In December 2015, the U.S. 5th Circuit (in a 2-1 decision) was called to decide whether a non-operating partner in a joint venture qualified as a “statutory employer” under the Louisiana Workers’ Compensation Act (“LWCA”), La. R.S. § 23:1021, even though that party did not sign the contract and was not specifically mentioned in the contract at all. In Wright v. Excel Paralubes, 807 F.3d 730 (5th Cir. 2015), the Court concluded that it was.

The LWCA provides that a principal qualifies as the statutory employer of a contractor if: (1) the contractor subcontracts out a portion of the work (“two contract theory”) or (2) the principal and contractor have a contract recognizing the principal as the statutory employer of the contractor’s employees. In the second case, the contract creates a rebuttable presumption that may be overcome only if the employee can show that his work was not “an integral part of or essential to the ability of the principal to generate that individual principal’s goods, products, or services.” La. R.S. § 23:1061.A(3). If the presumption cannot be overcome – and it rarely can – the principal is afforded the same statutory immunity under the LWCA as the contractor. Thus, the “statutory employer defense” has become a valuable litigation tool for operators facing exposure for injuries to employees of its contractors in Louisiana (both onshore and in state territorial waters).

In this case, Excel Paralubes and Conoco agreed to construct and jointly own a lubricating base oil plant in Westlake, Louisiana. The parties designated Conoco as the construction manager and operator of the plant. In that role, Conoco contracted with Wyatt Field Service Co. to perform work on a vacuum tower at the facility. In the Master Service Agreement between Conoco and Wyatt, Conoco included the talismanic statutory employer language addressing the essential nature of Wyatt’s work for Conoco. During Wyatt’s work at the facility, one of its boilermakers (Wright) was injured. Wright sued both Conoco and Excel. Both Conoco and Excel successfully argued to the Western District of Louisiana that they were the statutory employers of Wright, and thus, entitled to the statutory immunity under the LWCA. Wright appealed, arguing that because Excel did not sign the MSA, it could not benefit from the statutory employer defense.

Relevant to the 5th Circuit’s analysis, the MSA defined “Affiliate” as “a company … which is specifically identified to one party as an entity for which the other party has operating or management responsibilities.” Further, Paragraph 12 extended all “exclusions of liability and indemnities … above and elsewhere in this Agreement” to Conoco’s affiliates. Again, the MSA had the required statutory employer language benefiting Conoco contained in Exhibit G to the contract, but the issue was whether that extended to Excel, a non-operating joint venturer of the facility. The 5th Circuit noted that the Louisiana Supreme Court had yet to weigh in on this issue, thus, an Erie guess was necessary. Taking cue from intermediate Louisiana appellate courts, the 5th Circuit noted that “statutory employer status is liberally favored,” and that other courts have rejected “rigid application of La. R.S. 23:1061(A)(3),” finding that there is a “broad view of what constitutes a statutory employer.” However, in each case reviewed, the non-signing party was at least mentioned in the contract. Here, Excel’s name is nowhere to be found in the MSA.

Regardless, the 5th Circuit was persuaded by the reviewed state court opinions and found that the same “broad presumption of statutory employer status,” should apply to Excel in this case based upon the terms of the MSA. Importantly, Excel fell within the MSA’s definition of “Affiliate” to whom “all exclusions and liabilities” apply. And, since Conoco was deemed a statutory employer in Exhibit G, that same “exclusion of liability” extended to Excel, as Conoco’s affiliate. The Court further reasoned that “[n]ot only did Conoco, as operator, enter into a contract on Excel’s behalf as a co-owner, but Conoco is also a co-owner of the joint venture.” Thus, Conoco’s execution of the contract inured to the benefit of, and could have been enforced by the co-owner Excel.

Even more broadly though, the 5th Circuit stated: “we do not think the parties’ failure to name or require the signature of Excel in the MSA can overcome the broad presumption of statutory employer status approved by Louisiana courts …” Moreover, the “very purpose of Conoco and Excel in creating the joint venture was to give Conoco the exact operational authority it exercised on behalf of the joint venture when it signed the MSA with Wyatt.” Thus, the MSA should be read to recognize this relationship. “The liberal attribution of statutory employer status by Louisiana courts in cases like this reflects economic realities and efficiency.” Because Excel would certainly expect to be protected by and to benefit from the same contractual obligations Conoco negotiated for itself on behalf of the joint venture, courts should “promote efficiency by reaching the decision that aligns with the parties’ rational expectations.” Accordingly, the 5th Circuit affirmed the district court’s ruling.

While this case did rely upon the actual language of the MSA, the 5th Circuit was clearly persuaded that Louisiana believes the statutory employer relationship is broad and subject to a liberal interpretation. Operators with Louisiana assets, especially those who are non-operating owners of Louisiana assets, should routinely have their contracts reviewed to ensure that this very valuable defense is available to them through the MSA. Though being specifically named in the contract is the best way to avoid the confusion, this decision reveals the 5th Circuit’s understanding of the business structures and ventures that may exist and its intention to align the contracts with those parties’ expectations. And, once the Court has found that the requisite language is set forth in the contract, it is very difficult for the contractor to rebut the presumption that its work is not integral to the principal’s business. As the Eastern District of Louisiana once noted, the only contractor that has successfully rebutted the presumption so far was a luxury beautician service at a nursing home.

