Plaquemines Parish v. Riverwood Production Company, Inc., et al
ORDER AND REASONS - IT IS ORDERED that the renewed Motion to Remand by Plaintiffs and Plaintiff-Intervenors is GRANTED, as set forth herein. Signed by Judge Martin L.C. Feldman on 1/11/2022.(sa)
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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
THE PARISH OF PLAQUEMINES
RIVERWOOD PRODUCTION CO., et al.
ORDER AND REASONS
follow, the motion is GRANTED.
This case is one of many seeking to determine the oil and gas
industry’s responsibility (and consequent restoration obligations)
for the rapid loss/deterioration of Louisiana’s coastal wetlands.
For a third time, this Court must determine whether these cases
belong in federal court.
Louisiana costal parishes 1 filed this and 41 other lawsuits
in state court against 212 oil and gas companies alleging that
dredging, drilling, and waste disposal caused coastal land loss
The parish plaintiffs include Plaquemines, Jefferson, Cameron,
Vermillion, St. Bernard, and St. John the Baptist. Each parish
filed suit on its own behalf and in most if not all cases, the
State of Louisiana through the Attorney General and through the
Department of Natural Resources intervened as plaintiffs to
protect the State’s interests.
Case 2:18-cv-05217-MLCF-MBN Document 116 Filed 01/11/22 Page 2 of 29
and pollution; the plaintiffs allege a singular statutory cause of
Resources Management Act of 1978 (the CZM Act or the SLCRMA).
Louisiana Revised Statute § 49:214.36(D) provides a cause of action
against defendants that violate a state-issued coastal use permit
or fail to obtain a required coastal use permit. 2
exemptions from coastal use permitting requirements are uses which
do not have a significant impact on coastal waters (La.R.S. §
49:214.34(A)(10)) and activities “lawfully commenced” prior to the
effective date of the coastal use permit program shall not require
a coastal use permit.”).
It is the public policy of the State of Louisiana “[t]o
protect, develop, and where feasible, restore or enhance the
resources of the state’s coastal zone.”
La.R.S. § 49:214.22(1).
substantial impacts on coastal waters) within the coastal zone and
authorizes local governments with approved programs to enforce the
Paragraph D of La.R.S. § 49:214.36 authorizes local governments
to seek injunctive or declaratory relief to ensure permitted uses;
paragraph E states that “[a] court may impose civil liability and
restoration[;] or otherwise impose reasonable and proper sanctions
for [unauthorized] uses[; t]he court in its discretion may award
costs and reasonable attorney’s fees to the prevailing party.”
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Act to ensure that the only uses made of the coastal zone are those
authorized by a permit.
The defendants’ oil and gas exploration,
production, and transportation activities in the coastal parishes,
it is alleged, have contributed to coastal land loss, pollution,
and other damage. 3
Each lawsuit involves oil and gas operations
conducted in a different Operational Area and is brought against
a different cast of defendants. 4
The plaintiffs seek recovery of
The plaintiffs allege that the defendants’ activities have
violated implementing regulations, including those that require
restoration of production sites upon termination of operations and
require construction/operation of drilling sites using techniques
to prevent the release of pollutants, as well as those that
prohibit disposal of radioactive waste in the coastal zone.
Specifically, it is alleged that the defendants’ construction,
use, and failure to close unlined earthen waste pits violate the
CZM Act and regulations; that, if any waste pit was legally
commenced prior to 1978, the continued existence of such waste pit
constitutes a new use for which coastal use permit was required;
that the defendants never obtained the required state or local
coastal use permit for the closure or post-CZM operations of their
waste pits; that the defendants neither restored areas with pits
to their original condition nor constructed the pits using the
best practical techniques to prevent leaching; and that defendants
have disposed of oil field wastes from their waste pits without
permits. The plaintiffs also allege that “[s]ince 1978 and before,
Defendants’ oil and gas activities have resulted in the dredging
of numerous canals[, which have] exceeded the limits of coastal
use permits[;]” that the defendants’ failure to adequately design
or maintain these canals have caused erosion of marshes,
degradation of terrestrial and aquatic life, and “has increased
the risk of damage from storm-generated surges and other flooding
damage, and has enabled and/or accelerated saltwater intrusion[;]”
and that the defendants have failed to restore these canals to
their original condition.
