BP sues U.S. government over contract suspensions after oil spill

NEW YORK Wed Aug 14, 2013 4:02am BST

A BP petrol station is reflected in a car, in London April 28, 2009. REUTERS/Luke MacGregor

A BP petrol station is reflected in a car, in London April 28, 2009.

Credit: Reuters/Luke MacGregor

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NEW YORK (Reuters) - BP Plc is suing the U.S. government for barring the British oil giant from obtaining new federal contracts after the company pleaded guilty to charges related to the 2010 rig explosion in the Gulf of Mexico.

The suit, filed in U.S. District Court in southern Texas, claims keeping the ban in place risks causing the company "irreparable harm."

Last November the U.S. Environmental Protection Agency (EPA) sprung the ban on BP, citing BP's "lack of business integrity" after the Deepwater Horizon blowout that killed 11 workers and gushed millions of barrels of oil into coastal waters.

BP is one of the largest suppliers of fuel to the U.S. government, including to the military, holding contracts worth more than $1.34 billion (867.3 million pounds), according to the suit. The suspension only effects new contracts, not existing deals.

The oil company claims the ban unfairly includes 21 of its subsidiaries that had nothing to do with the spill.

"We believe that the EPA's action here is inappropriate and unjustified as a matter of law and policy, and we are pursuing our right to seek relief in federal court," said Geoff Morrell, BP's head of U.S. communications. "At the same time, we remain open to a reasonable settlement with the EPA."

An EPA spokesman referred all questions on the suit to the U.S. Justice Department, which declined to comment.

Bob Dudley, BP's chief executive, told investors in the second quarter that the company had plenty of work that was ongoing in the Gulf despite the ban but said the EPA order bars it from taking possession of new leases there.

The company is currently paying out millions of dollars to settle damage claims from Gulf residents in a contentious process that BP says is being mismanaged by the administrator, Louisiana lawyer Patrick Juneau.

Last week a judge ordered BP to pay $130 million to Juneau's team despite objections from the oil company, which is also facing the second phase of a trial in federal court to determine fines for environmental harm caused by the spill.

BP has incurred about $42.4 billion in charges related to the April 20, 2010, rig blast at the company's Macondo well that resulted in the largest oil spill in U.S. history.

The case is BP Exploration & Production Co et al v. McCarthy et al, U.S. District Court, Southern District of Texas, No. 13-02349.

(Reporting by Mica Rosenberg; Editing by Terry Wade and Jim Marshall)

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