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BP barred from new US government contracts, land leases

This image made from video released by British Petroleum (BP PLC) shows the gushing oil well in the Gulf of Mexico on Sunday, May 30, 2010 at 5:19 am EDT. (BP PLC)
December 29, 2011 12:00:00 AM PST
The Environmental Protection Agency temporarily suspended new federal contracts with BP and its affiliates due to a list of criminal counts against the company. Current contracts will not be affected.

The criminal counts stem from an investigation into a 2010 oil-rig explosion in the Gulf of Mexico that killed 11 workers and sent millions of gallons of oil into the Gulf. The oil spill was the largest in U.S. history.

"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," the EPA said in a statement.

More than two years later, BP faces criminal proceedings and massive civil claims related to environmental damage. Wednesday's decision creates yet another obstacle in BP's uphill battle to revive its tarnished image in the U.S. and abroad.

Of greatest concern to BP, analysts said, is the prospect of missing out on tens of millions of acres that the government plans to lease for drilling to oil and natural gas companies in the coming months. BP already is the largest deep-water leaseholder in the Gulf, the company said.

The Obama administration's decision made BP ineligible to bid for leases hours before the federal government held a sale for drilling in more than 20 million acres offshore in the Gulf. Thirteen offshore companies submitted bids totaling more than $133 million. BP did not participate. The government's next sale is scheduled for March 2013 and will make 38 million acres available.

The EPA said a suspension is standard practice when a criminal case raises responsibility questions about a company. BP announced earlier this month that it will plead guilty to manslaughter, obstruction of Congress and other charges and will pay a record $4.5 billion in penalties. Attorneys and a federal judge will meet in December to discuss a plea date.

The Associated Press contributed to this report.


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