The Court of Federal Claims dismissed Taylor Energy’s lawsuit to reclaim more than $430 million remaining in a trust fund to clean up its massive 14-year oil spill in the Gulf of Mexico.
U.S. Judge Nancy Firestone ruled against the company’s claim that the federal government should not be allowed to control its funds indefinitely as it determines how to address the spill about 12 miles off the Louisiana coast.
Taylor Energy originally set up a $666 million fund as the party responsible for addressing the spill, and spent more than a third of the money to cap nine of 25 wells that broke open when its oil production platform fell during Hurricane Ivan in 2004. The storm caused the steep walls of a canyon to collapse in deep water, burying most of the wells under a pile of sediment.
The company argued that the government should release the balance of the trust after the Interior Department determined that attempting to reach 16 wells buried in sediment mixed with oil was too risky, partly because existing technology was inadequate to do the work.
Without a means of safely reaching the wells, the government should not be able to withhold the funds indefinitely, the company said. “Every contract must be complete within some ascertainable term,” the company said. Taylor Energy said the government’s failure to release the money was a breach of good faith.
But Firestone ruled that under the terms of the agreement, “the government cannot be held liable for breaching its duty of good faith and fair dealing . . . until 50 years expire.” The judge agreed with the government’s contention that “Taylor has failed to state a claim because 50 years have not expired.”
Firestone also decided that other arguments put forth by Taylor Energy were not supported by the facts. “By its terms this trust will terminate when Taylor, as settlor, and the Interior, as beneficiary, agree to terminate the trust,” the ruling said.
The trust is valid until the Interior Department says, in writing, that Taylor Energy “has complied with all of its obligations under the . . . agreement,” the ruling said.
Taylor Energy said in an email Thursday that it “is disappointed with the court’s ruling” but that in its opinion the issue is not resolved.
A company spokesman said it has another lawsuit pending against Interior at a federal court in Louisiana “challenging the Interior Department’s action as being arbitrary and capricious, an abuse of discretion and contrary to law."
The company also has lawsuits pending against the U.S. Coast Guard and a company it hired to contain oil flowing from the site. The Coast Guard is charging Taylor Energy $7 million for the work.