Taylor Energy LLC Lawsuit: Settlement, Cleanup, and Bankruptcy

The Taylor Energy oil spill lawsuit reached its most consequential resolution in December 2021, when Taylor Energy Company LLC signed a consent decree with the U.S. Department of Justice worth roughly $475 million, transferring its $432 million decommissioning trust to the government, paying about $43 million more in penalties and reimbursements, and dismissing every pending suit it had filed against the United States.¹ Related litigation is still open, including a 2024 federal suit against the company’s insurance guarantors, and Taylor Energy itself filed for Chapter 7 bankruptcy in March 2025.²

How the Spill and the Lawsuits Began

On September 16, 2004, Hurricane Ivan triggered an underwater mudslide that toppled Taylor Energy’s 40-story production platform at Mississippi Canyon Block 20, about 11 miles off the Louisiana coast. The platform and its piping were buried under seafloor sediments, damaging an undetermined number of 28 undersea oil and gas wells and starting a discharge that has never fully stopped.³

In 2008, Taylor Energy sold off its other rigs, kept the damaged MC-20 site, and deposited roughly $666 million into a decommissioning trust administered by JPMorgan Chase under Department of the Interior oversight to cover plugging and remediation.³ After early work on 9 of the 28 wells, roughly $432.5 million remained. That trust, and who controlled it, became the center of most of the litigation that followed.

For years, Taylor Energy told the public the site was leaking only 3 to 5 gallons of oil per day. A 2019 NOAA technical report estimated the actual flow at 9 to 108 barrels per day, or 378 to 4,536 gallons, and identified active releases from multiple wells rather than just contaminated sediments as the primary source.⁴

The 2021 Federal Settlement

The core resolution of the government’s case came through a 60-page consent decree filed in the Eastern District of Louisiana (Case No. 2:20-cv-02910), lodged on December 22, 2021 and finalized on March 17, 2022.⁵⁶ It resolved the government’s civil claims under the Oil Pollution Act and the Clean Water Act.

Under the decree, Taylor Energy agreed to transfer more than $432 million from the decommissioning trust to the Bureau of Ocean Energy Management to fund plugging the remaining wells; pay a $15 million civil penalty under the Clean Water Act; pay $12.8 million to reimburse the Coast Guard for past removal costs; and pay $16.5 million in natural resource damages to federal and Louisiana trustees.¹⁶

The company also agreed to dismiss all pending lawsuits it had brought against the United States, relinquish control of the MC-20 site, hand over all relevant documents, and liquidate any remaining assets and transfer them to the government.⁵ According to The New York Times, the roughly $43 million in direct payments represented all of Taylor Energy’s remaining available assets beyond the trust.⁷ The trust balance was formally transferred from JPMorgan Chase to BOEM on June 6, 2022.⁸

Taylor Energy’s Failed Fight to Get the Trust Money Back

Before it settled, Taylor Energy spent years trying to recover the decommissioning trust in court. In 2016, the company sued in the U.S. Court of Federal Claims, arguing it had already completed all decommissioning work that could safely be done and that the Interior Department had no basis to keep holding the money.

On April 9, 2019, Senior Judge Nancy Firestone dismissed the suit, ruling that Interior retained the right to hold the funds while assessing whether more decommissioning was possible.⁹ In September 2020, the U.S. Court of Appeals for the Federal Circuit affirmed, holding that Taylor Energy could not use Louisiana contract law to override federal decommissioning requirements under the Outer Continental Shelf Lands Act. The court wrote that Taylor Energy was trying to “disguise its regulatory obligations as contractual ones” to escape federal oversight.¹⁰

The Coast Guard Cleanup and the Couvillion Litigation

In October 2018, the Coast Guard ordered Taylor Energy to install a new containment system at MC-20. When the company did not comply, the Coast Guard issued a Notice of Federal Assumption in November 2018, hired the Couvillion Group after competitive bidding, and drew on the Oil Spill Liability Trust Fund to install a subsea containment system that went operational in April 2019.¹¹

Taylor Energy sued on two fronts. It filed a declaratory judgment action against the Couvillion Group for trespass, and a separate suit against the Coast Guard (Taylor Energy Company LLC v. Luttrell, Case No. 2:18-cv-14046, E.D. La.) alleging violations of the Administrative Procedure Act and due process, calling the Couvillion arrangement a “barebones contract” that let the contractor charge over $40 million for services originally estimated at $3 million.¹²

The district court granted summary judgment to Couvillion on derivative sovereign immunity grounds, and the Fifth Circuit affirmed in June 2021.¹²

Taylor Energy also filed a $353 million reimbursement claim with the Coast Guard’s National Pollution Funds Center, arguing that Hurricane Ivan qualified as an “act of God” under the Oil Pollution Act. The NPFC denied the claim, finding Taylor had not met the legal standard.¹³ The company challenged that denial in the U.S. District Court for the District of Columbia,¹⁴ and, along with the Luttrell case, dropped the challenge as part of the 2021 settlement.

