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Latest Sanction Against BP Goes Beyond Gulf Spill

The government’s decision to at least temporarily ban BP from federal contracts is a result of not just the Deepwater Horizon explosion and spill, but years of safety problems at the oil giant.

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(Oli Scarff/Getty Images)

When the Obama administration temporarily banned BP from federal contracts Wednesday, it pointed to BP's "lack of business integrity" and conduct relating to the 2010 Deepwater Horizon explosion and spill.

The sanction, however, has been years in the making.

BP has been criminally convicted in four previous cases — including a 2005 explosion in Texas that killed 15 workers — and the EPA has been considering broader debarment proceedings against the company since at least 2005. The agency had actually been nearing a decision on a contract ban in January 2010, just a few months before the Deepwater Horizon tragedy unfolded, killing 11 workers and sending more than 200 million gallons of oil into the sea.

"This is not just about the Deepwater Horizon, but about a whole lot of things and a whole lot of parts of BP," said a former government official familiar with the debarment process. "It wasn't just narrowly scoped... they are looking at it as a systemic corporate-wide issue."

A limited suspension of government contracts for a specific facility or subsidiary operations, called suspension and debarment, is standard practice after a criminal conviction.

BP pleaded guilty on Nov. 15 to federal criminal charges of manslaughter and lying to Congress and agreed to pay more than $4 billion in fines relating to the Deepwater Horizon accident, which killed 11 workers and sent more than 200 million gallons of oil into the Gulf of Mexico. Three of the company's managers have also been criminally charged.

But the broad sanctions announced Wednesday target the BP corporation writ large — the British-based parent company and 21 international subsidiaries are included — and reflect a mistrust for BP's operations that has been growing over more than a decade.

In this case, experts close to the case say, the timing of the government's announcement was significant.

It came just hours before the government sold new rights to drill in the Gulf of the Mexico and seems intended to prevent BP, the largest leaseholder in the Gulf, from expanding its operations there until all of its problems are resolved.

"Suspensions are always timed to prevent something from happening," said Jeanne Pascal, a former EPA debarment attorney who led the government's investigation into BP from 1997 until she retired in 2010.

"A debarment says you have chronic bad behavior, and we think you present chronic risk for the government and that you will continue this behavior," said Pascal. "The immediate need was the issuance of new leases (Wednesday) in the Gulf of Mexico."

Wednesday's actions represent the government's effort to protect its fiscal resources and protect the public economic interest by not using taxpayer money to support actions that could cost the government more money later on.

After several past BP accidents, including two oil spills in Alaska and close calls at several U.S. refineries, private consultants and government investigators have pointed to wide-ranging problems within the company's culture. The critics have warned that BP has consistently prioritized speed and profit-making over safety and regulatory compliance.

The type of suspension ordered Wednesday is a part of what the government calls a "discretionary" debarment, which means it is considering this broader "corporate culture of noncompliance" and longer history.

While the EPA is the lead agency, its debarment decision affects the Department of Interior and Department of Defense, among other agencies. BP is among the U.S.'s largest corporate contractors and supplies more than $1 billion a year worth of fuel to the military.

The temporary suspension order issued Wednesday is the first step in a still-to-be-made decision about whether BP should be formally debarred, or banned entirely from contracts for a specified length of time.

For now, EPA officials tell ProPublica that the suspension could last anywhere from two to 18 months, depending on the final terms of the Department of Justice's plea agreement with BP. If the civil suits against BP remain unresolved, the suspension could stay in place longer.

As part of its criminal plea announced earlier this month, BP agreed to hire ethics and safety monitors for its Gulf operations and regularly evaluate its facilities for safety and environmental compliance. If the court approves the plea agreement, those terms would become a part of BP's probation, and thus a term of the suspension and debarment proceedings, an EPA spokesperson told ProPublica.

A spokesperson assigned to speak on behalf of BP told ProPublica that the company had not intended to bid on new Gulf leases in Wednesday's sale, and was not aware of the EPA's suspension decision until after their bids were due. But a Nov. 15 press release and filings with the SEC both suggest the company knew a ban could be coming.

BP was not explicitly banned from participating in the sale of new rights to drill in western Gulf of Mexico waters Wednesday, but would not have been allowed to win any leases if it had competed for them, a Department of Interior official said.

Since the 2010 spill in the Gulf, the government has granted BP more than 50 new leases in the Gulf of Mexico. BP is the single largest investor and leaseholder in the Gulf, where it currently operates seven drilling rigs.

"BP has invested more than $52 billion in the United States," the company said in a statement, "more than any other oil and gas company and more than it invests in any other country." It emphasized that it employs 23,000 people in the U.S. and said it supports nearly a quarter of a million American jobs.

