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By Zoe Vermeulen

In the recent case of Halle v. Galliano Marine Service, L.L.C., No. 16-30558, 2017 WL 1399697 (5th Cir. Apr. 19, 2017) the U.S. Fifth Circuit addressed for the first time whether ROV technicians, who are traditionally Jones Act seamen, qualify as seamen under the Fair Labor Standards Act (“FLSA”). The Court found that the plaintiff, an ROV technician assigned to an ROV support vessel, was not an FLSA seaman. In reaching its decision, the Court reiterated the important difference between a Jones Act seaman and a seaman for purposes of the FLSA.

Under the Jones Act, the term “seaman” is construed broadly to provide protection for a larger group of individuals. Seamen are exempt from the FLSA, so the term is construed narrowly, to ensure that more workers enjoy the benefits granted by the FLSA. The Court was clear that “the definition of ‘seaman’ in the Jones Act is not equivalent to that in the FLSA.”

The FLSA requires employers to provide overtime pay to any employee who works more than forty (40) hours in a workweek, unless the employee is subject to an exemption. Again, “seamen” are exempt from the FLSA’s overtime requirements. Under the FLSA, an employee is a “seaman” if: (1) the employee is subject to the authority, direction, and control of the master; and (2) the employee’s service is primarily offered to aid the vessel as a means of transportation, provided that the employee does not perform a substantial amount of different work. These criteria are very fact specific.

In Halle, there was a dispute as to whether the plaintiff was subject to the authority, direction, and control of the master of the ROV support vessel. Thus, the first factor was not dispositive. In analyzing the second factor, the Court found that the ROV technician plaintiff lived on the ROV support vessel and operated the ROV, which was attached to the support vessel, to perform industrial tasks in the water. He occasionally communicated GPS coordinates to the captain of the support vessel, but did not otherwise help ensure that the support vessel navigated safely or in any particular manner from point A to point B. The plaintiff did not control the vessel’s path to its intended target, steer, anchor, make any navigational decisions, or take any navigational actions. The plaintiff, and other ROV technicians, could not even see if there were navigational issues affecting the support vessel. Under these facts, the Court found that the plaintiff’s service was not “primarily offered to aid the vessel as a means of transportation.” As the plaintiff – a Jones Act seaman – could not meet the second prong of the test, he could not be a seaman for FLSA purposes.

This case provides valuable guidance to maritime employers in classifying employees for FLSA purposes. Employers should never assume that because a worker qualifies as a Jones Act seaman, he or she will automatically be exempt from the overtime requirements of the FLSA. While both the Jones Act and the FLSA employ the term “seaman,” Halle underscores the different tests for seaman status under these Acts. Litigants are cautioned not to borrow an analysis of this term under one Act for use in the other.

Misclassifying an employee as “exempt” can expose employers to back pay, liquidated damages, and attorneys’ fees. And with a recent increase in FLSA claims, correct employee classification is as critical now as ever.

EPA

By Lee Vail

On June, 9, 2017, Scott Pruitt signed a final rule  delaying the effective date of the RMP rule until February 19, 2019. The Environmental Protection Agency” (“EPA”) stated that it had received 54,117 public comments, 54,000 of which were part of a mass mail campaign, leaving 108 submissions with unique content. A final rule is expected to be published in the Federal Resister in the near future.

A significant portion of the final rule is dedicated to authority issues: can EPA stay effectiveness during reconsideration? In response to comments, the EPA affirmed that it had authority to delay implementation as required. Specifically the EPA stated:

  • EPA notes that CAA section 112(r)(7)(A) does not contain any language limiting “as expeditiously as practicable” to an outside date (e.g., “in no case later than date X”).
  • A natural reading of the language is that the act of convening reconsideration does not, by itself, stay a rule, but the Administrator, at his discretion, may issue a stay if he has convened a process.
  • The statutory framework for a discretionary rule under CAA section 112(r)(7) differs greatly from the “highly circumscribed schedule” analyzed by the NRDC [Natural Resources Defense Council v. Reilly, 976 F.2d 36 (D.C. Cir. 1992] court. Absent an otherwise controlling provision of the CAA, CAA section 307(d) allows EPA to set reasonable effective date.

