Offshore

Subscribe to Offshore via RSS

The Bureau of Ocean Energy Management (“BOEM”) and the Bureau of Safety and Environmental Enforcement (“BSEE”) recently issued a proposed rule on Risk Management, Financial Assurance and Loss Prevention (“Proposed Rule”), which was published in the Federal Register on October 16, 2020 and is now open for public comment. The Proposed Rule is the result of an extended effort by the Department of Interior, through its subagencies BOEM and BSEE to “streamline its evaluation criteria for determining whether oil, gas and sulfur lessees, right-of-use and easement (RUE) grant holders, and pipeline right-of-way grant holders may be required to provide bonds or other security above the prescribed amounts for base bonds to ensure compliance with their Outer Continental Shelf (OCS) obligations,” primarily decommissioning obligations. The path to this Proposed Rule has been long and winding, beginning in 2014 with BOEM resisting making changes through formal notice and comment rulemaking pursuant to the Administrative Procedures Act, and instead continuing to regulate this issue through Notice to Lessee (“NTL”) guidance documents. BOEM issued the last and most controversial NTL, NTL No. 2016-N01, in 2016, which created widespread industry concern, and, as a result, was never fully implemented.

Below is a summary of the current regulations and some of the more significant proposed changes.
Continue Reading Department of Interior Proposes New Financial Assurance and Decommissioning Regulations

U.S. and European major oil companies are beginning to re-evaluate their business structure and investment strategies in light of the current financial, legal, and social climate. In response, the industry is seeing a varying degree of investments in renewable energy and commitments to climate-related goals.  As companies make this transition into renewable energy, one sector picking up speed is wind energy.

BP, which rebranded itself as “Beyond Petroleum” in 2000, announced in February of this year its plans of becoming a net-zero emissions company by 2050. In August, BP set forth its strategy towards net-zero emissions, which includes plans to have 50 gigawatts of renewable generating capacity by 2030, up from the 2.5 gigawatts it currently has.Continue Reading Oil Majors’ Commitment to Net-Zero Emissions Leads to Investments in Wind Energy

The long-awaited proposed changes to the Department of Interior’s Financial Assurance Rule (“Proposed Rule”) were finally announced yesterday by the Trump Administration.  The announcement provides, among other things, that the proposed rulemaking is in efforts to clarify, streamline and provide greater transparency to the financial assurance requirements (e.g., supplemental bonding) for OCS lessees and grant holders of pipeline rights-of-way (“ROW”) and rights-of-use and easement (“RUE”), while protecting U.S. taxpayers against picking up the tab for high-risk decommissioning liabilities.  Once this Proposed Rule is published in the Federal Register (date yet to be announced), the public will have a 60-day comment period.
Continue Reading DOI Announcement of a Proposed Rule on Risk Management, Financial Assurance and Loss Prevention

On July 15, 2020, the Unites States Customs and Border Protection (“CBP”) issued a ruling (HQ H309672) in connection with the installation of an offshore wind farm located off the coast of Rhode Island and Massachusetts in U.S. territorial waters (the “July 15 Ruling”).  CBP determined that activities to be conducted in connection with the installation of offshore wind turbine generator (“WTG”) units using a non-coastwise-qualified jack up vessel (i.e., not a Jones Act compliant vessel) (the “Installation Vessel”) did not violate the Jones Act (46 U.S.C. § 55102) (or the Passenger Vessel Services Act (46 U.S.C. § 55103)).
Continue Reading U.S. Customs Revokes Recent Offshore Wind Ruling; Maintains Uncertainty Whether the Jones Act Applies to Wind Farm Installations on the OCS

Yesterday, the United State Department of Interior (DOI) announced the execution of a Memorandum of Understanding (MOU) with the Ministry of Petroleum and Energy of the Kingdom of Norway to formalize a partnership to share best practices, knowledge, experience, policy, and regulatory initiatives in connection with the development of as oil, gas, and wind energy resources.
Continue Reading U.S. Department of Interior Announces Formal Partnership with Norway to Promote and Share Offshore Energy Knowledge and Experience

