a settlement concerning Taylor Energy’s role in the longest running oil spill in United States history. The oil spill began in September 2004 when Hurricane Ivan crossed the northeastern Gulf of Mexico. The hurricane caused a seafloor shift that toppled one of Taylor Energy’s oil and gas production platforms in the Mississippi Canyon Area, Block 20 (“MC-20”), approximately 10 miles off the coast of Louisiana, initiating an oil discharge. The resulting oil leakage has been ongoing ever since.
Under the proposed Consent Decree, which was filed in the U.S. District Court for the Eastern District of New Orleans in the matter United States v. Taylor Energy Company LLC (Civil Action No. 20-2910), Taylor Energy agreed to pay over $43 million – all of the company’s remaining assets – for civil penalties under Section 311(b) of the Clean Water Act, removal costs incurred by the United States under OPA, and natural resources damages (“NRD”).[1] The State of Louisiana is a co-trustee for natural resources impacted by the spill and the NRD money is a joint recovery by the federal and state trustees.
Additionally, Taylor Energy will transfer to the U.S. Department of Interior (“DOI”)’s Bureau of Ocean and Energy Management (“BOEM”) over $432 million currently held in a decommissioning trust fund for plugging the seafloor oil wells, permanently decommissioning the facility, and remediating contaminated soil. Moreover, Taylor Energy agreed to relinquish any possession, custody, and control of its MC-20 facility in the Gulf of Mexico, and not interfere in any way with the Coast Guard’s oil containment efforts, removal, remediation, or decommissioning efforts.
Further, Taylor Energy agreed to turn over to the DOI and Coast Guard all documents, including all reports, surveys, studies, etc., that would assist with the response, containment, and decommissioning efforts. Upon liquidation, Taylor Energy will also turn over all of its remaining assets to the United States as its final payment and to resolve its liability for the oil spill. Taylor Energy does not admit to any liability as part of this agreement.
As a result of this ongoing oil spill, the United States filed a civil complaint that initiated this lawsuit against Taylor Energy in the United States District Court in New Orleans on October 23, 2020 seeking removal costs, civil penalties and NRD under the Oil Pollution and Clean Water Acts arising from the discharge of oil from the MC-20 Facility. Between 2016 and 2020, Taylor Energy filed several lawsuits against the United States, including challenging the Coast Guard’s decision to install a spill containment system and appealing the Coast Guard’s denial of Taylor Energy’s $353 million spill-cost reimbursement claim submitted to the U.S. Oil Spill Liability Trust Fund.
The proposed Consent Decree also requires Taylor Energy to dismiss the 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 — and a case pending in the District Court for the District of Columbia, Taylor Energy Co. LLC v. United States.
The proposed Consent Decree is subject to a 40-day public comment period and court review and approval. A copy of the consent decree is available at https://www.justice.gov/enrd/consent-decree/file/1458186/download.
[1] The $43 million is allocated as follows: $15 million for civil penalties; over $12 million for removal costs and $16.5 million for natural resource damages.