Expectation vs. Reality: The importance of clearly outlining a vessel’s purpose in offshore platform contracts after Earnest, Offshore Oil Servs., and Genesis Energy
A trio of Fifth Circuit opinions further analyzed the two-prong test created in In re Larry Doiron, Inc., 879 F.3d 568 (5th Cir. 2018) (en banc). The Doiron test asks (1) is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters? If so, (2) does the contract provide or do the parties expect that a vessel will play a substantial role in completion of the contract? If the answer to both is “yes,” then the contract is a maritime contract governed by the general maritime law. But if the answer is “no” to the second question, then the contract is nonmaritime.
For Houston maritime attorneys and businesses, the maritime/nonmaritime distinction is critical in determining whether general maritime law or state law applies to the contract. This has particular importance as applied to contracts involving offshore drilling platforms located on the outer continental shelf.[1] Under the Outer Continental Shelf Lands Act, the general maritime law applies to maritime contracts and state law applies to nonmaritime contracts.
Both Texas and Louisiana have oilfield anti-indemnity statutes that apply to nonmaritime offshore drilling platform contracts. The Texas statute is less stringent than Louisiana’s Oilfield Anti-Indemnity Act (LOAIA). Because the LOAIA nullifies defense and indemnity provisions subject to very narrow exceptions, the Fifth Circuit analyzed its application via Doiron’s maritime contract test in three recent cases.
[1] Even though these contracts may include choice-of-law provisions selecting the general maritime law as the governing law, they are not controlling.
Earnest v. Palfinger Marine U.S.A., Inc., 90 F.4th 804 (5th Cir. 2024)
In Earnest, the district court found that a contract to repair lifeboats on an offshore platform was nonmaritime because it did not call for the use of a vessel. The Fifth Circuit rejected this as an improper application of the Doiron test. Instead, the Doiron test focuses on whether the contract provides for, or the parties expect, that a vessel will play a substantial role in completing the contract. To have a substantial role, there must be a direct and substantial link between the contract and the operation of the ship, its navigation, or its management afloat.
The Fifth Circuit held that the contract in Earnest was a “classically maritime contract” for the following reasons:
- Nature and Character of the Contract: The contract’s substance was for the repair and maintenance of vessels necessary to support offshore drilling and production of oil and gas.
- Vessel Use: The use of a vessel is not determinative of its role in the contract under Doiron’s second prong. Rather, the focus is whether the vessel’s role in the contract is substantial or incidental. A contract for maintenance and repair of a vessel “inevitably” gives it a substantial role.
- Maritime Commerce: A vessel does not need to be engaged in maritime commerce to satisfy the first prong of the Doiron test. Here, offshore drilling and production (maritime commerce) could not occur unless the lifeboats were repaired and maintained per Coast Guard regulations. So, the contract to repair and maintain lifeboats was a necessary condition to facilitate maritime commerce, making it a maritime contract.
Offshore Oil Services, Inc. v. Island Operating Co., Inc., 150 F.4th 677 (5th Cir. 2025)
In this case, the Fifth Circuit distinguished Earnest as applied to a contract for mostly traditional oil and gas production services at an offshore platform. The court held that the contract was nonmaritime for the following reasons:
- Nonmaritime Contract: The court determined the contract was nonmaritime because its terms concerned services traditionally related to oil and gas production, which are considered nonmaritime activities. Record evidence also established that the parties did not expect vessels to play a substantial role in completing the contract.
- Incidental Vessel Use: Merely referring to marine transportation for workers and equipment did not establish a substantial role for vessels. The court characterized worker and equipment transport as incidental tasks.
- Atypical Maritime Tasks: Even when employees perform some maritime tasks like transferring equipment from a vessel to a platform, these tasks are incidental to the contract. Thus, nonmaritime contracts can involve occasional or “atypical” maritime work without changing the overall nonmaritime nature of the agreement.
- Vessel Use: The court clarified a point under Earnest. Vessel use may play a role in the Doiron analysis, but only when the contract’s terms and/or the parties’ expectations are unclear. Even then, the vessel’s use is not a distinct test. But here, both the terms of the contract and the parties’ expectations were clear, so vessel use did not factor into the court’s analysis.
Genesis Energy, L.P. v. Danos, L.L.C., 152 F.4th 648 (5th Cir. 2025)
The most recent case from the Fifth Circuit further distinguished the Earnest holding. The court held the underlying contract for repairs to an offshore platform was nonmaritime for the following reasons:
- Nonmaritime Nature of the Contract: The contract was nonmaritime because its terms centered on traditional oil and gas platform operations, with the vessel’s role limited to incidental/ancillary tasks like housing the crew and transporting materials, rather than playing a substantial role in the work.
- Attenuated Connection to the Vessel: The court noted several examples of substantial roles for a vessel where the parties expected to use it as a “necessary work platform” under the contract. Here, the parties’ expectations under the contract only established an “attenuated connection” between the vessel and the contract’s core work. The vessel’s primary functions were transporting supplies and housing the crew, which were insubstantial roles under the Doiron test.
- Further Distinguishing Earnest: Contracts for vessel repairs, like the one in Earnest, by their very nature contemplate that a vessel is necessary to perform the job. The same is not true for contracts to repair an offshore platform. For those contracts, the “proper focus” is whether the vessel is substantially involved in the actual work and use. Here, the vessel’s role was not necessary for completing the core tasks of the contract, further supporting its nonmaritime classification. By contrast, the lifeboats in Earnest “inevitably” had a substantial role in the contract for their maintenance and repair.
Key Takeaways
The Fifth Circuit’s recent trilogy of cases narrows the definition of a maritime contract under the Doiron test. An offshore oil and gas contract must contemplate an integral role for vessels by its terms and/or the parties must expect the vessel will play that role. If not, the contract will likely be construed as nonmaritime and state law will govern. To avoid any issues with state law anti-indemnity provisions invalidating defense and indemnity arrangements, offshore oil and gas operators and contractors should draft future contracts with these considerations in mind.
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