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UK, trade groups tell US court ban against BP unfair

Oil gushes from Bp's ruptured well in the Gulf of Mexico, in this frame grab captured from a BP live video feed on July 11, 2010. REUTERS/BP
Oil gushes from Bp's ruptured well in the Gulf of Mexico, in this frame grab captured from a BP live video feed on July 11, 2010. REUTERS/BP

HOUSTON (Reuters) - The U.S. Environmental Protection Agency may have been too harsh when it banned BP Plc from lucrative federal contracts as punishment for its 2010 Macondo oil spill, the UK and prominent business groups said on Tuesday.

The UK government, the American Petroleum Institute and the U.S. Chamber of Commerce said the EPA has caused regulatory uncertainty and soured the broader investment climate by barring the British oil major from acquiring new leases in the U.S. Gulf of Mexico or entering deals to supply the U.S. military with fuels.

In briefs submitted to a U.S. court, the groups made clear they support a lawsuit BP filed in August to challenge the ban, which impacts new contracts but not existing ones.

"EPA's disqualification and suspension of multiple BP entities may have been excessive," the UK's brief said. "The issue before the Court ... implicates the rights of one of the United Kingdom's largest companies and affects jobs and pensions of workers in the United Kingdom, the United States, and elsewhere."

The EPA sprung the suspension on BP a year ago, citing its "lack of business integrity" after the well blowout that killed 11 workers and gushed millions of barrels of oil into coastal waters in the worst offshore spill in U.S. history.

The aftermath of the accident caused tension in 2010 between Washington and London. The UK government said despite its criticisms of the EPA, it "recognizes the grave consequences" of the spill.

BP has already set aside $42.4 billion in provisions to deal with the aftermath of the spill.

Early next year, U.S. District Judge Carl Barbier is expected to decide how much BP should be fined under the Clean Water Act for the spill - with billions of dollars in potential liabilities at stake.

This week, the trial started of a former BP engineer, Kurt Mix, who allegedly deleted text messages and voicemails about the estimated size of the spill. He has pleaded not guilty to charges of obstruction of justice.

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

(Reporting by Terry Wade; Editing by Leslie Adler)

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