On January 12, the Supreme Court will hear oral arguments in Chevron U.S.A. v. Plaquemines Parish, Louisiana. The Court will determine whether Louisiana’s unholy alliance of plaintiff lawyers, local officials, and a complainant judiciary can extract, retroactively, billions of dollars from Chevron and other energy producers that were drilling for aviation gas (avgas) in the Louisiana delta under federal direction during World War II.
The technical question before the Court is whether Chevron may remove a state tort case to federal court. The case in question produced a $745 million jury verdict for alleged erosion damage in Plaquemines Parish. The answer turns on a federal statute allowing entities to remove a state case to federal court when claims “relat[e] to” actions taken under a federal officer’s direction. Over 40 similar cases wait in the wings.
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In a 2-1 decision in May 2024, the Fifth Circuit majority held that the company’s refining activities related to federal oversight, but its drilling did not. The court reasoned that, while Chevron’s predecessors “act[ed] under” a federal officer in producing crude oil, they did not do so in their drilling activities, because no federal contract explicitly linked those activities to federal supervision. Therefore, under the Fifth Circuit’s theory, drilling did not qualify as “related” under Congress’s test.
However, as I argued in a recent essay for the Washington Legal Foundation that borrowed from Judge Andrew Oldham’s dissent, these vertically integrated activities were “an indispensable, necessary, and direct step to producing avgas.” The Supreme Court should reject the majority’s formalism and adopt Oldham’s common-sense view that drilling and refining are fundamentally linked.
Federalism always presents complex challenges to the administration of justice, and our system has long recognized the danger of local bias against outsiders. To guard against this, the diversity provisions of Article III of the U.S. Constitution allow an out-of-stater initially to bring his case in federal court, or to remove any state case to a federal forum. States cannot require individuals or corporations to waive access to the federal courts as a condition of doing business within the state’s borders.
The need to guard against local bias is evident in this case. In 2016, then-Louisiana attorney general Jeff Landry (now the state’s governor) entered into a joint prosecution agreement with plaintiffs’ attorney John Carmouche (a major contributor to a pro-Landry super PAC) pledging that the state would not “expressly or impliedly endorse any substantive defenses or exceptions raised by any defendant” in these disputes. That commitment is a flat breach of an attorney general’s fiduciary duty of impartiality.
Yet when the Fifth Circuit handed down its Plaquemines verdict, current Louisiana attorney general Liz Murrill wrote multiple op-eds, accusing Chevron of “refusing accountability” and for choosing “profits over the people and the law.” She praised the local jury for its “painstaking review” of the evidence in holding Chevron responsible for one-quarter of erosion damages within Plaquemines Parish. She claimed that Chevron had released (with permits from state and federal agencies) some 4 billion gallons of diluted waste over 40 years across 2,000 miles of state coastline.
But the state lost some territory before the World War II–era drilling and refining activities—and would lose more of it after. Consider, for example, the devastating Great Mississippi River flood of 1927. The disaster led the U.S. Army Corps of Engineers to undertake major flood-control measures that dramatically reduced the silt available to replace large soil losses from natural erosion. The state lost hundreds of millions of tons of sediment annually, dwarfing any losses from oil and gas operations. Assigning 25 percent of parish-wide erosion to the oil companies profoundly overstates their liability and is unlikely to be reviewed fairly in Louisiana courts.
The federal removal power can end this abuse and ensure that other out-of-state corporations are treated fairly, as our legal system should demand.
Photo by Jim WATSON / AFP via Getty Images