BOARD OF COUNTY COMMISSIONERS OF BOULDER COUNTY; BOARD OF COUNTY COMMISSIONERS OF SAN MIGUEL COUNTY; CITY OF BOULDER v. SUNCOR ENERGY (U.S.A.) INC.; SUNCOR ENERGY SALES INC.; SUNCOR ENERGY INC.; EXXON MOBIL CORPORATION
No. 19-1330
UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT
February 8, 2022
Appellate Case: 19-1330 Document: 010110642555 Date Filed: 02/08/2022 Page: 1 PUBLISH FILED United States Court of Appeals Tenth Circuit Christopher M. Wolpert Clerk of Court
CHAMBER OF COMMERCE OF THE UNITED STATES OF AMERICA; COLORADO COMMUNITIES FOR CLIMATE ACTION; THE NATIONAL LEAGUE OF CITIES; THE U.S. CONFERENCE OF MAYORS; THE INTERNATIONAL MUNICIPAL LAWYERS ASSOCIATION; NATURAL RESOURCES DEFENSE COUNCIL; PUBLIC CITIZEN, INC., Amici Curiae.
Appeal from the United States District Court for the District of Colorado (D.C. No. 1:18-CV-01672-WJM-SKC)
Kannon K. Shanmugam, Paul, Weiss, Rifkind, Wharton & Garrison LLP, Washington, D.C. (William T. Marks, Paul, Weiss, Rifkind, Wharton & Garrison LLP, Washington, D.C.; Theodore V. Wells, Jr., Daniel J. Toal, Jaren Janghorbani, Paul, Weiss, Rifkind, Wharton & Garrison LLP, New York, New York; Colin G. Harris, Faegre Baker Daniels LLP, Boulder, Colorado; and Hugh Quan Gottschalk, Evan B. Stephenson, Wheeler Trigg O‘Donnell LLP, Denver, Colorado, with him on the briefs), for Defendants – Appellants.
Richard Herz, EarthRights International, Washington, D.C. (Marco Simons, Sean Powers, Michelle Harrison, EarthRights International, Washington, D.C.; David G. Bookbinder, Niskanen Center, Washington, D.C.; and Kevin S. Hannon, The Hannon Law Firm, Denver, Colorado, with him on the brief), for Plaintiff – Appellee.
Peter D. Keisler, C. Frederick Beckner III, and Ryan C. Morris, Sidley Austin LLP, Washington, D.C., filed an amicus brief on behalf of Chamber of Commerce of the United States of America.
W. Eric Pilsk, Sarah M. Keane, Sara V. Mogharabi, and Samantha R. Caravello, Kaplan Kirsch & Rockwell LLP, Denver, Colorado, filed an amicus brief on behalf of Colorado Communities for Climate Action.
Robert S. Peck, Center for Constitutional Litigation, P.C., Washington, D.C., filed an amicus brief on behalf of the National League of Cities, the United States Conference of Mayors, and the International Municipal Lawyers Association.
Peter Huffman, Natural Resources Defense Council, Washington, D.C., filed an amicus brief on behalf of the Natural Resources Defense Council.
Scott L. Nelson and Allison M. Zieve, Public Citizen Litigation Group, Washington, D.C., filed an amicus brief on behalf of Public Citizen.
Before HOLMES, LUCERO, and McHUGH, Circuit Judges.
This matter is before us on remand from the United States Supreme Court. Suncor Energy (U.S.A.) Inc. v. Bd. of Cnty. Comm‘rs of Boulder Cnty., 141 S. Ct. 2667 (2021) (Mem.). The case originally came to us as an appeal of the district court‘s order remanding the action to state court. Pursuant to
In BP P.L.C. v. Mayor & City Council of Baltimore, the Supreme Court rejected that position, holding that when a removal action is appealed under the limited grounds listed in
We undertake that further consideration now. For the following reasons, we hold that none of the six grounds asserted support federal removal jurisdiction. Accordingly, we affirm the district court‘s order remanding the action to state court.
I. BACKGROUND
A. Factual History
1. The Energy Companies and Climate
Stated broadly, this is a lawsuit about damages related to climate change. The Board of County Commissioners of Boulder County, the Board of County Commissioners of San Miguel County, and the City of Boulder (collectively, the “Municipalities“) say they have experienced and will continue to experience harm because of climate change caused by fossil-fuel consumption and rising levels of carbon dioxide in the atmosphere. They also allege they have spent and will continue spending millions of dollars to mitigate this harm.
The Municipalities contend that Suncor Energy (U.S.A.) Inc., Suncor Energy Sales, Inc., Suncor Energy, Inc., and ExxonMobil Corporation (“Exxon“) (collectively, the “Energy Companies“) have contributed significantly to the changing climate in Colorado by producing, marketing, and selling fossil fuels. And the Municipalities allege the Energy Companies have continued their fossil-fuel activities even though they knew these activities would change the climate dramatically. The Municipalities further allege the Energy Companies concealed and/or misrepresented the dangers associated with the burning of fossil fuels despite having been aware of those dangers for decades.
2. Exxon‘s Outer Continental Shelf Leases
On appeal, the Energy Companies contend there is federal jurisdiction over the Municipalities’ claims, in part, because Exxon and/or its affiliated companies have leased and continue to lease portions of the outer continental shelf of the United States (“OCS“) pursuant to the Outer Continental Shelf Lands Act (“OCSLA“) to extract fossil fuels. Accordingly, we include relevant background information about the OCS leases.
The OCS “is a vast underwater expanse” that begins several miles off the coastline and extends seaward for roughly two hundred miles. Ctr. for Sustainable Econ. v. Jewell, 779 F.3d 588, 592 (D.C. Cir. 2015). The “subsoil and seabed” of the OCS “appertain to the United States and are subject to its jurisdiction and control.”
Pursuant to the OCSLA, the Department of Interior (“DOI“) administers a federal leasing program to develop and make use of the OCS‘s oil and gas resources. See
By the terms of its OCS leases, Exxon is required to conduct drilling “in accordance with” federally approved exploration, development, and production plans and conditions. App. at 64 § 9. These plans must “conform to sound conservation practices to preserve, protect, and develop minerals resources and maximize the ultimate recovery of hydrocarbons from the leased area.” Id. § 10. Exxon is obligated to “exercise diligence in the development of the leased area and in the production of wells located thereon;” “prevent unnecessary damage to, loss of, or waste of leased
The leases provide DOI officials reserve the right to obtain “prompt access” to facilities and records of private OCS lessees for the purpose of federal safety, health, or environmental inspections. Id. at 64 § 12. The government reserves a right of first refusal to purchase all materials “[i]n time of war or when the President of the United States shall so prescribe.” Id. at 68 § 15(d). The government also requires that 20% of all crude or natural gas produced pursuant to drilling leases be offered “to small or independent refiners.” Id. § 15(c).
B. Procedural History
1. The Claims
In this action, the Municipalities sue for damages allegedly caused by climate change. They assert a variety of claims under Colorado law, both common law and statutory, against the Energy Companies. Specifically, the Municipalities allege claims of public nuisance; private nuisance; trespass; unjust enrichment; violation of the Colorado Consumer Protection Act,
The Municipalities seek compensatory damages, remediation and/or abatement, treble damages, and costs and attorney fees. The Municipalities also ask that the Energy Companies be held jointly liable under
2. The Notice of Removal and the District Court‘s Remand Order
After the Municipalities filed their Amended Complaint in Colorado state court, the Energy Companies filed a Notice of Removal in the United States District Court for the District of Colorado. In that Notice, they asserted seven grounds for removal. Five of those grounds were under the general removal statute,
The Municipalities timely filed a Motion to Remand pursuant to
3. The Appeal
The Energy Companies appealed the district court‘s remand order on six grounds, including the federal officer removal statute,
The Supreme Court has now clarified that in circumstances such as the present, where federal officer removal is one of multiple grounds for removal, the entire order of remand is reviewable on appeal. BP v. Mayor & City Council of Balt., 141 S. Ct. at 1543. Thus, our jurisdiction extends beyond the federal officer removal statute to all grounds advanced for federal jurisdiction over the action. The Court vacated our opinion and remanded to us for reconsideration. See Suncor Energy, 141 S. Ct. at 2667.
