Grace Ranch v. BP American Production, 989 F.3d 301

Background

Louisiana landowners ("legacy plaintiffs") sought remediation for contamination from historical unlined oilfield pits; tort remedies were foreclosed for subsequent purchasers under Eagle Pipe.
La. Stat. Ann. § 30:14 empowers the Commissioner of the Office of Conservation to sue to enjoin violations of conservation law; § 30:16 allows a private "person in interest" to sue if the Commissioner declines, with a statutory provision that a successful injunction shall be issued in the Commissioner's name and the Commissioner substituted as party.
Grace Ranch sued BP and BHP under § 30:16 in Louisiana state court after the Commissioner declined to act; the defendants removed to federal court on diversity grounds (Grace Ranch a Louisiana citizen; BP/BHP Texas citizens).
Grace Ranch argued removal was improper because Louisiana was effectively a party (or the real party in interest) and alternatively urged Burford abstention; the district court found diversity jurisdiction existed but remanded under Burford abstention.
The Fifth Circuit considered three main questions on appeal: (1) whether diversity jurisdiction existed given § 30:16; (2) whether an abstention-based remand is appealable after the 1996 amendment to § 1447(c); and (3) whether Burford abstention was appropriate here.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Louisiana is a party to a § 30:16 citizen suit so diversity is lacking	§ 30:16 requires any injunction be issued in the Commissioner's name; therefore the State is a party	The statute deputizes private plaintiffs to sue in their own name and the Commissioner only joins/substitutes if an injunction is granted	State is not a proper party; diversity exists at time of removal
Whether the possibility of later substitution of the Commissioner defeats jurisdiction	The statute treats the Commissioner as if he "had at all times been the complaining party," so diversity is absent from the start	Jurisdictional facts are assessed at time of removal; post-removal events do not defeat diversity	Jurisdiction determined at removal; potential late substitution does not destroy diversity
Whether an abstention-based remand is appealable after § 1447(c) was amended in 1996	Section 1447(d) bars appeals from remand orders; amendment of § 1447(c) eliminates Quackenbush exception so remand is unreviewable	Quackenbush and subsequent circuit precedent hold discretionary remands (abstention/supplemental jurisdiction) are reviewable; "defect" in § 1447(c) does not encompass all nonjurisdictional remands	Discretionary abstention remands are reviewable on appeal; the Fifth Circuit adopts the consensus view permitting review
Whether Burford abstention warranted here	Federal court should abstain to avoid undermining state remediation policy and because § 30:16 raises unsettled state-law questions	Federal courts routinely decide state-law claims under diversity; certification is available; this litigation will not disrupt a unitary state regulatory scheme	Burford abstention not warranted: although some factors favor abstention, the necessary threat to a coherent, interdependent state administrative scheme is absent; remand reversed

Key Cases Cited

Burford v. Sun Oil Co., 319 U.S. 315 (1943) (establishes Burford abstention doctrine to avoid federal interference with complex state regulatory schemes)
Thermtron Prods., Inc. v. Hermansdorfer, 423 U.S. 336 (1976) (read § 1447(d) with § 1447(c) to limit appeals of remand orders)
Quackenbush v. Allstate Ins. Co., 517 U.S. 706 (1996) (held abstention-based remands reviewable on appeal)
Carlsbad Tech., Inc. v. HIF Bio, Inc., 556 U.S. 635 (2009) (interprets interplay of § 1447(c) and (d) and recognizes limits on challenges to remands)
Mo., Kan., & Tex. Ry. Co. v. Hickman, 183 U.S. 53 (1901) (real-party-in-interest test for when a State is effectively a party)
Union Oil Co. of Cal. v. State, 458 F.3d 364 (5th Cir. 2006) (discusses when a state or state entity is the real party in interest for diversity purposes)
Eagle Pipe & Supply, Inc. v. Amerada Hess Corp., 79 So.3d 246 (La. 2011) (Louisiana Supreme Court ruling barring tort/contract suits by subsequent purchasers for pre-acquisition contamination)
New Orleans Pub. Serv., Inc. v. Council of the City of New Orleans, 491 U.S. 350 (1989) (NOPSI) (clarifies Burford and limits on federal interference where state review mechanisms exist)
Aransas Project v. Shaw, 775 F.3d 641 (5th Cir. 2014) (sets out Fifth Circuit factors for evaluating Burford abstention)