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Feds sue BP, other companies over oil spill

By JENNIFER A. DLOUHY, Houston Chronicle, Dec. 16, 2010

Fines of up to $4,300 a barrel, cleanup costs, other damages sought

WASHINGTON — The Justice Department on Wednesday sued BP and eight other companies in legal action that could force the firms to pay tens of billions of dollars in fines, cleanup costs and economic damages related to the Gulf of Mexico oil spill.

The government's civil lawsuit asked a New Orleans-based federal district court to make the companies pay the costs of removing oil from the Gulf and hold the firms liable without limitation for economic and natural resource damages from the spill.

The government also asked that the companies be fined up to $4,300 per barrel of spilled oil for violating the Clean Water Act.

The U.S. complaint targeted BP and its minority partners in the Macondo well - MOEX Offshore and Anadarko Petroleum Corp. - as well as Transocean, which owned the Deepwater Horizon drilling rig that worked on the project, and QBE Underwriting Ltd., Lloyd's Syndicate 1036, a liability insurer. The defendants include two Anadarko entities and four Transocean entities

Halliburton, which poured cement at the well, and Cameron International, which manufactured a crucial safety device used on the Deepwater Horizon, were not among the defendants, though Attorney General Eric Holder left open the possibility that the firms could be added later.

"It is conceivable that as time passes and as evidence is developed, that additional entities will be added to the complaint," Holder said.

The government also is still conducting a separate criminal investigation.

The Justice Department's move was motivated by a court-ordered deadline in a broad collection of lawsuits filed by fishing interests, restaurants, hotels and others alleging they were hurt by the spill.

To participate in depositions that are set to begin in the cases next month, federal prosecutors had to join the litigation, and U.S. District Judge Carl Barbier had set Wednesday as the deadline for all major complaints to be filed.

The government's lawsuit alleges that BP and other companies failed to take necessary precautions to control the Macondo well before it blew out on April 20, destroying the Deepwater Horizon rig, killing 11 workers and unleashing the worst offshore oil spill in the nation's history. The suit also said the firms didn't monitor the well continuously and failed to use available equipment to protect workers and the environment.

"We intend to prove that these violations caused or contributed to the massive oil spill," Holder said.

Fines of up to $21 billion

The lawsuit doesn't specify the cost of environmental damage and economic harm caused by the spill - and that could take years to quantify fully, said Tony West, assistant attorney general for the Justice Department's civil division.

But under the Clean Water Act alone, companies can be required to pay up to $1,100 per barrel of oil spilled - and as much as $4,300 per barrel if the firms are deemed grossly negligent.

Under the government's current estimates that 4.9 million barrels of oil gushed into the Gulf, BP could be facing fines of up to $21 billion if it is deemed grossly negligent.

BP is preparing to challenge the government's estimate of the amount of spilled oil. And the company could ask a federal court to lower the assessed penalty by presenting mitigating evidence that it assisted the government's cleanup and spill response operation.

The Obama administration also is seeking a court declaration that the companies are legally liable under the Oil Pollution Act and therefore required to pay all of the government's costs for cleaning up the spilled crude as well as economic and natural resource damages. The law caps those damages at $75 million, except in cases where the spill was caused by willful misconduct, gross negligence or violating an applicable federal regulation - as the Justice Department is alleging.

"We think there is evidence in this case of either willful misconduct or gross negligence, or a violation of these federal regulations," West said.

'BP has stepped up . . . '

BP has pledged not to limit itself to the $75 million cap and stressed in a statement Wednesday that it has worked to clean up the spill.

"Alone among the parties, BP has stepped up to pay for the cleanup of the oil, setting aside $20 billion to pay all legitimate claims," said BP spokesman Daren Beaudo. "We took these steps before any legal determination of responsibility and will continue to fulfill our commitments in the Gulf as the legal process unfolds."

It is unclear how the legal proceedings - which could stretch on for years - would affect money in the claims fund that BP established under White House pressure this summer.

Gulf Coast lawmakers in Congress are pushing legislation that would ensure that if the government ultimately prevails, court-ordered fines and damages could be dedicated to restoring the region.

Rep. Ed Markey, D-Mass., said the Obama administration faces a tough challenge in trying to hold BP and other companies legally accountable for the disaster.

"It may have taken these companies months to cap their well, but they will spend years trying to cap their financial obligations to the people of the Gulf," he said.

Transocean object

Transocean denied it was responsible for the spill and stressed in a statement that it was only a contractor following BP's instructions.

"The calculations, blueprints and step-by-step construction procedures for the Macondo well were crafted by BP engineers and approved by federal regulators in advance of - and in some cases during - the construction process itself," Transocean said.

Anadarko spokesman John Christiansen noted that under the two federal laws cited in the government's lawsuit, "all of the relevant parties may be named even though ultimate responsibility may rest solely with the operator" - which in this case was BP.

"As a non-operating minority interest holder in the well, we were not involved in the operations or decisions that occurred on the drilling rig," Christiansen added.


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