Whereas the EPA did not address substantive comments (as reconsideration is another rule making action), it did agree that sufficient issues were raised to justify reconsideration. Specifically the timing of the Bureau of Alcohol, Tabaco, Firearms and Explosives’ (“BATF”) West Fertilizer finding justifies reconsideration:

  • If the cause of the West Fertilizer explosion had been know sooner, the Agency may have possibly given greater consideration to potential security risks posed by the proposed rule amendments. All three of the petitions for reconsideration and many of the commenters discussed potential security concerns with the rule’s information disclosure requirements to LEPC and the public.

In conclusion, the effective date of the RMP revisions, published on January 13, 2017, has been delayed to February 19, 2019.

 

 

 

 

 

epa

By Lee Vail

The EPA updated its web page titled “Frequent Questions on the Final Amendments to the Risk Management Program (RMP) Rule” on Monday, June 12, 2017.  According to the revised Q&A (page 9):

  1. When does the rule become effective?
  2. The effective date of this action has been delayed to February 19, 2019.

It has generally been reported that the EPA sent the rule to the White House Office of Management & Budget (“OMB”) for a pre-publication review of the final rule. Has the EPA tipped its hand?

california

By Lee Vail

New projects require air permits and projects at major stationary sources that will emit (or increase) a significant amount of a regulated NSR pollutant, must conduct a control technology review.  In order to receive a permit, the applicant must determine the level of control considered Best Available Control Technology (“BACT”) and the permit issuing authority must agree.  This has been the rule for a long time and nothing is new.

As it relates to greenhouse gas (“GHG”) emissions, facilities that have a significant increase of a non-GHG and a significant increase in GHG must conduct a GHG BACT review.  Typically these reviews conclude that add-on controls, such as Carbon Capture and Sequestration (“CCS”), are infeasible. As a result, BACT may be a combination of good-engineering/good-combustion practices, low carbon fuels, or an emission limit.  The lack of feasible add-on controls is typically based on the high associated cost, the lack of controlling legal mechanisms, and the dearth of actual experience.  California has started a process that may start to address the last two issues.  As for the excessive cost of CCS, that will likely remain.  However experience usually results in some reduction of cost.

A little over a year ago, The California Air Resource Board (“CARB”) initiated a series of public workshops[1] with the goal of better understanding of “the ability of CCS to contribute to climate goals, the limitations or advantages of the technology, and the innovation and incentives necessary for adoption.”[2] Six additional “Technical Meetings” have occurred since that time and on May 8, 2017, CARB conducted a public workshop where CARB staff presented “an initial concept of a Quantification Methodology (QM) and Permanence Protocol for CCS.”[3] CARB is signaling the intent to establish QM and permanence requirements into California’s Low Carbon Fuel Standard (LCFS) in the near term with possible inclusion into the California Cap-and-Trade (“C&T”) regulation sometime in the future.

Following the May 8, 2017 workshop, CARB has received multiple substantive comment letters.  Many of these comments were from industry groups that provided significant positive technical comments.  That said general concerns with the current proposal were expressed:

  • Inability of moving carbon dioxide from one well to another (i.e., reuse carbon dioxide used for enhanced recovery).
  • Post-closure should not prohibit future activity in an oil reservoir if it can be shown that carbon dioxide is not released.
  • Well construction (cemented to the surface) will not allow use of existing wells and may be counterproductive with leak monitoring and mitigation.
  • Inclusion of QM for C&T should occur expeditiously.

California has unique laws concerning GHG control that create incentives to investigate CCS as an add-on technology.  CARB’s development of protocols (and eventually regulations) is clearly intended to spur activity along CCS activity.  Whereas, non-California projects are not constrained with C&T requirements, prolific expansion of CCS in California may make the infeasible argument more difficult. Close attention should be paid to this process.

________________________________________

[1] CARB, Carbon Capture and Sequestration Meetings, found at https://www.arb.ca.gov/cc/ccs/meetings/meetings.htm.

