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Case 4:12-cv-01976 Document 37

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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION PEIQING CONG, et al., Plaintiffs, v. CONOCOPHILLIPS COMPANY, Defendant.

CIVIL ACTION NO. 4:12-CV-01976

JURY TRIAL DEMANDED

CONOCOPHILLIPS COMPANYS DESCRIPTION OF THE ADMINISTRATIVE PROCESS FOR REQUESTING COMPENSATION UNDER CHINAS MINISTRY OF AGRICULTURES SETTLEMENT FUND Martin D. Beirne Texas Bar No. 02055000 Southern District of Texas No. 3120 1300 Post Oak Boulevard, Suite 2500 Houston, Texas 77056 Telephone: (713) 623-0887 Facsimile: (713) 960-1527 ATTORNEY IN CHARGE FOR DEFENDANT CONOCOPHILLIPS COMPANY [Additional counsel on next page]

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Of Counsel: BEIRNE, MAYNARD & PARSONS, L.L.P. David A. Pluchinsky Texas Bar No. 16074400 Southern District of Texas No. 9159 Darin L. Brooks Texas Bar No. 00796252 Southern District of Texas No. 22788 Kristen W. Kelly Texas Bar No. 24046198 Southern District of Texas No. 690180 1300 Post Oak Boulevard, Suite 2500 Houston, Texas 77056 Telephone: (713) 623-0887 Facsimile: (713) 960-1527 Of Counsel: KIRKLAND & ELLIS LLP Brant W. Bishop, P.C. Southern District of Texas No. 724895 Emily Hughes Southern District of Texas No. 1572784 655 Fifteenth St., N.W. Washington, D.C. 20005 Telephone: (202) 879-5000 Facsimile: (202) 879-5200

Of Counsel: BARTLIT BECK HERMAN PALENCHAR & SCOTT LLP Sean C. Grimsley Southern District of Texas No. 1561634 Glen E. Summers Southern District of Texas No. 598585 Daniel R. Brody Southern District of Texas No. 37820 1899 Wynkoop Street, 8th Floor Denver, Colorado 80202 Telephone: (303) 592-3100 Facsimile: (303) 592-3140

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Pursuant to the Courts January 22, 2013 Management Order, defendant ConocoPhillips Company provides the following description of ConocoPhillips Chinas (COPC) settlement agreement with Chinas Ministry of Agriculture (MOA) and the administrative process under which an affected party may petition the MOA for compensation from the fund established as part of that settlement agreement (the Fishermen Compensation Fund). Pursuant to a settlement agreement, COPC paid 1 billion RMB (~$160 million) to the MOA to compensate for damage to aquatic organisms, including to the Fishermen Compensation Fund for affected fishermen, and 100 million RMB (~$16 million) for an ecological fund. (Decl. A (Grimsley) Ex. 4, June 21, 2012 SOA Report pp. 8-9.) 1 The MOA is currently administering the Fishermen Compensation Fund. (Id.; (Decl. B (Vanhegan) 13).)2 Under the settlement agreement, the MOA has committed to organize the relevant departments and units to direct the payment of aquaculture fishery claim funds to fishermen in affected provinces. (Decl. B (Vanhegan) 13 (quoting Art. 5 of settlement agreement).) Under the settlement agreement, the MOA specifically identified fishermen from Hebei and Liaoning as potentially affected by the Bohai releases. (Decl. B (Vanhegan) 13 (quoting Art. 5 of settlement agreement).) The MOA is currently working with local provincial governments to distribute the Fishermen Compensation Fund to compensate eligible fishermen in the affected areas. While the settlement agreement does not identify Shandong fishermen as potentially affected by the Bohai releases, it does state: If any evidence is discovered on damages caused by Penglai 19-3 Oil Spill Accidents to aquaculture areas in Bohai Bay other than the aforesaid areas [Liaoning and Hebei Provinces], administrative mediation and other means may still be adopted to resolve the issue. (Decl. B (Vanhegan) 13 (quoting Art. 7 of the settlement agreement).) COPC completed payments to the MOA for the Fishermen Compensation Fund during the first calendar quarter of 2012. Soon after, the MOA transferred those funds to the local provincial governments (in the Liaoning and Hebei Provinces) in accordance with the breakdowns provided in the governments assessment reports related to the damage caused by the Bohai releases. The MOA did not identify damage to Shandong fisheries3 (far south of the Bohai releases), but instead found

