Feinberg Process Threatens to Destroy Domestic Gulf Shrimp Industry

New Orleans, LA … After waiting patiently since the Deepwater Horizon Oil Spill in April 2010 for compensation to sustain operations, the American Shrimp Processors Association (ASPA) is now sounding the alarm. ASPA and its members worked diligently with BP claims adjusters after the spill to generate a calculation methodology that fairly addresses their losses. BP’s adjusters initially used a pure sales-based formula that did not account for lost inventory, recovered sales and lower margins due to the immediate aftermath of the spill. After working closely with ASPA members and their representatives, BP’s adjusters agreed to utilize a production based formula that more accurately reflects the true toll of the spill on these small and medium sized domestic shrimp operations. As soon as that bridge was crossed, the entire process was turned over to Ken Feinberg, who amidst much fanfare promised to deliver compensation to affected businesses within seven days of filing a claim.

ASPA and its members have met with both Mr. Feinberg and his representatives to discuss the nuances of the shrimp processing industry and ensure a smooth transition to the GCCF process. Mr. Feinberg assured ASPA that the process would be transparent, fast and would err on the side of overpayments rather than underpayments. After nearly three months of the Feinberg GCCF process, ASPA members have received virtually no relief as the GCCF employs the original sales based calculation formula that was rejected by BP’s accountants.

“I am nothing short of stunned at the lack of progress,” notes ASPA Executive Director David Veal. “We all took Mr. Feinberg at his word that he would treat us fairly and make us as whole as possible until we can understand the long-term impact of this disaster. The exact opposite has turned out to be true. The GCCF process has regressed to being worse than the early BP process.” One ASPA member submitted a 6 month emergency claim to the GCCF for $4mm. The GCCF calculated the 6 month loss at just over $450,000.00 under their sales based formula. BP adjusters working on the exact same business claim calculated the business loss for the month of May alone at over $475,000.00. “This result simply makes no sense and defies logic,” said Veal. “The difference between the two calculations is the difference between staying open and shutting down. Many of our members likely cannot survive the offseason without immediate funds to purchase inventory.” Equally striking is the fact that BP requested ASPA members to retain employees on payroll after the spill rather than sending them to the BP claims line. Now those same processors are not receiving reimbursement for that payroll from GCCF, much less reimbursement for their true losses. Veal states that “Feinberg’s GCCF will likely cause more damage than the oil spill itself, and most certainly will increase BP’s ultimate liability if these plants shut down.”

ASPA has worked closely with GCCF accountants to address the accounting issue but they refuse to utilize the production formula endorsed by BP. Eddy Hayes, ASPA’s counsel, reflected that “after working with these businesses and this industry for the past five years they are more family than clients. I am completely flabbergasted at the treatment they are receiving. These are not shoe stores that have a relatively fixed supply and overhead where you can fairly adjust a loss based on lost sales and revenue. These are year-round businesses that rely upon a 6-9 month supply season. Most of these plants depleted their inventory after April in order to maintain customers while the waters were closed. That decision directly benefits BP and its long-term liability. However, unless the GCCF pays them to replenish that inventory used to retain customers, those mitigation efforts were useless.” Even those more capitalized processing businesses that have been able to replenish inventory have done so at significantly higher costs and have not been reimbursed for those losses from the GCCF. Veal concludes that “without processors to process shrimp, the entire industry will fall and Feinberg will achieved in less than three months what years of devastating hurricanes, dumped shrimp imports and economic recessions have failed to do.”


For more information, please contact:

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

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