On remand from the Supreme Court, we requested supplemental briefing from the parties. The Municipalities seek affirmance of the district court‘s decision remanding the action to Colorado state court, and the Energy Companies again claim removal is proper.
II. DISCUSSION
On appeal, the Energy Companies challenge the district court‘s remand order, relying on six grounds for federal jurisdiction under
We begin our analysis with a discussion of the relevant standard of review. Then, we discuss the merits of each proposed basis of federal subject-matter jurisdiction. Ultimately, we conclude the district court correctly rejected each ground, and we affirm the district court‘s remand order.
“Only state-court actions that originally could have been filed in federal court may be removed to federal court by the defendant.” Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). “Federal courts are courts of limited jurisdiction.” Gunn v. Minton, 568 U.S. 251, 256 (2013) (quoting Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994)). So “there is a presumption against our jurisdiction.” Merida Delgado v. Gonzales, 428 F.3d 916, 919 (10th Cir. 2005) (quotation marks omitted).
The presumption against jurisdiction is manifested in “the deeply felt and traditional reluctance of th[e Supreme] Court to expand the jurisdiction of the federal courts through a broad reading of jurisdictional statutes.” Romero v. Int‘l Terminal Operating Co., 358 U.S. 354, 379 (1959), superseded on other grounds by statute, The Jones Act,
“We review the district court‘s ruling on the propriety of removal de novo.” Frederick v. Hartford Underwriters Ins. Co., 683 F.3d 1242, 1245 (10th Cir. 2012). We also apply de novo review to questions of federal subject-matter jurisdiction. Navajo Nation v. Dalley, 896 F.3d 1196, 1203 (10th Cir. 2018).
B. Grounds Asserted for Federal Jurisdiction
In our prior decision, we rejected the Energy Companies’ reliance on
1. 28 U.S.C. § 1442(a): Federal Officer Removal Jurisdiction
The Energy Companies argue there is federal jurisdiction and this action is removable because Exxon acted under a federal officer pursuant to its OCS leases.2 The district court held that any control exercised by federal officers over Exxon‘s operations through the issuance of government leases to develop fossil fuels on the OCS was insufficient to trigger federal jurisdiction under
The federal officer removal statute permits removal of a state court civil action “that is against or directed to . . . any officer (or any person acting under that officer) of
the United States or of any agency thereof . . . for or relating to any act under color of such office.”
Section 1442(a)(1) removal can apply to private persons “who lawfully assist” federal officers “in the performance of [their] official dut[ies],” Davis v. South Carolina, 107 U.S. 597, 600 (1883), meaning the private person must be “authorized to act with or for [federal officers or agents] in affirmatively executing duties under . . . federal law,” Watson, 551 U.S. at 151 (alterations in original) (quoting City of Greenwood v. Peacock, 384 U.S. 808, 824 (1966)). And
government-directed conduct, and (3) they have a colorable federal defense to the claim or claims.
“The statutory phrase ‘acting under’ describes ‘the triggering relationship between a private entity and a federal officer.‘” Baltimore II, 952 F.3d at 462 (quoting Watson, 551 U.S. at 149). “The words ‘acting under’ are broad,” but “not limitless.” Watson, 551 U.S. at 147. In this context, “under” describes a relationship between private entity and federal superior typically involving “subjection, guidance, or control.” Id. at 151 (quoting WEBSTER‘S NEW INTERNATIONAL DICTIONARY 2765 (2d ed. 1953)). Thus, a “private person‘s ‘acting under’ must involve an effort to assist, or to help carry out, the duties or tasks of the federal superior.” Id. at 152. This “help or assistance necessary to bring a private person within the scope of the statute does not include simply complying with the law[] . . ., even if the regulation is highly detailed and even if the private firm‘s activities are highly supervised and monitored.” Id. at 152–53. Rather, “there must exist a ‘special relationship’ between” the private firm and the federal superior. Isaacson, 517 F.3d at 137 (quoting Watson, 551 U.S. at 157).
In
in compliance with the Federal Trade Commission‘s [(“FTC“)] detailed regulations.” Id. at 136. The defendants highlighted various lower court cases holding that government contractors could invoke
In Watson, the Court illustrated a sufficient special relationship with the facts in Winters v. Diamond Shamrock Chemical Co., 149 F.3d 387 (5th Cir. 1998), overruled on other grounds by Latiolais, 951 F.3d at 296. Id. at 153–54. Winters involved tort claims against Dow Chemical premised on the production of Agent Orange under a Department of Defense contract for use in the Vietnam War. 149 F.3d at 398. The Fifth Circuit determined that Dow satisfied the “acting under” element for federal officer removal based on “the government‘s detailed specifications concerning the make-up, packaging, and delivery of Agent Orange, the compulsion to provide the product to the government‘s specifications, and the on-going supervision the government exercised over the
formulation, packaging, and delivery of Agent Orange.” Id. at 400. Dow “provid[ed] the [g]overnment with a product that it used to help conduct a war,” and “at least arguably, performed a job that, in the absence of a contract with a private firm, the [g]overnment itself would have had to perform.” Watson, 551 U.S. at 154. As such, it had a “special relationship” with the government whereby it “help[ed] carry out[] the duties or tasks of the federal superior.” Id. at 152, 157 (emphasis omitted); see also Isaacson, 517 F.3d at 137 (holding the “acting under” prong satisfied because Dow “received delegated authority” from the Pentagon “to provide a product [Agent Orange] that the [g]overnment was using during war” and that it would otherwise need to produce itself); cf. Sawyer, 860 F.3d at 255 (holding a private contractor “acted under” a federal superior by manufacturing boilers for use in U.S. Navy vessels).
Watson addressed one other “important” argument advanced in favor of
This analysis of Watson and related caselaw indicates which types of contracts between federal superiors and private
with contractual terms, even if complex, and agree to help carry out the duties or tasks of the federal superior under that superior‘s strict guidance or control. And this closely supervised work must help federal officers fulfill basic government needs, accomplish key government tasks, or produce essential government products—that is, it must stand in for critical efforts the federal superior would need to undertake itself in the absence of a private contract. Wartime production is the paradigmatic example for this special relationship. Alternately, the “acted under” element may be established through the explicit contractual delegation of legal authority to act on the federal superior‘s behalf.
Here, Exxon‘s contractual relationship with the DOI does not meet these guidelines. By winning bids for leases to extract fossil fuels from federal land in exchange for royalty payments, Exxon is not assisting the government with essential duties or tasks. See Baltimore II, 952 F.3d at 465 (expressing skepticism “that the willingness to lease federal property or mineral rights to a private entity for the entity‘s own commercial purposes, without more, could ever be characterized as the type of assistance that is required to trigger the government-contractor analogy“). Critically, the leases do not obligate Exxon to make a product specially for the government‘s use, as in Winters, Isaacson, and Sawyer.
