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Oil and gas industry argues again for state venue

A federal appeals court should reverse a three-judge panel’s decision that lawsuits seeking to make oil and gas companies pay for alleged environmental damage belong in state court, several industry groups argued in briefs filed Tuesday.
Failing to do so could muddy the waters for future cases and undermine the “unique relationship” between the federal government and the oil industry, they said.
In 2013, some local governments in Louisiana’s coastal region filed lawsuits against more than 200 oil and gas companies, seeking compensation for damage they say the companies caused to the region’s wetlands. Most local governments on the coast did not file lawsuits.
Plaquemines Parish, one of the governments that did, in 2018 produced an expert report indicating at least some of the alleged damage dates back to World War II.
At that time, the companies say they were under strict wartime regulation and essentially were acting as officers of the federal government. That raises a federal issue, which means the cases should be heard in federal court, they say.
But a three-judge panel of the U.S. Court of Appeals for the Fifth Circuit unanimously ruled that the companies failed to make their argument in time. They said the relevant evidence had been included in court records long before the 2018 report.
The companies contend that the older documents only referenced serial numbers for certain wells and didn’t identify when they were drilled. In a brief filed in support of the companies’ position, the U.S. Chamber of Commerce and the National Association of Manufacturers says that limited information doesn’t meet the court’s previously established standard of “unequivocally clear and certain” evidence for removal to federal court.
“In holding that Defendant-Appellants should have ascertained the basis for federal removal from a passing reference buried in an exhibit, the panel’s decision leaves future litigants to guess about the application of the longstanding ‘unequivocally clear and certain’ test in their cases and in the lurch as to whether they now have an obligation to investigate every possible stray reference to ascertain whether it might somehow allege facts which invoke federal jurisdiction,” the Chamber/NAM brief states.
In a separate brief, the American Petroleum Institute argues the ruling could undermine “the oil and gas industry’s indispensable partnership with the federal government during times of national crisis, such as World War II.”
“If allowed to stand, the Panel’s decision would significantly restrict the industry’s access to federal courts when compelled to act at the direction or control of the federal government, jeopardizes the ability of the industry and the federal government to cooperate in the event of future military or economic crises, and impacts the industry’s ability to operate with certainty and reliance on federal permits without collateral attacks from states and state agencies,” the API says.
The companies have asked both the same panel and the full court to revisit the decision. Karen Sokol, an associate professor at Loyola University New Orleans College of Law, said the panel is unlikely to reverse itself but the full court might, noting that the Fifth Circuit is a “really big court.”
“It is very rare that courts do that,” she said.
Sokol said corporate defendants generally prefer federal court, which they perceive as friendlier than state courts. She said removal to federal court might allow them to avoid having a full trial, noting the damage that civil discovery in court did to the reputations and finances of the tobacco industry.
Trial lawyers tend to prefer state court, where special interest groups are significant contributors in judicial elections, Lana Venable with Louisiana Lawsuit Abuse Watch counters. Judges are appointed to federal courts and do not have to raise money from special interest groups, such as trial attorneys, to run for office.


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