4 This particular lawsuit concerns activities and operations by
six defendants (Riverwood Production Company, Inc., Chevron U.S.A.
Inc., Exxon Mobil Corporation, ConocoPhillips company, Estate of
William G. Helis, and Graham Royalty, Ltd.) associated with the
development of the Potash Oil & Gas Field in Plaquemines Parish,
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damages, costs necessary to restore the coastal zone, actual
restoration, and reasonable costs and attorney’s fees.
In their state court petitions, the plaintiffs attempt to
strategically “limit the scope of the claims and allegations of
this petition” to a state law cause of action under the SLCRMA and
(singling out their intention to disavow any right to relief under
federal law such as the Rivers and Harbors Act, the Clean Water
Act, any federal regulations, any claim under general maritime or
admiralty law). 6
Notwithstanding these disclaimers, the defendants removed
these parish coastal zone cases to this Court and to the Western
diversity jurisdiction; Outer Continental Shelf Lands Act; general
maritime law; or federal question jurisdiction. The Court rejected
which the Parish contends have caused substantial damage to the
land and waterbodies in the Coastal Zone.
5 To the extent that defendants’ operations were not lawfully
commenced or established prior to the implementation of the CZM,
the plaintiffs nevertheless allege that “[t]he complained-of
operations and activities were prohibited prior to 1978 by various”
other provisions of Louisiana state law.
6 The plaintiffs provide a comprehensive list of claims they submit
that they purposefully do not advance in their state court
They single out several federal statutes and more
generically disclaim any attempt to recover for any defendant’s
violation of a federal permit or any activity on the Outer
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all asserted bases of removal jurisdiction and remanded the cases
Petrochemical and Refining USA, Inc., 64 F.Supp.3d 872 (E.D. La
2014); Parish of Plaquemines v. Hilcorp Energy Co., 2015 WL 1954640
(E.D. La. 2015); Parish of St. Bernard v. Atlantic Richfield Co.,
2017 WL 2875723 (E.D. La. 2017).
Back in state court, the defendants filed motions requesting
that the plaintiffs identify the alleged state law violations
underlying the lawsuits.
The cases were progressing (some toward
early 2019 trial dates) when, on April 30, 2018, the plaintiffs
issued a Preliminary Expert Report on Violations in the related
Parish of Plaquemines v. Rozel Operating Co. case. 7
identifying clear-cut state permitting violations, the defendants
permitting law at issue was effective and that were instead subject
The plaintiffs’ expert opined that three types of
April 30 was the deadline for plaintiffs to provide preliminary
expert reports detailing the description of the specific SLCRMA
violations including specific instances of permit violations or
failures to obtain permits. The Expert Report was certified by the
Louisiana Department of Natural Resources and, thus, the
defendants contend, the Report is the DNR’s its official position
for all cases.
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activities occurred within the Bayou Gentilly case area that
First, there were certain uses that were legally
commenced before 1980 but whose impacts changed post1980, triggering the requirement for a permit that was
never obtained. Second, there were certain uses that
were illegally commenced at their beginning and
therefore did not qualify for the exemption from coastal
permitting or review. And third, there were certain uses
that were commenced after 1980 that did not receive
appropriate permits under SLCRMA.
Based on this Expert Report, the defendants, forum shopping
for a second time, removed this and other similar lawsuits to this
Court and to the Western District of Louisiana.
This time, the
defendants invoked federal subject matter jurisdiction based on 28
U.S.C. § 1331 (the federal question statute) and 28 U.S.C. § 1442
(the federal officer removal statute). 8
The plaintiffs moved to
This Court again granted the motion to remand, holding that
Shortly after round two notices of removal were filed, the Court
stayed these proceedings on the defendants’ motion pending a
determination by the MDL Panel as to whether it would grant the
defendants’ motions to coordinate these cases. But on July 31,
2018, the United States Judicial Panel on Multidistrict Litigation
denied the energy company defendants’ motion for centralization of
these lawsuits pending in the Eastern and Western District of
Louisiana. See In re Louisiana Coastal Zone Land Loss Litig., MDL
No. 2856, 317 F. Supp. 3d 1346 (2018). The Court promptly granted
motions to reopen these cases.
