Supreme Court Weighs Big Case Involving Major American Energy Companies

The Supreme Court considered a case on Monday with significant implications for the energy industry and what some have characterized as an effort to “weaponize” state courts.

The case, Chevron USA. v. Plaquemines Parish, centers on a procedural question about whether lawsuits seeking to hold oil companies accountable for damage to Louisiana’s coast should be heard in state or federal court.

“The classic person who acts under a government official is a government contractor providing the government with what it needs to win a war,” Paul Clement, the attorney representing the energy companies, told the justices.

Companies argue that actions taken to carry out government contracts during World War II give them grounds to move the case to federal court under the federal-officer removal statute. More than 40 lawsuits have been filed by coastal parishes against oil and gas companies over environmental damage.

In one case that went to trial in state court, a Louisiana jury found in April that Chevron must pay $745 million to the state’s Plaquemines Parish to help restore wetlands.

“They do not dispute that they dumped billions of gallons of produced water from oil wells directly into our marsh both before and after 1980,” the attorney representing Louisiana told the justices. “That’s why this is such a massive deal for the state of Louisiana.”

Justice Brett Kavanaugh asked Clement to explain his client’s underlying concern about fairness in state courts.

“Since almost the framing of the country, there’s been this problem…with issues that are nationally important, but locally unpopular…Those are the times when it is most important to be in federal court,” Clement said. “If they can prove their case in federal court, then everybody is going to accept the outcome and they’re not going to view it as something that is a product of local prejudice.”

In response to a similar question from Justice Clarence Thomas, Louisiana’s attorney said they “want the actual experts interpreting state law, especially when we get to the Louisiana Supreme Court on an important statute like this, and especially with respect to a problem that is so sweeping in scope.”

Trial lawyers in the state are “chasing vast payouts from oil and gas companies in the name of coastal restoration,” former U.S. Attorneys General Bill Barr and Michael Mukasey argued in an amicus brief.

“They strategically pursue these claims in state courts that are friendly— and sometimes beholden—to the plaintiffs’ bar,” they wrote.

Republican Louisiana Attorney General Liz Murrill wrote on X Monday that these cases “belong in state court.”

“The federal government is a sophisticated contractor – it knows how to contract for exactly what it wants,” she wrote. “It did not contract for the production of oil and gas – this was a supply contract. While most people know this already, it is also important to note that WWII ended in 1945. Texaco/Chevron’s activities did not. Evidence in one case alone showed 4 billion gallons of toxic production wastewater was continually dumped into our marsh and that it caused long-term damage.”

JCN President Carrie Severino told the Daily Caller News Foundation that oral arguments “brought out why Congress deemed it necessary to provide a federal forum for those who work to fulfill federal contracts.”

“A majority of justices seemed to appreciate this and to recognize the straightforward facts of this case, a promising development after an unfortunate state court litigation blitz sought to impose retroactive liability on oil companies that helped win World War II,” she told the DCNF.

Chevron Spokesperson Bill Turenne said in a statement that the “Supreme Court underscored the importance of this case in granting review and in the attention paid to the issues in today’s argument.”

“Chevron remains confident that a federal court is the proper forum for these cases and looks forward to the Court’s decision,” Turenne said.

Justice Samuel Alito decided to recuse from hearing the case “because of a financial interest in ConocoPhillips, the parent corporation for Burlington Resources Oil and Gas Company,” according to a notice filed Thursday.