[2] Workshop Notice and Draft Agenda, from Elizabeth Scheehle, Oil and Gas and Greenhouse Gas Mitigation Branch, CARB (January 21, 2016); found at https://www.arb.ca.gov/cc/ccs/meetings/Workshop_Notice_1-21-16.pdf.

[3] Workshop Notice and Draft Agenda, from Elizabeth Scheehle, Oil and Gas and Greenhouse Gas Mitigation Branch, CARB (April 18, 2017); found at https://www.arb.ca.gov/cc/ccs/meetings/Workshop_Notice_5-8-17.pdf

Close-up close-up shots of the tracks

By Michael J. O’Brien

In the recent case of BNSF Railway Co. v. Tyrrell, the U.S. Supreme Court rejected a blatant forum shopping attempt by two railway employees and limited future lawsuits against out-of-state railroads. In BNSF Railway Co., Robert Nelson of North Dakota and Kelli Tyrrell of South Dakota filed separate suits against BNSF Railroad in a Montana State Court pursuant to the Federal Employer’s Liability Act (“FELA”) 45 U.S.C. §51 et sec. which makes railroads liable for on-the-job injuries to their employees. Nelson allegedly injured his knee while working for BNSF in the State of Washington. Tyrrell claimed that her husband died of cancer he contracted after being exposed to chemicals while working for BNSF in South Dakota, Minnesota, and Iowa. Despite the fact that neither Plaintiff resided in Montana, nor sustained any injuries in Montana, they filed their lawsuit against BNSF in that state based upon BNSF’s alleged contacts in Montana.

BNSF was incorporated in Delaware and it maintained its principle place of business in Texas. It operates railroad lines in 28 states, however, it maintained less than 5% of its workforce and approximately 6% of its total track mileage in Montana. Nelson and Tyrell claimed that these contacts with Montana were sufficient for them to sue the railroad in Montana. BNSF disagreed.

After Tyrrell and Nelson filed suit, BNSF moved to dismiss both of their lawsuits for lack of personal jurisdiction. The Montana Supreme Court ultimately denied the motion allowed these cases to move forward holding that Montana Courts could exercise general personal jurisdiction over BNSF because §56 of FELA authorizes State Courts to exercise personal jurisdiction over railroads “doing business” in the state. The Montana Supreme Court further observed that Montana law provides for the exercise of general jurisdiction over “all persons found within the state.” Thus, because of BNSF’s many employees and miles of track in Montana, the Montana Supreme Court concluded that BNSF was both “doing business” and “found within” the state such that both FELA and Montana law authorized the exercise of personal jurisdiction.

The U.S. Supreme Court granted certiorari to resolve whether §56 of FELA authorizes State courts to exercise personal jurisdiction over railroads that do business in states but are neither incorporated, nor headquartered in that state. The Supreme Court also examined whether the Montana Court’s exercise of personal jurisdiction in these cases comported with constitutional due process.

A solid majority of the Court rejected the two theories upon which Nelson and Tyrrell had relied on to justify jurisdiction over BNSF in Montana. First, the Court held that FELA does not itself create a special rule authorizing jurisdiction over railroads simply because they happen to be doing business in a particular place. Next, the Court ordered that an exercise of jurisdiction over BNSF must still be consistent with due process. Thus, the Montana rule that allowed Courts in the state to exercise jurisdiction over “persons found” in Montana did not help the Plaintiffs as it violated due process.

The Supreme Court repeatedly mentioned that BNSF was not incorporated in Montana, and it did not maintain its principle place of business in that state. Further, BNSF was not so heavily engaged in activity in Montana “as to render it essentially at home” in that state. The Supreme Court noted that a corporation that operates in many places can “scarcely be deemed at home in all of them.” Thus, the business that BNSF did in Montana may be sufficient to subject the railroad to specific personal jurisdiction in maritime for claims related to the business activity in Montana. However, simply having in state business did not suffice to permit the assertion of general jurisdiction over claims like Nelson’s and Tyrrell’s that were completely unrelated to any activity occurring in Montana.

