Louisiana Lawsuit Wins Jurisdictional Tug-of-War Vs. Oil Industry, Sent to State Court

By Dana Drugmand

A federal court decided last week to send a lawsuit filed by a Louisiana parish against oil and gas companies back to state court, the kind of jurisdictional battle also facing cities and counties across the country who have filed climate liability suits against some of the same companies.

This particular lawsuit, by Plaquemines Parish, was one of 42 lawsuits that have been filed by Louisiana parishes against oil and gas companies for damage to the state’s coastal wetlands. The parishes allege the companies are violating Louisiana’s State and Local Coastal Resources Management Act that requires companies to restore the wetlands after damages. Oil and gas operations like dredging, drilling and waste disposal have degraded the wetlands and contributed to coastal erosion, increasing the state’s vulnerability to climate impacts.

A U.S. District Court judge for the Eastern District of Louisiana decided that the Plaquemines lawsuit involved state interests and should be heard in state court, where it was originally filed. This is the same battle being fought by the communities, particularly a handful in California, which filed climate liability suits against oil companies in state courts claiming violation of the state’s strong public nuisance laws. The companies had them moved to federal courts, where they believe federal precedent favors them, while the communities battle to have them heard by state courts.

“Like the defendants in the climate tort cases filed in state courts in other parts of the country, I suspect that Chevron and the other companies in the Plaquemines Parish case want to be in federal court because they believe that their arguments that climate related cases should not be in court at all—whether state or federal—because they raise issues for the political branches to resolve (if at all), are more likely to succeed in federal than state court,” said Karen Sokol, law professor at Loyola University New Orleans College of Law.

The Louisiana lawsuits do not specifically mention climate change but the impacts are clearly driven by global warming: a combination of sea level rise and land subsidence leaves coastal communities particularly vulnerable to the more extreme storms that are also a result of hotter global temperatures.

The parishes, include Jefferson, Cameron, Vermillion, St. Bernard, and St. John the Baptist in addition to Plaquemines, were joined by the city of New Orleans, which also filed a suit in March. The state of Louisiana intervened on the side of the parishes to ensure protection of the state’s interests. They are seeking to recover damages.

“It’s pretty clear the Plaquemines Parish lawsuit belongs in a state court in Plaquemines, where it was originally brought,” said Robert Verchick, Gauthier-St. Martin Chair in Environmental Law at Loyola University New Orleans. “The issues are controlled by Louisiana law, so legally a Louisiana court should decide the dispute.”

The legal questions are less straightforward in the climate liability suits. The California communities of San Francisco, Oakland, Richmond, Santa Cruz, Imperial Beach and the counties of Marin, San Mateo and Santa Cruz filed their lawsuits in California state courts, alleging the oil companies violated state law by selling a product they knew was dangerous, among other violations. The defendants moved the suits to federal court. Several of the suits were remanded back to state court by one U.S. District Court judge, while another kept them in federal court and dismissed them. They are all awaiting the jurisdictional ruling of the Ninth Circuit Court of Appeals.

That decision, which could come this summer, will not only likely decide the fate of these suits, but could influence how judges decide similar suits filed by New York City, Baltimore and Rhode Island. And it could influence whether more communities follow their lead and file future lawsuits.

Federal district courts in Louisiana had previously remanded the wetlands cases to state court. Defendants then moved them back to federal court following the release of an expert report by the parishes last year. That report indicated that the companies operated lawfully in the coastal zone prior to 1978, when the state statute was enacted and would be considered exempt from coastal use permitting requirements. The defendants claim that the expert report “reveals a federal dimension to the plaintiffs’ claims,” including “implicating wartime and national emergency activities undertaken at the direction of federal officers.” World War II era oil and gas operations, the companies  say, were legal and encouraged and justify federal jurisdiction.

Judge Martin L.C. Feldman, however, said in his ruling that the parish specifically limited its claims to state law and expressly excluded any federal law claims.

He rejected defendants’ arguments that they were acting as “federal officers” during wartime. “That the defendants may have complied with some federal oversight directives during WWII is precedentially insufficient to confer federal officer removal jurisdiction,” he wrote.

Feldman certified his order for appeal to the Fifth Circuit Court of Appeals. The defendants said they would immediately appeal his ruling.

“The ruling by Judge Feldman is the next step in legal proceedings that will continue for the foreseeable future,” Gifford Briggs, president of the Louisiana Oil & Gas Association, said in a statement. “The ruling clears the way for the appeal to the Fifth Circuit, and further supports industry’s calls for the lawsuits to be heard in federal court.”

Should the cases proceed to trial in federal court, the jury pool would draw from beyond the coastal parishes. Those jurors, said  John Carmouche, the attorney representing the parish plaintiffs, would be less inclined to hold the companies accountable for local damages.

Verchick also said the companies are trying to avoid accountability at the local level. “The oil and gas companies who are being sued for coastal destruction try to avoid state courts for understandable reasons—state trial courts tend to be closest to the alleged damage and the people there see the harmful effects every day,” he said. “Calls for industry accountability may be higher at the local level. The industry prefers federal courts, where trial judges are more likely to live in other parts of the state and where, on appeal, the judges may even come from other states. But the fact is this is a Louisiana case and it belongs in a Louisiana court.”

Beyond any potential strategic advantage, Carmouche said the defendants are likely pursing federal jurisdiction as a way to stall the litigation. “They’ve removed this twice,” he said. “They have no defense other than delay tactics to try to avoid a jury and a trial.”

He added that a trial would allow him to prove that the companies acted illegally. “The violations are the violations and there are real provable damages to the coast by the oil companies,” he said. “They should pay for the damage they’ve caused, not the taxpayers.”