Okaloosa County BOCC — July 30, 2015 — III. j. BP Settlement Update — reading text

TOURIST DEVELOPMENT DEPARTMENT MEMORANDUM DATE: July 30, 2015 TO: Tourist Development Council FROM: Ed Schroeder, Tourist Development Department Director Jim Trifilio, Coastal Management Coordinator SUBJECT: BP Settlement Update STATEMENT OF ISSUE: Updating the TDC on the BP settlement. BACKGROUND: Settlement information is being provided for informational purposes only. OPTIONS: N/A. RECOMMENDATION TO BCC: N/A; for informational purposes only.  Deep Horizon Oil Spill Settlement Fact Sheet The Deepwater Horizon oil spill occurred on April 20, 2010 and caused significant impacts to Florida’s natural resources and economy. Of Florida’s 790 miles of coastline, at least 177 miles were affected by the oil spill. Under this agreement in principle, BP would pay a total of $18.5 billion (not including the $1B it already committed for early restoration projects) to the affected governmental entities, including: 1) Economic Claims; 2) Natural Resource Damages; 3) RESTORE Act civil penalties. Economic Claims  $4.9 billion will be paid to resolve the Gulf Coast states’ economic claims:  Florida: $2 billion  Louisiana: $1 billion  Alabama: $1 billion  Mississippi: $750 million  Texas: $150 million Natural Resource Damages  $7.1 billion (not including the $1 billion already committed by BP for early restoration projects) to the Gulf Coast states and the United States to resolve their natural resource damage claims:  Louisiana: $ 5 billion  Florida: $680 million  Mississippi: $296 million  Alabama: $296 million  Texas: $238 million  Regionwide projects: $350 million  Open Ocean projects: $1.24 billion RESTORE Act  $5.5 billion to resolve Clean Water Act civil penalties, with Florida receiving at least $572 million of this amount pursuant to the RESTORE Act. Local Claims  Approximately $1 billion to resolve the economic loss claims of the vast majority of local governmental entities (including school boards) located in the Gulf Coast states. What Does Florida Get?  As part of this agreement in principle, Florida will receive at least a total of $3.252 billion:  $2 billion for economic damages;  At least $680 million for natural resource damages;  At least $572 million from the RESTORE Act.  Payments to Florida will come in over the course of several years per an agreed schedule. This is only an agreement in principle, with any final agreement contingent on the execution of settlement agreements with all necessary parties and court approval of the Consent Decree. BP to Settle Federal, State and Local Deepwater Horizon Claims for up to $18.7 Billion ... Page 1 of 3 Cookie information We use cookies to provide you with the best experience on our website. If you continue to use the site without changing your settings, we'll assume that you are happy to accept all cookies on the BP website. Blocking certain cookies can reduce the functionality of the site. Remember Continue you can change your settings at any time by referring to the help menu on your internet browser. More information on our cookies Press Press releases BP to Settle Federal, State and Local Deepwater Horizon Claims for up to $18.7 Billion BP to Settle Federal, State and Local Deepwater Horizon Claims for up to $18.7 Billion With Payments to be Spread Over 18 Years Release date: 02 July 2015 The Disclosure and Transparency Rules (“DTR”) made by the Financial Conduct Authority govern amongst other matters the disclosure of inside information. Accordingly in compliance with Rule 2.2, BP plc makes the following announcement Five years on from the Deepwater Horizon accident and spill in 2010, BP has reached agreements in principle to settle all federal and state claims arising from the event. BP today announced that its US Upstream subsidiary, BP Exploration and Production Inc (BPXP) has executed the agreements with the US federal government and five Gulf Coast states. The agreement with the states of Alabama, Florida, Louisiana, Mississippi and Texas also includes settlement of claims made by more than 400 local government entities. The principal payments are as follows: BPXP is to pay the United States a civil penalty of $5.5 billion under the Clean Water Act (CWA) – payable over 15 years. BPXP will pay $7.1 billion to the United States and the five Gulf states over 15 years for natural resource damages (NRD). This is in addition to the $1 billion already committed for early restoration. BPXP will also set aside an additional amount of $232 million to be added to the NRD interest payment at the end of the payment period to cover any further natural resource damages that are unknown at the time of the agreement. A total of $4.9 billion will be paid over 18 years to settle economic and other claims made by the five Gulf Coast states. Up to $1 billion will be paid to resolve claims made by more than 400 local government entities. The expected impact of these agreements would be to increase