Offshore exploration in the Gulf of Mexico implicates maritime law, federal law, and the different laws of five coastal states. The manner in which these different substantive laws interact is often a critical, but unclear, issue. Nowhere is this more apparent than when pollution occurs during exploration on the Outer Continental Shelf due to a maritime tort and causes damage to multiple states' coastlines. In providing clarity on this complex issue by recently striking any state law claims, the U.S. Fifth Circuit warned of the operational burden and added compliance costs to the offshore industry if it were subject to multiple state pollution laws and unclear regulations.
The court recently addressed whether state law claims by local governments could co-exist and supplement the Clean Water Act (CWA) and the Oil Pollution Act (OPA). In re DEEPWATER HORIZON, 745 F.3d 157 (5th Cir. 2014). Specifically, the court addressed whether states retain the right under their historic police powers to deter oil pollution and protect wildlife notwithstanding the application of these federal statutes; and whether the savings clauses in both federal statutes were sufficiently broad to preserve the state law claims. The district court answered both issues in the negative, dismissing the state law claims on federal preemption grounds. The Fifth Circuit affirmed.
Eleven coastal Louisiana parishes filed suit attempting to recover damages under the Louisiana Wildlife Protection Statute that authorizes civil penalties against any person who "through violation of any other state or federal law or regulation" kills or injures fish or wildlife. The CWA prevents a court from applying the law of an affected state against an out of state source. The Fifth Circuit rejected the parishes attempt to limit this point source primacy to discharges in neighboring states as opposed to discharges occurring on a federal enclave such as the OCS. The court discerned no difference where a federal substantive law provides similar and adequate relief for a discharge occurring on the OCS. As the Fifth Circuit observed, "the affected parties can sue for the generous remedies, including for loss of wildlife, that the OPA offers." Id. at 170.
The Fifth Circuit expressly recognized that to hold otherwise would create a chilling effect on offshore exploration. The court importantly noted, "if entities engaged in developing the OCS were subjected to a multiplicity of state laws in addition to federal regulations, they could be forced to adopt entirely different operational plans or in the worst case be deterred by the redundancy and lack of regulatory clarity from even pursuing their OCS plans. The reasons for avoiding redundant or conflicting legal regimes are equally potent whether the point source is located in a state or a federal enclave." Id. at 171.
The savings clauses in the federal statutes did not otherwise preserve these state law claims. The court readily found the CWA savings clause, by its own terms, only saved those state laws where the discharge originated in the state—not where the discharge passively migrated into a state to cause damage.
Unlike the CWA, the OPA savings cause broadly preserves a state's right to impose any fine or penalty, regardless of the point of discharge. While the language may be broad, the OPA was designed and enacted to complement the CWA, requiring the statutes to be read in context with one another. Even though state law claims may be saved under the OPA, they must nevertheless yield to the federal preemption required by the CWA's point-source primacy. To hold otherwise, the court noted, would allow the OPA to impliedly repeal or modify a central tenet of the CWA, a result which is unsupported by the text or purpose of the OPA. As such, the parishes' state law claims are preempted by federal statute and not otherwise preserved by any savings statute.
The Fifth Circuit's decision on the preemption of state law claims provides important clarity on the risks that a company may face after an offshore pollution event. This decision eliminates the risk that operators and other parties may have to comply with a "multiplicity of state laws in addition to federal regulations." With this knowledge, companies operating on the OCS are better able to allocate pollution risk through their contractual allocation of risk, and the purchase of insurance.