Feds: Company hasn't done enough to end slow-motion oil leak

AP News
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Posted: May 25, 2016 12:17 PM

BATON ROUGE, La. (AP) — The Justice Department is urging a federal court to let government regulators decide if a New Orleans company has done enough to end an oil leak in the Gulf of Mexico that began nearly 12 years ago and could last another century.

Taylor Energy Company sued the federal government in January to recover more than $400 million it set aside for work to stop the leak off Louisiana's coast.

Government attorneys asked the U.S. Court of Federal Claims late Tuesday to dismiss the lawsuit, arguing that the money should remain in a trust until Interior Department regulators decide whether the company has met its leak-related obligations.

The leak began in 2004 when an underwater mudslide triggered by Hurricane Ivan's waves toppled a company-owned platform and buried a cluster of 28 oil wells under 100 feet of sediment and mud.

Taylor Energy claims nothing can be done to completely eliminate the leaks, which create sheens that often stretch for miles.

Regulators have warned the leak could last a century or more if left unchecked.

In its suit, Taylor Energy accuses the government of violating a 2008 agreement requiring the company to deposit approximately $666 million in a trust to pay for leak response work. The company argues the government must return the remaining $432 million.

Taylor Energy also has been lobbying to recover at least some of the money. Since December 2014, at least four members of Louisiana's congressional delegation have sent letters urging the Obama administration to consider the company's settlement proposal.

Instead, federal authorities rebuffed the company's overtures and ordered it to perform more work at the leak site.

Taylor Energy says it already has spent more than $480 million trying to stop the leak, including $234 million from the trust.

In 2007, regulators ordered Taylor Energy to permanently plug all of its buried wells. The company drilled "intervention wells" to plug nine of the 28 wells but has insisted that more drilling would be too environmentally risky and could do more ecological harm than good.

In 2014, the company asked the Interior Department's Bureau of Safety and Environmental Enforcement to excuse it from having to plug 16 other wells or remove contaminated soil on the seafloor. The agency denied the request, saying it wasn't the best for the environment.

The company has appealed that decision to the Interior Department's Interior Board of Land Appeals, which hasn't ruled yet. The Justice Department argues that this board — not the Court of Federal Claims — should decide the matter, and that the company's suit is barred in any case by a 6-year statute of limitations.

An Associated Press investigation last year revealed evidence that the leak is worse than either the company or government have publicly reported. Presented with AP's findings, the Coast Guard provided a new leak estimate, about 20 times larger than one touted by the company in court last year.

Using satellite images and Coast Guard pollution reports, West Virginia-based watchdog group SkyTruth estimated last year that between 300,000 and 1.4 million gallons of oil have spilled from the site since 2004.

If SkyTruth's high-end estimate is accurate, Taylor's spill would be about 1 percent the size of BP's massive 2010 spill, which a judge ruled amounted to 134 million gallons. But it would still make the Taylor spill the 8th largest in the Gulf since 1970, according to the National Oceanic and Atmospheric Administration.

A 2014 report commissioned by the company said the sheens averaged less than 4 gallons per sighting. But the Justice Department's court filing Tuesday says the leak averaged 123 gallons per day between July and December 2015 and 112 gallons per day between January and April 2016 — at least 28 times higher than the company's estimate.