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Workers' Compensation

The Supremes Consider OCSLA

Thomas C. Fitzhugh, III, Fitzhugh & Elliott, P.C., Houston, Texas, addresses a case on the Supreme Court's upcoming docket that directly addresses concerns of the Longshore community: Valladolid v. Pacific Operations Offshore, LLP, 604 F.3d 1126, 44 BRBS 35(CRT) (9th Cir. 2010), cert. granted sub nom. Pacific Operations Offshore, LLP v. Valladolid, 179 L. Ed. 2d 298, 131 S. Ct. 1472 (2011).

This case will address the geographical limits of the Outer Continental Shelf Lands Act (OCSLA), 43 U.S.C.S. § 1331 et seq., and resolve a split among the circuits on whether any injuries occurring on land can be covered by OCSLA. OCSLA incorporates the Longshore Act for benefits to covered workers (Longshore and Harbor Workers' Compensation Act, 33 U.S.C.S. § 901 et seq.).

When offshore oil drilling expanded in the Gulf of Mexico, Congress felt a need to establish a legal framework for that activity. OCSLA passed on August 7, 1953, defined a body of law applicable to the seabed, the subsoil, and the fixed structures on the Outer Continental Shelf. The scope of the Act's coverage is in § 1333(a)(1):

The Constitution and laws and civil and political jurisdiction of the United States are extended to the subsoil and seabed of the outer Continental Shelf and to all artificial islands, and all installations and other devices permanently or temporarily attached to the seabed, which may be erected thereon for the purpose of exploring for, developing, or producing resources therefrom, or any such installation or other device (other than a ship or vessel) for the purpose of transporting such resources, to the same extent as if the outer Continental Shelf were an area of exclusive Federal jurisdiction located within a State: Provided, however, That mineral leases on the outer Continental Shelf shall be maintained or issued only under the provisions of this Act.

The word "minerals" includes oil, gas, sulphur, geopressured-geothermal and associated resources, and all other minerals which are authorized by an Act of Congress to be produced from "public lands."  The entire Act is directed at the exploration and production of minerals, including the leasing of federal lands for such activities. When OCSLA passed, movable drilling rigs and drill ships were not in use; these structures are treated as vessels under admiralty law, and regular workers assigned to them are seamen. However, transient workers, e.g., mud engineers, well loggers, casing crews, etc., on such ships who do not meet seaman's statute requirements are covered by OCSLA.

Congress initially considered applying maritime law to the fixed platforms, but it opted to adopt state law as surrogate federal law in recognition of the fact that workers on them are closely tied to the adjacent state, to which they often commute and on which their families live, unlike transitory seamen to whom a more generalized admiralty law is appropriate.

The Supreme Court has frequently interpreted OCSLA, working to define the boundary between admiralty law and the surrogate federal law that applies on platforms. This means state tort law applies to accidents on fixed platforms, but OCSLA specifically designates the Longshore Act as the workers' compensation statute for all OCSLA workers.

As most offshore oil production in recent decades has been in the Gulf of Mexico, the Fifth Circuit has developed an extensive body of OCSLA law, though there are a few cases from the other coasts where small offshore efforts exist. The Act not only applies to the drilling process but also to the construction and demolition of "permanent" fixed platforms and any other activity directly related to the production and transportation of "minerals." Drilling operations mean several companies have employees working side-by-side daily. The juxtaposition of vessels (such as crew and supply boats, drilling rigs, and fixed platforms) means that individuals suffering similar injuries may have widely varying remedies from their employers and significantly different entitlements under tort law from negligent companies for whom they do not work.

Juan Valladolid worked for Pacific Operations Offshore as a roustabout, stationed primarily on an offshore drilling platform off the California coast. He died at an onshore facility when he was run over by a forklift, and his widow filed a claim for longshore benefits under OCSLA. As a roustabout, his work primarily consisted of cleaning and maintenance duties: picking up litter, emptying trash cans, washing decks, painting, fixing equipment, and helping load and unload the platform crane.

