IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 14-20589

PETROBRAS AMERICA, INCORPORATED; CERTAIN UNDERWRITERS 

AT LLOYD'S, LONDON AND INSURANCE COMPANIES SUBSCRIBING 

TO POLICY NO. B0576/JM12318, 

 Plaintiffs - Appellants

v.

VICINAY CADENAS, S.A., 

 Defendant - Appellee

Appeals from the United States District Court

for the Southern District of Texas

Before JOLLY, JONES, and BENAVIDES, Circuit Judges.

EDITH H. JONES, Circuit Judge:

Petrobras America, Inc. (“Petrobras”) and the Underwriters of its 

construction all-risks insurance policy (“Underwriters”) sued Vicinay Cadenas, 

S.A. (“Vicinay”), the manufacturer of an underwater tether chain that broke 

just after being installed to secure the piping system for oil production from 

the Outer Continental Shelf of the Gulf of Mexico. When the chain ruptured, 

it caused the pipeline riser and related equipment to collapse to the sea floor, 

severing the connection between the wellhead and the surface thousands of 

feet above. Petrobras alleges four hundred million dollars in damage. Acting 

on all parties’ misunderstanding that the case sounds in admiralty, the district 

United States Court of Appeals

Fifth Circuit

FILED

March 7, 2016

Lyle W. Cayce

Clerk

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court granted summary judgment for Vicinay based upon the maritime law 

economic loss doctrine. The Underwriters then sought leave to amend their 

complaint, alleging, for the first time, that Louisiana law, not maritime law,

applied to this dispute under the Outer Continental Shelf Lands Act

(“OCSLA”). 43 U.S.C. §1333(a)(2). The magistrate judge denied the motion,

and the district court affirmed that decision. We hold that the choice of law 

prescribed by OCSLA is statutorily mandated and is consequently not 

waivable by the parties. On further analysis, we also hold that the applicable 

law is that of the adjacent state of Louisiana, not admiralty law. Id. 

Consequently, we reverse and remand for application of Louisiana law.

BACKGROUND

In October 2007, Petrobras contracted with Technip USA, Inc.

(“Technip”), to construct five “free-standing hybrid riser” (“FSHR”) systems

that move crude oil from wellheads on the seabed to “Floating Production 

Storage and Offloading” (“FPSO”) facilities on the surface of the sea. The FPSO

facilities are independently moored to the seabed and store and offload, but do 

not transport, the production. The risers are fixed in place at the wellhead. 

From above, tether chains connect the upper risers to huge nitrogen-filled 

“buoyancy cans,” which are designed to keep tension in the risers so that they

will not kink and impede the flow of oil. The buoyancy cans float 660 feet 

beneath the water surface; their tether chains play no role in securing the 

FPSO facilities. 

Technip subcontracted to Vicinay the manufacture of these tether 

chains, and Vicinay agreed to produce chains without welded-over cracks and 

defects. Vicinay, however, supplied chains that contained welded-over cracks. 

Shortly after installation in March 2011, one of the chains broke, causing the 

loss of the associated FSHR system, loss of use of the FPSO facility, and lost 

oil and gas production.

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Petrobras and the Underwriters sued Vicinay in March 2012 in federal 

district court asserting negligence, products liability, and failure to warn

claims. They alleged subject matter jurisdiction based on admiralty or, 

alternatively, under OCSLA; they did not assert that Louisiana law applied. 

Vicinay moved for summary judgment, arguing that it was entitled to prevail 

under the maritime law’s economic loss doctrine announced in East River 

Steamship Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 106 S. Ct. 2295

(1986).1 Notably, while opposing the motion, Petrobras and the Underwriters

did not contest the application of maritime law; in fact, they moved to add a 

fraud claim as an exception to the economic loss doctrine. The district court, 

assuming that maritime law applied, granted summary judgment to Vicinay 

in August 2014 but also granted the motion to amend. Both parties filed 

interlocutory appeals of the district court’s order. Only the Underwriters

added a fraud claim. 

