In the continuing regulatory response – even more than three years after the fact – to the DEEPWATER HORIZON disaster, the United States Coast Guard (USCG) has led off 2014 with proposed regulations that significantly change the reporting requirements for incidents on the Outer Continental Shelf (OCS). Most importantly, these new regulations broaden the types of reportable incidents for foreign-flagged vessels/units/facilities operating on the OCS. (more…)

For insurers concerned about the effect of tolling agreements between an insured and a third party, the United States District Court for the Eastern District of Louisiana recently confirmed that the proper policy language will ensure that such an agreement tolls only the statute of limitations and does not affect the coverage period or notice obligations. In XL Specialty Insurance Company v. Bollinger Shipyards, Inc., et al, 12CV2071 (E.D. La. Jan. 3, 2014) (Vance, J.), the Court was asked to determine whether a Directors, Officers, and Private Company Liability Insurance Policy (D&O policy) covered claims made by the United States against Bollinger Shipyards, Inc. in related litigation. The United States’ claims against Bollinger arose from Bollinger’s performance of subcontract work to convert 110-feet patrol boats into 123-foot patrol boats. Upon delivery, the “lengthened” vessels suffered structural failures. (more…)

The federal district court for the Eastern District of Louisiana in Johnson v. PPI Technology Services, Inc. (Case No. 11-2773, Rec. Doc. 305 (E.D. La. Dec. 17, 2013)) has scuttled an insurer’s attempt to avoid coverage for an act of piracy off the coast of Nigeria under the “Terrorism Exclusion” in a so-called Foreign Commercial Package Policy. The Johnson decision should be viewed as a jolly roger warning-flag to insureds and insurers alike to review their policies (hull, P&I, and general liability) regarding the applicability (or not) of terrorism/war risk exclusions to acts of piracy – particularly for companies working in the booming but dangerous oil fields off Africa, the haunt of modern day Barbary corsairs. The rash of recent piracy attacks on oilfield interests off the western coast of Africa has been widely publicized, but with a somewhat surprising dearth of litigation defining the potential liabilities for such incidents (at least in the United States). As such the Johnson decision is particularly important given the relatively scarce jurisprudence regarding insurance issues inherent in piracy events. (more…)

In a moment as pivotal as the Battle of San Jacinto, groundbreaking reform in Mexico may bring a Lone Star-sized opportunity to the American maritime industry. On December 20, 2013, Mexican President Enrique Pena Nieto signed into law constitutional reforms that will open the country’s energy sector to private investment. The reform will end the long-held monopoly by state-owned Petróleos Mexicanos (“Pemex”), allowing private companies to explore for and produce oil and gas under a variety of contracts, including services, production, profit-sharing and licenses. The reform was driven by a number of factors, including Pena’s broad political agenda, aging refineries, lack of deep-water drilling capability and dwindling oil production. The “easy” oil is drying up, and Pemex lacks the funds and technology to get at the difficult stuff. (more…)

The United States Court of Appeals for the Second Circuit in American Petroleum & Transport, Inc. v. New York, 2013 WL 6332548 (2d Cir. Dec. 6, 2013) recently – albeit reluctantly – joined the fleet of other federal circuit courts that have applied the United States Supreme Court’s decision in Robins Dry Dock as a per se bar against purely economic damages resulting from a maritime tort (i.e. economic damages in the absence of any physical property damage). Nonetheless, the court voiced its doubts regarding the validity of the majority rule derived from Robins Dry Dock: “Although we conclude that Robins Dry Dock has been overread to establish a rule barring damages for economic loss in the absence of an owner’s property damage, we believe the rule has been so consistently applied in admiralty that it should continue to be applied unless and until altered by Congress or the Supreme Court.” (more…)

