BP feud with US government over Gulf oil spill heats up

BP is preparing for battle with the U.S. government as it steps up its efforts to defend itself against up to $21 billion in civil fines that it could face in connection with the 2010 Gulf of Mexico oil spill.

In a filing in federal court in New Orleans on Wednesday, lawyers for the British oil giant argued that Justice Department attorneys made erroneous and misleading statements in a pending motion to approve a $1 billion civil settlement with Swiss drilling contractor Transocean.

While the motion and civil settlement only pertain to Transocean, BP doesn’t want the court to consider statements made about BP in deciding whether to approve the settlement, apparently out of concern it could affect the outcome of the oil spill civil trial that is set to begin Feb. 25.

“BP respectfully requests that the court limit its consideration of the motion and memorandum to the only question properly before the court at this time — namely, an evaluation and approval decision regarding the proposed settlement between the United States and the Transocean defendants,” BP said.

Among BP’s concerns is that the Justice Department asserts in the Transocean case motion that the Clean Water Act imposes a penalty based on the number of barrels of oil discharged. BP is challenging the assertion because it believes the statement also should  note that the quantity of oil discharged is only one factor in the penalty determination. The defendant’s degree of culpability also is a factor.

The U.S. government has accused BP of gross negligence, which, if proved, could result in a maximum fine of $21 billion based on the number of barrels of oil that the government says were discharged from BP’s well. BP has disputed the gross negligence allegation and  the government’s estimates of  how much oil spilled.

BP also takes issue with what it says is an implication in the government’s motion that the government has greater litigation risk on the gross negligence issue with respect to the Transocean defendants “in light of the view of the United States as to BP’s central role in the disaster.”

BP noted in its filing that official investigations have found fault with actions by several companies, not just BP.

“For these reasons, among others, the extent of BP’s involvement need not be considered here in the context of evaluating the proposed settlement between the United States and the Transocean defendants,” BP said.

On Thursday,  Transocean is scheduled to enter a guilty plea to a single misdemeanor criminal charge of violating the Clean Water Act as part of a settlement with federal prosecutors. If the deal is accepted by a judge in New Orleans, Transocean will pay a $400 million criminal penalty and be on probation for five years.

The civil penalty Transocean agreed to is pending before a different judge.

BP owned the undersea well that blew out off Louisiana, leading to the worst offshore oil spill in U.S. history. It was leasing from Transocean the Deepwater Horizon rig that exploded, killing 11 workers, after the well blew out.

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