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BP Business Economic Loss Claim Appeal 2016-1763: Cattle Maintenance is Fixed, Not Variable, Expense

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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 is a farming operation growing crops and raising cattle in Bastrop, Louisiana, Zone D. The Policy 495 criteria were triggered and the Agriculture Methodology was used to restate the P/Ls. Following review by the Vendor Accountants, an award of $172,624.38 pre-RTP was made by the Administrator.
BP appeals asserting the Administrator misclassified an expense item “Cattle Maintenance” as fixed when it should have been classified as a variable expense. BP contends this expense is in the nature of variable contract labor. BP pointsto Claimant’s income tax returns for support of its position under Exhibit 4 D.
Classification of an expense on a tax return may be considered but it will not control the terms of the Settlement Agreement and the adopted Policies of the  Administrator. Policy 361 v 5 directs “the Claims Administrator will treat expenses as Variable or Fixed if they fall within either of those categories pursuant to Exhibit 4 A, Attachment D.”
Cattle must be maintained. They are domesticated farm animals that can be injured by escaping fences, accident, fighting,predators and illness. They need daily monitoring/maintenance and that is in the nature of a fixed expense. The Vendor Accountants properly classified the expense as fixed. The award is affirmed and the appeal is denied.

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