The government can (and does) purchase some of the fuel produced by Exxon via its OCS leases, as it does from others in the marketplace. But the OCS leases do not require Exxon to tailor fuel production to detailed government specifications aimed at satisfying pressing federal needs. Compare Winters, 149 F.3d at 399 (referencing precise government specifications for Agent Orange that “included use of the two active
chemicals in unprecedented quantities for the specific purpose of stripping” vegetation), with Washington v. Monsanto Co., 738 F. App‘x 554, 555 (9th Cir. 2018) (unpublished) (explaining the government‘s off-the-shelf purchase of a defendant‘s product does not show that the government “supervised [the defendant‘s] manufacture . . . or directed [the defendant] to produce [the product] in a particular manner, so as to come within the meaning of ‘act[ed] under‘” (quoting
Additionally, the OCS leases do not appear to contemplate the type of “close supervision of the private entity by the [g]overnment” needed to bring a government contractor relationship within the meaning of
The Energy Companies attack these conclusions by contending that “the operative leases explicitly afford the federal government the right to control the rates of mining and production.” Appellants Br. at 40. The support for this argument comes from a provision in the 1979 lease, which states, “[a]fter due notice in writing, the Lessee shall drill such wells and produce at such rates as the Lessor may require in order that the leased area . . . may be properly and timely developed . . . .” App. 50 § 10. But there is also no allegation that the government ever actually directed Exxon‘s drilling activity or rates of production through its OCS land leases.
The same goes for the Energy Companies’ citation to the government‘s wartime right of first refusal. Even if the exercise of these clauses would create the requisite level of federal supervision, the Energy Companies cite no authority for the proposition that the simple reservation of such rights by the government, without exercising those rights, places a contractor in the special relationship needed for a private firm to invoke the removal statute. See Mays v. City of Flint, 871 F.3d 437, 447 (6th Cir. 2017) (disagreeing with the “argument that this ability to intervene [by the federal government] supports the[] invocation of federal-officer removal” in the absence of actual intervention).
Last, Exxon cannot show the type of legal delegation that the Watson Court hypothesized would be sufficient to conclude a private corporation was “acting under” a government superior. None of the provisions of the OCS leases “establish the type of formal delegation that might authorize [defendants] to remove the case.” Watson, 551 U.S. at 156. And “neither Congress nor federal agencies normally delegate legal authority to private entities without saying that they are doing so.” Id. at 157.
Because Exxon has not established that it acted under a federal officer by complying with the terms of its OCS leases, we do not need to reach the remaining elements for federal officer removal. We hold that the Energy Companies have not established federal officer removal jurisdiction and affirm the district court on this removal ground.
2. 28 U.S.C. § 1441: Original Jurisdiction
The Energy Companies also contend that removal is available pursuant to
On appeal, the Energy Companies claim federal jurisdiction exists under
then we discuss how those principles apply to each of the five grounds asserted for federal jurisdiction.
a. 28 U.S.C. § 1331
Although
i. The well-pleaded complaint rule
The Supreme Court has cabined jurisdiction under
The rule is premised on the notion that the plaintiff is the “master of the claim” and may “avoid federal jurisdiction by exclusive reliance on state law.” Caterpillar, 482 U.S. at 392. Under the well-pleaded complaint rule, it has long been held that a “plaintiff may by the allegations of his complaint determine the status with respect to removability.” Great N. Ry. Co. v. Alexander, 246 U.S. 276, 282 (1918). And the defendant‘s assertion of a defense based on federal law does not transform claims based on state law into a removable federal question. Louisville & Nashville R.R. Co. v. Mottley, 211 U.S. 149, 152-54 (1908). Indeed, a federal defense, including preemption, cannot support removal “even if the defense is anticipated in the plaintiff‘s complaint, and even if both parties admit that the federal defense is the only question truly at issue in the case.” Franchise Tax Bd., 463 U.S. at 14.
“[F]ederal jurisdiction attaches when federal law creates the cause of action asserted.” Merrill Lynch, Pierce, Fenner & Smith Inc. v. Manning, 578 U.S. 374, 383 (2016). The creation test “accounts for the vast bulk of suits that arise under federal law.” Gunn, 568 U.S. at 257. But there are two exceptions to the well-pleaded complaint rule: (1) the state-law claims are artfully pleaded/completely preempted by federal law and (2) the state-law claims necessarily raise a substantial, disputed federal question. Devon Energy Prod. Co., L.P. v. Mosaic Potash Carlsbad, Inc., 693 F.3d 1195, 1203-04 (10th Cir. 2012). Because the exceptions are relevant to this appeal, we describe them here.
Complete preemption is a term of art for an exception (or an independent corollary) to the well-pleaded complaint rule. Schmeling v. NORDAM, 97 F.3d 1336, 1339 (10th Cir. 1996). Sometimes complete preemption is also known as artful pleading. “If a court concludes that a plaintiff has ‘artfully pleaded’ claims” by excluding necessary federal questions from the pleadings, “it may uphold removal even though no federal question appears on the face of the plaintiff‘s complaint.” Rivet v. Regions Bank of La., 522 U.S. 470, 475 (1998). The Supreme Court treats the “artful pleading” and “complete preemption” doctrines as indistinct. See id.4 Thus, “[t]he artful pleading doctrine allows removal where federal law completely preempts an asserted state-law claim.” Id.
Complete preemption applies when “the pre-emptive force of a statute is so ‘extraordinary’ that it ‘converts an ordinary state common-law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule.‘” Caterpillar, 482 U.S. at 393 (quoting Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 65 (1987)). When this happens, the state-law cause of action becomes “purely a creature of federal law, notwithstanding the fact that state law would provide a cause of action in the absence of” the federal law. Franchise Tax Bd., 463 U.S. at 23. Upon the doctrine‘s proper invocation, “a complaint alleging only a state law cause of action may be removed to federal court on the theory that federal preemption makes the state law claim ‘necessarily federal in character.‘” Schmeling, 97 F.3d at 1339 (quoting Metro. Life, 481 U.S. at 63-64).
To determine whether a state-law claim is completely preempted by federal law, we apply a two-step analysis: “first, we ask whether the federal question at issue preempts the state law relied on by the plaintiff; and second, whether Congress intended to allow removal in such a case, as manifested by the provision of a federal cause of action.” Dutcher, 733 F.3d at 985-86 (quotation marks omitted). Because the first prong implicates the merits of an ordinary preemption defense, which cannot support removal, the removal analysis begins with the second prong. See Metro. Life, 481 U.S. at 66 (“[T]he touchstone of the federal district court‘s removal jurisdiction is not the ‘obviousness’ of the pre-emption defense but the intent of Congress.“).
A part of the congressional intent analysis is whether there is “a potential federal cause of action,” the existence of which “is critical” because “complete preemption is not the same as preemption.” Dutcher, 733 F.3d at 986. “That is, a state cause of action may not be viable because it is preempted by a federal law—but only if federal law provides its own cause of action does the case raise a federal question that can be heard in federal court.” Id. To completely preempt, “the federal cause of action need not provide the same remedy as the state cause of action.” Schmeling, 97 F.3d at 1343. However, “the federal remedy at issue must vindicate the same basic right or interest that would otherwise be vindicated under
“‘Complete preemption is a rare doctrine.‘” Id. at 1204 (quoting Cmty. State Bank v. Strong, 651 F.3d 1241, 1260 n.16 (11th Cir. 2011)). The Supreme Court has recognized it in just three statutory contexts:
iii. Substantial federal-question jurisdiction (Grable jurisdiction)
The Supreme Court has instructed that “a federal court ought to be able to hear claims recognized under state law that nonetheless turn on substantial questions of federal law.” Grable, 545 U.S. at 312. This is true “[e]ven though state law creates [a plaintiff‘s] causes of action” because a “case might still ‘arise under’ the laws of the United States if a well-pleaded complaint established that its right to relief under state law requires resolution of a substantial question of federal law in dispute between the parties.” Franchise Tax Bd., 463 U.S. at 13. But this circumstance describes a “special and small category” of cases. Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 699 (2006).
