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BP Claim Discretionary Review of Appeal 2016-1220: Agriculture Methodology Under Policy 495 and Exclusions Under Policy 328 Correctly Applied By SP

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The following is a Discretionary Review Order issued by Judge Barbier pursuant to the Rules Governing Discretionary Court Review of Appeal Determinations. Judge Barbier’s rulings are binding on the Claims Administrator and the Appeal Panelists. 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 in Monterey, Louisiana, and appeals the denial of its BEL claim on the basis the causation requirements of Exhibit 4B of the Settlement Agreement have not been satisfied. Claimant asserts the Settlement Program(SP) in its determination that claimant did not satisfy causation erred in the following ways:
the SP applied policy 495 and used the Agriculture Methodology; the SP excluded crop insurance proceeds from claimant’s total revenues along with crop disaster assistance program payments from revenues; and the SP excluded patronage dividend payments from revenues as well.  Claimant argues had this course of action not
been taken by the SP claimant would have satisfied the causation requirements of the Settlement Agreement.
A review of the record supports the action taken by and the determinations made by the SP. First, claimant is a farming operation and the SP in its review of the financial documents submitted by claimant properly concluded there were sufficient variances in revenues and expenses to invoke the provisions of policy 495 and use the Agriculture Methodology. Paragraph 15 of the Calculation Notes explained : “*** The business revenues are dependent on the harvest and sale of a particular crop(s). These revenues were allocated over the specific crop season. As such,  DWH Accountant utilized the Agriculture Methodology.”
Next,this panelist concludes the SP correctly used the provisions of policy 328 v.2 to exclude crop insurance proceeds.These payments are not the same as government subsidy payments as claimant contends, which payments the SP did not exclude from the causation calculation.They are insurance proceeds payments which are not considered a part of a business’ recurring revenue stream.Similarly,the SP correctly segregated crop disaster assistance program payments from the overall government subsidy payments and excluded these as a form of insurance proceeds within the
embrace of policy 328 v.2.
Finally, this panelist concludes the SP properly classified and treated patronage dividend payments,all of which were not excluded by the SP. Those payments received from were deemed the equivalent of supply purchase rebates and treated by the SP in its exercise of professional judgment as a reduction to expenses incurred rather than as an increase of income. The other dividend payments that were received were treated as income but reallocated to other time periods from those recorded by claimant.
The action of the SP in this regard and its exercise of professional judgment in applying the provisions of policy 495 are in keeping and consistent with the recent pronouncements of the supervising U.S.District Court in decision number 2016-548 rendered on July 26,2016. There is no error. Accordingly, the decision of the Claims Administrator is affirmed and the appeal of claimant is denied.
[Editor’s Note: This Order affirms the holding of the appeal panelist in Appeal 2016-1220

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