A SHORT "SHELF LIFE" FOR VALLADOLID'S ELUSIVE SUBSTANTIAL-NEXUS TEST?

AuthorPardue, William L.

TABLE OF CONTENTS I. Introduction 112 II. The Outer Continental Shelf Lands Act: A Brief History 116 A. The 1978 Amendments to OCSLA and the Extension of 43 U.S.C. [section] 1333(b) 119 III. The Longshore and Harbor Workers' Compensation Act 120 A. The Administrative Law Process 122 IV. The Issues and Cases 124 A. The Pre-Valladolid 3 | 5 | 9 Circuit Split Trifecta 125 B. The Valladolid Decision 128 C. The Supreme Court's Repudiation of the Fifth Circuit's Situs-of-Injury Test 130 V. The Post-Valladolid Line of Cases 133 A. Incongruous Results: Baker, Flores, Boudreaux, and Grabert 134 1. Baker 134 2. Flores 139 3. Boudreaux and Grabert 142 VI. Commentary: Refocusing the Statutory Lens 143 VII. Conclusion 147 I. INTRODUCTION

For more than two decades, three federal appellate courts have split over the interpretation of the breadth of the phrase "as a result of operations conducted on the outer continental shelf contained in 43 U.S.C. [section] 1333(b) of the Outer Continental Shelf Lands Act (OCSLA). (1) The tripartite interpretation arose in the context of determining eligibility status for injured claimants seeking workers compensation benefits under the Longshore and Harbor Workers' Compensation Act (LHWCA), (2) as extended by OCSLA. In 2012, however, the U.S. Supreme Court addressed the issue of workers' compensation coverage through OCSLA in Pacific Operators Offshore v. Valladolid: (3) The Court held that coverage under the LHWCA, as extended by OCSLA, is available to a claimant if the injury bears a "substantial nexus" to extraction operations on the Outer Continental Shelf (OCS). (4)

By affirming the Ninth Circuit's decision, the Court adopted a substantial-nexus test--a causation test--whereby if satisfied, "OCSLA, and by extension the LHWCA, provides the workers' compensation remedy for an injured [maritime] worker, even if the injury itself did not occur on the [OCS]." (5) In adopting the substantial-nexus test formulated by the Ninth Circuit, the Court in tandem rejected the too expansive "but-for" test of the Third Circuit (6) as well as the too restrictive "situs-of-injury" requirement of the Fifth Circuit. (7) The Court further rejected a two-pronged variant test advanced by the Solicitor General of the U.S. Department of the Interior, which posited that "an injury is compensable, no matter where it occurs, if there is 'a nexus between OCS operations and the employee's 'work performed' generally."' (8)

By adopting the substantial-nexus test, the Supreme Court appeared to have found the panacea, the "just right" solution to the more than two decade-long dilemma facing the federal appellate courts. The new substantial-nexus test, the Supreme Court noted, was based on a "lack of [any] textual 'situs-of-injury' requirement" found in a plain reading of [section] 1333(b). (9) The test also revealed that while the "operations that caused a worker's injury must have been on the Shelf, the injury itself could occur elsewhere, provided it bore a 'substantial nexus' to shelf operations." (10)

In the six years since the Court's Valladolid decision, a puzzling pattern has now emerged in similar cases for claimants seeking benefits under the LHWCA as extended by OCSLA. Upon closer inspection of subsequent decisions of the Department of Labor's Benefits Review Board and the Fifth Circuit Court of Appeals, specifically the 2016 Fifth Circuit decision Baker v. Gulf Island Marine Fabricators (11) and other recently decided cases, (12) these decisions applying the substantial-nexus test have failed to render any consistency in their results. More significantly, while the meaning of substantial nexus and the application of the substantial-nexus test were to have developed concomitantly over time, these decisions demonstrate, at least in the Fifth Circuit, that the substantial-nexus test and the latitude it grants to administrative law judges and courts to administer it are still in a state of flux, (13) leaving employers, their insurers, and employees flummoxed. While OCSLA extends coverage through the LHWCA to an employee who can establish a substantial nexus between his injury and his employer's extractive operations on the OCS, (14) nothing in the definitions contained in [section] 1333(b) states that the injury must occur on the OCS. (15)