In the Gulf of Mexico, helicopters have replaced seagoing vessels as the primary mode of transporting workers from shore to their jobs on offshore platforms and rigs. It is black letter law that a seagoing vessel in peril that is rescued is subject to an award for salvage. Since helicopters have replaced vessels in the Gulf, the follow up question is whether a helicopter can be subject to a salvage award. This very issue was recently examined by Judge Nanette Jolivette-Brown of the Eastern District of Louisiana in Sunglory Maritime LTD, et. al. v. PHI, Inc., et. al., No. 15-896, 2016 WL 852476 (E.D. La. 3/4/16).

It is important to note that helicopters take off, land, and refuel offshore on a daily basis. However, the incident involved in Sunglory is quite different from the norm. Specifically, in March 2013, a helicopter owned and operated by PHI was traveling to an offshore platform over the Gulf of Mexico carrying two crew members and seven passengers. When the helicopter was approximately ten (10) miles from shore, the pilot detected an unusual vibration coming from the aircraft. As the flight continued, the vibrations grew in duration and strength. Unsure of the vibration, the pilot turned the helicopter around and headed back to shore. Approximately six minutes from land, the pilot decided the safest course of action was to land on an anchored vessel in the Port of Corpus Christi. Without calling first to request permission to land, the helicopter landed on the AEOLIAN HERITAGE without incident.

PHI’s mechanics were dispatched to examine the helicopter aboard the AEOLIAN HERITAGE, and they were unable to find any obvious reason for the helicopter’s vibration. As such, the helicopter was returned to shore aboard the vessel and offloaded. It was later determined that the tail rotor drive shaft was in need of repair. The pilot recorded the landing as an “emergency,” and PHI later admitted that the incident in question was an “emergency landing.” Thereafter the vessel and its owners filed a claim for an award of maritime “salvage” under the general maritime law and the 1989 Salvage Convention. PHI disputed the vessel’s entitlement to a salvage award and moved for summary judgment.

In her lengthy opinion, Judge Brown noted that the law of marine salvage is of ancient vintage. In contrast to the common law, which does not grant a volunteer who preserves or saves the property of another any right to an award, a salvor of imperiled property on navigable waters gains a right of compensation from the owner. 2 Thomas J. Schoenbaum, Admiralty and Maritime Law 16-1 (5th ed. 2015). Because of the particular dangers of sea travel, public policy has long been held to favor a legally-enforced award in this limited setting to promote commerce and encourage the preservation of valuable resources for the good of society. Margate Shipping Co. v. M/V JA Orgeron, 143 F.3d 976, 984 (5th Cir. 1998). An award of salvage is generally appropriate when property is successfully and voluntarily rescued from marine peril. The Sabine, 101 U.S. 384 (1880).

To succeed on a salvage claim, a salvor must prove three elements: (1) that the property faced marine peril; (2) voluntarily service was rendered when not required as an existing duty or from a special contract; and (3) the salvage attempt succeeded in whole or in part, or contributed to the success of the operation. U.S. v. EX-USS CABOT/EDEALO, 297 F.3d 378, 381 (5th Cir. 2002).

Citing prior jurisprudence that the issue of whether an aircraft recovered in navigable waters is properly the subject of a salvage award remains unsettled, PHI moved for summary judgment. Simply stated, PHI argued that a helicopter is not the kind of property that may be subject to a salvage award. In response, the vessel cited the broad definition of “salvageable property” in the 1989 Salvage Convention which provides: “property means any property not permanently and intentionally attached to the shoreline and includes freight at risk.” Under this definition, it is clear that a helicopter, which is not permanently attached to the shoreline, would constitute salvable property.

When PHI disputed that the Salvage Convention was applicable to the exclusion of the general maritime law, the court quickly dismissed these claims. The District Judge noted the Salvage Convention was ratified by the U.S. Senate in 1991 and became part of U.S. law in 1996. Thus, the court found that PHI presented no reason or argument why the treaty should not be regarded as the supreme law of the land and the helicopter at issue was salvageable property.

Nevertheless, as there was a question as to the Salvage Convention’s applicability, the District Court conducted an in depth review as to whether the helicopter in question was also property subject to a salvage award under the general maritime law. Courts have held that to make a salvage award, there should be a nexus between the item salvaged and traditional maritime activities. PHI argued that its helicopter was not salvageable property under the general maritime law because it lacked a sufficient maritime nexus. To this end, PHI argued that the “bone dry, land based civilian helicopter” was the kind of non-vessel property that may not be the subject of a salvage claim.

The court disagreed citing prior jurisprudence that helicopters need not be a “vessel” to bear a sufficient maritime nexus to warrant a salvage award. Judge Brown also pointed out that the U.S. Supreme Court and the U.S. Fifth Circuit have each recognized that a helicopter that transports passengers to an offshore platform engages in a function traditionally performed by waterborne vessels; therefore, helicopters bear a sufficient nexus to traditional maritime activity such that admiralty jurisdiction may be invoked when accidents befall such helicopters. The court saw no reason (nor did PHI offer any evidence) why a helicopter that bears a significant relationship with traditional maritime activity would not “bear a strong maritime nexus.” Thus, the court could not agree with PHI that this helicopter could not be subject to a salvage award.

