Recent Development by J.-M. Downey
Amoco Production Co. (Amoco) contracted to sell natural gas to Sea Robin Pipeline Co. (Sea Robin). The gas was extracted by Amoco from beneath the Outer Continental Shelf (OCS) and delivered to Sea Robin's pipelines. A dispute arose regarding contractual provisions commonly known as take or pay provisions. Under a take or pay provision, the buyer authorizes the production of gas by the seller. If the buyer later refuses to accept the gas, it must nonetheless pay for the gas produced. When Sea Robin refused to accept gas it had contracted to buy, claiming, among other things, impossibility of contract and force majeure, Amoco filed suit in Louisiana state court. Sea Robin removed the action to the United States District Court, alleging that a federal question existed pursuant to the Outer Continental Shelf Lands Act (OCSLA or the Act). Amoco moved to remand the case to state court on the ground that the dispute's connection to the OCS was insufficient to justify federal jurisdiction. The motion was denied. The Fifth Circuit, affirming the district court's ruling, held that jurisdiction existed under OCSLA because the dispute between Amoco and Sea Robin arose “‘out of, or in connection with [an] operation conducted on the [o]uter Continental Shelf which involve[d] exploration, development, or production of the minerals.”’ Amoco Production Co. v. Sea Robin Pipeline Co., 844 F.2d 1202 (5th Cir. 1988).
About the Author
J.-M. Downey.
Citation
63 Tul. L. Rev. 1191 (1989)