A recent decision from the Ninth Circuit has added yet another wrinkle to the caselaw interpreting the scope of the Outer Continental Shelf Lands Act.
In 1953, when the Outer Continental Shelf was becoming an important area for the exploration and development of energy resources, Congress adopted the Outer Continental Shelf Lands Act, 43 U.S.C. §1331, et seq., to establish the law that would govern injuries occurring on the OCS. Congress determined that injuries to non-seaman, already covered by the Jones Act, would be subject to the remedies of the Longshore and Harbor Workers’ Compensation Act, 33 U.S.C. §901, et seq. The OCSLA provides that “[w]ith respect to disability or death of an employee resulting from any injury occurring as a result of operations conducted on the outer Continental Shelf for the purpose of exploring for, developing, removing, or transporting by pipeline the natural resources, or involving rights to the natural resources, of the subsoil and seabed of the outer Continental Shelf…” the LHWCA would define recovery.
The United States Court of Appeals for the Fifth Circuit determined that the OCSLA has a special situs requirement, meaning that in order for the OCSLA to apply, an injury must actually occur on the OCS. In Mills v. Director, OWCP, 877 F.2d 356 (5th Cir. 1989) (en banc), the court held that Congress enacted the OCSLA to provide a compensation scheme for non-seaman injured offshore who would otherwise not have a remedy, due to the inapplicability of state law to offshore operations. In that case, a welder had been injured onshore in Louisiana working on a structure that was to be installed on the OCS. Arguing that his injury was the “result of operations conducted on the outer Continental Shelf,” Mills sought LHWCA benefits, rather than state workers’ compensation benefits.
The Fifth Circuit found that Congress intended to cover OCS workers only where state law would otherwise not apply, and there was no legislative history suggesting an extension of the LHWCA to state workers was desired. To the contrary, the Fifth Circuit found instruction from the United States Supreme Court in Offshore Logistics, Inc. v. Tallentire, 477 U.S. 207 (1986), which involved a claim by the widows of offshore workers killed in a helicopter crash while transporting their husbands to the OCS. In rejecting OCSLA coverage, the Supreme Court stated that “Congress determined that
the general scope of OCSLA’s coverage . . . would be determined principally by locale, not by the status of the individual injured or killed.”
This decision, establishing a “situs of injury” test, was contrary to the Third Circuit, which had adopted a “but for” test of jurisdiction the previous year in Curtis v. Schlumberger Offshore Service, Inc., 849 F.2d 805 (3rd Cir. 1988). In that case, an offshore worker injured in a car accident on land was found to have OCSLA coverage because “but for” that employment he would not have been involved in the accident.
Now, the United States Court of Appeals for the Ninth Circuit has weighed in on OCSLA jurisdiction, in Valladolid v. Pacific Operations Offshore, LLP, No. 08-73862 (9th Cir. May 13, 2010). In that case, the worker was an offshore roustabout who was killed on shore at his employer’s facility, located some 250 feet from shore. Rejecting both the “but for” test from the Third Circuit and the “situs of injury” test from the Fifth Circuit, the Ninth Circuit has adopted yet a third test for OCSLA jurisdiction. In holding that the worker’s death is covered by the act, the Ninth Circuit held that for the OCSLA to apply, “the claimant must establish a substantial nexus between the injury and extractive operations on the shelf. To meet the standard, the claimant must show that the work performed directly furthers outer continental shelf operations and is in the regular course of such operations. An injury sustained during employment on the outer continental shelf itself would, by definition, meet this standard. However, an accountant’s workplace injury would not be covered even if related to outer continental shelf operations, while a roustabout’s injury in a helicopter en route to the outer continental shelf likely would be. We leave more precise line-drawing to the specific factual circumstances of later cases.”
What this means is that in the Ninth Circuit, which covers the states of Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington, OCSLA coverage has been significantly expanded. The employer and carrier in Valladolid have sought rehearing en banc before the Ninth Circuit seeking reversal of this decision. This decision should be of importance to all offshore employers. An appeal to the Supreme Court is likely in this matter, based on the significant divergence of tests adopted by the circuit courts.