A federal court can exercise federal-question jurisdiction over an action that pleads only state-law claims if those claims “require[] resolution of a substantial question of federal law in dispute between the parties.” Franchise Tax Bd., 463 U.S. at 13. The Supreme Court set out the standard for substantial question jurisdiction in Grable. The Court explained that the relevant question is, “does a state-law claim necessarily raise a stated federal issue, actually disputed and substantial, which a federal forum may entertain without disturbing any congressionally approved balance of federal and state judicial responsibilities.” Grable, 545 U.S. at 314.
Like complete preemption, “[t]he ‘substantial question’ branch of federal question jurisdiction is exceedingly narrow.” Gilmore v. Weatherford, 694 F.3d 1160, 1171 (10th Cir. 2012). It is not triggered by a “mere need to apply federal law in a state-law claim.” Grable, 545 U.S. at 313. Nor can it be triggered solely by a federal defense, in keeping with the well-pleaded complaint rule. Becker v. Ute Indian Tribe of the Uintah & Ouray Rsrv., 770 F.3d 944, 947 (10th Cir. 2014).
***
Having discussed the limits of
b. Claims arise under federal common law
The Energy Companies argue there is federal-question jurisdiction over the Municipalities’ state-law claims because they are governed by federal common law. The district court concluded federal common law did not create the cause of action because a federal common law claim was
It is undisputed that the Municipalities did not explicitly allege a claim under federal common law in the Amended Complaint. But the Energy Companies contend the Municipalities drafted their Amended Complaint to conceal the federal character of their claims. We begin by considering whether federal common law governs claims related to climate change, as the Energy Companies contend. Then, we turn to the question of whether the federal common law creates the Municipalities’ causes of action.
i. Relevant case law
“There is no federal general common law,” Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938), but there remain limited areas of “‘specialized federal common law,‘” Am. Elec. Power Co., Inc. v. Connecticut (AEP), 564 U.S. 410, 421 (2011) (quoting Friendly, In Praise of Erie—And of the New Federal Common Law, 39 N.Y.U. L. REV. 383, 405 (1964)). “The cases in which federal courts may engage in common lawmaking are few and far between.” Rodriguez v. FDIC, 140 S. Ct. 713, 716 (2020). Among them is when “a federal rule of decision is ‘necessary to protect uniquely federal interests.‘” Tex. Indus., Inc. v. Radcliff Materials, Inc., 451 U.S. 630, 640 (1981) (quoting Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 426 (1964)). The Energy Companies assert that the Municipalities’ claims here are governed by the federal common law of transboundary pollution. Accordingly, we begin with a discussion of the primary caselaw on which the Energy Companies rely.
In Illinois v. City of Milwaukee (Milwaukee I), 406 U.S. 91, 93 (1972), Illinois filed an original complaint in the Supreme Court on a theory of public nuisance against Milwaukee and several other Wisconsin cities for allegedly polluting Lake Michigan. The Court first held that cases arising under federal common law fall under the ambit of
In the 1970s, Congress passed major updates to the Clean Water Act. City of Milwaukee v. Illinois (Milwaukee II), 451 U.S. 304, 308 (1981). After these amendments, Illinois and Michigan filed a separate suit in federal district court under federal common law, seeking abatement of the public nuisance allegedly created by Lake Michigan sewage discharges. Id. at 310. The district court resolved the action in Illinois‘s favor. Id. at 312. The Seventh Circuit agreed that the federal common law of nuisance survived the 1972 amendments to the Water
The Court explained that in the absence of congressional action, “and when there exists a ‘significant conflict between some federal policy or interest and the use of state law,’ the Court has found it necessary, in a ‘few and restricted’ instances, to develop federal common law.” Id. at 313 (first quoting Wallis v. Pan Am. Petrol. Corp., 384 U.S. 63, 68 (1966); and then quoting Wheeldin v. Wheeler, 373 U.S. 647, 651 (1963)). This exercise is only “a ‘necessary expedient,‘” however, “and when Congress addresses a question previously governed by a decision rested on federal common law the need for such an unusual exercise of lawmaking by federal courts disappears.” Id. at 314 (quoting Comm. for Consideration of Jones Falls Sewage Sys. v. Train, 539 F.2d 1006, 1008 (4th Cir. 1976)). The Court ruled that the “self-consciously comprehensive” water pollution amendments left “no room for courts to attempt to improve on that program with federal common law.” Id. at 319.
In rejecting Illinois‘s argument that the Act‘s savings provision,
It is one thing . . . to say that States may adopt more stringent limitations through state administrative processes, or even that States may establish such limitations through state nuisance law, and apply them to in-state discharges. It is quite another to say that the States may call upon federal courts to employ federal common law to establish more stringent standards applicable to out-of-state dischargers.
Id. at 327-28 (first emphasis added). Thus, the amendments to the Clean Water Act displaced the federal common law for water-based transboundary pollution.
What Milwaukee II did to the federal common law of interstate water pollution, AEP did to the federal common law of interstate air pollution. In AEP, several states sued a few power companies and the Tennessee Valley Authority in federal court, asserting the companies’ CO2 emissions contributed to global warming and interfered with public rights in violation of the federal common law of interstate nuisance, or, in the alternative, state tort law. 564 U.S. at 418. They sought injunctive relief in the form of emissions caps. Id. at 419. The Second Circuit held the plaintiffs had stated a claim under the ““federal common law of nuisance,“” but the Court reversed. Id. (quoting Connecticut v. Am. Elec. Power Co., Inc., 582 F.3d 309, 358, 371 (2d Cir. 2009), rev‘d by 564 U.S. 410).
The Court first noted the history of “federal common-law suits brought by one State to abate pollution emanating from another State,” where “borrowing the law of a particular State would be inappropriate.” Id. at 421-22. But it said determining whether “the plaintiffs could state a federal common-law claim for curtailment of greenhouse gas emissions
In closing, the Court briefly addressed the plaintiffs’ state-law nuisance claims. It first noted that if a case “should be resolved by reference to federal common law[,] . . . state common law [is] pre-empted.” Id. at 429 (quoting Int‘l Paper Co. v. Ouellette, 479 U.S. 481, 488 (1987)). Thus, due to the Court‘s “holding that the [CAA] displaces federal common law, the availability vel non of a state lawsuit depends, inter alia, on the preemptive effect of the federal Act.” Id. (citing Ouellette‘s “holding that the Clean Water Act does not preclude aggrieved individuals from bringing a ‘nuisance claim pursuant to the law of the source State‘” (quoting 479 U.S. at 497)). But because no party briefed preemption or “the availability of a claim under state nuisance law,” the Court left the matter open. Id.
The Ninth Circuit applied AEP in Native Village of Kivalina v. ExxonMobil Corp., 696 F.3d 849 (9th Cir. 2012). There, an Alaskan village sued various energy producers, including Exxon, for climate change-related harms in federal district court, alleging violation of the federal common law of nuisance. Id. at 854. Kivalina‘s claims were slightly different than those of the AEP plaintiffs: it sought damages for harm caused by past emissions rather than emissions abatement. Id. at 857. But “the type of remedy asserted is not relevant to the applicability of the doctrine of displacement.” Id. “When Congress has acted to occupy the entire field“—as it did through the CAA in regard to domestic greenhouse gas emissions—“that action displaces any previously available federal common law action.” Id. “Thus, AEP extinguished Kivalina‘s federal common law public nuisance damage action, along with the federal common law public nuisance abatement actions.” Id. In other words, the federal common law of nuisance that formerly governed transboundary pollution suits no longer exists due to Congress‘s displacement of that law through the CAA.5 “Simply put,” this case could “not have been removed to federal court on the basis of federal common law that no longer exists.” Cnty. of San Mateo v. Chevron Corp., 294 F. Supp. 3d 934, 937 (N.D. Cal. 2018), aff‘d in part, 960 F.3d 586 (9th Cir. 2020),
Kivalina also brought a state-law nuisance claim, which the district court dismissed without prejudice, and without being addressed by the Ninth Circuit majority. In a concurring opinion, Judge Pro stressed that Kivalina may have retained its causes of action under state law: “Once federal common law is displaced, state nuisance law becomes an available option to the extent it is not preempted by federal law.” Kivalina, 696 F.3d at 866 (relying upon AEP‘s statement that “the availability vel non of a state lawsuit depends, inter alia, on the preemptive effect of the federal Act” (quoting 564 U.S. at 429)). Judge Pro therefore concluded that “Kivalina may pursue whatever remedies it may have under state law to the extent their claims are not preempted.” Id.
