Justice Department to Join Oil-Spill Lawsuits


WASHINGTON—The Justice Department on Wednesday is expected to seek to join civil lawsuits resulting from the Gulf of Mexico oil spill, the first major federal legal action in the probe of the disaster, according to people familiar with the matter.

Dozens of private-party lawsuits have been consolidated in so-called multidistrict litigation in federal court in New Orleans, representing claims against BP PLC and its contractors for damages from the worst oil spill in U.S. history.

In its complaint, the Justice Department is expected to allege violations of environmental-protection regulations, which could trigger penalties under laws including the Clean Water Act and the Oil Pollution Act, these people say.

By joining the litigation, Justice Department lawyers would likely play a major role in upcoming legal steps in the cases, including depositions of key witnesses, which could aid the government’s ongoing investigation, these people say.

The Justice Department declined to comment.

The government’s civil complaint is only the first salvo of what is likely to be a lengthy legal fight as the government and the companies involved try to assign blame for the April 20 oil-rig accident and the subsequent spill.

The rig explosion killed 11 people. Government officials estimate about 4.9 million barrels of oil spilled from the leaking well before BP plugged the leak on July 15.

In June, Attorney General Eric Holder announced that the Justice Department was conducting a broad probe into a wide range of possible criminal and civil violations in the disaster. Law-enforcement officials say a major focus of the investigation centers on violations of environmental-protection laws.

Most of the government’s legal strategy isn’t yet public. But government lawyers in recent months have tussled with a major BP contractor, Transocean Ltd., which owned the rig destroyed in the incident, over Transocean’s attempts to limit its liability.

President Barack Obama appointed a commission to investigate the causes of the disaster, with a report due to the president in January.

Over the past decade, BP has had several run-ins with the Justice Department. In October 2007, the company settled a government investigation of a deadly accident at a refinery in Texas, a 2006 pipeline leak in Alaska and improper propane trading in 2003 and 2004.

BP pleaded guilty to a felony violation of workplace-safety rules in the refinery case, pleaded guilty to a misdemeanor violation of federal clean-water rules in the pipeline spill and entered a deferred prosecution agreement to settle the propane price manipulation matter. In all, the company agreed to pay more than $370 million in criminal fines and restitution to resolve the cases, and was placed under probation for three years.

The company’s past transgressions are expected to prompt government lawyers to seek stiffer penalties, U.S. officials say.

The fines under the Clean Water Act could at a minimum amount to $4.5 billion, which would be $1,100 for each of the estimated 4.1 million barrels (out of a total of 4.9 million emanating from the well) that spilled into the waters. A maximum fine could be $21 billion if gross negligence is found by the courts. That fine would carry a $4,300 penalty for each of the total of 4.9 million barrels.

In addition to the federal probe, attorneys general from states, including Louisiana and Mississippi, whose coastlines were most affected by the spill, also have their own investigations under way and have agreed to pool their resources and share documents.

The Justice Department also helped the government negotiate with BP an initial $20 billion fund to pay claims from businesses and individuals whose livelihoods were affected by the disaster. Government officials say the fund doesn’t affect the total bill for damages the company could face.

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Stuart H. Smith is an attorney based in New Orleans fighting major oil companies and other polluters.
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