Plaintiff is the “Master of the Complaint”: Landowner of oil lease property successfully fights removal to the Eastern District of Louisiana in soil contamination case

Plaintiff is the “Master of the Complaint”: Landowner of oil lease property successfully fights removal to the Eastern District of Louisiana in soil contamination case

By: Lucy Anderson

Edited by: Molly MacKenzie

Henry J. Ellender Heirs, LLC v. Exxon Mobil Corp. et al., 2014 WL 4231186 (E.D. La. Aug. 26, 2014)

This case involved onshore property owned by Henry J. Ellender Heirs, LLC (“Ellender Heirs”) and located in Lirette Field in Terrebonne Parish, Louisiana. In its petition, the plaintiff claimed that the defendants leased the land for oil and gas exploration and production. As a result of these activities, the defendants allegedly contaminated the surface and subsurface soils and waters, specifically through the use of unlined and open earthen pits used to dispose of oilfield waste. The plaintiff sued in state court for negligence, breach of contract, and breach of obligations imposed by the Louisiana Mineral Code and Louisiana Civil Code.One of the defendants, Badger Oil Corporation (“Badger”), removed the case to the Eastern District of Louisiana, asserting federal question jurisdiction on three bases. The plaintiff filed a motion to remand. The court shaped its order to follow the three main arguments for removal. The parties first disputed whether or not the Outer Continental Shelf Lands Act (“OCSLA”) applied in this case, second, whether or not there was general maritime jurisdiction, and finally, whether or not a federal question jurisdiction existed under the Natural Gas Act. On all three fighting points, Badger was unable to carry its burden.The court began by stating that the purpose of OCSLA is to define a body of law applicable to the seabed, the subsoil, and the fixed structures to the Outer Continental Shelf, as well as for operations within the Outer Continental Shelf for the development of natural resources. In its motion for removal, Badger argued that the Act applied because the gas that was removed as a result of onshore functions at Lirette Field somehow “co-mingled” with pipelines originating from the Outer Continental Shelf. While creative, the argument failed as a result of Judge Fallon’s plain interpretation of the plaintiff’s complaint. In his assessment, the judge followed a Fifth Circuit test to determine whether or not OCSLA applied. The test requires that the activities that cause injury constitute an operation conducted on the Outer Continental Shelf, and that the claims arise out of, or in connection with, that operation. On the first prong, the defendant failed as the plaintiff’s case arose out of exploration and production of gas on land located at Lirette Field. Here, Judge Fallon agreed with precisely what the plaintiff had claimed in its petition – that the land was contaminated, that the oil and gas facilities on land were responsible, and that gas acquired on the land was placed into pipelines. Without more, the court found no reason to conclude that injury had occurred anywhere but on land, and the argument that “co-mingling” had occurred was simply not sufficient to invoke OCSLA and its federal jurisdiction.Next, Badger maintained that there was admiralty jurisdiction as some oil production activity involved canals. Citing Grubart Inc. v. Great Lakes Dredge & Dock Co., Judge Fallon questioned whether admiralty jurisdiction could be met since the case had to satisfy two conditions, those of location and of a connection with maritime activity. The court again concluded that the tort claim alleged by Ellender Heirs occurred on land. Though Badger suggested that some of the activities involved utilized canals, the court found that the canals were private and thus not “navigable waters.” Thus, the claim did not meet the “location” condition of the maritime activity requirement. Moving to the second condition, Judge Fallon also found that the tort alleged failed to be sufficiently connected to maritime activity, as there was no disruption of maritime commerce and no substantial relationship to maritime activity. He found the defendant’s reference to Judge Barbier’s decision in In re: Deepwater Horizon inapplicable as the explosion in that case caused a disruption of maritime commerce and bore a significant relationship to maritime activity.In dicta, Judge Fallon concluded that even if the case were considered maritime in nature, it could not be removed without some other basis for federal jurisdiction because of the “saving to suitors” clause within 28 U.S.C. § 1333. He noted that while the 2011 amendments to 28 U.S.C. § 1441 prompted some courts to allow removal of general maritime claims, it was his opinion that history and black letter law provided a basis for denying federal jurisdiction, regardless of any amendments.Finally, Badger argued that the Natural Gas Act created federal jurisdiction because the Act requires gas companies to obtain certificates from the Federal Energy Regulatory Commission (“FERC”) and because the plaintiff’s claims involved FERC certified activities. This argument also failed because Badger could not cite any cases that found federal jurisdiction over state claims simply due to the relationship to the regulatory scheme created by the FERC.