The NAM and other associations joined together in an amicus brief in a federal district court in Texas challenging an EPA order debarring all worldwide affiliates of BP from government contracts and leases. The case arose out of the Deepwater Horizon blowout in the Gulf of Mexico, which resulted in a plea agreement with BP Exploration and Development Company. After that company reached the plea agreement, EPA suspended the company, as well as its parent company and 19 other BP affiliates, preventing all of those companies from entering into any new federal procurement contracts and other transactions with the government. It also suspended the corporate headquarters from federal contracting by designating the headquarters a “violating facility” under the Clean Water Act (CWA).
BP sued EPA, arguing that the suspension orders exceeded EPA’s statutory authority. Our amicus brief supported this view, arguing that the statute clearly provides for mandatory disqualification from federal contracts “if the contract is to be performed at any facility at which the violation which gave rise to such conviction occurred, and if such facility is owned, leased, or supervised” by the convicted person. It was improper for EPA to designate the corporate headquarters as the violating facility because there was no CWA violation at that location. All of the conduct charged by EPA and agreed to in the plea agreement occurred on the rig, not at the headquarters.
This is another is a series of cases challenging EPA’s efforts to grant itself more power by broadening the language of one of its authorizing statutes. The automatic disqualification provision of the Clean Water Act was intended to exclude a facility from eligibility for contracts until the violating condition of the facility is corrected – at that point the facility again becomes eligible for contracts. EPA’s actions in this case punish the company as a whole under a statutory provision that does not allow that.
Moreover, EPA expanded its disqualification order to include all BP “affiliates,” including those in Singapore and Oman. This action was not supported by any justification grounded in the public interest, and the punishment threatens to undermine government contracting. The punishment was intended to send a message, but it was an unlawful abuse of EPA’s discretion to do so without any public interest justification.
In March, 2014, BP and EPA reached an administrative agreement under which EPA agreed to end the suspension and debarment of BP and its worldwide affiliates from federal contracting.