Demette v. Falcon Drilling Co., No. 00-30165 (5th Cir. June 12, 2001)
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 00-30165
KERMIT DEMETTE,
Plaintiff,
versus
FALCON DRILLING COMPANY, INC.; ET AL.,
Defendants.
R & B FALCON DRILLING USA, INC.,
Defendant-Third Party
Plaintiff-Appellee,
versus
FRANK'S CASING CREW & RENTAL TOOLS, INC.,
Third Party Defendant-Appellant.
Appeal from the United States District Court
for the Eastern District of Louisiana
June 12, 2001
Before HIGGINBOTHAM and DeMOSS, Circuit Judges, and FISH,(1)
District Judge.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
Appellee R & B Falcon Drilling USA, Inc. sued appellant
Frank's Casing & Crew Rental Tools, Inc. for indemnity when a
Frank's employee sued Falcon under the Longshore and Harbor
Workers' Compensation Act(2) for injury sustained while working on
a Falcon jack-up rig in the Gulf of Mexico. Frank's argued that
the indemnity agreement was voided by LHWCA or by Louisiana law.
The district court held that the indemnity agreement was valid.
Determining the validity of the indemnity agreement requires
a foray into the federal statutes defining the law applicable to
offshore drilling on jack-up rigs. We first consider the
application of the Outer Continental Shelf Lands Act ("OCSLA")(3)
and then construe the LHWCA. We conclude that the OCSLA applies
to a rig jacked-up over the outer continental shelf; that state
law does not apply to this case by operation of the OCSLA, but
the LHWCA does; and that the LHWCA does not invalidate the
indemnity agreement. We affirm.
I
Frank's Casing & Crew Rental Tools, Inc. and R & B Falcon
Drilling USA, Inc. are both contractors with Union Oil Company
of California for Unocal's offshore drilling operations.
Frank's provides casing services. "Casing" is an activity
performed during the drilling for oil, whether onshore or
offshore; it involves the "welding together and hammering of
pipe into the subsurface of the earth to create a permanent
construction."(4)
Frank's and Unocal signed a "Services and Drilling Master
Contract." Under the Master Contract, Frank's provided casing
services to Unocal at offshore drilling sites. Under the Master
Contract, Unocal agreed to defend and indemnify Frank's against
any liabilities Frank's owes to Unocal, and Frank's agreed to
defend and indemnify Unocal and all of its contractors and
subcontractors against liabilities they may owe to Frank's.
Falcon was a contractor of Unocal.
Falcon provides movable rigs from which casing crews drill
offshore wells. Falcon has an "Offshore Daywork Drilling
Contract" with Unocal. This contract provided Unocal with
access to all of Falcon's vessels for offshore drilling. Falcon
provided Unocal the Fal-Rig #85, a jack-up drilling rig. A
jack-up drilling rig is a floating rig with legs that can be
lowered into the seabed. Once the legs are secured in the
seabed, the rig can be "jacked-up" out of the water to create a
drilling platform. The process can be reversed, and a jack-up
rig can be towed to new sites.(5)
Pursuant to the Master Contract between Frank's and Unocal,
plaintiff Kermit Demette, an employee of Frank's, worked aboard
the Fal-Rig #85. Demette was injured while performing casing
work as a welder on the Fal-Rig #85. He was part of a "hammer
job," which involves a casing crew welding together sections of
pipe end-to-end as the pipe is driven into the seabed by a large
hammer. While Demette was working at the base of the derrick
where the pipe was being driven, a metal retaining ring used to
secure hoses fell from the derrick, striking him on the head.
At the time of Demette's injury, the Fal-Rig #85 was jacked up.
Its legs rested on the outer continental shelf of the United
States beyond the territorial waters of Louisiana.(6)
Demette sued Falcon for his injuries. Falcon, pursuant to
the Offshore Daywork Drilling Contract, filed a third-party
complaint against Unocal for defense and indemnity. Unocal
voluntarily assumed the defense of Falcon. Falcon then filed a
third-party complaint against Frank's, seeking defense and
indemnity pursuant to the Master Contract.
The district court granted summary judgment to Falcon on the
issues of whether Frank's owed defense and indemnity to Falcon.
Frank's agreed to fund a settlement with Demette and to pay
Falcon's defense costs, but made a full reservation of appeal
rights. A consent judgment was entered pursuant to this
agreement.
Frank's appeals the summary judgment ruling on indemnity and
defense.
II
The Outer Continental Shelf Lands Act(7) provides
comprehensive choice-of-law rules and federal regulation to a
wide range of activity occurring beyond the territorial waters
of the states on the outer continental shelf of the United
States. Relevant to this case, it applies federal law to
certain structures and devices on the OCS, incorporates state
law into federal law on the OCS, and applies the LHWCA to
certain injuries sustained by persons working on the OCS.
In this case, the parties dispute whether Louisiana state
law governs the Master Contract and whether the OCSLA makes the
Longshore and Harbor Workers' Compensation Act(8) applicable to
Demette's injuries. First, we must determine whether the injury
occurred on an OCSLA situs; if so, we then have two inquiries:
we must determine whether OCSLA makes state law applicable; and
we must determine if the injured party's status makes the LHWCA
applicable under OCSLA. We begin with a review of the three
OCSLA inquiries we must make in this case.
A. Section 1333(a)(1): Situs Test
Section 1333(a)(1) describes the reach of the OCSLA and
applies federal law within this scope. It states that the laws
and jurisdiction of the United States extend
to the subsoil and seabed of the [OCS] and to all
artificial islands, and all installations and other devices
permanently or temporarily attached to the seabed, which
may be erected thereon for the purpose of exporing [sic]
for, developing, or producing resources therefrom, or any
such installation or other device (other than a ship or
vessel) for the purpose of transporting such resources, to
the same extent as if the [OCS] were an area of exclusive
Federal jurisdiction located within a state.(9)
The Supreme Court and the Fifth Circuit have held that this
section creates a "situs" requirement for the application of
other sections of the OCSLA, including sections 1333(a)(2) and
1333(b).(10) Neither the Supreme Court nor this court has parsed
the precise language of the statute to specify the exact
contours of the situs test it establishes.(11) We are called upon
to do so today.
We rely on the text of the statute. A close inspection of
section 1333(a)(1) reveals that it applies to two primary sets
of subjects: "to the subsoil and seabed of the [OCS]"; and "to
all artificial islands, and all installations and other devices
permanently or temporarily attached to the seabed." This latter
category is further divided into two categories: those
artificial islands, installations, or devices "erected" on the
OCS "for the purpose of exploring for, developing, or producing
resources" from the OCS, and those "other than a ship or vessel"
whose purpose is "transporting such resources."(12)
Thus, the OCSLA draws important distinctions between the two
categories of artificial islands, installations, and other
devices. Each category is defined by the purpose of the
device--the former, extraction of resources; the latter,
transportation of resources. The former also includes the
phrase, "which may be erected [on the OCS]," while the latter
does not. Conversely, the latter contains the phrase, "other
than a ship or vessel," while the former does not.
We incorporate these distinctions into the following rule:
The OCSLA applies to all of the following locations:
(1) the subsoil and seabed of the OCS;
(2) any artificial island, installation, or other device
if
(a) it is permanently or temporarily attached to the seabed of the OCS, and
(b) it has been erected on the seabed of the OCS, and
(c) its presence on the OCS is to explore for, develop, or produce resources from the OCS;
(3) any artificial island, installation, or other device
if
(a) it is permanently or temporarily attached to the seabed of the OCS, and
(b) it is not a ship or vessel, and
(c) its presence on the OCS is to transport resources from the OCS.
B. Section 1333(a)(2): Incorporation of State Law
If the situs test is met, section 1333(a)(2) provides that
"[t]o the extent that they are applicable and not inconsistent
with this subchapter or with other Federal laws . . . the civil
and criminal laws of each adjacent State . . . are hereby
declared to be the law of the United States [on OCS situses as
defined by section 1333(a)(1)]." Sections 1333(a)(1) and
1333(a)(2) together provide a rule for the incorporation of
state law as surrogate federal law governing claims arising out
of activity on the OCS. This court has articulated the rule in
a three-part test announced in Union Texas Petroleum Corp. v.
PLT Engineering ("PLT"):(13)
[For state law to govern,] (1) The controversy must arise
on a situs covered by OCSLA (i.e., the subsoil, seabed, or
artificial structure permanently or temporarily attached
thereto). (2) Federal maritime law must not apply of its
own force. (3) The state law must not be inconsistent with
Federal law.(14)
For disputes arising out of contracts--including indemnity
contracts for offshore drilling--the courts of this circuit have
held that if the contract is a maritime contract, federal
maritime law applies of its own force, and state law does not
apply.(15)
C. Section 1333(b): Status Test
Section 1333(b) extends the LHWCA to non-seamen employed on
the OCS. Specifically, it creates the following "status" test:
the LHWCA applies to injuries "occurring as a result of
operations conducted on the [OCS] for the purpose of exploring
for, developing, removing, or transporting by pipeline the
natural resources . . . of the [OCS]."(16) In order for the LHWCA
to apply under section 1333(b), the injured worker must satisfy
the "status" requirement of section 1333(b) as well as the situs
requirement of section 1333(a)(1).(17)
III
A. Situs Test
Here, the situs requirement of section 1333(a)(1) is met.
