Which Ground for Federal Jurisdiction is the Safest in Dredging Cases?: Board of Commissioners of the Southeast Louisiana Flood Protection Authority - East v. Tennessee Gas Pipeline Co., LLC et al.

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The Eastern District of Louisiana recently denied the Board of Commissioners of the Southeast Louisiana Flood Protection Authority-East’s (Plaintiff) Motion to Remand its suit against 92 oil and gas companies back to state court. Board of Com’rs of the Southeast Louisiana Flood Protection Authority-East v. Tennessee Gas Pipeline Co., LLC et al. (E.D. La. 06/27/14) 2014 WL 2943602 at 2. On August 13, 2013, Defendant Chevron U.S.A. Inc. removed the case to federal court. Id. In its Notice of Removal, Chevron asserted that five grounds for federal jurisdiction existed because: 1) the Plaintiff’s right to relief depends upon the resolution of a substantial question of federal law; 2) the Plaintiff asserted a general maritime claim in its petition; 3) the lawsuit is subject to the Class Action Fairness Act; 4) the Outer Continental Shelf Act applies; and 5) federal enclave jurisdiction applies. Id., at 3.

Thereafter, the Plaintiff filed its Motion to Remand. After hearing arguments from both sides, the court held that federal jurisdiction did exist because the case necessarily raised a substantial federal issue. However, the court rejected the defendants other for grounds for removal by finding that: 1) the incident did not establish admiralty jurisdiction; 2) federal enclave jurisdiction was not implicated; 3) activities that allegedly caused injury at issue did not establish jurisdiction under the Outer Continental Shelf Lands Act; and 4) the case did not constitute a removable “mass action" under the Class Action Fairness Act. The court’s opinion in this case could be used as a guide for deciding which ground for removal is the safest when filing Notices of Removal in dredging cases.

Admiralty Jurisdiction 

  1. Location Test

When applying the location test to evaluate whether the tort occurred on navigable water or whether the injury suffered on land was caused by a vessel on navigable water, the court explained that it needed to categorize the Plaintiff’s alleged injury. Id., at 7. The court explained that the Plaintiff’s alleged injury is “ecological degradation and extensive land loss” within the Buffer Zone. The court noted that land degradation and land loss by their very nature occur on land. Therefore the question became, whether the  injury was caused by a vessel on navigable water. Id. According to the allegations in the Petition, the Plaintiff's injury was caused by various activities of the defendants, including dredging. Id. The parties did not dispute that dredges were vessels. Furthermore, the court recognized that courts have consistently “group[ed] dredges alongside more traditional seafaring vessels under the maritime statutes.” Id. Furthermore, neither parties disputed the finding that the coastal waterways that were dredged are navigable waters. Accordingly, the court found that the location test was met.

  1. Connection Test

Turning to the connection test, the court explained that to determine whether the incident has a potentially disruptive impact on maritime commerce, it must first describe the incident at an intermediate level of possible generality. Id., at 8. The court found that at an intermediate level of generality, the incident presented was properly described as coastal erosion caused by dredging in navigable waters. After characterizing the incident, the court then evaluated whether “coastal erosion caused by dredging in navigable waters” has a potentially disruptive impact on maritime commerce.

The court explained that coastal erosion, by itself, does not interfere with maritime commerce or commercial shipping because: 1) it does not impede vessel traffic; 2) threaten the physical integrity of vessels; or 3) result in injury to any person on a vessel. The court noted that “although coastal erosion has allegedly led to increased flood vulnerability, which in turn will allegedly require more spending on flood protection assets, this result is not disruptive to maritime commerce.” Id. The court was cognizant that “a hurricane and the accompanying flooding could certainly impact the Port of New Orleans and commercial shipping in the region.” Id. However, it stated that it could not “rely on such an attenuated series of events to find that the dredging at issue here disrupts maritime commerce.” Id. Accordingly, the court found that coastal erosion caused by dredges in navigable waters does not have a potentially disruptive effect on maritime commerce and will not create admiralty jurisdiction.

