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CLAIM SUMMARY / DETERMINATION FORM

Claim Number A15017-0004 

Claimant Rudy’s Oilfield Welding Services, Inc. 

Type of Claimant Private (US)

Type of Claim Loss of Profits and Earning Capacity 

Claim Manager 

Amount Requested $688,000.00 

FACTS 

On May 19, 2015, USCG Sector LA/Long Beach (LA/LB) received a report of an oil spill 

originated from Plains Pipeline line 901 onto the shore side of Highway 101 in Santa Barbara, 

CA. The ruptured pipeline discharged approximately 746 barrels of crude oil into the Pacific 

Ocean, a navigable waterway of the United States.1

 

Following the discharge, the U.S. Department of Transportation’s Pipeline and Hazardous 

Materials Safety Administration (PHMSA) issued a corrective action order to Plains Pipeline, LP 

to suspend operations and make safety improvements to line 901.2

 Shortly thereafter, PHMSA 

amended their corrective action order to Plains Pipeline, LP, suspending operations of line 903 as 

line 903 was connected to line 901 and showed similar corrosion characteristics to line 901.3

 At 

least three oil and gas production companies were affected by these pipeline closures and 

suspended operations from their platforms off the coast of Santa Barbara. ExxonMobil and 

Freeport McMoRan platforms suspended operations as they were dependent on Plains Pipeline 

lines 901 or 903 to transport their crude oil from their platforms to refineries in Kern County, 

CA, while operations on the Venoco platform Holly were suspended as their line 96 was 

connected to Plains Pipeline line 901.4

CLAIM AND CLAIMANT

On March 23, 2016, Mr. , owner of Rudy’s Oilfield Welding Services, Inc 

(Claimant) presented a claim to the NPFC seeking $688,000.00 in lost profits and earning 

capacity. Claimant states that he had been providing welding services for onshore and offshore 

platforms in southern California for the past 40 years. He further states that Venoco, Inc, DCOR, 

LLC, and Fleetcor were his primary customers providing 99% of his revenue and that these 

companies stopped operations because of the oil spill which resulted in all of his 

welding/maintenance work scheduled for fall 2015 and 2016 to be cancelled.5

 

1 See CG District 11 - Potential Medium Coastal Spill - Refugio Beach, CA dated May 25, 2015. 2 See PHMSA corrective action order issued to Plains Pipeline, LP dated May 22, 2015.

3 See Plains Pipeline Information website dated June 3, 2015.

4 See Noozhawk online article written by dated October 8, 2015. 5 See Optional OSLTF Claims Form dated March 10, 2016.
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APPLICABLE LAW 

Under 33 C.F.R. 136.105(a) and 136.105(e)(6), the claimant bears the burden of providing to the 

NPFC, all evidence, information, and documentation deemed necessary by the Director, NPFC, 

to support the claim. 

The OSLTF which is administered by the NPFC, is available, pursuant to 33 U.S.C. § 2713 and 

the OSLTF claims adjudication regulations at 33 C.F.R. Part 136, to pay claims for 

uncompensated damages. One type of damages available pursuant to 33 C.F.R. §136.231 is a 

claim for loss of profits or impairment of earning capacity due to injury to or destruction of 

natural resources.

Under 33 C.F.R. § 136.233 a claimant must establish the following:

(a) That real or personal property or natural resources have been injured, 

destroyed, or lost.

(b) That the claimant’s income was reduced as a consequence of injury to, 

destruction of, or loss of property or natural resources, and the amount of that 

reduction.

(c) The amount of the claimant’s profits or earnings in comparable periods and 

during the period when the claimed loss or impairment was suffered, as 

established by income tax returns, financial statements, and similar 

documents. In addition, comparative figures for profits or earnings for the 

same or similar activities outside of the area affected by the incident also must 

be established.

(d) Whether alternative employment or business was available and undertaken 

and, if so, the amount of income received. All income that a claimant 

received as a result of the incident must be clearly indicated and any saved 

overhead and other normal expenses not incurred as a result of the incident 

must be established. 

Under 33 C.F.R. 136.235, the amount of compensation allowable for a claim involving loss of 

profits or impairment of earning capacity is limited to the actual net reduction or loss of earnings 

or profits suffered. Calculations for net reductions or losses must clearly reflect adjustments for-

(a) All income resulting from the incident;

(b) All income from alternative employment or business undertaken;

(c) Potential income from alternative employment or business not undertake, but 

reasonably available;

(d) Any saved overhead or normal expenses not incurred as a result of the 

incident; and

(e) State, local, and Federal taxes.
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NPFC DETERMINATION 

Claimant claimed losses in the amount of $688,000 due to the oil spill. This includes 6 months 

of lost wages totaling $36,000, current loss of personal contributions totaling $48,000, potential 

income loss over 3 years of $117,000 and potential loss of property sale totaling $111,000. In 

addition, claimant provided business debt information and other bills that show amounts 

overdue. The total of all of these costs are approximately $595,810; far less than the claimed 

$688,000. 

Claimant provided the following to support its claim:

1. Current business debt accruing information with supporting documents. 

2. Invoice summary reports documenting accounts receivable from Venoco, Inc, for 

calendar years 2014 and 2015. 

3. A printout of Rudy’s Oilfield Welding Services profit & loss summary for periods 

Oct 2011 – Sep 2012 and Dec 2013 – Dec 2014. 

