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BP Business Economic Loss Claim Appeal 2015-1361: Agriculture methodology should be applied to crop duster (decision overruled)


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.

BP appeals the Settlement Program’s Business Economic Loss award of $176,706.14 to Claimant. I remand to the Settlement Program to apply Policy 495’s Agriculture Methodology.

Claimant is a crop-dusting business in Mississippi. In processing the claim, the Settlement Program determined the claim was insufficiently matched to meet the criteria required by the Settlement Agreement or by applicable law. This triggered application of Policy 495. The purpose of Policy 495 is to sufficiently match the claim. This is accomplished by the application of various accounting methodologies.

Here, Policy 495 generally requires application of the Agriculture Methodology based on Claimant’s NAICS Code, 115112. The Settlement Program, however, is not required to process a claim solely because of the NAICS Code if “in the professional judgment of Claims Administrator’s office, there are factors that indicate that income and expenses would be more sufficiently matched by applying an alternate methodology.” See Fn 7 of Attachment D to Policy 495.

In its professional judgment, the Settlement Program chose instead to apply the AVM methodology. The Settlement Program’s rationale is found in the Calculation Notes of the Settlement Program Accountants. It does not support the conclusion the Settlement Program reached to apply the AVM.

The first basis for deviating from the Agriculture Methodology is that “the business revenues are not dependent on the harvest and sale of particular crop(s).” See Note 13. While perhaps true, the observation does not support application of any particular methodology other than Agriculture. The second and third reasons cited are internally inconsistent. The second factor is that Claimant supports the general agriculture industry and … there is no crop season over which revenues can be spread. The third factor cites “the business operates on a short earnings cycle,” suggesting there is a crop cycle. And common sense tells us there is a crop cycle.

While conceding the Settlement Program can make a decision to apply a different methodology, this decision is subjected to de novo review by the appeals panel. Here, the record supports application of the Agriculture Methodology. Claimant references an appeal decision reaching a different outcome on similar facts. In general, a prior decision is to be given credence and followed in the absence of differentiating facts or strongly held disagreement as to outcome. While I do not agree with the outcome of the prior decision, I respect our need for consistency in opinions. Thus, while I am remanding this case, I am also requesting that the issue raised here be decided en banc. This will facilitate a consistent approach to the issue presented.

[Editor’s Note: This appeal panel decision was reversed by Judge Barbier under Discretionary Review.]

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