/>iIn October 2017, the Fifth Circuit released its opinion in United States v. Moss, et al., C.A. No. 16-30561 (5th Cir. Sept. 27, 2017), a case arising out of criminal charges for the alleged violation of safety regulations by various offshore contractors in connection with a November 2010 welding accident aboard an offshore production facility.
In 2013, the United States brought criminal indictments against the lessee and operator of the production facility, as well as several of the lessee’s contractors and their employees. Specifically, the “contractor parties” were charged with eight counts of knowing and willful violations of the Outer Continental Shelf Lands Act (OCSLA) enabling regulations. See 43 U.S.C. § 1350(c). The indictment also charged the lessee and one contractor with three counts of involuntary manslaughter, 18 U.S.C. §1112, and all of the defendants were charged with one count of violating the Clean Water Act, 33 U.S.C. §§ 1251 et seq., by negligently discharging oil into the Gulf of Mexico. The United States contended that “the contractors were criminally liable because they failed to obtain proper authorization to weld, failed to conduct appropriate pre-work inspections, and failed to ensure the construction area was safe for hot work as required by OCSLA safety regulations.”
In the district court, the “contractor parties” moved to dismiss all counts. The district court denied all of the motions to dismiss except with respect to the OCSLA charges, [1] which the district court granted for failure to state an offense on the grounds that OCSLA did not create criminal liability for contractors. The United States appealed. On appeal, the Fifth Circuit had to determine whether criminal liability arising under OCSLA could apply to contractors or, rather, was limited only to leaseholders.
In the Fifth Circuit, the United States raised a number of arguments regarding the interpretation of the OCSLA regulations. According to the United States, because the applicable OCSLA statute and regulations provide that “any person” who violates an OCSLA regulation is subject to criminal penalties, the “contractor parties” could face criminal charges. The Fifth Circuit, however, rejected this overly broad reading of the statutory text, noting instead that the applicable OCSLA statute, and the underlying regulations, explicitly limited criminal liability to lessees and permit holders and did not extend to contractors.
The United States also argued that the OCSLA statute and regulations created joint and several liability for contractors. The Fifth Circuit likewise rejected this argument, noting that an earlier section of the regulations limited their applicability to a lessee or permit holder. The Fifth Circuit also noted that joint and several liability was a theory that traditionally extended only to civil tort liability, not criminal liability.
Significantly, the Fifth Circuit held that under the applicable OCSLA statute and regulations, a contractor cannot be held criminally liable as a result of a lessee’s conduct or liability. Conversely, the lessee can be held criminally liable for the conduct of its contractors. This principle extends the regulatory framework put in place by OCSLA: that “lessees cannot escape responsibility for regulatory compliance by hiring out work to contractors.” The Fifth Circuit found, though, that the OCSLA statute and regulations were not meant to extend criminal liability to contractors. While the Fifth Circuit’s decision in Moss may address some concerns that offshore contractors had regarding criminal prosecution under OCSLA, the Fifth Circuit has not addressed the scope and extent of civil enforcement against a contractor by the Bureau of Safety and Environmental Enforcement (BSEE). We anticipate that it may do so in the near future.
[1] As noted above, the OCSLA charges included counts for “failing to perform pre-work inspections,” failing to obtain proper pre-welding authorizations, and failing to comply with other safety-related regulations. The United States contended that violation of these safety-related regulations gave rise to criminal liability by the offending party.
