What is the Outer Continental Shelf Lands Act?
Sep 13, 2012
- Jack Martone, The American Equity Underwriters, Inc.
I will now attempt to discuss workers’ compensation coverage under the Outer Continental Shelf Lands Act (OCSLA).
Let’s start in 1953. Oil and gas exploration off the coasts of the United States was beginning to become very big business. The question arose as to who owned the rights to the natural resources, the states or the federal government. The states asserted claims, the federal government went to court and won, and then they compromised.
In the Submerged Lands Act, Congress gave the states control over the natural resources out to three nautical miles from the coastline, defined as “the line of ordinary low water along the portion of the coast which is in direct contact with the open sea and the line marking the seaward limit of inland waters”. Exceptions were made for the Gulf of Mexico coasts of Florida and Texas, where state control was extended for 9 nautical miles, and the Great Lakes, where state control extended to the international boundary. (A nautical mile equals 1.15 land miles.)
Next, Congress passed the Outer Continental Shelf Lands Act.
Section 1333(a)(1) of OCSLA extends the “Constitution and laws and civil and political jurisdiction of the United States to the subsoil and seabed of the outer Continental Shelf and to all artificial islands, and to all installations and other devices permanently or temporarily attached to the seabed, which may be erected thereon for the purpose of exploring for, developing, or producing resources therefrom, or any such installation or other device (other than a ship or vessel) for the purpose of transporting such resources to the same extent as if the outer Continental Shelf were an area of exclusive Federal jurisdiction located within a State…” Federal law governs activities on the outer continental shelf (OCS), or as provided elsewhere in the OCSLA, the law of the adjacent state as surrogate federal law when necessary to the extent that state law is not inconsistent with federal law.
But we are concerned with Section 1333(b) of OCSLA, which deals with workers’ compensation benefits. “With respect to disability or death of an employee resulting from any injury occurring as the result of 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 OCS, compensation shall be payable under the provisions of the Longshore and Harbor Workers’ Compensation Act.”
So, OCSLA extends Longshore Act benefits to the OCS. Exactly what is the OCS?
Congress – “All submerged lands lying seaward and outside of the area of lands beneath navigable waters, as defined in Section 1301 of the Submerged Lands Act, and of which the subsoil and seabed appertain to the United States and are subject to its jurisdiction and control.”
U.S. Supreme Court – “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. In the Gulf of Mexico, the edge of the Continental Shelf, as so defined, lies as much as 200 miles from shore in some places.”
The OCSLA makes Longshore Act benefits payable in the event of injuries occurring as a result of operations on the OCS.
NOTE: Longshore Act insurance does not provide coverage for OCSLA exposure. If you have exposure under the OCSLA then you need a specific OCSLA endorsement on your workers’ compensation policy. You meet the OCSLA insurance requirement the same way that you meet the Longshore Act insurance requirement. You buy coverage from an insurance carrier authorized by the U.S. Department of Labor, or you obtain the U.S. Department of Labor’s authorization to self-insure. OCSLA exposure requires OCSLA insurance.
The Longshore Act has a status test and a situs test for coverage. What about OCSLA?
It has its own status test. As noted above, the worker must be engaged in 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. Longshore Act benefits are payable under OCSLA to workers in this status.
But it can get complicated out there depending on where you are and what you’re doing, occupationally and at the time of an injury.
Does OCSLA have a situs of injury requirement? Must the injury occur on the OCS? Now that the U.S. Supreme Court has affirmed the Ninth Circuit Court of Appeals’ decision in Pacific Operators Offshore, LLP v. Valladolid (January 2012) and resolved the conflict among the federal Circuit Courts of Appeal, we know that there is no situs of injury requirement in OCSLA for workers’ compensation benefits. The injury may occur anywhere, but there must be “substantial nexus” between the injury and the employer’s extractive operations on the OCS. So there is a situs of operations test, but not a situs of injury test.
You’ve got to sort out a variety of remedies when something goes wrong on the OCS. There are state act workers’ compensation laws, the Longshore Act, the OCSLA, the General Maritime Law, as well as liability remedies such as the Jones Act, the Death On the High Seas Act, and tort remedies under either state law or federal admiralty law.
If you’re an oil and gas worker (not a crewmember of a vessel) working on a platform, fixed or floating, on the OCS, you’re covered by OCSLA. You are also covered by the OCSLA if you are working elsewhere but there is a “substantial nexus” between your injury and your employer’s OCS operations.
If you’re an oil and gas worker working on a fixed platform in state waters, you’re covered by state act workers’ compensation. You fail to meet Longshore Act status because oil and gas work is not maritime employment, and you fail to meet Longshore Act situs because the platform’s sole purpose is to further gas and oil production, a non-maritime activity, and the platform is an artificial island, not an “other adjoining area” under Section 3(a) of the Longshore Act.
If you’re working on a vessel, either in state waters or on the OCS, you may qualify as a crewmember and not be covered by workers’ compensation laws at all. Your remedies may be under the Jones Act and General Maritime Law, and/or state liability laws.
But be aware that there may be Longshore Act exposure in and around the oil and gas platforms, whether fixed or temporary, both in state waters and on the OCS.
A recent case from the federal Fifth Circuit Court of Appeals indicates that it may be difficult to draw a line between oil and gas production on one part of an interconnected, multi-purpose facility and Longshore Act covered loading operations on to barges in another part of the facility. The question with regard to interconnected facilities either in state waters or on the OCS is how the courts will separate different functional areas into Longshore Act covered and non-covered areas or how a maritime loading operation on one part of a facility may convert extended, connected parts of the entire facility into “other adjoining areas” under Longshore Act situs considerations.
So anywhere in state waters or on the OCS where you have transportation and loading of oil and gas products (other than by pipeline) taking place you have to be alert to possible Longshore Act exposure. Remember that OCSLA and Longshore Act exposures are separate and must be separately insured.
ABOUT THE AUTHOR
John A. (Jack) Martone served for 27 years in the U.S. Department of Labor, Office of Workers’ Compensation Programs, as the Chief, Branch of Insurance, Financial Management, and Assessments and Acting Director, Division of Longshore and Harbor Workers’ Compensation. Jack joined The American Equity Underwriters, Inc. (AEU) in 2006, where he serves as Senior Vice President, AEU Advisory Services and is the moderator of AEU's Longshore Insider.