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1409_Thank-you-Lisa

EPA Suspends BP From Future Government Contracts

By | November 28, 2012

Just weeks after BP accepted blame for the Deepwater Horizon oil spill in the Gulf of Mexico; the federal government is announcing more punishment for the company. The Environmental Protection Agency is suspending BP from future government contracts.

Less than two weeks ago, BP agreed to pay $4.5 billion and plead guilty to eleven criminal charges. The company still needs to settle the Clean Water Act violations from the spill, and that could total more than twenty billion dollars.

So today’s news was yet one more blow. The EPA is suspending future contracts between the company and the federal government.

Ed Hirs is a professor of energy economics at the University of Houston. He says the contracts between the government and company can be wide-ranging.

“The arrangements would be entering into new lease holds with the federal government,” Hirs said. “So this would suspend BP from leasing new tracts to explore.”

“It could extend to BP entering into contracts to supply the government with fuel or to provide services.”

Services like transportation, refining and consulting. But Hirs says this is by no means a severe punishment.

“I think this is just a window dressing on the part of the EPA,” Hirs said. “It’s really not going to have any business effect on BP in the long-run.”

Because, Hirs says, the government will continue to honor existing contracts. And the federal government has an interest in keeping BP profitable, because it wants to collect the billions of dollars in fines from the company.

Still U.S. Senator Mark Begich expressed concern that the administration is singling out the oil industry.

“I think if that’s the new issue, of criminal issues against companies, then there are a lot of companies we should be looking at,” Begich said. “If you look at the defense end, we’ve had companies have problems but they’re not barred from business.”

Neither the EPA nor BP would comment for this story. Both issued statements.

The EPA blasted the company for a “lack of business integrity.” It says suspensions typically last up to 18 months, but can continue as long as there are ongoing legal proceedings.

The announcement has not affected the value of the company yet. BP stock finished up three tenths of a percent today.

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