Approximately two months later, the Underwriters filed another motion 

for leave to amend and asserted for the first time that Louisiana law, not 

maritime law, applied to this dispute under OCSLA. The magistrate judge 

denied the Underwriters’ motion for untimeliness and lack of good cause. The 

district court affirmed the magistrate judge’s ruling and denied the motion, 

provoking another appeal by the Underwriters. All of the parties’ appeals have 

been consolidated before us.

 

1 The economic loss doctrine, distinguishing tort from contract law in admiralty cases, 

disallows recovery of tort damages to the product itself. See East River, 476 U.S. at 871-74, 

106 S. Ct. at 2302-04.

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DISCUSSION

We review de novo a district court’s decision to grant summary judgment. 

Grand Isle Shipyard, Inc. v. Seacor Marine, LLC, 589 F.3d 778, 783 (5th Cir. 

2009) (en banc). We consider two issues on appeal.2 The first issue is whether

the Underwriters waived their OCSLA choice of law argument by failing to 

raise it until after summary judgment was granted on the merits. The second 

is whether, under OCSLA, maritime law or Louisiana law, the law of the state 

adjacent to the OCSLA situs, applied.3

I. Waiver

As a threshold matter, Vicinay argues that the Underwriters waived 

their choice of law argument by not raising it in the district court until the

eleventh-hour motion to amend their complaint, which was filed after 

summary judgment was granted. Vicinay contends that the Underwriters 

confuse OCSLA subject-matter jurisdiction, which is conferred on federal 

courts in 43 U.S.C. § 1349(b)(1)(A) and cannot be waived, with OCSLA choice 

of law, 43 U.S.C. §1333(a), which allegedly can be waived and therefore should 

not be raised for the first time on appeal. It is Vicinay that is confused.

 There is no dispute that, as Petrobras and the Underwriters originally 

pled, OCSLA provides a basis for subject matter jurisdiction in this case. The 

incident occurred on the Outer Continental Shelf, and the statutory grant of 

subject matter jurisdiction over cases and controversies “arising out of or in 

connection with” operations involving resource exploitation on the Shelf is 

 

2 The parties raise two additional issues: (1) assuming that maritime law applies to 

this dispute, whether the district court erred in its application of the East River economic 

loss doctrine; and (2) whether the district court abused its discretion in denying the 

Underwriters’ motion for leave to amend. In light of our conclusions, the first issue is 

irrelevant, and the second issue is moot.

3 We consider this choice of law issue because it is alleged that Louisiana state law

does not apply the economic loss doctrine.

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straightforward and broad. 43 U.S.C. § 1349 (b)(1)(A); See, e.g. EP Operating 

Ltd. P’ship v. Placid Oil Co., 26 F.3d 563, 569 (5th Cir. 1994). Although federal 

courts may have jurisdiction pursuant to OCSLA, however, “they must then 

turn to the OCSLA choice of law provision to ascertain whether state, federal,

or maritime law applies to a particular case.” In re DEEPWATER HORIZON, 

745 F.3d 157, 164 (5th Cir. 2014). OCSLA’s choice of law provision asserts 

federal jurisdiction over the subsoil and seabed of the Outer Continental Shelf, 

over all “artificial islands,” and over installations and devices used in the 

exploitation of offshore resources, “other than a ship or vessel.” 43 U.S.C. 

§1333(a)(1). In the following subsection, OCSLA adopts as surrogate federal 

law the “civil and criminal laws of each adjacent State” to govern the 

aforementioned areas (generally speaking) “[t]o the extent that [State laws] 

are applicable and not inconsistent . . . with other Federal laws and 

regulations . . . .” 43 U.S.C. §1333(a)(2)(A).

