Manufacturers, business groups challenge EPA debarment ruling

HOUSTON (Legal Newsline) -- This week, a group of manufacturers joined other business groups in supporting BP's efforts to fight the federal Environmental Protection Agency's debarment ruling.

Last November, the EPA banned BP from participating in new federal contracts. The agency pointed to the company's "lack of business integrity," citing the explosion and fire that occurred on Deepwater Horizon, which was licensed to BP.

The disaster killed 11 workers and resulted in the largest offshore spill in U.S. history.

In August, BP filed a lawsuit in the U.S. District Court for the Southern District of Texas, challenging the EPA's suspension and debarment decisions.

On Monday, the National Association of Manufacturers, along with the U.S. Chamber of Commerce, the American Petroleum Institute, the National Ocean Industries Association, the Organization for International Investment and TechAmerica, filed an amicus brief in support of BP.

The Chamber's Institute for Legal Reform owns Legal Newsline.

The groups say they are "significantly concerned" about the EPA's statutory overreach in this case.

"The EPA asserted the authority to declare that a Clean Water Act violation occurring at one company facility results in the mandatory disqualification of the corporate headquarters from involvement in any federal program. And according to the EPA, the discretionary suspension of a company based on the improper conduct of its employees automatically results in the indefinite suspension of multiple worldwide affiliates of that company, no matter their connection to or involvement in the improper conduct," they wrote in their 27-page brief.

"The suspension also is not restricted to a single agency or a single industry; the affiliates are barred from entering into a contract with any government agency or working with any company involved in a federal program, even in an entirely unrelated industry.

"These expansive assertions of authority, and the EPA's actions pursuant to that authority, pose a grave threat to federal contractors and private industries with business touching on federal programs or federal lands."

The groups agree that when a company commits a regulatory violation, agencies have discretion to exclude that company from federal contracting on a government-wide basis.

However, that discretion is not absolute, they argue.

"An agency must abide by the terms of the statutes and regulations that govern the exclusion of entities that have committed such violation. And an agency must exercise its discretion in a reasonable manner, demonstrating some connection between the violation the agency is addressing and the remedy it adopts," the groups wrote.

"The EPA followed neither of those dictates in this case. And the implications of that approach, should it be accepted by this court, are disturbing."

NAM Senior Vice President and General Counsel Linda Kelly said Wednesday if the ruling was left to stand it would set a harmful precedent for manufacturers across the country.

"While we agree with rules and regulations meant to protect the public interest, this debarment ruling seems to be ignoring the confines of the EPA's statutory authority in order to be punitive and to make a point," she said in a statement.

"This heavy-handed approach is concerning to all manufacturers."

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.