BP 2015 Annual Report Download - page 246

granted OSHA’s petition for review and briefing was completed in the
first half of 2014. The Review Commission is not expected to issue its
decision until later this year at the earliest.
Prudhoe Bay leak
In March and August 2006, oil leaked from oil transit pipelines operated
by BP Exploration (Alaska) Inc. (BPXA) at the Prudhoe Bay unit on the
North Slope of Alaska. On 12 May 2008, a BP p.l.c. shareholder filed a
consolidated complaint alleging violations of federal securities law on
behalf of a putative class of BP p.l.c. shareholders, based on alleged
misrepresentations concerning the integrity of the Prudhoe Bay pipeline
before its shutdown on 6 August 2006. On 7 December 2015, the
complaint was dismissed with prejudice. On 5 January 2016, plaintiffs
filed a notice of appeal of that decision to the Ninth Circuit Court of
Appeals.
Lead paint matters
Since 1987, Atlantic Richfield Company (Atlantic Richfield), a subsidiary*
of BP, has been named as a co-defendant in numerous lawsuits brought
in the US alleging injury to persons and property caused by lead pigment
in paint. The majority of the lawsuits have been abandoned or dismissed
against Atlantic Richfield. Atlantic Richfield is named in these lawsuits as
alleged successor to International Smelting and Refining and another
company that manufactured lead pigment during the period 1920-1946.
The plaintiffs include individuals and governmental entities. Several of the
lawsuits purport to be class actions. The lawsuits seek various remedies
including compensation to lead-poisoned children, cost to find and
remove lead paint from buildings, medical monitoring and screening
programmes, public warning and education of lead hazards,
reimbursement of government healthcare costs and special education for
lead-poisoned citizens and punitive damages. No lawsuit against Atlantic
Richfield has been settled nor has Atlantic Richfield been subject to a
final adverse judgment in any proceeding. The amounts claimed and, if
such suits were successful, the costs of implementing the remedies
sought in the various cases could be substantial. While it is not possible
to predict the outcome of these legal actions, Atlantic Richfield believes
that it has valid defences. It intends to defend such actions vigorously
and believes that the incurrence of liability is remote. Consequently, BP
believes that the impact of these lawsuits on the group’s results, financial
position or liquidity will not be material.
Abbott Atlantis related matters
In April 2009, Kenneth Abbott, as relator, filed a US False Claims Act
lawsuit against BP, alleging that BP violated federal regulations, and
made false statements in connection with its compliance with those
regulations, by failing to have necessary documentation for the Atlantis
subsea and other systems. BP is the operator and 56% interest owner of
the Atlantis unit which is in production in the Gulf of Mexico. On
21 August 2014, the court granted BP’s motions for summary judgment.
On 28 August 2014, the court entered final judgment in favour of BP. In
September 2014 the plaintiff filed a motion for reconsideration, which BP
opposed. On 18 December 2015, the judge denied plaintiffs’ motion for
reconsideration. On 8 January 2016, plaintiffs filed a notice of appeal.
EC investigation and related matters
On 14 May 2013, European Commission officials made a series of
unannounced inspections at the offices of BP and other companies
involved in the oil industry acting on concerns that anticompetitive
practices may have occurred in connection with oil price reporting
practices and the reference price assessment process. Related inquiries
and requests for information were also received from US and other
regulators following the European Commission’s actions, including from
the Japanese Fair Trade Commission, the Korean Fair Trade Commission,
the Federal Trade Commission (FTC) and the CFTC. On 1 October 2014,
BP was informed by the FTC that it was closing its investigation. On
7 December 2015, the European Commission confirmed that it has
dropped BP from its investigation.
In addition, 15 purported class actions related to these matters have been
filed in US district courts alleging manipulation and antitrust violations
under the Commodity Exchange Act and US antitrust laws, and these
purported class actions have been consolidated in federal court in
New York.
