By: Michael Kunzelman And Harry R. Weber, Associated Press –
Date: Thu Dec 16, 2010 6:16 am ET
NEW ORLEANS – A powerful plaintiff has joined the hundreds of people and businesses suing BP and other companies involved in the Gulf oil spill: the Justice Department.
The government, in an opening salvo in its effort to get billions of dollars for untold economic and environmental damage, accuses the companies of disregarding federal safety regulations in drilling the well that blew out April 20 and triggered a deadly explosion on the Deepwater Horizon rig. Wednesday's lawsuit is
separate from a Justice Department criminal probe that has not resulted in any charges.
"The department's focus on investigating this disaster and preventing future (spills) is not over," Attorney General Eric Holder said during a news conference in Washington. "Both our civil and criminal investigations are ongoing."
The federal lawsuit filed in New Orleans names BP, rig owner Transocean and some other companies involved in the ill-fated drilling project, but not Halliburton — the project's cement contractor — or the maker of a key cutoff valve that failed. Both could be added later.
BP said it would respond to the claims later but noted that it stands "alone among the parties" in having already stepped up to pay for the cleanup. It said in a statement that it will continue to fulfill its commitments to the Gulf and to cooperate with investigations.
"The filing is solely a statement of the government's allegations and does not in any manner constitute any finding of liability or any judicial finding that the allegations have merit," BP said.
The lawsuit makes it possible for the federal government to seek billions of dollars in penalties for polluting the Gulf of Mexico, beaches and wetlands, and reimbursement for its cleanup costs. More than 300 lawsuits filed previously by individuals and businesses, and now consolidated in the New Orleans federal court, include claims for financial losses and compensation for the families of 11 workers killed in the blast.
The judge overseeing those lawsuits had set Wednesday as the deadline to file certain types of complaints, though it was unclear whether the government was bound by that time frame.
"The Justice Department has left its options open to argue that there was gross negligence and therefore should be higher penalties," said David Uhlmann, a law professor at the University of Michigan who headed up the Justice Department's environmental crimes section for seven years. "The government has not limited itself in any way with the filing of its civil lawsuit."
The suit asks that the companies be held liable without limitation under the Oil Pollution Act for all removal costs and damages caused by the spill, including damages to natural resources. The lawsuit also seeks civil penalties under the Clean Water Act.
The government did not set a dollar figure in the lawsuit, saying the amount of damages and the extent of injuries sustained by the United States are not yet fully known.
Under the Clean Water Act alone, BP faces fines of up to $1,100 for each barrel of oil spilled. If BP were found to have committed gross negligence or willful misconduct, the fine could be up to $4,300 per barrel.
That means that based on the government's estimate of 206 million gallons released by the well, BP could face civil fines of between $5.4 billion and $21.1 billion. BP disputes the government's spill estimate.
The government did not specify in its lawsuit whether it believes there was gross negligence, but it left open the possibility for such a finding later.
Besides BP Exploration & Production Inc., the other defendants in the case are Anadarko Exploration & Production LP; Anadarko Petroleum Corp.; MOEX Offshore 2007 LLC; Triton Asset Leasing GMBH; Transocean Holdings LLC; Transocean Offshore Deepwater Drilling Inc.; Transocean Deepwater Inc.; and Transocean's insurer, QBE Underwriting Ltd./Lloyd's Syndicate 1036. Anadarko and MOEX are minority owners of the well that blew out.
Transocean disputed the allegations and insisted it should not be held liable.
"No drilling contractor has ever been held liable for discharges from a well under the Oil Pollution Act of 1990," Transocean said in a statement. "The responsibility for hydrocarbons discharged from a well lies solely with its owner and operator."
Anadarko said ultimate responsibility may rest solely with the operator of the well — 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," Anadarko said in a statement. "We recognize that we may have obligations under federal law, and we will continue to look to the operator to pay all legitimate claims as it has committed to do."
The staff of a presidentially appointed commission looking into the spill has said the disaster resulted from questionable decisions and management failures by BP, Transocean and Halliburton Energy Services Inc. The panel found 11 decisions made by these companies increased risk. Most saved time, and all but one had a safer alternative.
Halliburton and Cameron International, which made the rig's failed blowout preventer, weren't named as defendants in the suit. Halliburton did not immediately respond to a request for comment.
Eric Schaeffer, who led the Environmental Protection Agency's civil enforcement office from 1997 to 2002, cited three possible explanations for omitting Halliburton. The company could be close to a settlement, Justice needs more time to develop its case against Halliburton, or the government thinks it doesn't have a strong enough case against Halliburton.
Schaeffer said he doubts the government will let Halliburton completely off the hook.
"I would be inclined more toward the first explanation," Schaeffer said. "If they think Halliburton is maybe less culpable, they may be able to reach a settlement quicker. That could help them build their case against the rest of the companies."
Bruce Parris, manager of The Dock restaurant and bar just a few feet off the sand in Pensacola Beach, Fla., said "it's about time" President Obama started to hold BP accountable. He was standing on the restaurant's deck, watching large tractors sift through the sand as part of BP's beach cleanup operations.
"I'm all for anything. I don't care how they get money out of BP. Just get it," Parris said.
Separately, an administrator is doling out money to spill victims from a $20 billion fund of BP money.
The government's lawsuit alleges that safety and operating regulations were violated in the period leading up to the explosion.
It says the defendants failed to keep the well under control and failed to use the best available and safest drilling technology to monitor the well's conditions. They also failed to maintain continuous surveillance, and to maintain the equipment and material necessary to protect workers, natural resources and the environment, the suit charges.
