Total E&P USA, Inc. v. Marubeni Oil & Gas (USA), Inc. et al

MOTION for Partial Summary Judgment on Choice of Law

S.D. Tex.December 22, 2017

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION TOTAL E&P USA, INC. * CIVIL ACTION NO. Plaintiff * 4:16-cv-02674 * v. * JUDGE DAVID HITTNER * MARUBENI OIL & GAS (USA) INC. * Defendant * ************************************* MARUBENI OIL & GAS (USA) LLC’S MOTION FOR PARTIAL SUMMARY JUDGMENT ON CHOICE OF LAW Marubeni Oil & Gas (USA) LLC (“MOGUS”), through undersigned counsel, hereby moves for partial summary judgment under Rule 56 of the Federal Rules of Civil Procedure on the issue of choice of law. Concurrently herewith, MOGUS has filed three motions for partial summary judgement to establish liability against Total E&P USA, Inc. (“TOTAL”), reserving quantum for trial (the “Liability Motions”). MOGUS adopts and incorporates the Liability Motions herein by reference in globo for all purposes. The sole issue presented in this motion is whether Alabama law or Louisiana law governs where federal law does not apply to a particular issue. MOGUS contends, for the reasons stated below, that Alabama law applies in all such instances. Case 4:16-cv-02674 Document 157 Filed in TXSD on 12/22/17 Page 1 of 13 2 UNDISPUTED FACTS MOGUS adopts and incorporates all facts stated in the Liability Motions. For purposes of this Motion, the following additional facts are material and undisputed: Mississippi Canyon Block 305 (“MC 305”), Mississippi Canyon Block 348, (“MC 348”), and the Canyon Express Pipeline System (“CEPS”) are located on the Outer Continental Shelf (“OCS”) in the Gulf of Mexico.1 The CEPS traverses from MC 305 and MC 348 in a north/northeasterly direction and terminates at Main Pass Block 261.2 Attached as Exhibit A-1 is copy of a map included on the Bureau of Ocean Energy Management website (https//:boem.gov), which is utilized by the oil and gas industry.3 Exhibit A-2 is the same map cropped/magnified to focus in on the area of the Gulf of Mexico associated with the Liability Motions, with MC 305, MC 348, and Main Pass Block 261 identified.4 MP 261 is where the Canyon Station Platform is located, which is the termination point for the CEPS.5 MC 305, MC 348, and MP 261, and the area between MC 305/348 and MP 261 where CEPS is located, are all due south of Alabama.6 1 See Declaration of Kenneth Kuykendall attached hereto as Exhibit A. 2 Id. 3 Id., authenticating Exhibit A-1. The map can also be found https://www.boem.gov/Visual-1-Active-Leases-and- Infrastructure/. In addition, the Court can take judicial notice of this map pursuant to Fed. R. Evid. 201(b) for all purposes; see also Rooster Petroleum, LLC v. Fairways Offshore Exploration, Inc., No. 12-1322, 2013 WL 627437, at *7 n.4 (E.D. La. Dec. 4, 2013) (considering Fed. R. Evid. 201(b) and ruling courts can take[s] judicial notice of the date provided from BSEE’s website.”) 4 Exhibit A, authenticating Exhibit A-2 and the markings thereon. In addition, the Court can take judicial notice of this map pursuant to Fed. R. Evid. 201(b). See also note 3, supra. 5 See Declaration of Kenneth Kuykendall attached hereto as Exhibit A 6 See Declaration of Kenneth Kuykendall attached hereto as Exhibit A. Case 4:16-cv-02674 Document 157 Filed in TXSD on 12/22/17 Page 2 of 13 3 LAW AND ARGUMENT I. SUMMARY JUDGMENT STANDARD. A court shall grant summary judgment “if the movant shows that there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law.”7 Federal courts favor granting summary judgment “to achieve the just, speedy, and inexpensive disposition of actions.”8 “Which state’s substantive law governs an issue is a question of law for the court to decide.”9 Where no facts concerning which state’s law controls are disputed, the issue may be resolved on summary judgment.10 II. ALABAMA LAW APPLIES TO THIS DISPUTE. The choice-of-law analysis for an incident or a contract related to offshore activities in the Gulf of Mexico depends in part on whether the incident or the scope of the contract in question contemplates oil and gas operations in territorial state waters or on the Outer Continental Shelf (“OCS”). Choice of law within state waters will be controlled by the choice-of-law rules of the particular state (or maritime law if it applies to the facts). The choice-of-law analysis for events or contracts related 7 Fed. R. Civ. P. 56(a). 