4. Examples of personal loans to Rudy’s Oilfield Welding Services as well as 

payroll details for himself as well as his daughter, Ms. 

5. A copy of his business license from the City of port Huenene expiring June 30, 

2016.6

 

6. A letter from Plains Pipeline, L.P. dated January 28, 2016, in which his lost 

profits claim #080167739 was denied due to “materials and documentation 

submitted are insufficient to establish your claim under OPA.”7 

NPFC Analysis 

Under 33 U.S.C. § 2702(b) and 33 C.F.R. Part 136, a claimant must prove that its loss of income 

resulted from injury to or destruction of a natural resource. No evidence provided by the 

Claimant indicates that the loss of wages was due to the oil spill from Plains Pipeline, L.P. The 

NPFC obtained information from the PHMSA website that Plains Pipelines lines 901 and 903 

were shut down as a direct result of their poor condition as well as the need to purge, test and 

repair the lines to the satisfaction of PHMSA.89 Since Venoco’s line 96 was connected to Plains 

Pipeline 901, its discontinued use was not because of the Plains Pipeline oil spill but because of 

the mandated closure of Plains Pipeline line 901 as required by PHMSA. Therefore, Claimant’s 

loss was not a result of the oil spill, but because of the mandated closure of Plains Pipeline lines 

901 and 903 and subsequent closure of Venoco line 96. Claimant asserts that oil platforms 

owned or operated by DCOR, LLC, and Fleetcor that Claimant worked with were directly 

affected by the Plains Pipeline line 901 oil spill. However, the Claimant provided no evidence of 

this and the NPFC was unable to verify this information through their own research. If these two 

businesses were connected to Plains Pipeline lines 901 or 903, they too were disrupted by the 

PHMSA order. As a result, any related loss of profits or earnings Claimant incurred or may 

 

6 See Optional OSLTF Claims Form dated March 10, 2016, 2015

7 See letter from Plains Pipeline, L.P. to Rudy’s Oilfield Welding Service dated January 28, 2016.

8 See PHMSA Corrective Action Order issued to Plains Pipeline, LP dated May 21, 2015. 9 See PHMSA Amended Corrective Action Order issued to Plains Pipeline, LP dated November 21, 2015.
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incur is considered a consequence of PHMSA’s order and the subsequent stoppage of work by 

Claimant’s employers. The asserted losses are not the result of an OPA incident or injury to a 

natural resource and are therefore not compensable under OPA.

In addition, the Claimant is requesting reimbursement for the loss of three years of future wages 

totaling $117,000.00 and not actual lost wages. Under 33 C.F.R. 136.235, the amount of 

compensation allowable for a claim involving loss of profits or impairment of earning capacity is 

limited to the actual net reduction or loss of earnings or profits suffered. As the Claimant 

focused this portion of the claim on the loss of projected future earnings and not an actual loss of 

profits or earnings, those projected future earnings are not compensable under OPA. 

Additionally, the Claimant states that Venoco, Inc, DCOR, LLC, and Fleetcor were his primary 

customers providing 99% of his revenue but failed to provide signed contracts with any of these 

vendors. Without a signed contract proving continued work, it’s impossible to accurately predict 

or forecast any type of future income.

Six months of lost wages totaling $36,000.00 are claimed by the Claimant. Aside from not being 

compensable as the asserted losses were not a result of an OPA incident or injury to a natural 

resource, the Claimant’s submission of a single payroll record for pay period Sep 14, 2015 – Sep 

27, 2015 isn’t adequate to evaluate lost wages for a six month period of time. At a minimum, the 

NPFC would need three years of payroll documents as well as business and personal tax records 

for calendar years 2013, 2014 and 2015.

The Claimant is also requesting reimbursement for his use of personal funds to pay off business 

related debt as well as providing a monetary thank you to his employees totaling $48,000.00. 

Aside from not being compensable as the asserted losses were not a result of an OPA incident or 

injury to a natural resource, the Claimant failed to provide any detailed documentation to support 

the payment of business related debt or how money provided to employees as a monetary thank 

you is compensable under OPA.

Projected losses, including loss of business value as well as the projected loss of business related 

asset value totaling $200,000.00 are claimed. Additionally, Claimant is claiming an $111,000.00 

“potential loss sale of property”. Aside from not being compensable as the asserted losses were 

not a result of an OPA incident or injury to a natural resource, the Claimant failed to provide any 

detailed documentation to support how these projected business value or business related asset 

value losses, and potential loss of sale of property were calculated.

Claimant has not evidenced any saved overhead or normal expenses not incurred as a result of 

the incident. 33 C.F.R. 136.235 (d). In addition, 33 C.F.R. 136.233 (d) requires the Claimant to 

disclose whether alternative employment or business was available and undertaken and, if so, the 

amount of income received. It’s unclear to the NPFC if the Claimant filed for and received 

unemployment benefits, or if other job opportunities have been found. If any employment 

benefits were received, that information would have to be disclosed to the NPFC.

Summary

This claim is denied because the claimed costs are not due to the oil spill incident (injury, 

destruction, or loss of natural resources). Any claimed loss of profits or earnings Claimant 
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incurred or may incur is considered a consequence of PHMSA’s order and/or the subsequent 

stoppage of work by Claimant’s employers. For this reason and others stated above this claim is 

denied. 

 

Claim Supervisor:

Date of Review: 3/31/2016 

 

Supervisor’s Actions: Denial approved

Supervisor’s Comment