After winning preliminary court approval in May, it seemed as though British Petroleum’s (BP) proposed $7.8 billion settlement with victims of the 2010 Deepwater Horizon oil spill would be finalized. That is, until the Department of Justice (DOJ) stepped in.

In court documents filed Tuesday, the DOJ accused the oil giant of gross negligence and willful misconduct, which could result in penalties of up to $21 billion if the company is found guilty. The agency’s decision may reduce the chances that the previously proposed settlement will win court approval.

In a scathing memo, the DOJ accused company leadership of ignoring “fundamental organizational safety-based systemic causes,” allowing “rig-based mechanical causes to fester and ultimately explode in a fireball of death, personal injury, economic catastrophe and environmental devastation.” It also claims that BP hid evidence and failed to properly investigate the causes behind the spill.

For its part, BP has denied liability for the spill. It has filed its own suits against Transocean Ltd., which owned the exploded oil rig, and Halliburton Co., which cemented the defective Macondo well.

The initial $7.8 billion settlement would have included hundreds of thousands of plaintiffs who suffered health problems or business losses following the five billion-barrel spill.

Read more at Reuters.

For more InsideCounsel coverage of the BP oil spill, see:

$7.8 billion BP settlement wins preliminary court approval

Florida attorney general asks judge to delay approval of BP oil spill settlement

BP reaches $7.8 billion settlement with victims of Gulf oil spill

Fines on horizon for BP, Transocean and Halliburton

Deepwater Horizon: One year later