8 Fontenot v. Upjohn Co., 780 F.2d 1190, 1197 (5th Cir. 1986). 9 In re Cyrus II P'ship, 413 B.R. 609, 612 (Bankr. S.D. Tex.2008) (citing Aqua–Marine Constructors, Inc. v. Banks, 110 F.3d 663, 667 (9th Cir.1997)). 10 Id. (citing Hughes Wood Prods., Inc. v. Wagner, 18 S.W.3d 202, 204 (Tex.2000) (finding disputed issues of fact preclude summary judgment on choice of law); see also Benchmark Elecs., Inc. v. J.M. Huber Corp., 343 F.3d 719, 726 (5th Cir.2003), opinion modified on denial of reh'g, 355 F.3d 356 (5th Cir.2003) (resolving choice of law issues on summary judgment). Case 4:16-cv-02674 Document 157 Filed in TXSD on 12/22/17 Page 3 of 13 4 to OCS oil and gas operations is controlled by the Outer Continental Shelf Lands Act (“OCSLA”).11 Notably, OCSLA has its own choice-of-law rules, which override any contractual choice-of-law stipulated by contracting parties.12 Before the choice-of- law rules may be applied, however, OCSLA jurisdiction must be established. In this matter, the parties do not dispute that OCSLA applies to the issues not governed directly by federal law. The Fifth Circuit has regularly applied the broad OCSLA jurisdictional grant in contract cases “arising out of” or “in connection with” exploration, development, or production operations on the OCS. Even where the contractual dispute is “one step removed” from exploration, development, or production activities, the Fifth Circuit has found OCSLA provides federal jurisdiction.13 Specifically, decommissioning operations have been considered exploration, development, or production operations on the OCS for jurisdictional purposes.14 11 43 U.S.C. 1331, et seq. 12 Union Texas Petroleum Corp. v. P.L.T. Engineering, Inc., 895 F.2d 1043, 1050 (5th Cir. 1990). 13 United Offshore Co. v. S. Deepwater Pipeline Co., 899 F.2d 405 (5th Cir. 1990). 14 See Howell v. Avante Servs., LLC, CIV.A. 12-2448, 2013 WL 1681436, at *1 (E.D. La. Apr. 17, 2013) (noting court had federal jurisdiction under OCLSA for suit related to decommissioning operations); and Cutting Underwater Technologies USA, Inc. v. Con-Dive, LLC, CIV.A. 09-387, 2011 WL 1103679, at *5 (E.D. La. Mar. 22, 2011) aff'd sub nom. Cutting Underwater Technologies USA, Inc. v. Eni U.S. Operating Co., 671 F.3d 512 (5th Cir. 2012) (jurisdiction under OCSLA for suit arising out of contracts for the provision of services in connection with decommissioning activities). Case 4:16-cv-02674 Document 157 Filed in TXSD on 12/22/17 Page 4 of 13 5 OCSLA contains a specific choice of law provision which controls what law will govern claims arising on the OCS after OCSLA jurisdiction is established.15 The Fifth Circuit has held that this choice of law provision applies mandatorily and overrides the parties’ contractual selection of another law to apply or govern. Therefore, while parties often attempt to choose maritime law or the laws of a particular state to govern their contracts associated with OCS activities, OCSLA may mandate that such choice be ignored in favor of application of the adjacent state's substantive law. Specifically, section 1333(a)(2)(A) of OCSLA provides: To the extent that they are applicable . . . 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 subsoil and seabed of the Outer Continental Shelf, and artificial islands and fixed structures erected thereon, which would be within the area of the State if its boundaries were extended seaward . . .. In short, OCSLA provides that if a dispute arises out of oil and gas operations conducted on the OCS, specifically including decommissioning obligations, the adjacent state’s laws are applied as “surrogate federal law,” and are considered exclusive federal law when applied under OCSLA.16 Pursuant to 43 U.S.C.A. § 1333(a)(2)(A), the President of the United States was to “determine and publish in the Federal Register such projected boundaries extending seaward and defining each such area.” However, since OCSLA was 15 Union Texas Petroleum Corp. v. PLT Eng’g 895 F.2d 1043 (5th Cir. 1990). 