Thursday, November 29, 2012

BP Banned from Additional Drilling Leases and New Contracts with U.S.

The U.S. Environmental Protection Agency (EPA) announced on Wednesday that it has temporarily suspended BP Exploration and Production, Inc., BP PLC and affiliated companies (BP) from new contracts with the federal government. This includes oil development leases in a Gulf as well as contracts with the Department of Defense.

The BP suspension will temporarily prevent the company and from getting new federal government contracts, grants or other covered transactions until the company can demonstrate to the EPA that it meets Federal business standards. The suspension does not affect existing agreements and contracts BP has with the government. In 2011 BP was the largest fuel supplier to the U.S. Department of Defense and is likely to be the largest supplier in 2012, and 2013. This past September (2012) a Division of BP products of North America Inc., was awarded a contract for fuel with a maximum $816 million, and in May 2012 BP West Coast Products, L.L.C., doing business as Arco, La Palma, Calif., was awarded a contract with a maximum $782 million for fuel. So, for the short term, BP was barred from the Gulf oil lease auction and needs to demonstrate and document good behavior and environmental practices in fulfillment of their existing contracts.

On November 15, 2012, BP agreed to plead guilty to eleven counts of Misconduct or Neglect of Ship Officers, one count of Obstruction of Congress, one misdemeanor count of a violation of the Clean Water Act, and one misdemeanor count of a violation of the Migratory Bird Treaty Act, all arising from the 2010 Deepwater Horizon disaster that killed 11 people and caused the largest oil spill and EPA is calling in their press release the largest environmental disaster in U.S. history. BP agreed to pay $4.5 billion, including a record $1.26 billion criminal fine, to end all criminal charges and resolve securities claims against them. Separate from the corporate manslaughter charges, a federal grand jury has indicted two BP supervisors who were on board the Deepwater Horizon with  manslaughter and involuntary manslaughter for each of the 11 men killed in the blast, as well as a criminal violation of the clean water act.

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