Federal Enclave Jurisdiction

The defendants initially maintained that federal enclave jurisdiction existed in this case because “there are at least two federal enclaves within the area of alleged wetland loss—(1) Breton Island and Chandeleur Island in the Breton National Wildlife Refuge (‘Breton NWR’) and (2) the Delta National Wildlife Refuge (‘Delta NWR’).” Id., at 12. Aside from the Breton National Wildlife Refuge and the Delta National Wildlife Refuge, the court said the defendants did not point to any other possible federal enclaves within the Buffer Zone, the area identified in the Petition as experiencing coastal erosion. Id. Furthermore, the court noted that the defendants did not direct the court to any possible federal enclaves where they conducted the dredging or other activities that allegedly caused the coastal erosion. Id. The court explained that “unless [the] defendants' conduct took place on a federal enclave or the damage complained of—coastal erosion—occurred on a federal enclave, the court cannot say that the controversy arises from an enclave.” Id. Because the parties agreed that Breton National Wildlife Refuge and the Delta National Wildlife Refuge are outside the Buffer Zone, and the defendant’s failure to identify any other possible federal enclaves in the area where defendants' conduct took place or in the area experiencing erosion, the court found that it was unnecessary to apply the three-part test for whether a federal enclave truly exists.

Outer Continental Shelf Lands Act Jurisdiction

The defendants argued that the case at hand came within the OCSLA’s broad agent of jurisdiction, because the Plaintiff’s claims presented a direct threat to the efficient exploitation of minerals in the outer continental shelf. Id., at 13. The defendants further asserted that the dredged canals at issue were also used to transport hydrocarbon from the outer continental shelf to onshore terminals and other locations since the late 1940s. Id., at 13. The court applied the 5th Circuit's two-prong test for determining whether federal jurisdiction exists under OCSLA. The first prong presents a distinct inquiry- whether “the activities that caused the injury constituted an “operation conducted on the Outer Continental Shelf that involved the exploration and production of minerals.”  The court explained that all of the activities allegedly causing the Plaintiff’s injuries occurred on Louisiana’s coastal lands or within the Louisiana’s territorial waters.

The second prong requires the court to ask whether “the case arises out of, or in connection with the operation on the OCS.” Id., at 17. In addressing prong two, the court examined whether the injury would have occurred but-for the operations on the OCS. In this case, the court did find that some of the dredging and pipelines at issue facilitated oil and gas production on the OCS. However, the Plaintiff’s petition identified hundreds of wells on Louisiana's coastal lands and within Louisiana's coastal waters operated and/or drilled by the defendants. Id., at 17. Accordingly, the court found that the Plaintiff's injury would have occurred regardless of operations on the OCS. Therefore, the second prong of the analysis, the but-for-test, was not satisfied. Id.

Substantial Federal Issues
Based on the court’s opinion in this case, the safest ground for federal jurisdiction was the defendants assertion that the Plaintiff’s right to relief depends upon the resolution of a substantial question of federal law. The court conducted an analysis to determine if the following issues that were presented in the case were substantial: 1) whether the defendants’ conduct was an unauthorized alteration or injury to the levee systems under the Rivers and Harbors Act; 2) whether the Clean Water Act required the defendants to restore allegedly abandoned dredged canals; 3) what steps the Coastal Zone Management Act required defendants to take to minimize environmental effects; 4) whether the Plaintiff is a third-party beneficiary of dredging permits issued by the federal government; and 5) whether the defendants violated those terms of those federal permits. Id., at 34.

The court recognized the importance of the federal questions at stake in the case. The court further noted that the disputed issues implicated coastal land management, national energy policy, and national economic policy; all being vital federal interest. The court further explained that although the matter before it was a single case, it affects an entire industry, because the Plaintiff’s claims amount to a collateral attack on an entire regulatory scheme. Id., at 35. Additionally, the court explained that whether state and local entities are properly considered third-party beneficiaries of federal dredging permits is “a nearly pure issue of law … that could be settle once and for all.” Id. The court opined that the “Plaintiff’s claims were premised on the notion that regulatory framework provides inadequate protection for the residents of southeastern Louisiana, and through this litigation, Plaintiff seeks to have the entire oil and gas industry compensate residents for the shortfall.” Id. The court found that it had federal question jurisdiction under 28 U.S.C. § 1331, because the Plaintiff’s state law claims necessarily raised a federal issue, actually disputed and substantial. Id., at 36. Accordingly, the Plaintiff’s Motion to Remand was denied.

Topics:  CAFA, Class Action, Energy, Federal Jurisdiction, Oil & Gas, Pipelines

Published In: Civil Procedure Updates, Energy & Utilities Updates, Environmental Updates, Maritime Updates, Personal Injury Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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