16 43 U.S.C. § 1333(a)(1). Case 4:16-cv-02674 Document 157 Filed in TXSD on 12/22/17 Page 5 of 13 6 passed in the 1950’s, no President has ever undertaken this task and such projection lines have never been drawn. As such, jurisprudence is the guide in determining state adjacency for OCSLA purposes. Courts have considered a number of relevant factors to determine the adjacent state. In Reeves v. B & S Welding, Inc., the Fifth Circuit reviewed four types of evidence, namely (i) geographic proximity; (ii) considerations of other federal agencies as to which state was adjacent to a particular offshore block; (iii) prior court determinations; and (iv) projected boundaries to determine which state was the adjacent state.17 Further, in a subsequent Fifth Circuit case, Snyder Oil Corp. v. Samedan Oil Corp., the court refused to follow a strict formalistic test and determined that as long as the President fails to perform and publish the §1333 (a)(2)(A) projections, all relevant evidence should be considered to determine the adjacent state.18 Thus, the geographic proximity of an offshore block to a particular state is not necessarily conclusive of the adjacent state law application. Therefore, all four factors from Reeves should be analyzed. Brief commentary on these factors follows. 17 Reeves v. B & S Welding, Inc., 897 F. 2d 178 (5th Cir. 1990). 18 Snyder Oil Corp. v. Samedan Oil Corp., 208 F. 3d 521 (5th Cir. 2000). Case 4:16-cv-02674 Document 157 Filed in TXSD on 12/22/17 Page 6 of 13 7 1. Geographic Proximity. Geographic proximity is based on how close the property in question is to the states in question. The parties in Danos & Curole Marine Contractors, Inc. v. BP America Production Company agreed for purposes of the lawsuit that the platform made the subject of the litigation was closer to Louisiana. However, the court concluded, after analyzing the other three factors from Reeves, that the platform was adjacent to Alabama for choice of law purposes.19 Because proximity is not the sole determining factor, MOGUS believes the remaining three factors demonstrate that Alabama law should be applied to this dispute. 2. Agency Determinations. Agency determinations are relevant in the adjacent state analysis because agency “determinations of projected boundaries, or other determinations of a similar nature, make it more probable that if the President does ever ‘project boundaries’ those boundaries will be consistent with these other agency determinations.”20 Amongst multiple agency determinations, one agency’s determinations may be more probative than others if it is believed that the agency more closely followed the dictates of §1333(a)(2)(A). Pertinent examples of federal agency determinations that are probative to state adjacency determinations are (i) BOEM notices to pipeline 19 Danos & Curole Marine Contractors, Inc. v. BP America Production Company, (No. 13-3803, 2014 WL 6477175, at 6 (S.D. Tex. Nov. 18, 2014) 20 Snyder Oil, 208 F. 3d 521 at 525 (5th Cir. 2000). Case 4:16-cv-02674 Document 157 Filed in TXSD on 12/22/17 Page 7 of 13 8 right-of-way holders in the OCS listing what states are “affected states” with respect to a pipeline and (ii) BOEM’s OCS Plans Map for the Coastal Zone Management Program.21 CEPS is comprised of several rights-of-way originally granted by the Minerals Management Service of the Department of the Interior (now administered by the Bureau of Safety and Environmental Enforcement (“BSEE”)), and these rights of way generally traverse the following lease blocks after production was gathered from the Canyon Express Assets: Desoto Canyon Blocks: 221, 177, 133, 89; Mississippi Canyon Blocks 45, 85, 41; Viosca Knoll