So far, BP has spent more than $14 billion on cleanup and settlement costs related to the Gulf spill, and expects to pay more than $37 billion — including in criminal and civil settlements — by the time it is finished. In addition, the company has stated a renewed focus on safety and reorganized its corporate operations to increase safety and environmental accountability.

"I believe BP is genuine and sincere" in its efforts, said Tommy Beaudreau, director of the Bureau of Ocean Energy Management, in a press conference held Wednesday after the government's lease sale.

BP also emphasized that it is working speedily towards a resolution with the government.

"BP has been in regular dialogue with the EPA and has already provided both a present responsibility statement of more than 100 pages and supplemental answers to the EPA's questions," it said in a statement. "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."

Suevon Lee contributed reporting to this story.

Questions on the latest BP news? Join our live chat November 29 at 1 p.m. ET, with reporter Abrahm Lustgarten. 

I have to admit that I’m impressed.  I don’t think this is enough, but after the way the government has turned so many cheeks to BP, I’m impressed that it occurred to anybody in Washington to exert their power and fulfill their duties.

Unfortunately, like with any cleanup, if you just sweep raw sewage away from a spot, it’s only going to ooze in from another direction.  So which company is going to be the beneficiary, here?

It’s also worth wondering—I’m not accusing them, but it’s worth a thought—if BP’s management might be petty enough to try to retaliate against our wallets.  Shut down a refinery and gas prices jump and people are out of work, for example.

To answer John, what is the objective here?  Is it to put BP out of business since you don’t think “it is enough”?  We’re not talking about BP here as an inert object.  We’re talking about 23,000 people who work for them and the 250,000 people they support with their business.  How much is enough?  Once a company has admitted being wrong and has stepped up to the plate financially, where does it stop with lawyers and lawsuits?

Are you totally against the oil and gas industry?  The people who will cause a “retaliation” are people like you who don’t realize that companies such as BP do not have infinite funds.  Once these run out or the business climate is not conducive for them to operate here, people—real people—lose jobs and the economy suffers.  Start thinking about these people and their hopes and dreams as you want to see BP pay more and more money. 

The oil and gas industry spends a lot of money in business and gives a lot of money to charities.  BP is included here.  Putting any of them out of business or forcing them to go elsewhere will have far ranging effects which most people don’t realize.

I am not saying BP did nothing wrong.  What I am saying is there is more to the discussion than just punishing BP.

Clark, that’s exactly my point.  It’s not enough precisely because it only serves to punish (in some vague way that they’ll probably recover from instantly or turn around and inflict pain elsewhere) rather than help anybody.

I would rather have seen, two years ago (or ten, when the problems first surfaced), government inspectors swarming every BP installation and demanding everything be up to specifications.  My goals are in making sure we mitigate risk, not deprive people of profit.

Revenge is useless.  It’s never enough.

So please don’t give me any lines about how they spend a few bucks (or a few million bucks) on the Red Cross, so their pillaging of the economy and destruction of the environment is an acceptable loss.  Cult leaders are really, really nice people, when it suits their interests, but it doesn’t excuse the lives they destroy, either.

“You could call time out for safety,they wouldn’t fire you for it but they would find another way to fire you for it” —Daniel Baron Deepwater Horizon survivor

He stated this on CNN in front of 4 other survivors and they all agreed with his statement.
This is why we need serious whistleblower protection.Not that useless OSHA 11c whistleblower protection program and now their useless seaman protection act created after Deepwater Horizon.
OSHA whistleblower protection has not worked at protecting whistleblowers for over 20 years and DOL is well aware of it.
POGO stated about OSHA
“Workers who contact OSHA about safety concerns are like lambs being led to slaughter”
need i say more?

To John
Regarding your comments on Clarks posted comments; It sounds as though your saying a death is worth little if it saves many/moneys.  I think not ...Is one AVOIDABLE death, much less 11 worth the jobs of 250,000 or just one?
Just think over time all the persons and small Businesses that will end up being effected
I’m sure someone will come along and take over all of B,PS U.S. A operations if they pull out.
I’ll also bet you that many other power house companies are just chomping at the bit to take over all that B.P. was given.

Thanks for reading

wray edwards

Nov. 30, 2012, 2 a.m.

PLEASE stop referring to the catastrophic disaster in the gulf of Mexico as a “spill.”  If you accidently knock over a glass of milk, that’s a “spill.”  If you destroy the ecology of a body of water fhe size of the Gulf of Mexico with petroleum and Corexit, it is a planet threatening crime,  not a spill.

If you cause an abnormal gulf stream flow pattern, you are tampering with the planet’s weather, affecting the lives of millions of sea creatures and humans who depend on stable ocean chemistery and hydrallics.