The Fal-Rig #85 was jacked-up over the OCS at the time of
Demette's injury. It therefore falls into the second category
of OCSLA situses: it was a device temporarily attached to the
seabed, which was erected on the OCS for the purpose of drilling
for oil.(18)
Frank's argues that since the Fal-Rig #85 is a vessel,(19) the
OCSLA cannot apply to this case. Frank's argument is that the
qualifier "other than a ship or vessel" in section 1333(a)(1)
precludes the application of the OCSLA. This argument has no
merit. As discussed above, the statute twice refers to
artificial islands, installations, and other devices permanently
or temporarily attached to the seabed. Once it inserts the
qualifier "other than a ship or vessel"; once it does not. We
give effect to the different wording of the two phrases by
reading them differently.(20)
This result is consistent with the precedent of this
circuit. As we noted in Hodgen v. Forest Oil Corp.,(21) our
holding in Domingue v. Ocean Drilling and Exploration Co.(22)
implicitly supports the holding that a jacked-up rig is an OCSLA
situs. Domingue applied state law to an indemnity agreement
regarding an injury on a jacked-up drilling rig, but failed to
explicitly address the situs requirement of the OCSLA, focusing
instead on the question of whether state law applied.(23) Since
the incident occurred on the OCS beyond the territorial waters
of Louisiana, the only way state law could have operated was by
incorporation into federal law under OCSLA.(24)
The amicus supporting Frank's quotes Longmire v. Sea
Drilling Corp.,(25) which states: "The OCSLA covers fixed platform
workers, while floating rig workers, even those whose tasks are
essentially identical to the tasks performed by fixed platform
workers, are treated differently."(26) This out-of-context
statement cannot carry Frank's case. In the context of the
facts of the case, this statement addresses the fact that the
employee was injured on a tender working alongside a fixed
platform.(27) Tenders are vessels (in Longmire it was a converted
warship) that are often anchored next to drilling platforms to
service the platforms and ferry workers to and from the shore.
Longmire does not involve a floating rig, let alone a jack-up
rig; the "floating" rig the opinion refers to is this tender,
which was attached to the OCS only by an anchor. In Parks v.
Dowell Division of Dow Chemical Corp.,(28) we explained Longmire,
noting that tenders are not extensions of drilling rigs fixed to
the seabed, and the OCSLA does not apply to them.(29)Longmire's
conclusion that a tender is not an OCSLA situs is not relevant
to the facts of this case.(30)
In sum, this case arises out of an injury on an OCSLA situs.
Since the section 1333(a)(1) requirement is satisfied, the OCSLA
applies to this case.
B. Incorporation of State Law
The next logical step is to consider whether Louisiana law
applies as a surrogate to federal law under section 1333(a)(2).
As stated above, this circuit applies the PLT test to determine
the application of state law. The second prong of the PLT test
is that maritime law does not apply of its own force. Because
maritime law applies of its own force, Louisiana law does not
apply in this case.(31)
Maritime law applies to the Master Contract between Unocal
and Frank's if the contract is a maritime contract. The Master
Contract stated that Frank's would "provide casing installation
services." The parties indemnified each other against claims
brought by their employees. The contract does not explicitly
mention any vessels, and it is unclear whether it contemplated
work exclusively offshore or work both offshore and onshore.
Determining whether a contract relating to offshore drilling
is maritime is often a perplexing affair.(32) This circuit
utilizes the two-step test of Davis & Sons, Inc. v. Gulf Oil
Corp.,(33) to determine whether a contract is maritime. We
consider, first, the contract's "historical treatment in the
jurisprudence" and, second, the specific facts of the case.(34)
For some categories of contracts, the historical treatment is
sufficiently clear that the fact-specific inquiry becomes
unimportant.(35) This is such a case.
This court has held that indemnity provisions in contracts
to provide offshore casing services are maritime.(36) Even a
contract for offshore drilling services that does not mention
any vessel is maritime if its execution requires the use of
vessels.(37) This is true for contracts that may also involve
obligations performed on land.(38) Thus, circuit precedent
virtually compels the conclusion that this is a maritime
contract.
The Davis factors confirm this result. Davis lists six
factors to consider in determining whether the facts of the case
lend the contract a sufficiently "salty flavor"(39) for a court to
deem it maritime:
1) what does the specific work order in effect at the time
of the injury provide?
2) what work did the crew assigned under the work order actually do?
3) was the crew assigned to do work aboard a vessel in navigable waters[?]
4) to what extent did the work being done relate to the mission of the vessel?
5) what was the principal work of the injured worker? and
6) what work was the injured worker actually doing at the time of the injury?(40)
In this case, Demette's work order provided for a hammer
operator, a hammer mechanic, and four welders, including
Demette, to drive and weld 416 feet of pipe from the Fal-rig #85
while the rig was jacked-up; this crew actually performed the
hammer job the work order described; Demette was working on a
vessel over navigable waters; casing is an integral part of
drilling, which is the primary purpose of the vessel; and
Demette's principal work was as a welder performing casing work;
and Demette was performing casing services at the time of the
accident. Thus, all six factors point to the same conclusion:
the contract and the injury that invoked it were maritime in
nature.
C. Status Test
Having concluded that the OCSLA applies, but does not
incorporate state law, the only remaining issue under the OCSLA
is whether the LHWCA applies to Demette by virtue of section
1333(b) of the OCSLA. It does. Demette was injured while doing
casing work. Casing work is the model case of injuries
"occurring as a result of operations conducted on the [OCS] for
the purpose of exploring for, developing, removing, or
transporting by pipeline the natural resources . . . of the
[OCS]."(41)
We thus conclude that the injury occurred on an OCSLA situs,
that Louisiana law does not apply, and that the LHWCA applies to
this case by virtue of section 1333(b). We now address the
consequences of our conclusion that section 1333(b) applies the
LHWCA to this case.
IV
The LHWCA provides the exclusive remedies for injuries to
employees injured while subject to the LHWCA.(42) It creates for
such employees an action against the vessel (including its
owner) on which the employee was working when injured.(43) Section
905(b) of the LHWCA bars employers from indemnifying the vessel
from LHWCA liability.(44) However, if the injured employee is
entitled to the benefits of the LHWCA "by virtue of" section
1333(b) of the OCSLA, then section 905(c) of the LHWCA states
that "any reciprocal indemnity provision" between the vessel and
the employer is enforceable.(45)
Central to this case is the meaning of the phrase "by virtue
of." Frank's argues that Demette is directly covered by the
LHWCA,(46) and therefore section 905(b) bars the indemnity
agreement between Falcon and Frank's. Frank's reads section
905(c) to apply only to persons entitled to receive LHWCA
benefits exclusively "by virtue of" the OCSLA. We acknowledge
that this interpretation would not do violence to the text of
the statute.
Ordinarily, however, we should give the words of statutes
their plain meaning. The most obvious meaning of "by virtue of
section 1333" is simply that the worker is covered by section
1333. For example, it is perfectly sensible to say, "Demette is
eligible to receive LHWCA benefits by virtue of section 1333 and
also by virtue of the LHWCA itself." This sentence makes sense
because we understand that "by virtue of" does not imply
exclusivity. The adverbs "exclusively" or "solely" would have
indicated the meaning Frank's advocates, but those words are
absent from the statute.
We might question our plain meaning interpretation of "by
virtue of" if Frank's identified something in the context of the
statute that indicated that those words have a narrower, more
technical meaning. But there is none. Further, what little
legislative history section 905(c) has supports our reading of
the text. Congress enacted section 905(c) as part of the
Longshore and Harbor Workers' Compensation Act Amendments of
1984.(47) The House Conference Report(48) discusses language in the
Senate version of the bill; this language became section 905(c).
The Conference Report stated that "the Senate bill provides an
exemption to the Longshore Act's current proscription of
indemnity agreements under section [905(b)] of the Act. . . .
The bill would legalize those indemnity agreements insofar as
they apply to the Outer Continental Shelf." Thus, the
Conference Report treats section 905(c)'s limitation to persons
entitled to benefits "by virtue of section 1333" as applying to
all persons connected to the OCS, as defined by the OCSLA,
without any reference to any exception for persons qualifying
directly under the LHWCA.
Frank's argues that construing section 1333(b) to apply to
workers already directly covered by the LHWCA causes some
anomalies. While this may be so, this is a result of the
existence of section 905(c), not of any interpretation of
section 905(c). Any line we draw will leave some indemnity
agreements valid and others invalid. A line between LHWCA
employees on permanent platforms and all other LHWCA employees
is not any more arbitrary than a line between LHWCA employees on
permanent or temporary platforms and all other LHWCA employees.
In fact, as Judge Sear cogently argued in Campbell v. Offshore
Pipeline, Inc.,(49) interpreting section 905(c) to include
employees who are covered by virtue of both the LHWCA and OCSLA
eliminates some anomalies.(50)
Given that section 1333(b) of the OCSLA applies to Demette,
the plain language of section 905(c) dictates that the indemnity
contract, if reciprocal, is valid, notwithstanding section
905(b).(51) Since Frank's and Unocal each indemnified the other,
the indemnification is reciprocal and therefore valid.(52)
Frank's finally argues that even if section 905(c) removes
the section 905(b) prohibition, Louisiana law invalidates the
indemnity agreement. As we have already concluded, however,
Louisiana law does not apply to this contract.(53)
V
In sum, the OCSLA applies to this case; Louisiana law does
not apply as surrogate federal law under the OCSLA; and because
Demette is subject to the LHWCA by virtue of the OCSLA, the
indemnity agreement between Unocal and Frank's is valid.
