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District Courts Continue To Agree That Production SPARs Are Not Vessels

By R. Lee Vail

A spar is a nautical structure designed to float with the bulk of the hull below the waves-something akin to a giant buoy. Fields v. Pool Offshore, Inc., 182 F.3d 353(5th Cir. 1999). Spars are essential to the expansion of oil production in deep water and their use has led to the legal question of their status. Are they vessels? Consistent with the Fifth Circuit Court of Appeals's three part test, several recent decisions in Texas District Courts have found that a SPAR is a work platform and not a vessel. The finding is important since jurisdiction of a Jones Act action requires the existence of a vessel.

In Fields, the Fifth Circuit laid out the three part test to distinguish 'stationary' work platforms from vessels. These factors include the function of the structure, whether it is moored or secured at the time of the accident, and that it has greater than theoretical mobility. Fields distinguished spars from drilling rigs, as rig move from site to site; spars are committed to a particular location. Spars have elaborate methods of attaching to the sea floor which would be difficult and expensive to undue; drilling rigs do not. Subsequent to Fields, the United States Supreme Court clarified that the distinction was not time dependent; that is it did not flip back and forth dependent on when the accident occurred. Following is a summary of recent cases which have applied the above test.
 

In Jordan v. Shell Oil Co., 2007 WL 2220986 (S.D.Tex. 2007), the court granted a request for summary judgment since the spar, the URSA was not vessel. The court noted that spar was towed in portions, assembled over a period of years and once assembled was practically incapable of maritime transportation.

In contrast, in Nottingham v. Murphy Oil USA, Inc., 2009 WL 50160 (E.D. La. 2009), the court found that 'both the MEDUSA and the lifeboats possess some vessel characteristics' and denied the defendants motion for summary judgment considering the question of a vessel was a question of fact to be decided by a jury. Murphy Oil subsequently settled the case and was dismissed by order dated November 11, 2010.

In Moore v. Bis Salamis, Inc., 2010 WL 3745023 (E.D.Tex. 2010) and, Scroggs v. Bis Salamis, Inc., 2010 WL 3910563 (E.D.Tex. 2010), the court found the reasoning in Jordan persuasive, likewise dismissing the case under summary judgment, despite also finding that 'Thunder Horse's attachment to its current location less extensive than URSA's'. The court further found that Thunder Horse's capability of moving laterally within a 700 foot radius as 'merely incidental to its function as a work platform and, thus does not render it practically capable of maritime transportation.' The court put the greatest weight on Thunder Horse's 'extensive attachment to the ocean floor and long term commitment to a single location.'

Most recently, in Mendez v. Anadarko Petroleum, Corp., 2010 WL 4644049 (S.D. Tex. 2010) the court found, as a matter of law, that the Red Hawk spar was not a vessel and denied the plaintiffs motion to remand to state court. The court was unmoved by the fact that Anadarko had performed a study and determine the cost ($42 million) to move the spar. A theoretical capability was insufficient. Further, the presence of safety equipment consistent with a vessel (life jackets, ring buoys, inflatable rafts) did not weigh in favor of finding the spar to be a vessel. It was the type of equipment one expected to see on a structure 120 miles from the coast.

Full post as published by Louisiana Law Blog on December 28, 2010 (boomark / email).