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Latest Sanction Against BP Goes Beyond Gulf Spill

The Obama administration temporarily banned BP from federal contracts, but the sanction has been years in the making.

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For now, EPA officials tell ProPublica that the suspension could last anywhere from two to 18 months, depending on the final terms of the Department of Justice's plea agreement with BP. If the civil suits against BP remain unresolved, the suspension could stay in place longer.

As part of its criminal plea announced earlier this month, BP agreed to hire ethics and safety monitors for its Gulf operations and regularly evaluate its facilities for safety and environmental compliance. If the court approves the plea agreement, those terms would become a part of BP's probation, and thus a term of the suspension and debarment proceedings, an EPA spokesperson told ProPublica.

A spokesperson assigned to speak on behalf of BP told ProPublica that the company had not intended to bid on new Gulf leases in Wednesday's sale, and was not aware of the EPA's suspension decision until after their bids were due.  But a Nov. 15 press releaseand filings with the SEC both suggest the company knew a ban could be coming.

BP was not explicitly banned from participating in the sale of new rights to drill in western Gulf of Mexico waters Wednesday, but would not have been allowed to win any leases if it had competed for them, a Department of Interior official said.

Since the 2010 spill in the Gulf, the government has granted BP more than 50 new leases in the Gulf of Mexico. BP is the single  largest investor and leaseholder in the Gulf, where it currently operates seven drilling rigs.

"BP has invested more than $52 billion in the United States," the company said in a statement, "more than any other oil and gas company and more than it invests in any other country." It emphasized that it employs 23,000 people in the U.S. and said it supports nearly a quarter of a million American jobs.

So far, BP has spent more than $14 billion on cleanup and settlement costs related to the Gulf spill, and expects to pay more than $37 billion — including in criminal and civil settlements — by the time it is finished. In addition, the company has stated a renewed focus on safety and reorganized its corporate operations to increase safety and environmental accountability.

"I believe BP is genuine and sincere" in its efforts, said Tommy Beaudreau, director of the Bureau of Ocean Energy Management, in a press conference held Wednesday after the government's lease sale.

BP also emphasized that it is working speedily towards a resolution with the government.

"BP has been in regular dialogue with the EPA and has already provided both a present responsibility statement of more than 100 pages and supplemental answers to the EPA's questions," it said in a statement. "The EPA has informed BP that it is preparing a proposed administrative agreement that, if agreed upon, would effectively resolve and lift this temporary suspension."

Suevon Lee contributed reporting to this story.

 

Abrahm Lustgarten is a former staff writer and contributor for Fortune, and has written for Salon, Esquire, the Washington Post and the New York Times.
 
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