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BP Business Economic Loss Claim Appeal 2017-749: Grants to A Church Are Not “Revenue” That Need to be Reallocated Over The Period Covered By The Grant

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 $235,206.09 pre-RTP BEL award to claimant contending that the Settlement Program (“the SP”) erred by failing to reallocate revenue the Church
received in 2009 in the form of two grants from the XXXX. The grant proposal the YYY submitted to the Foundation in January 2009 requested $190,000, specifying that the requested funds would be used to complete Phase I of the church building renovation plan. In the section of the application form captioned “Date of Project/Program,” the Claimant entered “March-July 2009.” In June of 2009 the Claimant received from the Foundation $100,000. In July of 2009 the Claimant
requested $78,896.85 from the Foundation, to correct electrical conditions and to purchase a copier/printer. The Date of Project/Program section was filled in to specify “August through September.” The Foundation granted $90,000 in December, 2009. Both grant fund amounts were booked on the P&Ls in their months of receipt.
The SP applied the AVM Methodology of Policy 495 in processing the claim but did not reallocate the grant funds. BP contends that the funds should have been spread over “the period that the grant income actually covered,” The only authority it cites in support of that position are four decisions of the supervising District Court on discretionary review, each upholding the discretion of the SP to reallocate lump sum rental payments received by commercial landlords or commercial equipment lessors. For his part, counsel for the Claimant offers nothing more that the ipse dixit statement that because the maintained its financial statements on a cash basis, any attempt to “modify”them “to an accrual basis for specific line items,” would be improper.
Revenue reallocation in the case of cash basis claimants has been implicitly approved by the District Court in numerous discretionary review decisions, so that argument has no merit. In the end, however, it is the difference between commercial rent payments, which are always attributable to specific periods of occupancy or use, and a grant disbursement, which is pure largesse, with the funds represented thereby “due” only when sent and received, that informs the analysis. BP’s analogy to the Court’s endorsement of the SP’s right, in its discretion, to spread identifiable rent payments over the known term of a lease, fails. BP offers no other support for its argument, other than the general assertion that the situation here involved presents “ an ‘obvious mismatch’ of Claimant’s income and expenses.”
BP submits “a Final Proposal of $118,180 pre-RTP, the correct award after this error is fixed.” The Claimant submits as its Final Proposal the SP’s pre-RTP award of $235,206.09. Under the mandatory Baseball Process, the panelist selects the Church’s Final Proposal. Appeal denied.

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