Decl. A (Grimsley) refers to the declaration of Sean Grimsley and exhibits thereto attached to ConocoPhillips opening brief in support of its motion to dismiss at Dkt. No. 12-1.
2

Decl. B (Vanhegan) refers to the declaration of Graham Vanhegan and exhibit thereto attached to ConocoPhillips opening brief in support of its motion to dismiss at Dkt. No. 12-2.
3

The Cong and Li plaintiffs are from Shandong Province.

Case 4:12-cv-01976 Document 37

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harm only to the northwest. The local governments of Liaoning and Hebei have established and applied, with respect to compensable claims, both implementation plans and standards for determining the appropriate amount of compensation. These standards include established recovery amounts per registered acre for damages to different types of marine culture, including bottom-wave marine culture, pond culture, artificial reef culture, factory culture, and raft-type marine culture. Under the Liaoning provincial governments standards, eligible fishermen have been or will be compensated RMB 893 per registered acre for bottom sowing culture and RMB 1786 per registered acre for floating raft culture. As of November 2012, according to the MOA, approximately 78% of potentially-eligible households in Liaoning had entered into settlement agreements to accept payment from the Fishermen Compensation Fund. Under the Hebei provincial governments standards, eligible fishermen have been or will be compensated RMB 126.83 per registered acre for bottom sowing culture, RMB 339.87 per registered acre for floating raft culture, RMB 253.09 per registered acre of pond culture, RMB 221.96 per registered acre of artificial reef culture, and RMB 17.65 per square meter of factory-raised culture. As of November 2012, approximately 95% of eligible households in Hebei had entered into settlements and received payment from the Fishermen Compensation Fund. To obtain compensation, eligible fishermen from Liaoning and Hebei must provide the local governments with (1) a certificate of sea area usage issued by relevant government authorities, which demonstrates that the fisherman claimant can legally conduct business and includes the fisherman claimants relevant acreage, and (2) an identification card to verify the claimants identity. As an example of the distribution plans developed by the local governments of Hebei and Liaoning, local officials in Suizhong County, Liaoning Province developed and are carrying out the following stated plan for distribution of the countys portion of the Fishermen Compensation Fund: o Stage I: Promotion Stage (February 15, 2012 to March 4, 2012). Local officials are to inform shallow water fishermen throughout the entire county, mainly targeting towns and villages, of the availability of compensation from the Fisherman Compensation Fund. o Stage II: Reporting Stage (March 5, 2012 to March 15, 2012). Shallow water fishermen claiming losses are to complete a form report describing their losses and submit the report to local government officials. Then, the Oceanic and Fishing Bureau is to compile all such claims to reflect the status of the entire county. o Stage III: Auditing Stage (March 16, 2012 to June 30, 2012). Each towns 2