Valladolid also spent time working at La Conchita, Pacific Operations's onshore oil flocculation facility on the California coast 100-300 yards from the shore. This facility, referred to as La Conchita, received crude oil slurry from the offshore platforms via pipeline. The slurry would be processed and separated and the oil and gas extracted would be sent inland via pipelines. Valladolid performed maintenance duties at La Conchita, including painting, sandblasting, weed-pulling, cleaning drain-culverts, and operating a forklift.

Scrap metal from the offshore platforms was taken to the Casitas Pass Pier, about three miles from La Conchita. One of Valladolid's duties at La Conchita was to use a forklift to consolidate the scrap metal from the various locations so that scrap metal vendors could haul it away. This was done only once every couple of years, but it was during this work period that Valladolid was killed.

The widow received California state workers' compensation benefits but filed a claim under OCSLA for longshore benefits as well. The ALJ denied her claim because the injury did not occur on the Outer Continental Shelf and because he found that Valladolid was not doing maritime work. The BRB affirmed the denial on the situs question, and the widow sought review from the Ninth Circuit. Valladolid presented a question previously unresolved by the Ninth Circuit, and the claimant, widow of an offshore worker killed in an accident ashore, argued that the BRB's "situs of injury" requirement too narrowly restricted OCSLA claims.

In Curtis v. Schlumberger Offshore Service, Inc., 849 F.2d 805, 21 BRBS 61(CRT) (3d Cir.1988), the Third Circuit rejected the situs-of-injury test, holding that a claimant need only satisfy a "but for" test in establishing that the injury occurred "as the result of" operations on the Outer Continental Shelf. Thus an employee injured in a car accident on his way to meet a helicopter that would take him to an offshore platform was eligible for OCSLA benefits. The Fifth Circuit adopted a strict situs-of-injury requirement for OCSLA claims in Mills v. Director, OWCP, 877 F.2d 356, 22 BRBS 97(CRT) (5th Cir. 1989) (en banc), and it has reaffirmed that rule repeatedly since. Becker v. Tidewater, Inc., 586 F.3d 358, 366-367, 43 BRBS 39(CRT) (5th Cir. 2009); Pickett v. Petroleum Helicopters, Inc., 266 F.3d 366, 368, 35 BRBS 101(CRT) (5th Cir. 2001); Sisson v. Davis & Sons, 131 F.3d 555, 558, 31 BRBS 199(CRT) (5th Cir. 1998).

The Supreme Court in Offshore Logistics v. Tallentire, 477 U.S. 207, 91 L. Ed. 2d 174, 106 S. Ct. 2485, 51 Cal. Comp. Cases 638 (1986), hinted that the Fifth Circuit's view was correct. That case involved a wrongful death action by widows of employees killed in a helicopter crash en route to an offshore drilling location. The Court declined to apply OCSLA's tort provision (that adopts the law of the adjacent state for accidents on the Outer Continental Shelf) holding "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." 477 U.S. at 219. In an accompanying footnote, the Court added:

Only one provision of OCSLA superimposes a status requirement on the otherwise determinative OCSLA situs requirement; § 1333(b) makes compensation for the death or injury of an "employee" resulting from certain operations on the Outer Continental Shelf payable under the Longshoremen's and Harbor Workers' Compensation Act. We note that because this case does not involve a suit by an injured employee against his employer pursuant to § 1333(b), this provision has no bearing on this case.

Id. at 219 n.2.

Treating this footnote as dictum, the Ninth Circuit agreed with the Third Circuit that Tallentire was not dispositive of this case because it dealt with the choice-of-law provision of § 1333(a)(2)(A), not the § 1333(b) benefits provision. It conceded that "the operations must be on the outer continental shelf. See Herb's Welding v. Gray (Herb's Welding II ), 766 F.2d 898, 900, 17 BRBS 127(CRT) (5th Cir. 1985) (holding that an injury occurring on an oil platform in state waters is not eligible for OCSLA benefits)." 604 F.3d at 1132.

