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BP Business Economic Loss Claim Appeal 2016-2221:Claimant Not Precluded Under Oil and Gas Moratoria

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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.

BP appeals a BEL award to a Morgan City, Louisiana shipyard in the pre-RTP amount of $2,799,057.21. Its sole preserved basis of appeal is that based upon data in the record, the Program vendors had a duty to perform a Moratoria analysis pursuant to Sections 3.3 and 38.93, but that this was not done.
BP tacitly admits that Claimant’s assigned NAICS code (336611-Ship Building and Repairing) is not listed in Exhibit 19 as requiring an automatic Moratoria review. Nevertheless, citing prior decisions of this panel holding that Moratoria review is not restricted to the codes listed in Exhibit 19, BP points to evidence it asserts should
have placed the Program on notice that part of Claimant’s relevant operations involved providing goods or services for the offshore oil and gas industry.
First, it points to a website reference wherein Claimant represents in pertinent part that it performs services “for the marine offshore industry.” It further states that a contact note in the record indicates that the claim was initially placed on hold for possible Moratoria review, but that for unexplained reasons, it was subsequently cleared of such review. BP further claims that Claimant built boats for at least two entities in the offshore oil business, and that Claimant was one of the largest builders of self-elevating units, with said units focused on use in the Gulf of Mexico. BP adds that Claimant built crew and supply boats for which at the time supported the offshore oil and gas industry. Based upon these assertions, BP concluded that Claimant “likely” sustained losses due to the federal Moratorium. Accordingly, it seeks a remand for scrutiny of these potential excluded losses, or alternatively proposes $0.
In response, Claimant notes that under Section 38.145 of the Settlement Agreement, only those NAICS Codes in Exhibit 19 (which does list Claimant’s NAICS code of 336611) with descriptions that are marked with an adjacent “x” are considered “Support services to the Oil and Gas Industry.” Reference to that designation includes only “drilling and production platforms, floating, oil and gas, building” and “oil and gas offshore floating platforms manufacturing.” Based upon the executed affidavit of
Claimant’s managing member, neither of the two above activities were engaged in by Claimant at any relevant time. Claimant further points out that the Internet article relied upon by BP is generally an undocumented piece about a shipyard in Singapore wherein the author makes a parenthetical reference to marine service companies in the Gulf “such as[Claimant].” Similarly, BP’s quoting of in a piece in “Professional Mariner” magazine to the effect that the Gulf oil industry “is wary and guarded right now” was a valid observation that anyone could have made, including XXX, who in addition to his position with Claimant served on various unrelated industry boards.
Claimant further correctly notes, of reference to BP’s allegation of Claimant’s sales of vessels to and other oil and gas entities, that just because a claimant sells to companies in the oil and gas industry does not mean that a claimant is engaged in the oil and gas industry. Lastly, and in response to BP’s allegation of sales by Claimant of lift boats to ZZZ, the supplied affidavit specifically refutes those allegations and states that lift boats were sold only to ***
This panel requested the Program’s input as to a particular Contact Note in the record dated February 9, 2015 indicating that at some point before that date a decision had not been made as to whether Moratoria analysis would be proper before the Program decided not to conduct said analysis. The Program responded that when it
received the original decision by this panel (in which it determined that Claimant did not manufacture “oil and gas offshore floating platforms” or “drilling and production platforms,” but only lift boats), the Program felt that the Moratoria issue had been definitively determined by the Panel.
A de novo review of this record by the present three-member panel finds no reason to modify the original finding of this panel. Even if the NAICS codes listed in Exhibit 19 requiring automatic Moratoria review are illustrative and not exclusive, this panel finds unanimously that beyond speculation or inaccurate and out-of-context references, BP has not shown that this  Claimant engaged at any relevant time in providing goods or services to the offshore oil and gas industry. Accordingly, the final proposal of Claimant, adopting the entire BEL award, is chosen in this baseball appeal, especially when faced with that choice of BP’s proposal of $0 or a remand that is unwarranted in this record.

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