Despite a long history of “egregious violations,” the behemoth oil company’s temporary suspension from obtaining lucrative government contracts may turn out to be much shorter than expected.
“BP is a serious serial corporate environmental criminal and a corporate serial killer…. [The company] always settles its cases with the government and promises to change its culture, but it continues to do the same thing over and over again.”
— Jeanne Pascal, former EPA debarment counsel
On Wednesday, the Environmental Protection Agency (EPA) made a surprise announcement stating that, effective immediately, the oil behemoth and more than a dozen of its subsidiary companies will be “ineligible” to “receive any federal contract or approved subcontract” as a result of BP’s agreement to plead guilty two weeks ago to a wide range of crimes directly related to the deadly April 2010 disaster in the Gulf.
“EPA is taking this action due to BP’s lack of business integrity as demonstrated by the company’s conduct with regard to the Deepwater Horizon blowout, explosion, oil spill and response as reflected by the filing [by the Justice Department] of a criminal information,” the EPA said in its statement.
The notice of suspension, sent to BP PLC chief executive Robert Dudley, states that on November 23 the EPA’s suspension and debarment division recommended that BP immediately be suspended from government contract work. The notice of suspension typically is preceded by a complaint document that lays out all of the reasons suspension and debarment is sought. The EPA did not provide Truthout with a copy of the complaint.
In a news release BP issued after it settled criminal charges related to the Gulf disaster, BP said the company “has not been advised of the intention of any federal agency to suspend or debar the company in connection with this plea agreement.”
The EPA’s announcement, which does not apply to BP’s existing federal contracts, was made the same day the Department of the Interior’s Bureau of Ocean Energy Management opened up for sale to oil companies more than 20 million acres in the Western Gulf of Mexico for oil and natural gas exploration and development. Also, on Wednesday, two BP supervisors who were aboard the Deepwater Horizon when it exploded were arraigned on manslaughter charges, and a former BP vice president was arraigned on false statements and obstruction of Congress. All three pleaded not guilty.
A BP spokeswoman said the company already had decided before the decision by the EPA to sit out Wednesday’s lease sale. But the EPA’s suspension would also have covered new drilling leases and so the timing of the agency’s announcement does not appear to be coincidental. BP was the high bidder in June for 43 leases to drill in the Central Gulf of Mexico, not far from the site of where the Macondo well ruptured and spewed millions of barrels of oil into the waters. BP is the largest deepwater leaseholder in the Gulf.
But after the EPA announced BP’s suspension, BP quickly issued a statement, downplaying the EPA’s action and attempting to reassure its shareholders, saying that the corporation “has been in regular dialogue with the EPA” and is already negotiating with federal regulators to lift the ban.
“The EPA has informed BP that it is preparing a proposed administrative agreement that, if agreed upon, would effectively resolve and lift this temporary suspension,” BP’s statement says. “The EPA notified BP that such a draft agreement would be available soon.”
BP noted that it has already provided “both a present responsibility statement of more than 100 pages and supplemental answers to the EPA’s questions based on that submission.”
“Moreover, in support of BP’s efforts to establish present responsibility, the US Department of Justice agreed, in the plea agreement, that it will advise any appropriate suspension or debarment authority that in the Department’s view, BP has accepted criminal responsibility for its conduct relating to the Deepwater Horizon blowout, explosion, oil spill and response,” BP’s statement said.
However, in a statement issued to Truthout, the EPA said that while the agency cannot specifically comment on BP’s claims about negotiations to lift the contracting ban, the plea agreement the company entered into “includes a remedial order that, if accepted by the court at sentencing, will specifically provide for BP to submit to the government a plan for addressing the conditions which gave rise to the statutory violations within 60 days.
“This plan must be approved by the government, at which time it becomes a condition of BP’s criminal probation,” the EPA statement said. “In addition, there are pending civil proceedings. The suspension could therefore continue until those proceedings are completed.”
Those civil proceedings could continue for at least another year.
Still, Scott Amey, general counsel with the watchdog organization Project on Government Oversight (POGO), which applauded the temporary suspension, said he is not surprised that “BP is doing its due diligence to convince the government that is a responsible company.
“However, the EPA should be watchful of promises, especially this late in the game,” Amey added. “A company’s culture can’t change overnight or over the course of a few days.”
Assistant Attorney General Lanny Breuer cited the company’s corporate culture, in which it puts profits ahead of the safety and integrity of its operations, during a news conference in New Orleans two weeks ago, where the Justice Department announced that it had reached a settlement with BP over crimes related to the Gulf disaster.
“The explosion of the [Deepwater Horizon] was a disaster that resulted from BP’s culture of privileging profit over prudence,” Breuer said.
BP’s corporate culture has resulted in more than $10 billion in civil and criminal penalties against the oil giant over the past 17 years, evidenced most significantly by more than 700 infractions and/or violations identified by federal regulators in 2010 at its refineries, and alleged neglect at its other drilling rig in the Gulf called Atlantis.
