Oil Spill: The Federal Government Takes BP to Court

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I’m finishing up the Energy Innovations 2010 conference in Washington, of which more later today, but I wanted to note the news that the U.S. Justice Department has decided to sue BP and a number of other companies over this summer’s oil spill in the Gulf. From Attorney General Eric Holder’s statement today:

We intend to prove that these defendants are responsible for government removal costs, economic losses, and environmental damages without limitation. Even though the spill has been contained, the Department’s focus on investigating this disaster and preventing future devastation has not wavered.   Both our civil and criminal investigations continue, and our work to ensure that the American taxpayers are not forced to bear the costs of restoring the gulf area and its economy is moving forward.

The suit could potentially run to the tens of billions of dollars, based on the laws and fines cited in the lawsuit. The Department of Justice alleges that a number of regulations were violated in the weeks leading up to the explosion of the Deepwater Horizon on April 20, including:

  • Failing to take necessary precautions to keep the Macondo Well under control in the period leading up to the April 20th explosion;
  • Failing to use the best available and safest drilling technology to monitor the well’s conditions;
  • Failing to maintain continuous surveillance; and
  • Failing to use and maintain equipment and material that were available and necessary to ensure the safety and protection of personnel, equipment, natural resources, and the environment.

The lawsuit includes side companies like Anadarko Petroleum and Transocean, the owner of the rig. Interestingly Halliburton, which has been faulted for its cementing job on the well, was not named in the suit, though Holder said at a press conference that other companies could be added at a later date. “We will not hesitate to take whatever steps are necessary to hold accountable those who are responsible for the spill,” he said.

The lawsuit isn’t a surprise—the $20 billion fund BP set up earlier this year to pay for claims doesn’t protect it from lawsuits like this one. And you can expect BP to fight it—the company has already announced that it will contest the government estimate of the oil spilled into the Gulf, which is currently at 4.1 million barrels. As contentious as the spill claim system along the Gulf coast has been, Justice vs. BP could be just as tough.