Supreme Court expands workers' compensation coverage under the Outer Continental Shelf Lands Act

by Matthew H. Ammerman on January 17th, 2012

On January 11, 2012, the Supreme Court affirmed the 9th Circuit's opinion that a worker does not have to be injured on the Outer Continental Shelf to be entitled to Outer Continental Shelf Lands Act's federal worker's compensation benefits of the Longshore & Harbor Workers' Compensation Act. Pac. Operators Offshore, LLP v. Valladolid, 2012 U.S. LEXIS 577 (U.S. Jan. 11, 2012).

The full opinion is here:

The Court adopted a "substantial nexus" test. The worker must be injured as a result of operations on the Outer Continental Shelf (Shelf). There must be a "substantial nexus" (significant causal link) between the injury and his employer's operations on the Outer Continental Shelf conducted for purposes of extracting natural resources. That phrase was so important Justice Clarence Thomas said it twice in the final paragraphs of his opinion. In a concurring opinion, Justice Scalia threw a few punches at the Ninth Circuit and questioned why Justice Thomas agreed with an obscure "substantial nexus" phrase instead of a legal concept that has legal pedigree - proximate cause.

The OCSLA, passed in 1953, adopts the workers' compensation benefits of the Longshore Act for workers injured "an employee resulting from any injury occurring as the result of operations conducted on the outer Continental Shelf for the purpose of exploring for, developing, removing, or transporting by pipeline the natural resources...." 43 U.S.C. Sec. 1333(b). The Shelf starts nine nautical miles offshore Texas and Florida and three nautical miles everywhere else. Congress intended to cover offshore workers on the Shelf who did dangerous work and who may not be entitled to state workers' compensation benefits.

Here, Juan Valladolid was a California roustabout for his employer Pacific Operators in its oil exploration and extraction business. Valladolid spent about 98 percent of his time on one of Pacific's offshore drilling platforms performing maintenance. However, Valladolid was killed on land while using a forklift to move metal scrap at Pacific's shoreside facility in Conchita.

Justice Thomas rejected the Third Circuit's loose "but-for" test because it could lead to coverage of those whose jobs have virtually no connection to extractive operations on the Shelf. Unfortunately, he also rejected the easy-to-apply situs-of-injury test of the Fifth Circuit. That test provided that workers could only be covered by the workers' compensation provisions of OCSLA if their injury occurred on or over the Shelf. Justice Thomas said the plain language of Section 1333(b) had no situs requirement, and Congress could have added one if it wanted to impose such a limitation.

Where does this leave us? It seems likely that a roughneck who trips and suffers injury while boarding a helicopter at his employer's landside heli-pad to go work on the Shelf is probably OCSLA-covered now and entitled to LHWCA benefits. The harder task is finding the outer limits of the new test on land. A creative claimant's lawyer could make the argument that a worker in Tomball, Texas (roughly 100 miles from the coast) injured while loading a blow-out preventer (BOP) on a truck to be transported to the Shelf should be covered under the substantial connection test.

A close reading of the Valladolid case tells us that we should look to: (1) whether the worker's employer has operations on the OCS; and, if so, (2) if the injury had a "substantial nexus" (signficant causal link) to his employer's operations on the OCS. In the Fifth Circuit, this will likely lead to a close analysis of what the employer was doing on the Shelf and whether the injury was significantly caused by it. Valladolid's widow must show on remand that piling up scrap metal on a shoreside facility (to be picked up by scrap metal vendors) has a substantial nexus to work on the Shelf.

There is no longer a situs-of-injury requirement, but there is a situs-of-operations requirement. There are still boundaries to Section 1333(b) OCSLA coverage. They have, however, been expanded from what we were accustomed to in the Fifth Circuit where most of the work on the Shelf takes place.

Posted in OCSLA: Coverage: Status    Tagged with Valladolid, Outer Continental Shelf Lands Act, OCSLA, substantial nexus



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