American Shrimp Processing Industry Critical of Deepwater Horizon Settlement

ASPA Headquarters …On April 18, 2012 lawyers for BP and Plaintiffs filed documents setting forth the settlement details of economic damage claims in the Deepwater Horizon MDL proceeding. The settlement provides a $2.3 billion Seafood Compensation Program for oyster leaseholders, commercial fishermen, seafood crew and seafood vessel owners. Notably excluded from the Seafood Compensation Program are various key links in the seafood supply chain, namely docks, processors, distributors, and packaging supply businesses. The settlement provides a much larger risk transfer premium (multiplier) for those included in the Seafood Compensation Program than for the remaining parts of the seafood chain. Incredibly, the seafood businesses outside the Seafood Compensation Program receive the same, smaller risk transfer premium as non-seafood businesses. The difference in relative compensation between the groups inside the Seafood Compensation Program and those seafood businesses outside the Program is vast and could create industry damage outside of the oil spill itself.

“I simply can’t comprehend how after two years they don’t understand the difference between a seafood dock or processing business and a shoe store,” noted ASPA Executive Director David Veal. “Our future risk is no different than those inside the Seafood Program, and certainly much greater than a flower shop.”

The compensation formula for business economic loss claims outside of the Seafood Program utilizes a sales revenue (or modified gross profit) calculation with a benchmark period related to 2010 losses after the spill. This is a similar method that BP used when it administered the compensation program and that the GCCF initially adopted when it absorbed the program from BP. “We are now in our third iteration of the same accounting formula that does not adequately adjust seafood dock and processing claims,” stated Eddy Hayes, counsel to ASPA. “A sales-based calculation simply does not work. Pricing, volume, production capacity, and inventory issues are only a few of the variables that make this formula inappropriate. Virtually the entire processing industry had positive post-spill sales revenue from May through December from pre-spill inventory sales. That fact alone skews the formula as there is no adequate 2010 loss to make the low risk transfer premium worthwhile.’

ASPA worked closely and successfully with both BP and GCCF to bridge the gap between the sales based loss formula and an appropriate production calculation. According to David Veal, “ASPA and its members invested a significant amount of time and resources over the past two years in resolving claims. It is disheartening to say the least that we now have to start all over again from scratch and likely opt out of a settlement that the attorneys have promoted for months as better than the GCCF.”


For more information, please contact:

Eddy Hayes, Legal Counsel, ASPA
(504) 585-7500

David Veal, Executive Director, ASPA
(228) 806-9600