SCOTUS Decides Pacific Operators Offshore, LLP v. Valladolid

Today, the Supreme Court of the United States issued its opinion in Pacific Operators Offshore, LLP v. Valladolid.  The syllabus of the opinion, which was written by Justice Thomas, states:

Petitioner Pacific Operators Offshore, LLP (Pacific), operates 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, a respondent here, 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 extends 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.”

Held: The OCSLA extends coverage to an employee who can establish a substantial nexus between his injury and his employer’s extractive operations on the OCS.

(a) The Courts of Appeals have offered competing interpretations of §1333(b)’s scope. According to the Third Circuit, because Congress intended LHWCA coverage to be expansive, §1333(b) extends to all injuries that would not have occurred “but for” operations on the OCS. Thus, an employee who worked on a semisubmersible drill rig, but who died in a car accident on his way to board a helicopter to beflown to the rig, was eligible for benefits because he would not have been injured but for his traveling to the rig. In contrast, the Fifth Circuit has concluded that Congress intended to establish “a bright­line geographic boundary,” extending §1333(b) coverage only to em­ployees whose injuries or death occurred on an OCS platform or thewaters above the OCS. Under its “situs-of-injury” test, a welder in­jured on land while constructing an offshore oil platform was ineligi­ble for §1333(b) benefits. In the decision below, the Ninth Circuit held that §1333(b) extends coverage to injured workers who can es­tablish a “substantial nexus” between their injury and extractive op­erations on the OCS. The Solicitor General offers a fourth interpre­tation, which would provide coverage for off-OCS injuries only to those employees whose duties contribute to operations on the OCS and who perform work on the OCS itself that is substantial in bothduration and nature.

(b) Contrary to Pacific’s position, the Fifth Circuit’s “situs-of-injury” test is not the best interpretation of §1333(b).

(1) Nothing in the text of §1333(b) suggests that an injury must occur on the OCS. The provision has only two requirements: The ex­tractive operations must be “conducted on the [OCS],” and the em­ployee’s injury must occur “as the result of” those operations. If, as Pacific suggests, the purpose of §1333(b) was to geographically limitthe scope of OCSLA coverage to injuries that occur on the OCS, Con­gress could easily have achieved that goal by omitting from §1333(b)the words “as the result of operations conducted.” Moreover, Con­gress’ decision to specify situs limitations in other subsections, butnot in §1333(b), indicates that it did not intend to so limit §1333(b). This conclusion is not foreclosed by Herb’s Welding, Inc. v. Gray, 470 U. S. 414, or Offshore Logistics, Inc. v. Tallentire, 477 U. S. 207, nei­ther of which held that §1333(b) coverage was limited to on-OCS in­juries. Section 1333(b)’s text also gives no indication that Congressintended to exclude OCS workers who are eligible for state benefitsfrom LHWCA coverage. To the contrary, the LHWCA scheme incor­porated by the OCSLA explicitly anticipates that injured employees might be eligible for both state and federal benefits.

(2) Also unpersuasive is Pacific’s alternative argument that §1333(b) imports the LHWCA’s strict situs-of-injury requirement,which provides benefits only for injuries occurring “upon the naviga­ble waters” of the United States, 33 U. S. C. §903(a). It is unlikelythat Congress intended to restrict the scope of the OCSLA workers’ compensation scheme through a nonintuitive and convoluted combi­nation of two separate legislative Acts. In addition, under Pacific’s alternative theory, LHWCA coverage would not be extended to the navigable waters above the shelf. Thus, even employees on a crewship immediately adjacent to an OCS platform who are injured in a platform explosion would be excluded from §1333(b) coverage. That view cannot be squared with §1333(b)’s language.

(3) Pacific’s policy concerns also cannot justify an interpretation of §1333(b) that is inconsistent with the OCSLA’s text.

(c) Neither the Solicitor General’s status-based inquiry nor the Third Circuit’s “but for” test are compatible with §1333(b). The Solic­itor General’s inquiry has no basis in the OCSLA’s text, because §1333(b)’s “occurring as the result of operations” language plainlysuggests causation. And when taken to its logical conclusion, theThird Circuit’s test, though nominally based on causation, is essen­tially a status-based inquiry because it would extend coverage to allemployees of a business engaged in extracting natural resources fromthe OCS, no matter where those employees work or what they are do­ing at the time of injury. Because LHWCA coverage was extended only to injuries “occurring as the result of operations conducted onthe [OCS],” §1333(b)’s focus should be on injuries resulting from those “operations.”

(d) The Ninth Circuit’s “substantial-nexus” test is more faithful to§1333(b)’s text. This Court understands that test to require the in­jured employee to establish a significant causal link between his in­jury and his employer’s on-OCS extractive operations. The test maynot be the easiest to administer, but Administrative Law Judges and courts should be able to determine if an injured employee has estab­lished the required significant causal link. Whether an employee in­jured while performing an off-OCS task qualifies will depend on thecircumstances of each case. It was thus proper for the Ninth Circuit to remand this case for the Benefits Review Board to apply the “sub­stantial-nexus” test.