 Vicinay’s argument that the OSCLA provisions are waivable runs 

headlong into this court’s precedents rejecting parties’ ability to make a

“litigation choice” between maritime and adjacent state law. In re 

DEEPWATER HORIZON, 745 F.3d at 165 n.7; see also Alleman v. Omni 

Energy Servs. Corp., 580 F.3d 280, 283 n.2 (5th Cir. 2009) (“parties cannot 

choose to be governed by maritime law when OCSLA applies”). Because 

OSCLA’s choice of law scheme is prescribed by Congress, parties may not 

voluntarily contract around Congress’s mandate. Texaco Exploration & 

Production, Inc. v. AmClyde Engineered Prods. Co., Inc., 448 F.3d 760, 772 n.8 

(5th Cir. 2006); see also Union Tex. Petroleum Corp. v. PLT Eng’g, Inc., 

895 F.2d 1043, 1050 (5th Cir. 1990) (“We find it beyond any doubt that OCSLA 

is itself a Congressionally mandated choice of law provision requiring that the 

substantive law of the adjacent state is to apply even in the presence of a choice 

of law provision in the contract to the contrary.”). 

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Further, the Supreme Court has held that Section 1333(a) “supersede[s] 

the normal choice of law rules that the forum would apply.” In re 

DEEPWATER HORIZON, 745 F.3d at 166 (citing Gulf Offshore Co. v. Mobil

Oil Corp., 453 U.S. 473, 480-81 (1981)). If parties cannot choose to avoid 

Congress’s choice of law provision under OCSLA, then a fortiori the provision 

cannot be waived by failure to raise the issue below. Vicinay’s reliance upon 

Fruge v. Amerisure Mutual Insurance Co., 663 F.3d 743, 777 (5th Cir. 2011), is 

misplaced. Although that decision upheld waiver of a choice of law argument 

not raised in the district court, the case did not involve a statutorily mandated 

choice of law. Because Congress has delineated among admiralty, federal law 

and adjacent state law in OCSLA, the parties may not avoid, whether 

voluntarily or inadvertently, the statutory choice. The Underwriters’ choice of 

law argument is not waived.

II. Admiralty or State Law under OCSLA

As has been noted, the OCSLA prescribes the applicability of either 

maritime law or adjacent state law as “surrogate federal law” to govern the 

Outer Continental Shelf. Hufnagel v. Omega Serv. Indus., Inc., 183 F.3d 340, 

349 (5th Cir. 1999). These regimes are alternative, not overlapping. In re 

DEEPWATER HORIZON, 745 F.3d at 166; Baker v. Hercules Offshore, Inc., 

713 F.3d 208, 218 (5th Cir. 2013); Tenn. Gas Pipeline v. Hous. Cas. Ins., 

87 F.3d 150, 154 (5th Cir. 1996) (noting that OCSLA “was not intended to 

displace general maritime law”).

The Underwriters and Petrobras contend that the district court was 

required to apply Louisiana law, the law of the adjacent state, while Vicinay 

argues that maritime law applies to the dispute. This court has interpreted 

the statute to compel borrowing adjacent state law if three conditions are met: 

“(1) The controversy must arise on a situs covered by OCSLA (i.e. the subsoil, 

seabed, or artificial structures permanently or temporarily attached thereto). 

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(2) Federal maritime law must not apply of its own force. (3) The state law 

must not be inconsistent with Federal law.” PLT Eng’g ̧ 895 F.2d at 1047

(construing §1333(a)(2)(A)). 

The decisive question thus becomes whether maritime law “applies of its 

own force,” based on the twin tests of location and connection with maritime 

activity. Jerome B. Grubart, Inc. v. Great Lakes Dredge & Dock Co., 513 U.S. 

527, 534, 115 S. Ct. 1043, 1048 (1995). The location prong asks whether the 

incident occurred on “navigable waters” or, if injury occurred on land, whether 

it was caused by a vessel on navigable waters. In re La. Crawfish Producers, 

772 F.3d 1026, 1029 (5th Cir. 2014). The court must consider where the wrong 

“took effect” rather than the locus of the tortious conduct. Id. (citing Egorov, 

Puchinsky, Afanasiev & Juring v. Terriberry, Carroll & Yancey, 183 F.3d 453, 

456 (5th Cir. 1999) (per curiam)). 