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direction nor conducted activities with a causal nexus to the
Plaquemines v. Riverwood Prod. Co., 2019 WL 2271118 (E.D. La.
The Fifth Circuit affirmed in part, reversed in part, and
remanded for further consideration.
See Parish of Plaquemines v.
Chevron USA, Inc., 7 F.4th 362 (5 Cir. 2021).
The Fifth Circuit
held that removal was indeed timely but affirmed this Court’s
holding that there is no federal question jurisdiction.
the pendency of appeal, the Fifth Circuit overhauled its federalofficer
Latiolais v. Huntington Ingalls, Inc., 951 F.3d 286, 290 (5 Cir.
2020) (en banc).
In light of the new standard, which eliminated
the so-called “causal nexus” element of the test in favor of a
remanded purely for consideration of whether jurisdiction exists
possessing ‘only that power authorized by’” the United States
Case 2:18-cv-05217-MLCF-MBN Document 116 Filed 01/11/22 Page 8 of 29
Constitution and conferred by Congress.
251, 256 (2013) (citation omitted).
Gunn v. Minton, 568 U.S.
Whether or not this Court has
authority to hear this case turns solely on the federal officer
jurisdictional statute in which the raising of a federal question
in the officer’s removal petition ... constitutes the federal law
under which the action against the federal officer arises for
[Article III] purposes.”
Zeringue v. Crane Co., 846 F.3d 785, 789
(5 Cir. 2017) (quoting Mesa v. California, 489 U.S. 121, 136
The statute, as most recently amended in 2013, states
(in relevant part):
A civil action … that is commenced in a State court and that
is against or directed to any of the following may be removed
by them to the district court of the United States for the
district and division embracing the place wherein it is
pending: … any officer (or any person acting under that
officer) of the United States or of any agency thereof, in an
official or individual capacity, for or relating to any act
under color of such office. 28 U.S.C. § 1442(a), (a)(1).
Remand is proper if at any time the Court lacks subject matter
federalism concerns implicated by removal, the general removal
statute is to be strictly construed “and any doubt about the
Gutierrez v. Flores, 543 F.3d 248, 251 (5 Cir. 2008) (citation
omitted); Gasch v. Hartford Accident & Indem. Co., 491 F.3d 278,
281-82 (5 Cir. 2007) (citations omitted).
On the other hand,
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unlike the general removal statute, the federal officer removal
statute must be liberally construed.
See Watson v. Philip Morris
Companies, Inc., 551 U.S. 142, 147 (2007) (“The words ‘acting
under’ are broad, and this Court has made clear that the statute
must be ‘liberally construed.’”); see also City of Walker v.
Louisiana, 877 F.3d 563, 569 (5 Cir. 2017) (“federal officer
removal under 28 U.S.C. § 1442 is unlike other removal doctrines:
removal jurisdiction exists must be assessed “without a thumb on
the remand side of the scale.” Savoie v. Huntington Ingalls, Inc.,
817 F.3d 457, 462 (5 Cir. 2016) (citations omitted).
A. Federal Officer Removal Post-Latiolais
In Latiolais, the Fifth Circuit revised its jurisprudence on
the federal-officer jurisdictional test in order to “align with
sister circuits … [and] the plain language of the statute.”
F.3d at 289.
Under the new test, removal requires a defendant
show four predicates: “(1) it has asserted a colorable federal
defense, (2) it is a "person" within the meaning of the statute,
(3) that has acted pursuant to a federal officer's directions, and
(4) the charged conduct is connected or associated with an act
Case 2:18-cv-05217-MLCF-MBN Document 116 Filed 01/11/22 Page 10 of 29
pursuant to a federal officer's directions.”
Latiolais, 951 F.3d
Each of those predicates has a distinct legal meaning.
“Colorable Federal Defense”
“Federal officer removal must be predicated on the allegation
of a colorable federal defense.”
121, 129 (1989).
Mesa v. California, 489 U.S.
In order to demonstrate a colorable federal
sustainable” defense “as section 1442 does not require a federal
official or person acting under him ‘to win his case before he can
have it removed.’”
Latiolais, 951 F.3d at 296 (internal citations
According to Latiolais, “an asserted federal defense is
colorable unless it is ‘immaterial and made solely for the purpose
Id. at 297 (quoting Zeringue v. Crane Co., 846 F.3d
785, 790) (5 Cir. 2017).