The Citizen Suit That Forced Disclosure

A separate lawsuit brought by environmental groups is what pushed the spill into public view. Members of Healthy Gulf, formerly the Gulf Restoration Network, discovered the ongoing leak in 2010 during Deepwater Horizon response missions. In 2011, a coalition including Waterkeeper Alliance, Apalachicola Riverkeeper, and the Louisiana Environmental Action Network, represented by the Tulane Environmental Law Clinic, filed a notice of intent to sue under the Clean Water Act and the Resource Conservation and Recovery Act.¹⁵

The suit was filed in 2012 in the Eastern District of Louisiana, alleging that Taylor Energy was discharging oil without a permit and creating imminent environmental endangerment.¹⁶ In September 2015, Taylor Energy settled, agreeing to publicly disclose information about the spill, pay $400,000 for supplemental environmental projects, and take part in a transparent public response process. The settlement did not relieve the company of its obligation to stop the leak.¹⁷

The 2024 Suit Against the Insurance Guarantors

In 2024, the United States filed a new lawsuit in the Eastern District of Louisiana (Case No. 2:24-cv-02767) against Taylor Energy’s insurance guarantors, including Aspen Insurance UK Ltd and syndicates at Lloyd’s of London. The government is seeking $128 million to reimburse the Oil Spill Liability Trust Fund for Coast Guard cleanup costs, alleging that none of the guarantors had paid anything toward removal expenses. By the time of the filing, the containment system had collected more than 1.5 million gallons of oil.¹⁸

Bankruptcy and Current Status

On March 28, 2025, Taylor Energy filed a voluntary Chapter 7 petition in the Eastern District of Louisiana (Case No. 2:25-bk-10592). Judge Meredith S. Grabill presides, with Barbara Rivera-Fulton serving as trustee. The case was still active as of May 2026.²

The site itself is now under federal control. The containment system installed by Couvillion had captured more than 1.2 million gallons of oil by February 2023,¹⁹ but it does not eliminate the discharge. As of early 2025, the wells at MC-20 remained unplugged and the Coast Guard was maintaining daily oversight with scientific support from NOAA.²⁰

The available research does not indicate that Phyllis Taylor, who owned roughly 95 percent of the company, faces personal liability related to the spill or the bankruptcy.²¹

1
U.S. Department of Justice. Taylor Energy Company to Pay Over $43 Million and Transfer $432 Million Decommissioning Trust Fund
2
PACER Monitor. Taylor Energy Company, LLC
3
U.S. Department of the Interior. Consent Decree, United States v. Taylor Energy Company LLC
4
NOAA National Centers for Coastal Ocean Science. MC20 Report
5
Federal Register. Notice of Lodging of Proposed Consent Decree
6
U.S. Department of the Interior. Settlement Reached for Taylor Energy Oil Spill
7
The New York Times. Taylor Energy Oil Spill Gulf
8
BSEE. MC-20 Coast Guard BSEE BOEM Memorandum of Agreement
9
WWL-TV. Court Dismisses Taylor Energy Lawsuit Seeking Return of $432M
10
FindLaw. Taylor Energy Company LLC v. United States
11
Earthjustice. Taylor Energy Settles Lawsuit With Department of Interior
12
U.S. Court of Appeals for the Fifth Circuit. Taylor Energy Company LLC v. Couvillion Group LLC
13
U.S. Coast Guard NPFC. Claim Determination N13024-0001
14
Justia. Taylor Energy Company LLC v. United States of America
15
Tulane Environmental Law Clinic. Notice of Intent to File Citizen Suit Against Taylor Energy
16
GovInfo. Apalachicola Riverkeeper v. Taylor Energy Company LLC
17
Waterkeeper Alliance. Veil of Secrecy Finally Lifted on Taylor Energy’s Decade-Long Oil Leak
18
Bloomberg Law. Guarantors of Taylor Energy Sued for Oil Spill Cleanup Costs
19
Couvillion Group. MC20
20
NOAA. Taylor Energy
21
Houma Today. Oil Spill Louisiana Billionaire Phyllis Taylor Income Tax