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BP Business Economic Loss Claim Appeal 2017-705:Claimant Does Not Operate”Out of Zone” Facilities

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 received a BEL award of $1,151,889 pre-RTP. The company, which is based in New Orleans, is a real estate service provider for the energy, telecommunications and transportation industries. BP files an appeal alleging the Settlement Program failed to exclude revenues and expenses from out-of-zone facilities. In support of this proposition, BP points to Claimant’s website which references out-of-zone “ executive offices” in Houston and Pittsburgh. Appellant also cites the website in suggesting that performs work throughout the United States and maintains field project offices in 20 plus locations across the country, in support of clients and the company’s staff of over 350 land professionals.
In a thorough and well-written brief, Claimant’s counsel addressed each of these contentions. First, as BP must fully recognize by now, the fact that the company does work throughout the country is in no way fatal to its BEL claim. The key question is whether Claimant has out-of-zone “ facilities” as that term is defined in the Settlement Agreement, which would necessitate the exclusion of those revenues attributable to the out-of-zone facility.
Exhibit 5 defines a “ Facility” as a separate and distinct physical location of a Multi-Facility Business at which (claimant) performs or manages its operations.  Additionally, Policy 467 provides 3 requisite elements for classification as a facility : 1) a separate and distinct physical structure or premises 2)owned, leased or operated by the entity and 3) at which the entity performs/and or manages its operations.
Claimant submitted an affidavit from its President attesting to the fact that, although work is performed throughout the country, the company’s field personnel work exclusively in the field or out of office space occupied, operated by and paid for by third party clients. This arrangement is not unusual for a company such as
which provides project management, right of way and land acquisition work, permitting and title services to various industries and BP has presented only conjecture to suggest otherwise. This scenario clearly does not comport with the requirements of a separate physical structure owned, leased or operated by Claimant, as required by Policy 467.
With respect to the offices in Houston and Pittsburgh, Claimant points out that the Pittsburgh office was not established until April 2011 and the Houston office had a minimal staff of 4 employees, two of whom were clerical and two focused on business development. The President, through his affidavit, maintains that the entity manages and operates its business out of its New Orleans headquarters. Additionally, from 2007 on, all of owners, officers, management, accountant, payroll, accounts
receivable and payable, human resources, legal, risk management and business development departments ( with the exception of the personnel located in Houston) were located, operated and managed out of the New Orleans office.
The only remaining issue is whether the personnel at the Houston site should be considered as performing or managing the operations of the company. Clerical and business development people would not likely be managing the operations of the entity but “ performing operations of the company” is a broad description and, therefore, presents a closer question. Nevertheless, Policy 467 establishes that “ An Entity does not “ perform or manage” operations at a location unless it can identify the expenses and revenues, if any, associated with the operations of that location separately from the expenses and revenues of other locations owned, leased or operated by the Entity. The financial documents in the record confirm Claimant’s contention that there was no such segregation of the expenses and/or revenues associated with the Houston location. Under these circumstances, BP cannot establish that Claimant maintained any out –of-zone facility as that term is applied under the Settlement Agreement. Accordingly, BP’s appeal must be dismissed and the award in favor of Claimant is affirmed

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