The US Department of Justice wants oil giant BP excluded from any new contracts with the US government because it has not demonstrated that it is a "responsible" federal contractor following the 2010 Gulf of Mexico oil spill disaster.
BP is fighting to overturn the US Environmental Protection Agency's (EPA) 2012 decision that banned its subsidiaries from pitching for any new contracts to supply oil to the American government.
The British firm, among the biggest suppliers of oil to the US Defence Department, initially thought the ban was temporary.
However, the EPA has not revoked the "mandatory debarment", arguing that BP has still not rectified the problems that led to the explosion on its Deepwater Horizon oil rig in 2010.
Robert Dreher, acting assistant attorney general for the US Department of Justice, said in a court filing this week that the EPA was "wholly reasonable" for coming to the conclusion that BP's "latest round of plans and promises is insufficient to demonstrate that BP is a responsible federal contractor", reported The Telegraph.
In a statement, the oil giant said: "As stated in our motion, BP believes that the EPA's disqualification and suspension decisions should be invalidated because they are arbitrary and capricious, contrary to the law, and an abuse of discretion.
"Importantly, the EPA had no basis to designate BPXP's headquarters in Houston as the "violating facility" under the relevant disqualification statute, nor can it make the required showing that 'immediate action' was necessary when it based the suspension on events that happened more than two-and-a-half years before the suspension, particularly when the government continued to do business with BP and repeatedly found it to be a responsible contractor," BP added.
A US federal appeals court on 10 January affirmed a federal judge's approval of a multi billion-dollar settlement between BP and businesses and individuals who suffered economic losses in the 2010 Gulf of Mexico oil spill.
In the 2-1 decision, a panel of the 5th US Circuit Court of Appeals ruled that US District Judge Carl Barbier was correct in rejecting a BP bid, which required businesses seeking compensation to provide proof that traced their economic losses to the oil spill.
The plaintiffs, including hotel owners and oyster gatherers, have welcomed the ruling.
BP Sues EPA
BP sued the EPA last August, arguing that "the suspension of BP is unlawful, arbitrary, capricious, and an abuse of EPA's discretion."
BP in 2013 pleaded guilty to 11 counts of felony seaman's manslaughter and one count of lying to Congress over the Deepwater Horizon disaster. It also confessed to violating pollution regulations relating to the 2010 oil spill and a number of previous incidents.
The Environmental Protection Agency (EPA) said in 2012 that the oil major should be excluded from future contracts owing to the "lack of business integrity" it supposedly demonstrated in its handling of the disaster. The suspension does not apply to contracts signed before the 2010 disaster.
The April 2010 explosion on the Deepwater Horizon platform killed 11 workers and sent more than four million barrels of oil into the sea. It is one of the worst environmental disasters in history.