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BP Business Economic Loss Claim Appeal 2016-742: Volunteer fire department not excluded government 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.

BP appeals a BEL award to an Anniston, Alabama volunteer fire department which initially was ruled excluded from the Program under Section 38.77 as a governmental organization before it was granted the award on reconsideration.

In support, BP refers to Amendment 583 of the Alabama constitution which declares such fire departments to be “public” entities. It further argues that even if not owned at least 51% by the State under Section 38.77(d), it still qualifies as an “affiliate” of a governmental organization under that same provision. BP cites to Claimant’s being subject to the State’s competitive bid laws and other regulations restricting how it performs its operations and further argues that the “vast majority” of Claimant’s budget comes from state contributions and grants. Lastly, it cites other panel decisions for the proposition that other non-profits “like Claimant” were deemed to be excluded as governmental organizations.

As pointed out by Claimant, at least two decisions of this panel, in analyzing not just non-profits “like Claimant,” but specifically volunteer fire departments in Alabama and Louisiana, have concluded that the subject exclusion is not applicable to such an entity. This panelist agrees with those decisions. Claimant’s Articles of Incorporation establish that its governance and day-to-day operation is by its own directors and fire chief, and the fact that the majority of its revenue comes from state grants has little or no relevance to our inquiry. Indeed, Policy 307 and many decisions of this panel have held that grant money is considered revenue for purposes of award calculations under this Agreement. BP’s argument that Claimant’s being subject to State regulations shows its a status as a State affiliate is overbroad. The list of both private and public entities subject to various and sundry State regulations would make such an argument, if accepted, the fruition of the dictum of “the tail wagging the dog.”

In the opinion of this panelist, BP misconstrues Section 38.77(d) in its argument that an “affiliate” is not subject to the “51% or more ownership by government” modification. This panelist, and other panel decisions, have held that all such entities in said section are subject to the “51% or more” requirement, whether as affiliates or not. In the end, it is the element of control that determines this decision, and Claimant herein has more than established that while it may be subject to State standards, it certainly is not controlled by the State. The Program’s decision was correct, and Claimant’s final proposal affirming that decision is hereby chosen.

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