British government comes to defense of BP


Kurt Mix, center, arrives at the Hale Boggs Federal Building in New Orleans on Tuesday. The former BP drilling engineer is charged with deleting text messages and voice mails about the company's response to its massive 2010 oil spill in the Gulf of Mexico. (Jonathan Bachman/AP)
December 3, 2013

The British government has taken the unusual step of filing a brief in a Texas federal court in support of BP in its quest to get the Environmental Protection Agency to lift a ban on the British oil firm’s ability to bid for federal contracts, including leases on new offshore drilling prospects in the Gulf of Mexico.

“It is the view of Her Majesty’s Government that EPA’s disqualification and suspension of multiple BP entities may have been excessive,” the government said in its amicus brief filed with the U.S. District Court for the Southern District of Texas. Given BP’s efforts to settle oil spill claims, the British government said that the EPA’s prohibition, “if upheld, could undermine the corporate culture of responsibility all responsible governments have sought to foster.”

The brief, filed late Monday night, is an open sign of tension that has been quietly escalating between the U.S. and British governments over the punishment for the huge oil spill triggered by a blowout on BP’s Macondo well in the Gulf of Mexico. Eleven people died in the fire that broke out on the Deepwater Horizon drilling rig on April 20, 2010.

The British government has a special interest in BP’s case because the company’s continuing travails affect British jobs and pension funds.

Three and a half years after the spill, and after tens of billions of dollars in payments by BP, the British oil giant is still fighting legal battles over Clean Water Act fines and settlements with individuals and businesses in the gulf region.

Unlike the financial settlements over the spill, the EPA’s suspension of BP from federal contracting impairs the ability of the company to invest and expand in the United States.

BP is one of the largest foreign investors in the United States, and in 2012 was the top oil and gas producer and deep-water lease holder in the Gulf of Mexico. It says it has invested $55 billion in the United States in the past five years and plans to invest “at least” $4 billion a year in Gulf of Mexico exploration in the next decade. It now has nine rigs operating in the gulf.

The EPA first suspended BP on Nov. 28, 2012, citing its “lack of business integrity.” After BP pleaded guilty to criminal charges in a $4.5 billion settlement with the Justice Department, the EPA extended its ban. On Aug. 12, BP filed suit in Texas seeking relief from the EPA ban. But on Nov. 26, the agency again extended its ban on BP and 25 of its subsidiaries.

The agency declined to comment, but said “discussions between EPA and BP continue.”

The company says it has sought to take responsibility and pay hefty amounts to repair damages and get back to business with improved safety procedures. But in recent months, it has taken a tougher stance in negotiations with plaintiffs and the Justice Department.

“Businesses weighing whether to accept responsibility and to implement swift corrective actions in times of crisis may be dissuaded from such a path if regulators do not take this into account when subsequently issuing sanctions or use a company’s acceptance of responsibility as a basis for other arguably punitive actions,” the British government’s brief said. “It is Her Majesty’s Government’s belief that EPA’s actions in this case may be inconsistent with this principle and diminish the likelihood of businesses accepting responsibility and cooperating fully in the future.”

While it said that BP deserved punishment, the British government brief said that the EPA’s power to bar BP from bidding on military fuel supply contracts it once held and federal offshore leases was “designed to be a temporary measure, lasting only until ‘the condition giving rise to [an underlying Clean Water Act] conviction has been corrected.’ ”

A separate brief in support of BP was filed by several trade groups, including the U.S. Chamber of Commerce, the American Petroleum Institute and the National Association of Manufacturers.

Steven Mufson covers energy and other financial news.
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