BP 2011 Annual Report Download - page 164

162 BP Annual Report and Form 20-F 2011
Additional information for shareholders
claimed a right to indemnity for such damages based on its well services
contracts with BP. On 20 June 2011, BP filed counter-complaints against
Dril-Quip, Inc. and M-I, asking for contribution and subrogation based on
those entities’ fault in connection with the Incident and under OPA 90,
and seeking declaratory judgment that Dril-Quip, Inc. and M-I caused or
contributed to, and are responsible in whole or in part for damages incurred
by BP in relation to, the Incident. On 20 January 2012, the court granted
Dril-Quip, Inc.’s motion for summary judgment, dismissing with prejudice
all claims asserted against Dril-Quip in the federal multi-district litigation
proceeding in New Orleans.
On 21 January 2012, BP and M-I entered into an agreement settling
all claims between the companies related to the Incident, including mutual
releases of claims between BP and M-I that are subject to the federal
multi-district litigation proceeding in New Orleans. Under the settlement
agreement, M-I has agreed to indemnify BP for personal injury and death
claims brought by M-I employees. BP has agreed to indemnify M-I for
claims resulting from the Incident, but excluding certain claims.
On 30 May 2011, Transocean filed claims against BP in the DoJ
Action alleging that BP America Production Company had breached its
contract with Transocean Holdings LLC by not agreeing to indemnify
Transocean against liability related to the Incident. Transocean also
asserted claims against BP under state law, maritime law, and OPA 90 for
contribution. On 20 June 2011, Cameron filed similar claims against BP in
the DoJ Action.
On 26 August 2011, the judge in the federal multi-district litigation
proceeding in New Orleans granted in part BP’s motion to dismiss a
master complaint raising claims for economic loss by private plaintiffs,
dismissing plaintiffs’ state law claims and limiting the types of maritime law
claims plaintiffs may pursue, but also held that certain classes of claimants
may seek punitive damages under general maritime law. The judge did not,
however, lift an earlier stay on the underlying individual complaints raising
those claims or otherwise apply his dismissal of the master complaint to
those individual complaints.
On 14 September 2011, the BOEMRE issued its report (BOEMRE
Report) regarding the causes of the 20 April 2010 Macondo well blowout.
The BOEMRE Report states that decisions by BP, Halliburton and
Transocean increased the risk or failed to fully consider or mitigate the
risk of a blowout on 20 April 2010. The BOEMRE Report also states that
BP, and Transocean and Halliburton, violated certain regulations related
to offshore drilling. In itself, the BOEMRE Report does not constitute
the initiation of enforcement proceedings relating to any violation. On
12 October 2011, the U.S. Department of the Interior Bureau of Safety
and Environmental Enforcement issued to BP E&P, Transocean, and
Halliburton Notification of Incidents of Noncompliance (INCs). The
notification issued to BP E&P is for a number of alleged regulatory
violations concerning Macondo well operations. The Department of
Interior has indicated that this list of violations may be supplemented as
additional evidence is reviewed, and on 7 December 2011, the Bureau of
Safety and Environmental Enforcement issued to BP E&P a second INC.
This notification was issued to BP for five alleged violations related to
drilling and abandonment operations at the Macondo well. BP has filed an
administrative appeal with respect to the first and second INCs. BP has
also filed a joint stay of proceedings with the Department of Interior with
respect to the 12 October 2011 INCs and plans to file a joint stay regarding
the 7 December 2011 INCs.
On 30 September 2011, the judge in the federal multi-district
litigation proceeding in New Orleans granted in part BP’s motion to dismiss
a master complaint asserting personal injury claims on behalf of persons
exposed to crude oil or chemical dispersants, dismissing plaintiffs’ state
law claims, claims by seamen for punitive damages, claims for medical
monitoring damages by asymptomatic plaintiffs, claims for battery and
nuisance under maritime law, and claims alleging negligence per se. As
with his other rulings on motions to dismiss master complaints, the judge
did not lift an earlier stay on the underlying individual complaints raising
those claims or otherwise apply his dismissal of the master complaint to
those individual complaints.
