Contango Operators, Inc. v. United States

9 F.Supp.3d 735

CONTANGO OPERATORS, INC. and Certain Underwriters Severally Subscribing to Combined Cover Note JHB–CJP–1718, Plaintiffs

v.UNITED STATES of America and Weeks Marine, Inc., Defendants.

Civil Action No. H–11–0532.

United States District Court, S.D. Texas, Houston Division.

Signed March 26, 2014.

Karen Klaas Milhollin, Hall Maines Lugrin, P.C., Erik David Garza, Attorney at Law, George H. Lugrin, IV, Westmoreland Hall PC, Houston, TX, for Plaintiffs.

Robert Emmett Kelly, Bruce A. Ross, U.S. Department of Justice, Washington, DC, Catherine Barrett Rice, Jefferson Randolph Tillery, Jones Walker et al., Matthew Francis Popp, Waits, Emmett & Popp, L.L.C., New Orleans, LA, for Defendants.

MEMORANDUM OPINION AND ORDER

SIM LAKE, District Judge.

Contango Operators, Inc. and certain non-operating working interest owners own a pipeline that runs along the floor of the Gulf of Mexico and six wells that are attached to the pipeline. In February of 2010 a dredge owned by Weeks Marine, Inc. (“Weeks Marine”) struck and ruptured the pipeline. Contango and Certain Underwriters Severally Subscribing to Combined Cover Note JHB–CJP–1718 filed this action against Weeks Marine and the United States of America to recover for the ensuing damages.¹ The court has subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1333.

The parties tried the case to the court from December 9, 2013, to December 16, 2013. After carefully considering the evidence, the stipulations of the parties, the parties' arguments, and their post-trial submissions, the court makes the following findings of fact and conclusions of law pursuant to Fed.R.Civ.P. 52(a)(1).

I. Background²

Under the Rivers and Harbors Act of 1899 (“RHA”), 33 U.S.C. § 403, no submarine structure may be built in the navigable waters of the United States unless authorized by the United States Army Corps of Engineers (the “Corps”). Accordingly, in September of 2007 Contango filed with the Regulatory Division of the Corps an application for a permit to construct a natural gas pipeline in the Gulf of Mexico off the coast of Louisiana.³ The application stated that the pipeline would cross the “Atchafalaya Pass Channel.”⁴ As part of the application review process an employee in the Regulatory Division cross-referenced a list of Corps-maintained channels to determine whether the “Atchafalaya Pass Channel” was a Corps-maintained channel. Although the list did not explicitly refer to an “Atchafalaya Pass Channel,” it did include an area identified as the “Atchafalaya River, Bayous Chene, Boeuf & Black.” At all times relevant to this litigation the channel labeled in Contango's permit application as the “Atchafalaya Pass Channel” was included within the “Atchafalaya River, Bayous Chene, Boeuf & Black.” The court will refer to the area generally as the “Atchafalaya Channel.” The Corps granted Contango a permit to construct its pipeline in November of 2007.⁵ Information concerning the proposed placement of the Contango pipeline across the Atchafalaya Channel was not forwarded from the Regulatory Division of the Corps to the Waterways Division of the Corps.⁶ The Waterways Division provides the locations of submarine pipelines to the engineers who prepare dredging contracts for Corps-maintained channels.⁷

After completing the pipeline in April of 2008 Contango provided as-built drawings that illustrated the intersection of the pipeline and the Atchafalaya Channel to the Minerals Management Service (“MMS”), the National Ocean Service (“NOS”), and the United States Coast Guard (the “Coast Guard”). No division within the Corps received the as-built drawings.

In April of 2009 the Corps began to solicit bids on a contract to dredge the Atchafalaya Channel.⁸ Corps engineers prepared project specifications that were provided to the bidders and would ultimately become part of the dredging contract.⁹ Five submarine pipelines located in or near the Atchafalaya Channel were identified in the specifications; the Contango pipeline, however, was not listed.¹⁰ Weeks Marine was awarded the contract in August of 2009.¹¹ The Contango pipeline was not identified in the dredging contract.¹²

The National Oceanic and Atmospheric Administration (“NCAA”) is the federal agency tasked with the publication of nautical charts. Before November 25, 2009, the relevant NOAA charts—Electronic Navigational Chart (“ENC”) US4LA21E and Raster Navigational Chart (“RNC”) 11351—displayed the Atchafalaya Channel without the Contango pipeline.¹³ After receiving information from MMS about a new pipeline across the Atchafalaya Channel, NOAA published on its website the updated ENC US4LA21E on November 25, 2009, and the updated RNC 11351 on December 3, 2009.¹⁴ Both the updated ENC and the updated RNC (collectively, the “updated NOAA charts”) depicted the Contango pipeline.¹⁵ The Coast Guard also publishes nautical information to the public in the form of a weekly Local Notice to Mariners (“LNM”).¹⁶ On December 2, 2009, the Coast Guard published LNM 48/09, announcing the addition of a submarine pipeline to the area displayed in the RNC. The updated NOAA charts and LNM 48/09 were published after Weeks Marine had been awarded the contract and had commenced dredging.¹⁷