The Justice Department isn't the first government entity to sue BP. Alabama Attorney General Troy King filed federal lawsuits in August on behalf of the state against BP, Transocean, Halliburton and other companies that worked on the project.
The government, in an opening salvo in its effort to get billions of dollars for untold economic and environmental damage, accuses the companies of disregarding federal safety regulations in drilling the well that blew out April 20 and triggered a deadly explosion on the Deepwater Horizon rig. Wednesday's lawsuit is
separate from a Justice Department criminal probe that has not resulted in any charges.
"The department's focus on investigating this disaster and preventing future (spills) is not over," Attorney General Eric Holder said during a news conference in Washington. "Both our civil and criminal investigations are ongoing."
The federal lawsuit filed in New Orleans names BP, rig owner Transocean and some other companies involved in the ill-fated drilling project, but not Halliburton — the project's cement contractor — or the maker of a key cutoff valve that failed. Both could be added later.
BP said it would respond to the claims later but noted that it stands "alone among the parties" in having already stepped up to pay for the cleanup. It said in a statement that it will continue to fulfill its commitments to the Gulf and to cooperate with investigations.
"The filing is solely a statement of the government's allegations and does not in any manner constitute any finding of liability or any judicial finding that the allegations have merit," BP said.
The lawsuit makes it possible for the federal government to seek billions of dollars in penalties for polluting the Gulf of Mexico, beaches and wetlands, and reimbursement for its cleanup costs. More than 300 lawsuits filed previously by individuals and businesses, and now consolidated in the New Orleans federal court, include claims for financial losses and compensation for the families of 11 workers killed in the blast.
The judge overseeing those lawsuits had set Wednesday as the deadline to file certain types of complaints, though it was unclear whether the government was bound by that time frame.
"The Justice Department has left its options open to argue that there was gross negligence and therefore should be higher penalties," said David Uhlmann, a law professor at the University of Michigan who headed up the Justice Department's environmental crimes section for seven years. "The government has not limited itself in any way with the filing of its civil lawsuit."
The suit asks that the companies be held liable without limitation under the Oil Pollution Act for all removal costs and damages caused by the spill, including damages to natural resources. The lawsuit also seeks civil penalties under the Clean Water Act.
The government did not set a dollar figure in the lawsuit, saying the amount of damages and the extent of injuries sustained by the United States are not yet fully known.
Under the Clean Water Act alone, BP faces fines of up to $1,100 for each barrel of oil spilled. If BP were found to have committed gross negligence or willful misconduct, the fine could be up to $4,300 per barrel.
That means that based on the government's estimate of 206 million gallons released by the well, BP could face civil fines of between $5.4 billion and $21.1 billion. BP disputes the government's spill estimate.
The government did not specify in its lawsuit whether it believes there was gross negligence, but it left open the possibility for such a finding later.
Besides BP Exploration & Production Inc., the other defendants in the case are Anadarko Exploration & Production LP; Anadarko Petroleum Corp.; MOEX Offshore 2007 LLC; Triton Asset Leasing GMBH; Transocean Holdings LLC; Transocean Offshore Deepwater Drilling Inc.; Transocean Deepwater Inc.; and Transocean's insurer, QBE Underwriting Ltd./Lloyd's Syndicate 1036. Anadarko and MOEX are minority owners of the well that blew out.
Transocean disputed the allegations and insisted it should not be held liable.
"No drilling contractor has ever been held liable for discharges from a well under the Oil Pollution Act of 1990," Transocean said in a statement. "The responsibility for hydrocarbons discharged from a well lies solely with its owner and operator."
Anadarko said ultimate responsibility may rest solely with the operator of the well — 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," Anadarko said in a statement. "We recognize that we may have obligations under federal law, and we will continue to look to the operator to pay all legitimate claims as it has committed to do."
The staff of a presidentially appointed commission looking into the spill has said the disaster resulted from questionable decisions and management failures by BP, Transocean and Halliburton Energy Services Inc. The panel found 11 decisions made by these companies increased risk. Most saved time, and all but one had a safer alternative.
Halliburton and Cameron International, which made the rig's failed blowout preventer, weren't named as defendants in the suit. Halliburton did not immediately respond to a request for comment.
Eric Schaeffer, who led the Environmental Protection Agency's civil enforcement office from 1997 to 2002, cited three possible explanations for omitting Halliburton. The company could be close to a settlement, Justice needs more time to develop its case against Halliburton, or the government thinks it doesn't have a strong enough case against Halliburton.
Schaeffer said he doubts the government will let Halliburton completely off the hook.
"I would be inclined more toward the first explanation," Schaeffer said. "If they think Halliburton is maybe less culpable, they may be able to reach a settlement quicker. That could help them build their case against the rest of the companies."
Bruce Parris, manager of The Dock restaurant and bar just a few feet off the sand in Pensacola Beach, Fla., said "it's about time" President Obama started to hold BP accountable. He was standing on the restaurant's deck, watching large tractors sift through the sand as part of BP's beach cleanup operations.
"I'm all for anything. I don't care how they get money out of BP. Just get it," Parris said.
Separately, an administrator is doling out money to spill victims from a $20 billion fund of BP money.
The government's lawsuit alleges that safety and operating regulations were violated in the period leading up to the explosion.
It says the defendants failed to keep the well under control and failed to use the best available and safest drilling technology to monitor the well's conditions. They also failed to maintain continuous surveillance, and to maintain the equipment and material necessary to protect workers, natural resources and the environment, the suit charges.
The Justice Department isn't the first government entity to sue BP. Alabama Attorney General Troy King filed federal lawsuits in August on behalf of the state against BP, Transocean, Halliburton and other companies that worked on the project.
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