Thus, the question is whether the federal act that displaced the federal common law preempted the state-law claims. And because ordinary preemption can never serve as a basis for removal, a state lawsuit brought under state law in the transboundary pollution context could be removed by means of a federal question only through the doctrine of complete preemption.
In sum, the Energy Companies’ argument that the Municipalities’ claims “arise under” federal common law fails because the reliance on only state-law claims leaves complete preemption as the sole path for federal removal jurisdiction. As instructed in AEP and supported by Kivalina, we look to the federal act that displaced the federal common law to determine whether the state claims are preempted. In this case, that would be the CAA. Before considering whether the CAA completely preempts the field, however, we pause to address the Energy Companies argument that the Municipalities artfully pleaded their state-law claims to avoid the federal nature of their federal common law claims.
ii. Artful pleading/complete preemption
The Energy Companies assert that despite stating only state-law claims, it is nonetheless clear from the face of the complaint that “federal common law supplies the rule of decision for th[e]se claims.” Appellants Br. at 26. For the reasons we now explain, we reject this argument.
While the Energy Companies assert their argument is “not merely a question of pleading,” Reply Br. at 7, they essentially contend the Municipalities have engaged in “artful pleading” by attempting to conceal the federal character of their claims in state garb, see Appellants Br. at 26 (citing a portion of a district court opinion that references “artful pleading“); Reply Br. at 7-8 (quoting a section of Wright & Miller‘s treatise titled “Removal Based on Artful Pleading” for the proposition that “a plaintiff cannot ‘block removal’ by attempting to ‘disguise [an] inherently federal cause of action‘” (quoting 14C CHARLES A. WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE § 3722.1 (2d ed. 2019))). This reliance on the “artful pleading” exception to the well-pleaded complaint rule, however, is misplaced. For purposes of federal subject-matter jurisdiction, we look to the face of the complaint and assess whether the plaintiff has advanced a federal claim. Verlinden, 461 U.S. at 494. It is only when the merits of a defense based on “complete preemption” are considered that the court is free to look behind the plaintiff‘s chosen claims to determine whether federal law has completely preempted the area.
As noted, complete preemption requires congressional intent. See Metro. Life, 481 U.S. at 65-66. Because federal common law is created by the judiciary—not Congress—Congress has not “clearly manifested an intent” that the federal common law for transboundary pollution will completely preempt state law. Id. at 66. Therefore, the federal common law for transboundary pollution cannot completely preempt the Municipalities’ state-law claims. See Marcus v. AT&T Corp., 138 F.3d 46, 54 (2d Cir. 1998) (applying the same reasoning and holding that “federal common law does not completely preempt state law claims in the area of interstate telecommunications“).
The importance of the procedural posture of the lawsuit for purposes of removal jurisdiction was recently emphasized by the Second Circuit in City of New York v. Chevron Corp., 993 F.3d 81 (2d Cir. 2021). There, the city brought state nuisance claims against various multi-national oil companies, alleging the companies were liable for damages caused by global warming. Id. at 88. Importantly, the city initiated the action in federal court, and thus, the issues before the district court and the circuit were not within the context of removal. Id. Instead, the district court granted the oil companies’ motions to dismiss the action under
On appeal, the Second Circuit affirmed on the same grounds. Id. at 89-103. Importantly for our purposes, the circuit court acknowledged and explained the tension between its conclusion that federal common law displaced the city‘s state-law claims and the “parade of recent opinions holding that ‘state-law claims for public nuisance brought against fossil-fuel producers do not arise under federal law.‘” Id. at 93 (quoting City of Oakland v. BP P.L.C., 960 F.3d 570, 575 (9th Cir. 2020), amended & superseded on denial of reh‘g, 969 F.3d 895 (9th Cir. 2020)). The court explained that each of the decisions that concluded federal common law did not preempt the plaintiff‘s state-law claims had done so in different procedural context-removal. Id. Unlike in the removal context, the Second Circuit was permitted to consider the defendants’ ordinary preemption defense when analyzing whether the city had failed to state a claim.
In the removal context, however, only complete preemption can support removal. And because the federal common law does not completely preempt state law, removal is not warranted under the artful pleading or complete preemption exception to the well-pleaded complaint rule. The Municipalities have pleaded only state-law causes of action. And at this stage of the proceedings, we do not look behind those allegations.6
Having determined that the federal common law does not completely preempt the state-law claims, we now consider whether the federal act that displaced the federal common law—the CAA—completely preempts them. The district court held that it does not, reasoning that the CAA does not govern the sale of fossil fuels, and it “expressly preserves many state common law causes of action.” App. at 228. “From this,” the district court determined “Congress did not intend the [CAA] to provide exclusive remedies in these circumstances, or to be a basis for removal under the complete preemption doctrine.” Id. The district court explained that the preemption argument based on emissions standards must “be resolved in connection with an ordinary preemption defense, a matter that does not give rise to federal jurisdiction.” Id. at 232.
The Energy Companies point to two provisions of the CAA they claim completely preempt the state-law claims. First, they highlight the CAA‘s citizen-suit provision authorizing private challenges to rulemakings, or the absence of such rulemakings, by the EPA. See
The Energy Companies acknowledge complete preemption applies when “a federal statutory scheme ‘provide[s] the exclusive cause of action for the claim asserted.‘” Appellants Br. at 34 (quoting Beneficial Nat‘l Bank v. Anderson, 539 U.S. 1, 8 (2003)) (emphasis added). But the CAA does not provide an exclusive federal cause of action for suits against private polluters, nor does it completely displace all state law in that area. To the contrary,
Even setting aside this savings clause,
The same is true with respect to
In Devon Energy, we held the availability of judicial review of federal administrative action does not displace comparable state-law claims against private parties. 693 F.3d at 1207. There, Devon, an oil and gas producer, mistakenly drilled a well at a location in New Mexico‘s “Potash Area“—a mineral-rich reserve managed by the federal Bureau of Land Management (“BLM“)—without BLM permission. Id. at 1198. BLM subsequently reviewed and approved the placement of Devon‘s Apache Well. Id. at 1199. Mosaic, a potash mining company, claimed that Devon‘s initial mistaken placement of the Apache Well had wasted resources and caused Mosaic damage. Id. Unable to reach a settlement, Devon sued Mosaic in federal court, seeking “a declaratory judgment that federal law completely preempted Mosaic‘s anticipated state-law claims emanating from Devon‘s unauthorized drilling.” Id. at 1198. Devon asserted that Mosaic‘s only available remedies were “the federal administrative and judicial remedies under the Administrative Procedure Act.” Id. at 1200 (quotation marks omitted).
