Oil Exploration Louisiana

Quick and short introduction. The state of Louisiana is suing oil and gas companies for damage to the environment in their exploration, sourcing, and production of oil and gas. In the process of doing so, the state claims the companies caused considerable damage to what is called a Coastal Zone. The issue being gaining the necessary permits to do such activities and business. Louisiana is seeking the retoration of the coastal area and more likely than not penalties for damaging the environment.

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2013: Six Louisiana coastal parishes filed 42 lawsuits alleging that oil and gas companies violated Louisiana’s State and Local Coastal Resources Management Act of 1978. The state permitting law requires certain activities within the state’s designated “coastal zone” to comply with an environmental permitting system.

Specifically, the parishes claimed the companies engaged in oil and gas exploration, production, and transportation in various “Operational Areas” along the Louisiana coast without securing the proper permits or by violating the conditions of the permits they did have, and that other pre-1980 activities (before SLCRMA’s effective date) were not “lawfully commenced,” and, consequently not exempt under the Act’s grandfather clause. The parishes sought wide-ranging remedies, including damages and restoration of affected coastal lands.

The first of these cases went to trial in Louisiana state court in April 2025, with a jury finding that Chevron must pay Plaquemines Parish $744.6 million.

“Louisiana Takes Center Stage in Supreme Court Removal Dispute,” MBLB. September 4, 2025

Legal Issue

The challenged conduct spanned decades. In some cases dating back World War II. During the war, some defendant companies operated under federal government contracts to refine petroleum products for the war effort, and the companies have argued that some of the crude oil produced in the disputed areas was used to fulfill those contracts.

The oil companies have repeatedly attempted to remove these cases to federal court, invoking various theories of federal jurisdiction, including, as relevant here, the federal officer removal statute, based on their World War II-era federal contracts. Pursuant 28 U.S.C. § 1442(a)(1), federal officers and “any person acting under that officer” may remove lawsuits involving their official duties from state to federal court. In 2011, Congress amended the statute to allow the removal of not just actions “for” any act under color of office but also actions “relating to any act under color of such office.”

In affirming the District Court’s order denying removal, the U.S. Court of Appeals for the 5th Circuit ruled that although the oil companies may have been “acting under” an officer of the United States when they fulfilled contracts to supply the federal government with gasoline for aviation, their production of crude oil did not “relat[e] to” their contracts to refine the oil into gasoline because the contracts did not specifically address oil production.

Arguments and Analysis

The Supreme Court must now determine the appropriate test for determining when federal contracts sufficiently “relate to” challenged conduct, under the federal officer removal statute. Although the Fifth Circuit here demanded a contractual provision directly on point to satisfy that test, other circuits have adopted a more lenient test that requires only some “connection” or “association” between the challenged act and the defendant’s federal duties or directions.

The Supreme Court’s decision in this case will likely affect federal contracts and contractors across a variety of industries. The federal officer removal statute reflects an understanding that state court proceedings may “reflect ‘local prejudice’” or priorities, and contractors required to implement federal priorities may therefor prefer to litigate in a federal court, as opposed to a state court selected by plaintiffs. A Supreme Court decision narrowing the removal protections for federal contractors would potentially subject contractors to a greater risk of liability in unfavorable state court forums.

Court hears arguments in suit attempting to find companies responsible for damage to Louisiana coast, SCOTUSblog Jan 12, 2026, Amy Howe.

The Supreme Court on Monday morning grappled with a dispute in Chevron USA Inc. v. Plaquemines Parish, Louisiana over whether oil and gas companies can move a lawsuit seeking to hold them responsible for damage to the Louisiana coast to federal court. A lawyer for the companies told the justices that they should be allowed to do so under a federal law, known as the federal officer removal statute, that gives federal courts the power to hear state court cases filed against “any officer (or any person acting under that officer) or the United States or of an agency thereof, in an official or individual capacity, for or relating to any act under color of such office.” Paul Clement argued that the conduct at the center of the case “effectively amounted to a joint venture during World War II to get as much oil out of the ground, transport it to the refineries that the government was helping to finance to expand, all in an effort to get petroleum products and in particular” aviation gasoline “onto the war front.”

Several justices, however, expressed concern about the potential reach of the companies’ position. That concern, combined with the dearth of questions for Louisiana Solicitor General J. Benjamin Aguiñaga, who represented the challengers, and the absence of Justice Samuel Alito (who did not participate in the case because he has a financial interest in a parent company of one of the defendants), made it difficult to predict who will ultimately prevail.

The dispute before the court on Monday is one of 42 that a group of Louisiana coastal parishes (along with state officials) filed under state law more than a decade ago. They contend that the oil and gas companies, whose predecessors produced crude oil along the coast during World War II, violated the law and damaged the coast, and the parishes sought to have the companies pay damages.

Monday’s proceedings centered on the companies’ efforts to transfer the case from state to federal court under the federal officer removal statute. A federal appeals court in New Orleans rejected the companies’ plea. It concluded that the parishes’ lawsuits focus on the companies’ exploration for, and production of, crude oil, while the companies entered into contracts with the government during the war to produce aviation gasoline, known as avgas, which required them to refine crude oil. And in particular, the U.S. Court of Appeals for the 5th Circuit emphasized, the companies’ contracts with the government did not require them to produce crude oil at all; instead, they could have bought it on the open market.

