BP Working with EPA to Resolve Ban

BP announced late Wednesday that it was working with the U.S. Environmental Protection Agency to demonstrate "present responsibility" and have a temporary ban on the company entering into new Federal contracts lifted.

The EPA announced Wednesday that it was temporarily suspending BP from entering into new Federal contracts due to BP's "lack of business integrity" in relation to the Deepwater Horizon oil spill and response. The news coincided with the announcement that more than $157 million of bids have been made in the latest Western Gulf of Mexico Lease Sale, but that BP did not bid on any blocks in this sale.

BP confirmed in a statement that the EPA's voluntary suspension would only apply to new leases and would not affect any existing contracts the company has with the U.S. government, including those relating to current and ongoing drilling and production in the Gulf of Mexico.

BP said that the EPA's action is pursuant to administrative procedures providing for discretionary suspension until a company can demonstrate "present responsibility" to conduct business with the U.S. government. The firm said that it 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 based on that submission.

BP also said that in support of its efforts to establish present responsibility, the US Department of Justice has agreed to advise any appropriate suspension or banning authority that in the DOJ's view BP has accepted criminal responsibility for its conduct relating to the Deepwater Horizon accident. In mid-November the DOJ and BP announced they had come to an agreement to resolve all Federal charges and all claims by the Securities and Exchange Commission connected to the disaster.

BP added that the EPA itself has informed BP that it is preparing a proposed administrative agreement that, if agreed upon, would effectively resolve and lift the temporary suspension.

Meanwhile, debt ratings agency Fitch Ratings said Thursday in its own statement on the matter that the ban on BP winning new US government contracts is likely to be short lived because of the importance of the US market to the oil group and its significant investment in safety since the Macondo disaster.



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Ben | Nov. 30, 2012
There were technical, operational and management lapses, no doubt, that led to this unfortunate incident. However, in my opinion, the federal government agency overseeing the safety of the drilling operation also failed miserably in its due diligence responsibilities. Deepwater drilling was not new to the oil and gas industry and several wells were drilled before Macondo with little understanding of how a blowout should be responded to. The government failed to verify the sufficiency of blowout and oil spill mitigation plans for deepwater drilling, prior to approving applications to drill. BP has paid dearly for this incident, but their efforts since then have led to multiple new safety and environmental research projects, inniovations and initiatives to prevent a recurrence. Therefore, the ban appears to be unfair to BP.

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