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

By Mica Rosenberg

NEW YORK, Aug 13 (Reuters) - BP Plc is suing the U.S.government for barring the British oil giant from obtaining newfederal contracts after the company pleaded guilty to chargesrelated 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 businessintegrity" after the Deepwater Horizon blowout that killed 11workers and gushed millions of barrels of oil into coastalwaters.

BP is one of the largest suppliers of fuel to the U.S.government, including to the military, holding contracts worthmore than $1.34 billion, according to the suit. The suspensiononly effects new contracts, not existing deals.

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

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

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

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

The company is currently paying out millions of dollars tosettle damage claims from Gulf residents in a contentiousprocess 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'steam despite objections from the oil company, which is alsofacing the second phase of a trial in federal court to determinefines for environmental harm caused by the spill.

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

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