In Plaquemines Parish et al. v. Chevron et al., the U. S. Fifth Circuit has ruled on whether 42 suits brought by six parishes and the Louisiana Attorney General against a number of oil companies belongs in federal court or state ourt. The allegations are that the companies’ operations over the years  essentially destroyed the Louisiana coastal marshes. Billions of dollars are at stake. The immediate issue was whether the defendants’ removal was timely. They were, the result of which is that the cases are likely to remain in federal court.

A short history

The Louisiana State and Local Coastal Resources Management Act (SLCRMA) was enacted in 1978. Much of this dispute concerns drilling activities that first took place before the Act’s effective date and whether those activities were legally commenced or established.  The Louisiana Coastal Resources Program’s Final Environmental Impact Statement (FEIS) required that to benefit from a grandfather clause in SLCRMA actual use or activity must have been begun in good faith before enactment. The meaning of “lawfully commenced or established” comes from the FEIS.

The petitions and the Rozel report

The petitions allege that the companies violated SLCRMA by failing to obtain necessary coastal use permits or by violating the terms of the permits they did obtain. The parishes alleged that the grandfather clause does not apply because those activities were not lawfully commenced or established before 1980. The plaintiffs disclaimed any claim arising under federal law (wanting the cases to remain in the state courts).

The petitions alleged that operations before 1980 violated Statewide Rules 29, 29-A and 29-B, fieldwide orders, and orders of the Louisiana Stream Control Commission. The petitions did not affirmatively reveal on their face any grounds for federal-officer removal, and allegations of violations of Louisiana orders did not reveal a relationship to federal law.

The Rozel report was prepared by Plaquemines Parish and represented the position of the Louisiana Department of Natural Resources in all 42 cases. The recently-released report argued that the companies’ use or activity did not commence in good faith before 1980 because it departed from good industry practices in that the companies, for example, dredged canals instead of building overland roads, used vertical drilling instead of directional drilling, used earthen pits at wellheads instead of steel tanks, produced too much oil, and failed to build saltwater reinjection wells.

According to the Court, the report revealed for the first time a new legal theory:  The companies’ operations were not lawfully commenced before 1980 because of actions during World War II while the companies were acting under the authority of the wartime Petroleum Administration for War agency.

The result

The only question before the court was whether removal was timely, and it was. The defendants could not determine from the petitions that World War II-era conduct was at issue. Before the Rozel report the companies had no way of connecting the alleged violations of SLCRMA to World War II-era federal directives.

In 2013 the entirety of the 382 page FEIS was attached to briefs citing the FEIS for propositions that did not make federal-officer removal unequivocally clear and certain. The FEIS itself did not clearly reveal a causal nexus between a federal wartime directive and the companies’ alleged wrongdoing. The FEIS showed that World War II activities might be relevant but did not make removal unequivocally clear and certain.

The court did not reach the underlying jurisdictional question of whether federal-officer jurisdiction exists. The case was remanded for consideration of that question.

This is a case of two musical interludes, your state court and your federal court.