There is no dispute that defendants are “persons” within the
meaning of the statute.
III. “Acted Pursuant” or “Acted Under”
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Latiolais says very little about this prong of the test,
focusing instead on the first and fourth prongs. 9
To the extent
it addresses this element, it appears that Latiolais merely applies
characterization of Latiolais, arguing that “by eliminating the
‘causal nexus’ requirement and replacing it with the ‘connection
or association’ test, Latiolais expanded the set of activities
The Court disagrees.
The Fifth Circuit overruled its prior case law on this test
due to a change in the language of the statute.
Where the statute
previously made removable any case “against or directed to … any
person acting under [a federal] officer … for any act under color
of such office,” the revised (and now operative) language made any
such case removable by “any person acting under [a federal] officer
Notably, Latiolais does not presume to overrule prior
jurisprudence on the first prong. It cites with favor as to the
colorable federal defense prong several cases which it overrules
as to their holdings on the fourth prong. Compare Latiolais, 951
F.3d at 297 (citing Zeringue, 846 F.3d at 790 favorably with regard
to whether or not a federal defense is colorable) with Latiolais,
951 F.3d at 296 n.9 (listing Zeringue as one of the cases overruled
“to the extent that those cases erroneously relied on a ‘causal
nexus’ test after Congress amended section 1442(a) to add ‘relating
Id. at 296).
Critically, in Latiolais, the defendant
benefitted from governmental contractor immunity. Not so here.
See Latiolais, 951 F.3d at 296 (“Avondale performed the
refurbishment and, allegedly, the installation of asbestos
pursuant to directions of the U.S. Navy. Thus, this civil action
relates to an act under color of federal office.”).
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… for or relating to any act under color of such office.”
Latiolais, 951 F.3d at 292 (emphasis added).
Because, as the
Supreme Court has noted, “[t]he ordinary meaning of the words
[relating to] is a broad one – ‘to stand in some relation; to have
bearing or concern; to pertain; refer; to bring into association
with or connection with,’” Morales v. TWA, 504 U.S. 374, 383
jurisprudence on the fourth prong of this test needed revision.
Prior to Latiolais, the Fifth Circuit required a showing “that a
causal nexus exists between the defendants’ actions under color of
federal office and the plaintiff's claims.”
Winters v. Diamond
Shamrock Chem. Co., 149 F.3d 387, 398 (5 Cir. 1998).
dispensed of the “causal nexus” test in favor of asking whether
pursuant to a federal officer’s directions.”
Latiolais, 951 F.3d
Latiolais only explicitly overrules cases “to the extent that
those cases erroneously relied on a ‘causal nexus’ test after
Congress amended section 1442(a) to add ‘relating to.’”
defendants would thus have the Court assume that the Fifth Circuit
intended for that explicit overruling to also serve as an implicit
overruling of this third prong.
Moreover, Latiolais was prompted
by a change in the language of the federal-officer removal statute.
That change had no effect on the language which governs this prong,
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namely, that removal may be effected by “any person acting under
[a federal] officer.”
28 U.S.C. § 1442(a)(1).
The Court believes
that if the Fifth Circuit had intended to expand the “acting under”
test, it would have done so explicitly. Neither the plain language
of Latiolais nor the plain language of the statute necessitates a
change in the courts’ jurisprudence on the “acting under” prong.
Alternatively, defendants may be suggesting that the third
and fourth prongs of the test are so intertwined that a change in
one necessitates a change in the other.
However, the Fifth
Circuit, in a post-Latiolais decision, has held otherwise: “though
the ‘acting under’ and ‘connection’ elements may often ride in
tandem toward the same result, they are distinct.
In other words,
a defendant might be ‘acting under’ a federal officer, while at
the same time the specific conduct at issue may not be ‘connected
St. Charles Surgical Hosp., LLC v. La. Health Serv.
& Indem. Co., 990 F.3d 447, 454 (5 Cir. 2021).
The “acting under”
analysis may therefore proceed in much the same way that it did
prior to the Fifth Circuit’s remand, albeit with the benefit of
additional time, research, and factual evidence. 11
Defendants also suggest that, even if their predecessors were
not “acting under” federal officers with regard to the challenged
activity, their connection and association with entities that did
act under federal direction satisfies this element of the test.
