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The "substantial-nexus" test which the United States Court of Appeals for the Ninth Circuit adopted in Valladolid v. Pac. Operations Offshore, LLP is faithful to the text of 43 U.S.C.S. § 1333(b). The test requires an injured employee to establish a significant causal link between the injury that he suffered and his employer's on-outer Continental Shelf operations conducted for the purpose of extracting natural resources from the outer Continental Shelf. Although the Ninth Circuit's test may not be the easiest to administer, it best reflects the text of § 1333(b), which establishes neither a situs-of-injury nor a "but for" test. Whether an employee injured while performing an off-outer Continental Shelf task qualifies is a question that will depend on the individual circumstances of each case.
Petitioner Pacific Operators Offshore, LLP (Pacific) was the operator of two drilling platforms on the Outer Continental Shelf (OCS) off the California coast and an onshore oil and gas processing facility. Employee Juan Valladolid spent 98 percent of his time working on an offshore platform, but he was killed in an accident while working at the onshore facility. His widow, respondent Luisa Valladolid, sought benefits under the Longshore and Harbor Workers' Compensation Act (LHWCA), 33 U.S.C. §901 et seq., pursuant to the Outer Continental Shelf Lands Act (OCSLA), which extended LHWCA coverage to injuries “occurring as the result of operations conducted on the [OCS]” for the purpose of extracting natural resources from the shelf, 43 U.S.C. §1333(b). The Administrative Law Judge dismissed her claim, reasoning that §1333(b) did not cover Valladolid's fatal injury because his accident occurred on land, not on the OCS. The Labor Department's Benefits Review Board affirmed, but the Ninth Circuit reversed. Rejecting tests used by the Third and the Fifth Circuits, the Ninth Circuit concluded that a claimant seeking benefits under the OCSLA “must establish a substantial nexus between the injury and extractive operations on the shelf.” The U.S. Supreme Court granted certiorari.
Did the Ninth Circuit err in applying the “substantial nexus” test to determine if a claimant could receive compensation under the LHWCA and 43 U.S.C.S. § 1333(b)?
The Supreme Court affirmed the Ninth Circuit's decision, finding that the Ninth Circuit's "substantial nexus" test was faithful to the text of § 1333(b), and it adopted that test over the "but for" test which the U.S. Court of Appeals for the Third Circuit adopted in Curtis v. Schlumberger Offshore Service, Inc., and the "situs-of-injury" test which the U.S. Court of Appeals for the Fifth Circuit adopted in Mills v. Director, Office of Workers' Compensation Programs. A remand to the Board to apply the "substantial nexus" test, in the first instance, was an appropriate disposition.