Last, it is important to note that this holding is also relevant in maritime cases. Indeed, since FELA case law is applicable to Jones Act cases, BNSF Railway Co.’s holding will, by extension, also limit forum shopping by Jones Act seaman under the same reasoning.

refinery_sunset_10212716

By R. Lee Vail, P.E., Ph.D.

On January 13, 2017, the Environmental Protection Agency (“EPA”) published a final rule revising portions of the Risk Management Program (“RMP”) rule. On April 3, 2017, the EPA proposed to delay the effective date of the changes until February 19, 2019 to allow for a reconsideration of these changes. 82 Fed. Reg. 16146 (Apr 3, 2017). Comments were due by May 19, 2017 and the comment period is now closed. Four hundred and five (405) public comments are available on Regulations.Gov and range from a few sentences in support of a position to detailed comments. Commenters for denial often state that sufficient time and consideration was allotted in the rule making process and comments supporting the delay often focus on a flawed rule-making process that created the changes.

The current delay is set to expire on June 19, 2017 as the original stay is effective for up to three months.[1] Commenters for the delay state that time is needed to correct the apparent flaws. Comments against the delay include citation to an “expressed mandate that regulations promulgated pursuant to §112(r) have an effective date assuming compliance with RMP requirements as expeditiously as practical.” See United Steelworkers Union comments. In proposing extra time to conduct the reconsideration, the EPA suggested that “three months to be insufficient to complete the necessary steps in the reconsideration process.” 82 Fed. Reg. at 16148. In the event EPA chooses to delay all or portions of the revised rule, a central issue will be the amount of time required.

Separate and aside, the Teamsters Union has teamed up with an environmental group and filed a lawsuit alleging that the public has been denied access to emergency response plans as required by the Emergency Planning and Community Right to Know Act (“EPCRA”). In the lawsuit, New Jersey Work Environment Council (NJWEC) et al. v. State Emergency Response Commission (SERC), plaintiffs are seeking access to Emergency Response Plans (“ERP”) developed by the Local Emergency Planning Community (“LEPC”). Whereas the suit is not demanding facility ERPs, the likely source of any information at the LEPC would be facilities. The stayed rule includes provisions that the facility confirm whether the stationary source is included in the community ERP pursuant to 42 U.S.C. 11003 (see stayed rule at 40 CFR 68.180(b)(i)) and increased availability of information to the public (see stayed rule at 40 CFR 68.210). Although the information requested in the lawsuit is not identical to facility information in the stayed rule, it certainly overlaps.

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[1] Such reconsideration shall not postpone the effectiveness of the rule. The effectiveness of the rule may be stayed during such reconsideration, however, by the Administrator or the court for a period not to exceed three months. Clean Air Act §307(d)(7)(B).

This is a horizontal, color, royalty free stock photograph shot with a Nikon D800 DSLR camera. The sky at dusk reflects pastel colors on the tranquil water's surface. Lilly pads float on this wetland landscape. Trees fill the background.

By Lauren J. Rucinski

The US Ninth Circuit Court of Appeals has an opportunity to rule on controversial Clean Water Act wetlands jurisdictional requirements through the appeal of a Montana man’s conviction for polluting a navigable waterway. US v. Joseph Robertson, No. 16-30178 (C.A. 9). The timing of the appeal could affect the Trump administration’s efforts to take a second look at the Obama-era “Waters of the United States” (“WOTUS”) rule.

Joseph Robertson was convicted by a jury in the U.S. District Court for the District of Montana in April of 2016 for unauthorized discharge of pollutants into waters of the US and malicious mischief for injury or depredation of US property. The charges arose from Robertson’s excavation and construction of 9 stock ponds after being told by the government that he could not do so. The activities caused the discharge of dredged and fill materials into a tributary of the neighboring navigable river and also caused damage to nearby wetlands. Robertson was sentenced to 18 months prison and ordered to pay $129,933 in restitution for ponds dug on Beaverhead-Deerlodge National Forest land and on private property near his mining claim. Robertson now argues that the District Court did not have jurisdiction to hear his case because the government failed to articulate a lawful standard for what qualifies as “waters of the United States.” United States v. Robertson, No. CR 15-07-H-DWM, 2015 WL 7720480 (D. Mont. Nov. 30, 2015).