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As such, to qualify as “acting under” a federal officer,
private persons like these defendants must make “an effort to
assist, or to help carry out, the duties or tasks of the federal
guidance, or control” over the private company.
Watson v. Philip
Morris Companies, Inc., 551 U.S. 142, 152 (2007).
subject to federal regulation will not suffice to bring private
action within the scope of the statute; rather, only private
parties that are (often, contractually) obligated or “authorized
to act with or for [federal officers or agents] in affirmatively
executing duties under … federal law” are sufficiently “acting
under” federal control.
See id. at 151 (internal quotation and
“When a company subject to a regulatory order
(even a highly complex order) complies with the order, it does not
ordinarily create a significant risk of state-court ‘prejudice.’”
Id. at 152.
Simply complying with the law or regulations is
insufficient to bring a private person within the scope of the
officer removal statute’s arising under requirement.
contract, payment, employer/employee relationship, or principal
Id. at 156.
As the Fifth Circuit noted in a
The Court will address this argument later in this Order and
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relationship between the removing party and the relevant federal
officer, requiring courts to determine whether the federal officer
‘exert[s] a sufficient level of subjection, guidance, or control’
over the private actor.”
St. Charles Surgical Hosp., 990 F.3d at
455 (citations omitted) (emphasis in original).
The paradigm “acting under” relationship is when a private
person acts as directed by a federal law enforcement officer.
id. at 149 (describing pre-Prohibition Era liquor tariff cases
upholding federal officer removals by federal revenue officers or
those assisting federal revenue officers in their official duties
in raiding distilleries and arresting distillers).
a private person acts as an assistant to a federal official in
helping that official to enforce federal law,” the private person
may satisfy the acting under requirement.
Id. at 151 (“private
persons who lawfully assist the federal officer in the performance
of his official duty” may permissibly invoke the statute).
“Connected or Associated With”
complete change in this prong from a “causal nexus” analysis to a
“[s]ubject to the other requirements of section 1442(a), any civil
action that is connected or associated with an act under color of
federal office may be removed.”
Latiolais, 951 F.3d at 296.
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test is, by intention, quite broad, and covers any and all acts
that “‘stand in some relation; … have bearing or concern; [or]
pertain’” to acts under color of federal office. Id. at 292
(quoting Morales, 504 U.S. at 383).
Having reviewed the law which governs this case, the Court
now applies the law to these facts.
Colorable Federal Defense
immunity, preemption, and due process.
Again, the Court need not
conclude that these defenses will be successful at trial.
a defense is plausible, it is colorable.”
Latiolais, 951 F.3d at
The Court considers each in turn.
Under the first, defendants have immunity under Boyle
immunity through that relationship.
The third suggests that
government’s direction and control under its war powers.”
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be discussed further in latter sections, the Court cannot say
defendants were federal contractors or subcontractors as relates
to their challenged activities.
That leaves the third avenue for
Defendants rely on Ackerson v. Bean Dredging LLC, 589
F.3d 196 (5 Cir. 2009), in which immunity was granted to a federal
contractor when “the actions causing the alleged harm were taken
pursuant to contracts with the federal government that were for
the purpose of furthering projects authorized by acts of Congress.”
Ackerson, 589 F.3d at 206. The Court is not aware of any government
contract with these defendants that required them to proceed with
the challenged activities during WWII. 12
The Court finds that
these defendants cannot assert a viable claim for immunity on these
At the heart of this case is whether or not defendants’
actions in the oil fields of Southern Louisiana were “lawfully
As will be discussed below, defendants submit that government
contracts with related parties required these defendants to
proceed with the challenged activities in order to fulfill the
government contracts with those related parties, who needed crude
oil in large quantities. At best, this is an indirect result of
a government contract, and as such is not sufficiently close such
that these defendants may take advantage of government contractor
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established” such that no permit was required under the SLCRMA.
Defendants claim that their actions were lawfully established –
and even legally mandated – because of federal directions and/or
If they are correct, their compliance with federal
regulations may be a viable defense against alleged violations of
As defendants note, their argument is “not that WWII
directives made it impossible for them to get a SLCRMA permit in
Instead, their argument is “that WWII directives made it
impossible for defendants to conduct activities in the way that
plaintiffs allege was required in the 1940s.”