Blocks 1003, 1002, 958, 914, 913, 869, 825, 781, 780, 682; and Main Pass Blocks 260, 261.22 Attached as Exhibit B is NTL 2007-G20, which includes as Attachment No. 1 to Exhibit A an identification of specific lease blocks for which Alabama is the affected state for right-of-way purposes.23 All of the lease blocks through which CEPS traverses are included in Attachment 1 to Appendix A included in Exhibit B attached hereto,24 demonstrating that Alabama is the “affected state” for Coastal Zone Management purposes for part of the infrastructure (e.g. CEPS) made the subject of this lawsuit, 21 See Danos & Curole Marine Contractors, Inc. v. BP America Production Company, USDC SDTX, Case No. 4:13-cv-03803, Docket 20-4. 22 See Exhibit A and Exhibit A-3. 23 NTL stand for Notice to Lessees and are the Department of the Interior’s pronouncements on specific topics. NTL 2008-G20 attached as Exhibit B is entitled: Coastal Zone Management Program Requirements for OCS Right-of-Way Pipeline Applications. 24 See footnote 21, supra. Case 4:16-cv-02674 Document 157 Filed in TXSD on 12/22/17 Page 8 of 13 9 and for the very infrastructure transporting production from MC 305 and MC 348.25 In addition, several lease blocks included on Attachment 1 to Appendix A attached to NTL 2007-G20 are located between MC 305/MC 348 and the closed point of Louisiana. In addition, attached as Exhibit C is the OCS Plans Map for [the] Coastal Zone Management Program.26 MC 305, MC 348, MP 261 and all of CEPS clearly fall within the red zone indicating that they are a part of the Alabama CZM. These examples of adjacency determinations indicate that Alabama is the adjacent state for choice of law purposes under OCSLA. 3. Prior Court Determinations. Relevant prior court determinations are weighed in order to establish which state is adjacent to the property in question. A prior court decision that determines the adjacency of platforms or other infrastructure “in the vicinity” of the property at hand is considered a relevant court decision when weighing the factors from Reeves. MOGUS is unaware of any cases analyzing lease blocks in the vicinity of MC 305, MC 348, MP 261 and CEPS in which a court determined that Louisiana law applied through application OCSLA choice of law principles. 25 MOGUS notes that neither MC 305 nor MC 348 are included in Attachment 1 to Appendix A of NTL 2007-G20 included as Exhibit B. However, the laundry list of lease blocks stops with the row of lease blocks directly north of MC 305 (two rows north of MC 348), those being Mississippi Canyon Area Blocks 251-261 It should be noted, however, that the following lease blocks included on Attachment 1 to Appendix A of NTL 2007-G20 included as Exhibit B lie in between MC 305 and MC 348 and the nearest point in Louisiana (moving South to North): Mississippi Canyon Blocks 251-258, 155-169, 110-122, 64-72, and 20-29, and Viosca Knoll Blocks 983- 995 and 940-949. See Exhibit A. 26 See https://www.boem.gov/OCS-Plans-Map-for-CZM/. The Court can take judicial notice of this map pursuant to Fed. R. Evid. 201(b). See also note 3, supra. Case 4:16-cv-02674 Document 157 Filed in TXSD on 12/22/17 Page 9 of 13 10 Courts have determined that lease blocks “in the vicinity of” MC 305, MC 348, MP 261 and CEPS are adjacent to Alabama for choice of law purposes, such blocks including Viosca Knoll 823, Viosca Knoll 915, and Viosca Knoll 786.27 In fact, in addition to these court determinations, Snyder itself analyzed MP 261, the block on which the Canyon Station Platform and the end point of CEPS and where all of the production from MC 305 and MC 348 was processed, and determined that MP 261 was adjacent to Alabama for choice of law purposes.28 MC 305 and MC 348 are identified on Exhibit A-2, as are MP 261, Viosca Knoll 823, Viosca Knoll 915, and Viosca Knoll 786.29 The courts recognized that: (i) the lease blocks fell on the Alabama side of the seaward extension of state territorial boundaries; and (ii) agency determinations indicated that Alabama was