Pacific Operators Offshore, L.L.P. v. Valladolid, No. 10-507; U.S. Supreme Court; opinion by Thomas, J.; partial concurrence by Scalia, J.; decided January 11, 2012. On certiorari to the U.S. Court of Appeals for the Ninth Circuit.

Petitioner Pacific Operators Offshore, L.L.P. (Pacific), operates two drilling platforms on the Outer Continental Shelf (OCS) off the California coast and an onshore oil and gas processing facility. Employee JuanValladolid 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. Pp. 3-14.

(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 be flown 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 bright line geographic boundary,” extending § 1333(b) coverage only to employees whose injuries or death occurred on an OCS platform or the waters 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 both duration and nature. Pp. 3-6.

(b) Contrary to Pacific’s position, the Fifth Circuit’s “situs-of-injury” test is not the best interpretation of § 1333(b). Pp. 6-12.

(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 limit the 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, but not 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 Congress intended to exclude OCS workers who are eligible for state benefits from 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. Pp. 6-10.

(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 unlikely that 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. Pp. 11-12.

(3) Pacific’s policy concerns also cannot justify an interpretation of § 1333(b) that is inconsistent with the OCSLA’s text. P. 12.

(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 plainly suggests causation. And when taken to its logical conclusion, the Third Circuit’s test, though nominally based on causation, is essentially a status-based inquiry because it would extend coverage to all employees of a business engaged in extracting natural resources from the 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 on the [OCS],” § 1333(b)’s focus should be on injuries resulting from those “operations.” Pp. 12-14.

(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 may not 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 the circumstances 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. P. 14.

604 F.3d 1126, affirmed and remanded.