Plaquemines Parish v. Riverwood Production Company, Inc.

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

THE PARISH OF PLAQUEMINES CIVIL ACTION

v. NO. 18-5217

RIVERWOOD PRODUCTION CO., et al. SECTION F

ORDER AND REASONS

Before the Court is a renewed motion to remand by the

plaintiffs and plaintiff-intervenors. For the reasons that

follow, the motion is GRANTED.

Background

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 parishes1 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

1 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.

and pollution; the plaintiffs allege a singular statutory cause of

action for violation of Louisiana’s State and Local Coastal

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 Among the

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

SLCRMA’s enactment (La.R.S. § 49:214.34(C)(2) (“Individual

specific uses legally commenced or established 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).

The SLCRMA regulates certain “uses” (activities that have

substantial impacts on coastal waters) within the coastal zone and

authorizes local governments with approved programs to enforce the

2 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

assess damages; order...restoration costs; require...actual

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.”

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

3 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,

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

accompanying state and local regulations.5 The plaintiffs

expressly disclaim advancing any federal claims whatsoever

(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

District, initially alleging four bases for jurisdiction:

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

petition. 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

Continental Shelf.

all asserted bases of removal jurisdiction and remanded the cases

to state court. See, e.g., Parish of Plaquemines v. Total

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 Rather than

identifying clear-cut state permitting violations, the defendants

submit that the Expert Report revealed that the plaintiffs

“primarily attack activities undertaken before the state

permitting law at issue was effective and that were instead subject

to extensive and exclusive federal direction, control, and

regulation.” The plaintiffs’ expert opined that three types of

7 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.

activities occurred within the Bayou Gentilly case area that

violated SLCRMA:

First, there were certain uses that were legally

commenced before 1980 but whose impacts changed post-

1980, 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

remand.

This Court again granted the motion to remand, holding that

removal was untimely, that there was no federal-officer

8 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.

jurisdiction because defendants neither acted under federal

direction nor conducted activities with a causal nexus to the

federal government’s actions, and that no federal question

jurisdiction could be found in this case. See Parish of

Plaquemines v. Riverwood Prod. Co., 2019 WL 2271118 (E.D. La.

2019). Defendants appealed.

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. During

the pendency of appeal, the Fifth Circuit overhauled its federal-

officer jurisdictional test in an en banc decision known as

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

broader and elusive “related to” element, the Fifth Circuit

remanded purely for consideration of whether jurisdiction exists

under the federal-officer jurisdictional test. The Court

considers.

Legal Standard

“‘Federal courts are courts of limited jurisdiction,’

possessing ‘only that power authorized by’” the United States

Constitution and conferred by Congress. Gunn v. Minton, 568 U.S.

251, 256 (2013) (citation omitted). Whether or not this Court has

authority to hear this case turns solely on the federal officer

removal statute, 28 U.S.C. § 1442(a)(1), which “is a pure

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

(1989)). 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

jurisdiction. 28 U.S.C. § 1447(c). Given the significant

federalism concerns implicated by removal, the general removal

statute is to be strictly construed “and any doubt about the

propriety of removal must be resolved in favor of remand.”

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,

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:

it is not narrow or limited”). Thus, although it remains

defendants’ burden to establish the existence of federal

jurisdiction over this controversy, whether federal officer

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.” 951

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

pursuant to a federal officer's directions.” Latiolais, 951 F.3d

at 296. Each of those predicates has a distinct legal meaning.

I. “Colorable Federal Defense”

“Federal officer removal must be predicated on the allegation

of a colorable federal defense.” Mesa v. California, 489 U.S.

121, 129 (1989). In order to demonstrate a colorable federal

defense, however, a defendant need not assert a “clearly

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

omitted). According to Latiolais, “an asserted federal defense is

colorable unless it is ‘immaterial and made solely for the purpose

of obtaining jurisdiction’ or ‘wholly insubstantial and

frivolous.’” Id. at 297 (quoting Zeringue v. Crane Co., 846 F.3d

785, 790) (5 Cir. 2017).

II. “Person”

There is no dispute that defendants are “persons” within the

meaning of the statute.

III. “Acted Pursuant” or “Acted Under”

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

prevailing law to the facts.10 Defendants contest this

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

that satisfy both the ‘acting under’ and ‘connection or

association’ requirements.” 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

9 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

to.’” Id. at 296). Critically, in Latiolais, the defendant

benefitted from governmental contractor immunity. Not so here.

10 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.”).

… for or relating to any act under color of such office.” See

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

(1992), the Fifth Circuit determined that its previous

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). Latiolais

dispensed of the “causal nexus” test in favor of asking whether

“the charged conduct is connected or associated with an act

pursuant to a federal officer’s directions.” Latiolais, 951 F.3d

at 296.

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.’” Id. The

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,

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

or associated with an act pursuant to the federal officer's

directions.’” 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

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.

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

superior[,]” and the federal officer must exert “subjection,

guidance, or control” over the private company. Watson v. Philip

Morris Companies, Inc., 551 U.S. 142, 152 (2007). Merely being

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

citation omitted). “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. Id. Courts

must look for evidence of delegation perhaps contained in a

contract, payment, employer/employee relationship, or principal

/agent arrangement. Id. at 156. As the Fifth Circuit noted in a

recent decision, “the ‘acting under’ inquiry examines the

The Court will address this argument later in this Order and

Reasons.

