The Importance of Maritime Commerce and Law in Texas

For a variety of reasons, maritime commerce and its governing law are extremely important to Texas. Let’s take a look at a few reasons why:

Texas Ports

If Texas were its own country (some believe it already is), it would rank ninth among the world’s economies with a GDP of around $ 1.9 trillion. Texas ports are an indispensable engine of this economy generating 25% of its GDP while moving over 600 million tons of foreign and domestic goods and generating $ 450 billion in economic value and $ 7.8 billion in national taxes and local per year. Three Texas ports rank in the top five in total tonnage in the United States: Houston (first), Beaumont (fourth) and Corpus Christi (fifth). The Houston Ship Channel is the nation’s busiest waterway serving eight public terminals and nearly 200 private terminals while supporting more than 3 million jobs in the United States. In March 2021, Port Houston declared its largest monthly container volume of nearly 300,000 20-foot equivalent units (TEUs). Meanwhile, the Port of Beaumont is the nation’s No.1 strategic military unloading port, and Port Corpus Christi set a new record in June 2021 for the volume of cargo carried in the first six months of 2021 with huge increases in LNG and agricultural products. exports of raw materials, not to mention its voluminous movements of crude oil and petroleum products. And Texas still has two other major ports, Freeport, which ranks 15th nationally for foreign tonnage handled with over 900 ship calls per year and plans to expand booming multimodal facilities, and Brownsville, serving over 230 industrial companies, including the construction of offshore drilling rigs, ship repair and dismantling, bulk oil terminals, grain handling and more.

Lightening operations

You may not realize it, but almost every day tankers regularly transfer crude oil and refined products to the Gulf of Mexico via Ship-to-Ship (STS) transfers, which are carried out while the giant ships sail side by side, much like US Navy warships conduct ongoing refueling operations. Lean operations generally involve the transfer of 350,000 to 375,000 barrels of product. A 2014 study estimated that around 279 lightening operations took place that year, representing around 100 million barrels of product transferred offshore between tankers.

Deep water ports

Due to the shale oil boom in the Permian Basin, private companies have offered to build up to eight offshore oil export terminals stretching from Brownsville to southeast Louisiana, although energy analysts predict that only two or three will eventually be built. The one proposed by Enterprise Products Partners goes through the regulatory approval process and would be built about 30 miles from Freeport. Two other projects are competing for a location off Corpus Christi.

LNG terminals

Numerous liquefied natural gas (LNG) trains, which are the liquefaction and purification facilities for a liquefied natural gas plant, are being built in Texas and southwest Louisiana to transport LNG to abroad. In addition to its Sabine Pass liquefied gas export facility, Cheniere recently largely completed its third LNG train in Corpus Christi, Freeport LNG is developing four near Port Freeport and two more export projects have been approved. for Brownsville (Annova with six trains and Texas LNG with two). These LNG exports will be transported by LNG carriers mainly to Asian and European markets.

Offshore production

Combine all of the above activities with the ongoing offshore oil production in the Gulf of Mexico, producing over 2.3 million barrels of oil equivalent per day, and whose lease sales have generated over $ 1,000 billion. dollars in offshore leases since 2017, as well as the prospect of developing renewable energy resources, including solar and offshore wind facilities in the Gulf of Mexico, all of which are or will be served by Offshore Supply Vessels (OSVs) and crewboats , and you can see that the maritime trade to and from Texas is vibrant and complex.

Maritime law

Above this myriad of activities is U.S. maritime law, which governs the movement of ships in and out of Texas ports, between offshore tankers, and to and from offshore facilities in the Gulf of Mexico, including including deepwater ports, and contractually applies to many ship charters and bills of lading. Of course, Texan law plays a role when it is contractually involved or when environmental damage occurs, and maritime contracts governed by foreign, mainly English law, also significantly affect the rights and remedies of the parties.

In the above context, this column will address important and interesting legal issues facing the shipping industry in Texas and beyond, including:

  • How do you determine what constitutes a maritime contract under the recent Fifth Circuit precedent?
  • When is an indemnity clause enforceable under maritime and Texas law and what are the differences between these regimes?
  • What do laytime, laydays, laycan, demurrage and deviation mean, and how do they apply in charter parties and sales contracts?
  • How does the Jones Law apply to freight transportation in the Gulf of Mexico, and what are the implications of violating it?
  • What are the magic pipe cases and what civil and criminal liability standards apply to oil pollution incidents under Marine and Texas laws?
  • What is Texas Chicken, and where does it fit in the rules for the conduct of merchant ships within the narrow confines of the Houston Ship Channel?
  • What are Incoterms and how do they relate to the transfer of risk of loss and property?
  • What are the implications of providing a safe, still afloat berth under recent Supreme Court precedent?
  • What constitutes a marine accident, and what are the reporting requirements for it and the implications of violating them?
  • What air pollutant emission requirements currently apply to merchant ships in U.S. and Texas waters, and what is in the pipeline?
  • What standards apply to prevent invasive species from entering Texas waters through ship ballast water discharges?
  • What are the liability risks of Texas offshore lightening operations and what standards govern them?
  • How do arbitration clauses affect rights, remedies and claims under maritime law?

From time to time we will also discuss the origins and meanings of original maritime legal terms such as charter party, dead freight, general average, allision, cabotage and COFR. We will also try to answer any maritime legal questions you may have, so please send us your questions.

I hope we have piqued your curiosity. Looking forward to your visit next month.

Keith B. Letourneau is partner of Blank Rome in Houston. His practice focuses on maritime issues, energy transactions and litigation. he is reachable here.