If shown to legally
require otherwise illegal activities, those directives may well
preempt state law.
Preemption is a viable defense.
C. Due Process
Defendants raise a federal due process defense, claiming that
plaintiffs seek to impose “retroactive liability for conduct that
was lawful when it occurred.” Plaintiffs respond that their claims
are not based on retroactive application of the SLCRMA but instead
are based on “coastal ‘uses’ occurring or continued on or after
October 1, 1980.”
While the Court agrees that plaintiffs are not
retroactively applying the SLCRMA, the asserted violations of the
SLCRMA relate to actions that were conducted during WWII.
legality of those actions is at issue.
If the directives under
which defendants claim they were required to act are held to not
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have been sufficient for “lawful commencement” under the SLCRMA,
defendants may have a viable due process claim. 13
Because at least two of these three federal defenses are
jurisdictional test is met.
As previously noted, there is no dispute that the defendants
are “persons” within the meaning of the statute.
The second prong
of this jurisdictional test is met.
III. “Acted Pursuant” or “Acted Under”
The third and crucial prong of the test is whether defendants
“acted pursuant to a federal officer's directions.”
951 F.3d at 296.
Defendants advance three theories to satisfy
this prong. First, they assert that they were federal contractors.
Third, they submit that, even if no contract
applies, the oil industry had a “special relationship” with the
federal government such that defendants were under the direction
of federal officers.
The Court will consider each in turn.
Plaintiffs state that the defendants did not assert due process
in their removal notice.
As plaintiffs do not assert that the
initial omission renders this defense null and as the Court does
not premise its decision on this defense alone, the Court merely
notes that plaintiffs are correct.
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A. Contractual Federal Direction
During WWII, Humble Oil operated Potash Field, which is the
subject of this case. The record shows no federal contract between
Humble Oil and the federal government under which Humble Oil would
have been directed to perform the actions which led to this
Instead, defendants advance a novel legal theory based
on their interpretation of Latiolais under which the government
contracts by which refineries produced aviation gas for government
use suffice to give rise to jurisdiction for the upstream producer.
As the Court is not convinced by defendants’ interpretation of
Latiolais, it declines to find that Humble Oil was a government
contractor during WWII with regard to the relevant activities in
this case. 14
Such an interpretation would create nearly unlimited
breadth under the federal-officer jurisdictional test whereby any
supplier to a federal contractor could take advantage of that
As summarized in a section heading, defendants’ argument is
that “Humble Oil’s [challenged] activities in Potash Field [are]
‘related to’ government directives to refiners.”
government directives were directed at the refiners, and not at
The Court notes for the sake of completeness and accuracy that
Humble Oil appears to have had a federal contract to produce
aviation gas at its own refinery. Defendants do not rely on that
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The removal statute permits removal by “any officer
(or any person acting under that officer) of the United States or
of any agency thereof … for or relating to any act under color of
Defendants attempt to claim here that because
federal officers directed the refineries to act, the related acts
committed by Humble Oil in Potash Field (and now challenged in
this lawsuit) grant Humble Oil’s successor the right to remove. 15
However, Humble Oil did not act under “that officer,” as required
The refineries, who had federal contracts and acted
pursuant to those contracts, can likely remove “for or relating
to” any related act, but that does not extend to those not under
that contractual direction.
B. Sub-Contractual Federal Direction
federal contracts entered into by the refineries by claiming that
necessary for fulfillment of the federal contract.
can point to no document evidencing such a subcontract. Defendants
instead argue that their supplier relationships suffice to create
To allow this argument would at best
That Humble Oil and the relevant refinery have come to be owned
by the same company and even their close relationship during WWII
are unavailing. Humble Oil as an entity as it was during WWII is
the “person” at issue in this case for purposes of this statute.
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confuse the meaning of the term “subcontractor.”
product that Humble Oil supplied to the government contractors was
evidence, though, that Humble Oil took over any portion of the
See, e.g., Avondale Indus. v. International Marine
Carriers, 15 F.3d 489, 494 (5 Cir. 1994) (“A subcontractor is one
who takes a portion of a contract from the principal contractor or
In any case, the Court is skeptical that
a subcontractor relationship is sufficient to demonstrate that an
circumstances demonstrating significant federal control over a
particular subcontractor. 16
For example, defendants cite a Fourth Circuit case in which a
subcontractor was permitted to exercise removal under this
statute. There, “[t]he DOD contract not only contemplated the use
of subcontractors; it also made them directly accountable to the
federal government.” Cty. Bd. of Arlington Cty., Virginia v.