The Clean Water Act prohibits the discharge of any pollutant without a permit into “navigable waters,” which it defines, in turn, as “the waters of the United States.” 33 U.S.C. §§ 1311(a), 1362(7), (12). The term “waters of the US” has always included certain wetlands within federal jurisdiction, but the scope of that jurisdiction has been controversial.  The U.S.  Army Corps of Engineers administers the program which issues permits for dredge and fill activities affecting waters of the US. However, for a certain waterbody to be subject to permitting requirements, it must be a “water of the United States.”

Over the years, the primary issue concerning which wetlands are subject to regulation was the degree of their connectedness with a “real” navigable water. The current seminal cased interpreting “waters of the United States” is a split 4-1-4 opinion from the US Supreme Court in Rapanos v. US, 547 U.S. 715 (2006). Justice Scalia wrote the plurality opinion which held that the term “waters of the United States” requires wetlands to maintain a “continuous surface connection” to navigable waters. Justice Kennedy wrote a separate concurring opinion with a relatively wider view of jurisdiction under the Clean Water Act, requiring only that the wetland maintain a “significant nexus” to navigable waters. Confusion has ensued, with courts applying the Clean Water Act to any water that satisfied either the Kennedy or Scalia tests. However, the Seventh Circuit, and relevant to the Robertson case, the Ninth Circuit have held that the Kennedy test alone is controlling. N. Cal. River Watch v. City of Healdsburg, 496 F.3d 993, 999-1000 (9th Cir. 2007).

The Corps and EPA sought to resolve the ambiguity created by the Rapanos decision by issuing guidance in 2007, then revising it in 2008.  However, the regulated community found the guidance equally ambiguous and many requested promulgation of rules rather than guidance. The Obama administration promulgated a regulation, referred to as the WOTUS rule, in 2015.[1] The rule used Kennedy’s test only, but that regulation was challenged in a number of federal district courts and courts of appeal.  The litigation has been consolidated nationwide in the US Court of Appeals for the Sixth Circuit, where the rule has been stayed pending review.[2]

In the meantime, the Corps permitting and enforcement programs continue under the prior rules, with only Rapanos as guidance. The jury in the Robertson case was instructed to use the Kennedy “significant nexus” test in determining that the tributary Robertson polluted was in fact regulated by the CWA. Two months after Robertson’s conviction, the Ninth Circuit decided United States v. Davis, 825 F.3d 014 (9th Cir. 2016). In Davis, the Ninth Circuit held that a split Supreme Court decision should only bind the federal courts of appeal when a majority of the Justices agree upon a single underlying rationale and one opinion can reasonably be described as a logical subset of the other. Id.at 1021-22. Robertson argues on appeal that the ruling in Davis effectively overturns prior Ninth Circuit precedent applying the Kennedy test as the sole test, teeing up the question of which Rapanos test should be applied, if any, for the Ninth Circuit.

The Ninth Circuit will hear the Robertston case amid a slew of other legal battles over the jurisdiction of the Clean Water Act. For example, a case pending in the Eastern District of California for over a year pivots around the same arguments on the breadth of the Clean Water Act’s jurisdiction. See Duarte Nursery Inc. v. Army Corps of Engineers, et al., 17 F. Supp. 3d 1013 (E.D.Cal. 2014). The plaintiffs in that case have filed a motion to stay the case until the Robertston decision.

Further, a Supreme Court case, National Association of Manufacturers v. Department of Defense, challenges whether law suits over the WOTUS rule should be heard in the federal district courts or federal appellate courts (currently pending in 6th Circuit). If the Supreme Court decides that the district courts should hear these types of cases, it could revive a waterfall of stayed or dismissed district court cases over the WOTUS rule. The Supreme Court decided to take up the case in January, but the Trump administration subsequently asked the Court to stay the case following a February 28, 2017 executive order[3] compelling U.S. EPA and the Army Corps of Engineers to take another look at the WOTUS rule. On the same day, EPA and the Corps announced that their intent is to repeal the WOTUS rule and to propose a new rule.[4] A proposed revision to the rule has been sent to the Office of Management and Budget, but has not yet been released to the Federal Register for proposal.[5] It is widely anticipated that the proposed rule will adopt the Scalia test.