treated as the adjacent state.30 Given the location of MC 305 and MC 348 relative to the blocks involved in each of these cases, the courts’ rationale in those cases persuasive for the analysis here. Accordingly, as in the Snyder Oil and Danos & 27 In Danos & Curole Marine Contractors, Inc. v. BP America Production Company, the court determined that the adjacent state of Viosca Knoll Block 915 was Alabama (No. 13-3803, 2014 WL 6477175, at 6 (S.D. Tex. Nov. 18, 2014). See also Brown v. Total E & P USA Inc., CIV.A. 07-8133, 2008 WL 4724309, at *1 (E.D. La. Oct. 24, 2008) (applying Alabama state law under OCSLA)(see minute entry attached as Exhibit D). Brown concerned injuries sustained by the plaintiff on TOTAL’s Viosca Knoll Block 823 production platform located in the Gulf of Mexico. Brown v. Total E & P USA Inc., 341 Fed.Appx. 24 (5th Cir.2009); and Texaco Exploration & Prod., Inc. v. AmClyde Engineered Prods., et al., Nos. 993623, 99–3646, 00–0813, 2008 WL 782818 n.1 (E.D.La. Mar.20, 2008) (stating that the parties agreed and the court determined Alabama law applied in dispute concerning Viosca Knoll 786). 28 The fact that several governmental agencies considered MP 261 to be off the coast of Alabama was relevant to the court’s determination that it was adjacent to Alabama for the choice of law determination. Snyder Oil, 208 F. 3d 521 at 528 (5th Cir. 2000). 29 See Exhibit A, authenticating Exhibit A-2. 30 Snyder Oil, 208 F. 3d 521 at 528; Danos & Curole, 61 F.Supp.3d at 692. Case 4:16-cv-02674 Document 157 Filed in TXSD on 12/22/17 Page 10 of 13 11 Curole , this Court should conclude that MC 305, MC 348 and CEPS are adjacent to Alabama and that Alabama law governs. 4. Boundary projections. The Fifth circuit has accepted two projected boundary lines to determine the adjacent state. The first boundary line is simply a continuation of the state’s boundary lines. The second boundary line is a north/south line extended from the point on the boundary marking the end of the state’s territorial claim.31 Employing the first of these tests is problematic because each state may create a continuation of its boundaries differently. The second test, however, is crystal clear and demonstrates that MC 305, MC 348, MP 261 and CEPS are all east of the Alabama/Mississippi boundary line projected due south, suggesting that it is appropriate to consider such properties adjacent to Alabama. CONCLUSION For the foregoing reasons, this Motion for Partial Summary Judgment on Choice of Law should be granted and this Court should determine that Alabama law applies to this dispute. 31 Reeves v. B & S Welding, Inc., 897 F. 2d 178 (5th Cir. 1990). Case 4:16-cv-02674 Document 157 Filed in TXSD on 12/22/17 Page 11 of 13 12 Respectfully submitted, LOOPER GOODWINE P.C. /s/ Paul J. Goodwine Paul J. Goodwine (Attorney-in-Charge) LA Bar No. 23757; SDTX ID No. 437800 Holly O. Thompson LA Bar No. 31277; SDTX ID No. 2953818 Taylor P. Mouledoux LA Bar No. 31889; SDTX ID No. 1581156 650 Poydras Street, Suite 2400 New Orleans, Louisiana 70130 Telephone: (504) 503-1500 Telecopier: (504) 503-1501 pgoodwine@loopergoodwine.com hthompson@loopergoodwine.com tmouledoux@loopergoodwine.com -and- SCHONEKAS, EVANS, McGOEY & McEACHIN, LLC Kyle Schonekas LA Bar No. 11817; SDTX ID No. 305350 Joelle F. Evans LA Bar No. 23730; SDTX ID No. 436275 Jacob K. Weixler LA Bar No. 36076; SDTX ID No. 2984836 909 Poydras Street, Suite 1600 New Orleans, LA 70112 Telephone: (504) 680-6050 Telecopier: (504) 680-6051 kyle@semmlaw.com joelle@semmlaw.com jake@semmlaw.com Attorneys for Marubeni Oil & Gas (USA) LLC Case 4:16-cv-02674 Document 157 Filed in TXSD on 12/22/17 Page 12 of 13 13 CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the above and foregoing pleading has been served on all counsel of record for the parties via e-mail, FedEx and/or by electronic filing in the Court’s electronic filing system on this 22nd day of December, 2017. /s/ Paul J. Goodwine Case 4:16-cv-02674 Document 157 Filed in TXSD on 12/22/17 Page 13 of 13