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November 28, 2012

EPA Suspends BP From New Federal Government Contracts

Posted in: BP oil disaster

Cumulative BP oil slick footprint from July 2010

The Environmental Protection Agency has temporarily suspended BP from any new contracts with the federal government. In a statement, the EPA attributes this action 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.”

BP just entered into a criminal settlement with the Justice Department over the Deepwater Horizon disaster, pleading guilty to 14 criminal charges, including one misdemeanor violation of the Clean Water Act and one misdemeanor violation of the Migratory Bird Treaty Act. Two rig workers were charged with manslaughter and former BP Vice President David Rainey was charged with obstruction of justice for withholding information about the amount of oil spilled into the Gulf of Mexico.

Despite the settlement, however, the EPA suspended new contracts with BP. There are still outstanding civil penalties to be determined, potentially through a trial process. And the EPA has a role in those civil penalties for violations of the Clean Water Act. In its statement, the EPA made it sound like they merely engaged in standard practice, for the federal government to “conduct business only with responsible individuals or companies.”

This is a temporary suspension on new government contracts, and does not affect existing contracts. So BP will not get evicted from their current rigs in the Gulf of Mexico, for example.

The BBC adds:

The UK company was the biggest fuel supplier to the US Department of Defense, which awarded it contracts valued at about $1.35bn (£845m) in 2011.

BP’s contracts with the US military jumped 33% over a year in 2011, according to data from Bloomberg. The group was awarded a fuel contract in May from the Pentagon while it faced mounting legal costs over the disaster.

Clearly BP won’t go broke without those new contracts. And we don’t know how long the suspension will last. But for now, this cuts off a key profit center for the company, perhaps to gain leverage in the ultimate disbursement of civil penalties.


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