It was BP’s negligence at the company’s Texas City refinery and its pipelines in Alaska, along with its manipulation of the Midwest propane market, to cite just a few examples, that originally led former EPA debarment counsel Jeanne Pascal to recommend in 2010 that the company be stripped of receiving additional federal contracts.
Pascal made that recommendation just a couple of months before the Gulf disaster and her retirement from the agency. She said she had prepared a “suspension and debarment complaint” against BP, “with about 60 exhibits, but “the debarment action went nowhere, not even after the well blowout in the Gulf of Mexico.”
Pascal told Truthout the EPA should not be engaging in any settlement discussions with BP over their federal contracts. She said BP’s statement tells her that the EPA gave the company a “heads-up” about the suspension.
“BP is a serious serial corporate environmental criminal and a corporate serial killer,” Pascal said. “They killed eleven people in the Gulf and fifteen people in Texas City – 26 people in the span of five years. BP always settles its cases with the government and promises to change its culture but it continues to do the same thing over and over again. They need to be held to the same standard that other [suspension and debarment] respondents are held to.”
A passionate environmentalist, Pascal said she believes there are certain companies whose “egregious violations” don’t warrant settlement, and BP is one of them.
“BP has killed millions of fish and marine mammals; they have ruined the fisheries in the Gulf as well as the tourist industry. The paltry $4 billion settlement [BP entered into with the government earlier this month] is not nearly enough to rectify the damage BP has done to the Gulf and its people. It’s not in the public interest to settle with BP at this time,” she said. “The government should insist on a period of years in which BP proves its corrupt corporate culture has changed, and that is has stopped putting profit over American lives and the safety of the environment.”
Rep. Ed Markey (D-Massachusetts) agreed that BP’s conduct warranted suspension.
“After pleading guilty to such reckless behavior that killed men and constituted a crime against the environment, suspending BP’s access to contracts with our government is the right thing to do,” said Markey, the ranking member o f the Natural Resources Committee. “When someone recklessly crashes a car, their license and keys are taken away. The wreckage of BP’s recklessness is still sitting at the bottom of the ocean and this kind of time out is an appropriate element of the suite of criminal, civil and economic punishments that BP should pay for their disaster.”
Rena Steinzor, the president of the Center for Progressive Reform and a professor a the University of Maryland School of Law, made the case for permanently debarring BP from receiving federal contracts because of its poor safety record.
But Amey, the POGO attorney, said, “suspension of large contractors doesn’t last that long. In past cases, it has lasted mere days.”
Pascal said suspension and debarment is an action taken “because of an immediate need for the government to protect itself.”
“I can guarantee you the EPA coordinated this action with the Department of Interior and the Department of Defense,” Pascal said. “EPA normally suspends or debars a company guilty of environmental crimes in the wake of a criminal action because conduct rising to criminal conduct is not presently responsible. This suspension is clearly designed to prevent BP from bidding on leases. That was, in part, the immediate need that needed action.”
BP’s contracting work has been a financial boon for the corporation.
In September, while BP was engaged in settlement discussions with the government over its role in the Gulf disaster, the company was awarded hundreds of millions of dollars in new Pentagon fuel contracts.
BP PLC is one of the Pentagon’s main fuel suppliers and one of the government’s top 100 contractors, with $1.47 billion worth in Fiscal Year 2011, which represents 179 government contracts, according to the web site USASpending.gov. This year alone, BP has won $1.1 billion in federal contracts. In just two years, BP has earned from the government more than half the money it is obligated to pay in fines related to the Gulf disaster.
At the same time, according to POGO, BP has racked up more instances of misconduct – 61 since 1995 -than any of the other top 100 corporations that receive government contracts and has paid $10 billion in civil and criminal penalties.
In an interview in 2010, Pascal said she had to proceed with caution when she considered debarring the oil company from receiving government contracts because of its relationship with the Pentagon.
“If I had debarred BP while they were supplying 80 percent of the fuel to US forces it would have been almost certain that the Defense Department would have been forced to get an exception,” Pascal said.
She noted at the time that the 80 percent figure was provided by her “contact,” an attorney, who works at the Defense Energy Support Center, part of the Defense Logistics Agency, which is responsible for purchasing all of the fuel for the military.
A Defense Logistics Agency spokesperson did not respond to requests for comment.
Because the Pentagon is so heavily reliant on BP for fuel, top Pentagon officials can still seek to lift the ban for BP if they write a justification letter to Congress requesting permission to use the suspended contractor.
Pascal pointed to an executive order issued by Ronald Reagan in 1986 authorizing the federal government to use suspended, debarred or excluded contractors, in certain circumstances:
An agency may grant an exception permitting a debarred, suspended, or excluded party to participate in a particular transaction upon a written determination by the agency head or authorized designee stating the reason(s) for deviating from this Presidential policy. However, I intend that exceptions to this policy should be granted only infrequently.
BP has to convince the federal government that it’s now a responsible corporation in order to win back the government’s business. But Pascal rattled off a list of major violations dating back to 1999 that she said proves BP’s “promises and assurances” should not be “trusted as truth.”
“BP needs to prove they have changed,” she said. “The Deepwater Horizon disaster was too extensive to trust BP…. Promises from this company should be disregarded.”