Ultimately, the Court denied PHI’s motion for summary judgment insofar as the issues of whether the helicopter actually faced a marine peril or whether the vessel’s salvaging service was “voluntary” were questions of fact that could not be resolved on summary judgment. However, it is critical to note that while the court ultimately deferred its final ruling, there can be no question that Judge Brown ruled that a helicopter is marine property subject to a salvage award.

In Nguyen v. American Commercial Lines, L.L.C., the U.S. Fifth Circuit clarified the presentment requirements set forth in the Oil Pollution Act of 1990 (“OPA 90”). Although the fishermen’s information submitted was sufficient to present a claim, the Court refused to allow some of the claimants from pursuing litigation because they failed to comply with both of the time limitations set forth in the Act.

OPA 90 contains two important time restrictions affecting potential claimants. First, under its “presentment requirement,” a claimant must first present their claim(s) to the designated “responsible party” and wait until liability is denied or until 90 days has passed since presentment of the claim to bring suit against the responsible party. Second, OPA 90 also provides a three (3) year statute of limitations that begins on the date the oil discharge incident occurred.

On July 23, 2008, a collision occurred causing oil to discharge from a barge owned by American Commercial Lines, L.L.C. (“ACL”). The Coast Guard designated ACL as the “responsible party” under OPA 90. In June 2009, certain commercial fishermen and others affected by the oil spill submitted claims to ACL’s attorney. On July 22, 2011- one day shy of the three-year statute of limitations – ACL received notice of new and amended claims involving additional claimants who were not part of the initial claim sent in 2009. Three days later all of the claimants filed suit.

Two issues were before the Fifth Circuit in this case: (i) whether the fishermen had presented enough information to ACL in order to comply with the OPA 90’s presentment requirement and (ii) whether the fishermen had to comply with both the 90-day waiting period after presentment before filing suit and the three (3) year statute of limitations.

The fishermen had submitted letters to ACL including their fishing licenses and dock receipts for seafood sold, a statement alleging losses from the oil spill and an evaluation of damages. ACL had responded by requesting a list of additional information it needed in order to process their claims. The fishermen refused to provide all of the information requested. ACL argued that the fishermen failed to comply with the presentment requirements because other sections in OPA 90 required the claimants to provide “evidence to support” their claims, specifically, those sections relating to filing a claim for damages to a federally-established fund. Therefore, ACL claimed it had the right to demand this additional information.

However, the Fifth Circuit found that federal-fund requirements did not apply to claims being brought against a “responsible party.” The Court focused on the language in OPA 90 providing that “all claims for removal costs or damages shall be presented first to the responsible party.” The Act defines “claim” as “a request, made in writing for a sum certain, for compensation for damages or removal costs resulting from an incident.” Also, “damages” are defined to include loss of subsistence use of natural resources, loss of revenues, loss of profits, etc. Thus, the Court held that ACL was improperly conflating the requirement of filing claims against the federal fund with those of presenting claims to a responsible party. The Fifth Circuit found the fishermen had submitted sufficient information with their claim letters to ACL, because nothing in the plain language of the statute suggested that they needed to provide any explanation or documentation beyond what they submitted.

Second, the Fifth Circuit evaluated OPA 90’s two separate time restrictions. The Court clarified that the two time requirements “operate[] independently” of one another. Meaning, the fishermen could not rely on compliance with the period of limitations as a way to circumvent the presentment requirements.

The fishermen pointed to at least one case in which the Court had allowed a claimant to commence an action without waiting the full 90 days. However, in that case, extenuating circumstances existed because the Coast Guard had not designated the responsible party until 55 days before the end of the three-year period. In this case, the claimants could not point to any similar extenuating circumstances as the Coast Guard identified ACL as the responsible party well outside the 90-day period.

The fishermen also argued that ACL tacitly denied their claims because it had not responded to any of the initial clams in 2009, and therefore, it was assumed it would not respond to the claims presented in July 2011. However, the Court found this unpersuasive and stated that “[w]ithout an actual denial of all liability for a claim by the responsible party or compliance with the 90-day waiting period, the presentment requirement has not been satisfied.” Tacit denial by a nonresponse would not satisfy compliance with the presentment requirement. The Court held that the claimants who failed to present their claims at least 90 days prior to commencing the action were found to be barred from pursuing a claim against ACL.

Thus, the Fifth Circuit clarified that as long as a claimant provides enough information or material in accordance with the plain language of OPA 90, a court will likely find compliance with the presentment requirements. Unfortunately, this means that in order for a responsible party to gain additional information it may need to evaluate the claims and be in a better negotiating position, it may have to wait for litigation to be instituted where more information may be obtained through the discovery process.

Also, the Fifth Circuit found the statutory language of OPA 90 required compliance with both the 90-day waiting period and the three-year statute of limitations. Thus, if a claimant does not submit a claim to the responsible party at least 90 days before the expiration of the three-year statute of limitations, the claim will be barred. This opinion is favorable for a responsible party as it further clarifies the onus put on claimants who may have a claim under OPA 90 to exhaust their presentment requirements within the relatively strict time limitations provided by the statute. However, it is important for a responsible party to ensure they do not take any actions that could be interpreted as a denial of liability and that they don’t hastily deny liability for a claim that would otherwise be barred.

