Energy industry’s immunity at stake

by Derek Farr

In what might be the most consequential legislation of the year, lawmakers have introduced a bill that would allow Wyoming oil and gas workers and their dependants to sue energy operators in the case of a workplace death or injury.

House Bill (HB) 273 would make the owner of a worksite liable for its contractor’s workers if the owner directs the contractor or the jobsite’s safety.

Currently, state law dictates that a contractor is immune from litigation as long as the company pays worker’s compensation insurance. That immunity extends to the site operator (e.g. the energy company) unless the company shows enough control over the workspace to demonstrate liability – and that hasn’t happen in 15 years.

The last Wyoming suit that showed operator liability was in 1994 when a contractor’s employee won a $1.4-million suit against Natural Gas Processing (NGP) after he suffered extreme head trauma during the fi nishing stages of drilling.

In that case the Wyoming Supreme Court found a NGP employee had explicitly ordered the directives that led to the accident. But since 1994, not one operator has been found liable for an injury or death even though Wyoming has one of the highest workplace death rates in the country. But to HB 273 opponents, that is no reason to make large-scale changes to laws that protect companies from a potentially endless parade of litigation.

They say current laws are working just fine and the reason it’s been 15 years since a suit has shown operator liability is because the operators are rightfully not liable.

Lining their pockets

“The law has not changed since 1986,” said Wyoming personal-injury and wrongful-death lawyer Pat Murphy. “It’s just that a meritorious case has not come before the court since 1994.”

Murphy, who represents defendants in a majority of his cases, believes HB 273 would force operators to “pay for an injury or death it did not cause.”

According to Murphy the bill unfurls “vicarious liability” where “(site operators) are paying for the sins of somebody else.”

This scenario, Murphy said, goes against the state’s public policy of personal responsibility.

He points to a 1986 Wyoming Supreme Court decision that says site owners should not be forced to pay for injuries caused by the contractor when the worker’s compensation system already covers those injuries. It goes on to say that because the contractor passes the worker’s compensation cost to the owner, “(the owner) has in a sense already assumed financial responsibility for the injuries.”

The court argued that if owners were subject to double liability (once with worker’s compensation and twice with litigation) they might choose to use their own inexperienced employees instead of experienced contractors.

What’s more, Murphy added, the bill would open a Pandora’s box of litigation for all industries that contract work. He even suggested the bill would allow a roofing company employee who was injured at the jobsite to sue the homeowner who hired the contractor.

Murphy argued making it easier for a contractor’s employees to sue means “the owner will be stuck paying for contractor’s negligence,” which is unfair to the operator and bad for the state’s energy-dependent economy.

“I think it would have a really chilling effect on this industry,” said Bruce Hinchey, president of the Petroleum Association of Wyoming. “We are pretty nervous about this bill.”

Calling it a “money grab by trial lawyers,” Hinchey said the majority of the money wouldn’t make it to an injured worker anyway.

He says the money would end up in attorneys’ pockets.

But HB 273 proponents say the possibility of litigation would prompt energy companies to provide a safer workplace that would produce less worker deaths.

Hinchey rejects that idea, saying energy companies are already committed to a safe workplace.

“I think our companies do a great job of being safe and training our employees on how to be safe,” he said, adding “This bill has nothing to do with safety. It’s about trial attorneys lining their pockets.”

No responsibility

But HB 273 proponents argue multihundred-billion dollar energy companies are being given an unfair legal advantage over the families of dead and injured workers.

“Right now these guys don’t even get to make their case to the jury,” said Riverton lawyer John Vincent. “What you’ve done in effect is protect the oil company.”

In contrast to Murphy’s assertion that the law hasn’t changed since 1986, Vincent says state law has been altered by the Wyoming Supreme Court to accommodate the energy industry.

According to Vincent, since the 1987 case of Capellen v. OXY USA where a federal judge ruled the site operator has a “duty of reasonable care” for contracted workers, the law has been altered by the state Supreme Court to the point it is nearly impossible for an injured worker to sue an energy company. Most suits get dismissed with sweeping summery judgments that relieve energy companies from liability.

Vincent says HB 273 would reverse the trend and put state law back to the Capellen standard.

He points to the Wind River Indian Reservation – which uses the Capellen ruling as the duty-of-reasonable-care standard – where energy companies operate unencumbered by their added liability.

According to Vincent, the Capellen standard acknowledges duty created through legal regulations and government leases that name the operator as being responsible for workers. In addition, operators require the contractors to drill using their specific standards, which amounts to controlling the worksite, he said. Further, an operator representative oversees virtually every portion of the drilling process in nearly all cases, he said.

Vincent says 42 energy workers have died in Wyoming since 2000 and not one family has successfully filed suit against the site owner.

“The company that’s in control of everything is not accountable for its own negligence,” he said.

Without a mechanism for recovery, Vincent says injured or killed workers and their families are left with paltry compensation packages and no other legal recourse.

And Vincent points out that 2009 has already gotten off to a bad start.

“The bottom line is when you kill three guys in a month as we have had this year and nobody is held accountable … in a civilized world that’s incomprehensible.”

HB 273’s sponsors are Reps. Keith Gingery (R-Jackson), George Bagby (D-Rawlins), Saundra Meyer (D-Evanston), Dan Zwonitzer (R-Cheyenne) and Sen. Tony Ross (R-Cheyenne).

The House Judiciary Committee – chaired by Gingery – considered the bill Wednesday.