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BP sues US environment agency over ban on government contracts

19 August 2013

BP has launched a legal challenge against the US Environmental Protection Agency (EPA) over its decision to exclude the UK-based oil major from all new US government contracts. The ban on new supply and exploration contracts was imposed after BP pleaded guilty to criminal charges related to the 2010 Gulf of Mexico disaster. 

The 2010 Deepwater Horizon incident killed 11 men and spewed millions of barrels of oil into the Gulf in the worst offshore spill in US history
The 2010 Deepwater Horizon incident killed 11 men and spewed millions of barrels of oil into the Gulf in the worst offshore spill in US history

The EPA accused it of a “lack of business integrity” over the handling of the 2010 accident, which killed 11 men and spewed millions of barrels of oil into the Gulf in the worst offshore spill in US history.

BP, which was taken by surprise by the EPA ban, initially suggested it would only be a brief suspension that would soon be resolved through an agreement. But in February the EPA took further action to issue a “mandatory debarment” against BP Exploration and Production’s Houston headquarters.

BP has now sued the EPA and two senior officials at the regulator, demanding the ban be lifted. It alleges that “the suspension of BP is unlawful, arbitrary, capricious, and an abuse of EPA’s discretion” and says it “faces a substantial threat of irreparable harm if an injunction is not granted”.

BP is one of the largest fuel suppliers to the US government, with contracts worth more than $1.34bn, primarily supplying the military. It also has more than 700 oil and gas exploration blocks in the Gulf, which remains one of its most important regions. Existing contracts are not affected by the ban.

BP said in a court filing: “EPA’s suspension of BP is not temporary and there is no pending agency investigation or legal or debarment proceedings that would permit the suspension to continue lawfully.”

The move against the EPA adds yet another strand to the ever-growing web of litigation in which BP is embroiled over the Gulf disaster. The company is still on trial over civil penalties and could face fines of more than $17bn under the Clean Water Act - compared with $3.5bn it has budgeted - if it is found grossly negligent, a charge it denies.

It is also battling to stem payouts under the compensation settlement it struck last year with businesses who say they lost money in the spill. BP says many of the payouts are for “fictitious” losses. The cost has risen from an original $7.8bn estimate to $9.6bn and is this quarter expected to use up the remaining $300m BP has set aside, pushing the total bill for the disaster above $42.4bn.


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