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BP Business Economic Loss Claim Appeal 2016-1061: Construction trailers as “Facilities”

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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 is a commercial construction company located in St. Petersburg, Florida, which received an award of $1,422,834, pre-RTP. BP appeals alleging that the Settlement Program committed two errors, namely:

1. Claimant had on-site facilities (including on-site construction trailers) at construction projects it managed outside the Gulf Coast Areas which the Settlement Program failed to exclude the revenue generated from Claimant’s out-of-zone facilities, and

2. The Settlement Program erred in its treatment of Claimant’s owner/officer compensation by relying on Claimant’s federal income tax returns (which BP contends included incorrect information) instead of the detailed information regarding owner compensation submitted by Claimant. Claimant’s documentation shows owner/officer compensation to be $153,140 for 2010 while Claimant’s federal tax returns shows $128,629. BP asserts that correcting this error reduces Claimant’s award by $37,904, pre-RTP. Claimant is willing to accept this adjustment and reduction of $37,904 “in the spirit of compromise,” so we will only deal with BP’s first issue.

BP asserts that these on-site trailers are “Facilities” pursuant to the Settlement Agreement, as they are “separate and distinct location[s] of a Multi-Facility Business at which it performs or manages its operations.” Settlement Agreement, Ex.5 at 2. BP states that Policy 467 directly addresses this issue and the District Court has affirmed the policy decision. Policy 467 provides that “A trailer placed at a construction site and used as a permanent office for the duration of the construction project will typically be considered a Facility if the claimant owns, leases or operates the trailer and performs or manages its operations there. Such construction office trailers are more analogous to a building or fixture than they are to a mobile machine.” BP points out that Claimant’s website identifies a XXXXX all over the State of Florida, and multiple permits for construction trailers which it required for them. Also, a review of the XXXXX website show Claimant has performed several projects outside the Gulf Coast Areas during the relevant time period. BP cites a recent Discretionary Review Decision (relating to Claim # XXXXX) it contends supports its position that the construction trailers are “Facilities.” Thus, says BP, the revenues and expenses from these out of zone construction projects must be removed from the BEL calculation.

Claimant counters that BP’s assertion that these construction trailers were used “for the duration of the project” is pure speculation. The trailers that are sometimes on site for projects are not brought in at the beginning and are not left until the end of the project. Most services are completed from the headquarters in St. Petersburg long before the trailer might be on site. Only a small portion of the operations are performed during the short time the trailers are on-site. Policy 467 relates to a “trailer used as a permanent office for the duration of the construction project.” Claimant contends that the duration of the project is from the Conceptual Plan and Budgeting to the Certificate of Occupancy. Also, these trailers are not used as a “permanent office.” These trailers are by their very nature temporary. They are 10X20 trailers with a desk and a chair used to store plans and make calls. Claimant asserts that there has been several similar claims involving construction companies and on-site trailers where the Appeals Panel denied BP’s contention that these trailers were facilities, and construction trailers from which no real management or supervisory operation emanate are not separate facilities. BP has offer no real, substantive evidence, according to Claimant, other than conclusory assertions that dispel Claimant’s position.

This Panel requested a Summary of Review asking the Claims Administrator to give us the extent to which this issue was analyzed and evaluated. The Claims Administrator replied that based on Claimant’s response that since 2001, it has had only one location where it maintained its business, “no additional analysis was conducted regarding whether the Claimant had multiple facilities.”

The Post-Appeal documentation and Claimant’s reply contain highly relevant evidence which the Claims Administrator has not seen. The District Court has instructed us that such evidence must first be reviewed by the Claims Administrator before the Appeals Panel undertakes to rule on the appeal. Thus, and in accordance with that mandate from the District Court, this appeal is remanded for that purpose.

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  1. Nick Lanese says:
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    Tom, this St Pete construction company was remanded back to DHCC, did you get resolution yet? If so, what was the outcome? THANKS! Nick

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