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In Tesla Offshore, LLC v. International Offshore Services, LLC, the United States Court of Appeal for the Fifth Circuit recently considered whether a vessel pulling an underwater sonar device was engaged in towing, such that the captain of the vessel was required to have a towing license. Concluding that this was towing and that the captain’s lack of the appropriate license was known to the owner of the towing vessel, the Fifth Circuit affirmed the district court’s findings that a towing operation was taking place at the time of the incident.

Tow-tal Damage Caused

In November 2012, Tesla Offshore, LLC was undertaking a “high-resolution deeptow archaeological survey” of part of the Outer Continental Shelf in the Gulf of Mexico. Tesla hired two vessels from International Offshore Services, LLC to assist with the operation, including the INTERNATIONAL THUNDER, which was to pull a sonar towfish, a device about 7½ feet long that resembled a torpedo. Another vessel served as the “chase vessel” and helped track the towfish. Five Tesla employees worked aboard the INTERNATIONAL THUNDER.

During the operation, the towfish hit one of the mooring lines of the DEEPWATER NAUTILUS, a mobile drilling offshore unit owned by Shell. The allision caused the mooring line to lose all tension and forced the DEEPWATER NAUTILUS to temporarily suspend drilling operations.

A jury trial in federal court in New Orleans ultimately would award Shell $9 million in damages, and find Tesla 75% at fault and International 25% at fault.

Tow Be or Not Tow Be, That is the Question

International challenged the district court’s determination that the INTERNATIONAL THUNDER was a “towing vessel” under 46 USC § 2101. The captain of a towing vessel of 26 feet or more in length is required to hold a towing license. The district court instructed the jury that the INTERNATIONAL THUNDER was a towing vessel and that the captain did not have the requisite towing certificate. International contended that this instruction led the jury to reject its limitation defense, which would have allowed it to limit its liability pursuant to the Limitation of Liability Act 46 USC § 30505, if the owner lacked “privity or knowledge” of the negligent acts or other fault that caused the damage.

The Fifth Circuit invited the U.S Solicitor General to opine on whether the applicable laws and regulations required the captain of the INTERNATIONAL THUNDER to have a towing license. The Solicitor General’s view was that the laws and regulations required such a license.

The Fifth Circuit noted that the U.S. Code defines a “towing vessel” as a “commercial vessel engaged in or intending to engage in the service of pulling, pushing, or hauling along side, or any combination of pulling, pushing, hauling along side.” International argued that the activities of the INTERNATIONAL THUNDER were very different from traditional towing. However, the Fifth Circuit rejected this argument, noting that the definition of a towing vessel expressly contemplated that a towing vessel may tow objects other than vessels and that this was expressly in the statutory text. The Fifth Circuit also rejected International’s claim that under the district court’s ruling a fishing vessel would be deemed a towing vessel as soon as it hooked a fish, noting that such vessel was in the business of fishing not towing. Lastly, the Fifth Circuit rejected International’s claim that towing required a voyage from one point to the next, noting, again, that there was no support for such contention in the statutory language.

What’s Tow Be Done?

The Fifth Circuit’s ruling helps clarify what constitutes towing and provides an expansive definition. Vessel owners should ensure that their captains have the requisite towing licenses if they are engaged in any activity that involves “pulling, pushing, or hauling along side” even if that may not be a traditional towing activity. Failure to do so may result in the inability of vessel owners (and their insurers) to limit liability in the event that the towing operation causes loss or damage.