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. See

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). Thus, “[w]here

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).

IV. “Connected or Associated With”

As noted in the previous section, Latiolais effected a

complete change in this prong from a “causal nexus” analysis to a

“connection or association” test. Under the new test, and

“[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. This

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.

Analysis

I. Colorable Federal Defense

Defendants raise three key potential federal defenses:

immunity, preemption, and due process. Again, the Court need not

conclude that these defenses will be successful at trial. “[I]f

a defense is plausible, it is colorable.” Latiolais, 951 F.3d at

297. The Court considers each in turn.

A. Immunity

Defendants’ immunity defense rests on three possible

theories. Under the first, defendants have immunity under Boyle

v. United Techs. Corp., 487 U.S. 500, (1988) as federal

contractors. The second theory suggests that defendants’

predecessors were government subcontractors and may assert

immunity through that relationship. The third suggests that

“irrespective of any contract, [defendants] acted under the

government’s direction and control under its war powers.” As will

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

immunity. 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

facts.

B. Preemption

Defendants claim that their compliance with WWII

authorizations and regulations entitles them to a preemption

defense. At the heart of this case is whether or not defendants’

actions in the oil fields of Southern Louisiana were “lawfully

12 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

immunity.

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

regulations. If they are correct, their compliance with federal

regulations may be a viable defense against alleged violations of

state law. As defendants note, their argument is “not that WWII

directives made it impossible for them to get a SLCRMA permit in

1980.” 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. The

legality of those actions is at issue. If the directives under

which defendants claim they were required to act are held to not

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

viable, the Court concludes that the first prong of this

jurisdictional test is met.

II. “Person”

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.” Latiolais,

951 F.3d at 296. Defendants advance three theories to satisfy

this prong. First, they assert that they were federal contractors.

Second, they alternatively suggest that they were federal

subcontractors. 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.

13 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.

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

lawsuit. 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

contract.

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.” However, the

government directives were directed at the refiners, and not at

14 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

contract here.

Humble Oil. 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

such office.” 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

by statute. 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

Alternatively, defendants attempt to piggy-back on the

federal contracts entered into by the refineries by claiming that

Humble Oil was a government subcontractor whose product was

necessary for fulfillment of the federal contract. However, they

can point to no document evidencing such a subcontract. Defendants

instead argue that their supplier relationships suffice to create

subcontractor relationships. To allow this argument would at best

15 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.

confuse the meaning of the term “subcontractor.” Certainly, the

product that Humble Oil supplied to the government contractors was

necessary to the fulfillment of the contract. There is no

evidence, though, that Humble Oil took over any portion of the

contract, as is generally required to be understood as a

subcontractor. 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

another subcontractor”). In any case, the Court is skeptical that

a subcontractor relationship is sufficient to demonstrate that an

entity is “acting under” a federal officer absent special

circumstances demonstrating significant federal control over a

particular subcontractor.16

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 asbestos-

containing 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

any refinery.

C. Non-Contractual Federal Direction

As defendants recognize, regulation is not the same as

direction. Regulation is in many ways an exercise of legislative

power; it applies broadly and generally without regard to

particular entities. 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

during a critical period in this nation’s history. Those

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. Some of those changes may even have

otherwise been illegal. What defendants have not demonstrated is

that they were doing any more than complying with regulation. In

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

17 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.

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

suffice to show that these defendants were “acting under [a

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

the government itself for the prosecution of war” (emphasis

removed). They contrast this to the nature of the regulation

cigarette companies faced in Watson v. Philip Morris. There, the

18 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. Their

expiration at the close of war does not change their status any

more than any regulation’s expiry changes its status.

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

help[ing] officers fulfill other basic governmental tasks.”

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

contractual relationship. 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

principal/agent arrangement.” Id. at 153, 156. Here, likewise,

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.

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. In this case, the facts

demonstrate compliance with regulation. They do not demonstrate

direction. The PAW was given power to direct. It threatened to

direct. But threats are not themselves direction. Defendants

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

officer. Therefore they cannot avail themselves of removal under

this statute.

IV. “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

regulatory directives. For example, plaintiffs assert that oil

companies extracted oil at overly high production rates, which

“generated accelerated wave action that erodes levees and destroys

marshes.” Defendants respond that they maintained such high

production rates to meet the government’s need for aviation gas

during WWII. Plaintiffs also contend that oil companies should

have used steel tanks at each well rather than earthen pits and

central tanks, as the latter led to leakage and seepage.

Defendants respond that the government’s war effort and wartime

regulations required minimal use of steel. Under any of

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. The statutory

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

were not lawfully commenced. Plaintiffs challenge certain

activities as having violated the SLCRMA, which necessarily

implies that plaintiffs contend that they were not lawfully

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’

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. That is not

for this Court to judge. 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. However, while

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.

New Orleans, Louisiana, January 11, 2022

i L. C. FELDMAN

UNITED STATES DISTRICT JUDGE

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