The scope of the Clean Water Act jurisdiction is particularly significant to landowners and industry groups in Louisiana. Obtaining a permit is costly but the penalties for discharging into waters of the United States without one can be rather substantial (criminal conviction and/or civil penalties), and can include an injunction stopping the project. The Trump administration has indicated that it supports the Scalia interpretation which would, to a certain degree, limit the scope the U.S. EPA and Army Corp of Engineers jurisdiction over certain “isolated” waters and wetlands. However, if the Ninth Circuit endorses the Kennedy rule in the Robertson case, it may create more legal hurdles for the Trump administration in overturning the WOTUS rule through rulemaking action.

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[1] 80 Fed. Reg. 32054, June 29, 2015.

[2] In re: United States Department of Defense and United States Environmental Protection Agency Final Rule: Clean Water Rule: Definition of “Waters of the United States”, 803 F.3d 804 (6th Cir. 2015).

[3] See: https://www.whitehouse.gov/the-press-office/2017/02/28/presidential-executive-order-restoring-rule-law-federalism-and-economic.

[4] 82 Fed. Reg. 12532, March 6, 2017.

[5] For updates on the current WOTUS rulemaking, see: https://www.epa.gov/wotus-rule.

Louisiana State Capital

By Matthew C. Meiners

Under Louisiana law, workers’ compensation is the exclusive remedy that an employee may assert against his employer or fellow employees for work-related injury, unless he was the victim of an intentional act. That exclusive remedy also extends to statutory employers.

Workers’ compensation legislation was enacted to provide social insurance to compensate victims of industrial accidents, and it reflects a compromise between the competing interests of employers and employees: the employer gives up the defense it would otherwise enjoy in cases where it is not at fault, while the employee surrenders his or her right to full damages, accepting instead a more modest claim for essentials, payable regardless of fault and with a minimum of delay. However, due to the fear that employers would attempt to circumvent that liability by interjecting between themselves and their workers intermediary entities which would fail to meet workers’ compensation obligations, the law provides that some principals are by statute deemed, for purposes of liability for workers’ compensation benefits, the employers of employees of other entities. This is what is known as statutory employment, and it is intended to provide greater assurance of a compensation remedy to injured workers.

Under Louisiana law, there are two bases for finding statutory employment:

First Basis: The existence of a written contract recognizing the principal as the statutory employer. A “principal” is any person who undertakes to execute any work which is a part of his trade, business, or occupation in which he was engaged at the time of the injury, or which he had contracted to perform and contracts with any person for the execution thereof. Such a contractual provision creates a rebuttable presumption of a statutory employer relationship between the principal and the contractor’s employees, whether direct or statutory employees. This presumption may be overcome only by showing that the work is not an integral part of or essential to the ability of the principal to generate that individual principal’s goods, products, or services.

Second Basis: Being a principal in the middle of two contracts, referred to as the “two contract theory.” The two contract theory applies when: (1) the principal enters into a contract with a third party; (2) pursuant to that contract, work must be performed; and (3) in order for the principal to fulfill its contractual obligation to perform the work, the principal enters into a subcontract for all or part of the work performed. The two contract statutory employer status contemplates relationships among at least three entities: a general contractor who has been hired by a third party to perform a specific task, a subcontractor hired by that general contractor, and an employee of the subcontractor.

A statutory employer is liable to pay to any employee employed in the execution of the work or to his dependent, any compensation under the Louisiana Worker’s Compensation Act which the statutory employer would have been liable to pay if the employee had been immediately employed by the statutory employer. In exchange, the statutory employer enjoys the same immunity from tort claims by these employees as is enjoyed by their direct employer. Additionally, when a statutory employer is liable to pay workers’ compensation to its statutory employees, the statutory employer is entitled to indemnity from the direct employer and has a cause of action therefor.