In reaching this conclusion, we acknowledge the dissent's
puzzlement at the conclusion that a jack-up rig is a vessel and
that maritime law can apply on an OCSLA situs. But we disagree
that en banc reversal of established circuit precedent is in
order. Although current law suffers from the inconsistencies
the dissent complains of, changing the law of this circuit may
not improve the situation.(54) Instead, the source of the
dissent's vexation is the OCSLA itself, a statute that by
introducing the law of terra firma to a seaward realm requires
unavoidably arbitrary line-drawing between the application of
terrestrial law and the law of the sea.(55)
We AFFIRM the district court's grant of summary judgment
against Frank's.
DeMOSS, Circuit Judge, dissenting:
Because the panel majority arrives at their decision in this
case without consideration of three Supreme Court cases and two
statutory amendments which I think require a different
conclusion, I respectfully dissent.
Rodrigue -- The First Supreme Court Case
On August 7, 1953, the United States Congress passed the
Outer Continental Shelf Lands Act (hereinafter "OCSLA"), which
extended federal law (and adjacent state law) "to the sub-soil
and seabed of the Outer Continental Shelf and to all artificial
islands and fixed structures which may be erected thereon for
the purpose of exploring for, developing, removing, and
transporting resources therefrom." See 4(a)(1), 67 Stat. 642
(emphasis added). The extension of federal law contemplated by
this provision was to be "to the same extent as if the Outer
Continental Shelf were an area of exclusive federal jurisdiction
located within a state." Id. The subsequent sub-paragraph of
this same section provided that the civil and criminal laws of
each adjacent state "are hereby declared to be the law of the
United States for that portion of the sub-soil 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 its boundaries were extended seaward to the outer
margin of the Outer Continental Shelf." We considered the
significance of these statutory provisions in two cases, Dore v.
Link Belt Co., 391 F.2d 671 (5th Cir. 1968), and Rodrigue v.
Aetna Casualty & Surety Co., 395 F.2d 217 (5th Cir. 1968). Each
of these cases involved the death of a worker employed on a
drilling rig on a fixed platform on the Outer Continental Shelf.
In each case, the plaintiff sought relief under Louisiana state
law, which they contended was made applicable by OCSLA. The
defendants contended that relief could only be made under the
Death on the High Seas Act ("DOHSA"). In holding that relief
was available only under DOHSA, the Fifth Circuit stated:
We think that a consideration of both intrinsic
and extrinsic factors requires the conclusion
that it was the intention of Congress that (a)
this occurrence be governed by Federal, not
State, law, and (b) that the Federal law thereby
promulgated would be the pervasive maritime law
of the United States. In connection with the
latter phase -- the choice by Congress of
maritime law -- it is again important to keep in
mind that we are in an area in which Congress has
an almost unlimited power to determine what
standards shall comprise the Federal law.
Dore, 391 F.2d at 675 (quoting Pure Oil Co. v. Snipes, 293 F.2d
60, 64 (5th Cir. 1961)). The Supreme Court granted certiorari
in both cases, which were argued together. In an opinion
covering both cases, Rodrigue v. Aetna Casualty & Surety Co., 89
S. Ct. 1835 (1969), the Supreme Court in an unanimous decision
written by Justice White, reversed the decisions of the Fifth
Circuit and stated:
In light of the principles of traditional
admiralty law, the Seas Act, and the Lands Act,
we hold that petitioner's remedy is under the
Lands Act and Louisiana law. The Lands Act makes
it clear that federal law, supplemented by state
law of the adjacent State, is to be applied to
these artificial islands as though they were
federal enclaves in an upland State. This
approach was deliberately taken in lieu of
treating the structures as vessels, to which
admiralty law supplemented by the law of the
jurisdiction of the vessel's owner would
apply.... Since the Seas Act does not apply of
its own force under admiralty principles, and
since the Lands Act deliberately eschewed the
application of admiralty principles to these
novel structures, Louisiana law is not ousted by
the Seas Act, and under the Lands Act it is made
applicable.
Id. at 1837. In a very comprehensive discussion of the
legislative history of OCSLA, the Supreme Court went on to make
the following comments:
1. "Even if the admiralty law would have applied to
the deaths occurring in these cases under traditional
principles, the legislative history shows that Congress did
not intend that result. First, Congress assumed that the
admiralty law would not apply unless Congress made it
apply, and then Congress decided not to make it apply. The
legislative history of the Lands Act makes it clear that
these structures were to be treated as island or as federal
enclaves within a landlocked State, not as vessels." Id.
at 1840.
2. "Careful scrutiny of the hearings which were the
basis for eliminating from the Lands Act the treatment of
artificial islands as vessels convinces us that the
motivation for this change, together with the adoption of
state law as surrogate federal law, was the view that
maritime law was inapposite to these fixed structures."
Id. at 1841.
3. "The committee was aware that it had the power to
treat activity on these artificial islands as though it
occurred aboard ship .... And the very decision to do so
in the initial bill recognized that if it were not adopted
explicitly, maritime simply would not apply to these
stationary structures...." Id. at 1841 (citations
omitted).
4. "[T]he special relationship between the men
working on these artificial islands and the adjacent shore
to which they commute to visit their families was also
recognized by dropping the treatment of these structures as
'vessels' and instead, over the objection of the
administration that these islands were not really located
within a State, the bill was amended to treat them 'as if
(they) were (in) an area of exclusive Federal jurisdiction
located within a State.'" Id. at 1842.
In light of the Supreme Court decision in Rodrigue and the
absence of any later decision by the Supreme Court changing any
of its conclusions in Rodrigue, I would submit that the
following principles are applicable to the case now before us:
1. Structures placed on the Outer Continental Shelf
"for the purpose of exploring for, developing, removing,
and transmitting resources therefrom," are not vessels;
2. Maritime law does not apply to these structures;
and
3. The laws of the State of Louisiana will apply to
activities on these structures to the extent that such
state laws are not inconsistent with other federal laws.
The First Statutory Amendment
In 1978, Congress adopted comprehensive amendments to OCSLA.
See Pub. L. 95-372 (1978). Section 203(a) of this statutory
amendment reads as follows:
SEC. 203. (a) Section 4(a)(1) of the Outer
Continental Shelf Lands Act (43 U.S.C. 1333(a)(1)
is amended --
(1) by striking out "and fixed structures"
and inserting in lieu thereof ", and all
installations and other devices permanently or
temporarily attached to the seabed,"; and
(2) by striking out "removing, and
transporting resources therefrom" and inserting
in lieu thereof "or producing resources
therefrom, or any such installation or other
device (other than a ship or vessel) for the
purpose of transporting such resources."
The report of the Conference Committee regarding the
amendment reads as follows:
Section 203 -- Laws Applicable to the Outer Continental Shelf
Both the Senate bill and the House amendment
amend section 4(A)(1) of the OCS Act of 1953 by
changing the term "fixed structures" to "and all
installations and other devices permanently or
temporarily attached to the seabed" and making
other technical changes. The Conference Report
retains this language.
The intent of the managers in amending
section 4(A) of the 1953 OCS Act is technical and
perfecting and is meant to restate and clarify
and not change existing law. Under the
Conference Report language, federal law is to be
applicable to all activities on all devices in
contact with the seabed for exploration,
development, and production.
H.R. Conf. Rep. No. 95-1474 (1978). The House Committee Report
No. 95-590 on this legislation states the following in the
section-by-section analysis:
Section 203.--Laws Applicable to Outer
Continental Shelf
Section (a) amends section 4(a)(1) of the OCS
Act of 1953 by changing the term "fixed
structures" to "and all installations and other
devices permanently or temporarily attached to
the seabed" and making other technical changes.
It is thus made clear that Federal law is to be
applicable to all activities on all devices in
contact with the seabed for exploration,
development, and production. The committee
intends that Federal law is, therefore, to be
applicable to activities on drilling ships, semi-submersible drilling rigs, and other watercraft,
when they are connected to the seabed by
drillstring, pipes, or other appurtenances, on
the OCS for exploration, development, or
production purposes. Ships and vessels are
specifically not covered when they are being used
for the purpose of transporting OCS mineral
resources.
H.R. Rep. No. 95-590 (1978) (emphasis added).
I have found no Supreme Court decision and no Fifth Circuit
decision which expressly discuss or interpret the significance
of the statutory language change made by the 1978 Amendments to
OCSLA regarding deletion of "fixed structures" and insertion of
"all installations and other devices permanently or temporarily
attached to the seabed" in the definition of the situs to which
OCSLA is to apply. We must assume that when it was adopting the
1978 Amendments to OCSLA, Congress was aware of and considered
the Supreme Court holding in Rodrigue. Since there is nothing
in the text of the 1978 Amendments nor in any legislative
history which would indicate a desire or intention on Congress'
part to change any of the Supreme Court's holdings in Rodrigue,
we have to assume that Congress accepted those holdings as
applicable to the 1978 Amendments. The deletion of the words
"and fixed structures" and the insertion of the words "and all
installations and other devices permanently or temporarily
attached to the seabed" reflect a clear intention on the part of
Congress to broaden and clarify the category of structures and
facilities to which OCSLA would apply; and the House Committee
Report 95-590 expressly identifies "drilling ships, semi-submersible drilling rigs, and other water craft, when they are
connected to the seabed by drill string, pipes, or other
appurtenances on the OCS for exploration development or
production purposes" as being the situs of activities to which
OCSLA would apply. In my view, there is absolutely no question
at all that these statutory language changes eliminate the basis
for any distinction which our case law may have made in the past
as between a "jack-up rig" being a vessel and "a fixed platform"
not being a vessel, insofar as activities on the Outer
Continental Shelf are concerned. Both our Circuit and the
Supreme Court have clearly indicated that Congress holds the
ultimate power in defining applicable law and categorizing the
facilities and operations to which it applies when dealing with
activities on the Outer Continental Shelf.