BP should be broken up, the pieces sold and the proceeds given to the victims and spent on mitigation…if it’s not too late…a very real possibility.

Also, scalar, zero point energy might be a welcome end to big oil tyranny.

To wray edwards:

If your going to do that. Why not go one step further and make BP operations inside the United State a US Government corporation? That way the government could both guarantee both the safety of the ecology and protect the other small business that are down line, BP is owned primarily by the Rothschilds or has a large amount of stocks owned by the Rothschilds. Shell oil is primarily owned by the Queen of England. So both BP and Shell Oil are both primarily government corporations that are owned by Great Britain operating like it a private corporation inside the United States. They just aren’t US Government Corporations, but foreign owned government corporations.

Do a Google Search of both BP and She Oil and see who owns them.

Larry,

Bill figured out my point.  Companies such as BP consist of many employees and hire many contractor’s employees.  When people are talking about punishing or breaking up companies, they need to look at the effect on these people and their families.  These people have hopes and dreams like everyone else.  As a fellow employee told me one time, “The true definition of a depression is when you lose your job and have to go home and tell your family.”

While I sincerely regret the loss of life in the Horizon disaster as everyone does, putting all of BP’s employees out of work as well as many of their contractors out of work will not bring the people back.  It will also not remove the oil and gas from the water.

This has become like a feeding frenzy for lawyers and lawsuits with even strip clubs in Louisiana wanting to sue BP.  I am just asking when “is enough”?  BP should pay for what they have done.  They have paid and will pay a lot of money as well as revise their method of operations, but when does the “blood in the water” stop?  Hopefully, before a lot of people lose their jobs and the “depression” hits them.

As for Wray, do you have any facts to back up your claims?  Have you read any of the scientific reports regarding Recovery of the Gulf?  Do you know that mother nature releases 5500 bbls of day of oil from the sea floor into the Gulf of Mexico?  Have you read what the bacteria has to done to remove the natural gas from the water?  Mother Nature has a way of solving problems whether they be volcanoes, earthquakes, droughts, melting polar caps, or even oil spills.  These things have been going on for millions of years.  Nothing is more deadly to air quality than volcanoes.  While we need to prevent any and all pollution by man kind like the Horizon disaster, I think it may be a little too rash to say the earth will not recover or at least take steps to mediate it.  Let’s look at the science and try to put this in perspective.  Causing a lot of people to lose their jobs or going back to riding bicycles does not seem to be a very good answer.

Let’s change the way business is done through regulation, but at the same time, let’s not forget the people involved in any action the government and lawyers take.  As an interesting question for everyone, where is the money going from all these fines and lawsuits?  What is the government going to do with it?  I haven’t heard the answer to this one.

I’d like to see Lord Tony in SuperMax.

After raising serious safety and quality issues at BP leases in Alaska, I suffered retaliation and lost my job.  The office of the ombudsman interacted due to the fact I had scores of documentation concerning the wrong doing. I was given a letter from the president of BP Alaska thanking for my actions and assuring I would suffer no further adverse action from BP. Since then, I found out from two ombudsman employees that BP management discussed having me block from all BP leases.

I have applied for several jobs that I was most qualified for but unsuccessful. In April this past year I was called by a contractor,  while on a project in Scotland, to work a two month project at BP Pruhdoe Bay. I was prevented from performing the task by BP managers though I was the most qualified person in the state. Contractor and direct BP employees told me I was block by BP. A BP internal investigation was launched that found no wrong by BP. Where is the protection our goverment is suppose to supply? I have worked all my life in the oil and gas industry for many oil companies, I was never treated the way BP treated me after raising serious issues.

WRAY EDWARDS IS CORRECT!
The damage goes way beyond the effected area! It has CHANGED THE WEATHER, SICKENED AND KILLED MASSIVE WILDLIFE, SICKENED and EFFECTED   MANY PEOPLE!! There is NO amount of money that can fix that! The ANSWER is to STOP USING OIL which is a PREHISTORIC TECHNOLOGY!!  SOLAR has ALWAYS BEEN THE ANSWER!  TRUTH IS: These corporations would LOSE there POWER OVER US—Something THEY DON’T WANT TO DO!
This has NOTHING to do with JOBS!

LARRY…The U.S. Government IS, itself a corporation founded in 1871.  One of the great issues here is corporate hegemony…see Monsanto, NALCO {a Buffet Corp. makes corexit}, BP, Exxon, etal which spend billions to subvert common sense and ecological safety.  See fracking, T. Boone Pickens on the Ogalala fossil water enterprise and other enterprises which threaten safe drinking water.

