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BP Business Economic Loss Claim Appeal 2017-563:Appeals Panel Describes Several Decisions Regarding Out-of-Zone Project Revenue

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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 amount of this BEL award. BP’s arguments on appeal are three-fold: First, BP argues that Claimant may have maintained out-of-zone Facilities whose revenue was erroneously included in the Program’s calculations. Second, and in the alternative, BP argues that, even if there are no out-of-zone Facilities, any revenue earned on out-of-zone projects should have been excluded from the Program’s calculations. Third, BP disputes the Program’s treatment of certain expenses.
Facilities
BP has presented no real evidence that Claimant maintained out-of-zone Facilities. BP’s speculation isn’t sufficient to entice this Panel to remand this matter for further investigation, much less conclude that Claimant was a Multi-Facility Business with out-of-zone Facilities.
Revenue from Out-of-Zone Projects
BP’s argument that revenue from Claimant’s out-of-zone projects should be excluded from the Program’s calculations is a novel one. Notwithstanding this Panel’s admiration for BP’s creativity, this Panel finds BP’s position to be without merit. This argument has been implied, if not overtly stated, in a number of appeals. Below are a number of Appeal Panel Decisions wherein BP’s suggestion has been rejected:
Appeal Panel Decision for Claim No.XXX. BP alleged that a mechanical contractor had an out-of-zone facility, and the revenues and expenses from this facility must be excluded. The panelist determined that the claimant had no out-of-zone facility, and held that the revenues and expenses incurred from work performed by the claimant out-of-zone in Tennessee must be included in the compensation calculation. The decision also stated that “BP requests a remand with instructions that the Settlement Program ‘investigate and exclude Claimant’s out-of-zone revenues.’” The Panel declined that request. Thereafter, BP sought discretionary review of the panel decision, which was declined by the Court.
Appeal Panel Decision for Claim No. YYY. The claimant sold asphalt through a third party’s warehouse in Indiana. BP appealed the Settlement Program’s
determinations that the claimant had no facility in Indiana and the revenues generated from activities in Indiana should be included in the compensation
calculation. The Appeals Panel affirmed the Settlement Program and held that claimant’s compensation calculation should include the revenues and expenses related to its Indiana activities. Once again, BP unsuccessfully sought discretionary review.
Appeal Panel Decision for Claim No. ZZZ.The claimant in this decision had its sole facility in Mobile, Alabama and admitted it had employees working at customers’ locations out-of-zone in Houston, Texas and Atlanta, Georgia. The panelist properly concluded that, because the claimant did not have its own facility in Houston or Atlanta, there was no basis to exclude the revenue earned at these locations.
Appeal Panel Decision 2016-2196: This decision addressed BP’s argument that a Florida contractor had facilities in out-of-zone areas where it performed construction. The Appeals Panelist found that the contractor’s activities in other states were not performed at separate facilities based on the terms of the Settlement Agreement and Policy 467. Accordingly, the revenues and expenses generated through the construction projects conducted out-of-zone were properly included in the compensation calculation because the Claimant did not have a facility at these construction projects.
Appeal Panel Decision 2016-339: A three-member panel held that a construction trailer used for storage of materials, permit documentation, and OSHA was not a
facility. The claimant in this appeals decision managed all of its operations and conducted all its supervisory business operations from its headquarters. Therefore,
the headquarters was the claimant’s sole facility. Accordingly, all revenues and expenses were attributable to this facility and were properly included in the claimant’s compensation calculation.
Appeal Panel Decision 2016-992: The Appeals Panelist confirmed that it is the location of the Claimant’s facility, and not its customer, that determines a Claimant’s
eligibility for recovery. The appeals claimant was a beach gear and souvenir wholesaler who was located out of the Settlement Agreement’s economic loss zone, but sold to customers in the zone. The location of its customers was held to be irrelevant to its eligibility for recovery.
Appeal Decision 2015-1098: The claimant was a cargo shipping company and BP alleged it had a facility in Mexico. Claimant received checks and cash from customers
in Mexico which were deposited at its in-zone Florida location. In addition to this, claimant had common ownership with a company operating in Mexico. However,
because the claimant itself did not have a facility in Mexico, the Appeals Panelist found the Settlement Program properly concluded it was not a multi-facility business
and these revenues should be included in the compensation calculation. The decision stated that “[i]t is the location of the source facility that controls eligibility under the Settlement Agreement, not the ultimate destination of the sales and services.”
Appeal Panel Decision 2015-1411: The panelist held that providing services to customers, in this case hotels, did not result in the appeal’s claimant having a facility
at its customers location. Its sole location was its headquarters and all revenues and expenses are attributable to the claimant’s headquarters. It also recites Policy 467,
which provides in part that “The Claims Administrator does not locate a Business Entity on the basis of the location of the customers, employees, contractors or other
representatives of the business apart from the structure owned, leased or operated by the business.”
The following Appeal Decision is of particular interest, as BP appears to have taken a position contrary to the one taken in the instant appeal:
Appeal Panel Decision 2016-1837: The appeal panelist in this decision agreed with BP that revenues and expenses earned at non-facility locations should not be
attributed to the location of that non-facility, but rather to the location of a claimant’s headquarters.
In light of these decisions, and our interpretation of the Settlement Agreement, this Panel respectfully rejects BP’s argument.
Treatment of Expenses
BP disputes the treatment of some of Claimant’s expenses –e.g., “Professional Fees – Consulting,” “Materials & Supplies,” “Field Equipment & Supplies.”Assuming that BP were correct regarding all of the contested expenses and this Panel adjusted Claimant’s award, in light of BP’s Final Proposal of -0-, the “baseball process” obliges this Panel to adopt Claimant’s Final Proposal, as Claimant’s Final Proposal would be closer to the adjusted amount.
Conclusion
Following a de novo review of the record, this three-member Panel unanimously adopts Claimant’s Final Proposal.

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