This court disagreed: “While Mosaic may have been able to appeal the BLM‘s approval of the Apache Well, the availability of an administrative remedy against the BLM has no bearing on whether Mosaic‘s state law claims against Devon have been completely supplanted by a private federal cause of action.” Id. at 1207 (quotation marks omitted). Mosaic was not challenging federal agency action or inaction but rather those actions taken by the private party, Devon, that resulted in injury to Mosaic. “Thus, even if pursuing relief through the APA might ultimately have
This logic bars
The courts that have considered this question agree the CAA does not completely preempt this type of climate change action.8 We agree with these well-reasoned decisions and affirm the district court‘s rejection of complete preemption by the CAA as a basis for federal jurisdiction.
d. Substantial federal-question jurisdiction (Grable jurisdiction)
Next, the Energy Companies argue that the Municipalities’ state-law claims necessarily raise disputed, substantial federal issues suitable for federal court resolution—both because the claims relate to the federal government‘s conduct of foreign affairs and because they “amount to a collateral attack on cost-benefit analyses committed to, and already performed by, the federal government.” Appellants Br. at 28. The elements for substantial federal question—or Grable—jurisdiction are that the “federal issue is: (1) necessarily raised, (2) actually disputed, (3) substantial, and
(4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress.” Gunn, 568 U.S. at 258.
The district court rejected the Energy Companies’ argument that the Municipalities’ “claims necessarily depend on a resolution of a substantial question” of federal policy. App. at 217. It determined that the Energy Companies had not cited any binding foreign policies or explained how this case would interfere with the policies they did cite. The district court also held that
i. Necessarily raised
“To determine whether an issue is ‘necessarily’ raised, the Supreme Court has focused on whether the issue is an ‘essential element’ of a plaintiff‘s claim.” Gilmore, 694 F.3d at 1173 (quoting Grable, 545 U.S. at 315). For example, in Grable, the Court exerted federal-question jurisdiction over a state court action because the meaning of a federal statute “appear[ed] to be the only legal or factual issue contested.” 545 U.S. at 315. Likewise, in Smith v. Kansas City Title & Trust Co., 255 U.S. 180, 201 (1921), “[t]he decision depend[ed] upon the determination of” “the constitutional validity of an act of Congress which [was] directly drawn in question,” 255 U.S. 180, 201 (1921). And in Merrill Lynch, the Court confirmed federal-question jurisdiction would lie over a state court action brought to enforce a federal duty “because the claim‘s very success depends on giving effect to a federal requirement.” 578 U.S. at 384.
The Energy Companies contend that the Municipalities’ suit “implicates federal issues” because it “interfere[s] with” the federal government‘s longstanding “policy of pursuing economic growth rather than imposing emissions limits under imbalanced international agreements.” Appellants Br. at 29–30. The Energy Companies attempt to establish this specific foreign policy by citing multiple federal sources from different branches of government that span four decades and feature different levels of binding legal effect. Id. at 28–30 (citing remarks by Presidents Ford and Trump, an executive order from President Reagan, a Senate resolution responding to President Clinton‘s signing of the Kyoto Protocol, and several laws passed in the wake of that signing). Setting aside whether this asserted foreign policy can be pieced together from such a miscellaneous patchwork, the Energy Companies have not shown how the alleged foreign policy forms a necessary element of the Municipalities’ claims.
The Energy Companies also argue that the Municipalities’ nuisance claims necessarily raise a collateral attack on the federal government‘s “weighing of the costs and benefits of fossil-fuel production and use” and upset the “appropriate balance” regarding that delicate issue struck under federal administrative law. Appellants Br. at 30–31 (citing
The Municipalities assert state-law claims—for nuisance, trespass, unjust enrichment, civil conspiracy, and violation of Colorado‘s consumer protection law—based on the Energy Companies’ knowing promotion and sale of fossil fuels at levels that allegedly caused damage in Colorado. Far from the situation where the meaning of federal law is “the only legal or factual issue contested,” Grable, 545 U.S. at 315 (emphasis added), here none of the issues the Municipalities raise pertain to the meaning of these policy statements and federal regulations. The Municipalities can prevail on their claims without proving any issue of federal law because the success of those claims is grounded in traditional state-law causes of action and does not depend on any federal policy or regulation. And the decision in this suit does not “depend[] upon the determination of” any federal policy, order, or regulation that is “directly drawn in question.” Smith, 255 U.S. at 201. If these federal issues are raised, it will be by the Energy Companies as potential defenses, which cannot create a basis for removal. See Becker, 770 F.3d at 947 (stating substantial question jurisdiction cannot depend solely on a federal defense).
To be sure, there is a federal interest in promoting energy development. The Energy Companies, however, have failed to establish that a federal issue is a necessary element of the Municipalities’ state-law claims.
ii. Substantial
Even if the Energy Companies have identified a federal issue that is a necessary element of the Municipalities’ claims, however, the Energy Companies would still have to show that the federal issues are sufficiently substantial. The Supreme Court has applied two tests to determine whether a federal issue is sufficiently substantial. As explained in Grable and Gunn, courts should look to the importance of the issue to the federal system to determine whether it is substantial. Gunn, 568 U.S. at 260; Grable, 545 U.S. at 310. The Supreme Court suggested in Merrell Dow that courts should also consider whether the relevant federal law provides
1) Grable/Gunn substantiality
To satisfy Grable‘s “substantial” prong, “it is not enough that the federal issue be significant to the particular parties in the immediate suit.” Gunn, 568 U.S. at 260. “The substantiality inquiry under Grable looks instead to the importance of the issue to the federal system as a whole.” Id.; see Grable, 545 U.S. at 310 (holding “that the national interest in providing a federal forum for federal tax litigation is sufficiently substantial to support the exercise of federal-question jurisdiction.” (emphasis added)). Such importance to the system can be evaluated by assessing whether the federal issue “would be controlling in numerous other cases.” McVeigh, 547 U.S. at 700. For example, “Grable presented a nearly ‘pure issue of law,’ one ‘that could be settled once and for all and thereafter would govern numerous . . . cases.’” Id. (quoting R. Fallon, et al., HART & WECHSLER‘S THE FEDERAL COURTS AND THE FEDERAL SYSTEM 65 (2005 Supp.)). In contrast, resolution of claims that are “fact-bound and situation-specific” would not have this precedential effect and would be insufficiently substantial. Id. at 701.
The important national interest test is not satisfied here. A prerequisite to establish a case as having importance “to the federal system as a whole” is to identify a concrete federal law or regulation that the case definitively implicates, which the Energy Companies have neglected to do. Gunn, 568 U.S. at 260. The Energy Companies broadly argue that this state suit “sits at the intersection of federal energy and environmental regulation and necessarily implicates foreign policy and national security.” Appellants Br. at 32. But it is difficult to comprehend how the suit‘s resolution could have controlling effect across the federal system regarding any of these substantial issues when the Energy Companies fail to adequately tether their “national interest” argument to any specific federal law or laws.
It follows from this fundamental failure that this case, unlike Grable, does not present “a nearly ‘pure issue of [federal] law’” for definitive resolution, McVeigh, 547 U.S. at 700, (quoting R. Fallon et al., HART AND WECHSLER‘S THE FEDERAL COURTS AND THE FEDERAL SYSTEM 65 (2005 Supp.)), or “a context-free inquiry into the meaning of a federal law,” Bennett, 484 F.3d at 910. To the contrary, the resolution of the Municipalities’ state-law claims promises to be “fact-bound”—because it is dependent on analyzing the fossil-fuel activities of the Energy Companies over a period of decades—and “situation-specific”—because it is dependent on establishing the damage to natural environment
2) Merrell Dow substantiality
A federal issue may also be substantial when the relevant federal law provides a private right of action or preempts state remedies. Grable, 545 U.S. at 316 (citing Merrell Dow, 478 U.S. at 812). Merrell Dow‘s analysis of § 1331 substantiality in the context of a state court tort suit is pertinent here.
