It’s about time: Feds bar BP from new contracts


I rarely get a chance to say this, but the feds are on a roll when it comes to the matter of BP. Although I’ve been quite critical over the last two-and-a-half years of the government’s response to the Deepwater Horizon spill, there’s little to criticize in its recent aggressive posture toward the oil giant and its wanton recklessness that killed 11 workers and caused massive environmental damage throughout the Gulf of Mexico.

Just before Thanksgiving, the U.S. Justice Department announced a $4.5 billion criminal penalty against BP — the largest ever — and, more importantly, held out the prospect of collecting a much larger civil penalty for BP’s gross negligence in the matter, monies that would not undo the damage but could go along way toward the job of environmental restoration. One lingering criticism was the question of why BP had not been barred from going after lucrative federal contracts.

Now, that is exactly what has happened:

 The Environmental Protection Agency has suspended BP from bidding on any new federal contracts, including drilling leases, as a result of the company’s conduct during the Deepwater Horizon oil rig disaster in 2010 that led to 11 deaths and the largest U.S. offshore spill.

The temporary ban came early on the day the Interior Department held a sale of leases on 20 million acres of offshore oil and gas prospects in the western Gulf of Mexico that the department said attracted $133 million in bids. People familiar with the process said the company did not submit any bids.

The EPA said the suspension will not affect BP’s current contracts or leases, which are crucial to the company. The London-based oil giant is the largest leaseholder in the deep-water Gulf of Mexico, with more than 700 leases, and it is the gulf’s largest producer of oil and gas, from more than 20 fields there. It won 40 new leases in June.

In 2011, BP was also the largest supplier of fuel to the U.S. military, with contracts worth about $1.35 billion.

This is good news on several front. For one thing, it’s been hypocritical for one hand of the federal government to be accusing BP of serious criminal misconduct while the other hand continues to dole out considerable dollars. More importantly, this yet again sends BP the message that the feds are getting serious and thus puts pressure to agree to a civil settlement on terms dictated by Washington.

We’ve already seen the impact of this decision in what I would have to call a good news/bad news development:

 WASHINGTON — The federal government took in nearly $134 million in high bids Wednesday during a Gulf of Mexico oil-and-gas lease sale that did not include any bids from BP.


Wednesday’s lease sale offered over 20 million acres and attracted $133.7 million in high bids for 116 tracts covering 652,522 acres on the U.S. Outer Continental Shelf offshore of Texas. A total of 13 offshore energy companies submitted 131 bids.

Chevron had the highest single-tract bid of $17.2 million, Beaudreau said.

“The Gulf of Mexico is and will continue to be one of the bedrocks of the United States’ all-of-the-above energy portfolio,” Beaudreau said.

The bad news here is that the government continues to race forward with these deepwater leases for big rigs that are very much like the Deepwater Horizon. The accident in 2010 didn’t only expose a BP problem, but it raised broader safety questions about the safety — and wisdom — of drilling in one mile of water in a natural paradise like the Gulf once was. The continued quest to meet our addiction to fossil fuels with risky drilling raises the risk of another disaster — regardless of who’s logo is on the side of the rig.

To read coverage from the Washington Post on the federal ban of BP contracts, please go to:

To follow coverage fron the Advocate of new oil and gas leases in the Gulf of Mexico, please read:

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Stuart H. Smith is an attorney based in New Orleans fighting major oil companies and other polluters.
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