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BP Business Economic Loss Claim Appeal 2016-1109: Claiming entity not operating facility at time of spill


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, in the business of propane sales and services, appeals the denial of its Start-up BEL claim. This particular appeal involves its Zone D location at Brundidge, AL. Claimant essentially asserts on appeal that the Program erroneously converted its BEL claim to a Start-up BEL claim (under which it failed all causation tests). Central to its argument is the position that Claimant was in fact in existence since 2006, but just not at the subject facility, which it obtained and began operating by way of an Asset Purchase Agreement dated August 31, 2011. The Program used the latter date as as the date Claimant’s operations commenced, thus justifying its conversion of the claim to a Start-up claim under Exhibit 7 and Policy 362v2. Claimant asserts that the Settlement Agreement focuses on the “operating history” of a business, and not on the formation, existence, or ownership of an entity, and that hence the financials of this facility should be considered even before Claimant purchased it in 2011.

BP argues that the real question, whether or not Claimant as a corporate entity was in existence since 2006, is whether this Claimant was actually operating this facility as of April 20, 2010.

This panelist has reviewed the Settlement Agreement, as well as relevant policies and Discretionary Decisions of the District Court, and is persuaded to agree with the position of the Program and BP in this matter. Significantly, Policy 362v2 speaks of matters where a Claimant elects to file separately for each eligible facility (as in the present case), and requires the Claims Administrator to perform a separate causation test analysis “on each Facility.” In this case, an analysis on the subject facility necessarily commences on the date that Claimant obtained this facility, and it is of no moment that Claimant may have operated other facilities for earlier periods of time. This panelist further is influenced by recent decisions of the Court that seem to impose a bright line of analysis as to when a particular entity came into being, regardless of whether predecessors in title performed identical operations at the subject facility. See, eg, Decision numbers 2016-263 and 2016-300. The latter decision is particularly binding, dealing as it does with, like here, an asset purchase scenario.

For all of the above, the decision of the Program converting this matter to a Start-Up BEL claim and finding no causation for an award under that standard must be affirmed.

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