Biden's announcement after a meeting with Iraqi President Jalal Talabani shows just how diplomatically sensitive the incident remains nearly three years later.
Blackwater security contractors were guarding U.S. diplomats when the guards opened fire in a crowded Baghdad intersection. Seventeen people were killed, including women and children, in a shooting that inflamed anti-American sentiment in Iraqi.
The U.S. rebuffed Iraqi demands that the U.S. contractors face trial in Iraqi courts. After a lengthy investigation, U.S. prosecutors charged five of the contractors with manslaughter and took a guilty plea from a sixth.
But the case fell apart in December after a judge found that the Justice Department mishandled evidence and violated the guards' constitutional rights. Prosecutors now face difficult odds getting an appeals court to reinstate the case.
The dismissal outraged many Iraqis, who said it showed the Americans considered themselves above the law. The Iraqi government began collecting signatures for a class-action lawsuit from victims who were wounded or lost relatives.
Messages seeking comment from lawyers for the guards were not immediately returned Saturday.
Blackwater has said the guards were innocent, contending there were ambushed by insurgents. Prosecutors said the shooting was unprovoked.
Court documents paint a murky picture of a case rife with conflicting evidence. Some witnesses say the Blackwater convoy was under fire; others say it wasn't. Some said the entire convoy fired into the intersection; others said only a few men opened fire.
Even the government's key witnesses, three members of the Blackwater convoy, at times seemed to undercut the government's case.
Since the shooting, Blackwater has renamed itself Xe Services and overhauled its management. Iraq has pulled the company's license to operate in the country.
By Associated Press Writer Matt Apuzzo