Analysis - U.S. government attack on BP shows it ready for court battle

WASHINGTON Thu Sep 6, 2012 3:54pm BST

A British Petroleum (BP) logo is seen at a petrol station near the Burj Khalifa in Dubai August 29, 2012. REUTERS/Jumana ElHeloueh

A British Petroleum (BP) logo is seen at a petrol station near the Burj Khalifa in Dubai August 29, 2012.

Credit: Reuters/Jumana ElHeloueh

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WASHINGTON (Reuters) - In accusing BP Plc (BP.L) of gross negligence and wilful misconduct over the 2010 Deepwater Horizon oil spill, the U.S. Justice Department has shown that it is prepared for a bruising court struggle with the London-based oil giant.

Government lawyers used unusually blunt language in describing the conduct of BP and its executives in a court filing on Friday, saying that it "would not be tolerated in a middling size company manufacturing dry goods for sale in a suburban mall."

While settlement talks are still possible, and some saw political overtones to the timing of the Justice Department's statements ahead of this week's Democratic National Convention, most legal experts said the stinging accusations suggested that the government felt it could win a case in front of a jury and make BP suffer.

The government's sharpened language is characteristic of a case where gross negligence is the central issue, said Martha Judy, a law professor at Vermont Law School who specializes in environmental liability. The government needs to pull out outrageous examples of BP's conduct if it wants to show the company was not just negligent but grossly so, she said.

"The point they're trying to persuade the judge of is that this is so beyond unreasonable, it is ridiculous and perhaps even reckless or intentional," Judy said.

The August 31 court filing reiterated the government's long-held position that BP committed gross negligence, a position that could nearly quadruple civil damages under the Clean Water Act to $21 billion (13.1 billion pounds) if a federal judge agrees.

While not introducing any new facts, the 39-page brief was sprinkled with tart language about what it called BP's "cherry-picked assertions" and "culture of corporate recklessness." It accused Transocean Ltd (RIG.N) of gross negligence, too. A Transocean spokesman declined to comment.

"I read it as the government being profoundly confident in the merits of its case, a confidence that they will ultimately prevail in a finding of gross negligence," said Blaine LeCesne, a law professor at Loyola University in New Orleans.

BP contests the allegation, and in a statement responding to the Justice Department on Tuesday said it "looks forward to presenting evidence on this issue" at a trial scheduled to begin in January 2013 in New Orleans. The company had no further comment on Wednesday.

The U.S. government and BP are engaged in talks to settle civil and potential criminal liability, though neither side will comment on the status of negotiations. LeCesne said the Justice Department's filing firmly signals that it is ready for trial.

"The lines have been drawn, and they are preparing for battle," LeCesne said. "Unless there is a significant about-face in BP's perspective this case is going to trial."

The filing comes more than two years after the disaster that struck on April 20, 2010 when a surge of methane gas known to rig hands as a "kick" sparked an explosion aboard the Deepwater Horizon rig as it was drilling the mile (1.6 km)-deep Macondo 252 well off Louisiana's coast. The rig sank two days later.

The well spewed 4.9 million barrels of oil into the Gulf of Mexico for 87 straight days, unleashing a torrent of oil that fouled the shorelines of four Gulf Coast states and eclipsed the 1989 Exxon Valdez spill in Alaska in severity.

PROVING RECKLESSNESS

A Justice Department spokesman declined to comment on Wednesday.

To illustrate the idea that BP was grossly negligent leading up to the 2010 oil spill, Justice Department lawyers highlighted internal BP emails that, while previously public, remain colourful and potentially embarrassing.

For example, in an email to his boss, BP team leader John Guide wrote that the Macondo drilling team was "flying by the seat of our pants."

"Everybody wants to do the right thing, but this huge level of paranoia from engineering leadership is driving chaos," Guide wrote in the email, which government lawyers quoted near the front of their latest brief.

Houston-based David Sims responded by email that they should speak later because he was on his way to dance practice. "We're dancing to the Village People," Sims wrote.

GETTING BUSY AGAIN

An internal BP investigation after the oil spill did not mention the existence of the emails, which should have been a "clarion cry of impending disaster," government lawyers wrote.

Justice Department lawyers were not required to file the brief. They did so voluntarily in a matter the government is not a party to, a $7.8 billion settlement BP reached with individuals and businesses.

The department was concerned that, in approving that settlement, U.S. District Judge Carl Barbier could make a ruling about negligence that would later hurt the government's position, government lawyers wrote.

The government's brief got the attention of analysts at the financial services firm Raymond James & Associates, which said its timing was meant to make an impact before the Democratic National Convention in Charlotte.

"After several quiet months on the legal front, the DOJ is getting busy again, and the political overtones seem readily apparent," the analysts wrote.

(Corrects name of professor in fourth paragraph)

(Editing by Chris Baltimore and Richard Chang; Desking by Vicki Allen)

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