U.S. Supreme Court declines to hear oil firms' appeal of coastal lawsuit ruling

U.S. Supreme Court declines to hear oil firms' appeal of coastal lawsuit ruling

The U.S. Supreme Court has declined to hear oil companies' appeal of a ruling in a high-stakes lawsuit over coastal damage, which could open the way for the case to move forward in state court.

The decision adds a final imprimateur to December and October decisions by the U.S. 5th Ciruit Court of Appeals that sent the damages suit filed against Chevron USA, Exxon Mobil Corp., ConocoPhillips Co., BP America, and Shell back to the 25th Judicial District Court in Plaquemines Parish, which filed the lawsuit.

The Supreme Court decision adds to the expectation that the 5th Circuit rulings will clear the way for 42 similar lawsuits filed in Plaquemines, Jefferson, St. Bernard, St. John the Baptist, Vermilion and Cameron parishes between 2012 and 2017 against a total of about 200 oil and gas companies to begin being heard in state courts. 

One of the suits, filed by Cameron Parish against 26 different oil companies that operated there, already has been returned to a state court, and is set for trial on Nov. 27, according to John Carmouche, the lead attorney for the parishes in the lawsuits.

He said several more of the suits already have been returned to state courts in Plaquemines and Jefferson parishes. 

If successful, those suits could result in oil and gas companies being ordered to pay billions of dollars to restore or compensate for environmental damages caused by their operations in those parishes. A major concern is the multitude of canals cut through marsh by the industry, exacerbating the state's rapid coastal land loss.

"Yesterday, the United States Supreme Court clearly told big oil and gas companies they will be appearing in Louisiana state court and face a jury of Louisiana citizens regarding their destruction of our precious coast," Carmouche said.

"For nine long years, our politicians have been threatened, parishes dragged through the court system, and damages left to linger because these oil giants think that’s the way they have to handle their business in Louisiana," he said. "This could have been handled much simpler: Admit your responsibility and fix what you damaged so Louisiana taxpayers do not have to pay for the damage created by these giants."

Oil and gas interests remain concerned about the lawsuits, and their potential effects on the state's economy. 

"The energy industry continues to be the number one private investor in Louisiana’s coast through GOMESA revenues and partnerships to improve coastal resiliency programs and strengthen hurricane protection," said Tommy Faucheux, president of the Louisiana Mid-Continent Oil and Gas Association, which represents larger oil and gas production companies in the state, including many who are defendants in the suit.

GOMESA is the federal Gulf of Mexico Energy Security Act, which requires a share of offshore oil revenue be paid to the federal government by oil and gas firms for the rights to drill wells on leases in federal waters. The law provides about 37% of the fees and royalties to the state and parishes associated with wells off their borders.  

"Instead of pursuing legal actions that continue to discourage investments in our state, we should focus on building upon our longstanding partnership with local communities to advance the coast, economy, and the state of Louisiana for future generations,” said Faucheux.

The October ruling by a three-judge panel of the 5th Circuit upheld a decision by the late U.S. District Judge Martin Feldman, an appointee of President Ronald Reagan. Feldman found that just because oil and gas exploration and production operations were part of the war effort, the companies were not acting as federal agents and the suit did not need to be heard in federal court. 

The original suits were narrowly written to avoid having them heard in federal court by only challenging the failure of the companies to comply with the State and Local Coastal Resources Management Act, a 1980 state law. Each suit contained language specifying that it was not challenging the companies with violation of any federal laws.

The companies unsuccessfully argued that because they were producing oil in the parish for the war effort during World War II, they were acting as agents of the federal government and the suits should be tried in federal court.

That same argument was presented to the Supreme Court in briefs filed in February in support of the energy companies by retired U.S. Air Force Gen. Richard B. Myers, who was chairman of the Joint Chiefs of Staff under President George W. Bush; retired Adm. Michael G. Mullen, chairman of the Joint Chiefs of Staff under both Bush and President Barack Obama; and by the American Petroleum Institute and the American Fuel & Petrochemical Manufacturers trade association. 

"Here, removal (to federal court) ensures that a Louisiana state court cannot second-guess decisions made by federal officers almost 80 years ago that were designed to maximize the use of our nation's natural resources to win WWII," said the brief filed by the former military commanders. 

"The historical record makes clear that (the Petroleum Administration for War, or PAW) directed and controlled producers and refiners," said the brief filed by the energy trade groups. "PAW formed industry committees and ensured antitrust immunity for oil company executives so they could work together, under PAW’s direction and control, to ensure that refineries had the crude oil needed to produce aviation gasoline and hundreds of other petroleum products the government needed to fight the war."

The Supreme Court decision was just a line item on a list of similar denials of "writs of certioriari" filed on the court's website on Monday.

The denial contained no explanation, but said that Supreme Court Justice Samuel Alito "took no part in the consideration or decision of this petition." Individual justices often remove themselves from consideration of cases in which they may have a conflict, but no reason was given by Alito for his non-participation in this decision. 

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Hmm, if the lawsuits are based upon violation of a 1980 State law, does that mean damages would only be payable for damage incurred since 1980?

It would seem so to me Steve but after SCOTUS has settled this as a state court venue, I suspect that the negotiations for a settlement commence.  The canals are an obvious focus but what remediation beyond that may be required to reach a settlement is beyond my pay grade.  This will be very interesting to watch.  The degrading coast not only puts public infrastructure at risk, it also impacts a lot of oil and gas infrastructure..  That being the case, the industry should have sought a settlement long ago instead of litigating for years.  Some of the impacts may be contested but no one who has spent even a little time in the Atchafalaya Basin and the marshes of south Louisiana should disagree with the damage done by canals.  Of course those who use those canals for sport or commerce other than O&G may want to keep quite a few.  A lot of stake holders will butt heads on that.


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