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BP Business Economic Loss Claim Appeal 2016-2196:Out-of-Zone Locations Not “Facilities” Under Policy 467

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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

BP appeals the substantial BEL award ($11,768.682.13 pre-RTP) to an electrical contractor headquartered in St. Petersburg, Florida (ZoneC).
Claimant’s financial statements triggered one of the Policy 495 matching criteria and the claim proceeded under the Construction Methodology. The issue on appeal is whether the Program failed to exclude revenue attributable to facilities located out of the Economic Claim Zone.
Claimant is a large company that has construction projects nationwide. BP argues that there is “copious” evidence that the claimant conducts its operations from out-of-zone facilities such as job site construction trailers and went as far as to provide a link to a YouTube video which it purports to show employees entering one
such construction trailer near Washington, D.C.
BP also notes that has full-time employees in out-of-Zone locations, is registered to do business, pays taxes and maintains licenses in out-of-zone states, and maintains a warehouse in Atlanta, Georgia which it leases for $13,000-$15,000 per month in support of its position. BP requests a remand to recalculate the award excluding the
out-of-zone revenue and, alternatively, offers a final proposal of $0.
Policy 467 defines a “Facility” as follows:
(a)A separate and distinct physical structure or premises;
(b)Owned, leased or operated by the Business Entity;
(c)At which the Business Entity performs and/or manages its
operations.
A potential facility must satisfy all three elements of this definition to constitute a “Facility.”  The policy further provides examples of what constitutes a “Facility” for
specific categories of entities and states, in pertinent part:
J. Construction Office Trailer: 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 trailers are more analogous to a
building or fixture than they are to a mobile machine.
Claimant responded that the YouTube video was a promotional video shot by a professional marketing company which actually depicted employees at the company’s
headquarters in St. Petersburg.
The record reveals that the Program investigated the issue of construction trailers prior to issuing the award. Claimant acknowledges that it has onsite construction trailers but maintains that the trailers were used as temporary storage space for materials, permit documentation and OSHA required materials and that all operations are managed from the claimant’s headquarters in St. Petersburg. Claimant does not derive revenue from the Atlanta warehouse nor is there record evidence that it performs or manages its operations from there. The fact that the claimant has employees in other states, maintains licenses and pays taxes there is insufficient to conclude that it maintains a “Facility” in such out-of-Zone locations.
This panel is not unmindful of the District Court’s previous discretionary review decision in Claim No ***in which the Court held that “[A]n on-site trailer from which a construction company manages a particular construction project is considered a separate Facility in accord with Claims Administrator’s Policy 467.”
Key to that decision is the phrase “from which a construction company manages a particular construction project” (emphasis added).
After a de novo review and discussion, this three-member panel unanimously concludes that this record is factually distinguishable and that the Claims Administrator did not err in concluding that Claimant did not manage projects from temporary storage trailers. This panel further concludes that there is no basis for remand and that the award was appropriate. Accordingly, the appeal is denied.

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