BP Gulf of Mexico oil spill disaster in 2010
BP plc has launched legal action to try to overturn a ban on it gaining new US government contracts, claiming it faces a “substantial threat of irreparable harm”.
The oil giant was handed a temporary ban by the US Environmental Protection Agency in November, freezing it out of new supply and exploration contracts, after it pleaded guilty to criminal charges related to the Gulf of Mexico disaster.
The EPA accused it of a “lack of business integrity” over the handling of the 2010 spill. BP, which was taken by surprise by the ban, had 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 agency, demanding the suspension and debarment be lifted. It alleges that “the suspension of BP Is unlawful, arbitrary, capricious, and an abuse of EPA’s discretion”.
It claims it “faces a substantial threat of irreparable harm if an injunction is not granted”.
The claim stands at odds with comments by BP chief executive Bob Dudley who just two weeks ago told reporters the ban “isn’t causing distress in any way”.
BP has contracts to provide fuels to the US military worth more than $1.34bn and has more than 700 oil and gas exploration blocks in the Gulf of Mexico, which remains one of its most important regions.
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 oil giant hinted in its second-quarter results at the end of July that further action against the EPA was possible, noting: “Decisions reached by the EPA can be challenged in federal court.”
It added that: “Prolonged suspension or debarment from entering new federal contracts… could have a material adverse impact on the group’s operations in the US.”
Despite this, Mr Dudley played down the significance of the ban, saying: “We have largest acreage position in Gulf of Mexico, more than 700 blocks… that’s plenty, we have a lot.
“We have been debarred from supplying fuel to the US military going forward but quite frankly we have a very big business in the US and this is not distracting us from what we do.”
Asked about the possibility of mounting a challenge against the EPA, he said: “I think that’s a more routine discussion we have with the EPA. The fact we haven’t got the details of that worked out isn’t causing distress in any way.”
BP has previously insisted the contracts are relatively low margin despite the high revenues involved.
