The U.S. government is suspending oil giant BP from winning new federal contracts or oil leases, saying the company’s “lack of business integrity” makes it an unfit partner in the wake of the 2010 Deepwater Horizon oil spill.
The Environmental Protection Agency says the suspension is indefinite. It will last “until the company can provide sufficient evidence to EPA demonstrating that it meets federal business standards.”
The action stems from criminal charges against BP for the Deepwater Horizon disaster that began on April 20, 2010, killing 11 workers and leading to a massive oil spill in the Gulf of Mexico.
BP this month agreed to plead guilty and pay a $4.5 billion penalty. The government also is pursuing a civil lawsuit against BP over the spill.
The Environmental Protection Agency’s decision suspends BP from new federal leases and contracts, but the company will be able to continue existing arrangements with the government. The British oil company is the leading supplier of fuel to the U.S. military, with a contract worth more than $1 billion a year.
It also is among the top drillers in Alaska and the largest producer of oil and gas in the Gulf of Mexico. BP’s suspension was announced just before a lease sale Wednesday in the western Gulf of Mexico. Tommy Beaudreau, director of the U.S. Bureau of Ocean Energy Management, said the government would not award “any bid for which BP was the high bidder until the suspension was resolved.”
But Beaudreau didn’t join the EPA in slamming the company. “BP has gone through significant internal reforms,” he said. “I believe BP is genuine and sincere about reforming the way it does business offshore and making real changes not only to its practices but its culture.”
Assistant Attorney General Lanny Breuer has said the Deepwater Horizon disaster was a result of BP’s culture of “profit over prudence.”
EPA officials would not say what exactly BP needs to do to show that it meets federal business standards and have the suspension lifted.
BP released a statement saying the EPA indicated a draft agreement would be out soon on what has to happen to end the suspension. The company said that following the Deepwater Horizon disaster it made leadership changes, reorganized its business and adopted voluntary drilling standards.
“In the two and a half years since the Deepwater Horizon accident, the U.S. government has granted BP more than 50 new leases in the Gulf of Mexico, where the company has been drilling safely since the government moratorium was lifted,” the company said in its statement.
Federal contracting suspensions usually don’t last more than 18 months. But the government could hold off on lifting the suspension until court action against BP is resolved.
The United States accounts for more than 20 percent of BP’s global production. The impact on BP depends on the length of the suspension and if the company gets a waiver from the Department of Defense to allow it to provide fuel, said Scott Amey, general counsel for the Project on Government Oversight, a nonpartisan government watchdog organization.
He said some suspensions last just a few days and others more than a year.
“We’ll have to wait to find out what the long-term impact is,” Amey said. “I think that this is a sign the government is taking its responsibilities seriously.”
Massachusetts Rep. Ed Markey applauded the suspension, saying that BP behaved recklessly in the Gulf of Mexico and now has to pay the penalty.
“This kind of timeout is an appropriate element of the suite of criminal, civil and economic punishments that BP should pay for their disaster,” said Markey, the top Democrat on the House Natural Resources Committee.