In the most recent ruling of the BP DEEPWATER HORIZON/Macondo Well blowout and spill, Judge Barbier of the Eastern District of Louisiana recently dismissed certain claims made by the plaintiffs under the Oil Pollution Act of 1990, or “OPA 90.”

On April 20, 2010, the BP’s Macondo Well suffered a tragic blowout resulting in an explosion aboard and ultimately the sinking of the offshore drilling rig, the DEEPWATER HORIZON. Following the sinking, the Macondo Well released millions of barrels of oil into the Gulf of Mexico before it could be plugged, nearly three months later. In the weeks following the blowout, at the direction of President Obama, the U.S. Secretary of the Interior conducted an exhaustive review of precautions and technology that should be used to improve the safety of offshore oil and gas exploration and production. Based on his findings, the Secretary of the Interior concluded that a six-month moratorium on new offshore well permits and an immediate cessation of drilling activity at 33 permitted wells was warranted to implement proposed safety measures and consider the findings of ongoing investigations related to the DEEPWATER HORIZON incident (the “Moratorium”).

Following the DEEPWATER HORIZON incident, many thousands of plaintiffs filed suit against BP, and many of those plaintiffs who work in the offshore exploration and production environment included claims under OPA 90 for economic losses resulting from the Moratorium. In an effort to test the sufficiency of these claims, Judge Barbier considered the specific claims of a select group of six test plaintiffs, including an offshore diving company, platform drilling rig provider, an offshore equipment salvage company, an offshore oil and gas exploration and production company, a drilling services provider, and an offshore heavy machinery inspection and service company.

Under OPA 90, a plaintiff may recover economic damages “due to the injury, destruction, or loss of real property, personal property, or natural resources.” And unlike under general maritime law, as established by the historic case of Robins Dry Dock & Repair v. Flint, 275 U.S. 303 (1927), the plaintiff need not own or lease the property or resource damaged to state a cause of action under OPA 90. Based on these precepts, plaintiffs argued that their damages were “due to” injury to a natural resource (the Gulf of Mexico) by an oil spill caused by the “responsible party” (BP). But, the Court disagreed.

Judge Barbier found that while the DEEPWATER HORIZON blowout and oil spill was in fact an OPA 90 “incident,” plaintiffs’ damages did not result from the “discharge or substantial threat of discharge of oil from the Macondo well.” Instead, their damages “resulted from the perceived threat of discharge from other wells.” This “threat” prompted the Secretary of the Interior’s Moratorium, which was designed to address “the risk of possible future blowouts and oil spills from wells other than Macondo. These perceived threats from other wells are different OPA 90 “incidents” than the DEEPWATER HORIZON incident for which BP is a responsible party. Thus, BP could not be held liable to the plaintiffs under OPA 90 for their alleged economic damages incurred as a result of the US Government’s Moratorium on offshore drilling and production.

The Court found support for its decision in the U.S. 5th Circuit’s opinion in In re Taira Lynn Marine Ltd. No. 5, 444 F.3d 371 (5th Cir. 2006). The plaintiffs in Taira Lynn sought economic damages under OPA 90 when their businesses were shut down due to a mandatory evacuation. The evacuation was prompted by the allision of a barge with a bridge and the subsequent discharge of poisonous gas from the barge. The 5th Circuit found none of the plaintiffs’ claims in Taira Lynn compensable because their damages resulted not from the release of harmful gases, but instead by the mandatory evacuation. Comparing the present claims to those made by the plaintiffs in Taira Lynn, the Court found them to be “even more attenuated” because unlike the evacuation in Taira Lynn, the Moratorium was instituted to prevent future danger, not to deal with the present danger, like the evacuation. The Court also found compelling the existence of no previous case where economic damages had been awarded as a result of a drilling moratorium – even though a moratorium had been instituted every year from 1982 to 2008 for a variety of reasons.

With this latest decision it appears that the potential for a plaintiff to recover damages against the “responsible party” of an OPA 90 incident for the subsequent actions of governmental actors – even when the government’s actions are in response to an OPA 90 “incident” – is reaffirmed as being not unlimited.

The 5th Circuit issued a decision this week addressing an employer’s liability for benefits under the LHWCA to an employee who was allegedly injured while working.  Although the end result was employer-friendly, it took numerous appeals for the employer to obtain it.  Although some language suggests the plaintiff also filed a separate tort suit, this decision is solely about his entitlement to LHWCA benefits.  BIS Salamis, Inc. et al v. Director, Office of Workers’ Compensation Programs, United States Department of Labor et al, No. 15-60148 (5th Cir. March 17, 2016).

In this case, the Plaintiff, Joseph Meeks, worked for BIS Salamis as an offshore sandblaster/painter.  The Plaintiff claimed that he injured his neck and back during a personnel back transfer from a platform to a vessel.  Exactly what occurred was disputed, but it appears that a personnel basket hit the vessel bulwarks while the Plaintiff was standing nearby.  When the personnel basket struck him, it caused the Plaintiff to “hit the deck with his feet,” “knock his teeth together,” and “hit his shoulder on the railing of the boat.”  Interestingly, immediately after the accident the Plaintiff stated that “he was all right.”  About 30 minutes later, the Plaintiff claimed that he felt pain in his lower back, neck, and mouth.  Thereafter, he was examined by a company physician who diagnosed him with a back strain.  The doctor noted degenerative problems in Plaintiff’s neck and back, but released him to light duty work within a week of the accident.  The Plaintiff continued to treat with the doctor, who then released him to regular duty within another two weeks.