The controlling premise of the majority opinion in the case
before us is that Fal-Rig 85 is a vessel. Because it is a
vessel, admiralty and maritime law controls its operations and
activities. Because admiralty and maritime law applies, that
body of law prevents and preempts any application of state law.
If the majority's original premise is incorrect, then their
house of cards collapses.
In my view, we are bound by the Supreme Court decision in
Rodrigue, and by Congress' 1978 Amendments to OCSLA, to conclude
that when a jack-up rig is operating on the Outer Continental
Shelf, it cannot be construed as being a vessel because, in the
statutory language, it is "an installation temporarily attached
to the seabed for the purpose of exploring for, or producing oil
and gas" or, in the language of the House Committee Report
(supra), it is "a watercraft connected to the seabed by
drillstring, pipes, or other appurtenances for exploration or
production purposes." This conclusion is mandated not only by
the new language of OCSLA but also by common sense and plain
language interpretation of "what is a vessel."
The dictionary says that a vessel is "a craft for traveling
on water." Webster's Collegiate Dictionary (Random House 1991).
The quintessential characteristics of a vessel are that it
floats on water and that it is used for transporting cargo or
passengers from one place to another. In order to "float on
water," it must be supported by the laws of buoyancy, i.e., it
will float to the extent that the volume of water which it
displaces weighs more than the vessel and its cargo. However,
the mere fact that a structure floats does not mean it is a
vessel. A floating dock does float, but it is permanently
connected to land and never goes anywhere. Likewise, a
restaurant or gambling casino built on a barge is floating, but
if it is connected to land by permanent mooring lines and
utility lines (water, gas, sewage, electricity, telephones) and
never moves, it is not a vessel; it is simply a floating dock
with a restaurant on it, which earns money by selling food or
games of chance, not by transporting cargo or people. A pontoon
bridge floats, but it is not a vessel because it does not move
once it is in place. Using these concepts to assess the
characteristics of a jack-up drilling rig, I come to the easy
conclusion that a jack-up drilling rig is clearly not a vessel
when it is "jacked up." Clearly, when it is jacked up, Fal-Rig
85 is not floating at all. The process of jacking up lifts the
hull and work decks of the Fal-Rig 85 completely out of the
water. The only parts of the Fal-Rig 85 which are in the water
are its legs, which extend downward through the water into the
seabed where support for the entire weight of Fal-Rig 85 is
found in the sea bottom itself. In the jacked-up position, the
hull and work decks of the Fal-Rig 85 are high enough out of the
water that neither ocean currents nor wind generated wave action
impacts the work area. Finally, in the jacked up position, the
Fal-Rig 85 cannot move; its position in terms of longitude and
latitude is fixed; it is stationary. The primary purpose for
which the Fal-Rig 85 was built is to drill a hole in the earth
under water in order to locate oil and/or gas and produce them
if found. The Fal-Rig 85 earns its revenue for cutting the hole
and completing the well, and it performs these tasks only when
it is jacked up. In its jacked up position, the Fal-Rig 85 is
functionally indistinguishable from a drilling platform which
has been assembled on site in the water: (1) both stand on legs
resting on the bottom; (2) both have work decks and platforms
high enough above the water to avoid currents and waves; and (3)
both conduct drilling and completion activities for oil and gas
production. I can see no rational basis for distinguishing the
two platforms.
I recognize that our case law has labeled a jack-up drilling
rig as a "special purpose vessel;" but in my view that is a
mislabeling that confuses the realities involved and, in light
of the 1978 Amendments to OCSLA, should not be applicable to
operations on the Continental Shelf. The "special purpose" of
a jack-up rig, which is drilling for oil and gas, has nothing to
do with traditional maritime activities or interests. Drilling
for oil and gas does not create any buoys, channel markers, or
other aids to navigation. Drilling for oil and gas does not
enhance or improve the navigability of the waters in which it
occurs. Drilling for oil and gas does not facilitate the
loading or unloading of vessels. A jack-up drilling rig is a
structure designed and constructed (1) to contain and house in
one structure all of the work spaces, living spaces, machinery,
and engines, pumps, generators, hoists, pipe racks, derrick,
cranes, and other equipment required to conduct drilling
operations into the earth and (2) to float in water when
required to move from one drill site to another but then jack
itself up out of the water to conduct drilling operations. This
unique combination of functions saves time and expense by
avoiding the dismantling and disassembly into pieces and units
and the reassembling process which inevitably occurs in order to
move a shore side drilling rig or a drilling platform which was
originally constructed at a site in the water. While it is true
that during the time a jack-up rig is being moved it floats and
is moved by tug boats, like a barge, the percentage of time
involved in such moves represents only a tiny fraction of the
time that it is jacked up in a fixed position engaged in
drilling operations. It is better labeled, therefore, as a
"movable drilling platform" for it moves only for the purpose of
drilling in another location and while drilling it is a fixed
and stationary platform. To label the Fal-Rig 85 as a "vessel"
when it has a casing being driven into the sea floor in
anticipation of drilling with a drill stem for thousands of feet
into the earth is simply nonsense to me.
In addition to the changes made by Congress in the
definition of what constituted a "situs" for purposes of the
Outer Continental Shelf Lands Act, the 1978 Amendments to OCSLA
also made changes pertinent to our discussion here by (1) adding
definitions for the term "exploration," the term "development,"
and the term "production" which had not previously been included
in the 1953 Act; and by (2) deleting from old 4(c) of the 1953
Act the phrase "described in subsection (b)" and inserting in
lieu thereof "conducted on the Outer Continental Shelf for the
purpose of exploring for, developing, removing, or transporting
by pipeline the natural resources ... of the sub-soil and seabed
of the Outer Continental Shelf" as it appeared in old subsection
(b) of 4 of the 1953 Act. While these amendments were more or
less technical in nature, they clearly demonstrate that Congress
considered changes needed in 4(c) and wanted workman's
compensation benefits extended to employees who sustain
disability or death on the broader definition of situses as
contemplated by the amendments to 4(a)(1) discussed earlier.
In this regard, it should be noted that the original 1953 Act
contained a definition of "the term 'employee' which makes
express that the term does not include "a master or member of a
crew of any vessel" and this phraseology was retained in the
1978 amendments to the subsection dealing with the extension of
compensation benefits. Consequently, it seems clear to me that
as of the time of the 1978 amendments to OCSLA, Congress
intended that "employees" working on "all artificial islands and
all installations and other devices permanently or temporarily
attached to the seabed" would be entitled to receive
compensation benefits in accordance with the provisions of
LHWCA, but "crew members" of "any vessel" would not be entitled
to receive compensation benefits. And this necessarily means
that "artificial islands, etc." and "vessels" are separate and
distinct concepts, and we make a mistake when we fail to
distinguish them. I have great difficulty, therefore, in
understanding how the majority opinion concludes that the Fal-Rig 85 can be both at the same time.
Herb's Welding -- The Second Supreme Court Case
In resolving the interplay between the LHWCA and OCSLA, the
decision of the U.S. Supreme Court in Herb's Welding, Inc. v.
Gray, 105 S. Ct. 1421 (1985), is the second case I view as
controlling. Gray, a welder with Herb's Welding, was employed
to help repair and maintain oil and gas pipelines and fixed
platform production structures in the Bay Marchand oil and gas
field, which is located both in Louisiana territorial waters and
in the Outer Continental Shelf. On July 11, 1975, Gray was
welding a two-inch gas pipeline on a platform in the navigable
waters of Louisiana when an explosion occurred. Gray, in trying
to run away from the area, twisted his knee. Gray received
workman's compensation benefits under the Louisiana compensation
law, but the carrier refused to pay benefits under the LHWCA.
An administrative law judge denied Gray's claim for LHWCA
benefits because he was "not involved in maritime employment."
The Benefits Review Board determined that Gray was covered under
the LHWCA and remanded the case for entry of an award. The
administrative law judge awarded $10,000 and deducted the $3,000
already awarded under the state compensation law. Herb's
Welding appealed the decision of the Benefits Review Board to a
panel of the Fifth Circuit, which in April 1983, affirmed the
decision of the Benefits Review Board by holding that Gray "was
clearly employed in maritime employment and therefore was
within the compensation coverage afforded by the LHWCA." Herb's
Welding v. Gray, 703 F.2d 176, 180 (5th Cir. 1983).
The Supreme Court granted certiorari and promptly reversed.