In Mays v. Chevron Pipe Line Co., 2020 WL 4432025, a three-judge panel of the United States Fifth Circuit Court of Appeal held on August 3, 2020, that the Longshore Harbor Workers’ Compensation Act may apply to an injury in state territorial waters if there is a substantial nexus between an employee’s injury and his employer’s, both direct and statutory, extractive operations on the Outer Continental Shelf.
Continue Reading U.S. Fifth Circuit Clarifies “Substantial Nexus” Test for LHWCA

In recent years, there has been an increase in the number of denials of applications to decommission offshore pipelines in place in a departure from the Bureau of Safety and Environmental Enforcement’s (“BSEE”) longstanding practices.  The denials are accompanied by an order from BSEE to decommission the pipelines by removal, with reference to Notice to Lessees (“NTL”) 2009-G04 and/or “significant sediment resource areas” (“SSRA”) in the vicinity of the pipeline.  BSEE is also issuing orders to companies to remove pipelines located in SSRAs that were previously decommissioned in place.

Continue Reading Federal Offshore Pipeline Decommissioning in BOEM Significant Sediment Resource Areas

Last year, in another dispute over who should bear the cost of decommissioning offshore facilities, the Southern District of Texas held that a former sub-assignee of offshore operating rights was entitled to equitable subrogation from the record title owner and initial assignor.  Sojitz Energy Venture, Inc. v. Union Oil Co. of California, 394 F. Supp. 3d 687 (S.D. Tex. 2019).Continue Reading Fifth Circuit to Hold Oral Argument in Sojitz v. UNOCAL in April 2020

The Bureau of Ocean Energy Management (BOEM) recently issued an Information to Lessees (ITL) regarding the potential applicability of new regulations issued by the Committee on Foreign Investment in the United States (CFIUS) to bids at the upcoming March 18th federal offshore lease sale (Lease Sale 254), which will offer for lease all available, unleased acreage in the Gulf of Mexico region.

Continue Reading Increasing Scrutiny of Foreign Investment in the U.S.: BOEM Puts Companies on Notice of Potential CFIUS Review of Bids at Upcoming Federal Offshore Lease Sale

In a stark reminder of the sanctity of Coast Guard investigations, and the consequences of impeding such investigations, the U.S. Department of Labor’s Occupational Safety and Health Administration (“OSHA”) recently took action against a maritime employer for allegedly retaliating against a seaman who cooperated with the Coast Guard in connection with its investigation of a maritime casualty.  On October 20, 2017, Bouchard Transportation’s ATB BUSTER BOUCHARD/B. NO. 255 suffered an explosion and fire while transporting roughly 2,000 barrels of oil off Port Aransas, Texas.  Two crewmembers perished as a result of the casualty.  The brother of one of the deceased crewmembers, who also happened to be a Bouchard Transportation employee, cooperated with the Coast Guard in the ensuing investigation.  Three months later, the surviving brother was terminated without explanation.  OSHA found the termination constituted a retaliatory discharge in violation of the Seaman’s Protection Act (46 U.S.C. §2114) (the “SPA”).  In broad terms, the SPA prohibits maritime employers from terminating or discriminating against seamen who cooperate with Coast Guard, Department of Labor or National Transportation Safety Board investigations.  The obvious intent of the SPA is to guaranty “that, when seamen provide information of dangerous situations to the Coast Guard, they will be free from the “debilitating threat of employment reprisals for publicly asserting company violations” of maritime statutes or regulations.”  Gaffney v. Riverboat Services of Indiana, Inc., 451 F.3d 424, 444 (7th Cir. 2006).  In 2010, Congress empowered OSHA to administer claims arising under the SPA.Continue Reading OSHA Awards Damages for Retaliatory Discharge of Jones Act Seaman in Violation of Seaman’s Protection Act