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BP suspended from federal contracts over 'lack of business integrity' BP suspended from US federal contracts over Deepwater disaster
(about 1 hour later)
The US Environmental Protection Agency said on Wednesday that it has temporarily suspended BP and its affiliates from new contracts with the federal government, citing the oil company's "lack of business integrity" associated with the disastrous 2010 Gulf oil spill. BP will be temporarily banned from seeking new contracts with the US government because of the oil company's "lack of business integrity" during the Gulf of Mexico oil disaster, the Environmental Protection Agency said Wednesday.
Two weeks ago, BP agreed to plead guilty to charges involving the deaths of 11 workers on the Deepwater Horizon oil rig, which exploded and sank in April 2010, setting off the largest offshore oil spill in the US. The order blocks BP temporarily from competing for new oil leases in the Gulf of Mexico – such as the auction of 20m acres taking place on Wednesday – or from bidding on new contracts to supply the Pentagon or other government agencies with fuel.
BP will also plead guilty to lying to Congress about how much oil was spewing from the blown-out Macondo well. It does not affect existing business. BP is the largest oil producer in the Gulf of Mexico, with more Deepwater leases than any other company, according to the BP website.
The agency said Wednesday that the suspension is due to BP's "lack of business integrity as demonstrated by the company's conduct with regard to the Deepwater Horizon blowout, explosion, oil spill, and response". The order was handed down just two weeks after BP agreed to plead guilty to manslaughter and other charges arising from the April 2010 explosion of the Deepwater Horizon oil rig, as well as pay a record $4.5bn in fines.
"Federal executive branch agencies take these actions to ensure the integrity of Federal programs by conducting business only with responsible individuals or companies. Suspensions are a standard practice when a responsibility question is raised by action in a criminal case," the EPA said in its statement. Two BP rig supervisors were also due in a New Orleans court on Wednesday to be formally charged with manslaughter in the deaths of 11 workers aboard the rig. The supervisors, Donald Vidrine and Robert Kaluza, are accused of ignoring abnormal pressure readings seen as a red flag of a well blow-out.
The business implications of the suspension – or its duration – were not immediately clear. A former BP executive David Rainey was also due in court on charges of lying to Congress about the amount of oil that was gushing from the well.
More details soon... The EPA said the suspension was based on BP's conduct at the time of the blow-out as well as the 87 days it took to contain the well. Some 4.9m barrels of crude gushed into the Gulf of Mexico before the well was finally capped.
"EPA is taking this action due to BP's lack of business integrity as demonstrated by the company's conduct with regard to the Deepwater Horizon blowout, explosion, oil spill, and response, as reflected by the filing of a criminal information," the announcement said.
The announcement went on to describe the oil spill as the "largest environmental disaster in US history".
It said BP would remain under suspension, and barred from new federal government contracts and transactions, until the company can demonstrate that it meets federal business standards.
"Federal executive branch agencies take these actions to ensure the integrity of federal programmes by conducting business only with responsible individuals or companies. Suspensions are a standard practice when a responsibility question is raised by action in a criminal case," the EPA announcement said.
The agency gave no further details about the duration of the suspension, and the potential costs to BP were not immediately clear.
However, the EPA action was positively received by a number of key players, including former senator Bob Graham, who had chaired the White House oil spill commission. "I can't put a dollar figure on what that would mean but I would assume that access to one of the larger reserves of petroleum in the world – which the Gulf of Mexico is – would have some economic consequences. And the longer the prohibition, the greater the consequences," Graham told The Guardian.
He went on to praise the Obama administration for holding the oil company to account.
"I think sending a very strong signal that the federal government is going to be a much better steward of public property and that those who are permitted to explore and then potentially exploit those public properties are going to have to conduct themselves by world class standards," Graham said.
Campaign groups also applauded the move by the EPA. But the Oceana conservation group said the tough line from the Obama administration was undercut by its decision to go ahead with new lease sales in the Gulf of Mexico on Wednesday.
"We are pleased that BP is being penalised for the irresponsible actions," said Matt Dundas, the campaign director. But he went on: "Overall, President Obama is missing the lesson of the Deepwater Horizon disaster which is that offshore drilling is inherently dirty and dangerous and needs to be phased out."
There was no immediate reaction from BP on Wednesday morning. It was also not immediately clear whether the oil company had anticipated this step, as it seeks to consign the oil spill in the past.
The oil company, in announcing its plea deal with the Justice Department earlier this month, had specifically said it did not expect to be barred from future business dealings. "Under US law, companies convicted of certain criminal acts can be debarred from contracting with the federal government," the oil company said in its statement. "BP has not been advised of the intention of any federal agency to suspend or debar the company in connection with this plea agreement. BP will continue to work co-operatively with the debarment authority."