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BP Business Economic Loss Claim Appeal 2017-535: Policy 381 v.3 is the Preferred Guide for Determining Whether Claimant Was Doing Business Prior to 10/20/08, the Dividing Line Between Regular BEL Claimants and Start-Up Claimants

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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 Claim. Claimant failed Causation. Claimant contends on appeal that the Program should have processed Claimant as a general BEL Claim rather than as a Start-Up Claim. Claimant suggests that it would have passed Causation had its Claim been classified as a general BEL Claim. According to Exhibit 7 to the Settlement Agreement, a Start-Up business is one with less than 18 months of operating history. Based on that definition, the Program classified Claimant as a Start-Up business.

Claimant is a trucking company primarily engaged in long-distance refrigerated truckload hauling. Claimant argues that it commenced operations in March 2008 when it purchased a refrigerator trailer which was later used to haul frozen shrimp and plants. Subsequent to the equipment, and prior to 10/20/08, Claimant incurred expenses maintaining the truck and trailer. BP argues that all of these expenses were incurred in the preparation to do business. Further, BP points out that Claimant did not obtain an EIN number until after 10/20/08, nor did Claimant obtain federal authorization to operate until after 10/20/08.

In order to determine whether or not Claimant had “less than eighteen months of operating history at the time of the DWH Spill,” per Exhibit 7 to the Settlement Agreement, this Panel must begin by deciding what criteria to apply in making that determination. BP points to Policy 362 v.2 – Operating History of and Definition of Start-Up Business. This policy contains the following relevant statements: For purposes of inclusion in the Start-Up BEL Framework, the Claims Administrator will determine a claimant’s operating history based on when the claimant began doing business or operating. . . . [T]he Claims Administrator’s analysis of whether a business was doing business or was in operation will be based on the totality of circumstances involving claimant’s business and will include a focus on when the business began to . . . c) perform its full time services . . . or e) incur substantial costs or expenses of a nature indicative of the actual start-up of business operations.

If one were to stop here, then this Panel’s task would be to determine whether or not Claimant had met the above criteria as of 10/20/08. However, Policy 362 v.2 goes on to state the following: “Only claimants that can establish an operating history, in accordance with this analysis, that commenced before April 20, 2010 will be eligible for compensation under the Start-Up BEL framework.”

When this last sentence is read in context with the previous criteria, one could reasonably argue that the criteria set forth in Policy 362 v.2 is associated with the date of the Spill, not 10/20/08. Policy 362 v.2’s focus appears to be on whether or not a business was doing business or operating on 4/20/10. Indeed, numerous appeal decisions have referred to Policy 362 v.2 as guidance in determining whether or not a new business was eligible at the time of the Spill.

Claimant, on the other hand, argues that Policy 381 v.3 – The Commencement Date for a Start-Up Business – governs whether or not a claimant was operating as of10/20/08, the dividing line between general BEL claimants and Start-Up claimants. This policy contains the following relevant statements (emphasis added):”The Claims Administrator has determined that the correct application of Exhibit 7 is to classify as a Start-Up Business one that commenced operations after 10/20/08 and classify as a general BEL business one that commenced operations on or before 10/20/08.”

There can be little doubt that Policy 381 v.3 is focused on 10/20/08. Putting aside the question of which policy applies to what dates, the criteria set out in each policy differs. Policy 362 v.2 requires that a claimant either have performed services or incurred substantial expenses indicative of the actual start-up of business operations. Policy 381 v.3 only requires that a claimant have commenced operations. After much reflection, this Panel finds that Policy 381 v.3 is the preferred guide for determining whether or not a claimant was doing business prior to 10/20/08, the dividing line between regular BEL claimants and Start-Up claimants.

As such, this Panel is tasked with deciding whether or not Claimant had “commenced operations” prior to 10/20/08. Although a close, and to some degree, subjective call, this Panel finds that Claimant had commenced operations more than 18 months prior to the Spill. Consequently, this Claim should have been processed as a regular BEL Claim.

In light of the above, this matter is remanded for further processing in accordance with this decision.

 

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