EPA lifts post-Macondo contract suspension in agreement with BP

The US Environmental Protection Agency and BP PLC reached an agreement that will effectively end the bar on new federal contracts imposed on the multinational oil company in the wake of the 2010 Macondo deepwater well incident and crude oil spill.

The administrative agreement will be in place for 5 years, EPA said on Mar. 14. It suspended 25 BP entities and disqualified BP Exploration & Production Inc. from performing new federal contract work at its corporate facility in Houston in November 2012.

EPA made the move after BP pled guilty to criminal charges stemming from the well’s Apr. 20, 2010, blowout and explosion that claimed 11 lives, and the subsequent crude oil leak of an estimate 4.9 million bbl of oil into the Gulf of Mexico.

The suspension did not affect BP’s existing federal contracts, EPA noted. “This is a fair agreement that requires BP to improve its practices in order to meet the terms we’ve outlined together,” said Craig Hooks, EPA’s assistant administrator for administration and resources management. “Many months of discussions and assessments have led up to this point, and I’m confident we’ve secured strong provisions to protect the integrity of federal procurement programs.”

In a separate statement, BP America Inc. Chairman and Pres. John Minge said, “After a lengthy negotiation, BP is pleased to have reached this resolution, which we believe to be fair and reasonable. Today’s agreement will allow America’s largest energy investor to compete again for federal contracts and leases.”

Agreement’s terms

EPA said the agreement, which took effect immediately, requires BP to retain an independent auditor approved by the federal environmental regulatory agency which will conduct an annual review and report on BP’s compliance. There are also specific provisions addressing ethics compliance, corporate governance, and process safety, it added.

The agreement also gives EPA authority to take appropriate corrective action in the event the agreement is breached. The agency said it coordinated its negotiations with the US Department of the Interior, Defense Logistics Agency, and US Coast Guard.

BP said the agreement’s terms and conditions include those contained in the remedial order stemming from its 2012 plea agreement with the US Department of Justice and final judgment order with the US Securities and Exchange Commission. It said it would dismiss a lawsuit it filed against EPA in federal court in Texas alleging improper statutory disqualification and suspension.

Not everyone welcomed news of the agreement. Tyson Slocum, who directs the energy program at the Washington-based Public Citizen advocacy group, said it “lets a corporate felon and repeat offender off the hook for its crimes against people and the environment,” adding, “This is a company that was on criminal probation at the time of the 2010 Deepwater Horizon disaster, and it has failed to prove that it is a responsible contractor deserving of lucrative taxpayer deals.”

Slocum said the agreement’s requirement that BP retain an independent auditor to ensure it complies as a responsible contract is inadequate protection for US taxpayers.

“While we applaud EPA for initiating the ban, it is premature to end it,” he maintained. “BP has failed to demonstrate that the corporate culture that allowed the Alaskan pipeline spill, the Texas City refinery explosion, the propane market manipulation and the Gulf Coast tragedy has changed.”

Contact Nick Snow at nicks@pennwell.com.

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