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eLABORate: Supreme Court Restricts Ability of States to Muscle in on Federal Government's Exclusive Jurisdiction Over Outer Continental Shelf

June 11, 2019

In Parker Drilling Management Services, Ltd. v. Newton, No. 18-389 (June 10, 2019), the United States Supreme Court held that state laws only apply on the Outer Continental Shelf (OCS) if “federal law does not address the relevant issue.” The case involved an employee working on a drilling platform off the coast of California who filed a class action against the employer alleging violation of several California wage-and-hour laws, among other claims. In particular, the employees claimed, inter alia, that California’s minimum-wage and overtime laws required the employer to pay him for the 12 hours each day he spent on standby, during which he could not leave the platform.

All nine Justices were in agreement in resolving the issue before them, which the Court stated involved “a close question of statutory interpretation,” particularly, the Outer Continental Shelf Lands Act (OCSLA), 43 U.S.C. § 1331, et seq. The specific statutory provision at issue before the Court provides that state laws are to be adopted as federal law on the OCS “[t]o the extent that they are applicable and not inconsistent” with other federal law. 43 U.S.C. § 1333(a)(2)(A) (emphasis added).

Pursuant to the OCSLA, it is well-settled that the only law that applies to the OCS is “federal law,” whether via a federal statute or state statute adopted as surrogate federal law. In other words, the OCSLA borrows certain state laws, but such state laws are declared to be “federal law.” With this in mind, even if, for example, a particular state law may provide more protection than federal law, the state law would be “inapplicable” and “inconsistent” with federal law such that it cannot be adopted as a surrogate to federal law with respect to the OCS. If the case were otherwise, there would be conflicting federal laws – the federal statute itself and the state statute adopted as federal law.

In reaching its decision, the Court resolved a conflict between the Fifth and Ninth Circuit Courts of Appeals. The Fifth Circuit has long held that, under the OCSLA, state law only applies to the extent it is necessary “to fill a significant void or gap” in federal law. Continental Oil Co. v. London Steam-Ship Owners’ Mut. Ins. Assn., 417 F.2d 1030, 1036 (5th Cir. 1969). In contrast, in 2018, the Ninth Circuit held that state law is “applicable” whenever it “pertain[s] to the subject matter at hand” and “inconsistent” with federal law only “if they are mutually incompatible, incongruous, [or] inharmonious.” Parker Drilling Management Services, Ltd. v. Newton, 881 F.3d 1078, 1090, 1093 (9th Cir. 2018). In determining the applicability of certain California wage-and-hour laws to the OCS and, based on its broad interpretation of the language of the OCSLA, the Ninth Circuit held that the California wage-and-hour laws applied and were not “inconsistent” with federal law, the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201, et seq., within the meaning of the OCSLA. In adopting the more narrow interpretation of the Fifth Circuit, the Supreme Court specifically found that California law requiring payment to employees for standby time and payment of a minimum wage higher than that required by federal law is not adopted as federal law and does not apply on the OCS because the FLSA already addresses those issues.

While the issue before the Supreme Court involved the application of the OCSLA to California wage-and-hour laws in the face of the FLSA, the Court’s construction regarding the language of the OCSLA is not so limited. Instead, it is pertinent to the applicability of any state law as surrogate federal law on the OCS. The Court also suggested that a state law can be “inconsistent” with federal law even in the absence of a federal law addressing the relevant issue, i.e., if federal law created a deliberate gap or a state law is inconsistent with a federal law addressing a different issue.