BP sues EPA over federal contract ban

BP is asking a federal court to overturn the Environmental Protection Agency's decision to suspend the oil giant from receiving new federal contracts as a result of the fatal 2010 Gulf of Mexico disaster.

The company, a major fuel supplier to the U.S. military, filed a lawsuit in a Houston federal district court Monday alleging that the 2012 suspension and its continuation are an abuse of the EPA’s discretion.

“EPA wields extraordinary power in making suspension and disqualification decisions and must scrupulously follow the law and legal standards that govern its actions. It has manifestly failed to do so in this matter,” the lawsuit states.

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The EPA suspended BP in late 2012, shortly after its $4.5 billion plea agreement with the Justice Department to resolve criminal and securities claims, citing the oil giant’s “lack of business integrity as demonstrated by the company's conduct” in the disaster.

But BP’s new lawsuit alleges that the EPA’s action was unjustified and calls it a violation of the Administrative Procedure Act.

“EPA’s decision to suspend did not address the overwhelming evidence and record of BP’s present responsibility as a government contractor and leaseholder, and did not attempt to explain how or why immediate suspension was necessary to protect the public interest, as federal law requires,” the complaint states.

The contracting suspension has temporarily taken BP out of the running for new fuel and related service contracts that are worth billions of dollars.

The company currently holds more than $1.3 billion in federal contracts, the complaint notes.

BP’s complaint says that the EPA rejected the company’s administrative challenges to the suspension last month. But BP spokesman Geoff Morrell, in a statement, said that “we remain open to a reasonable settlement with the EPA.”

The federal civil case against BP, which is expected to result in billions of dollars in Clean Water Act penalties, remains ongoing.