Under the connection test, the incident giving rise to the alleged tort

must be analyzed at an intermediate level of generality by “assess[ing] the 

general features of the type of incident involved.” Grubart, 513 U.S. at 534, 

115 S. Ct. at 1048 (citing Sisson v. Ruby, 497 U.S. 358, 363, 110 S. Ct. 2892, 

2896 (1990)). Further, the court must consider whether the general character 

of the activity giving rise to the plaintiff’s injury is substantially related to 

traditional maritime activity. Id. We address each test in turn.

A. Location Test

The Underwriters argue that the location test is not met, principally 

because the tether chain connected the floating buoyancy can to the riser, 

which in turn was affixed to the seabed. Under the specific terms of OCSLA, 

adjacent state law should apply—to the exclusion of admiralty law—to these 

“fixed structures erected” on the subsoil and seabed. 43 U.S.C. §1333(a)(2)(A). 

This is a significant argument. Cf. Hufnagel, 183 F.3d at 351-52 (location test 

not met where plaintiff was struck by a chain and hook while engaged in 

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repairs on a fixed offshore drilling platform).4 The critical distinction between 

Hufnagel and this case, of course, is that the tether chain failed deep in the 

waters of the Gulf of Mexico, whereas the injury to the plaintiff in Hufnagel

occurred on the deck of a drilling platform and not on or in the sea. Thus, it 

can be argued that the tortious activity here “took effect” in navigable waters

with the severance of the riser string. See In re La. Crawfish Producers, 

772 F.3d at 1029. We do not address this prong further, however, because the 

breaking of the tether chain fails the admiralty connection test. 

 B. Connection Test

 Vicinay argues that the connection test is satisfied because maritime 

commerce was disrupted by the tether chain’s failure, and that failure was 

“substantially related to traditional maritime commerce.” Further, Vicinay

reinforces its substantial relationship contention by noting that the FPSO is a 

vessel and the tether chain and buoyancy can are “unique to the maritime 

world and do not exist on land-based operations.” We disagree.

 To show disruption of maritime commerce, Vicinay points out that 

Petrobras had to suspend all oil and gas development operations in the area to 

investigate the cause of the chain’s failure. The Supreme Court has cautioned, 

however, that the type of incident involved must not be defined at too high or 

too low a level of generality; instead the question is “whether the incident could 

be seen within a class of incidents that posed more than a fanciful risk” to 

maritime commerce. Grubart, 513 U.S. at 538-39, 115 S. Ct. at 1051. The 

proper focus is on “potential effects, not the ‘particular facts of the incident.’” 

Id. at 538, 115 S. Ct. at 1051. Cases from the Supreme Court and this circuit 

interpret potential disruption of maritime commerce in terms of the incident’s 

 

4 Far less persuasive, however, and without legal support is the Underwriters’ broader 

contention that the incident did not occur on “navigable waters” because it took place more 

than 660 feet below the Gulf of Mexico.

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effect on the navigability of the waterways. See, e.g., id. at 539, 115 S. Ct. at 

1051 (noting that damage to an underwater freight tunnel may imperil “the 

water course itself,” and “navigational use” could be restricted during repair);

Sisson, 497 U.S. at 362, 110 S. Ct. at 2896 (a fire on a noncommercial vessel in 

a marina may disrupt maritime commerce because the fire “can spread to 

nearby commercial vessels or make the marina inaccessible to such vessels”);

In re La. Crawfish Producers, 772 F.3d at 1029 (maritime commerce would be 

disrupted by the “obstruction of water flows” in Louisiana’s Atachafalaya Basin 

caused by dredging activities). 

