UK government backs BP in fight against ban from US federal contracts

http://www.theguardian.com/business/2013/dec/03/uk-government-bp-fight-ban-us-federal-contracts

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The UK government has weighed in to back BP's fight against a US ban from seeking federal contracts following the fatal Deepwater Horizon blowout.

In court filings that emerged on Tuesday, the government described the ban as "excessive" and threatening "unjustified economic consequences" – marking the first time the coalition government has made a public defence of the oil giant.

The US Environmental Protection Agency barred BP last year from taking any new government contracts, following the 2010 Gulf of Mexico oil rig explosion that killed 11 people and triggered the worst environmental disaster in US history. BP then sued the US government over the ban in August.

The UK government said it recognised "the grave consequences" of the spill, but argues that the ban - which extends to BP affiliates not involved in the disaster - fails to meet "reasonable standards".

"It is the view of Her Majesty's government that the EPA's disqualification and suspension of multiple BP entities may have been excessive," the filing says. "The government is concerned that such a broad sanction can and will have serious and unjustified economic consequences."

The latest move is a boost for BP, which has been urging prime minister David Cameron to intervene for months. In May, anonymous executives were quoted warning that the oil giant faced financial crisis unless action was taken to limit the spiralling compensation bill, running into tens of billions of dollars. BP has since described some of the compensation claims it faces as "fictitious" and "absurd".

In its latest financial statement BP revealed that it had set aside $42.5bn (£28bn) for cleanup costs, fines and compensation related to the spill. But the final bill will not become clear until early next year when a US district court rules on the fine BP must pay under the Clean Water Act.

In its legal submission, the government argues: "Regulators should apply the law fairly and predictably, lest their actions erode global public trust in the institutions and the individuals involved. In this case, Her Majesty's government is concerned that these reasonable standards have not been met."

BP and its partners face fines of as much as $1,100 for each barrel of oil released into the Gulf if they are found negligent in their actions while drilling the well and in limiting the effects of the accident. Those fines could rise to $4,300 a barrel if the responsible parties are found to have acted with gross negligence or "wilful misconduct".

At the height of the spill, withering criticism from President Barack Obama directed at "British Petroleum" – the name the oil major discarded in 1998 – triggered accusations of anti-British sentiment from Conservative politicians, including London mayor Boris Johnson, and UK business leaders. After a spate of hostile headlines from the tabloid press, Cameron said he did not want a war of words with the US, but called on Obama not to single out BP above the other companies involved.

A BP spokesperson welcomed the UK's legal submission: "The EPA's sweeping suspension and debarment of BP has gone on for far too long and is not supported by the law."

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