A Louisiana jury last April determined oil giant Chevron owed $744 million for environmental damage to the state’s coastline. Chevron, seeking a rematch in a potentially friendlier arena, told the U.S. Supreme Court on Monday that a federal court should decide the case. [some emphasis, links added]
Chevron’s argument centers on a federal law that allows defendants to move certain lawsuits from state court to federal court when the claims are tied to actions taken under federal authority.
Chevron, whose case has been joined by the Trump administration, says its World War II-era work supplying aviation gasoline for the U.S. brings it within that rule.
The justices must decide whether that is enough to allow Chevron to move the case, previously decided by jurors in Plaquemines Parish, to federal court.
Chevron attorney Paul Clement argued the link is straightforward: Chevron’s predecessors produced the specific crude oil that was the “indispensable component” of the gas they refined for the government.
He said the contracts themselves “drew the connection” by tying what the government paid for the gas to the market price of crude and by promising to reimburse any new crude-oil taxes.
That, according to Clement, shows that crude production and gas refining were part of the same federally directed effort.
Louisiana and Plaquemines Parish argue the opposite: that no federal contract is at issue in the lawsuit. Louisiana Attorney General Liz Murrill says the allegations focus on activities in Louisiana’s coastal zone that were not directed by the federal government.
“The statute itself requires acting under an officer. They’ve never identified a particular officer that they were purportedly acting under instructions,” state Solicitor General Ben Aguiñaga told the court.
The outcome has the potential for broad implications beyond Plaquemines Parish. Local governments in Louisiana have filed more than 40 lawsuits in local courts seeking billions of dollars from energy companies.
In 2016, then–Attorney General Jeff Landry, now Louisiana’s governor, signed a joint prosecution agreement with plaintiffs’ lawyer John Carmouche, who is working on dozens of cases similar to the one in Plaquemines Parish.
The agreement committed the state to not “expressly or impliedly endorse” substantive defenses raised by any defendant in the coastal cases.
Legal scholars called it a form of bias that the U.S. Constitution can’t tolerate.
“You just can’t have this in our federal system,” said former Justice Department attorney Mike Fragoso. “The fact of the matter is that there’s a broader issue of constitutional principles of federal supremacy in all these kinds of cases.”
Murrill laughed when asked about that argument, calling it “convenient.”
“They certainly wanted to get President Trump’s attention by trying to tether this issue and these cases to the president’s policy agenda,” Murrill said. “This has nothing to do with federal supremacy, and it is not in conflict with that.”
A decision in either direction has a variety of other implications, to varying degrees.
Two former Joint Chiefs of Staff, Navy Admiral Michael Mullen and Air Force General Richard Myers, warned that requiring extreme contractual detail as a standard could slow wartime contracting and discourage companies from helping the government in future emergencies for fear of later liability in state court.
Meanwhile, the pursuit of billions of dollars in damages comes at a time when the U.S. demand for energy is expected to increase 25% by 2030.
Louisiana is welcoming billions of dollars in industrial development and growth, including a $10 billion Meta data center in the northeast portion of the state.
The lawsuits are in a state whose economy is unusually rife with oil and gas activity, and they “harm the very citizens they purport to protect,” according to the Pelican Institute, a Louisiana-based conservative think tank that argues the litigation costs taxpayers, reduces offshore drilling activity, and eliminates jobs.
“A lot of the communities recognize the good that businesses like Chevron can do in terms of not only the number of jobs, but the things that they offer to the community,” Sarah Harbison, legal counsel for the Pelican Institute, said in an interview.
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