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BP Business Economic Loss Claim Appeal 2015-1664: Grant to for-profit entity


The following is an Appeal Panel Decision issued pursuant to Section 6 of the BP Deepwater Horizon Economic & Property Damages Settlement Agreement and the Rules Governing the BP Appeals Process. 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 filed this Business Economic Loss claim under the Settlement Agreement. The Claims Administrator denied the claim on multiple occasions. Claimant appeals.

Claimant and BP agree that the issue on appeal is whether the Settlement Program properly excluded ATR grant funds from revenue in determining whether Claimant met the tests outlined in Exhibit 4B of the Settlement Agreement. They ignore a second dispositive issue presented by the appeal. The Settlement Program accountants did exclude grants from revenues pursuant to Policy 328. See Calculation Notes 9 and 10. Claimant argues that Policy 328 does not mandate exclusion of grants received by “for-profit” parties. While such grants can be excluded, exclusion should be on a case-by-case basis. Claimant then argues that in this case the grants are for services actually rendered to clients and are not “block” grants, concluding the revenues should be counted.

Policy 328 v2 does state that grants for “for-profit” entities “shall not typically be treated as “revenue.” Claimant’s business model does state a plausible argument that Claimant is the exception to the Policy, however. Both parties ignore, however, Calculation Note 24. It states that Policy 474 is the basis for the denial of the claim for failure to establish causation. Specifically, the Claims Administrator found “It has been determined that the documentation provided is not sufficient to establish causation based on Exhibit 4B of the Settlement Agreement. Please note that, although the Claimant passes the mathematical portion of the Decline-Only Causation test, the Claimant did not establish causation for the Decline-Only Causation test as the Claimant did not provide specific documentation that identifies factors outside the control of the Claimant that prevented the recovery of revenues in 2011 as required by Exhibit 4B…”

A review of the record supports the Settlement Program’s determination. In fact, the Denial Notice states Claimant was required to provide “Documentation identifying factors outside the control of the Claimant that prevented the recovery of revenues in 2011.” The Claims Administrator’s denial is upheld based upon Policy 474.

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