Statutory employer status can provide very valuable protection to companies who contract for work to be performed in Louisiana; however, you should consult your attorney to make sure you meet the legal requirements, and to properly draft the necessary contractual provisions.

 

BSEE

By Michael J. O’Brien

Scott Angelle, a native of Breaux Bridge, Louisiana, has been appointed by the Trump Administration to head the Bureau of Safety and Environmental Enforcement (“BSEE”).  Mr. Angelle first held public office in the late 1980’s. He has since served as a Parish President, Secretary of Louisiana’s Department of Natural Resources, and, most recently, as Chairman of the Louisiana Public Service Commission. Under his leadership as Louisiana’s Secretary of the Department of Natural Resources, the state’s coastal permitting system was reformed, providing for efficient permitting while increasing drilling rig counts in Louisiana by more than 150 percent during his tenure. Mr. Angelle has also served as Chairman of the Louisiana State Mineral Board, and as a member of the Louisiana State University Board of Supervisors, Southern States Energy Board, and the Louisiana Coastal Port Advisory Authority.

Mr. Angelle will become BSEE’s fourth director since it was established six years ago. BSEE was formed after the Deepwater Horizon explosion to promote safety, protect the environment, and conserve resources offshore through “vigorous regulatory oversight and enforcement.”

BSEE is headquartered in Washington D.C. and supported by regional offices in New Orleans, Louisiana, Camarillo, California, and Anchorage, Alaska.  These regional offices review applications for permits to drill, ensure safety requirements are met, conduct inspections of drilling rigs and offshore production platforms, investigate offshore accidents, issue Incidents of Non-Compliance and have the authority to fine companies through civil penalties for regulatory infractions.

Mr. Angelle’s post does not require Senate confirmation; as such, he will start working as the head of BSEE Tuesday, May 23, 2017. Secretary of the Interior, Ryan Zinke, issued the following statement about Mr. Angelle: “Scott Angelle brings a wealth of experience to BSEE, having spent many years working for the safe and efficient energy production of both Louisiana’s and our country’s offshore resources. As we set our path towards energy dominance, I am confident that Scott has the expertise, vision, and the leadership necessary to effectively enhance our program, and to promote the safe and environmentally responsible exploration, development, and production of our country’s offshore oil and gas resources.”

 

structure

By Matthew C. Meiners

In targeting a company for purchase, many buyers prefer to purchase the assets of a company, as opposed to the stock (or other equity) of the company because, as a general rule, the buyer of assets in an asset acquisition does not automatically assume the liabilities of the seller.  Accordingly, an asset acquisition generally allows the buyer and seller to select which assets and liabilities will be transferred.  However, in certain circumstances, the buyer can be held responsible for liabilities of the seller if a court determines that certain exceptions are met.  Louisiana courts have been willing to impose liability on asset-sale successors on the following grounds:

  1. The buyer assumed the liabilities;
  2. The transaction was entered into to defraud the seller’s creditors;
  3. The buyer company is a “mere continuation” of the seller company; and
  4. The transaction was “in fact” a merger.

The “mere continuation” exception is probably the most likely to catch a buyer off guard.  Louisiana courts, in considering whether an asset-sale successor is a “mere continuation” of the seller company, have considered the extent to which the buyer company has retained the same employees, supervisory personnel, company name, and physical location as the seller company.  Further, prior business relationships may be considered, as well as the continuity of general business operations and the identity of the business in the eyes of the public.  A threshold requirement to trigger a determination of whether successor liability is applicable under the “mere continuation” exception is that one company must have purchased all or substantially all the assets of another.

If you plan to purchase all or substantially all of the assets of a company, especially if your goal in choosing an asset purchase over a stock purchase is to avoid or minimize your liability for the seller’s liabilities, you should carefully consider the ways in which you could be seen as merely continuing the seller’s business under the factors described above.  You may be signing on for more liability than you anticipate.