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BP Business Economic Loss Claim Appeal 2017-927: “Job Sites” Do Not Qualify as “Facilities” Under Exh. 5 of SA and Policy 467

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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

The Settlement Program awarded Claimant, the constructor of timber bridges, $1,275,765 post-RTP. BP appeals alleging that the award was based on income and profits that did not arise in the Gulf Coast Areas (“GCA”), and request that this claim be remand for a calculation of Claimant’s award without including income and profit arising from outside the Gulf Coast Areas. BP asserts that the Settlement Agreement compensates Business Economic Loss claimants for “Economic Damage,” defined as “loss of profits, income and/or earnings arising in the Gulf Coast Areas or Specified Gulf Waters allegedly arising out of, due to, resulting from, or relating in any way to,
directly or indirectly, the Deepwater Horizon Incident.”
Consistent with this definition, claimants are members of the Settlement Class only insofar as they either (1) “sold products in the GulfCoast Areas or Specified Gulf Waters” (either directly to end users, or to another business one step removed from end users); or (2) “are service businesses with one or more full-time employees … who performed their full time services while physically present in the Gulf Coast Areas or Specified Gulf Waters…” In this regard, according to BP, the boundaries of the defined Gulf Coast Areas represent the limits outside which the Parties agreed that the effects of the oil spill did not reach, or were too tenuous to warrant compensation. To the extent that claimants earned income and profits from sales of goods and services outside the defined Gulf Coast Areas any loss of that income or profits were not “due to” the Spill.
Here, contends BP, Claimant earned revenue from numerous projects outside the Gulf Coast Areas throughout 2007-2011, and sets forth several examples. Claimant counters that BP’s standard for excluding out-of-zone profits is incorrect. BP uses the incorrect analysis to support its conclusion. It argues that Claimant constructed bridges in states outside the GCA and, as a result, alleges that profits from such projects did not “arise in” the GCA. BP fails to utilize, however, the correct standard by
which to determine whether revenue “arose in” the GCA and is “due to” the spill. To do so one must determine whether out-of-zone revenue was generated from an out-of-zone “Facility” for it to be excluded from the analysis. In effect, BP is actually arguing that Claimant qualifies as a multi-facility business which disallows any profit generated from “Facilities” located outside the GCA.
However, the framework that governs the multi-facility analysis is found in Exhibit 5 of the Settlement Agreement and in Claims Administrator Approved Policy 467. Before the spill and throughout 2012, Claimant has operated from its sole location in Lutz, Florida. Claimant has stated, under oath, that it did not maintain more than one separate and distinct facility between April 1, 2010 and December 31, 2010. Moreover, Claimant’s job sites do not qualify as “Facilities” under Policy 467. Exhibit 5 and Policy 467 govern whether a claimant qualifies as a “Multi-Facility Business.” Exhibit 5 defines a “Multi-Facility Business” as “a business entity that, during the period April 1, 2010 through December 31, 2010, maintained Facilities in more than one location and had at least one Facility within the Gulf Coast Areas.” It further defines a “Facility” as a “separate and distinct physical location of a Multi-Facility Business at which it performs or manages its operations.”
Section IV of Policy 467 also governs what qualifies as a “Facility” and discusses whether a claimant ultimately should be designated a “Multi-Facility Business.” This section states that a location must meet all three of the following elements: 1. A separate and distinct physical structure or premises; 2. Owned, leased, or operated by the Business Entity; and 3. At which the Business Entity performs and/or manages its operations. The policy further defines the terms “performs” and “manages” to determine the extent of a claimant’s operations at the additional locations. One “performs operations at a location if, in the normal course of its business, it has employees or agents who perform their work at that location and/or it provides services or products at that location.” A business “manages its operations at a
location if, in the normal course of business, it has employees or agents present at the location, on a full-time or part-time basis, who are responsible for the management, supervision, or direction of the operations of the Entity.”
Claimant’s job sites do not qualify as “Facilities” under Policy 467 or Exhibit 5. As the affidavit of Claimant’s President explains, Claimant does not manage its operations from any construction trailer or “separate and distinct physical structure or premises” when it works at a particular job site. Other Appeal Panels have found similar
affidavits persuasive. Policy 467 requires that all three elements of the definition must be met to qualify as a “Facility.” This affidavit demonstrates that none of the criteria are met and confirms that Claimant’s location in Lutz, Florida is the sole facility. Moreover, the description of a construction office trailer does not accurately describe the setup at Claimant’s job sites. Thus, the record evidence shows that Claimant does not qualify as a “Multi-Facility Business” because
its operations are managed from its sole facility location in Lutz, Florida.
Consequently, the Settlement Program properly determined this was a single-facility business and calculated the claim under Exhibit 4. Based on the above, the Appeal Panelist unanimously affirms the decision issued by the Settlement Program and BP’s appeal is denied.

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