BP 2015 Annual Report Download - page 243

plaintiffs filed a motion asking the court to prevent BP from arguing that
government action and/or inaction following the oil spill is a ‘superseding’
cause with respect to some or all of the damages that plaintiffs claim.
The motions are fully briefed, but the court has not yet issued a ruling.
Halliburton and Transocean settlements.
On 20 May 2015, BP and Transocean, and BP and Halliburton Energy
Services Inc. (Halliburton), entered into confidential settlement
agreements to resolve the final remaining disputes between these
parties stemming from the Incident.
Under the agreement with Transocean, BPXP and BPAPC agreed to
indemnify Transocean for compensatory damages (including natural
resource damages), to pay Transocean $125 million in compensation for
incurred legal fees, and discontinue attempts to recover as an additional
insured under Transocean’s liability policies. Transocean agreed to
indemnify BPXP and BPAPC for the personal and bodily injury claims of
Transocean employees, as well as for claims relating to any future
cleanup or removal of diesel or other pollutants stored on the Deepwater
Horizon. BPXP, BPAPC, and Transocean will mutually release all claims
between the companies.
BPXP’s agreement with Halliburton resolves the remaining claims
between the two companies and includes indemnities and the dismissal
of all claims against each other.
Agreement for early natural resource restoration
On 21 April 2011, BP announced an agreement with natural resource
trustees for the US and five Gulf Coast states, providing for up to
$1 billion to be spent on early restoration projects to address natural
resource injuries resulting from the Incident. To date, BP and the trustees
have reached agreement on a total of 65 early restoration projects that
are expected to cost approximately $877 million. The remaining unpaid
balance of the $1 billion will be paid within 30 days after court approval of
the proposed Consent Decree.
Under the proposed Consent Decree, Trustees would continue to
implement these early restoration projects as part of the final settlement
of all US and state claims for natural resource damages.
PSC settlements
PSC settlements – Economic and Property Damages Settlement
Agreement
The Economic and Property Damages Settlement resolves certain
economic and property damage claims, and includes a $2.3 billion BP
commitment to help resolve economic loss claims related to the Gulf
seafood industry (which we refer to as the Seafood Compensation Fund)
and a $57-million fund to support advertising to promote Gulf Coast
tourism. It also resolves property damage in certain areas along the Gulf
Coast, as well as claims for additional payments under certain Master
Vessel Charter Agreements entered into in the course of the Vessels of
Opportunity Program implemented as part of the response to the
Incident. The Economic and Property Damages Settlement does not
cover claims by individuals and businesses that opted out of the 2012
PSC settlements and/or whose claims were excluded from them,
including claims for recovery of losses allegedly resulting from the 2010
federal deepwater drilling moratoria and/or the related permitting
processes. The Economic and Property Damages Settlement also does
not resolve private securities litigation pending in MDL 2185.
The economic and property damages claims process is under court
supervision through the settlement claims process established by the
Economic and Property Damages Settlement. This provides that class
members release and dismiss their claims against BP not expressly
reserved by that agreement. The Economic and Property Damages
Settlement also provided that, to the extent permitted by law, BP
assigned to the PSC certain of its claims, rights and recoveries against
Transocean and Halliburton for damages with protections such that
Transocean and Halliburton cannot pass those damages through to BP.
The claims facility operating under the framework established by the
Economic and Property Damages Settlement commenced operation in
June 2012. Following numerous court decisions on 31 March 2015, the
court denied the PSC’s motion seeking to alter or amend a revised policy,
addressing the matching of revenue and expenses for business
economic loss claims, which requires the matching of revenue with the
expenses incurred by claimants to generate that revenue, even where
the revenue and expenses were recorded at different times. On 23 April
2015, the PSC appealed this decision to the Fifth Circuit. On
18 December 2015, the PSC and BP entered into a joint stipulation to
stay this appeal pending resolution of certain issues in the district court in
New Orleans. On 8 January 2016, the Fifth Circuit granted the joint
stipulation and stayed the appeal for 120 days.
The effective date of the Economic and Property Damages Settlement
Agreement was 8 December 2014, and the final deadline for filing all
claims other than those that fall into the Seafood Compensation Program
was 8 June 2015.
On 8 May 2015, the Fifth Circuit upheld three awards to non-profit
entities under the Economic and Property Damages Settlement, each of
which was premised on an official policy that typically treated grant
monies and contributions to non-profit entities as revenue for purposes of
the settlement’s calculations. BP argued that this policy was inconsistent
with the language of the settlement agreement and would place the
agreement in violation of United States law, but the Fifth Circuit upheld
the policy and determined that the district court did not otherwise abuse
its discretion in denying review of the three awards. The court also held
that requests for discretionary review of settlement claims by BP or
individual claimants under the Economic and Property Damages
Settlement can be appealed by BP or individual claimants to the Fifth
Circuit.
For more information about BP’s current estimate of the total cost of the
Economic and Property Damages Settlement, see Financial statements –
Note 2.
PSC settlements – Medical Benefits Class Action Settlement
The Medical Benefits Class Action Settlement (Medical Settlement)
resolves certain medical claims by response workers and Gulf Coast
residents. Under the Medical Settlement, class members release and
dismiss their claims against BP covered by that settlement, except that
class members do not release certain claims for later-manifested physical
conditions (LMPCs).
The Medical Settlement involves payments to qualifying class members
based on a matrix for certain Specified Physical Conditions (SPCs), as
well as a 21-year Periodic Medical Consultation Program (PMCP) for
qualifying class members. The Medical Settlement also provides that
class members claiming LMPCs may pursue their claims through a
mediation/litigation process, but waive, among other things, the right to
seek punitive damages. Consistent with its commitment to the Gulf, BP
has also agreed to provide $105 million to the Gulf Region Health
Outreach Program to improve the availability, scope and quality of
healthcare in certain Gulf Coast communities. This healthcare outreach
programme will be available to, and is intended to benefit, class
members and other individuals in those communities. BP has already
funded $93.7 million for projects sponsored by this programme.
The district court approved the Medical Settlement in a final order and
judgment on 11 January 2013. The effective date was 12 February 2014
and the deadline for submitting claims was 12 February 2015. The total
number of claims estimated by the Medical Claims Administrator is
approximately 37,200. At year end, approximately 7,600 SPC claims,
totalling approximately $17 million, have been approved for
compensation. In addition, approximately 22,000 claimants have been
determined eligible for the PMCP.
MDL 2185 and other securities-related litigation
Since the Incident, shareholders have sued BP and various of its current
and former officers and directors asserting shareholder derivative claims
and class and individual securities fraud claims. Many of these lawsuits
have been consolidated or co-ordinated in federal district court in
Houston (MDL 2185).
Additional disclosures
*Defined on page 256. BP Annual Report and Form 20-F 2015 239