Obama Ends Federal Contracts With BP Citing "Lack of Business Integrity"

The bodies of 11 workers were never recovered in the Deepwater Horizon oil rig spill in the Gulf of Mexico in April 2010. (Gerald Herbert/File/Associated Press)

http://www.cbc.ca/news/business/story/2012/11/28/wrd-bp-oil-spill-charges-court.html

BP suspended from new U.S. government contracts

2 BP supervisors, ex-executive in court on Gulf oil spill charges

The Associated Press Posted: Nov 28, 2012 8:36 AM ET Last Updated: Nov 28, 2012 1:47 PM ET

The Obama administration put a temporary stop to new federal contracts with British oil company BP today, citing the company's "lack of business integrity" and criminal proceedings stemming from the Deepwater Horizon disaster in 2010.

The action by the Environmental Protection Agency won't affect current contracts, but prevents BP and its affiliates from new government contracts and grants "until the company can provide sufficient evidence to EPA demonstrating that it meets federal business standards," the agency said.

In a further blow to the company, BP will be disqualified from winning new leases to drill for oil or gas on taxpayer-owned land until the suspension is lifted. The federal government planned a sale Wednesday of more than eight hectares of offshore land in the Gulf of Mexico. BP won't be eligible for that sale, the Interior Department said.

In London, BP sought to minimize the effects of the suspension, and said it has been informed by the EPA that an agreement to resolve the dispute is in the works. Highlighting its investments in the U.S. economy, BP said it employs 23,000 American workers and has invested more in the U.S. than any other oil and gas company.

"The company has made significant enhancements since the accident," BP said in a statement, noting its efforts to adopt new drilling standards and to reorganize its operations in response to the spill.

The suspension will not affect any existing agreements between BP and the federal government.

The EPA said the suspension was standard practice when a criminal case raises responsibility questions about a company. The suspension came the same day two BP rig supervisors and a former executive were scheduled to be arraigned on criminal charges stemming from the deadly explosion and the company's response to the resulting oil spill in the Gulf of Mexico.

BP to plead guilty, pay $4.5B

BP announced earlier in November that it will plead guilty to manslaughter, obstruction of Congress and other charges and will pay a record $4.5 billion in penalties to resolve a Justice Department investigation of the disaster. Attorneys and a federal judge will meet in December to discuss a plea date.

'The wreckage of BP's recklessness is still sitting at the bottom of the ocean.'
 —Ed Markey, congressman for the 7th District of Massachusetts

"When someone recklessly crashes a car, their licence and keys are taken away," said Ed Markey, congressman for the 7th District of Massachusetts, the top Democrat on the House Natural Resources Committee and a frequent critic of BP.

"The wreckage of BP's recklessness is still sitting at the bottom of the ocean", the Massachusetts Democrat said.

David Rainey was indicted Nov. 15 on counts of obstruction of
Congress and false statements. (Cheryl Gerber/File/Associated Press)

When it agreed to the plea deal, BP said it hadn't been advised that any federal agency intended to suspend it. However, an EPA official said Wednesday that the plea agreement includes a provision for how BP can satisfy the concerns that stand in the way of the suspension being lifted.

That order, if the court accepts it during sentencing, would give BP 60 days to address the conditions that led to violations. If the government approves the plan, it becomes part of BP's criminal probation.

But the suspension could still remain in effect while civil claims against BP move forward, said the EPA official, who spoke on condition of anonymity to discuss terms of the agreement. In addition to the criminal proceedings, BP faces huge civil claims covering the billions of dollars in civil penalties the U.S. government and the Gulf states are seeking from it because of environmental damage.

A trial is scheduled for early next year. Attorney General Eric Holder and the states have vowed to press their case and BP has vowed to fight it. However, negotiations have been under way in an effort to reach a settlement. At the time of the criminal settlement, Holder said the government intended to show in the upcoming civil case that BP was grossly negligent in causing the spill.

2 BP supervisors, ex-executive in court on spill charges

Two BP rig supervisors and a former BP executive were scheduled to be arraigned Wednesday on criminal charges stemming from the explosion and the company's response to the oil spill.

BP well site leaders Robert Kaluza and Donald Vidrine were indicted this month on manslaughter charges in the death of the 11 rig workers. The federal indictment accuses them of disregarding abnormal high-pressure readings that should have been glaring indications of trouble just before the blowout of BP's Macondo well.

Former BP executive David Rainey was charged separately with concealing information from Congress about the amount of oil that was leaking from the well.

Their defence attorneys have vowed to fight the charges