The Plaintiff claimed that he continued to have back and neck pain, retained an attorney, and started to treat with a doctor his lawyer recommended.  That doctor eventually performed surgery on his lower back, opined that surgery may be needed on his neck, and opined that Plaintiff could never return to work.  BIS Salimis obtained surveillance on Plaintiff showing that he was quite capable of doing work.  When they deposed the plaintiff, he denied his ability to perform the tasks he was videotaped performing.  BIS Salimis denied benefits.

The ALJ (Administrative Law Judge) agreed with BIS Salimis that Plaintiff’s back and neck complaints were not related to his personnel basket accident, finding that the plaintiff had no credibility.  The BRB (Benefits Review Board) reversed and remanded back to the ALJ, finding that the ALJ’s ruling was unsupported by the evidence.  After remand, the ALJ against ruled in favor of BIS Salimis.  The BRB reversed a second time, again claiming that the ALJ’s ruling was not supported by the evidence.  BIS Salimis then appealed the BRB’s decision to the 5th Circuit.  The 5th Circuit reversed the BRB’s decision and re-instated the ALJ’s denial of benefits.  Their decision contains a very good discussion of the presumptions that exist under the LHWCA in favor of an injured worker, and shows under what circumstances the employer can overcome them.

On June 30, 2015, the U.S. Department of Labor’s Wage and Hour Division, after being prompted by President Obama, announced proposed rule changes that would dramatically affect the salary requirements for employees who are exempt from the Fair Labor Standards Act’s overtime requirements.  For nearly 9 months, no action was taken to move the proposed rule change forward.  Then, on March 14, 2016, the DOL sent the proposed rule change to the Office of Management and Budget for final approval.

Generally, under the current rules, to be considered an “exempt” employee, an employee must perform certain exempt duties, or “white collar” duties, and be paid a salary of no less than $455 per week (which is not subject to reduction based upon the quality or quantity of the work – i.e., be paid on a “salaried basis”).  Under the proposed rule change, the amount required to satisfy the salary basis test would more than double.  Under the proposed rule, the amount required to meet the salary requirement for an exempt employee would rise to an amount equal to the 40th percentile of weekly earnings of full time salaried workers as determined by the DOL’s Bureau of Labor Statistics (an amount estimated to be $970 per week or an annual salary of $50,440).  The proposed rule would also raise the amount paid to an employee to qualify for the highly-compensated employee exemption and would also establish mechanisms for automatic increases to the salary requirements in order to meet the exemption’s requirements.  In this article, the Society for Human Resource Management (or SHRM) provides a link to important source documents regarding the rule change, including the DOL’s notice of the proposed rule change, a letter from Members of Congress expressing concern over the changes, and a link to the OMB site showing that the proposed rule has been forwarded to the OMB for approval.  The OMB review may take one to two months.  In the meantime, it is possible that Congress may take action.

Stay tuned.

On Wednesday, February 24, 2016, President Obama signed H.R. 644, known as the Trade Facilitation and Trade Enforcement Act (“Customs Bill”). For Louisiana’s vast number of companies operating in the agribusiness, seafood processing, and related industries, the signing of the bill is a significant milestone. The Customs Bill sets forth principal objectives concerning: (1) general trade policy efficiency; (2) trade protection (leveling the playing field for local workers dealing with foreign competitors); and (3) strengthening of the Trade Promotion Authority Statute. The following represents Customs Bill considerations that Louisiana businesses will find pertinent.

What are the major components of the Customs Bill that Louisiana businesses must know?

The Customs Bill creates a coordinated effort for trade facilitation. The primary agency funded under the Customs Bill is the United States Customs and Border Protection (“CBP”). The bill modernizes the CBP’s Automated Commercial Environment (“ACE”) which will be used to track and process imports and exports.  The International Trade Data System (“ITDS”), also known as the “single window,” will eventually be used to submit all trade documentation. Cooperative efforts among trade enforcement agencies and the efficient-electronic filing of trade documents are both important goals of the Customs Bill.

The Customs Bill also strengthens the enforcement of U.S. international-trade laws. The bill expands requirements on imports to ensure health, safety, and the protection of intellectual property rights. The bill includes provisions, which prevent dumping and currency manipulation. The bill also includes “miscellaneous” provisions pertaining to expansions on the requirements for the United States Trade Representative to resolve foreign country practices that create barriers to U.S. goods and services. A portion of the bill also encourages more Americans to engage in global commerce through the internet by availing themselves of an internet tax moratorium.

How does the Customs Bill specifically help Louisiana’s local businesses?

The Customs Bill enforces U.S. trade laws which directly impact Louisiana’s local businesses. For example, “dumping,” a method of predatory pricing used by foreign companies to undercut local markets and drive away competition, has hurt critical Louisiana industries in the past. The Customs Bill requires CBP to investigate evasion of antidumping or countervailing duties. The bill also contains the legislative language of the PROTECT Act which would require annual reporting on CBP policies regarding antidumping evasion.  The Customs Bill’s antidumping provisions are particularly important for protecting Louisiana’s seafood, agriculture, and food-processing businesses.  Louisiana’s manufacturing sector also serves to benefit as that sector is often most impacted by unfair trade practices.

