US to press on with $18bn BP lawsuit despite settlement

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The US government vowed to press ahead with its $18bn (£11bn) legal action against BP despite the oil giant’s $7.8bn settlement with 110,000 Gulf of Mexico businesses and individuals over the Deepwater Horizon oil spill.

In a strongly worded statement, the US Department of Justice (DoJ) said the settlement “by no means fully addresses its responsibility for the harms it has caused” or meant that BP had paid for “its violation of law”.

The DoJ which is bringing a federal negligence case under the Clean Water Act, which could cost as much as $18bn, said that it remains “fully prepared” to try the case.

BP, which denies gross negligence and also disputes the amount of oil that poured into the Gulf, has set aside $3.5bn to pay fines.

But the US government is also investigating whether there are criminal charges to be brought, amid claims BP was responsible for the millions of barrels of oil which flowed into the Gulf following an explosion on the Deepwater rig in April 2010.

News of the settlement with the plaintiffs was welcomed by BP’s senior executives. The agreement ends one of four “pillars” of the trial in New Orleans which was originally scheduled to begin last Monday, February 27 but was postponed.

The other three pillars in that trial are claims outstanding from the states of Louisana and Alabama, counter-claims between BP and its former Deepwater partners including Transocean (NYSE: RIG - news) , and civil claims under the Clean Water Act from the federal government.In addition, BP is facing shareholder lawsuits in Houston.

Shareholder reaction seemed positive: “Overall this will probably be seen as good news. More the reduction in uncertainty than the number involved,” said Robert Talbut, of Royal London Asset Management, which owns 0.37pc of BP’s shares.

The settlement was made between BP and the Plaintiffs’ Steering Committee (PSC (SES: DM0.SI - news) ), which represents 110,000 local businesses and individuals from the US Gulf coast who claim to have lost out financially as a result of the spill.

The settlement is preliminary, and is subject to final written agreement, which must be made within 45 days, as well as court approval.

The New Orleans trial has now been indefinitely postponed pending clarity on the implications of the settlement. BP has maintaned it was not the only company at fault in the spill.