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BP Business Economic Loss Claim Appeal 2017-299:Policy 495’s Attachment E Allows Reallocation of Tuition Revenue Only

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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 appeals the denial of its BEL Claim. Claimant failed Causation. On appeal, Claimant’s primary contention is that the Program improperly applied Policy 495’s Educational Methodology to its Claim. Specifically, Claimant contends that the Program improperly used the Educational Methodology to reallocate Claimant’s
non-tuition revenue. Claimant argues that Part (a) of Policy 495’s Attachment E – Educational Methodology only applies to tuition revenue.
The scope of Policy 495, Attachment E – Educational Methodology, Part (a) (“Allocation of revenue”) is an issue that has been raised in a number of recent appeals. This Panel, for instance, currently has four such appeals pending. Although each appeal is unique, portions of this Decision is intended to address the broader issues that are common in each of these appeals.
Policy 495, Attachment E – Educational Methodology, Part (a)(i) states that “[a]n evaluation of the claimant’s tuition fee arrangements (i.e., payments for annual
tuition, an individual semester, or multiple semesters) will be performed to understand the time period for which the student tuition amount applies.”
Indeed, throughout Attachment E, Part (a) the word “tuition” appears 10 times. Nowhere is there a discussion regarding reallocation of non- tuition revenue. A Summary of Review was requested. One of the questions posed to the Claims Administrator was whether or not the Program relied upon Attachment E for the reallocation of non-tuition-related revenue (e.g ., donations, grants). The Program responded “No.” However, excerpts from the record appear to contradict this response. For instance, the following statement can be found at Note 16 of the Accountant Causation Calculation Schedule: This identifies the individual accounts that were determined to be donations/contributions-related, and to which education framework was applied. . . . Based on the framework, total revenues are allocated
evenly across the months of the academic period.
Moreover, the following statement appears at Note 24 of the Accountant Causation Calculation Schedule: Per Policy 495 Attachment E . . . Contribution income have been allocated to those months within the academic year. Further, Note 25 of Accountant Causation Calculation Schedule states that this revenue (as well as fundraisers, parent club donations, etc.) . . . per Attachment E of Policy 495 . . . has been allocated on a straight line basis.
The problem with reallocating non-tuition revenue pursuant to Attachment E, Part (a) is that Part (a) requires that tuition “be allocated on a straight line basis to
those months covered by the tuition.” See Attachment E, Part (a)(iii). In other words, rather than allowing the Program to exercise its independent discretion as to
whether or not to reallocate non-tuition revenue, and more importantly, how to reallocate, Attachment E, Part (a) mandates that revenue be reallocated, and that
revenue must be restated on a straight line basis over the course of the academic year.  As evidenced by the Notes from the Accountant Causation Calculation Schedule, the Program appears to have applied this mandated straight line reallocation to non-tuition revenue.
This Panel is of the opinion that, with respect to revenue, only tuition can be reallocated pursuant to Attachment E, Part (a). Non-tuition revenue, if reallocated, must be restated pursuant to some authority other than that set forth in Attachment E, Part (a). For instance, Policy 495, p. 7, states that “P&Ls submitted by the claimant
will be restated if in analyzing and processing a claim, the CSSP Accounting Vendors identify . . . a mismatch of revenue and variable expenses.” Additionally, page E2 of
Attachment E states that “[i]f the CSSP Accounting Vendor identifies an error(s) in how the claimant has accounted for revenue or variable expenses, correcting entries
will be made to the P&Ls to restate revenue and expenses to the appropriate month.”
Nothing in this decision should be interpreted as prohibiting the Program from reallocating non-tuition revenue. Rather, the rationale for reallocating non-tuition revenue should be based a Policy 495 provision other than Part (a) of Attachment E. The Program should exercise its independent discretion as to whether or not to reallocate non-tuition revenue, and further, should not be bound by the mandated straight line basis allocation.
This Panel concedes that the Program may consider this Panel’s analysis as a “distinction without a difference.” After all, it is likely that the Program, after exercising its independent discretion, may reach the same result regarding the reallocation of non-tuition revenue. But paraphrasing Justice Scalia, when interpreting the text of the Settlement Agreement, words matter.
That said, this Panel disagrees with Claimant’s broad position that the Educational Methodology has no application to this Claim. Claimant is obviously an educational institution. Attachment E provides that the “Educational Institutions Methodology shall be applied to adjust an educational claimant’s contemporaneous P&Ls that have been deemed not to be ‘sufficiently matched.’”
This Panel’s decision is a narrow one: The Program may not rely upon Attachment E, Part (a) to reallocate Claimant’s non-tuition revenue.
The Claimant raises several other issues which will be addressed below.
First, Claimant argues that Policy 495 only permits the restatement of revenues and expenses for identified “errors.” That position, of course, has been rejected by the District Court. Second, Claimant urges this Panel to hold this Claim in abeyance pending the resolution of the appeal of Policy 495 pending before the Fifth Circuit. Again, that request has been denied by the District Court.
On a final note, the Program appears to have classified a number of revenue accounts (e.g., Registration Fees, Subsidy Income) as tuition. At first glance, some of these revenue accounts may not meet the definition of tuition. In a supplemental filing, Claimant has contested the Program’s categorization of some of these accounts. In light of this Panel’s opinion that Attachment E, Part (a)’s mandated reallocation only applies to tuition revenue, how an account is categorized takes on added significance. Hence, on remand, this Panel requests that the Program reexamine its categorization of Claimant’s revenue accounts.
This matter is remanded for processing in accord with this Decision.

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