A Trial of Liability, Limitation, Exoneration, and Fault Allocation
was originally scheduled to begin in the federal multi-district litigation
proceeding in New Orleans in February 2012. The court’s pre-trial order
issued 14 September 2011 provided for the trial to proceed in three phases
and to include issues asserted in or relevant to the claims, counterclaims,
cross-claims, third-party claims, and comparative fault defences raised in
Transocean’s Limitation of Liability Action.
On 18 October 2011, Cameron filed a petition for writ of mandamus
with US Court of Appeals for the Fifth Circuit seeking an order vacating the
trial plan for the 27 February 2012 trial and requiring that all claims against
Cameron in that proceeding be tried before a jury. On 26 December 2011,
the Court of Appeals denied the application for mandamus.
The State of Alabama has filed a lawsuit seeking damages for
alleged economic and environmental harms, including natural resource
damages, civil penalties under state law, declaratory and injunctive
relief, and punitive damages as a result of the Incident. The State of
Louisiana has filed a lawsuit to declare various BP entities (as well as
other entities) liable for removal costs and damages, including natural
resource damages under federal and state law, to recover civil penalties,
attorney’s fees, and response costs under state law, and to recover
for alleged negligence, nuisance, trespass, fraudulent concealment
and negligent misrepresentation of material facts regarding safety
procedures and BP’s (and other defendants’) ability to manage the
oil spill, unjust enrichment from economic and other damages to the
State of Louisiana and its citizens, and punitive damages. The Louisiana
Department of Environmental Quality has issued an administrative order
seeking environmental civil penalties and other relief under state law.
On 23 September 2011, BP removed this matter to federal district court.
Several local governments in the State of Louisiana have filed suits
under state wildlife statutes seeking penalties for damage to wildlife as a
result of the spill. On 10 December 2010, the Mississippi Department of
Environmental Quality issued a Complaint and Notice of Violation alleging
violations of several state environmental statutes.
On 14 November 2011, the judge in the federal multi-district
litigation proceeding in New Orleans granted in part BP’s motion to
dismiss the complaints filed by the States of Alabama and Louisiana.
The judge’s order dismissed the States’ claims brought under state law,
including claims for civil penalties and the State of Louisiana’s request
for a declaratory judgment under the Louisiana Oil Spill Prevention and
Response Act, holding that those claims were pre-empted by federal
law. It also dismissed the State of Louisiana’s claims of nuisance and
trespass under general maritime law. The judge’s order further held that
the States have stated claims for negligence and products liability under
general maritime law, that the States have sufficiently alleged presentment
of their claims under OPA 90, and that the States may seek punitive
damages under general maritime law. On 9 December 2011, the judge
in the federal multi-district litigation proceeding in New Orleans granted
in part BP’s motion to dismiss a master complaint brought on behalf of
local government entities. The judge’s order dismissed plaintiffs’ state law
claims and limited the types of maritime law claims plaintiffs may pursue,
but also held that the plaintiffs have sufficiently alleged presentment
of their claims under OPA 90 and that certain local government entity
claimants may seek punitive damages under general maritime law. The
judge did not, however, lift an earlier stay on the underlying individual
complaints raising those claims or otherwise apply his dismissal of the
master complaint to those individual complaints.
On 9 December 2011 and 28 December 2011, the judge in the
federal multi-district litigation proceeding in New Orleans also granted BP’s
motions to dismiss complaints filed by the District Attorneys of 11 parishes
in the State of Louisiana seeking penalties for damage to wildlife, holding
that those claims are pre-empted by the Clean Water Act. Many of the
parishes have filed notices of appeal to the U.S. Court of Appeals for the
Fifth Circuit.
On 3 March 2012, BP announced a settlement with the Plaintiffs’
Steering Committee (PSC) in the federal Multi-District Litigation
proceedings pending in New Orleans (MDL 2179) to resolve the substantial
majority of legitimate private economic loss and medical claims stemming
from the Incident. The agreement in principle is subject to final written
agreement and court approvals.
The proposed settlement is comprised of two separate
agreements. The first of these resolves economic loss claims and the
other resolves medical claims. The proposed agreement to resolve
economic loss claims includes a $2.3 billion BP commitment to help
resolve economic loss claims related to the Gulf seafood industry and a