BP sues US government over federal contracts

BP is returning to court in the US – this time as the plaintiff. The British multinational oil group is suing the government for barring it from gaining new federal contracts after its Deepwater Horizon installation exploded and polluted the Gulf of Mexico in 2010.

The US Environmental Protection Agency imposed the block in November, accusing BP of “lack of business integrity” in handling the disaster, in which oil equivalent to nearly five million barrels gushed into the sea.
The company, one of the US government’s biggest fuel suppliers, is permitted by the agency to complete existing contracts but is banned even from obtaining new leases to drill in the Gulf.

Its lawsuit, in a federal court in Texas, challenges the ban on the grounds that the agency has surpassed its authority and is guilty of an abuse of power.

BP’s case states that the “decision to suspend did not address the overwhelming evidence and record of BP’s present responsibility as a government contractor and leaseholder”, and that it “did not attempt to explain how or why immediate suspension was necessary to protect the public interest, as federal law requires”.

The company claims further that the ban unfairly applies to 21 of its subsidiaries, which were not involved in the oil spill.

Geoff Morrell, BP’s head of US communications, said: “We believe the [agency’s] action here is inappropriate and unjustified as a matter of law and policy, and we are pursuing our right to seek relief in the federal court.
“At the same time we remain open to a reasonable settlement.”

In November BP agreed to pay $4.5bn (£2.89bn, €3.4bn) to meet demands arising from the criminal case against it. The company then reached agreement to pay $7.8bn to individuals and businesses claiming compensation in a class action for the damage inflicted.

It paid a further $10bn to other parties, including local government bodies, that had not joined the class action, and spent $14bn on its response to the disaster and the clean-up operation.

BP points out that therefore it has already been punished for the spill and expects to suffer “irreparable harm” if the ban remains.

However, the company has lost an action to suspend compensation payments until the completion of an official investigation into false claims, and it faces a civil trial in Louisiana in which the Justice Department contends that gross negligence caused the disaster.

The latter case, if proved, could result in an order to pay billions more dollars in environmental fines.