In so doing, the Supreme Court held:
The rationale of the Court of Appeals was that
offshore drilling is maritime commerce and that
anyone performing any task that is part and
parcel of that activity is in maritime employment
for LHWCA purposes. Since it is doubtful that an
offshore driller will pay and maintain a worker
on an offshore rig whose job is unnecessary to
the venture, this approach would extend coverage
to virtually everyone on the stationary platform.
We think this construction of the Act is
untenable.
Herb's Welding, 105 S. Ct. at 1426. The Supreme Court went on
to analyze its prior cases, particularly its decision in
Rodrique v. Aetna Casualty & Surety, supra, and to describe in
some detail the factual circumstances that determine the nature
of the employment that Gray was involved in:
[Gray] built and maintained pipelines and
platforms themselves. There is nothing
inherently maritime about those tasks. They are
also performed on land, and their nature is not
significantly altered by the marine environment,
particularly since exploration and development of
the Continental Shelf are not themselves maritime
commerce.
Id. at 1428 (footnote omitted). In assessing the precedential
aspects of the Supreme Court decision in Herb's Welding, we
need to remember that:
1. Gray's injury occurred in 1975 at which time the
pertinent statutory provisions were the LHWCA as amended in
1972 and OCSLA as originally passed in 1953;
2. Gray's injury occurred on a fixed platform in
Louisiana territorial waters;
3. The Supreme Court decision in Herb's Welding was
issued prior to the effective date of the 1984 amendments
to LHWCA; and
4. The Supreme Court did not address in its decision
the applicability of 1333(b) of OCSLA, either in its form
as it existed on the date of injury or as it was amended in
1978 during the course of appeals of Gray's claim through
the Benefits Review Board.(56)
Nevertheless, the Supreme Court decision in Herb's Welding is
especially controlling insofar as it deals with the meaning of
the term "maritime employment." The Court in Herb's Welding
discussed at great length the decision of the Supreme Court in
Rodrique, supra, and reconfirmed all of its essential holdings.
In this regard, the Supreme Court in Herb's Welding stated:
We cannot assume that Congress was unfamiliar
with Rodrique and the Lands Act when it referred
to "maritime employment" in defining the term
"employee" in 1972. It would have been a
significant departure from prior understanding to
use that phrase to reach stationary drilling rigs
generally.
105 S. Ct. at 1427 (footnote omitted).
After categorizing the Fifth Circuit's view of the term
"maritime employment" as "expansive," the Court went on to
state:
The Amendments [1972 amendments to LHWCA] were
not meant "to cover employees who are not engaged
in loading, unloading, repairing, or building a
vessel, just because they are injured in an area
adjoining navigable waters used for such
activity. H.R. Rep. 92-1441, p. 11 (1972); S.
Rep. 92-1125, p. 13 (1972); U.S. Code Cong. &
Admin. News 1972, p. 4708. We have never read
"maritime employment" to extend so far beyond
those actually involved in moving cargo between
ship and land transportation. Both Caputo and
P.C. Pfeiffer Co. make this clear and lead us to
the conclusion that Gray was not engaged in
maritime employment for purposes of the LHWCA.
Id. at 1427-28.
I have found no Supreme Court decision subsequent to Herb's
Welding that purports to overrule in whole or in part the
principal core decision that the Supreme Court made in Herb's
Welding, i.e., that the term "maritime employment" does not
include any of the various activities which lessees, operators,
contractors, subcontractors, and their employees perform in
connection with exploring for, drilling for, producing, and
transporting oil and gas from the seabed beneath navigable
waters.
1984 Amendments to LHWCA
The second statutory amendment made by Congress which the
panel majority did not consider in arriving at their conclusion
is found in a portion of the 1984 amendments to the Longshoreman
and Harbor Worker's Compensation Act. These changes relate to
the inclusion of new subparagraph (c) in 33 U.S.C. 905 as it
now exists. This change was initiated by a provision in Senate
Bill 38 of the 98th Congress First Session set forth in 4(c)
of that bill, which reads as follows:
(c) Section 5 [of LHWCA] is
amended by adding at the end thereof the
following new subsection:
"(c) In the event that the
negligence of a third party causes
injury to a person entitled to receive benefits
under this chapter by virtue of section 4 of the
Outer Continental Shelf Lands Act (43 U.S.C.
1333), then such person, or anyone otherwise
entitled to recover damages by reason thereof,
may bring an action against such third person in
accordance with the provisions of section 33 of
this Act. Nothing contained in this chapter, or
in any otherwise applicable State law, shall
preclude the enforcement according to is terms of
any written agreement under which the employer
has agreed to indemnify such third party in whole
or in part with respect to such action.
S. 38, 98th Cong. 4(c) (1984) (emphasis added). The House of
Representatives declined to go along with the changes
contemplated by this section of the Senate Bill and the
Conference Committee appointed to resolve this and other
conflicts inserted the language as it now appears in 33 U.S.C.
905(c) which reads as follows:
(c) Outer Continental Shelf
In the event that the negligence of a vessel
causes injury to a person entitled to receive
benefits under this chapter by virtue of section
1333 of Title 43, then such person, or anyone
otherwise entitled to recover damages by reason
thereof, may bring an action against such vessel
in accordance with the provisions of subsection
(b) of this section. Nothing contained in
subsection (b) of this section shall preclude the
enforcement according to its terms of any
reciprocal indemnity provision whereby the
employer of a person entitled to receive benefits
under this chapter by virtue of section 1333 of
Title 43 and the vessel agree to defend and
indemnify the other for cost of defense and loss
or liability for damages arising out of or
resulting from death or bodily injury to their
employees.
33 U.S.C. 905(c) (emphasis added).
The legislative history regarding this change indicates that
the Senate Report stated:
Finally, the Senate Bill provides an
exemption to the Longshore Act's current
proscription of indemnity agreements under
Section 5(b) of the Act. That section is made
applicable currently to situations on the Outer
Continental Shelf by virtue of Section 4 of the
Outer Continental Shelf Lands Act (43 U.S.C.
1333). The bill would legalize those indemnity
agreements insofar as they apply to the Outer
Continental Shelf and would further preempt the
application of state laws prohibiting such
indemnity agreements.
S. Rep. No. 98-81 (1983), reprinted in 1984 U.S.C.C.A.N. 2771,
2773 (emphasis added).
The report of the Conference Committee states:
Second, the substitute removes the current
proscription with respect to mutual indemnity
agreements between employers and vessels as
applied to the Outer Continental Shelf by virtue
of the Outer Continental Shelf Lands Act.
In my view, it is extremely significant that, as indicated
by the underlining in the text of the Senate Bill and the
statute as finally passed, the word "third person" in the Senate
Bill was changed to the word "vessel" in the statute as finally
passed; the internal cross-reference as to the section under
which "an action" may be brought was changed from "the
provisions of section 33 of this Act" to "the provisions of
subsection (b) of this section;" the opening phrase in the last
sentence of the Senate Bill which stated "nothing contained in
this chapter or in any otherwise applicable state law" was
changed to read "nothing contained in subsection (b) of this
section" in the statute as passed; and finally, the language at
the end of the second sentence referring to "any written
agreement under which the employer has agreed to indemnify such
third party" was changed to refer to "any reciprocal indemnity
provision whereby the employer of a person entitled to receive
benefits under this chapter by virtue of section 1333 of Title
43 and the vessel agree to defend and indemnify the other."
From these textual changes and legislative history I draw the
following conclusions fairly easily:
1. Senate Bill 38 intended to effect a preemption of
"otherwise applicable state law," but the final statute as
passed says absolutely nothing about that subject;
2. The change from "third party" to "vessel"
considerably narrows the category of parties (1) whose
negligence may be the cause of injury to an oil field
worker on the Outer Continental Shelf and (2) who would be
entitled to be the beneficiary of an indemnity agreement
from the employer; and
3. The term "vessel" as consciously inserted by
Congress in 905(c) must be construed consistently as that
same term is used in OCSLA and, therefore, the term
"vessel" cannot be taken to mean a situs of offshore oil
and gas activity as defined in OCSLA.
The Third Supreme Court Case -- Tallentire
The final Supreme Court case which I look to in assessing
the issues in this case is the case of Offshore Logistics, Inc.
v. Tallentire, 106 S. Ct. 2485 (1986). In Tallentire, two
offshore drilling platform workers were killed when the
helicopter in which they were riding crashed in the high seas
some 35 miles off the Louisiana coast while transporting them
from the offshore drilling platform where they worked to their
home base in Louisiana. The issue in the case revolved
essentially around the provisions of 7 of the Death on the
High Seas Act (DOHSA) and the effect, if any, of OCSLA.
Survivors of the deceased workers contended that they were
entitled to damages based on the Louisiana Wrongful Death
Statute, which was made applicable either by its own terms or by
the applicability of OCSLA. The federal district court
determined that the survivors were entitled to benefits only
under DOHSA. In a very long and scholarly opinion, a panel of
our Court concluded that 7 of DOHSA was broad enough on its
face to permit the applicability of the Louisiana Wrongful Death
Statute and that, as a matter of law, Louisiana has the
authority to apply its Death Act to its own citizens on the high
seas adjacent to its shores and that, therefore, the survivors
may assert a claim under the Louisiana Death Act. Tallentire v.
Offshore Logistics, Inc., 754 F.2d 1274 (5th Cir. 1985). On the
issue as to whether the Louisiana Wrongful Death Statute applied
by way of 1333 of OCSLA, the Fifth Circuit panel waffled. It
assumed that OCSLA does apply but the Louisiana statute would
then be in conflict with DOHSA "so Louisiana law could be
adopted only to the extent it is not inconsistent with DOHSA."(57)Id. at 1279.
