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23 February 2011

Supreme Court Grants Certiorari in Pacific Operations Offshore, LLP v. Valladolid

The Outer Continental Shelf Lands Act (“OCSLA”) extends worker compensation benefits for “disability or death . . . resulting from any injury occurring as the result of operations conducted on the outer Continental Shelf.” 43 U.S.C. § 1333(b). On February 22, 2011, the Supreme Court granted certiorari in Pacific Operations Offshore, LLP v. Valladolid, No. 10-507, to resolve disagreement among the lower courts as to the scope of that provision.

The Fifth Circuit has held that OCSLA imposes a “situs-of-injury” requirement, so that compensation under the statute is available only for injuries occurring over the outer continental shelf. Mills v. Director, Office of Workers’ Compensation Programs, 877 F.2d 356 (5th Cir. 1989) (en banc). The Third Circuit has held that OCSLA imposes a “but for” test, so that compensation is available if the injury occurred “as the result of” operations on the outer continental shelf. Curtis v. Schlumberger Offshore Service, Inc., 849 F.2d 805, 809–11 (3d Cir. 1988. Disagreeing with both the Fifth Circuit’s situs-of-injury test and the Third Circuit’s but-for test, the Ninth Circuit last year held that compensation is available under OCSLA so long as “the claimant [can] establish a substantial nexus between the injury and extractive operations on the shelf.” Valladolid v. Pacific Operations Offshore, LLP, 604 F.3d 1126, 1139 (9th Cir. 2010).

The Supreme Court’s resolution of this conflict is likely to have significant consequences for the offshore drilling industry and other industries involved in the extraction of natural resources from the outer continental shelf. If the Court allows plaintiffs to bring claims under the OCSLA even for injuries occurring outside the geographic boundaries of the outer continental shelf, companies could be subject to significantly expanded liability.

The defendant in the case now before the Court, Pacific Operations Offshore, LLP, operates two offshore oil drilling platforms located over the outer continental shelf more than three miles off the coast of California. Although the decedent, Juan Valladolid, spent the great majority of his working time aboard one of the drilling platforms, he was injured at Pacific Operations’s onshore oil-processing facility, when he was crushed by a forklift. His widow filed claims for benefits under the California workers’ compensation scheme, the Longshore and Harbor Workers’ Compensation Act, and the OCSLA. Her federal claims were referred to an administrative law judge, who rejected the OCSLA claim on the grounds that Valladolid’s injury had occurred outside the geographic situs of the outer continental shelf. On appeal, the Ninth Circuit announced its “substantial nexus” test and remanded for further factual findings.

Absent extensions, amicus briefs in support of the petitioner will be due on April 15, 2011, and amicus briefs in support of the respondent will be due on May 16, 2011. Any questions about this case should be directed to Andrew Tauber (+1 202 263 3324) in our Washington, DC office.

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