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BP Business Economic Loss Claim Appeal 2015-1040: Fire equipment company not subject to moratoria review, exclusion


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.

The Claims Administrator awarded $345,407.81 to a fire service and equipment company in New Iberia, Louisiana. No Policy 495 criteria were triggered.

On appeal, BP does not challenge the award calculation. Instead, it contends that the Claimant is an excluded member of the Oil and Gas Industry. Alternatively, BP assigns error in the Administrator’s failure to investigate whether Claimant suffered any moratoria – related losses.

BP describes the Claimant’s business as providing equipment and services “to the oil and gas industry.” This asserted description of the Claimant’s business is the lynchpin of BP’s arguments. In support of its position, BP argues that the Administrator should have assigned NAICS Code 213112 – Support Activities for Oil and Gas Operations – because this NAICS Code is listed among those excluded in Exhibit 17 of the Settlement Agreement. BP also argues that Claimant’s invoices and website create a “mountain of evidence” that its business falls within the definition of the Oil and Gas Industry in Section of the Settlement Agreement.

In response, Claimant acknowledges that it has customers that are themselves in the oil and gas industry. Claimant describes itself as a fire safety and commodities company with customers in the mining, food services, construction and chemical industries in addition to oil and gas customers. Additionally, Claimant points out that the Administrator assigned NAICS Code 423850 – Service Establishment Equipment and Supplies Merchant Wholesalers – a business description that is not among the excluded businesses listed in Exhibit 17. Claimant therefore argues that there is no provision in the Settlement Agreement that provides for exclusion of an otherwise eligible business simply because it has customers in the oil and gas industry.

Under the Settlement Agreement, the Claims Administrator is tasked with determining the proper NAICS Code for a claiming entity. Policy 480 v.2 requires the Administrator to select the NAICS Code that most accurately describes the entity’s primary business activities; that is, the activities in which the entity was primarily engaged during the Benchmark, Compensation Class Periods.

Here, the record does not support BP’s argument that the Claimant engages in excluded oil and gas industry activities. To the contrary, the record reflects that some, but not all, of Claimant’s customers are themselves members of the oil and gas industry. There is nothing in the Settlement Agreement that would impute the Oil and Gas Industry exclusion to claimants who sell products or provide services to excluded entities. The NAICS Code assigned by the Administrator was correct. BP’s argument that the Claimant should have been excluded is without merit.

BP also argues in the alternative that the Administrator should have conducted a moratoria analysis and denied any of Claimant’s losses that are attributable to the Federal moratoria on offshore drilling that was in effect from May 28, 2010 to July 12, 2010. BP’s argument on this point is based on a letter from the [GCCF] denying a claim by an employee of the Claimant for lost overtime and commission payments from the spill. The denial letter appears to quote a statement by a representative of the Claimant that the employee’s loss resulted from the moratorium, not from the spill.

BP sees this as “substantial evidence” that the Claimant experienced moratoria losses. BP also argues that Claimant’s NAICS code is among those enumerated in Exhibit 19 which require a moratoria loss analysis by the Administrator. On this argument, BP is incorrect. Close review of Exhibit 19 does not include Claimant’s NAICS Code 423850 – Service Establishment Equipment and Supplies Merchant Wholesalers. On this basis, the Claims Administrator was justified in concluding that a moratoria evaluation was unnecessary.

For the foregoing reasons, BP’s appeal is denied and the Claimant’s Final Proposal is selected.

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