On February 24, 2010, Weeks Marine's non-self-propelled dredging barge, the G.D. MORGAN, struck the Contango pipeline. The pipeline was ruptured, and Contango incurred losses as a result.¹⁸ Contango's pipeline was shut-in for thirty-five days from the date it was struck until it was repaired and placed back in service.¹⁹ During this thirty-five-day period Contango was not able to produce or sell gas or condensate from the wells connected to the pipeline.²⁰

Contango alleges that the United States breached the duty to ensure that dredging activities did not interfere with or endanger the Contango pipeline. Contango alleges that Weeks Marine breached its duty to conduct dredging operations in a reasonable manner and that Weeks Marine is presumed to be at fault because Weeks Marine's moving vessel, the G.D. MORGAN, caused damage to a stationary object, the Contango pipeline. Contango also alleges that both defendants committed negligence per se based on violations of various federal maritime regulations governing the operation of the Weeks Marine dredging barge.

II. Liability of the Parties

A. Applicable Law

To establish a negligence claim under admiralty law the plaintiff bears the burden to show that (1) the defendant owed the plaintiff a duty; (2) the defendant breached that duty; and (3) the breach caused the plaintiff's alleged injuries. Canal Barge Co. v. Torco Oil Co., 220 F.3d 370, 376 (5th Cir.2000). The duty owed—i.e., the obligation to conform to a certain standard of care—is a question of law for the court. Theriot v. United States, 245 F.3d 388, 400 (5th Cir.1998). Whether that duty was breached is a question of fact. Id. at 394. In an allision²¹ case the standard of care is reasonable care under the circumstances. Id. at 400 ; Southern Natural Gas Co. v. Pontchartrain Materials, Inc., 711 F.2d 1251, 1254 (5th Cir.1983). The duty owed by the United States in a suit brought against it pursuant to the Suits in Admiralty Act is “ ‘equal to that of a private person in like circumstances.’ ” Southern Natural Gas, 711 F.2d at 1254 (quoting Canadian Pac. (Bermuda) Ltd. v. United States, 534 F.2d 1165, 1168 (5th Cir.1976) ).

The “existence and scope of a duty” depends on the “ ‘foreseeability of the harm suffered by the complaining party.’ ” In re Great Lakes Dredge & Dock Co. LLC, 624 F.3d 201, 211 (5th Cir.2010) (quoting Consolidated Aluminum Corp. v. C.F. Bean Corp., 833 F.2d 65, 67 (5th Cir.1987) ). The duty to use reasonable care is “owed only with respect to the interest that is foreseeably jeopardized” by the alleged conduct. Great Lakes Dredge, 624 F.3d at 211 (internal quotation marks omitted). In the Fifth Circuit a harm is considered

a foreseeable consequence of an act or omission if harm of a general sort to persons of a general class might have been anticipated by a reasonably thoughtful person, as a probable result of the act or omission, considering the interplay of natural forces and likely human intervention.

Id. (internal quotation marks omitted).

Two Fifth Circuit decisions involving damages to pipelines are instructive in identifying the duties of the defendants in this case. Michigan Wisconsin Pipeline v. Williams–McWilliams, 551 F.2d 945 (5th Cir.1977), involved an allision between a dredge and a pipeline. The pipeline had been constructed pursuant to a permit from the Corps of Engineers, but the specifications attached to the dredger's government contract did not show the pipeline crossing the area to be dredged. 551 F.2d at 948. The contract also contained two “site inspection clauses” in which the dredger agreed to take steps “reasonably necessary to ascertain the nature and location of the work and the general and local conditions which can affect the work and the cost thereof” and to “acknowledge that he ha[d] investigated and satisfied himself as to the conditions affecting the work.” Id. at 949 (internal quotation marks omitted).

After the accident the pipeline owner sued the dredger for damages. Id. at 947. The dredger filed a third-party complaint, arguing that the United States was at fault for providing specifications that failed to show the pipeline. Id. at 947.

The district court in Michigan Wisconsin found in favor of the pipeline owner and against the dredger, and dismissed the dredger's third-party complaint. Id. Affirming the judgment against the dredger and reversing the dismissal of the complaint against the United States, the Fifth Circuit held the United States may be held liable where it has “by a prolonged course of conduct [led] a contractor to expect that when certain kinds of material structures are present in an area in which a contract is to be performed that the structures will be shown on the specifications drawings.” Id...