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Obama administration lifts BP’s ban on leasing, contracting imposed after Gulf spill

BY MARK DRAJEM and JIM SNYDER

WASHINGTON, D.C. -- U.S. officials lifted a ban on government contracting imposed on BP in response to the 2010 oil spill in the Gulf of Mexico that fouled beaches from Florida to Louisiana.

An end to the suspension lets BP, once the Defense Department’s top fuel supplier, win lucrative federal contracts and seek leases for oil exploration on federal lands or waters. There is a U.S. auction next week for the right to drill in the Gulf, where the spill occurred.

“After a lengthy negotiation, BP is pleased to have reached this resolution, which we believe to be fair and reasonable,” John Mingé, chairman and president of BP America, said in an e-mailed statement.

Ending the suspension may help BP expand its foothold in the Gulf of Mexico. The U.S. Bureau of Ocean Energy Management, part of the Interior Department, on March 19 plans to auction leases covering more than 40 million acres in the Gulf for oil and gas exploration.

BP is the second-biggest oil producer in the Gulf with 63.6 MMbbl in 2013, second only to Royal Dutch Shell Plc, according to Interior Department data.

Agreement Terms

The 45-page administrative agreement between BP and the Environmental Protection Agency announced today will last five years and requires the oil company to comply with a set of safety, ethics and corporate governance requirements. The company will also retain an independent auditor, who will conduct an annual compliance review and report to the EPA.

“This is a fair agreement that requires BP to improve its practices in order to meet the terms we’ve outlined together,” Craig Hooks, an EPA assistant administrator, said in a statement.

The EPA imposed the suspension in 2012 after determining that BP hadn’t fully corrected deficiencies that led to a fatal explosion at the Deepwater Horizon drilling rig, triggering a massive oil spill.

“This suspension hasn’t served its purpose and should continue,” Scott Nelson, a lawyer at Public Citizen, a health and safety advocacy group in Washington, said in an interview prior to the announcement. “But they’ve put on a hard press,” to end the ban.

BP Lawsuit

BP in August sued the EPA in federal court in Houston seeking to lift the suspension. The company’s request was backed by the British government and U.S. Chamber of Commerce, the biggest business lobbying group in Washington. As part of the deal today, BP announced it would drop that lawsuit.

BP pleaded guilty to 11 counts of felony seaman’s manslaughter, two pollution violations and one count of lying to Congress in connection with the offshore spill, the worst in U.S. history. After it agreed to plead guilty, the government suspension was put in place.

BP agreed to pay $4.5 billion in related criminal and civil penalties and faces additional fines, in addition to thousands of claims by individuals and companies.

BP also faces potential additional civil penalties. A federal judge in New Orleans is currently weighing how to assess blame for the disaster among the three main companies involved - - BP, rig owner Transocean Ltd. and oil-field services provider Halliburton Co.

The judge also must determine how much oil spilled, a key measure for determining how much BP will eventually have to pay in Clean Water Act fines.

03/14/2014

 

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