Back to State Court, Again: BP and Shell Lose Removal to Federal Court under FORS

Plaquemines Par. v. BP Am. Prod. Co. Chevron USA, Inc., 2024 U.S. App. LEXIS 12890 *, 2024 WL 2746246 No. 23-30294 Consolidated with No. 23-30422 (5th Cir. May 29, 2024).

This consolidated appeal by BP Am. Prod. Co. Chevron USA, Inc. is yet another in the decade long attempt by oil companies to remove suits filed against them in various state courts by various parishes (in particular, Cameron and Plaquemines) and the State of Louisiana for alleged violations of the Louisiana State and Local Coastal Resources Management Act (SLCRMA).[2] The oil companies previously attempted to remove on the basis of federal question, OCSLA, admiralty and diversity jurisdiction.[3] On remand, the defendants sought particulars of what state laws were violated.[4] In support of the plaintiffs' theories, they produced a report, the Rozel report which resulted in a new theory for removal on federal question and under the Federal Officer Removal Statute (FORS).[5]

The district court remanded the cases but an interlocutory appeal may be taken when a remand is granted under FORS.[6] The Fifth Circuit affirmed the remands but in Plaquemines Par. v. Chevron USA, Inc.,[7] though the court affirmed the remand of the suits against the oil companies as producers of oil, it stated: “’As the district court noted, the 'refineries, who had federal contracts and acted pursuant to those contracts, can likely remove [under § 1442], but that does not extend to [parties] not under that contractual direction.’" These appeals follow up on whether the oil companies in their capacity as “refineries” could remove under FORS. The district courts again granted remand which again resulted in these consolidated interlocutory appeals.

Judge Davis, joined by Judge Engelhardt, concluded that the cases could not be removed under FORS as the defendants were unable to satisfy the fourth element of removal under the standard adopted by the en banc court in Latiolais v. Huntington Ingalls, Inc.[8] In Latiolais, the Fifth Circuit brought its jurisprudence under FORS in line with other courts of appeal and required “a defendant to show that ‘the charged conduct is connected or associated with an act pursuant to a to a federal officer's directions, and (4) the charged conduct is connected or associated with an act pursuant to a federal officer's directions.’”[9]

The defendants produced contracts with the Defense Supplies Corporation ("DSC"), a federal agency to produce high octane aviation fuel at refineries in Texas and Louisiana during World War II.[10] Yet, despite these contracts, as the defendants could not make any connection between the government’s regulation, however minimal, of production of oil to the contracts for increased quantities of aviation fuel, the majority of the court limited its analysis to the “connected to or associated with” element to directives in the refining contracts.

Here, again, the defendants fail. None of the government contracts pertain to oil production or required the defendants to use only oil which they produced. The relationship between oil production and refinery activity is too attenuated. In addition, the majority determined that the defendants’ assertion that they were vertically integrated companies at the time of the contracts was also unavailing.[11] Though the Petroleum Administration for War ("PAW"), allocated oil produced from fields to specific refineries to maximize production during the war, how the oil was produced was not a consideration of PAW or even if an oil company had an integrated refinery.[12]

Having failed to show that the “[p]laintiffs' claims against them are ‘connected or associated with’ actions they carried out pursuant to a federal directive,” the remand was affirmed.

Judge Oldham filed a lengthy dissent and focused on the “preemption” federal defense. The defendants asserted that federal regulations during World War II made compliance with state laws impossible.[13] “The defendants' decisions 80 years ago plainly ‘related to’ their avgas[14] contracts and hence satisfy today's federal officer removal statute.”[15]

Is en banc review next, a writ of certiorari to the U.S. Supreme Court?

[1] Federal Officer Removal Statute, 28 U.S.C. § 1442(a)(1).

[2] LSA-R.S. § 49:214.30(A)(1).

[3] Plaquemines, 2024 U.S. App. LEXIS 12890 at *8.

[4] Id.

[5] Id. at *9.

[6] 28 U.S.C. § 1447(d).

[7] 2022 U.S. App. LEXIS 28733 *, 2022 WL 9914869 (5th Cir. 2023), cert. denied, 143 S.Ct. 991 (2023)

[8] 951 F.3d 286 (5th Cir. 2020).

[9] 2024 U.S. App. LEXIS 12890 at *15, citing Latiolais, 951 F.3d at 296.

[10] Id. at *22-25.

[11] Id. at *35.

[12] Id. at *36.

[13] Id. at *64.

[14] Aviation gas.

[15] Id. at *65.