December 16, 2010 / 8:39 PM / 9 years ago

Q+A-What the U.S. lawsuit against BP means and what's next

WASHINGTON, Dec 16 (Reuters) - The Obama administration has sued BP Plc (BP.L)(BP.N) and its partners in the Macondo oil well that spilled almost 5 million barrels of oil into the Gulf of Mexico, creating the worst offshore oil spill in U.S. history. [ID:nN15162968]

Here are some answers to questions about what the lawsuit means and what happens next.

Q: What does the government’s lawsuit accuse the companies of doing?

A: The lawsuit accused the well owners, BP, Anadarko Petroleum Corp APC.N and Mitsui & Co Ltd (8031.T) unit MOEX as well as the well driller Transocean Ltd (RIG.N) and its insurer QBE Underwriting, of failing to adhere to U.S. environmental laws and safety regulations.

Specifically, the lawsuit said they failed to take the necessary precautions to keep the well under control before it exploded on April 20. Further, they allegedly failed to use the best available and safest drilling technology to monitor the well’s condition or maintain continuous surveillance.

Q: Could additional companies and individuals be charged or more charges be added to the lawsuit?

A: Yes and yes. Attorney General Eric Holder made it clear on Wednesday that the investigation was continuing, both for possible criminal charges and other civil charges. The lawsuit filed only addressed violations of the Clean Water Act and the Oil Pollution Act.

Legal experts also expect other companies like Halliburton (HAL.N), which did the cementing for the well, or Cameron International CAM.N, which provided the blow-out preventer, to eventually be charged too.

Plus, they expect that prosecutors will pursue criminal charges for violations of the environmental laws and they could also file other charges if they find that the companies or its employees made false statements or obstructed the investigation.

“There will be criminal charges under the Clean Water Act for negligently discharging oil,” said David Uhlmann, a University of Michigan Law School professor who previously ran the Justice Department’s environmental crimes section.

That is what happened in the Exxon (XOM.N) Valdez tanker spill off the Alaska coast in 1989.

“The only question is what other violations are charged, are there false statements, was there obstruction of justice?” he said, adding that it was an open question about whether individuals would be charged.

Additionally, scores of animals were injured by the oil so the Justice Department could seek charges for violations of the Endangered Species Act and the Migratory Bird Treaty Act.

Q: What are the range of penalties that the companies could face and would the companies settle the charges instead?

A: If found liable, BP and the other companies could face billions of dollars in fines, potentially more than $20 billion. The Clean Water Act alone includes penalties of up to $1,100 per barrel of oil spilled or up to $4,300 per barrel if gross negligence or willful misconduct is found by the judge.

The harm to wildlife and animals are also subject to stiff fines, as much as $25,000 per violation. Those penalties could be subject to appeal if imposed by a court.

As for a possible settlement, legal experts expect most if not all of the companies implicated in the oil spill to negotiate a deal to settle any government charges.

Q: What happens next in the litigation?

A: The Justice Department filed its civil lawsuit in a federal court in New Orleans which is already considering several hundred private lawsuits involving the oil spill. The next step is what is called discovery, to go through the evidence that potentially could be used during the trial against the companies.

University of Michigan Law School professor Uhlmann said that could be an “unwieldy process” because federal prosecutors are still reviewing possible criminal charges and some evidence will be revealed. (Reporting by Jeremy Pelofsky; Editing by Xavier Briand)

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