5th Circuit Rules in Favor of Offshore Contractors on Contractor Liability under OCSLA

Houston (28 September 2017) – Today, a panel of the U.S. 5th Circuit Court of Appeals ruled against the government with regard to its attempt to exercise criminal enforcement powers against contractors and subcontractors.

The case stems from a fatal welding accident that occurred on an offshore oil platform in the Gulf of Mexico in November of 2012. The government charged the owner and operator of the platform, Black Elk Energy, with criminal violations of the Outer Continental Shelf Lands Act and the Clean Water Act and sought to impose criminal penalties under OCSLA against contractors working on the platform.

In today’s ruling, the court stated, “For over 60 years, the federal government did not regulate or prosecute oilfield contractors, as opposed to lessees, permittees, or well operators under OSCLA” and affirmed the District Court ruling that ‘none of the OCSLA regulations apply to oilfield contractors’. In response, IADC President Jason McFarland issued the following statement:

“This is not about safe and environmentally sound operations, to which our members, and our industry, are committed, but about due process. Today’s ruling affirms that a regulatory agency cannot, through policy statement and without notice and comment rulemaking, abandon decades of administrative practice so as to criminalize the conduct of contractors, subcontractors and individuals broaching a rule that was never crafted to apply to them. As the Administration’s regulatory reform efforts move forward, we are committed to working with the Department of Interior and its bureaus to produce regulations that ensure safe working conditions, are protective of the environment and which are clear in their allocation of responsibility and liability.”

ABOUT IADC

Since 1940, the International Association of Drilling Contractors (IADC) has exclusively represented the worldwide oil and gas drilling industry. IADC’s mission is to catalyze improved performance for the drilling industry by enhancing operational integrity and championing better regulation to facilitate safer, cleaner and more efficient drilling operations worldwide. For more information, visit the IADC website at www.iadc.org.