On appeal to the Supreme Court, the Supreme Court held "that
neither OCSLA nor DOHSA requires or permits the application of
Louisiana law in this case," and accordingly the Court reversed
and remanded the decision of the Fifth Circuit. As was the case
in the Fifth Circuit opinion, the larger part of the Supreme
Court decision related to the interpretation of 7 of DOSHA,
but the Court did address in clear and expressive language the
interplay between DOHSA and OCSLA. See 106 S. Ct. at 2491-93.
The Supreme Court determined that because the helicopter crash
and ensuing death of the platform workers in this case occurred
"miles away from the platform and on the high seas," it would
not be proper to extend OCSLA to the casualties in this case.
In reviewing the history and applicability of OCSLA, the Supreme
Court in Tallentire stated:
The intent behind OCSLA was to treat the
artificial structures covered by the Act as
upland islands or as federal enclaves within a
landlocked State, and not as vessels, for
purposes of defining the applicable law because
maritime law was deemed inapposite to these fixed
structures. See Rodrigue v. Aetna Casualty &
Surety Co., 395 U.S. 352, 361-366, 89 S. Ct.
1835, 1840-1842, 23 L.Ed.2d 360 (1969). This
Court endorsed the congressional assumption that
admiralty law generally would not apply to the
lands and structures covered by OCSLA in
Rodrigue, noting that accidents on the artificial
islands covered by OCSLA "had no more connection
with the ordinary stuff of admiralty than do
accidents on piers." Id., at 360, 89 S. Ct., at
1839-1840. See alsoHerb's Welding, Inc. v.
Gray, 470 U.S. 414, 422, 105 S. Ct. 1421, 1426,
84 L.Ed.2d 406 (1985). Thus, in Rodrigue, the
Court held that an admiralty action under DOHSA
does not apply to accidents "actually occurring"
on these artificial islands, and that DOHSA
therefore does not preclude the application of
state law as adopted federal law through OCSLA to
wrongful death actions arising from accidents on
offshore platforms. Rodrigue v. Aetna Casualty
Co., supra, 395 U.S., at 366, 89 S. Ct., at 1842.
Id. at 2491-92. While I recognize that the issue of what
constitutes a "situs" as defined in OCSLA was not directly
before the court in Tallentire, I think this quoted paragraph
from Tallentire is very instructive as indicating that as of
1986 the Supreme Court was clearly following the jurisprudential
analysis of Rodrigue and Herb's Welding as to whether the
"artificial islands" involved in oil and gas production should
be considered as "vessels" and that the place where an injury or
death occurs is more determinative of the applicability of the
Outer Continental Shelf Lands Act than the status of the injured
worker as being employed in operations relating to production of
oil and gas from the Outer Continental Shelf.
Undisputed Facts
At the time of his injury, Demette was employed by Frank's
Casing as a welder who welded together the segments of casing as
they are installed in an oil and gas well. At the time of his
injury, Demette was on the derrick floor of the Fal-Rig 85 and
he was struck on the head by some object which fell from the
derrick tower above him. At the time of Demette's injury, the
process of hammering the casing down into the sea floor was
going on which means that the casing pipe extended from the
derrick floor down into the seabed beneath the water. At the
time of Demette's injury, Fal-Rig 85 was in a jacked-up position
and was located on the Outer Continental Shelf adjacent to the
State of Louisiana. A blanket service agreement was signed
between Union Oil of California (Unocal) and Frank's Casing Crew
and Rental, Inc. (Frank's), under the terms of which Frank's was
to provide casing installation services as specified in
subsequent work orders. The blanket service agreement would
cover work orders issued for casing services both onshore and
offshore. Frank's would be paid for its services by Unocal.
Unocal also had a blanket service agreement with R&B Falcon
Drilling USA, Inc. (Falcon). This contract provided Unocal with
access to all of Falcon's jack-up drilling rigs for offshore
drilling, but it did not specify use of Fal-Rig 85. Each of the
Unocal/Falcon and Unocal/Frank's blanket agreements contains
indemnity agreements, but there is no contractual agreement of
any kind directly between Falcon and Frank's.
Given these undisputed facts, I can easily concur with the
majority holding that on the occasion of Demette's injury, Fal-Rig 85 was a situs as defined in OCSLA because it was jacked up
out of the water, supported by its legs resting on the sea
bottom, and was connected to the sea bottom by the casing being
driven into the floor of the ocean for the purpose of exploring
for oil and gas. I, likewise, concur with the finding that the
majority inferentially makes that at the time of his injury
Demette was employed by an employer engaged in operations
relating to exploration for and production of oil and gas from
the Outer Continental Shelf and that, therefore, he would be
entitled to compensation benefits for his injury from his
employer under the provisions of 1333(b) of OCSLA.
I have to abandon ship, however, from the rest of the
majority's conclusions. Specifically, I dissent from the
following majority conclusions:
1. "Because maritime law applies of its own force,
Louisiana law does not apply in this case." Majority
Opinion at ______.
2. "Thus all six factors [Davis case] point to the
same conclusion: the contract and the injury that invoked
it were maritime in nature." Majority Opinion at ____.
While the majority opinion does not specifically say, I
have to assume that it is referring to the contract between
Unocal and Frank's because that is the only contract in
which Frank's agreed to indemnify anybody from anything;
and
3. Section 905(c) of LHWCA validates the indemnity
agreement between Unocal and Frank's, a conclusion which I
find both unnecessary and incorrect.
Concluding Comments
In Rodrigue, the Supreme Court held that Congress made an
explicit decision that maritime law would not apply to the
"artificial islands placed or erected on the Outer Continental
Shelf for the purpose of exploration, production, and
development of oil and gas resources" when it passed the
original OCSLA in 1953. After the Supreme Court decision in
Rodrigue, Congress made substantial amendments to OCSLA in 1978,
the most significant of which was the elimination of the term
"fixed structures" and the insertion of the words "all
installations and other devices permanently or temporarily
attached to the seabed." The legislative history of this change
contains an express statement that: "The committee intends that
federal law is, therefore, to be applicable to activities on
drilling ships, semi-submersible drilling rigs, and other
watercraft when they are connected to the seabed by drillstring,
pipes, or other appurtenances." H.R. Rep. No. 95-590. The key
phrase in this new definition is "when they are connected to the
seabed by drillstring, pipes, or other appurtenances" because
these circumstances result in these "installations and other
devices" being "permanently or temporarily attached to the
seabed." In this broader definition, Congress drew no
distinctions as to whether the attachment was between the seabed
and a fixed platform, a movable platform, a semi-submersible
platform, or a drilling ship platform. I have to conclude,
therefore, that from and after the 1978 Amendments to OCSLA all
of our Circuit case law purporting to draw tortuous and
complicated distinctions as to what is and is not a "vessel" are
just "so much sound and fury signifying nothing" insofar as
activities on the Outer Continental Shelf are concerned.
Congress spoke originally in 1953, the Supreme Court interpreted
in 1969, and Congress spoke again in 1978 without changing or
correcting in any way the principles established by the Supreme
Court that the artificial islands, structures, installations,
and devices temporarily or permanently placed on the Outer
Continental Shelf for the purpose of producing oil and gas are
not "vessels" and that "maritime law" does not apply to them.
As to the conclusion that the contract between Unocal and
Frank's was maritime in nature, I think the panel majority's
conclusion is in direct conflict with the language of the
Supreme Court in Herb's Welding. The installation of casing at
various stages in the drilling for and producing of an oil and
gas well is normal and routine regardless of whether the oil
well is producing from dry land on shore or from the seabed.
The installation of casing in an oil and gas well has absolutely
nothing to do with improving the navigability of the waters in
which the well may be drilled, nor does it have anything to do
with the placement of an aid to navigation in those waters, nor
does it have anything to do with loading or unloading of a
vessel. If, as the Supreme Court held in Herb's Welding, a
welder who repairs gathering pipelines and well production
structures is not engaged in "maritime employment" because
"there is nothing inherently maritime about those tasks," then
in my view the task of welding together segments of casing pipe
as they are driven into the seabed, as Demette was doing here in
this case, surely should not be deemed a maritime employment.
Therefore, the contract between Unocal and Frank's to provide
such casing services should not be a maritime contract. Like a
ship without an engine or rudder, our Fifth Circuit case law on
the subject of "maritime employment" and "maritime contracts"
has floated from one side of the Gulf of Mexico to the other
depending upon the vagaries of wind and current in each
individual case. I regret to say that our Circuit case law on
"what is a vessel" and "what is a maritime contract" and what is
"maritime employment" have taken on a Humpty-Dumpty(58) approach --
they are whatever a particular panel says they are. That's a
tragic circumstance because it destroys uniformity and
predictability of the law; and the only ones who benefit from
unpredictability and confusion are lawyers.
In regard to 905(c) of LHWCA, I have great difficulty in
understanding the rather convoluted argument which the majority
opinion puts forth as to the applicability of this subsection.
