BP: Could the Worst News Still Be Ahead?
Despite agreeing to a $4.5 billion settlement with the U.S. government, the oil producer may face more fines if Attorney General Eric Holder pursues further penalties under the Clean Water Act, and there is a small chance that the company could be given a federal contracting ban.
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As the company noted in a statement issued following the plea agreement, under federal law “companies convicted of certain criminal acts can be debarred from contracting with the federal government.” While the government has not notified BP regarding its intentions, the company said it will “continue to work with the debarment authority.”
A ban would be disastrous for the company. The United States accounts for more than 20 percent of its oil and gas production, and the company has invested more than $52 billion in the country over the past five years — more than BP has invested in any other country. Furthermore, if the company is barred from government business, its contracts with the Department of Defense, worth approximately $1.35 billion in 2011, will be cancelled.
BP has faced a possible ban before; in July 2010, several months after the spill dumped million barrels of crude into the Gulf of Mexico, activists pressed the Obama administration to debar the company from all federal contracts. However, the Environmental Protection Agency, which purchases fuel for the Defense Department, did not take action. But that is not to say that the agency will not pursue a ban now. The agency’s website does say that companies can be debarred “following criminal conviction under [the] Clean Water Act,” and British Petroleum plead guilty to 13 criminal charges and 1 misdemeanor under the act in its plea agreement with the Department of Justice.
Yet, as University of Baltimore law professor Charles Tiefer told Bloomberg, “it looks like there will be little if any suspension or debarment for BP,” although he does believe the ban would be deserved. “For BP to get off without a suspension or debarment is like going to a maximum security federal prison and handing out a folder of pardons,” he said.
The company will face a civil trial in New Orleans in February, and the Department of Justice has plans to file manslaughter charges against two top company officials for the deaths of 11 workers as well as charges against BP’s former vice president of exploration, David Rainey, for making false statements regarding the rate of the oil spill.
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