BP 2007 Annual Report Download - page 46

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at all sites where it has been identified as a PRP or is otherwise named
and has established provisions accordingly. BP does not anticipate that
its ultimate exposure at these sites individually, or in aggregate, will be
significant, except as reported for Atlantic Richfield Company in the
matters below.
The US and the State of Montana seek to hold Atlantic Richfield
Company liable for environmental remediation, related costs and natural
resource damages arising out of mining-related activities by Atlantic
Richfield’s predecessors in the upper Clark Fork River Basin (basin).
Federal and state trustees also seek to recover damages for alleged
injuries to natural resources in the basin. Past settlements resolved
Atlantic Richfield’s alleged liability for portions of these claims. In 2007,
the parties reached an agreement in principle in which Atlantic Richfield
agreed to pay approximately $169 million, plus interest, to settle all
remaining claims for natural resource damages in the basin, and federal
and state claims for environmental remediation and related costs in the
Clark Fork River operable unit and in portions of the Anaconda operable
unit owned by the State of Montana. Under the agreement, the State of
Montana agreed to use most of the settlement funds to remediate and
restore the identified areas. The settlement must be lodged in federal
court and is contingent on government review of public comments on
the settlement, and court approval of the settlement. It includes limited
reservations of rights against Atlantic Richfield. Other portions of the
basin, principally in Anaconda and Butte, still require remediation. The
estimated future cost of completing remedies that the EPA has selected
or proposed in the other remaining operable units in the basin is
approximately $290 million. Past settlements between Atlantic Richfield,
the US and the State of Montana, including consent decree settlements
in other portions of the basin, may provide a framework for future
settlement of the remaining claims.
The group is also subject to other claims for natural resource damages
(NRD) under CERCLA, OPA 90 and other federal and state laws. NRD
claims have been asserted by government trustees against a number of
group operations. This is a developing area of the law that could affect
the cost of addressing environmental conditions at some sites in the
future.
In the US, many environmental clean-ups are the result of strict
groundwater protection standards at both the state and federal level.
Contamination or the threat of contamination of current or potential
drinking water resources can result in stringent clean-up requirements
even if the water is not being used for drinking water. Some states have
even addressed contamination of non-potable water resources using
similarly strict standards. BP has encouraged risk-based approaches to
these issues and seeks to tailor remedies at its facilities to match the
level of risk presented by the contamination.
Other significant legislation includes the Toxic Substances Control Act,
which regulates the development, testing, import, export and
introduction of new chemical products into commerce; the Occupational
Safety and Health Act, which imposes workplace safety and health,
training and process safety requirements to reduce the risks of physical
and chemical hazards and injury to employees; and the Emergency
Planning and Community Right-to-Know Act, which requires emergency
planning and spill notification as well as public disclosure of chemical
usage and emissions. In addition, the US Department of Transport (DOT),
through the Pipeline and Hazardous Materials Safety Administration,
comprehensively regulates the transportation of the group’s petroleum
products such as crude oil, gasoline and chemicals to protect the health
and safety of the public.
BP is subject to the Marine Transportation Security Act (MTSA) and
the DOT Hazardous Materials (HAZMAT) security compliance regulations
in the US. These regulations require many of our US businesses to
conduct security vulnerability assessments and prepare security
mitigation plans that require the implementation of upgrades to security
measures, the appointment and training of designated security personnel
and the submission of plans for approval and inspection by government
agencies.
The US government, in an effort to further mitigate the threat of
terrorism to critical US infrastructure, is additionally mandating two new
security legislation initiatives, which began in the fourth quarter of 2007
and will continue through 2008:
– Chemical Facility Anti-Terrorism Standard (CFATS) rollout starting in
2007/2008.
– Transportation Workers Identification Credential (TWIC) rollout starting
in 2007/2008.
CFATS is new legislation that began implementation in the fourth
quarter of 2007 and will continue through 2008. It is intended to provide
an enhanced security posture for US facilities that manufacture or store
fuels. Additionally, it will cover facilities that have national economic
impact to the US, should these facilities be a target for terrorism. A
number of BP facilities will be impacted by this legislation. Compliance
will require them to complete a screening review, and if not found to be
exempt, they will be required to conduct a detailed security vulnerability
assessment and a detailed security plan for each facility impacted.
TWIC is a new government employee background screening
programme that is linked to the MTSA facilities. The programme requires
all designated personnel with unescorted access to restricted areas of
the MTSA designated facilities to submit to a detailed background
screening programme and to be issued a bio-metric identification card.
All of BP’s MTSA-regulated facilities will be impacted and will be required
to comply by the end of 2008 in a phased in approach.
BP has a national spill response team, the BP Americas Response
Team (BART), consisting of approximately 250 trained emergency
responders at group locations throughout North America. In addition to
the BART, there are five Regional Response Incident Management
Teams, a number of HAZMAT Teams and emergency response teams at
our major facilities. Collectively, these teams are ready to assist in a
response to a major incident.
See also Legal proceedings on page 84.
European Union regional review
Within the EU, European Community legislation is proposed by the
European Commission (EC) and usually adopted jointly by the European
Parliament and the Council of Ministers. It must then be implemented by
each EU member state. When implementing EU legislation, member
states must ensure that penalties for non-compliance are effective,
proportionate and dissuasive, and must usually designate a ‘competent
authority’ (regulatory body) for implementation. Where the EC believes
that a member state has failed fully and correctly to transpose and
implement EU legislation, it can take the member state to the European
Court of Justice, which can order the member state to comply and in
certain cases can impose monetary penalties on the member state. A
few non-EU states may also agree to apply EU environmental legislation,
in particular under the framework of the European Economic Area
agreement.
An EC directive for a system of integrated pollution prevention and
control (IPPC) was adopted in 1996. This system requires certain listed
industrial installations, including most activities and processes
undertaken by the oil and petrochemicals industry within the EU, to
obtain an IPPC permit, which is designed to address an installation’s
environmental impacts, air emissions, water discharges and waste in a
comprehensive fashion. The permit requires, among other things, the
application of Best Available Techniques (BAT), taking into account the
costs and benefits, unless an applicable environmental quality standard
requires more stringent restrictions, and an assessment of existing
environmental impacts and future site closure obligations. All such plants
had to obtain such a permit by 30 October 2007 and permits may include
an environmental improvement programme. The EC is currently
reviewing the IPPC directive with the primary aim of merging several
separate directives related to industrial emissions into a single directive.
Initial indications suggest there is a strong desire by the EC to propose a
more prescriptive piece of legislation with a greater emphasis on
mandating emission limits contained in guidance documents. In
particular, the review is likely to propose more stringent regulations of
combustion plant (with scope increased to include plants down to 20MW
thermal input), extend IPPC to cover organic chemical manufacture by
biological treatment (biofuels) and may open the way for NOx and SOx
trading by member states.