BP 2014 Annual Report Download - page 242

an Administrative Law Judge from the OSH Review Commission. The
Administrative Law Judge rendered her decision on 31 July 2013. Of the
42 remaining citations, OSHA voluntarily dismissed one of them and the
judge vacated 36 additional citations. The remaining five citations were
downgraded and assessed an aggregate penalty of $35,000. In addition,
the judge accepted the parties’ pre-trial settlement of the 23 citations. As
a result of the settlement and the judge’s decision, the total penalty in
respect of the citations was reduced from the original amount of
approximately $3 million to $80,000. The Review Commission has
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 2015 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. The BP p.l.c. shareholder filed an
amended complaint, in response to which BP filed a motion to dismiss,
which was granted by the trial court on 14 March 2012. The plaintiff
appealed the court’s dismissal of the case, and on 13 February 2014 the
Ninth Circuit affirmed in part and reversed in part, ruling that claims based
on four alleged misrepresentations should not have been dismissed. The
case has been remanded to the trial court for further proceedings.
Exxon Valdez matters
Approximately 200 lawsuits were filed in state and federal courts in
Alaska seeking compensatory and punitive damages arising out of the
Exxon Valdez oil spill in Prince William Sound in March 1989. Most of
those suits named Exxon (now ExxonMobil), Alyeska Pipeline Service
Company (Alyeska), which operates the oil terminal at Valdez, and the
other oil companies that own Alyeska. Alyeska initially responded to the
spill until the response was taken over by Exxon. BP owns a 46.9%
interest (reduced during 2001 from 50% by a sale of 3.1% to Phillips) in
Alyeska through a subsidiary of BP America Inc. and briefly indirectly
owned a further 20% interest in Alyeska following BP’s combination with
Atlantic Richfield. Alyeska and its owners have settled all the claims
against them under these lawsuits. Exxon has indicated that it may file a
claim for contribution against Alyeska for a portion of the costs and
damages that it has incurred. If any claims are asserted by Exxon that
affect Alyeska and its owners, BP will defend the claims vigorously.
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. The judge took this on advisement. A decision of the court is
awaited.
Bolivia
In respect of Pan American Energy’s arbitration case for compensation
for the expropriation of its shares in Empresa Petrolera Chaco S.A.
(Chaco) which commenced in March 2012 against the Republic of Bolivia,
on 18 December 2014, the Republic of Bolivia and Pan American Energy
signed a $357 million settlement agreement and agreed to terminate the
arbitration.
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 have also been 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. The
other investigations remain open and there is no deadline for the
completion of the inquiries.
In addition, fifteen 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.
See Financial statements – Note 31 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.
Both the US and the EU have enacted strong sanctions against Iran,
including: 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
238 BP Annual Report and Form 20-F 2014