The companies then came to the Supreme Court, which agreed last year to weigh in.

Representing the companies on Monday, Clement emphasized that the phrase “relating to” in the federal officer removal statute was a “capacious” one, intended to have “substantial breadth.” Indeed, he suggested, the parishes effectively do not defend the lower court’s conclusion but instead shift their focus to a different part of the statute, dealing with who can move a case to federal court. “That effort to change the subject does not work,” Clement argued.

There is little doubt, Clement said, “that the refining of avgas under federal contract satisfies” the removal statute’s “acting under” requirement; the only question, he indicated, is whether the companies’ refining activities are “connected to or associated with the production activities assailed in these lawsuits.” And the answer is “yes,” he insisted, because crude oil was an “indispensable component” of avgas.

Aaron Roper, an assistant to the U.S. solicitor general who argued on behalf of the federal government in support of the companies, echoed Clement’s argument.

“By assisting the federal government in obtaining a critical wartime product under federal supervision,” Roper said, the companies “acted under a federal officer in refining avgas. That refining is an act under color of federal office that can support removal. And these suits relate to that act because they target the production of the crude oil that was the key ingredient in avgas and that the federal government linked to that refining by both contract and regulation.”

But some justices were skeptical. Justice Ketanji Brown Jackson countered that the addition of the phrase “relating to” was intended to be merely a “conforming amendment” that did not substantively change the statute’s meaning.

For his part, Chief Justice John Roberts pressed Clement and later Roper about the scope of the companies’ proposed rule. Roberts asked Clement “how far upstream” a company could go and still have a product “relate to” the subject of a federal contract. For example, Roberts asked, if a vertically integrated company sells products to the government, would products “10 steps above that, where they’re buying the materials,” “relat[e] to” a government act?

Later Roberts told Roper that the phrase “relating to” is “very broad.” Where, he asked, do you draw the line? Roberts worried aloud that adopting a broad interpretation of the phrase would have a “butterfly effect.” “You know,” Roberts said, “the butterfly flaps its wings and it has the end result halfway around the world?”

Justice Neil Gorsuch also indicated that the phrase “relating to” was expansive. He quipped to Roper, “The Big Bang is related to you being here today, counsel.”

Clement argued that this case was “relatively straightforward” because of the central role for crude oil in producing avgas. And he offered a possible test to provide guidance for courts interpreting the rule: the key question, he said, is whether stopping the activity in which the defendants engaged “would have a direct negative effect on the government” – which, in this case, he said, it would.

Clement later offered another possible limit on his rule, telling the justices that “if you recognize that the kind of regulation here is distinct in the World War II context,” the court could reverse the lower court’s decision and rule for the companies without opening the floodgates to a mass movement of cases from state to federal court under the law at the center of the case.

Roper also sought to quell the chief justice’s concerns, telling him that the court didn’t necessarily need to resolve all of the line-drawing issues in this case.

Justice Amy Coney Barrett wondered aloud how the court should dispose of the case if it agreed with Clement that the lower court had applied the wrong rule. Should it send the case back to the 5th Circuit for it to take another look under the new rule, she queried, or should it go ahead and hold that the case can be moved?

Clement urged the justices to apply the new test themselves, rather than returning the case to the lower court.

Justice Elena Kagan asked Clement to address what she characterized as an “apparent anomaly” created by the companies’ position: a vertically integrated company that had the capacity to both produce crude oil and refine it could rely on the removal law and end up in federal court, while a non-integrated company without a refining capacity could not. “Why isn’t that just a bizarre outcome?,” she asked.

Clement conceded that there was a “surface anomaly.” But he urged the court to think about this question in terms of the “acting under” prong of the removal law. When you do that, he suggested, “it makes sense that” companies that had contracts directly with the federal government – the vertically integrated companies that had refining contracts with the government but also produced crude oil – “get to remove and those that are not don’t get to remove.”

During his time at the lectern, Aguiñaga called the dispute before the justices an “easy case,” as he emphasized that the oil companies “do not dispute that they dumped billions of gallons of” waste water “from oil wells directly into our marsh.” And in particular, he added, the companies had “abandoned below any argument that they were acting under a federal officer in committing the acts charged in our complaints” – which would mean that they could not transfer their case to federal court.

Aguiñaga also emphasized what he characterized as a “fundamental disconnect between this refinery theory” – the companies’ reliance on their contracts to produce avgas, which required them to refine crude oil – and the conduct that the parishes and state were targeting in their complaints, which was based on the exploration for and production of crude oil. “I think this Court has never seen and” the oil companies “have not identified for you any case where this Court has basically mixed and matched the ‘acting under’ conduct that satisfies prong 1 with whatever the conduct is that satisfies prong 2 [‘for or relating to any act under color of such office’].”

Aguiñaga spoke at length without interruption – whether this was because the justices largely agreed with him or instead because they had already made up their minds remains to be seen.

Still awaiting SCOTUS