Archives for June 2010

How Far Does The OCSLA Reach?

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.

General Maritime Law Preempts Louisiana’s Professional Rescuer’s Doctrine

Louisiana’s Professional Rescuer’s Doctrine is a jurisprudential rule stating that a professional rescuer, such as a fireman or a policeman, who is injured in the performance of his duties, assumes the risk of such an injury and is not entitled to damages.

In Rogers v. Coastal Towing, L.L.C., the Eastern District of Louisiana was presented with the issue of whether general maritime law preempts Louisiana’s Professional Rescuer’s Doctrine.  The Captain of Defendant’s vessel suffered a heart attack, and Plaintiff was one of the paramedics assigned to respond. A gangplank was provided from the dock to the vessel, and when Plaintiff jumped from the gangplank onto the deck of the vessel, he sustained various injuries.  He filed a complaint seeking damages for his injuries.  Defendant subsequently filed for summary judgment, urging that Louisiana’s Professional Rescuer’s Doctrine bars Plaintiff’s recovery, and that the Louisiana Professional Rescuer’s Doctrine may be applied to supplement general maritime law.

The question presented to the Court was whether general maritime law preempted Louisiana’s Professional Rescuer’s Doctrine.  The Court found that it does.  The Court reasoned that the application of the doctrine would work a material prejudice to a characteristic feature of general maritime law and that it would interfere with the proper harmony and uniformity of general maritime law in its interstate relations, and that as such, it was preempted.

Rogers v. Coastal Towing, L.L.C., 2010 WL 2291483 (La. E.D. 2010)

Day With the DOL Scheduled

The United States Department of Labor, Division of Longshore and Harbor Workers’ Compensation, Seventh District, in conjunction with Loyola Law School, will host its annual Day With the DOL on September 29th at the Pan American Life Center in New Orleans. Details and registration will be available here.

OPA 90 and The Federal Oil Spill Liability Trust Fund

Passed by Congress in 1990 following the M/V EXXON VALDEZ oil spill in Alaska, the Oil Pollution Act (OPA) imposes liability for removal/cleanup costs and damages resulting from an incident in which oil is discharged into navigable waters or adjoining shorelines and the territorial waters of the United States.  The Act is one of the main federal statutes establishing liability for damages for injuries or loss of natural resources. 

OPA places the financial burden on the “responsible party” to pay for removal costs and damages resulting from the incident.  Removal includes containment and the taking of other actions to minimize or mitigate damage to public health or welfare including fish, wildlife, public and private property, shorelines and beaches.

The responsible party is defined as any person or company owning, operating or chartering a vessel.  With respect to an offshore facility, the responsible party is the lessee or permittee of the area in which the facility is located.  With respect to a mobile offshore drilling unit (MODU) or rig, its owner or operator is the responsible party.  Depending on the circumstances and scope of the spill, both the owner/operator of the MODU and the lessee of the area may be designated the responsible party.

Liability of the responsible party for these costs is one of strict liability, i.e., the responsible party will be liable without regard to fault.  The claimant need only prove that a discharge occurred from the vessel or facility and that the defendant is the responsible party.

Although OPA imposes strict liability, it places a monetary cap on that liability.  But those limits may not be very meaningful because the conditions that allow the limits to be lifted are not very difficult to meet.  The first exception to the monetary limits is that notwithstanding such limits, all removal costs incurred by federal, state of local governments shall be paid by the responsible party.  If the responsible party fails to report an incident or fails to provide all reasonable cooperation and assistance requested by officers, it will not be entitled to limit its liability.  Further, if the discharge was proximately caused by gross or willful misconduct or violation of an applicable federal safety, construction or operating regulation, it will not be allowed to limit its liability.

Even though a responsible party alleges that the discharge was caused solely by the act or omission of a third party, it must still pay removal costs and damages to claimants if the third party does not do so voluntarily.

A wide range of damages are covered by OPA 90.  They include: real or personal property damage, loss of profits or earning capacity, loss of subsistence use of natural resources, loss of government revenues, cost of increased public services and natural resource damage and the costs of assessing such damage.  Any person who incurs damage or loss may submit claims against the responsible party.

In general, the Oil Spill Liability Trust Fund comes into operation when the responsible party denies a claim or fails to settle it within ninety days.  This fund is provided for by a 5¢ per barrel tax from the oil industry on petroleum produced in or imported to the United States.  The fund is managed by the National Pollution Funds Center administered by the United States Coast Guard.  If the responsible party has not responded to a claim for damages, the aggrieved party may contact the NPFC directly, 202-493-6700, or 800-280-7118.  The NPFC website is easy to access and provides clear instructions for the claims process.  The fund is intended to provide efficient responsive adjudication of claims, and it is not imperative that a claimant undertake the expense of filing a lawsuit against the responsible party and invite the inevitable delay in recovery.  Generally, the claimant must first submit its claim to the responsible party.  If the responsible party denies the claim or does not act within ninety days, the claimant may apply to the NPFC.  (Note that OPA 90 and the Fund do not respond to claims for personal injury.)  To apply to the NPFC, the claimant must show that it submitted its claim to the responsible party which denied or took no action on the claim.

The claims must be supported by reasonable documentation.  For claims involving lost profits or earning capacity, the claimant is only entitled to profit that was lost or typically earned.  Costs of cleaning vessels and facilities are recoverable.  Further, the claim must be submitted within three years of the date the damage was reasonably discoverable.  Examples of supporting documentation include photographs and bookkeeping/tax records.

A waterfront property owner may have a claim for restoring the property to its pre-spill condition, or if the owner sells the property, the owner may submit a claim for the difference between its assessment before the spill and the lower price received for it after the spill.  If the claimant incurs clean up costs, it must show its actions were reasonable, that his actions aided in the spill clean up and necessary to present or reduce the effects of the spill.  Supporting documents should include logs, invoices, proof of payment, and any documentation the claimant feels support the claim.

It has been my experience that the personnel at the NPFC are not adversarial.  To the contrary, they are extraordinarily helpful in guiding claimants through the process and making sure that each claim is given full attention, no matter its size.  The NPFC does require reasonable documentation in support of the claim before payment will be issued, but that is consistent with their mission, which is to ensure that the money in the Fund with which it is entrusted is paid only to those who have legitimate claims.