Louisiana’s seafood industry will also benefit from other measures in the bill.  The bill requires the CBP to train personnel for the detection and seizure of illicit fish and wildlife being imported into the U.S.

Finally, the Customs Bill should improve health and safety at Louisiana’s ports, and enhance port-related infrastructure.  Louisiana’s shallow-draft-inland ports are largely cargo and industrially focused, while the coastal ports serve as support sites for offshore-related industries. The Customs Bill requires CBP to coordinate federal responses to cargo entering the United States that pose a threat to the health and safety of U.S. consumers. CBP will also be required to provide effective training to its personnel assigned to U.S. ports of entry to ensure the safe and expeditious entry of merchandise into the United States. Each of these measures should ultimately help improve the safety of Louisiana ports, related-supporting businesses, and essential personnel.

What are the legal implications of the Customs Bill moving forward?

The Customs Bill is one of a number of bills which represents comprehensive U.S. trade reform in connection with the Trans-Pacific Partnership (“TPP”).[1]  The Customs Bill should improve the nation’s enforcement of trade laws which is integral to Congress passing the TPP.  The bill should also increase transparency, accountability, and coordination among U.S. agencies working in trade enforcement. The signing of the Customs Bill may be a step in the right direction in protecting certain of America’s target industries and ensuring the benefits of international trade in the 21st century.

[1] The Trans-Pacific Partnership (TPP) is a trade agreement involving twelve Pacific Rim countries signed on February 4, 2016 in Auckland, New Zealand after seven years of negotiations. It is not yet in effect.

Since the announcement by Helis Oil & Gas that it intended to introduce hydraulic fracturing (“fracking”) to St. Tammany Parish, the local response has been vitriolic to stay the least – from public protests and interstate billboards to lawsuits. In fact, according to DNR officials, the large public hearing on Helis’ drilling permit application was a first for them. These fights are raging across the country between oil and gas companies and environmentalists and concerned citizens who worry the fracking will adversely affect their groundwater or adjoining lands. States like Vermont, Maryland, New York, and others have banned fracking altogether. Other local and state governments have banned fracking bans. Needless to say, this issue is a hot topic in the U.S. right now.

Helis, a New Orleans-based energy company, claims over 60 successful fracturing projects around the U.S., and now they hope to do one closer to home in St. Tammany Parish. In June 2014, the St. Tammany Parish Government filed a lawsuit against James Welsh, in his capacity as Commissioner of Conservation for the State of Louisiana, DNR seeking to prevent DNR from issuing a critical permit that Helis needed to begin drilling its exploratory well. St. Tammany argued that its zoning laws prohibited Helis from drilling the well at the proposed site – private timber lands, that were zoned A-3 residential. The Town of Abita Springs later filed similar suits in multiple courts. In December 2014, the Office of Conservation granted Helis’ permit application. In the St. Tammany Parish lawsuit, the state district court judge eventually granted a partial summary judgment on behalf of Helis, declaring that the St. Tammany Parish zoning ordinances were pre-empted by general state law, and on behalf of the Commissioner, declaring that DNR had complied with the law during the Master Plan review of the permit process. Other claims in the case remained unresolved, but this ruling was immediately appealed. On March 9, 2016, the Louisiana First Circuit affirmed the district court’s summary judgment. Though Helis’ opponents have publicly declared that they would not stop until the U.S. Supreme Court weighs in, this is latest in a string of victories for Helis in the various lawsuits filed to stop the proposed drilling.

In this case, St. Tammany Parish argued that its zoning ordinances precluded Helis (or anyone) from drilling wells on the proposed drilling site because it was zoned A-3 residential – “single-family residential environment on moderate sized lots.” The ordinances limit the land use of such zones to “certain specified cultural, educational, religious, and public uses.” The property has been used as a pine tree farm for over 30 years, and sits atop the Southern Hills Aquifer, the sole source of drinking water in the area. St. Tammany Parish argues that its authority to enact and enforce its own zoning ordinances within its geographic boundaries is provided by the Louisiana Constitution, and cannot be displaced.

Helis and DNR countered that La. R.S. § 30:28F expressly preempts local zoning ordinances where they contradict. The State Office of the Conservation is statutorily mandated to regulate the oil and gas resources in Louisiana, and that statute provides that DNR’s issuance of a permit is “sufficient authorization” for the permit holder to enter the property and drill. “No other agency or political subdivision of the state shall have the authority, and they are hereby expressly forbidden, to prohibit or in any way interfere with the drilling of a well or test well in search of minerals by the holder of such a permit.” La. R.S. 30:28F. These laws were enacted at a state level under the guidance of the Louisiana Constitution acknowledging environmental preservation as a public policy of the state.

