OPINION:
Politicians and trial lawyers in Louisiana are hoping to use the home-field advantage of state courts to shake down oil and gas companies. The alleged misdeed: contributing to coastal erosion and damaging wetlands while producing aviation fuel for the U.S. military during World War II.
Cash-strapped coastal parishes (counties), politically well-connected trial lawyers, and Louisiana’s reputation as what the American Tort Reform Association calls a “litigation hellhole” have created a toxic brew with implications that reach far beyond the Bayou State.
On Jan. 12, the Supreme Court heard oral arguments in Chevron USA et al. v. Plaquemines Parish et al. The justices will decide (probably by late June) whether companies can be sued in state courts for actions they took on behalf of and under contract with the federal government.
A ruling by the high court allowing a Plaquemines Parish jury’s $744.6 million verdict in April against Chevron under a 1978 Louisiana law to stand would deal a serious blow to the U.S. oil and natural gas sector — precisely when the nation has reemerged as a global energy superpower.
The roots of the high-stakes Supreme Court showdown stretch back over eight decades, when Chevron (then known as Texaco) produced aviation gas (avgas) under contract with the Petroleum Administration for War, a federal wartime agency. In 2013, the state of Louisiana and Plaquemines Parish sued Chevron and other energy companies for damages stemming from the production of crude oil for refining into avgas, alleging that the companies’ drilling and other activities caused coastal erosion.
The whopping $744.6 million verdict handed down last year prompted Chevron and other oil companies, supported by the Trump administration, to petition to have the case removed to federal court. They have good reason to seek a less-biased venue.
“State courts in Louisiana present a substantial risk of local bias against out-of-state defendants,” said Richard A. Epstein, a professor of law at New York University. “The Louisiana Attorney General’s Office entered into a joint prosecution agreement with [Plaquemines Parish] counsel John Carmouche, contractually prohibiting the State from supporting any defense, however meritorious, raised by Chevron. This arrangement erased the attorney general’s independence and improperly aligned the State’s interests with private financial gain.”
“This risk of bias was further evident in the conduct of Judge Michael Clement — a recipient of campaign contributions from Mr. Carmouche and his associated PACs — in a related trial involving identical issues,” Mr. Epstein added.
Congressional efforts to protect private parties, including contractors, from overzealous state prosecutors and courts date to 1815. Hoping to add clarity to those legal protections in 2011, Congress broadened the scope of the standard that allows cases to be removed to federal court to include actions “related to” the fulfillment of a federal contract. This bears directly on the case in Louisiana, where pollution from oil drilling was linked to refining it into wartime aviation fuel.
“The record is clear,” the Washington Legal Foundation and the Atlantic Legal Foundation note in an amicus brief submitted to the high court. “Petitioners’ World War II oil production directly relates to their federal avgas contracts.”
In a vertically integrated company such as Chevron, there would have been no aviation fuel without the drilling.
The implications of tying up wartime federal contractors in state court are not lost on two military leaders who submitted their own brief to the Supreme Court.
“Our nation can ill afford the divisions, confusion, and uncertainty that would necessarily result if disputes arising from wartime decision-making were adjudicated in piecemeal fashion in various state courts,” retired Gen. Richard B. Myers and retired Adm. Mike Mullen said.
Louisiana’s loss of coastal wetlands — caused by hurricanes, sinking land (subsidence), and the diversion of the Mississippi River for flood control — long predates World War II. Targeting a single, deep-pocketed industry as the culprit ignores the complexities of the region’s ecosystem.
“There are over 40 cases pending in state courts that are dripping with political bias and contempt for the defendants,” the American Tort Reform Association points out. If the high court rules to keep the Louisiana case in state court, then it will set a precedent that opens the door to the imposition of ruinous, retroactive liability nationwide.
• Bonner Russell Cohen, Ph.D., is a senior policy analyst with the Committee for a Constructive Tomorrow.
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