United States v. Moss

Decision Date27 September 2017
Docket NumberNo. 16-30561.,16-30561.
Parties UNITED STATES of America, Plaintiff-Appellant v. Don MOSS; Curtis Dantin; Grand Isle Shipyards, Incorporated; Christopher Srubar, Defendants-Appellees
CourtU.S. Court of Appeals — Fifth Circuit

Emily Katherine Greenfield, Kevin G. Boitmann, Nicholas D. Moses, Assistant U.S. Attorneys, U.S. Attorney's Office, Eastern District of Louisiana, New Orleans, LA, for PlaintiffAppellant.

Walter Francis Becker, Jr., Esq., Douglas L. Grundmeyer, Esq., Charles Donald Marshall, III, Esq., Chaffe McCall, L.L.P., Edward Joseph Castaing, Jr., Esq., Crull, Castaing & Lilly, Harry A. Rosenberg, Esq., Senior Attorney, David Matthew Korn, Esq., Phelps Dunbar, L.L.P., Robert Steven Lemoine, Esq., New Orleans, LA, Dane Christian Ball, Esq., Shaun G. Clarke, Esq., Alexander Michael Wolf, Smyser Kaplan & Veselka, L.L.P., Houston, TX, for DefendantsAppellees.

Ryan A. Smith, Brownstein Hyatt Farber Shreck, L.L.P., Washington, DC, for Amici Curiae.

Before JONES, CLEMENT, and ELROD, Circuit Judges.

EDITH H. JONES, Circuit Judge:

A fatal welding accident occurred on an offshore oil platform in the Gulf of Mexico in November 2012. Three years after that incident, the government indicted the owner and operator of the platform and several oil platform contractors, charging criminal violations of the Outer Continental Shelf Lands Act (OCSLA), 43 U.S.C. §§ 1331, et seq ., and the Clean Water Act, 33 U.S.C. §§ 1251 et seq ., as well as involuntary manslaughter. 18 U.S.C. § 1112. The defendants moved to dismiss. The district court left all of the charges in place except for the OCSLA charges against the contractor defendants, appellees Grand Isle Shipyards, Inc. (GIS), Don Moss, Christopher Srubar, and Curtis Dantin, which it dismissed for failure to state an offense. Fed. R. Crim. Pro. 12. The government timely appealed. Because the OCSLA regulations do not apply to these appellees, the judgment of the district court is AFFIRMED.

BACKGROUND
1. OCSLA and Regulatory Enforcement

Congress enacted OCSLA in 1953, granting the Department of the Interior authority to promulgate and enforce safety and environmental regulations on "any holder of a lease or permit under [OCSLA]." 43 U.S.C. § 1348(b). For over 60 years, the federal government did not regulate or prosecute oilfield contractors, as opposed to lessees, permittees, or well operators, under OCSLA.1

A month after the 2010 Deepwater Horizon spill, however, the Secretary of the Department of the Interior reorganized the Minerals Management System (MMS), tasked with enforcing OCSLA, into three agencies: the Office of Natural Resources Revenues (ONRR), the Bureau of Ocean Energy Management (BOEM), and the Bureau of Safety and Environmental Enforcement (BSEE). See Secretarial Order 3299 (May 19, 2010). The newly-created BSEE started aggressively enforcing OSCLA and its regulations against a series of contractors. BSEE announced in a 2011 press release about enforcement actions, "[t]his is the first time the Department of the Interior has issued INCs [incidents of non-compliance] directly to a contractor that was not the well's operator."2 In 2012, just months before the incident that gave rise to this case, BSEE issued an internal "Interim Policy Document" opining that contractors may be liable for civil penalties under OCSLA, although this document made no mention of criminal liability. See Bureau of Safety and Environmental Enforcement, IPD No. 12-07, Issuance of an Incident of Non Compliance (INC) to Contractors (Aug. 15, 2012).

2. The West Delta 32 Lease Block Incident and Indictment

In summer 2010, Black Elk Energy Offshore Operations, LLC obtained a federal oil and gas lease covering a portion of the Gulf of Mexico known as the West Delta 32 Lease Block, and operated a three-platform production facility there. Black Elk contracted with Appellee GIS and Wood Group PSN, Inc. to provide platform workers. Wood Group also furnished a "Person-in-Charge" for the platform, Appellee Srubar. Srubar and Wood Group were responsible for conducting safety inspections and issuing safety permits for "hot work," such as welding and grinding, that emits sparks.

