09222017Headline:

Tampa, Florida

HomeFloridaTampa

Email Tom Young Tom Young on LinkedIn Tom Young on Twitter Tom Young on Facebook Tom Young on Avvo
Tom Young
Tom Young
Attorney • (813) 251-9706

BP Business Economic Loss Claim Appeal 2017-144: Crop Subsidy Revenues Properly Allocated to One Season Rather than Across Calendar Year

0 comments

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 BEL award in favor of objecting to the Program’s treatment of a government subsidy categorized as “Market Gains/ Storage Forgiveness/ Loan
Deficiencies.”
Claimant asserted that this subsidy related specifically to cotton. BP contends these payments should have been allocated across the calendar year as were Claimant’s other subsidies that were not associated with the production of a specific crop. Under this line of reasoning, since the subsidy is not related to the sale of a certain crop but instead is intended to support the farm operation throughout the year, the revenue should not be allocated to a narrow time period coinciding with the production of a single crop. Appellant asserts, if the subsidy in question was allocated across the entire year, Claimant would fail causation.
As explained in the Accountant notes, Market Gains are government payments that result from acceptance of CCC loans. These are government loans against which a farmer pledges his crop. If crop prices increase, the farmer can choose to sell the crop and pay back the loan. If the crop price decreases, the farmer can simply take the loan as revenue. The difference between the value of the pledged crop commodity and the original loan amount is a market gain. Claimant asserts that all Market Gains, Storage Forgiven and Loan Deficiencies Revenues were in relation to cotton produced in the year the government payment was recorded. Further, the DWH Accountants confirmed the corresponding crop type to which the market gains relate ( in this case cotton).
Accordingly, there is a finding herein that it was appropriate to allocate these payments to the cotton season and there was no error in not allocating the revenue across the entire year as was done with other subsidies that were not associated with a specific crop. BP’s appeal is dismissed.

Leave a Comment

Have an opinion? Please leave a comment using the box below.

For information on acceptable commenting practices, please visit Lifehacker's guide to weblog comments. Comments containing spam or profanity will be filtered or deleted.