Determining the "Adjacent State" for Choice of Law Purposes under OCSLA

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.

1  The north-south projection is by no means certain. For example, several cases have held platforms in Main Pass to be adjacent to Louisiana with no discussion of possible application of Mississippi law notwithstanding Mississippi’s due north location. See, e.g., Freeport McMoRan Resource Partners, L.P. v. Kremco, Inc., 827 F. Supp. 1248 (E.D. La. 1992) (Main Pass 299); Haynie v. Dynamic Offshore Contractors, Inc., No. CIV.A. 89-4552, 1991 WL 33615 (E.D. La., March 17, 1991) (Main Pass 116).