If the majority is correct that Fal-Rig 85 is a vessel whose
special purpose was to drill an oil and gas well and Demette's
assignment of welding together segments of casing pipe was an
essential aspect of that special purpose, then Demette was a
member of the crew of a vessel and both 1333(b) of OCSLA and
902(3)(G) of LHWCA would exclude Demette from any right to
compensation benefits under the LHWCA. Even if Demette were
determined not to be a member of the crew of the Fal-Rig 85, he
would not be entitled to benefits directly under LHWCA because
Herb's Welding specifically held that activities related to oil
and gas production are not maritime employment. Likewise, if
the majority opinion is correct that the Fal-Rig 85 is a vessel,
then Demette would not be entitled to compensation benefits
indirectly by way of 1333(b) of OCSLA because the Fal-Rig 85
would not be a situs to which 1333(b) could have extended
those compensation benefits. In short, just as I believe that
the Fal-Rig 85 cannot be a vessel and an OCSLA situs at the same
time, I believe an injured employee cannot be an offshore oil
production worker under 1333(b) and a maritime worker under
902(3) of the LHWCA at the same time. On the other hand, if I
am correct that when it is jacked up and driving casing into the
seabed, the Fal-Rig 85 is not a vessel but an OCSLA situs, then
Demette is an oil field worker right where he should be on an
OCSLA situs when he is injured and, therefore, is entitled to
compensation benefits under 1333(b). Of course, this
discussion about compensation benefits is somewhat academic
because Demette settled all of his personal injury claims and
whether or not he received the compensation benefits he should
have gotten is not an issue before us on appeal.
But the same conundrum arises in analyzing the applicability
of 905(c). A full understanding of the relevance of 905(c)
is much clearer when you look at the legislative history of that
provision. As indicated earlier in this dissent, the first
iteration of the provisions which ultimately became 905(c) was
in Senate Bill 38 which used the term "third party" in place of
the term "vessel" in identifying the negligent tortfeasor and in
identifying the indemnitee of the indemnity agreement referred
to therein. Likewise, Senate Bill 38 had an express provision
contemplating that this new language would preempt and override
"any otherwise applicable state law." The House of
Representatives was not agreeable to this change, and the
Conference Committee eliminated the idea of preemption of state
law altogether and inserted the word "vessel" in place of the
words "third party." It is uncontroverted that Demette's injury
occurred on the Fal-Rig 85, and there is nothing in the briefs
or record excerpts to indicate that any other tug boat, crew
boat, supply boat, barge, or other water craft was involved and
could be the source of a "vessel negligence" claim. Therefore,
if the Fal-Rig 85 in its jacked-up position is not a vessel (as
I have argued earlier in this dissent), then there is no vessel
negligence upon which Demette (the injured worker) could have
sued and no vessel to be sued as defendant. If, on the other
hand, the majority is right and the jacked-up Fal-Rig 85 is
actually a vessel, then, because he is a member of the crew of
the vessel, Demette (the injured worker) loses his status as an
employee entitled to compensation under 1333(b), which is an
essential condition to the applicability of 905(c).
Conclusion
I recognize, of course, that no single panel of our Court
can overrule any prior panel decisions and that the changes and
reconsiderations that I suggest herein can only be effected by
an en banc reconsideration by our Court. In my view, that is
precisely what we should do, and I have written at length in
this dissent in order to put the parties to this appeal, the
amicus in this appeal, and other interested agencies on notice
that I will call for a ballot for en banc reconsideration, if
strong suggestions for such course of action from the parties
and other interests are forthcoming. In my opinion, the seabed
of the Outer Continental Shelf adjacent to the States of Texas,
Louisiana, and Mississippi contains the largest volume of both
discovered and undiscovered oil and gas resources of all of the
areas of the Outer Continental Shelf. It is also my opinion
that the largest number of workers involved in the development
of these oil and gas resources on the Outer Continental Shelf
come from the States of Texas, Louisiana, and Mississippi and
that most of the operators, contractors, and subcontractors who
engage in the business of drilling and producing oil and gas
from the Outer Continental Shelf are either headquartered in or
have major facilities in the States of Texas, Louisiana, and
Mississippi. We are also blessed to have within the States of
Texas, Louisiana, and Mississippi an enormous concentration of
legal talent (private practitioners, corporate counsel, and law
school professors) who are familiar with (1) the history of the
development of the oil and gas resources on the Outer
Continental Shelf, (2) the statutory enactments by Congress, (3)
the Supreme Court decisions interpreting the statutes, (4) the
statutes and interests of the adjacent states, and (5) that
historic, traditional, judge-made body of amorphous law
affectionately known as "admiralty and maritime law." An en
banc reconsideration of the enigmas raised here in this case,
informed by briefs of counsel for the parties and interested
amici, would be a first step in bringing greater uniformity and
predictability to the law applicable to the development of these
increasingly critical natural resources.
1. District Judge of the Northern District of Texas, sitting by
designation.
10. Offshore Logistics, Inc. v. Tallentire, 477 U.S. 207, 217-20 &
220 n.2 (1986); Mills v. Director, OWCP, 877 F.2d 356, 361-62 (5th Cir.
1989) (en banc).
11. Mills interpreted section 1333(b) and held that it could not
apply to injuries that do not occur on or over the OCS. 877 F.2d at
362.
12. 43 U.S.C.A. 1333(a)(1). The reference "any such installation
or other device" suggests that Congress treated "installation or other
device" as a unit separate from "artificial islands." In the context
of the entire section, however, it is clear that Congress used
"artificial islands, installations, and other devices" as a single
category. See 43 U.S.C.A. 1333(c) (using the phrase "artificial
island, installation, or other device referred to in subsection (a) of
this section"); 43 U.S.C.A. 1333(d)(2) (same); 43 U.S.C.A.
1333(d)(1) (using the phrase "artificial islands, installations, and
other devices referred to in subsection (a) of this section"); 43
U.S.C.A. 1333(e) (same); 43 U.S.C.A. 1333(f) (same). Further, it
is hard to imagine an artificial island that is not subsumed into the
category "installations and other devices permanently or temporarily
attached to the seabed." Making sense of text and context, we conclude
that "artificial islands, and all installations and other devices" form
a single category.
15. See Hodgen v. Forest Oil Corp., 87 F.3d 1512, 1526 (5th Cir.
1996) (observing that the second factor in the PLT test is identical to
the determination that the contract is maritime); Diamond Offshore Co.
v. A&B Builders, Inc., 75 F. Supp. 2d 676, 681 (S.D. Tex. 1999)
(applying Hodgen to an indemnity contract).
16. 43 U.S.C.A. 1333(b). Section 1333(b)(1) expressly excludes
masters and crew of vessels.
19. This is beyond dispute. This circuit has repeatedly held that
special-purpose movable drilling rigs, including jack-up rigs, are
vessels within the meaning of admiralty law. See, e.g., Smith, 960 F.2d
at 460; Offshore Co. v. Robison, 266 F.2d 769, 776 (5th Cir. 1959).
The dissent's challenge to the definition of vessel is misplaced. The
dissent argues that a jack-up rig stops being a vessel when it jacks
up. Tinkering with the maritime definition of vessel would overturn a
centuries-old understanding of what constitutes a vessel. See The
Robert W. Parsons, 191 U.S. 17, 28-32 (1903) (reviewing authority). As
long as a boat is able and intended to return to navigation, it remains
a vessel, even when in dry dock, storage on land, or otherwise removed
from the water. See Thomas J. Schoenbaum, 1 Admiralty and Maritime Law
88-92 (West 2d ed. 1994). This circuit has repeatedly rejected the
notion that removing a vessel's hull from the water divests it of
vessel status. See American Eastern Development Corp. v. Everglades
Marina, Inc., 608 F.2d 123, 124-25 (5th Cir. 1979) (contractual action
involving boat in dry storage); Delome v. Union Barge Line Co., 444
F.2d 225, 228-32 (5th Cir. 1971) (unseaworthiness action involving boat
undergoing repairs on marine railway). Thus, the dissent's argument
that a jack-up rig stops being a vessel when it temporarily lifts out
of the water implicates the treatment of any boat, ship, barge, or
special-purpose vessel that is temporarily taken out of navigation.
Further, the dissent's definition of vessel, which requires that the
object "float on water," would also exclude submersible rigs and
submarines (when submerged), and boats employing hydrofoils (which
displace less water than their mass).
20. See Rusello v. United States, 464 U.S. 16, 23 (1983) ("We
refrain from concluding here that the differing language in the two
subsections has the same meaning in each."). Also, the use of the term
"temporarily" implies that devices that can detach from the seabed and
are capable of movement on the sea--i.e., vessels--can fall within the
scope of the OCSLA. The distinction the statute draws between devices
used to extract and devices used to transport resources serves to
exclude vessels that merely transport resources: oil tankers and the
like. The transport devices covered by the OCSLA are pipelines, which
are explicitly mentioned in section 1333(b), and similar structures.
A further indication that the statute contemplates vessels being OCSLA
situses is section 1333(b)'s exclusion of "a master or member of a crew
of any vessel" from LHWCA coverage on OCSLA situses. If OCSLA situses
are never vessels, this provision would be mere surplusage. The
dissent's contention that an OCSLA situs cannot be a vessel ignores
these textual indications to the contrary.
23. Id. at 395-98. Hodgen, 87 F.3d at 1525-26, notes that Domingue
failed to discuss the situs requirement.
