Obama administration launches BP oil spill legal battle

The battle between the White House and BP over this summer’s Gulf of Mexico oil spill entered a new phase yesterday as the Obama administration launched legal action against the oil giant and other firms involved in the drilling of the Macondo oil well.

The suit, which if successful will secure billions of dollars in damages, targets BP, Anadarko Petroleum Corp and MOEX, as well as well driller Transocean Ltd and insurance firm QBE Underwriting/Lloyd’s Syndicate 1036.

US Attorney General Eric Holder told reporters that the civil action could still be followed by further legal action against the firms. “Both our criminal and civil investigations are continuing, and our work to ensure that the American taxpayers are not forced to bear the costs of restoring the Gulf area - and its economy - goes on,” he said.

Significantly, the suit does not name Halliburton, which cemented the well, or Cameron International, which provided equipment to the rig. However, officials signaled that companies not named in the suit were still being investigated.

The legal action does not put a dollar value on the damages being sought, but it does accuse the companies involved of violating the Clean Water Act and the Oil Pollution Act.

Under US law, the companies would be liable for fines of up to $4,300 per barrel of oil leaked if they are found guilty of gross negligence, and up to $1,100 per barrel if no gross negligence is found. As such, based on government estimates of the size of the spill the companies could face total fines ranging from $5.4bn to $21bn.

The suit, which was filed in a New Orleans federal court, joins a host of private legal actions against BP and its partners that are also being weighed by the court.

In a statement, BP insisted the suit does “not in any manner constitute any finding of liability or any judicial finding that the allegations have merit”, It added that it will “answer the government’s allegations in a timely manner and will continue to cooperate with all government investigations and inquiries”.

However, the company still experienced its biggest share price fall in four months, falling 3.2 per cent in the immediate wake of the news.

The oil giant has set aside $40bn to cover potential damages and legal costs and has agreed to pay $20bn into an independently managed account to provide compensation to individuals and business impacted by the spill. It is also in the process of selling off a number of assets to further strengthen its financial position.

Meanwhile, the former partners that worked on the will have continued to try and push the blame for the spill onto BP.

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