Express Scripts Pharmacy, Inc., 996 F.3d 243, 253 (4 Cir. 2021).
Likewise, the case defendants cite from this district involved a
subcontract in which the subcontractor “presented evidence at
least plausibly demonstrating that the installation of asbestoscontaining wallboard was required by the government contracts …
and in turn the subcontracts.” Jackson v. Avondale Indus. Inc.,
469 F. Supp. 3d 689, 706 (E.D. La. 2020). While defendants state
that WWII-era regulations allowed the federal government to impose
penalties for breach of a government subcontract and required
suppliers to prioritize provision of materials to government
contractors, neither of these general regulations demonstrates
specific or direct control over Humble Oil’s provision of oil to
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C. Non-Contractual Federal Direction
Regulation is in many ways an exercise of legislative
Direction is a form of judgment – it is more
akin to an exercise of juridical power.
To comply with federal
regulations is required of every entity doing business in the
United States. 17
To act pursuant to a federal officer’s directions
is to be told that you or your entity in particular must behave in
a certain manner.
Defendants paint a picture of an intensely
regulated industry that was regulated even more strictly than usual
regulations were designed to quite literally fuel the government’s
war effort, and certainly effected great changes in industry
behavior, such as cooperation between competitors and massive
increases in production.
otherwise been illegal.
Some of those changes may even have
What defendants have not demonstrated is
that they were doing any more than complying with regulation.
none of the many wartime orders entered into evidence is there a
direct command by a federal officer that defendants must, for
example, use leaking pits rather than steel tanks in the Potash
Defendants’ contention that they did not adhere to these mandates
voluntarily is of no import; they were and are required to comply
with all valid regulations under penalty of law.
Case 2:18-cv-05217-MLCF-MBN Document 116 Filed 01/11/22 Page 24 of 29
oil field. 18
Evidence that government regulations substantially
limited the use of steel and even required permits to be issued
for such uses of steel may play into a preemption defense or may
indicate that the uses were “lawfully commenced,” but they do not
federal] officer” when creating those pits any more than any other
compliance with federal regulation. 19
Defendants’ response to this is that they had a “special
relationship” with the federal government during WWII under which
the government “commandeer[ed] … the oil industry so that it would
timely provide huge quantities of critical petroleum products to
They contrast this to the nature of the regulation
cigarette companies faced in Watson v. Philip Morris.
As this Court noted in its prior Order and Reasons, defendants
do have evidence of one instance of federal oversight in the Potash
Field involving an application for an exception to an order. The
exception, which was granted, was required to obtain materials to
drill 10 wells directionally and on less stringent spacing
requirements than otherwise required under prevailing regulations.
Defendants also point out that Potash Field was among the fields
listed as “high value” by the government, and listed it, again
among others, as a field needing to produce more oil than
originally determined in order to meet war needs.
19 At oral argument, defendants claimed that the wartime directives
should not be considered “regulation” for purposes of this Act as
they differed in type from ordinary regulation. The Court is not
convinced. Although the regulation in this case may have been to
the benefit of oil production, it remains that the regulations
were generally applicable and for a defined purpose.
expiration at the close of war does not change their status any
more than any regulation’s expiry changes its status.
Case 2:18-cv-05217-MLCF-MBN Document 116 Filed 01/11/22 Page 25 of 29
Supreme Court noted that the distinction between an intensely
regulated entity and an entity which can avail itself of this
statute is in “go[ing] beyond simple compliance with the law and
Watson, 551 U.S. at 153. Under regulations and oversight conducted
and enforced by the Petroleum Administration for War (PAW), these
defendants claim that they were involved in “an effort to assist,
or to help carry out, the duties or tasks of the federal superior.”
Id. at 152.
What defendants neglect in the holding of Watson is
the emphasis the Supreme Court places on the importance of a
They distinguish prior cases by noting
that a prior defendant “fulfilled the terms of a contractual
agreement” and state that in Watson there is no “evidence of any
contract, any payment, any employer/employee relationship, or any
Id. at 153, 156.
defendants have not shown any such direct relationship between the
federal government and the entities whose actions are challenged.