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government is to publicize the complete list of farmers claiming losses, as well as a description of claimed losses for the particular town. During the public notice period, claims are investigated and if false claims are detected, the auditing team is to resolve the matter according to the nature of the case. o Stage IV: Disbursement Stage (July 1, 2012 to July 30, 2012). After farmers suffering losses and the local town government sign the Agreement on Disbursement of Indemnification and Compensation Funds and the Commitment Letter, agreeing to forego any future demands for compensation, the county government tasks the oceanic and fishing department with disbursing the compensation funds. As for fishermen from Shandong, there is no specific process identified under the settlement agreement to petition the MOA for compensation from the Fishermen Compensation Fund. However, the MOA has indicated that fishermen from Shandong who have evidence of damage resulting from the Penglai 19-3 oil releases can contact their local fishery bureau to report such damage. The local fishery bureau officials can work with provincial fishery officials, who, in turn, will work with MOA officials in Beijing, to determine whether such claims are supported by the evidence related to the Penglai 19-3 oil releases. The MOA will then determine, based on that evidence, whether further administrative process and compensation are warranted as contemplated by the settlement agreement. Based on discussions with the MOA, fishermen from Shandong province followed this process earlier in 2012 by submitting claims of damage to local fishery bureaus. The MOA in Beijing, working with provincial fishery officials, determined that there was insufficient evidence to show that the Penglai 19-3 oil releases affected fisherman to the south, and therefore did not provide compensation based on these claims. It is not clear from the discussions with the MOA whether the Cong or Li plaintiffs in this case were part of the group of Shandong fishermen that presented potential claims to the MOA. In addition to the Fishermen Compensation Fund, the MOA dedicated a portion of its monetary settlement with COPC (and its settlement with CNOOC) to fund programs for the general remediation of aquaculture resources in the Bohai Sea. Working jointly with the local provincial governments of Liaoning, Hebei, and Shandong, and the municipal government of Tianjin, the MOA last year launched the Bohai Bioresources Remediation and Release Campaign on June 3, 2012. The campaign was the first general remediation program undertaken by the MOA pursuant to the settlement agreements with COPC and CNOOC. A total of 140 million Chinese shrimp, Gazami crab, flounder and redeye mullet were released at multiple locations around the Bohai Sea. This and other future programs will benefit fishermen throughout the Bohai Sea, including fishermen from Shandong.

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Respectfully submitted, /s/ Martin D. Beirne Martin D. Beirne Texas Bar No. 02055000 Southern District of Texas No. 3120 1300 Post Oak Boulevard, Suite 2500 Houston, Texas 77056 Telephone: (713) 623-0887 Facsimile: (713) 960-1527 ATTORNEY IN CHARGE FOR DEFENDANT CONOCOPHILLIPS COMPANY

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Of Counsel: BEIRNE, MAYNARD & PARSONS, L.L.P. David A. Pluchinsky Texas Bar No. 16074400 Southern District of Texas No. 9159 Darin L. Brooks Texas Bar No. 00796252 Southern District of Texas No. 22788 Kristen W. Kelly Texas Bar No. 24046198 Southern District of Texas No. 690180 1300 Post Oak Boulevard, Suite 2500 Houston, Texas 77056 Telephone: (713) 623-0887 Facsimile: (713) 960-1527 Of Counsel: KIRKLAND & ELLIS LLP Brant W. Bishop, P.C. Southern District of Texas No. 724895 Emily Hughes Southern District of Texas No. 1572784 655 Fifteenth St., N.W. Washington, D.C. 20005 Telephone: (202) 879-5000 Facsimile: (202) 879-5200

Of Counsel: BARTLIT BECK HERMAN PALENCHAR & SCOTT LLP Sean C. Grimsley Southern District of Texas No. 1561634 Glen E. Summers Southern District of Texas No. 598585 Daniel R. Brody Southern District of Texas No. 37820 1899 Wynkoop Street, 8th Floor Denver, Colorado 80202 Telephone: (303) 592-3115 Facsimile: (303) 592-3140

Case 4:12-cv-01976 Document 37

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CERTIFICATE OF SERVICE I hereby certify that on this 30th day of January 2013, a true and correct copy of the foregoing instrument was forwarded to the following counsel-of-record by facsimile, Certified Mail, return receipt requested, or regular U.S. mail. Thomas E. Bilek Kelly Cox Bilek THE BILEK LAW FIRM, L.L.P. 808 Travis, Suite 802 Houston, Texas 77002 Stuart H. Smith Michael G. Stag John L. Fontenot Sean Cassidy SMITH STAG, L.L.C. 365 Canal Street, Suite 2850 New Orleans, Louisiana 70130 John D. Sloan, Jr. M. Raymond Hatcher Laureen F. Bagley SLOAN, BAGLEY, HATCHER & PERRY LAW FIRM 101 East Whaley Street P.O. Drawer 2909 Longview, Texas 75606

/s/ Darin L. Brooks Darin L. Brooks

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