EPA Temporarily Halts New Federal Contracts For BP

By Eyder Peralta

November 28, 2012

Citing a "lack of business integrity," the Environmental Protection Agency announced it was temporarily suspending the oil giant BP from entering into new contracts with the federal government.

In a press release, the EPA said BP demonstrated the lack of integrity during the Deepwater Horizon "blowout, explosion, oil spill and response." This kind of suspension, the EPA explained, is "standard practice when a responsibility question is raised by action in a criminal case."

Earlier this month, as we reported, BP agreed to plead guilty to criminal misconduct and agreed to pay a record $4 billion in criminal penalties.

"The BP suspension will temporarily prevent the company and the named affiliates from getting new federal government contracts, grants or other covered transactions until the company can provide sufficient evidence to EPA demonstrating that it meets Federal business standards," the EPA said. "The suspension does not affect existing agreements BP may have with the government."

The Houston Chronicle's Loren Steffy, a business columnist, says that the suspension, however, could affect BP's ability to get new leases to drill in the Gulf of Mexico and could affect the extension of some of the existing leases.

"The London-based oil giant is the largest leaseholder in the deep-water Gulf of Mexico, with more than 700 leases, and it is the gulf's largest producer of oil and gas from more than 20 fields there," The Washington Post reports.

The Post adds that generally these kinds of suspensions are limited to 18 months.

Steffy notes:

"It's not clear what the financial impact will be, but the decision sends a strong message to BP — as well as other companies operating in the Gulf — about the importance of process safety. The EPA was designated as the lead federal agency in making the determination for the suspension. In making it's decision, its done what federal regulators with the Bureau of Safety and Environmental Enforcement have steadfastly refused to do: hold operators economically accountable for their actions."

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