Here, expressed in general terms, a component failed on an underwater

structure in an offshore production installation and caused the structure to fall 

to the sea floor. Such an incident does not have the potential to disrupt 

maritime commercial or navigational activities on or in the Gulf of Mexico.

Vicinay’s emphasis that Petrobras halted its development operations for some 

period following the failure of the FHSR erroneously relies on the “particular 

facts of the incident,” Grubart, 513 U.S. at 538, 115 S. Ct. at 1051, rather than 

general maritime and commercial activity. Moreover, the disruption affected 

oil and gas production and development activities rather than navigation or 

traditional maritime commerce. Even the involvement of the FPSO, 

technically a vessel, is unrelated to the disruption of navigation or maritime 

commerce activity because the FPSO’s only purpose was to store and process 

the oil in a fixed location for later transport. Finally, the fact that the buoyancy 

can eventually floated to the surface and had to be recovered provides, under 

the circumstances taken as a whole, no more than a de minimus potential to

disrupt maritime commerce or navigation. See id. at 538-39, 115 S. Ct. at 1051 

(more than a fanciful risk to commercial shipping is required).

Vicinay’s argument that the second prong of the connection test is met is

squarely foreclosed by Texaco Exploration & Production v. AmClyde 

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Engineered Products Co., Inc. In AmClyde, Texaco brought negligence and

products liability causes of action against a crane manufacturer arising from 

the failure of a barge-mounted construction crane that caused the deck of a

production platform to collapse into the sea. 448 F.3d 760, 766 (5th Cir. 2006). 

Critically, the platform was affixed to the Outer Continental Shelf. Id. This

court held that the tort claims were not substantially related to traditional 

maritime activity because they were “inextricably connected with the 

development of the Outer Continental Shelf and an installation for production 

of resources there,” and the development of resources on the Outer Continental 

Shelf is not a traditional maritime activity. Id. at 771; see also PLT Eng’g, 

895 F.2d at 1048 (“the principal obligation of PLT and the subcontractors was 

to build the gathering line and connect it to the platform and the transmission 

line. These activities are not traditionally maritime. Rather they are the 

subjects of oil and gas exploration.”). The Amclyde court distinguished Grubart 

as arising from a traditional maritime activity: “repair or maintenance work 

on a navigable waterway performed from a vessel.” 448 F.3d at 771 (citing 

Grubart, 513 U.S. at 540, 115 S. Ct. at 1043). 

As in AmClyde, Petrobras’s products liability, negligence, and failure to 

warn tort claims resulting from the failure of the tether chain are all 

“inextricably intertwined” with its oil and gas production and development 

operations on the Outer Continental Shelf. Further, as AmClyde confirms, 

development on the Outer Continental Shelf is not a traditional maritime 

activity. Contrary to Vicinay’s argument, Petrobras’s development of resources 

on the Outer Continental Shelf was not transformed into a maritime activity 

because it involved the use of the FPSO facility and a buoyancy can. That the 

crane in AmClyde was mounted on a barge did not alter the conclusion that 

the resource development activities on a fixed production platform were not 

maritime in nature; so it is here, particularly because the FPSO facility was 

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permanently moored to the Outer Continental Shelf and was not used for 

transportation. Likewise, the buoyancy can simply kept tension in the risers 

to prevent kinks that would impede the flow of oil. The can and tether chain 

had nothing to do with any traditional maritime activities.

In sum, the rupture of the tether chain was neither potentially nor 

actually disruptive to navigation and maritime commerce, nor did it bear a 

substantial relation to traditional maritime activity. Maritime law does not

apply of its own force. Because the other criteria of OCSLA choice of law are 

satisfied, Louisiana law applies to this dispute. 

CONCLUSION

In light of the erroneous adjudication based on maritime law, we 

REVERSE and REMAND for further proceedings under Louisiana law. The 

Underwriters’ appeal of the district court’s denial of its motion for leave to 

amend is DISMISSED as moot.

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