BP, EPA Spar Over Government Contract Suspension

Weary Of Negotiating, BP Sues For 'Relief' From Gulf Spill Punishment

WASHINGTON -- BP, the oil giant whose exploding well dumped more than 200 million gallons of oil into the Gulf of Mexico in 2010, has sued the Environmental Protection Agency, challenging the government's temporary ban on BP obtaining new U.S. leases or government contracts.

In a lawsuit filed in U.S. District Court in the Southern District of Texas last week, London-based BP argues that the EPA's November 2012 suspension of the company from new U.S. contracts was "punitive, arbitrary, capricious, and an abuse of EPA's discretion." BP, Europe's second-biggest oil company, asks the court to declare the suspension null and void and to block the EPA from enforcing it.

The EPA suspension, citing BP's "seriously improper conduct" in preventing and dealing with the spill and concealing its size, will stay in effect until the company shows it "meets federal business standards."

Such punishment is rare against companies as big as BP, especially so long after a disaster. "This only happens generally when you are not a central contractor that anyone cares about and you've done something like embezzlement, fraud, overcharging, that kind of thing," said Rena Steinzor, a law professor at the University of Maryland and the president of the Center for Progressive Reform. "It's extremely uncommon," said Steinzor, author of a law journal article calling for the federal government to permanently bar BP because of its history of accidents.

BP's lawsuit questions why the government treated the company as a responsible contractor for more than 2 1/2 years after the Deepwater Horizon blowout, awarding it 23 new government fuel contracts before imposing the suspension.
BP also complains the suspension should not apply to 21 subsidiaries not involved in the Gulf spill. The lawsuit says BP had been working with EPA to develop a plan to address safety and environmental procedures within the company before the suspension.

“We believe that the EPA's action here is inappropriate and unjustified as a matter of law and policy, and we are pursuing our right to seek relief in federal court," Geoff Morrell, BP's head of U.S. communications, said in a statement. "At the same time, we remain open to a reasonable settlement with the EPA.”

The suspension came several weeks after the Department of Justice announced a plea agreement to settle criminal charges against BP. The company agreed to pay $4.5 billion in fines and pleaded guilty to 11 felony counts of misconduct and neglect related to the deaths of 11 workers on the Deepwater Horizon. BP also pleaded guilty to one felony count of obstructing justice for lying to Congress about the size of the spill, and to misdemeanor counts for violating the Clean Water Act and Migratory Bird Treaty Act. BP's lawsuit claims its plea agreement protects the company from the EPA's suspension.

Scott Amey, general counsel at the Project on Government Oversight, said the timing of the EPA's suspension of BP "has had me scratching my head."

"I was shocked that EPA took that action so long after the oil spill," Amey said. He added that he thinks the company's challenge is valid. "But I think they should be working more on altering their corporate policies and procedures to convince the government they're presently responsible and should be removed from the list rather than filing a complaint in court." He said BP has a long history of misconduct as a U.S. contractor, with his group cataloging 63 instances of misconduct by BP and its subsidiaries since 1995.

The lawsuit doesn't say how much the suspension is costing BP, and the company declined to comment. BP is the largest supplier of fuel to the U.S. military, with $1.34 billion in federal contracts, which aren't affected by the suspension.

According to the The Telegraph, BP CEO Bob Dudley said recently that the suspension was not "causing distress in any way" for the company.

"We have largest acreage position in Gulf of Mexico, more than 700 blocks ... that’s plenty, we have a lot," Dudley said. "We have been debarred from supplying fuel to the U.S. military going forward, but quite frankly we have a very big business in the U.S. and this is not distracting us from what we do."

In addition to its tangle with the EPA, BP remains the target of civil lawsuits over the Gulf spill, which could cost it an additional $17.5 billion.

BP has said it reserved $42.3 billion to pay for the spill. Dudley recently told Bloomberg Businessweek that he was frustrated with the settlement process and was increasingly turning to the courtroom to get beyond the spill.

An EPA spokesman referred HuffPost's request for comment to the Department of Justice, where a spokesman declined to comment because "the matter is pending litigation." The government has until Oct. 13 to respond to the lawsuit in court.

BP's history of accidents includes the Texas City Refinery explosion in March 2005, which killed 15 employees and injured 170 others. A BP subsidiary was also forced to pay $255 million to Alaska for two oil spills on the North Slope in 2006.

Even after those tragedies, BP didn't appear to do the overhaul of safety standards that it promised, said Michael Pender, who served as director of legal counsel for the EPA's Office of Criminal Enforcement, Forensics, and Training from 1992 to 2000. He pointed to BP's oil spill response plan for the Gulf of Mexico, which was found after the Deepwater Horizon disaster to include rescue strategies for sea lions, seals, sea otters, and walruses -- none of which live in the Gulf.

"Following the Texas City conviction, BP was required to implement a corporate environmental management approach that would be designed to prevent this from happening," said Pender. "But it's obvious they failed."

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