California False Claims Act matters
On 4 November 2014 the California Attorney General filed a notice in
California state court that it was intervening in a previously-sealed
California False Claims Act (CFCA) lawsuit filed by relator Christopher
Schroen against BP, BP Energy Company, BP Corporation North America
Inc., BP Products and BPAPC. On 7 January 2015, the California Attorney
General filed a complaint in intervention alleging that BP violated the
CFCA and the California Unfair Competition Law by falsely and
fraudulently overcharging California state entities for natural gas. The
relator’s complaint makes similar allegations, in addition to individual
claims. The complaints seek treble damages, punitive damages, penalties
and injunctive relief. On 9 April 2015, the BP defendants filed a demurrer,
motion to strike and motion to dismiss (forum non conveniens) to the
relator’s claims that were not adopted in the Attorney General’s
complaint, which was denied on 10 June 2015. BP filed additional
demurrers to the Attorney General’s and the relator’s complaints, which
were granted in part and denied in part on 14 August 2015. On
22 September 2015, BP filed its answer and affirmative defenses. Trial is
scheduled to commence on 10 July 2017.
Scharfstein v. BP West Coast Products, LLC
A purported class action lawsuit was filed against BP West Coast
Products, LLC in Oregon State Court under the Oregon Unlawful Trade
Practices Act on behalf of customers who used a debit card at ARCO
gasoline stations in Oregon during the period 1 January 2011 to
30 August 2013, alleging that ARCO’s Oregon sites failed to provide
sufficient notice of the 35 cents per transaction debit card fee. After a
jury trial and subsequent hearing, in 2014 the jury rendered a verdict
against BP and determined that statutory damages of $200 per class
member should be awarded. On 25 August 2015, the court determined
the size of the class to be slightly in excess of two million members. BP
intends to appeal. No provision has been made for damages arising out
of this class action.
See Financial statements – Note 32 for additional information on the
group’s legal proceedings.
International trade sanctions
During the period covered by this report, non-US subsidiaries, or other
non-US entities of BP, conducted limited activities in, or with persons
from, certain countries identified by the US Department of State as State
Sponsors of Terrorism or otherwise subject to US and EU sanctions
(Sanctioned Countries). Sanctions restrictions continue to be insignificant
to the group’s financial condition and results of operations. BP monitors
its activities with Sanctioned Countries, persons from Sanctioned
Countries and individuals and companies subject to US and EU sanctions
and seeks to comply with applicable sanctions laws and regulations.
The US and the EU sanctions against Iran that were in place in 2015
included: in the US, sanctions against persons involved with Iran’s
energy, shipping and petrochemicals industries, and sanctions against
financial institutions that engage in significant transactions with the Iran
Central Bank; and in the EU, a prohibition on the import, purchase and
transport of Iranian-origin crude oil, petroleum products and natural gas.
Additionally, the Iran Threat Reduction and Syria Human Rights Act of
2012 (ITRA) added Section 13(r) to the Securities Exchange Act of 1934,
as amended (the Exchange Act), and requires that issuers must file
annual or quarterly reports under the Exchange Act to disclose in such
reports whether, during the period covered by the report, the registrant
or its affiliates have knowingly engaged in certain, principally Iran-related,
activities.
The US and the EU implemented temporary, limited and reversible relief
of certain sanctions related to Iran pursuant to a Joint Plan of Action
(JPOA) entered by Iran, China, France, Germany, Russia, the UK and the
US with effect from 20 January 2014 and in July 2015, these countries
agreed the Joint Comprehensive Plan of Action (JCPOA). Following the
JCPOA, BP representatives visited Iran, met Iranian government officials
and met other Iranian nationals. Such meetings were introductory in
nature with a view to considering possible future business opportunities.
Following confirmation by the International Atomic Energy Agency on
16 January 2016 (Implementation Day) that Iran had fully implemented
the JCPOA measures necessary for sanctions relief, the European Union
242 BP Annual Report and Form 20-F 2015