In Merrell Dow, the plaintiffs sued a drug manufacturer in state court, alleging that use of Bendectin during pregnancy led to birth deformities. 478 U.S. at 805. Five of the six claims were common-law tort claims, and one claim alleged misbranding in violation of the Food, Drug, and Cosmetic Act (“FDCA”). Id. at 805–06. The complaint also alleged that the defendant‘s promotion of the relevant drug violated the FDCA, amounting to a rebuttable presumption of negligence, and that the defendant‘s FDCA violations directly and proximately caused the injuries. Id. at 806. The defendant removed the case based on this injection of federal law into the complaint, and the Sixth Circuit upheld jurisdiction.
The Supreme Court reversed. It reasoned the FDCA provided no federal private cause of action and the plaintiffs’ tort cause of action was “a subject traditionally relegated to state law.” Id. at 810–11. “Given the significance of the assumed congressional determination to preclude federal private remedies, the presence of the federal issue as an element of the state tort is not the kind of adjudication for which jurisdiction would serve congressional purposes and the federal system.” Id. at 814. The Court further explained that Congress‘s decision not to include a federal remedy for a violation of the FDCA “is tantamount to a congressional conclusion that the presence of a claimed violation of the statute as an element of a state cause of action is insufficiently ‘substantial’ to confer federal-question jurisdiction.” Id.
The Court rejected the defendant‘s argument “that there is a powerful federal interest in seeing that the federal statute is given uniform interpretations, and that federal review is the best way of insuring such uniformity.” Id. at 815. “To the extent that petitioner is arguing that state use and interpretation of the FDCA pose a threat to the order and stability of the FDCA regime,” the Court determined that a preemption defense, not an attempted removal under § 1331, was the defendant‘s proper recourse. Id. at 816. And it also rejected the argument that “whether a particular claim arises under federal law depends on the novelty of the federal issue.” Id. at 817. It determined that this would lead to inconsistencies across the federal courts. Id.
The Merrell Dow opinion also included an important footnote that attempted to reconcile the seemingly conflicting holdings on § 1331 substantial question removal in Smith, 255 U.S. 180, and Moore v. Chesapeake & Ohio Railway Co., 291 U.S. 205 (1934). Id. at 814 n.12. The Court saw the difference in results “as manifestations of the differences in the nature of the federal issues at stake.” Id. In Smith, where the Court found federal jurisdiction, “the issue was the constitutionality of an important federal statute.” Id. Conversely, in Moore, where the Court did not find federal jurisdiction, “the Court emphasized that the violation of the federal standard as an element of state tort recovery did not fundamentally change the state tort nature of the action.” Id.
The Grable Court clarified that Merrell Dow did not create a bright-line rule prohibiting substantial-question jurisdiction from being premised on a federal statute that contained no private right of action. 545 U.S. at 317–18. Grable explained the import of Merrell Dow‘s reasoning:
The absence of any federal cause of action affected Merrell Dow‘s result two ways. The Court saw the fact as worth some consideration in the assessment of substantiality. But its primary importance emerged when the Court treated the combination of no federal cause of action and no preemption of state remedies for misbranding as an important clue to Congress‘s conception of the scope of jurisdiction to be exercised under § 1331. The Court saw the missing cause of action not as a missing federal door key, always required, but as a missing welcome mat, required in the circumstances, when exercising federal jurisdiction over a state misbranding action would have attracted a horde of original filings and removal cases raising other state claims with embedded federal issues.
Here, none of the sources of federal law upon which the Energy Companies premise their attempted substantial-question removal contain a private cause of action, and none would be likely to preempt any of the Municipalities’ state-law claims.11 Absence of a congressionally crafted remedy, or of a single federal statute, regulation, or other law that speaks directly to the alleged important federal issues, reveals the absence of the “welcome mat” required for a federal court to confidently accept jurisdiction over these state-law tort claims. Id.
This case also falls within Merrell Dow‘s conception of a federal interest not critical enough to trigger substantial-question jurisdiction because, as in Moore, whatever federal issues exist “d[o] not fundamentally change the state tort nature of the action.” 478 U.S. at 814 n.12; see Moore, 291 U.S. at 216–17 (reasoning that the presence of a federal statute as an element of the state-law cause of action did not confer federal jurisdiction, because “the right of the plaintiff to recover was left to be determined by the law of the state” (quoting Minneapolis, St. Paul & Sault Ste. Marie R. Co. v. Popplar, 237 U.S. 369, 372 (1915))). Finally, Merrell Dow rejects the argument that uniformity of interpretation is a sufficient reason to demand a federal forum to protect the federal interest when a preemption
In summary, the standards set forth in Grable, Gunn, and Merrell Dow indicate that the Energy Companies’ asserted federal interests are not substantial enough to support federal jurisdiction. Because these federal interests are neither “necessarily raised” nor sufficiently “substantial,” we affirm the district court‘s rejection of this basis for removal.
e. Federal enclave jurisdiction
State-law “actions which arise from incidents occurring in federal enclaves may be removed to federal district court as a part of federal question jurisdiction.” Akin v. Ashland Chem. Co., 156 F.3d 1030, 1034 (10th Cir. 1998). The Energy Companies contend this doctrine allows for removal of the Municipalities’ claims because the Amended Complaint alleges injuries within federal enclaves. Specifically, they point to allegations of an insect infestation across Rocky Mountain National Park, an increased flood risk to San Miguel River in Uncompahgre National Forest, and “heat waves, wildfires, droughts, and floods” in both locations. Appellants Br. at 44 (quoting App. at 73, 80, 111, 116, 127). The district court held federal enclave jurisdiction does not support removal because although injury may have occurred to those federal enclaves, “[t]he actual injury for which [the Municipalities] seek compensation is injury to ‘their property’ and ‘their residents,’ occurring ‘within their respective jurisdictions’” and not within the federal enclaves. App. at 237 (quoting id. at 73, 75, 193). We agree.
As the Municipalities note, Uncompahgre National Forest is mentioned nowhere in the Amended Complaint. And San Miguel River is not a federal enclave. The river runs through southwest Colorado for approximately 81 miles. San Miguel River, AMERICAN RIVERS, https://www.americanrivers.org/river/san-miguel-river/ (last visited Jan. 1, 2022). The majority of that distance is outside Uncompahgre Forest‘s borders. The river crosses through the forest at only two brief junctures, each well under a mile. See San Miguel River, GOOGLE MAPS, http://www.google.com/maps/place/San+Miguel+River/ (last visited January 12, 2022). An increased flood risk to the San Miguel River thus cannot credibly be deemed an injury within a federal enclave.
It is true that the Amended Complaint references damage in Rocky Mountain National Park, but it does so only in passing, and not as the site of any injury that might trigger federal enclave jurisdiction. For example, the Amended Complaint alleges “more severe insect outbreaks” across Colorado resulting from climate change, as evidenced in part by a recent outbreak in Rocky Mountain National Park that “was the most severe ever seen” in the state. App. 116. As the district court reasoned, the insect outbreak in the national park is referenced only “to provide an example of the regional trends that have resulted from [the Energy Companies‘] climate alteration,” id. at 237, with the actual alleged injury being “the bark beetle epidemics seen across Colorado,” id. 116 (emphasis added).