the cumulative pre-tax charge associated with the Deepwater Horizon accident and spill by around $10 billion from $43.8 billion at the end of the first quarter. Separately to these agreements, the total charge reported in BP’s second quarter results will also reflect other items including charges for additional business economic loss determinations. The principal payments arising from the agreements will be made over extended periods of time as set out in the attached schedule of payments. NRD and CWA payments are scheduled to start 12 months after the agreements becomes final. Total payments for NRD, CWA and State claims will be made at a rate of around $1.1 billion a year for the majority of the payment period. Carl-Henric Svanberg, BP’s chairman, said: “Five years ago we committed to restore the Gulf economy and environment and we have worked ever since to deliver on that promise. We have made significant progress, and with this agreement we provide a path to closure for BP and the Gulf. It resolves the company’s largest remaining legal exposures, provides clarity on costs and creates certainty of payment for all parties involved. http://www.bp.com/en/global/corporate/press/press-releases/bp-to-settle-federal-state-local... 7/17/2015 BP to Settle Federal, State and Local Deepwater Horizon Claims for up to $18.7 Billion ... Page 2 of 3 “In deciding to follow this path, the Board has balanced the risks, timing and consequences associated with many years of litigation against its wish for the company to be able to set a clear course for the future. “The Board therefore believes that this agreement is in the best long-term interest of BP and its shareholders. The Board set out its position on the dividend at the first quarter and this remains unchanged by the agreement.” Bob Dudley, BP’s group chief executive, said: “This is a realistic outcome which provides clarity and certainty for all parties. “For BP, this agreement will resolve the largest liabilities remaining from the tragic accident and enable BP to focus on safely delivering the energy the world needs. “For the United States and the Gulf in particular, this agreement will deliver a significant income stream over many years for further restoration of natural resources and for losses related to the spill. “When concluded, this will resolve not only the Clean Water Act proceedings but also the Natural Resource Damage claims as well as other claims brought by Gulf States and local government entities.” BP’s chief financial officer, Brian Gilvary, said: “The negotiations were carried out with the goal of reaching a collective solution that would be acceptable for all parties. For BP this will provide certainty with respect to BP’s financial obligations for the matters settled, particularly with the ability to spread payments smoothly over many years. “The impact of the settlement on our balance sheet and cashflow will be manageable and enables BP to continue to invest in and grow its business, underpinned by a resilient and robust financial framework.” The agreements in principle are subject to execution of definitive agreements. These will comprise a Consent Decree with the United States and Gulf states with respect to the civil penalty and natural resource damages, a settlement agreement with five Gulf states with respect to State and local claims for economic and property losses, and release agreements with local government entities. The Consent Decree will be subject to public comment and final court approval. The Consent Decree and settlement agreement with the Gulf states are conditional upon each other and neither will become effective unless (1) there is final court approval for the Consent Decree and (2) local government entities execute releases to BP’s satisfaction. The agreements do not cover the remaining costs of the 2012 class action settlements with the Plaintiffs’ Steering Committee for economic and property damage and medical claims. They also do not cover claims by individuals and businesses that opted out of the 2012 settlements and/or whose claims were excluded from them. BP will continue to defend those claims vigorously. Today’s agreements in principle also do not resolve private securities litigation pending in MDL 2185. Payment schedule Year after Civil Penalty Natural Resource NRD additional State Claims consent payments Damages (NRD) final payment payments decree payments 0 $1,000,000,000 1 $379,310,345 $489,655,172 2 $189,655,712 $244,827,586 3 $379,310,345 $489,655,172 $260,000,000 4 $379,310,345 $489,655,172 $260,000,000 5 $379,310,345 $489,655,172 $260,000,000 6 $379,310,345 $489,655,172 $260,000,000 7 $379,310,345 $489,655,172 $260,000,000 8 $379,310,345 $489,655,172 $260,000,000 9 $379,310,345 $489,655,172 $260,000,000 10 $379,310,345 $489,655,172 $260,000,000 11 $379,310,345 $489,655,172 $260,000,000 12 $379,310,345 $489,655,172 $260,000,000 13 $379,310,345 $489,655,172 $260,000,000 14 $379,310,345 $489,655,172 $260,000,000