On issues of pre-emption, unless there is an express provision mandating it, the courts must look to legislative intent, which includes “examining the pervasiveness of the state regulatory scheme, the need for state uniformity, and the danger of conflict between the enforcement of local laws and the administration of the state program.” Palermo Land Co., Inc. v. Planning Comm’n of Calcasieu Parish, 561 So.2d 482, 497 (La. 1990) (citing Hildebrand v. City of New Orleans, 549 So.2d 1218, 1227 (La. 1989)). The First Circuit found that the legislative intent and pervasiveness of the state regulatory scheme was clearly defined (see “expressly forbidden”) within La. R.S. 30:38F itself. As a result, the First Circuit agreed with Helis and found those ordinances that specifically interfered with Helis’ drilling of the well to be unconstitutional.

Underscoring that, the Louisiana Constitution reminds that “notwithstanding any provision of this Article, the police power of the state shall never be abridged.” La. Const. Art. §9(B). The Commissioner’s power is an exercise of police power and the statutes addressing local zoning regulations do not apply to the Commissioner in the exercise of that power. St. Tammany argues then that the Commissioner’s regulation of the oil and gas activity does not preclude those constitutional zoning powers reserved by the local government. The First Circuit disagreed. Specifically, those competing constitutional mandates are both found in Article VI of the Constitution, and §9(B) again provides that nothing within Article VI can abridge the Commissioner’s policing power.

Finally, La. R.S. § 30:28F is a general law enacted by the legislature that denies authority to a political subdivision – such as a Parish – by expressly prohibiting interference with the drilling of a well by a permit holder. Section 5 of the Article VI of the State Constitution further acknowledges that adopted home rule charters by local governments are limited by Louisiana general law and other sections of the Constitution. Consequently, the First Circuit affirmed the district court’s ruling in all respects, and unless reversed by the Louisiana Supreme Court, its order renders local ordinances that infringe on a permit-holder’s drilling rights unconstitutional.

The Eastern District of Louisiana recently held that a marine fuel supplier who provided fuel to a vessel, through two intermediaries, did not have a valid maritime lien on the vessel even though the vessel accepted and signed for the fuel delivery. See Valero Marketing & Supply Co. v. M/V ALMI SUN, 2016 WL 475905, at *9 (E.D. La. Feb. 8, 2016) (Brown, J.). Maritime liens arise as a matter of law for those who provide “necessaries” to a vessel such as: repairs; supplies; towage; and the use of a dry dock or marine railway. 46 U.S.C. § 31301(4). However, the “necessary” must also have been requested by the vessel’s owner or authorized representative to bind the Vessel, for the maritime lien to attach. Without this, the supplier does not have a right to a maritime lien and may be exposed to unnecessary liabilities should an issue of non-payment occur.

Here, the Vessel’s owner, through its agent, made a request to O.W. Bunker Malta Ltd (“O.W. Malta”) to supply the Vessel with fuel. O.W. Malta relayed the request to its U.S. affiliate, O.W. USA, who then selected Valero to ultimately provide the fuel. Valero supplied the Vessel with approximately 200 metric tons of fuel, and was never paid. Thereafter, the O.W. Bunker group of companies, including the two cited above, ceased all business operations and O.W. USA filed for Chapter 11 bankruptcy protection.

In an attempt to satisfy the outstanding debt, Valero had the Vessel arrested on allegation of a maritime lien. The Vessel Owner challenged Valero’s alleged maritime lien, arguing that no one with authority to bind the Vessel selected Valero to provide fuel. Valero argued that the Owner and agent both knew that O.W. Malta could not directly supply the Vessel with fuel, and that Valero would provide the Vessel fuel instead. Valero also argued that even though it contracted with O.W. USA, the Vessel Owner and agent both ratified that contract, making it “on the order of the owner.”

In its decision and analysis, the Court relied heavily on Martin Energy Serv’s., L.L.C. v. M/V BOURBON PETREL, 2015 WL 2354217, at *7 (E.D. La. May 14, 2015), which declared that “although a supplier of necessaries may in certain circumstances be entitled to a maritime lien, such liens are not automatic, but depend on the relationship between the various parties involved.” Therefore, the sole issue presented to the Court was whether Valero provided fuel “on the order of the owner or a person authorized by the owner.” If the Owner or an authorized representative did request the fuel from Valero, then it would be entitled to a maritime lien as a provider of a necessary. If not, Valero’s sole remedy would be to assert a claim against the now bankrupt company. To that end, the Court examined the parties’ contractual relationships to determine if the Owner had in fact authorized the US affiliate to bind the Vessel. Finding none, the Court continued to examine whether the Owner or his agent ratified O.W. USA and Valero’s contractual arrangement. Again, the Court found no ratification.

In reaching its decision, the Court relied on Lake Charles Stevedores, Inc. v. PROFESSOR VLADIMIR POPOV MV, 199 F. 3d 220, 231-32 (5th Cir. 1999), which held that “merely knowing that a subcontractor would be used, or even that a particular supplier would most likely be used, to ultimately furnish necessaries, does not necessarily create a maritime lien.” There must be more than knowledge or acceptance of necessaries in order to bind the Vessel and its Owner.

From the facts of this case, the Court held that at no point did the Owner or a person authorized to bind the Vessel actually contract, based on the nature of the relationship between the entities, for the supplied fuel. “The fact that the Vessel’s captain was forewarned by [the owner’s agent] that the Vessel would be receiving [fuel] from Valero and given instructions to coordinate with Valero neither establishes” that a party authorized to bind the Vessel selected the supplier and nor does it amount to ratification of a contractual relationship with the supplier, which may have created a maritime lien against the Vessel. This case reaffirms the Fifth Circuit’s precedent “that acceptance of services from a supplier of necessaries does not alone create a maritime lien,” but rather a maritime lien is created by a contractual relationship between the supplier and a party authorized to bind the Vessel.