The Energy Companies also argue the allegation that climate change will bring “heat waves, wildfires, droughts, and floods to the State” is an allegation of injury to Rocky Mountain and Uncompahgre because those enclaves exist within Colorado. Id. at 73. This theory sweeps far too broadly. The doctrine of federal enclave jurisdiction generally requires “that all pertinent events t[ake] place on a federal enclave.” Rosseter v. Indus. Light & Magic, No. C 08-04545 WHA, 2009 WL 210452, at *1 (N.D. Cal. Jan. 27, 2009)
“That the alleged climate alteration by [the Energy Companies] may have caused similar injuries to federal property does not speak to the nature of [the Municipalities‘] alleged injuries,” which are all “alleged to have arisen exclusively on non-federal land.” App. at 238. We agree with the district court that there is no viable claim of federal enclave jurisdiction and affirm its rejection of removal based on that doctrine.
f. Outer Continental Shelf Lands Act
The Energy Companies assert federal jurisdiction exists under the OCSLA due to Exxon‘s decades-long OCS fossil-fuel operations pursuant to federal leases. The district court denied this argument, holding that “[a] case cannot be removed under OCSLA based on speculative impacts; immediate and physical impact is needed.” App. at 248. Thus, the district court concluded, “[t]he fact that some of Exxon[]‘s oil was apparently sourced from the OCS does not create the required direct connection.” Id. at 246 (emphasis added). And it held the OCSLA was not grounds for federal jurisdiction. The OCSLA provides that federal courts “shall have jurisdiction of cases and controversies arising out of, or in connection with . . . any operation conducted on the [OCS] which involves exploration, development, or production of [OCS] minerals.”
The dispute here focuses on this second prong: whether the case arises out of or in connection with the OCS operation. Exxon argues this question should be answered in the affirmative because the Municipalities’ claims “arise in part from [Exxon]‘s operations on the [OCS].” Appellants Br. at 47. In response, the Municipalities argue OCSLA jurisdiction is founded on only “injuries arising directly out of physical activities on the OCS or disputes directly involving OCS activities.” Appellee Br. at 52. We agree with the Municipalities.
The § 1349(b) jurisdictional test is designed to cover a “‘wide range of activity occurring beyond the territorial waters of the states,’” Barker v. Hercules Offshore, Inc., 713 F.3d 208, 213 (5th Cir. 2013) (quoting Texaco Expl. & Prod., Inc. v. AmClyde Engineered Prods. Co., 448 F.3d 760, 768 (5th Cir. 2006), amended on reh‘g, 453 F.3d 652 (5th Cir. 2006)), and to encompass “the entire range of legal disputes that [Congress] knew would arise relating to resource development on the [OCS],” Laredo Offshore Constructors, Inc. v. Hunt Oil Co., 754 F.2d 1223, 1228 (5th Cir. 1985). But while “[u]se of the but-for test implies a broad jurisdictional grant
The district court similarly reasoned that a strict application of the but-for test would “dramatically expand the statute‘s scope,” creating removal jurisdiction regarding “[a]ny spillage of oil or gasoline involving some fraction of OCS-sourced-oil” or “any commercial claim over such a[n OCS-sourced] commodity.” App. at 247–48. The court concluded that § 1349 is not constructed so expansively in practice, and instead read OCSLA as requiring a case to “arise directly out of OCS operations.” Id. at 245. Again, we agree with the district court‘s thoughtful analysis.
Indeed, caselaw bears out this interpretation. The decisions finding jurisdiction under § 1349 all involve a significantly more direct connection between OCS operations and the relevant lawsuit than that which exists here.12 They each feature either claims with a direct physical connection to an OCS operation (collision, death, personal injury, loss of wildlife, toxic exposure) or a contract or property dispute directly related to an OCS operation. See, e.g., Barker, 713 F.3d at 213 (“By his own admission Barker‘s employment on the jack-up rig was directly related to the development of minerals or other natural resources on the OCS.”); Amoco Prod. Co. v. Sea Robin Pipeline Co., 844 F.2d 1202, 1210 (5th Cir. 1988) (stating that the contract rights at issue “necessarily and physically ha[d] an immediate bearing on the production of the particular [OCS oil] well,” thus bringing the dispute within the “arising out of, or in connection with” language (quoting
Here, there is not such a nexus between the dispute and Exxon‘s OCS operations.
The decision in Parish of Plaquemines v. Total Petrochemical & Refining USA, Inc., 64 F. Supp. 3d 872, 898 (E.D. La. 2014), supports this conclusion. While that case dealt with the first prong of the Fifth Circuit‘s § 1349(b) test, its analysis is nonetheless pertinent here. In Total Petrochemical, a Louisiana parish sued various oil companies for engaging in unpermitted local operations that damaged parish land and waterbodies. Id. at 877–78. In seeking removal under § 1349(b), the defendants argued that “some of the complained-of activity . . . pertains to pipelines that carry oil and gas from the OCS to the [Parish], and that some of the facilities at issue in the [Parish] service oil and gas development on the OCS and co-mingle production with offshore sources.” Id. at 894. The defendants claimed jurisdiction was proper “because [the] action ‘involve[d]’ operations on the OCS, and it therefore ar[o]se[] in connection with OCS operations.” Id. at 896. The court rejected this argument, holding that “the relationship between the injuries in this case and the activities that cause[d] them and any operations on the OCS [was] simply too remote and attenuated.” Id. at 898. Just as “the ‘mere connection’ between the claims asserted and an OCS operation [was] ‘too remote’ to establish federal jurisdiction” in Total Petrochemical, id., it is likewise too remote to establish federal jurisdiction here.
Even under the technical reading of the Fifth Circuit‘s jurisdictional test advocated by Exxon, there is no indication that Exxon‘s OCS operations were a pure “but-for” cause of the Municipalities’ claims. None of the Energy Companies offer any basis to conclude that absent the OCS activities the injuries complained of would not have occurred. Accordingly, the OCS activities are not the “but-for” cause of the Municipalities’ injuries.
As the Baltimore I court reasoned, “[the d]efendants were not sued merely for producing fossil fuel products, let alone for merely producing them on the OCS.” 388 F. Supp. 3d at 566. “Rather, the City‘s claims are based on a broad array of conduct, including [the] defendants’ failure to warn consumers and the public of the known dangers associated with fossil fuel
Finally, the Energy Companies argue that the statutory purpose of OCSLA‘s jurisdictional grant would be frustrated if this suit is not heard in federal court because an award of the billions of dollars in damages sought by the Municipalities “would substantially discourage production on the [OCS] and would jeopardize the future viability of the federal [OCS] leasing program.” Appellants Br. at 47–48. But it is difficult to see how such a prospective theory of negative economic incentives—flowing from a lawsuit that does not directly attack OCS exploration, resource development, or leases—is anything other than contingent and speculative. And, as the district court noted, “[a] case cannot be removed under OCSLA based on speculative impacts; immediate and physical impact is needed.” App. at 248; cf. Texas v. United States, 523 U.S. 296, 300 (1998) (“A claim is not ripe for adjudication if it rests upon ‘contingent future events that may not occur as anticipated, or indeed may not occur at all.’” (quoting Thomas v. Union Carbide Agricultural Prods. Co., 473 U.S. 568, 580–81 (1985))).
The defendants in Total Petrochemical made a similar policy argument, contending that the imposition of state court liability based on injuries to the land and waterbodies of a Louisiana parish would “have a significant adverse impact on oil and gas production on the OCS because the OCS and onshore oil and gas systems do not operate independently but rather extensively overlap and share infrastructure.” 64 F. Supp. 3d at 894. The district court found that the state court lawsuit could negatively impact the defendants’ OCS operations but held that such impact was too speculative to support jurisdiction. Id. at 897–98. The same logic applies here. The chain of contingencies that connects the initiation of this case in state court to an eventual “impair[ment of] the total recovery of the federally[] owned materials from the” OCS is too uncertain, speculative, and hypothetical to serve as a jurisdictional hook. Amoco Prod., 844 F.2d at 1210. Thus, we affirm the district court‘s rejection of OCSLA‘s jurisdictional provision as a basis for federal subject-matter jurisdiction over the Municipalities’ claims.
III. CONCLUSION
For the reasons explained, we hold that none of the six grounds the Energy Companies assert for removal on appeal are sufficient to establish federal jurisdiction over the Municipalities’ state-law claims. We therefore AFFIRM the district court‘s order remanding the action to the state court.
60