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BP Sues U.S. to Drop Contract Ban

Thursday, August 15, 2013

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British oil giant BP has filed suit against the U.S. Environmental Protection Agency, seeking to lift a federal contract ban imposed after the company was charged with crimes, including manslaughter, in the Deepwater Horizon disaster.

EPA announced the ban on federal contracts in November, saying BP Exploration and Production Inc. had displayed a “lack of business integrity” in the "blowout, explosion, oil spill, and response" regarding the April 2010 accident, which killed 11 oil rig workers in the Gulf of Mexico.

The ban came two weeks after BP agreed to plead guilty to 14 criminal charges, including manslaughter, and agreed to pay the largest criminal penalty in U.S. history in the case.


BP says it has taken extensive steps to improve safety since the April 2010 accident and continued to receive contracts.

The U.S. Justice Department also announced criminal indictments against three BP employees in the case.

Indefinite Suspension

EPA called the ban temporary but set no date to lift it. The suspension, called a debarment, applied to new federal contracts and grants.

“Suspensions are a standard practice when a responsibility question is raised by action in a criminal case,” EPA said at the time.

The agency said the suspension would continue until BP Exploration and Production, BP PLC and other affiliated companies “can provide sufficient evidence to EPA demonstrating that it meets federal business standards."

In a lawsuit filed Monday (Aug. 12) in U.S. District Court in Texas, however, BP contends that the ban unfairly penalizes nearly two dozen affiliated companies that had nothing to do with the Deepwater Horizon disaster. It also says the ban was unlawfully imposed without prior notice.

Fuel, Gas Supplier

The suit calls BP "a long-standing business partner of the federal goverment." It notes that BP is "one of the largest fuel suppliers to the government," with contracts worth more than $1.34 billion. BP also holds more than $224 million in international contracts with the U.S. government, the company says.

Furthermore, the company holds hundreds of oil and gas leases in the Gulf of Mexico alone, nearly all of them in deepwater, BP said.

Deepwater Horizon
U.S. Coast Guard

BP pleaded guilty to criminal charges, including manslaughter, in the Deepwater Horizon accident that killed 11 workers in the Gulf of Mexico.

The suit notes that the government continued to award fuel contracts to BP after Deepwater Horizon, with the appropriate federal contracting officer reviewing BP's record before each contract.

In addition, BP said, it has received 84 licenses for drilling in 12 countries since 2010.

'Abuse of Discretion'

BP noted that Deepwater Horizon-related criminal proceedings against the company were concluded in February.

The oil company also said it had presented EPA with voluminous documentation concerning its responsibility for the Deepwater Horizon explosion as well as the steps it had taken to prevent such incidents in the future.

It called the ban "unlawful, artibrary, capricious, and an abuse of EPA's discretion."

A federal-court civil suit in the disaster is scheduled to resume next month in New Orleans.


Tagged categories: Accidents; BP; Fatalities; Government; Government contracts; Laws and litigation; Oil and Gas

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