Lastly, the Court also addressed Valero’s contention that the Commercial Instruments Maritime Lien Act (“CIMLA”), which provides the legal right to maritime liens, was designed to protect American companies from foreign traders’ failure to pay for necessaries. The Court rejected this argument on the basis that “[this] Court cannot favor American companies so heavily as to ignore CIMLA’s third statutory requirement for asserting a maritime lien; namely, that the provision of necessaries to a vessel be ‘on the order of the owner or a person authorized by the owner.” Therefore, despite Valero’s attempts to expand protections for American companies in terms of maritime liens, the Eastern District of Louisiana held that the statutory requirements set forth in CIMLA were not met because the fuel order was not made by the Owner or a party authorized to bind the vessel. Holding that mere acceptance of a necessary does not create a contractual relationship between a supplier and the Vessel’s owner, the Court found Valero’s maritime lien invalid.

The U.S. Fifth Circuit issued a decision this week that addresses the murky question of what law applies to offshore incidents. It illustrates that the choice of law issue is not merely academic but has important real-world consequences. In this case it meant that a lawsuit for over $400,000,000 was given new life. See Petrobras Am., Inc. v. Vicinay Cadenas, S.A., No. 14-20589 (U.S. 5th Cir. 3/7/2016).

In October 2007, Petrobas America, Inc. (“Petrobas”) contracted with Technip USA, Inc. (“Technip”) to construct five “free-standing hybrid riser (“FSHR”) systems that move crude oil from wellheads on the seabed to “Floating Production Storage and Offloading” (“FPSP”) facilities on the surface of the sea. The FPSO facilities are independently moored to the seabed and store and offload, but do not transport, the production. The risers are fixed in place at the wellhead. From above, tether chains connect the upper risers to huge nitrogen-filled “buoyancy cans,” which are designed to keep tension in the risers so that they will not kink and impede the flow of oil. The buoyancy cans float 660 feet beneath the water surface; their tether chains play no role in securing the FPSO facilities.   The FSHR systems were located in the Chinook and Cascade fields in the Gulf of Mexico off the coast of Louisiana.

Technip subcontracted to Vicinay Cadenas, S.A. (“Vicinay”) the manufacture of these tether chains. Shortly after installation in March 2011, one of the tether chains broke, causing the loss of the associated FSHR system, loss of use of the FPSO facility, and lost oil and gas production. Petrobras and its underwriters sued Vicinay in March 2012 in federal district court in Houston asserting negligence, products liability, and failure to warn claims. Petrobas alleged subject matter jurisdiction based on admiralty or, alternatively, under OCSLA. Importantly, Petrobas did not assert that Louisiana law applied.

Vicinay moved for summary judgment, arguing that Petrobas’s economic damages claims were foreclosed under maritime law by East River Steamship Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 106 S. Ct. 2295 (1986). Notably, while opposing the motion, Petrobras did not contest the application of maritime law. The district court, assuming that maritime law applied, granted the motion for summary judgment. Two months later, Petrobas filed a motion for leave with the district court to amend its complaint and for the first time asserted that Louisiana law applied pursuant to the Outer Continental Shelf Lands Act (“OCSLA”). If Petrobas was correct and Louisiana law applied, then its claims should not have been dismissed because Louisiana law – unlike maritime law – allows for economic loss damages in this circumstance. See La. R.S. 9:2800.53(5); Chevron USA, Inc. v. Aker Mar., Inc., 604 F.3d 888 (5th Cir. 2010).

The magistrate denied the motion for leave because it was untimely, and the district court affirmed. Petrobas appealed. On appeal, the U.S. Fifth Circuit decided two issues: (1) Whether Petrobas waived the application of Louisiana law by failing to assert it until after summary judgment was granted; and (2) Whether maritime law or Louisiana law applied.

The U.S. Fifth Circuit held that Petrobas did not (and could not) waive the application of Louisiana law. Based on the line of cases holding that OCSLA is a congressionally-mandated choice of law that cannot be waived by agreement of the parties, the Court held that OCSLA could not be avoided “inadvertently.”

The Fifth Circuit also applied the PLT test and determined that Louisiana law, pursuant to OCSLA, applied. In doing so, the Court provided a very good analysis of the second element of PLT, whether “maritime law applies on its own force.” This element of the PLT test requires the performance of the Grubart “location” and “connection with maritime activity” tests. The Court had serious questions on whether the “location” test was satisfied, but found that since the “connection with maritime activity” test was not satisfied it did not need to reach the issue. The Court performed an excellent analysis of the “connection with maritime activity test” and explained how to properly apply it by analyzing the incident at an “intermediate level of generality.” In doing so, the 5th Circuit found that “the rupture of the tether chain was neither potentially nor actually disruptive to navigation and maritime commerce, not did it bear a substantial relationship to traditional maritime activity.” Therefore, maritime law did not apply on its own force, and per PLT, OCSLA and Louisiana law applied. The dismissal of Petrobas’ $400,000,000 damages claim was reversed, and the case was remanded to the district court for further proceedings.