BP’s past casts a long shadow over its future in the US

Documents filed as part of a legal battle between BP and the US Environmental Protection Agency reveal just how far apart the two are when it comes to restoring BP’s ability to compete for lucrative government contracts or obtain offshore leases.

BP filed a lawsuit Monday challenging the EPA’s suspension of the company’s ability to win new business with the federal government. The suspension was initiated last November when BP agreed to plead guilty to criminal charges stemming from the April 2010 Deepwater Horizon blowout and spill in the Gulf of Mexico.

A more serious mandatory debarment was issued in January, when BP’s guilty plea was formally accepted. The debarment prohibits BP’s exploration and production arm from doing any business with the government from its corporate headquarters in Houston, essentially eliminating BP as a bidder for Outer Continental Shelf leases.

The suspension and debarment are not designed to punish a company for past offenses, but to protect the US from unscrupulous or unreliable contractors. The limits are supposed to be lifted once a company proves that the conditions giving rise to the violation that triggered the government action have been corrected.

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BP’s lawsuit lays out the reasons why it should not have been suspended in the first place and why the current suspension should be immediately lifted.

Chief among the reasons is that the US government continued to do business with BP after the blowout at its Macondo well.

“BP immediately accepted responsibility for its role in the accident and promptly implemented numerous remedial and corrective measures to improve its operations and prevent a similar occurrence,” BP’s lawsuit states. “As a result, the federal government continued to do business with BP.”

In fact, the government awarded 23 fuel contracts to BP following the Deepwater Horizon blowout.

“The government has thus repeatedly concluded over the past three years that BP is responsible and, indeed, continues to purchase fuel from BP under the parties’ existing contracts,” the lawsuit states.

BP also noted that it continued to be awarded deepwater leases in the Gulf after the accident, and was praised by regulators for the efforts it made to boost the safety of its operations.

When Michael Bromwich, then director of the Bureau of Safety and Environmental Enforcement, was asked in December 2011 whether BSEE would seek to bar BP from bidding on contracts because of Macondo, he said he did not consider it appropriate to administer the “administrative death penalty” in this case.

But all that was before the admissions BP made in the deal it struck with the Justice Department — admissions that included lying to Congress about the flow rate of the leaking Macondo oil and negligent acts that led to the death of 11 workers.

At least that is the viewpoint of Richard Pelletier, the EPA officer who heard BP’s appeal of its suspension and decided on July 19 that the suspension should remain.

Pelletier’s language in his 20-page decision is damning. He makes clear that he weighed the evidence against BP in the context of a broader and longer safety record, going back to the 2005 explosion of BP’s Texas City refinery, which killed 15 workers.

Pelletier references language in an April 2009 presentation BP made when the EPA then was considering suspending the company because of criminal convictions stemming from Texas City and in the wake of a major oil spill from a BP pipeline on Alaska’s North Slope.

The report included a statement from Tony Hayward, then the BP Group CEO, who said: “Our goals are simply stated. No accidents, no harm to people, and no damage to the environment.”

Pelletier then takes those words and shoves them firmly down BP’s throat.

“Seventeen months later the (Deepwater Horizon blowout) occurred, resulting in the death of 11 men and heretofore unprecedented environmental damage,” Pelletier wrote. “In the view of the tragedy…BP did not achieve the promised goals of ‘No accidents, no harm to people, and no damage to the environment,’ however well intended.”

So, Pelletier asks, if we couldn’t believe them then, why should we believe them now?

Pelletier concludes that, despite BP’s detailed plan outlining the internal safety and culture improvements it is making, the company’s past speaks louder than its present.

“I find that a plan required as a condition of probation and for which there is no record of compliance provides limited evidence” of BP’s current ability to be a reliable contractor, Pelletier concludes.

For it’s part, BP says it was blindsided by Pelletier’s report, and that during months of negotiations with the EPA and other federal agencies, no one suggested that previous accidents would factor into a decision on BP’s current ability to fulfill government contracts.

BP also notes that absent a list of more specific steps that the EPA would consider sufficient to “lift the conditions” that provoked the suspension, then this “temporary” step becomes, in fact, a permanent ban in violation of the law.

How this plays out is anyone’s guess. But it is likely that BP will not participate in the August 28 Western Gulf lease sale, making this the third sale it has missed since the suspension.

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  1. Robert Godfrey at August 15, 2013 12:18 pm

    In 2005, Federal Energy Regulatory Commission (FERC) Office of Energy Products, Gas, Environment and Engineering then-director Richard Hoffman stated at a public meeting in Maine that BP’s lack of safety culture as demonstrated by the Texas City explosion would not prevent FERC from issuing permits to construct then-proposed Crown Landing LNG import terminal in New Jersey and Pelican Island LNG at Galvaston, Texas. (See http://www.savepassamaquoddybay.org/news_archives/2005/news_2005sep.html#30_bdn)
    Thankfully, the EPA takes its public safety responsibility far more seriously than does FERC.


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