In a decision that could have far-reaching implications for efforts to stop the longest-running oil spill in U.S. history, a federal judge in Washington on Tuesday dismissed a 2016 lawsuit in which the responsible oil company sought the return of $432 million it set aside for plugging leaking Gulf oil wells.
Senior Judge Nancy Firestone of the U.S. Court of Federal Claims threw out Taylor Energy Co.’s demand that the U.S. Interior Department return the money, which is the amount still left in a $666 million trust established in 2008 for “decommissioning” Taylor’s oil platform and damaged oil wells 12 miles off the mouth of the Mississippi River.
"Taylor Energy is disappointed with the court's ruling. However, by no means is this question resolved. We are reviewing the ruling and will consider all options going forward," the company said in a statement Wednesday. "Taylor Energy remains committed to its role as the current responsible party and continues to advocate for a response that is grounded in science and prioritizes the well-being of the environment."
The platform had been connected to 26 oil and gas wells when it toppled over in a mudslide caused by Hurricane Ivan in 2004. Oil has been slowly leaking from the site 450 feet below the Gulf surface ever since.
Taylor argued it has already fulfilled all the duties listed in the trust agreement that could be safely done. It has spent nearly half a billion dollars trying – and failing – to stop oil from leaking from below the mudslide. Included in what Taylor has spent is $234 million from the trust fund for removing parts of the toppled platform and drilling so-called relief wells to intercept and permanently plug up the nine wells that were deemed most likely to be leaking oil.
Since 2016, Taylor has been arguing it should get the remaining money in the trust back. It pointed to a 2013 report from a group of government and industry experts that determined the risk of any further decommissioning work outweighed the potential benefits.
But Firestone ultimately decided the Interior Department has the right to keep the money in the trust to see if any more could be done, or even to change its assessment of the risk. The government has already drastically changed its position on whether the oil can be at least contained. Last fall, the Coast Guard seized partial control of spill-response operations and now has contractors on the scene, trying a new method to cap the leak, against Taylor’s objections.
Taylor continues to argue in separate court proceedings in New Orleans that the Coast Guard and its contractor are causing more harm than good with the latest containment efforts, which began in February.
The trust agreement does not cover containment operations, so Taylor will have to use separate money to pay for the work now underway by the Coast Guard’s contractor, Couvillion Group.