ISSUE: Outer Continental Shelf Lands Act

Jack_crop 72dpiThe Outer Continental Shelf Lands Act (OCSLA) extends the provisions of the Longshore and Harbor Workers’ Compensation Act to disabilities or death resulting from any injury occurring as the result of operations “arising out of or in connection with any operations conducted on the outer Continental Shelf for the purpose of exploring for, developing, removing or transporting by pipeline the natural resources … of the subsoil and seabed of the outer Continental Shelf ….”  It provides for criminal penalties and personal liability for corporate officers if the company does not comply with the requirement to maintain proper workers’ compensation insurance coverage. 

To be covered by the OCSLA, the claim for disability or death must arise from an injury “occurring as the result of operations” as described above.

If you are an employer with oil and gas operations on the OCS, do not overlook possible OCSLA exposure. It can be complicated sorting out the various exposures among the different workers’ compensation and liability laws that may apply on the OCS.  It is important to determine precisely where your employees are and what they are doing.  For example, are they working in state waters or on the OCS?  Are they engaged in oil and gas exploration, development, removal or transportation, or are they engaged in maritime employment?  Are they working on vessels, or on fixed platforms, or on objects whose vessel status is unclear?  Are they working on land in operations that have a “substantial nexus” with the employer’s on-OCS operation?

When injuries occur, there are possible remedies available under state workers’ compensation laws, the Longshore and Harbor Workers’ Compensation Act, the OCSLA, the Jones Act, the General Maritime law, section 905(b) of the Longshore Act, and state tort remedies.

Here are some general principles to help you be alert to possible OCSLA exposure.

There is a status test for OCSLA coverage.  The worker must be engaged in work integral to operations conducted on the OCS for the purpose of exploring for, developing, removing or transporting by pipeline the natural resources of the subsoil and seabed of the OCS.

There is a situs of operations test.  The employer must be conducting oil and gas operations on the OCS of the United States.

The OCSLA is intended to provide uniform coverage for OCS workers, including work on platforms, in transit to and from platforms, on pipelines between platforms and shore, and at onshore facilities “integral” to the resource extraction processes on the OCS.

What does “integral” mean?  What does “substantial nexus” mean?  We don’t know yet, since “substantial nexus” is a recently formulated case by case test.  It does not mean merely connected with or peripheral to OCS operations.  The work must be a necessary part of furthering regular, ongoing OCS operations.  For example, constructing fixed offshore platforms on shore would be work covered by OCSLA. 

What are state waters?  For most states, state waters extend from the shoreline out to a distance of 3 nautical miles (a nautical mile equals 1.15 land miles).  In the cases of Florida and Texas, state waters extend out 9 nautical miles.  For the Great Lakes, state waters extend to the international boundary.  Beyond these limits for the coastal states, you are on the OCS.  The Supreme Court has defined the OCS as “The gently sloping plain which underlies the seas adjacent to most land masses, extending seaward from shore to the point at which there is a marked increase in the gradient of the decline and where the continental slope leading to the true ocean bottom begins….”

If you are an oil and gas worker working on a fixed platform in state waters, you are covered by state workers’ compensation laws.  You do not meet the Longshore Act “status” test, because oil and gas exploration is not maritime employment, and you fail the Longshore Act “situs” test because the fixed platform’s purpose is to further gas and oil production, a non-maritime activity, and the platform is considered to be an “artificial island”.

An injury does not have to occur on the OCS in order to be covered by the OCSLA.  Based on the U.S. Supreme Court’s recent decision in Pacific Operators Offshore LLP v. Valladolid, the injury may occur anywhere, but there must be “substantial nexus” between the injury and the employer’s extractive operations on the OCS.  There is a situs of operations test, but not a situs of injury test.

Longshore Act insurance coverage does not provide coverage for OCSLA exposure.  If you have a possible OCSLA exposure then you need the specific OCSLA endorsement on your standard workers’ compensation policy (the form of endorsement for OCSLA coverage is found at 20 C.F.R. 704.351).  You meet the OCSLA insurance requirement the same way that you meet the Longshore Act insurance requirement.  You buy coverage from an insurance company authorized by the U.S. Department of Labor, or you obtain the Department of Labor’s authorization to self insure (or you join a group self insured fund like ALMA).

To repeat, even if the employer has state workers’ compensation insurance coverage and USL&H insurance coverage, if an employee has an injury that is covered by the OCSLA, then the employer must have OCSLA coverage or it will be considered uninsured for that injury.     

Leave a Reply