24. Frank's cites a number of cases challenging this conclusion,
none of which are apposite. Frank's relies on Smith v. Penrod Drilling
Corp. 960 F.2d 456 (5th Cir. 1992), in arguing that a vessel cannot be
an OCSLA situs. The holding of Smith was that maritime law, and not
Louisiana law, applied to an indemnity agreement regarding a jack-up
rig. Id. at 461. This is a straightforward application of the second
prong of the PLT test and has nothing to do with the question of
whether jack-ups can be OCSLA situses. Indeed, Smith explicitly found
that since the accident that implicated the indemnity agreement
occurred on a fixed, permanent platform, it need not address the
question of whether a jack-up is an OCSLA situs. Dupre v. Penrod
Drilling Corp., 993 F.2d 474, 476-77 (5th Cir. 1993), follows Smith in
this regard and is equally distinguishable. Frank's also cites
Tennessee Gas Pipeline v. Houston Cas. Ins. Co., 87 F.3d 150, 155-56
(5th Cir. 1996), for the proposition that vessels are not within the
OCSLA jurisdiction for removal purposes. This claim is incorrect.
Tennessee Gas Pipeline finds removal jurisdiction over maritime claims
involving a fixed platform that was within OCSLA jurisdiction; it makes
no claims about vessels. Frank's claim stems from its confusion of
"vessels" with "maritime claims." While maritime claims cannot
generally be removed to federal court, claims arising under federal
statute can be. While the presence of a vessel in the facts of a case
may allow a plaintiff to allege claims under maritime law, the presence
of a vessel does not convert other, non-maritime claims into
unremovable maritime claims.
29. See id. at 157. Although arguably an anchor "attache[s]" a ship
to the seabed, a tender, unlike a jack-up rig, is not "erected" on the
OCS.
30. Frank's also cites legislative history stating that the phrase
"waters above the [OCS]" was deleted from the situs requirement of what
became section 1333(b) in order "to make more definite the application
of the [LHWCA] to workers other than those employed on vessels." Sen.
Rep. No. 411, 83d Cong., 1st Sess. 16, 23 (1953). Unfortunately for
Frank's, the situs requirement that this deletion left behind was later
deleted, leaving no situs requirement in the enacted version of that
subsection. As noted above, section 1333(b) contains only a status
requirement.
31. Since Louisiana law does not apply, we need not decide whether
it is inconsistent with federal law in this case. If the contract in
this case were not maritime, we would then consider whether Louisiana
law is inconsistent with applicable federal law.
32. See Davis & Sons, Inc. v. Gulf Oil Corp., 919 F.2d 313, 315 (5th
Cir. 1990) ("The attempt to determine whether a contract, particularly
one linked to offshore gas and oil production, is governed by state or
maritime law has led to much confusion.").
34. Id. at 316; see alsoCampbell v. Sonat Offshore Drilling, Inc.,
979 F.2d 1115, 1121 (5th Cir. 1992) (describing two-step character of
the Davis test).
35. An example of such a case is Smith, 960 F.2d at 459-60.
36. See Campbell v. Sonat Offshore Drilling, 979 F.2d at 1120-21;
see alsoSmith, 960 F.2d 456 (holding that contract to "work over" a
jack-up rig is maritime); Diamond Offshore Co. v. A&B Builders, Inc.,
75 F. Supp. 2d 676, 679-81 (S.D. Tex. 1999) (holding that a contract
for repair of a jack-up rig is maritime); Gilbert v. Offshore
Production & Salvage, Inc., 1997 WL 149959, at *4 (E.D. La. March 21,
1997) (holding that a contract to provide drilling supervision services
is maritime); Campbell v. Offshore Pipeline, Inc., 1993 WL 302623, at
*3-4 (E.D. La. Aug. 5, 1993) (holding that a contract for welding
services of pipeline on the OCS is maritime).
37. See Lewis v. Glendel Drilling Co., 898 F.2d 1083, 1086 (5th Cir.
1990) (holding that a contract to provide offshore drilling services is
maritime even if it does not mention vessels). Contracts involving
vessels tend to be deemed maritime. See PLT, 895 F.2d at 1048
(describing an "oversimplified" test as "whether the transaction
relates to ships and vessels, masters and mariners, as the agents of
commerce"). Schoenbaum, 1 Admiralty and Maritime Law 3-10 provides
an extensive list of contracts found to be maritime and non-maritime.
41. 43 U.S.C.A. 1333(b). That Demette may be a longshoreman by
operation of the LHWCA itself seems to be of little consequence; the
language of the OCSLA is clear. This point becomes important in the
analysis of 33 U.S.C.A. 905(c) below.
46. Both parties seem to agree that Demette is a longshoreman by
operation of the LHWCA itself. To qualify as a longshoreman under the
LHWCA, the employee must be engaged in maritime employment over
navigable water, but not a seaman. See 33 U.S.C.A. 902(3); Director,
OWCP v. Perini North River Assoc., 459 U.S. 297 (1983).
50. See id. at *5 (noting that a contrary interpretation would lead
to different treatment of two indemnity agreements when two workers are
injured on the same platform, but one is not entitled to benefits
directly under the LHWCA).
51. Frank's also argues that this interpretation of section 905(c)
renders section 905(b) a nullity. This is nonsense. Section 905(c)
applies only on the OCS and only when the contract is reciprocal.
52. That Falcon was not a signatory to the reciprocal Unocal-Frank's
indemnity agreement does not alter this result. We have so held in
Campbell v. Sonat Offshore Drilling, Inc., 979 F.2d 1115, 1124 (5th
Cir. 1992).
53. We do not imply that if Louisiana law did apply to this
contract, it could invalidate the indemnity agreement. State law is
incorporated as surrogate federal law by OCSLA only to the extent it
does not conflict with federal law. State law therefore could not
invalidate indemnity agreements declared valid by the LHWCA. See 33
U.S.C.A. 905(c); H. Conf. Rep. No. 98-1027, at 23 (1984), reprinted
in 1984 U.S.C.C.A.N. 2771, 2773 (stating that section 905(c) "would [
] preempt the application of state laws prohibiting such indemnity
agreements.").
54. The dissent's recourse to legislative history of the OCSLA to
argue that OCSLA situses cannot also be deemed vessels does not grapple
with the text of the OCSLA, which contemplates OCSLA situses that are
vessels. See Parts II.A and III.A. We also note that even if we were
to ignore the text of the OCSLA, examination of the purposes of the
OCSLA does not yield so clear an answer as the dissent indicates. This
circuit has noted that OCSLA was originally designed as a gap-filling
statute. Mills v. Director, OWCP, 877 F.2d 356, 358 (5th Cir. 1989)
(en banc). This was because fixed platforms on the OCS were neither
vessels nor within the territorial jurisdiction of any state; thus, no
law applied to them. The OCSLA filled this gap by applying state law
as surrogate federal law to those platforms. Floating rigs, however,
were always subject to maritime law, and thus did not linger in the
lawless limbo occupied by drilling platforms prior to the enactment of
the OCSLA. Thus, applying the OCSLA's choice-of-law provision only
when "maritime law [does] not apply of its own force," PLT, 895 F.2d at
1047, is consistent with the gap-filling purpose of the OCSLA.
55. By applying state law as surrogate federal law to offshore
situses, the OCSLA requires courts to draw lines between the zones in
which surrogate federal law applies and in which admiralty law applies.
No interpretation of the OCSLA can eliminate the arbitrariness of such
lines. Our circuit precedent essentially draws a line between floating
rigs and fixed platforms, which may seem arbitrary in light of the
purposes cited by the dissent. PLT, 895 F.2d at 1047. One
alternative, treating jack-up rigs as vessels but also applying to them
surrogate federal law instead of maritime law, would draw a strange
line between rig operators who are permanently assigned to floating
rigs (who are crew members, and thus would be excluded from LHWCA
coverage by section 1333(b)(1), but would also lack seaman's remedies
because maritime law would not apply) and rig operators temporarily
assigned to floating rigs or assigned to platforms (who are covered by
the LHWCA by section 1333(b)). Another alternative, proposed by the
dissent, would deem floating rigs no longer vessels when they jack-up
on the OCS. This draws an equally strange line between rigs that lift
out of the water to drill and rigs that do not, even when both are
OCSLA situses. Further, this creates the problem of determining when
a rig has been sufficiently jacked-up to switch the applicable law from
admiralty to surrogate federal law. This in turn complicates questions
of what law applies to incidents that occur while a rig is jacking up
or which law applies to contracts governing the use of jack-up rigs.
56. On remand from the Supreme Court, the Fifth Circuit panel
quickly concluded that Gray was not entitled to recover under 1333(b)
because of the "geographical limitation imposed by the OCSLA."
57. Curiously, the text of 43 U.S.C. 1333 cited in footnote 7
of the Fifth Circuit opinion is the text of subsection (a)(1) as passed
in 1953 even though the helicopter crash in Tallentire occurred in
August 1980, well after the 1978 amendments to OCSLA which broadened
the definition of a "situs" as discussed above.
58. "There is glory for you," [said Humpty-Dumpty]. "I don't
know what you mean by 'glory,'" Alice said. "I meant 'there is a nice
knock-down argument for you," [said Humpty-Dumpty]. "But 'glory'
doesn't mean a nice knock-down argument," Alice objected. "When I use
a word," Humpty-Dumpty said in a rather scornful tone, "it means just
what I choose it to mean, neither more nor less." Lewis Carroll,
Through the Looking Glass ch. 6.