Finally, the BP gulf dustup is the tip of a far more dangerous iceberg.  The similarities between BP gulf behavior and TEPCO regarding the Fukushima catastrophe are very frightening.  In both cases, corporate mentality all but ignores the most fundamental human ethics in favor of corporate obfuscation and the safety of humans from Bopal, to Exxon Valdez, BP, and chemtrails.

Humans are viewed as expendable corporate chattels to be sacrificed on the alters of corporate profits and power.

As for CLARK, Yes, i am familiar with the planet’s natural events which might mitigate natural and man made threats to a certain degree.  There is something to be said for bicycles and walking, but not to the exclusion of solar energy and scalar technologies.

Truse me, in a full blown effort to employ solar energy {to which Germany is dedicated} every last person not employed in the cleanups will find ready employment in solar.

GOOD ON YOU CINDY!  Excellent commentary.

The effects of that colossal oil spill and the damage that resulted has been widely described as “unknown” so far because we don’t have enough (and will not have enough) data to even draw conclusions for at least 20 and possibly 50 to 100 years- I say that not because I’m quoting anyone but from my own scientific training. Much like Fukushima. So spouting a bunch of crap about jobs lost is hardly even worth the oxygen. One thing lost in the discussion is BP’s role in the Exxon Valdez disaster- why is that lost in the history? And there was a blowout in the Caspian that BP is tied to, but it’s left out of the discussion as well. Corporate culture is all about short term profits, but we can’t afford that kind of thinking if we intend our descendants to survive the increasingly toxic world they are inheriting. Even the wealthy need water to drink and air to breathe.

Evidently, neither Cindy nor Wray’s jobs are in jeopardy.  If either of you worked for BP or companies depending on much of their revenue from BP, you would be more concerned as the government and the lawyers just keep piling on fines and lawsuits.  But what difference does it make to you?  All you care about is goring a company—and an industry—which you don’t realize that we need.

I like solar for what it can do but have yet to see a solar powered airplane, train, ocean going ship, 18 wheeler, etc.  Like anything else, solar has its limits with present technology.

When you manage to get rid of oil which you only look at as a power source, you will also be getting rid of plastics, many medicines, paint, clothes, face cream, and I could go on and on.  Had you thought of that or do you think solar will replace these also?  Being a chemist myself, I can tell you that’s not going to happen.

We need all forms of energy and until technology comes up with suitable alternatives to oil and gas for ALL forms of energy needs as well as the products mentioned above, oil and gas will be used.  That is just a fact of life.

Neither Wray nor Cindy present any scientific facts to prove their suppositions.  They talk about corruption as if the oil business was the only one doing it.  No one wants the earth to be damaged.  Man and companies make mistakes and should be held accountable.  However, most of us also don’t want to revert to the stone age without jobs either.

Corruption happens in many industries and not just the oil industry.  Look at the financial industry which has destroyed many people’s savings.  Do you want to get rid of it too because of a couple of bad actors?  There are other examples, but the point is we need all the jobs we can get right now including solar and oil industry jobs. 

Saying it is not about jobs and people’s welfare when the government and lawyers just keep attacking (not just the oil industry but any industry which has thousands of employees and their families working in it) only means you don’t care because it doesn’t affect your job.  Unfortunately, I cannot look at it that way.  People matter.

Clark,

Me thinks thou doth protest too much concerning “jobs.”  One of the great human enterprises is to learn what to do with leisure.  If Tesla’s technology is ever given the support which the robber barons witheld and hid,  this world will ease away from sweat shops, carbon pollution and corporate greed.

See:  http://en.wikipedia.org/wiki/Wireless_energy_transmission

We are on the brink of free energy which will challenge humanity to up the creative ante.  Mere jobs will be replaced by social harmony aimed at efforts to work with nature instead of in spite of it.  Great strides in human longevity and quality of life, might occur unless the nuke reptiles prevail.

Most jobs will be taken over by automation.  That is of course we don’t end up as a new Planet of the Apes.

Bill, you took half a sentence out of context to accuse me of something.  I said that my goals don’t include depriving anybody of profits.  That doesn’t mean I’m for or against profit, just that it’s not my target.

It’s a possible means to achieve certain ends, and should never be an end in itself.

The “end” should be prevention.  If the only way to do that is to wait a few years, then gut a company’s finances, then fine.  But I call that “not enough” because these deaths, these catastrophes were entirely preventable, so this is—at best—closing the barn door after the cow has walked off.

The “solution” is to make sure the damned wells get inspected and the test results for materials are made public.  A better solution would have been to start that ten years ago, when suspicions were first aroused.  Bickering about whether BP has paid for its mistakes is a side issue that avoids the core problems.