Oil and gas companies and their attorneys should take note: Some district courts within the U.S. Court of Appeals for the Fifth Circuit appear to be watering down the Outer Continental Shelf Lands Act, a powerful—albeit underutilized—tool for the removal to federal court of oil and gas disputes otherwise governed by state law.
The Fifth Circuit in In re Deepwater Horizon in 2014 reaffirmed decades of precedent in holding that OCSLA requires only a “but for” connection between a dispute and an “operation” on the Outer Continental Shelf. As any first-year tort student knows, a “but for” test is quite broad. Such a test captures a host of activities related to both offshore production and onshore activities related to that production, including the operation of processing facilities, pipelines, ports, and waste management facilities. Since Deepwater Horizon, however, some lower courts have interpreted the decision to effectively eliminate the “but for” test, and thereby drastically limit the scope of OCSLA jurisdiction. This article explains the tension between the Fifth Circuit’s standard and its recent application by the lower courts.