The Valladolid decision was no doubt a turning point in the ongoing Ping-Pong match of the federal appellate courts for determining eligibility of an injured employee's coverage for Longshore benefits under OCSLA. The Supreme Court's holding effectively widened the playing field for workers seeking OCSLA and LHWCA benefits--especially for workers involved in OCS operations in the Fifth Circuit--by concretely and definitively foreclosing any reference to a geographic element requiring the injury to have occurred on the OCS, (16) even when no textual basis for such element could be found in the statute. (17) Despite the substantial-nexus test's usefulness in bringing together the two critical components creating the "nexus", namely, that (1) the work performed directly furthers OCS operations and is in the regular course of such operations, and (2) whether the injured worker's labor furthered shelf operations rather than whether the injury itself was caused by those operations, post-Valladolid litigation has not fostered uniformity in similar decisions, but rather has "add[ed] complexity to the law and litigation to the courts," (18) and has created further uncertainty in an otherwise "already muddled area of law." (19)

The lack of development, uniformity, and understanding of the substantial-nexus test therefore begs the question: has the elusive Valladolid substantial-nexus test reached the end of a short shelf life? If so, is there a more reasonable and workable solution to the otherwise ongoing quandary of extending OCSLA coverage to injured employees as the result of extraction operations conducted on the OCS? If the jurisdictional grant in OCSLA is broadly (and liberally) based (20) and the LHWCA and workers' compensation statutes are to be liberally construed in favor of the claimant, (21) then it follows that a substantial nexus necessarily exists between the work being performed in furtherance of the exploration, development, and/or production of resources on the OCS, and the injury sustained by the claimant on land. And if, as the Supreme Court and the concurring Justices held in Valladolid, the substantial-nexus test best reflects "and is more faithful to the text of [section] 1333(b)" (22) and the Fifth Circuit's situs-of-injury requirement is nonetheless "unmoored from the text of [section] 1333(b)," (23) then it is fair to say that the Fifth Circuit is paying nothing more than lip service to the Supreme Court's precedent by smearing jurisdictional lines through its continued imposition of a geographic-laden, situs-of-injury requirement that the Supreme Court so emphatically rejected in Valladolid.

This comment examines first the historical purpose of OCSLA as well as the 1978 Amendments which codified the current language of coverage for an injury "occurring as the result of operations, conducted on the Outer Continental Shelf." Second, it will further discuss the jurisprudence of the three federal appellate courts regarding the OCSLA coverage prior to Valladolid, while also examining the post-Valladolid line of cases such as Baker, as well as three other administrative law judge cases, Flores, Boudreaux, and Grabert, that have failed to render any uniformity from application of the Supreme Court's precedent. Third, the comment will analyze the Fifth Circuit's ongoing fractured application of the substantial-nexus test, the factual parsing occurring in its decisions, and the "morass of inconsistent standards" (24) rendered in its opinions awarding or denying coverage to injured claimants. Finally, it will conclude with an examination of whether the work or services performed by a claimant in furtherance of the exploration, development, and production of resources on the OCS necessarily creates a substantial nexus, even though the work is performed onshore or elsewhere.

  1. THE OUTER CONTINENTAL SHELF LANDS ACT: A BRIEF HISTORY

    The modern-day legal concept of the continental shelf is an American idea first adopted by President Truman after World War

  2. (25) The purpose of the continental shelf was to advance the United States' [discovery, extraction and] development of natural resources and petroleum beneath the subsoil and seabed lying thereunder. (26) In 1945, President Truman issued a proclamation (27) as well as an executive order (28) asserting the United States' dominion over all of "the natural resources of the subsoil and sea bed of the continental shelf beneath the high seas but contiguous to the coasts of the United States as appertaining to the United States... ." (29) The Executive Order further placed the resources of the continental shelf under the jurisdiction and control of the Secretary of the Interior, and directed Congress and the Supreme Court to sort out "any issues between the United States and the several states." (30)

    Following the President's directive, the Supreme Court began sorting out several issues which arose related to submerged lands and minerals beyond the coasts of several states. In United States v. California, (31) the Supreme Court held that California had no right to any of the submerged lands or minerals beyond its coast line:

    California is not the owner of the three-mile marginal belt along its coast . [T]he Federal Government rather than the states has paramount rights in and power over that belt, an incident to which is full dominion over the resources of the soil under the water area, including oil. (32) Following on the heels of the California case, the Supreme Court equally concluded similar claims brought by Louisiana and

    Texas. (33) As a result of the confusion as to where a state's ownership beyond its...

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