In Petrobras Am., Inc. v. Vicinay Cadenas, S.A., 815 F.3d 211 (5th Cir. 2016), the U.S. Fifth Circuit Court of Appeals recently analyzed whether maritime law or Louisiana law applied to an offshore dispute occurring on the outer continental shelf.
The Petrobras case involved an underwater tether chain that broke after being installed in an oil production piping system in the Gulf of Mexico. The tether chain connected a “floating production storage and offloading” facility on the surface of the sea to a nitrogen-filled “buoyancy can” floating 660 feet beneath the water’s surface.
The Fifth Circuit applied the two-part test to determine whether general maritime law applied to the plaintiff’s claims: (1) did the incident occur on navigable waters? and (2) was the incident substantially related to a traditional maritime activity?
The Location Test
The Fifth Circuit found that this incident easily met the location test because the tether chain “failed deep in the waters of the Gulf of Mexico.” The court gave little credence to the fact that the chain was attached to a floating riser, which in turn was attached to the seabed.
The Connection Test
The court, however, held that the incident did not meet the maritime connection test. It first found that the incident was neither potentially (nor actually) disruptive to maritime commerce, despite the fact that all oil and gas development in the area was temporarily suspended to investigate the chain’s failure. The court’s primary inquiry was whether the incident could potentially affect the navigability of waterways. The failure of the tether chain simply caused the buoyancy can to float to the surface, which only constituted a “de minimus” disruption to maritime commerce.
The Fifth Circuit also found that the incident did not bear a substantial relation to traditional maritime activity. The incident primarily concerned oil and gas development on the outer continental shelf—activities that are not traditionally maritime.
Conclusion
Because the rupture of the tether chain did not disrupt navigation and did not bear a substantial relation to traditional maritime activity, general maritime law could not apply to the claims.
All cases are different, and the same analysis may not apply to a case with similar facts. If you have questions about whether general maritime law or state law applies to your claims, it is advisable to consult with an attorney.
Allen & Gooch is providing this legal update for informational purposes only. This article should not be construed as legal advice or a legal opinion as to any specific facts or circumstances. You should consult your own attorney concerning your particular situation and any specific legal questions you may have.