Louisiana Record

Tuesday, October 15, 2019

Court of Appeals rejects Houma oyster operator's request for $3.4 million in oil spill loss

By Sam Knef | Feb 26, 2017

NEW ORLEANS — A Houma oyster processing business that was forced to shut down after the Deepwater Horizon oil spill has lost its bid to get more compensation from the BP Economic and Property Damages Settlement fund.

The Fifth District Court of Appeals rejected a petition from ARTCC Enterprises, doing business as Bayou Oyster, which sought $3.4 million from the Court Supervised Settlement Program (CSSP). 

In a per curium order issued Feb. 17, a three-judge panel affirmed an Eastern District of Louisiana ruling that found the business was entitled to $29,567.81 under the settlement program.

The order noted that the figure was "substantially offset" by approximately $375,000 in payments the business had already received through BP compensation programs that preceded the establishment of CSSP.  

Businesses that shut down due to the 2010 oil spill could file claims with the Economic and Property Damages Settlement program, which establishes different compensation packages depending on when the business began operations.

The “Failed Business” category is defined as an entity that started operations before Nov. 1, 2008, and the "Failed Start-Up Business" category is defined by those that began after that date.

ARTCC filed a total of three claims. The first one represented that it was a failed startup with operations beginning July 1, 2009. While that claim was pending, it filed another failed business claim indicating that it started operations on May 27, 2009.

A third claim it submitted was titled, “Failed Business Economic Loss Sweat Equity Sworn Written Statement" with a commencement date of June 20, 2009.

Under terms of the settlement program’s appeals process, claimants and BP can compromise on their proposals but without an agreed resolution, the appeal panel has to choose to award either the claimant’s final proposal or the final proposal offered by the BP parties but no other amount. 

Initially, ARTCC had proposed a $5 million settlement, arguing that it was a pre-existing company, not a failed startup.

"ARTCC’s methodology diverged in numerous ways from the E&P Settlement, taking into consideration factors that are not part of either the 'Failed Start-Up' or 'Failed Business' compensation frameworks," the order states.

While ARTCC dropped its proposal from $5 million to $3.4 million, BP's initial proposal of $29,567.81 survived review of a claims administrator and at the program’s appeal panel.

"We discern no error in the CSSP’s interpretation or application of the E&P Settlement," the Fifth Circuit order states.

The Fifth Circuit panel found that ARTCC's argument that the CSSP should have classified it as a continuing business and applied the compensation framework for a failed business rather than a startup failed for three reasons.

"First, although the actual date of ARTCC’s commencement of operations appears to be a moving target, all of the various dates listed by ARTCC in its submissions to the CSSP occur after November 1, 2008," the order states. "Second, as the Appeal Panel decision points out, ARTCC’s multi-million dollar compensation request was not based on criteria permitted or authorized by the E&P Settlement. Finally, the E&P Settlement makes clear that the proper claimant is the 'entity' asserting a business economic damages claim, and not, as ARTCC contends, the business (here, Bayou Oyster) that is operated by that entity."

The Fifth Circuit panel included Judges Jennifer Elrod, Leslie Southwick and James Graves.

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