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Wednesday, January 11, 2012

Supreme Court Rules Unanimously In Offshore Workers’ Comp Case

This morning the Supreme Court issued its decision in Pacific Operators Offshore, LLP v. Valladolid (.pdf download), affirming the Ninth Circuit’s holding that workers in the offshore extractive industry who are injured while working onshore may receive workers compensation under the Outer Continental Shelf Lands Act (OCSLA). In this unanimous opinion, written by Justice Thomas, the Court applied standard methods of statutory interpretation in a straightforward manner to resolve a split among the circuit courts in interpreting the OCSLA.

Juan Valladolid was killed when a forklift crushed him while he was working for Pacific Operations Offshore, an oil extraction company.  Valladolid spent 98% of his working hours on an oil platform on the Outer Continental Shelf (OCS) three miles from the California coast but died while working onshore to clean up scrap metal taken from operations on the OCS.  Valladolid’s widow, Luisa, argued that she was entitled to benefits under the Outer Continental Shelf Lands Act (the Act), which requires employers or their insurance providers to pay benefits to individuals or surviving relatives when employees suffer “any injury occurring as the result of operations conducted on the [OCS] for the purpose of exploring for, developing, removing, or transporting by pipeline the natural resources…of the [OCS].” An administrative law judge denied Luisa Valladolid’s claim for benefits because her husband’s death did not occur “on the subsoil and seabed of the [OCS], or the artificial islands and structures erected thereon.”

The Ninth Circuit Court of Appeals reversed this decision and held that the plain language of the Act shows that a death or injury does not have to occur on the OCS for an injured employee or surviving relative to receive benefits as long as there is “a substantial nexus between the injury and extractive operations on the shelf.” The Ninth Circuit’s test conflicted with those devised by two other circuits. The Third Circuit had adopted an expansive reading of the statute as covering all injuries that would not have occurred “but for” the operations on the OCS – including, for example, a worker “killed in a car accident on the way to the helicopter that was to fly him to the rig” that he worked on. The Fifth Circuit, on the other hand, had adopted a much narrower interpretation, holding that the statute covered only injuries actually suffered “on an OCS platform or the waters above the OCS.”

Surprisingly, given the Supreme Court’s penchant for reversing the Ninth Circuit’s decisions, the Court in this case affirmed the Ninth Circuit’s ruling and its “substantial nexus” test, through a common sense reading of the statute in question. As a result, workers in the offshore extractive industries who are injured or killed while working onshore may still receive benefits under the OCSLA if they can show a “substantial nexus” between their injury and operations on the Outer Continental Shelf.

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