The 5th Circuit Tightens The Boundaries Of Maritime Contracts

In two recent decisions, the US Court of Appeals for the Fifth Circuit has sharpened the test for how and when an offshore oil and gas contract is considered "maritime" in nature. Both holdings have the potential to have significant implications for the reach of federal admiralty law versus state law under the Outer Continental Shelf Lands Act (OCSLA).

In 2018's In Re Larry Doiron, Inc., the Fifth Circuit replaced the six-factor, fact-intensive test of maritime contract jurisdiction as established by Norfolk Southern Railway Co. v. Kirby with a new, two-prong test that asks:

1. Whether the contract provides services to facilitate the drilling or production of oil and gas on navigable waters, and
2. Whether the contracting parties expect that a vessel will play a substantial role in the completion of the contract.

Id. at 576.

Consequentially, courts have since ruled that a contract meeting both prongs is a maritime contract, drawing on federal admiralty law, while those contracts that fail to meet both prongs invoke the law of the adjacent state (oftentimes Louisiana) as surrogate federal law in accordance with the OCSLA.

In the years since, the Fifth Circuit has wrestled with how aggressively to apply the second, vessel-centric prong of the Doiron test, especially in the context of contracts applying to offshore oil platforms. The court has signaled increasing skepticism that the mere reference to a vessel (for transport, accommodation, or incidental support) is sufficient to turn an otherwise nonmaritime oil field services contract into one maritime in nature.

In two notable recent decisions, the court has seemingly sought to address this dilemma by attempting to establish a narrowed approach.

Earnest v. Palfinger Marine USA, Inc., 90 F.4th 804 (5th Cir. Jan. 14, 2024)

In January 2024's Earnest v. Palfinger Marine USA, Inc., the Fifth Circuit overturned the district court's ruling and held that a master services contract (MSC) "to provide annual inspections, maintenance, repairs of the lifeboats" on an oil platform was a maritime contract. Id. at 807.

Despite the district court's finding that the lifeboats were required safety equipment "merely incidental" to the operations performed on the oil platform, thus failing the second prong of the Doiron test, the Fifth Circuit held that the MSC had all the content and context necessary to invoke admiralty jurisdiction. Id. at 815. The court reasoned that the first prong of the Doiron test was easily met, as the contract was explicit in its intent to provide services to an oil platform. Id. at 812. In assessing the second prong, the court decided that because "lifeboats are a required component of 'drilling and production of oil and gas on navigable waters from a vessel, [which] is commercial maritime activity [,]'" the second prong's "substantial role" standard was met as well. Id. at 813.

The decision essentially highlighted that incidental vessel usage is secondary to the question of whether a vessel plays a substantial part in fulfilling the agreement. Put differently, the Earnest court resolved that where the execution of a contract is inextricably dependent upon the involvement of a vessel, the agreement must be characterized as maritime in nature.

Offshore Oil Services, Inc. v. Island Operating Company, Inc., et al., 2025 US App. LEXIS 22908 (5th Cir. Sept. 4, 2025)

More recently, in September, the Fifth Circuit heard a contractual dispute arising from a plaintiff's claim for injuries sustained "while disembarking [a vessel] via a personnel basket transfer to [an oil] platform" situated on the Outer Continental Shelf. Offshore Oil Servs., 2025 US App. LEXIS 22908 at *6. In resolving the law meant to apply to the claim, the court was meant to determine whether an MSC between the owner and operator of the oil platform in question was a maritime contract such that the employer under the contract would owe indemnity to the vessel and platform owners, respectively. Id. at *2.

While the contract cleared the first standard of the Doiron test, the Fifth Circuit ultimately found that because the contract's terms did not "provide that vessels would play a substantial role in the completion of the work[,]" [emphasis added] and because "any use of vessels was incidental to the work contemplated by the MSC[,]" the contract was not one deserving of admiralty jurisdiction. Id. at *16. The court clarified that while the MSC referenced vessels in its provision requiring the contractor "'to provide marine transportation for equipment and workers' when the work was located offshore or within inland waters," the provision ultimately "concerned transporting workers to the jobsite." Id. at *2.

The court specifically distinguished the MSC in question from that in Earnest, stating in its decision that while Earnest "involved a contract 'for the repair and maintenance of vessels necessary to support offshore drilling and production of oil and gas, i.e., maritime commerce[,]'" the agreement in Offshore Oil Servs. "contemplated no requirements resembling such work, but instead called for services traditionally related to oil and gas production and considered nonmaritime, even when conducted on an offshore platform." Id. at *21. This conclusion by the Fifth Circuit thus reiterated the standard set by Earnest in interpreting the Doiron test: It is not the nature of the work being performed nor the mention of a vessel that creates a maritime contract — it is the ability or inability to perform said work without a vessel present.

Conclusion

Both Earnest and Offshore Oil Servs. exemplify the Fifth Circuit's endorsement of a narrow application of the Doiron test when determining the ability of a contract to invoke admiralty jurisdiction. If the court's recent trends are to be given weight, a mere mention or reference to a vessel in a contract for services related to the drilling or production of oil and gas will not reflexively deem that contract maritime in nature. The court will instead look to an agreement's reliance on the presence of a vessel in carrying out the contracted-for duties. Contractors and operators engaged in service agreements involving vessels should therefore remain cognizant of the way in which vessels are incorporated and not simply that they are incorporated in a passive manner. A party engaged in offshore activities that hopes to have its contract reviewed in admiralty jurisdiction, opposed to under state law, should therefore ensure that a vessel has a nonnegotiable presence and integral role in the performance of the work assigned.

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