The case involves clean up costs for a spill that has been ongoing since 2004.
State Attorney General Liz Murrill has asked the federal government to drop a $128 million lawsuit against insurance companies over the longest-running spill in U.S. history -- leaking off Louisiana's coast for 21 years and counting -- arguing that the legal effort to recover costs harms the local energy industry.
The lawsuit pertains to a spill that began in 2004, when Hurricane Ivan caused an underwater mudslide that toppled a Taylor Energy-owned oil platform near the mouth of the Mississippi River. Since then, as much as 29,000 gallons of oil per day have leaked from the site, according to federal estimates.
More than 20 years after the platform toppled, the spill is ongoing, though much of it is being captured by a containment system.
After settling a lawsuit with Taylor Energy in 2021, the federal government sued the oil company's insurers in 2024 seeking additional oil spill cleanup funds.
In a Sept. 24 letter to U.S. Attorney General Pam Bondi, Murrill argues that the lawsuit is at odds with President Donald Trump's executive order on "unleashing American energy," which calls for increasing domestic oil and gas production. She also contends that the litigation relies on arguments that are "fundamentally contrary to well-settled insurance law."
In her letter, Murrill said that the Department of Justice "filed the lawsuit in question during the waning days of the Biden administration" and stated that it had "directly harmed" Louisiana's energy industry.
The Department of Justice did not immediately respond to a request for comment. It filed a motion on Monday to stay the case due to the ongoing government shutdown, which was granted on Tuesday. The Patrick F. Taylor Foundation, the Taylor family's philanthropic organization, did not respond to a request for comment.
Continued costs for government
Taylor Energy had long downplayed the extent of the leak and its responsibility for cleaning it up. In 2008, the company sold all of its oil and gas interests and set up a fund to clean up the spill. The company capped nine of the 25 wells at the site of the spill, but argued that the remaining 16 were too risky to plug because they were covered with sediment mixed with oil.
In 2018, the federal government found that a substantial amount of oil was still leaking from the site and ordered the company to stop the spill. The company refused, and the government hired a contractor to build an oil containment system around the site and sued Taylor Energy to recoup the costs.
Finally, in 2021, the company settled with the federal government for $475 million.
But with the spill still underway, the federal government sued the companies that insured Taylor Energy in the Eastern District of Louisiana for an additional $128 million plus interest in oil spill response costs.
As a result of the spill, "the United States has incurred and will continue to incur removal costs," the lawsuit states, and argues that the insurers are liable for those costs under the 1990 Oil Pollution Act.
In 2022, the National Oceanic and Atmospheric Administration said that it had removed more than 1 million gallons of oil from the site of the spill.
'Jobs in Louisiana'
Murrill said that the DOJ should not seek oil spill cleanup funds from insurance companies under the 1990 law. She argues that the insurers already paid out claims for the spill when it first took place in 2004, and is not responsible for costs incurred related to the spill since then.
Further, she said that since the lawsuit was filed, insurance companies have indicated that they may stop providing oil spill coverage, which could limit oil production in federal waters off Louisiana's coast.
"The continued degradation of the insurance market for offshore energy operators threatens the economy, jobs in Louisiana, and critical oil production from the U.S. offshore region," she wrote in the letter.