BP banned from US government contracts

The decision was announced hours before two BP supervisors pleaded not guilty in a federal court in New Orleans to manslaughter charges for their failure to prevent the deadly blast on the Deepwater Horizon drilling rig.

A former BP executive charged with obstruction of justice for lying about how much oil was gushing out of the runaway well also pleaded not guilty in the same court.

Two weeks after BP agreed to pay $4.5 billion to settle criminal charges in the case, the US Environmental Protection Agency said the firm was barred from obtaining new contracts until it can prove it meets US government business standards.

"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 agency said in a statement.

The EPA cited BP's admission of guilt on November 15 to 11 counts of manslaughter, one count of felony obstruction of Congress and two environmental violations arising from the April 20, 2010 well blowout, which caused the worst ecological disaster in US history.

The blowout and sinking of the Deepwater Horizon drilling platform left 11 people dead and spewed some 4.9 million barrels of oil into the Gulf of Mexico over 87 days, blackening beaches in five states.

The EPA said the ban on BP and its affiliates from receiving federal contracts will continue "until the company can provide sufficient evidence to EPA demonstrating that it meets federal business standards."

The order does not affect existing contracts.

Also on Wednesday, the Bureau of Ocean Energy Management announced the sale of exploration rights to 20 million acres in the western Gulf of Mexico. BP did not bid for any of the leases. The next sale is scheduled for March.

BP said in a statement that it hopes to have the ban lifted as quickly as possible and has been working with the EPA to prove it can meet federal standards.

"As BP's submissions to the EPA have made clear, the company has made significant enhancements since the accident," BP said.

"In the two and a half years since the Deepwater Horizon accident, the US government has granted BP more than 50 new leases in the Gulf of Mexico, where the company has been drilling safely since the government moratorium was lifted," it added.

However, BP's legal woes are far from over. It must still resolve a civil case on environmental fines which could amount to as much as $18 billion if gross negligence is found. It also remains on the hook for economic damages, including the cost of environmental recovery.

Earlier this year, BP reached an agreement to settle claims from fishermen and others affected by the disaster for $7.8 billion, but it must be approved by a federal judge.

BP has signaled it will continue to aggressively pursue damages from rig operator Transocean and well operations subcontractor Halliburton, which BP blames for faulty work leading up to the blowout.

In New Orleans, Robert Kaluza, 62, and Donald Vidrine, 65 -- the highest-ranking BP supervisors onboard the Deepwater Horizon at the time of the deadly blast -- pleaded not guilty Wednesday to felony manslaughter charges.

Prosecutors said the men ignored "glaring red flags that the well was not secure" and failed to take "appropriate action" to prevent the blowout, but their defense lawyers said they are being treated as scapegoats.

"The problem with this is that Congress and others demand human flesh to pay for terrible casualties like this," Kaluza's lawyer, Bob Habans, told reporters on the courthouse steps.

"This time they chose Donald Vidrine and Bob Kaluza as the scapegoats for this prosecution."

A presidential commission tasked with investigating the environmental catastrophe spread the blame for the deadly blast, citing BP and its subcontractors for shoddy work, poor management and risky shortcuts.

Kaluza and Vidrine face up to 10 years in prison on each of 11 counts of seaman's manslaughter and eight years in prison on each of 11 counts of involuntary manslaughter.

Former senior BP executive David Rainey was charged in a separate indictment with obstructing a congressional investigation and making false statements to law enforcement officials for allegedly downplaying the extend of the spill.

Rainey faces five years in prison if convicted.