A wireline hand is injured on a
fixed offshore platform located on the Outer Continental Shelf 120 miles due
South of Bayou La Batre, Alabama, but only 60
miles from the Louisiana
coast as the crow flies. He files suit
against the platform operator. The
operator makes demand upon the plaintiff’s employer for contractual defense and
indemnity under a master service agreement containing a governing law provision
calling for the application of Texas
law to all issues related to the contract.
What substantive law applies to the plaintiff’s injury claim? What substantive law applies to the
contractual demand? There is more to
these questions than meets the eye.
Under the express terms of the Outer Continental Shelf Lands Act (“OCSLA”), the
substantive laws of the state “adjacent” to the platform are applicable as
surrogate federal law:
To the extent that they are applicable and not inconsistent
with this subchapter or with other Federal laws and regulations of the
Secretary now in effect or hereafter adopted, the civil and criminal laws of each adjacent
State . . . are hereby declared the law of the United States for that
portion of the subsoil and seabed of the outer Continental Shelf, and
artificial islands and fixed structures erected thereon, which would be within
the area of the State if boundaries were extended seaward to the outer margin
of the outer Continental Shelf, and the President shall determine and publish
in the Federal Register such projected lines extending seaward and defining
each such area.
43 U.S.C. § 1333(a)(2)(A). See also Rodrigue v.
Aetna Casualty & Surety Co., 395 U.S. 352 355, 89 S.Ct. 1835, 1837
(1969); Coulter v. Texaco, Inc., 117 F.3d 909, 911 (5th Cir. 1997). Because no President has seen fit to publish the
“projected lines” called for by OCSLA, courts must make the state “adjacency”
determination on their own when presented with a dispute governed by
OCSLA.
In Reeves v. B & S Welding, Inc., 897 F.2d 178, 179-80 (5th Cir. 1990),
the Fifth Circuit articulated four factors relevant to the adjacency
determination: “(1) geographic
proximity; (2) which coast federal agencies consider the subject platform to be
‘off of’; (3) prior court determinations; and (4) projected boundaries.” The court in Reeves determined that all four factors favored Texas
as the state adjacent to the High
Island area platform at
issue.
The Fifth
Circuit again addressed the OCSLA state adjacency issue in Snyder Oil Corp. v. Samedan Oil Corp., 208 F.3d 521 (5th Cir. 2000). Affirming the district court’s holding, the
Fifth Circuit determined that a platform in the Main Pass Block 261 area was
adjacent to Alabama. The court expressly rejected the suggestion
that geographic proximity should be determinative and held instead that a court
making the adjacency determination must consider “all relevant evidence”
presented. Id.
at 525. Discussing an earlier district
court case, Pittencrieff Resources, Inc.
v. Firstland Offshore Exploration Co., 942 F. Supp. 271, 277 (E.D. La.
1996), where the court based its decision on the only evidence presented –
geographic proximity, the Fifth Circuit wrote:
Pittencrieff
determined “adjacency” on the sole ground of geographic proximity, because
“[n]o party to this action has disputed that Alabama
is the closest state geographically, and no party has provided any reason why Louisiana or Florida
should be considered the adjacent state.”
This is entirely consistent with the Reeves
multi-factored analysis; if the parties present evidence on only one factor,
that factor is controlling.
Id. at 524.
Although the Main Pass 261 platform at issue
in Snyder was considerably closer in
proximity to the Louisiana coast than it was
to Alabama, the court considered other
relevant evidence presented in reaching its ultimate determination that the
platform was adjacent to Alabama
for OCSLA purposes. That evidence
included various documents demonstrating that federal agencies considered the
Main Pass 261 block to be “off of” Alabama and
that a seaward projection of the Mississippi –
Alabama border put the platform to the east
and on the Alabama
side of the border. The court further
considered the location of the MMS office having inspection responsibilities
over the platform, and it took particular note of an MMS chart illustrating a
seaward extension of the state border. Id.
at 526. In this regard, the court noted:
Agency determinations of projected boundaries, or other
determinations of a similar nature, make it more probable that if the President
does ever “project boundaries” those boundaries will be consistent with these
other agency determinations.
Id. at 525.
In two subsequent federal district court
cases, Brown v. Total E&P USA Inc., 2008 WL 4724309 (E.D. La. 2008),
and Texaco Exploration and Production
Inc. v. AmClyde Engineered Products, Inc., 2008 WL 782818 (E.D. La. 2008), Alabama
was deemed the adjacent state for facilities located in Viosca Knoll 823 and Viosca
Knoll 786. Both Viosca Knoll blocks were
closer as the crow flies to Louisiana but
geographically south of Alabama. Thus, while the multi-factor test for
adjacency established in Reeves and
followed in Snyder provides no
certainty and necessitates a case by case approach, precedent is building for
application of Alabama law to facilities due south of the Alabama coast.[1]
Should the court deem Alabama the adjacent state for OCSLA purposes in the
context of the hypothetical posed in the opening paragraph, the claim of the
wireline hand against the platform operator will be governed by Alabama law. As for the contract claim, under the holding
in Union Texas Petroleum v. PLT Engineering, 895 F.2d
1043, 1050 (5th Cir. 1990), cert. denied, 498 U.S. 848 (1990),
application of the adjacent state’s law is considered a congressionally
mandated choice of law that cannot be changed by a contract’s governing law
provision. Thus, in the hypothetical, Alabama law applies to the contract claim notwithstanding
the contract’s Texas
choice of law provision. This could be
significant inasmuch as Alabama has no oilfield
anti-indemnity statute, whereas Texas
does.
For more information, please
contact William W. Pugh at wwpugh@liskow.com or David W. Leefe at dwleefe@liskow.com or
go to www.liskow.com.
