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BP Business Economic Loss Claim Appeal 2016-408: In matching analysis, “nature and complexity” of the business must be considered


The following is an Appeal Panel Decision issued pursuant to Section 6 of the BP Deepwater Horizon Economic & Property Damages Settlement Agreement and the Rules Governing the BP Appeals Process. Links may have been added to assist the reader. The original decision may be found here, as well as a glossary of BP Settlement terms.

Claimant appeals the amount of its BEL award on the grounds that the Settlement Program should not have applied the AVM methodology.

Claimant’s P&Ls triggered four of Policy 495’s “seven criteria.” Notwithstanding that, Claimant contends that the Settlement Program should have considered the nature of Claimant’s business and still deemed the P&Ls sufficiently matched, thus obviating the need to apply the AVM methodology.

Specifically, Claimant attributed the escalation of cost goods sold compared to revenue in July through September 2010 to Claimant stockpiling clay material in order to be ready to supply this material when the resumed levee work (which allegedly had been suspended following the Spill).

This Panelist requested a Summary of Review. The Claims Administrator was asked the following: “Notwithstanding that the claim triggered various criteria, did the Settlement Program conduct further inquiry into whether or not the claim was still sufficiently matched by evaluating the ‘nature and complexity . . . of the . . . business in question.’”

The Claims Administrator’s response was “that the Profit and Loss statements provided were inherently unmatched and extends beyond the nature of business activity which took place in July through September 2010.”

This Panelist is satisfied that the Claims Administrator appropriately exercised its professional judgement in the application of Policy 495.

BP’s Final Proposal is adopted.

Editor’s Note: The issue of the exercise of professional judgment in relation to the application of Policy 495’s matching methodologies is a critical one. While we cannot comment on whether the P&L’s at issue in the instant claim were indeed sufficiently matched, we nevertheless commend this Appeal Panelist for pressing the Claims Administrator to demonstrate that its vendors did not simply rely on the “seven tests.”

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