The court dismissed reference to a number of Fifth Circuit cases, interpreting them to deal with issues other than situs. Instead, the court proceeded to analyze the issue as a "straightforward question of statutory construction." 604 F.3d at 1133.

The Fifth Circuit in Mills held that § 1333(b) itself contains the situs-of-injury requirement. 877 F.2d at 358-359. Beyond that, the employer argued that the situs requirement of § 1333(a) applies to OCSLA as a whole. The Valladolid court rejected both positions, adopting the Third Circuit's reasoning instead. It found the absence of an explicit situs requirement in § 1333(b) controlling. The analysis of a number of major decisions convinced this panel that the Fifth Circuit essentially interpolated the situs requirement in § 1333(b), a section it found that only contained a situs requirement. The court delved into the legislative history to no avail, finding it confusing and inconclusive on this point. Its view of the statute is that each subsection contained its own situs requirement, and thus the specific requirement of § 1333(a) was not binding on subsequent sections nor a limitation on coverage. The court held "that § 1333(b) may apply to injuries occurring outside the situs of the outer continental shelf, so long as they occur 'as the result of operations conducted on the outer continental shelf.'" 604 F.3d at 1139.

The Ninth Circuit explained its own test: "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." Id. This position, in the Ninth Circuit's opinion, comports with the pre-Mills decisions from the Fifth Circuit, e.g., Nations v. Morris, 483 F.2d 577, 584 (5th Cir. 1973) ("OCSLA, in its incorporation of [the LHWCA], did not speak in terms of injuries occurring on such platforms so as to distinguish them from those off the platforms. ... Obviously Congress purposefully established a system that would apply without regard to physical location.").  As the BRB's dismissal of the claim rested on the situs analysis, the court remanded the case to the BRB for further consideration.

It agreed with the Board's analysis that direct application of the LHWCA did not afford coverage, since the La Conchita facility was not a maritime situs under traditional longshore analysis. Applying its expansive "functional relationship" analysis from Brady-Hamilton Stevedore Co. v. Herron, 568 F.2d 137, 141, 7 BRBS 409 (9th Cir. 1978), it found that even though it was physically close enough to the ocean, the facility was not "used as an integral part of longshoring operations." 604 F.3d at 1141. The court affirmed the denial of benefits under the direct application of the LHWCA but remanded the case for reconsideration of compensability under its expanded view of OCSLA. The employer successfully petitioned for a writ of certiorari, and the case will be argued in the new term of the Supreme Court. Given the Fifth Circuit's overwhelming case load of OCSLA claims, it would be shocking if the Supreme Court upset the well-developed jurisdictional analysis of the Fifth Circuit in favor of two other circuits that seldom address these issues.

While offshore drilling in the United States today is confined primarily to the Gulf of Mexico, the country's energy needs will eventually cause expansion of production to the other parts of the Outer Continental Shelf. This makes Valladolid a case of future interest to the entire Longshore community. With offshore wind power projects on the drawing boards for all coasts, the question arises as to what law will govern the installation and operation of these wind farms. OCSLA expressly applies to production of geothermal energy, but even the broadest application of that Act which courts have rendered to date cannot conceptually reach the wind farms. Congress could add language to the existing statute to cover the wind structures. However, unlike platforms and rigs, the wind turbines are not designed to house people continuously. Most components for wind turbines are manufactured overseas, so they begin their U.S. journey as maritime cargo. Installation of the towers and blades offshore invariably will be from barges, and the workers assigned to these projects will be either seamen or maritime workers covered by the LHWCA directly. Considering this and its more immediate concerns with the budget and wars, Congress may not be eager to expand OCSLA.

© Copyright 2011 Thomas C. Fitzhugh, III. All rights reserved. Reprinted with permission. This article was also reprinted in the Benefits Review Board Service – Longshore Reporter.