*Herman Melville, Moby Dick; Or, the Whale

Just under a year after the November 16, 2012 rig fire that left three workers dead, a joint investigative panel of BSEE and the United States Coast Guard has issued a report regarding the causes of the incident and recommending various enforcement actions/regulatory responses in the wake of the incident (“the Report”). Accidents_and_Incidents/Panel_Investigation_Reports/Final%20BSEE%20Black%20Elk%20report.pdf. This Report and the ensuing Incidents of Non-Compliance (INCs) issued by BSEE are yet another reinforcement of BSEE’s controversial, unprecedented, and arguably ultra vires extension of its regulatory enforcement jurisdiction to offshore contractors in addition to its historic and statutorily supported jurisdiction over OCS operators and lessees. (more…)

Day after day, day after day,
We stuck, nor breath nor motion;
As idle as a painted ship
Upon a painted ocean.

Samuel Coleridge, The Rime of the Ancient Mariner

After nearly half a century of being “stuck” in state courts under the saving-to-suitors clause and the Supreme Court’s decision in Romero v. Int’l Terminal Operating Co., 358 U.S. 354 (1959), the non-removal albatross may have fallen from the neck of maritime defendants under a developing line of cases from the Southern District of Texas in the wake of the recent 2011 amendments (effective January, 2012) to the removal statute (28 U.S.C. §1441). (more…)

The United States Fifth Circuit Court of Appeal of Community Bank of Lafourche v. M/V MARY ANN VIZIER, 2013 WL 5615738 (5th Cir. Oct. 15, 2013) recently re-affirmed the historic but infrequently applied “useless judgment” doctrine, which precludes subject matter jurisdiction in the federal appellate courts when the losing litigant in an in rem proceeding before the district court fails to protect the federal courts’ in rem jurisdiction by either seeking a stay and/or substitution of security (cash, supersedeas bond) for the res to perpetuate in rem jurisdiction. See Republic Nat’l Bank of Miami v. United States, 506 U.S. 80 (1992); Newpark Shipbuilding & Repair, Inc. v. M/V TRINTON BRUTE, 2 F.3d 572 (5th Cir. 1993); Eurasia Int’l, Ltd. v. Holman Shipping, 411 F.3d 578 (5th Cir. 2005). This doctrine is particularly relevant in cases of maritime in rem practice, given that the interlocutory sale of a vessel not only liquidates the res but also erases any prior liens or encumbrances against the Vessel. The result in Community Bank is of particular note for vessel mortgagees, maritime lienors, and vessel owners engaged in in rem litigation, because failing to take the necessary steps to protect jurisdiction can result in preclusion of an appeal from an adverse ruling in the district court. (more…)

In the wake of the Macondo disaster, regulation of the offshore industry on the Outer Continental Shelf (OCS) has undergone profound change, both in terms of the agencies who regulate and the substantive regulations. Almost immediately after the April 20, 2012 blowout of the Macondo well, President Obama dissolved the former Mineral Management Services (MMS, a sub-bureau within the Department of the Interior, which was wracked with internal problems and corruption) and formed a new agency (Bureau of Ocean Energy Management, Regulation, and Enforcement) that ultimately became two related agencies: (1) the Bureau of Ocean Energy Management (BOEM), which handles lease sales and permitting of OCS wells; and (2) BSEE, which handles regulation with regard to safety and operational requirements for activities on the OCS. While this overhaul of the former MMS was dramatic and comprehensive, it did not affect the traditional, historic jurisdiction of the United States Coast Guard (USCG) over vessels and certain aspects of other OCS facilities. (more…)

With the recent uptick in well decommissioning work in the Gulf of Mexico fueled by the so-called “Idle Iron Initiative” undertaken post-Macondo by the Bureau of Safety and Environmental Enforcement (BSEE, see Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) NTL 2010-G-05), decommissioning contractors and operators should be aware of the recent developing district court split within the Federal District Court for the Eastern District of Louisiana (EDLA) regarding whether plugged-and-abandoned (P&A’d) wells remain “wells” for purposes of the Texas and Louisiana Oilfield Anti-Indemnity Acts (TOAIA, Tex. Civ. Prac. & Rem. Code §127.001 et seq., and LOAIA, La. Rev. Stat. §9:2780). (more…)