Texas Federal Court Finds Alabama, Not Louisiana Proper Adjacent State Of Offshore Platform In Indemnity Dispute

For work on a platform in the Gulf of Mexico, the operator of the platform and a contractor entered a master service contract in which each agreed to indemnify the other for the injuries of their own employees.  An employee of the operator was injured on the platform and the worker filed suit against the operator and the contractor in Louisiana federal court.  The contractor brought a cross claim against the operator to enforce its indemnity provision and the Louisiana court transferred the cross claim to the U.S. District Court for the Southern District of Texas pursuant to a forum selection clause in the master service contract.  The contractor filed a motion for partial summary judgment seeking a determination that the defense and indemnity provisions of its contract were enforceable against the operator.

To decide the motion, the court had to determine whether Alabama or Louisiana was the “adjacent state” to the offshore platform under the Outer Continental Shelf Lands Act to determine which state’s law to apply where gaps in federal law existed.  The operator contended that Louisiana was the adjacent state, which would render the indemnity provisions unenforceable under the Louisiana Oilfield Indemnity Act.  The court, however, concluded that Alabama is the adjacent state and that Alabama law applies.  The court rejected the operator’s argument that the President had established a boundary for purposes of OCSLA through the former Minerals Management Services administrative boundaries formed in 2006.  The court proceeded to analyze the four factors from Snyder Oil Corp. v. Samedan Oil Corp., 208 F.3d 521 (5th Cir. 2000), to determine that Alabama is the proper adjacent state.  Even though the platform was closer to Louisiana, the other three factors (the projected boundaries of the states, federal agency determinations, and prior court determinations) weighed in favor of Alabama.