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BP Sues to Lift Federal Contract Suspension

BP plc has sued the U.S. government to overturn a suspension from federal contracts for most of its entities, including the exploration and production (E&P) arm.

The lawsuit, filed in U.S. District Court for the Southern District of Texas, seeks to lift the ban imposed by the U.S. Environmental Protection Agency last November because of "BP's lack of business integrity as demonstrated by the company's contact with regard to the Deepwater Horizon blowout, explosion, oil spill and response..." (see Daily GPINov. 29, 2012). EPA disqualified BP's E&P arm from federal contracts in February.

The suspension was issued to "temporarily" prevent BP from securing new federal government contracts, grants or other covered transactions until it could provide evidence that it was meeting federal business standards. The suspension did not impact existing agreements that BP had with the government.

"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," BP said. "At the same time, we remain open to a reasonable settlement with the EPA."

BP's complaint names the EPA, Administrator Gina McCarthy and EPA's Richard Pelletier, who is in charge of debarment decisions.

 The ban prevents BP from securing new oil and gas leases in the United States and may hamper its activities in the Gulf of Mexico (GOM), where it has 719 leases, the lawsuit said. BP's GOM output dropped to 219,000 boe/d in 2012 from 338,000 in 2010, in part because of the GOM deepwater moratorium following the Macondo well blowout, as well as sales of assets.

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