In September 2012, Black Elk interrupted its oil and gas production on West Delta 32 to commission construction projects on the platforms that could not be performed during production. Compass Engineering and Consulting, LLC3 drew up the construction plans, and Compass hired Appellee Moss as an independent contractor and onsite inspector to coordinate and manage the work on the West Delta 32 platform projects.

One project involved installing a divert valve on the Lease Automatic Custody Transfer (LACT) unit.4 During this work, someone discovered that the prefabricated piping necessary to upgrade the LACT unit was missing. A Black Elk manager decided the piping should be rebuilt. To do that, the crew was required to perform "hot work" and weld the sump line piping, some of which lay within 20 feet of the Wet Oil Tank. On November 16, Wood Group issued a hot work permit to the GIS crew.

A fatal explosion occurred that morning, killing three men, injuring others, and discharging pollutants into the Gulf of Mexico. The cause of the explosion is disputed, but the government contends 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.

Criminal indictments were issued three years later against Black Elk, as the lessee-operator, and the contractor appellees. The second superseding indictment charged the contractor-appellees with eight counts of violations of 43 U.S.C. § 1350(c) for knowing and willful violations of OCSLA's enabling regulations. The indictment charged Black Elk, GIS, Wood Group, Srubar, and Dantin with five separate counts for failing to perform pre-work inspections on each of the five days before the incident, in violation of 30 C.F.R. §§ 250.113(c)(1)(ii) and 250.146(c). It charged all of the defendants with a single count for failing to perform a pre-work inspection on the actual day of the incident. It also charged Black Elk, GIS, Moss, and Dantin with failing to render the hydrocarbons in the sump-line piping and oil tanks inert before welding on the day of the explosion under 30 C.F.R. §§ 250.113(c)(3) and 250.146(c). Finally, the indictment charged those four parties with failing to obtain written authorization from the Person-in-Charge before welding the sump-line piping on the day of the explosion under 30 C.F.R. §§ 250.113(c)(1)(i) and 250.146(c).

Notably, the indictment also charged Black Elk and GIS 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 district court did not dismiss those counts and they remain pending.

3. District Court Proceedings

The defendants filed several motions to dismiss the charges against them. The district court issued a written order dismissing the OCSLA charges against Wood Group, GIS, Moss, and Dantin, and a second written order dismissing the OCSLA charges against Srubar days later. The district court analyzed each of the regulatory provisions cited in the indictment and concluded that none of the OCSLA regulations apply to oilfield contractors. Central to this analysis, the court pointed out that each of the three specific provisions of OCSLA regulations underlying the charged criminal violations5 imposes requirements addressed to "You."

Under the OCSLA regulations, "You" is a defined term:

You means a lessee, the owner or holder of operating rights, a designated operator or agent of the lessee(s), a pipeline right-of-way holder, or a State lessee granted a right-of-use and easement.

30 C.F.R. § 250.105.6 The district court held this definition does not include contractors, subcontractors or service providers. Finding that only Black Elk is the owner, lessee, or holder of operating rights, and that no other regulatory provision brought contractors within the ambit of "You," the district court dismissed the OCSLA counts against the appellees. The government timely appealed.

STANDARD OF REVIEW

The district court's interpretation of a federal statute is reviewed de novo, United States v. Kaluza , 780 F.3d 647, 653 (5th Cir. 2015), as is the district court's interpretation of a regulation. Anthony v. United States , 520 F.3d 374, 377 (5th Cir. 2008). "In reviewing a challenge to an indictment alleging that it fails to state an offense, the court is required to take the allegations of the indictment as true and to determine whether an offense has been stated." United States v. Crow , 164 F.3d 229, 234 (5th Cir. 1999).

"This court interprets regulations in the same manner as statutes, looking first to the regulation's plain language." United States v. Fafalios , 817 F.3d 155, 159 (5th Cir. 2016). "[W]here, as here, a regulatory violation carries criminal penalties, the regulation ‘must be strictly construed and cannot be enlarged by analogy or expanded beyond the plain meaning of the words used.’ " United States v. CITGO Petroleum Corp ., 801 F.3d 477, 482 (5th Cir. 2015) (quoting United States v. Clark , 412 F.2d 885, 890 (5th Cir. 1969) ). See also Diamond Roofing Co. v. OSHRC, 528 F.2d 645, 649 (5th Cir. 1976) ("If a violation of a regulation subjects private parties to criminal or civil sanctions, a regulation cannot be construed to mean what an agency intended but did not adequately express.").

DISCUSSION

On appeal, the government relies on four main arguments. First, the government contends that a plain reading of OCSLA subjects any person, including contractors and their employees, to criminal penalties for violating the regulations promulgated under the statute. 43 U.S.C. § 1350...

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