In the end, as the Supreme Court stated:
The upshot is that a highly regulated firm cannot find a
statutory basis for removal in the fact of federal regulation
alone. A private firm's compliance (or noncompliance) with
federal laws, rules, and regulations does not by itself fall
within the scope of the statutory phrase “acting under” a
federal “official.” And that is so even if the regulation is
highly detailed and even if the private firm's activities are
highly supervised and monitored. Watson, 551 U.S. at 153.
Case 2:18-cv-05217-MLCF-MBN Document 116 Filed 01/11/22 Page 26 of 29
So it is here.
The oil industry was indeed highly regulated,
supervised, and monitored during WWII, and the regulation was both
highly detailed and often quite specific.
demonstrate compliance with regulation.
In this case, the facts
They do not demonstrate
The PAW was given power to direct.
It threatened to
But threats are not themselves direction.
have failed to show that they had a government contract, cannot
demonstrate a sufficient subcontractor relationship under statute,
and cannot show that they were otherwise “acting under” a federal
Therefore they cannot avail themselves of removal under
“Connected or Associated With”
While the Court need not reach this prong of the test, it
finds that for the sake of completeness it makes sense to do so.
Assuming, arguendo, that defendants had shown that they were acting
under the direction of a federal officer, the Court finds that
their actions are “connected or associated” with that direction.
The new “connection or association” test is a broad one, greatly
expanding the scope of actions which qualify under this test.
The challenged activities at issue in this jurisdictional
dispute are, almost to a one, related to WWII efforts and/or
For example, plaintiffs assert that oil
companies extracted oil at overly high production rates, which
Case 2:18-cv-05217-MLCF-MBN Document 116 Filed 01/11/22 Page 27 of 29
“generated accelerated wave action that erodes levees and destroys
Defendants respond that they maintained such high
production rates to meet the government’s need for aviation gas
Plaintiffs also contend that oil companies should
have used steel tanks at each well rather than earthen pits and
Defendants respond that the government’s war effort and wartime
defendants’ three broad theories by which they were “acting under”
the direction of a federal officer during WWII, these actions are
most certainly “related to” those directions.
language on this prong, as demonstrated aptly in Latiolais, is,
possibly by design, very broad.
Plaintiffs respond that the challenged conduct is not the
activities this Court has listed but is instead the defendants’
failure to obtain permits when the SLCRMA came into effect in 1980.
However, it is impossible to discuss the one without the other.
The SLCRMA required permits for all “uses” in effect in 1980 that
commenced. The commencement of the relevant activities is squarely
raised by this lawsuit. If the commencement was lawful, no permits
were needed. Even assuming that the charged conduct is defendants’
Case 2:18-cv-05217-MLCF-MBN Document 116 Filed 01/11/22 Page 28 of 29
actions in 1980, defendants are correct that “to assess defendants’
1980 obligations, a factfinder must decide whether defendants’
activities were lawfully commenced.”
This is not a decision on the merits of this case or on the
types of defenses available to the defendants.
It may well be
that the defendants’ compliance with federal regulation entitles
them to a defense or demonstrates that their challenged activities
were “lawfully commenced” as required by the SLCRMA.
for this Court to judge.
That is not
The question before this Court is whether
defendants have satisfied the four-prong test enabling them to
remove this otherwise-state-law case into federal court.
The voluminous record in this case demonstrates that the oil
industry in WWII was intensely regulated.
It demonstrates that
the federal government had a great interest in the success of the
oil industry and a significant reliance thereupon.
defendants may have shown compliance with federal regulation, they
have failed to demonstrate that their compliance entitles them to
the removal provisions of this statute.
In order to remove,
defendants must show that they were “acting under” the direction
of a federal officer.
The Court finds that they were not.
Accordingly, for the foregoing reasons, IT IS ORDERED: that
the renewed motion to remand is GRANTED.
Case 2:18-cv-05217-MLCF-MBN Document 116 Filed 01/11/22 Page 29 of 29
New Orleans, Louisiana, January 11, 2022
MARTIN L. C. FELDMAN
UNITED STATES DISTRICT JUDGE
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