Mayor & City Council of Baltimore v. BP p.l.c.

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On May 17, 2022, the Fourth Circuit Court of Appeals denied energy companies’ petition for rehearing en banc of the court’s affirmance of a district court’s order remanding Baltimore’s climate change case against the companies to state court. The companies had argued that the panel’s decision “squarely conflicts” with the Second Circuit’s decision dismissing New York City’s case against energy companies and that the panel’s application of the well-pleaded complaint rule was at odds with Fourth Circuit precedent.

For a second time, the Fourth Circuit Court of Appeals ruled that the City of Baltimore’s lawsuit seeking to hold oil and gas companies liable for climate change harms should proceed in state court. In its first decision in 2020, the Fourth Circuit concluded that it could only address whether the case had been properly removed under the federal-officer removal statute and found that the case had not been properly removed. The Supreme Court vacated that decision in 2021, holding that federal appellate courts could consider all grounds for removal when federal-officer removal is one of the asserted grounds for removal. In this second decision, the Fourth Circuit again rejected federal-officer removal as a basis for subject matter jurisdiction based on its earlier analysis and also rejected the seven other grounds for removal asserted by the oil and gas companies. First, the Fourth Circuit rejected the contention that Baltimore’s claims were necessarily governed by federal common law, finding that the well-pleaded complaint rule would bar removal because Baltimore’s complaint did not expressly invoke federal common law and also that it was not appropriate to create federal common law for the issues raised by the complaint. The court found that even if control of interstate pollution, energy independence, and multilateral treaties qualified as “uniquely federal interests” that could justify creation of federal common law, the companies failed to establish a significant conflict between state-law claims and the federal interests. In addition, the Fourth Circuit concluded that removal based on federal common law would not be proper where any previously existing federal common law had been displaced by the Clean Air Act and Clean Water Act. Second, the Fourth Circuit found that the companies failed to establish Grable jurisdiction because Baltimore’s complaint did not “necessarily raise” any of the federal issues identified by the companies, including balancing of the costs and benefits of fossil fuel extraction or federal duties to disclose. The court also found that the companies “wrongly” relied on the foreign-affairs doctrine in the Grable context as a basis for federal jurisdiction. Third, the Fourth Circuit held that the Clean Air Act did not completely preempt Baltimore’s state-law claims. Fourth, the court rejected the companies’ argument that their operations within federal enclaves conferred federal jurisdiction. The court noted that all of Baltimore’s alleged harms were pleaded “within the confines and boundaries of Baltimore City” and specifically to non-federal lands. Fifth, the Fourth Circuit found no jurisdiction under the Outer Continental Shelf Lands Act, holding that the companies did not demonstrate the required but-for connection between Baltimore’s claims and the companies’ exploration and production of fossil fuels on the Outer Continental Shelf. Sixth, the Fourth Circuit concluded that the bankruptcy removal statute did not provide grounds for removal. The court found both that the defendants failed to show that Baltimore’s lawsuit had a “close nexus” or was “related” to any bankruptcy involving predecessors, subsidiaries, or affiliates of the defendants and also that an exception to bankruptcy removal was applicable because Baltimore was a governmental unit exercising its police power. Seventh, the Fourth Circuit rejected admiralty jurisdiction as a basis for removal, finding that the defendants did not show how their floating rigs and platforms qualified as “vessels” for the “location test” of admiralty jurisdiction.

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The Fourth Circuit Court of Appeals scheduled oral argument for January 25, 2022 in fossil fuel companies’ appeal of the remand order in Baltimore’s climate change case. The Fourth Circuit will consider the companies’ arguments that Baltimore’s claims arise under federal law and that there is federal jurisdiction because the claims arise out of the defendants’ operations on the Outer Continental Shelf.

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The fossil companies argued that Baltimore’s claims arise under federal law and also that the action was removable pursuant to the Outer Continental Shelf Lands Act because it has a connection with the companies’ activities on the outer continental shelf.

In their supplemental brief to the Fourth Circuit, the fossil fuel companies’ supplemental opening brief was scheduled to be due August 6, 2021, with the supplemental response brief due September 7, and any supplemental reply brief due September 28.

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On March 6, 2020, the Fourth Circuit Court of Appeals declined to reverse a remand order that returned the City of Baltimore’s climate change case against fossil fuel companies to state court. The district court had rejected all eight of the defendants’ grounds for removal, but the Fourth Circuit held that its appellate jurisdiction was limited to the issue of whether the defendants properly removed the case under the federal officer removal statute. The Fourth Circuit cited decades-old Fourth Circuit precedent limiting the scope of review of remand orders to grounds specifically exempted from the statutory bar on appellate review, including federal-officer removal. The court rejected the defendants’ argument that a Supreme Court decision on the scope of interlocutory review had abrogated this precedent. The Fourth Circuit also concluded that the Removal Clarification Act of 2011 did not authorize “plenary review” of remand orders. Regarding the application of federal-officer removal in this case, the Fourth Circuit found that none of the three contractual relationships on which the defendants based removal were sufficient to justify such removal, either because the relationships failed to satisfy the requirement that the defendants were “acting under” a federal officer or because the contractual relationships were “insufficiently related” to Baltimore’s claims. The first contractual relationship consisted of fuel supply agreements between one defendant and the Navy Exchange Service Command; the court said these agreements contained provisions “typical of any commercial agreement” and did not satisfy the “acting under” requirement. The second contractual relationship was oil and gas leases administered under the Outer Continental Shelf Lands Act; the court found that these agreements did not satisfy the “acting under” requirement and, moreover, that the defendants “did not plausibly assert that the charged conduct was carried out ‘for or relating to’ the alleged official authority, given the ‘wide array of conduct’ for which they were sued,” including alleged “concealment and misrepresentation of the products’ known dangers—and simultaneous promotion of their unrestrained use.” The third contractual relationship was a 1944 agreement between one defendant’s predecessor and the Navy for joint operation of a strategic petroleum reserve; the Fourth Circuit concluded this agreement did not satisfy the “acting under” requirement and that its relationship to Baltimore’s claims was too attenuated.

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Chevron Corporation submitted a letter asserting that the Ninth Circuit’s decision in Juliana v. United States supported the companies’ argument that the climate change claims asserted by local and state governments against the companies “have their source in federal law and therefore belong in federal court.”

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The plaintiffs responded that the court should disregard the defendants’ submission because it was an inappropriate attempt to supplement the evidentiary record and have the court make new factual findings. The plaintiffs further argued that the supplemental materials did not support federal-officer removal jurisdiction.

After the argument, the defendants submitted a letter and other documents in response to a question from the court regarding whether the federal government had exercised its right to extract petroleum form the Elk Hills Reserve. The defendants said that a 1976 law gave the Secretary of the Navy authority to sell or otherwise dispose of the U.S. share of the petroleum produced from such reserves and that the government had final authority over all production, which was carried out by defendant Chevron Corporation’s predecessor Standard Oil. The defendants also submitted a General Accounting Office report that indicated that Chevron and the government shared production, revenues, and expenses in proportion to their ownership shares.

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On October 1, 2019, the Fourth Circuit Court of Appeals denied fossil fuel companies’ motion for a stay pending their appeal of the district court order remanding Baltimore’s climate change lawsuit against the companies to state court.

On September 30, 2019, the Fourth Circuit tentatively calendared oral argument on the companies’ appeal for the December 10–12 argument session.

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Seven amicus briefs were filed in support of Baltimore. Amicus parties included (1) three organizations representing the interests of local governments; (2) a group of scholars and scientists “with strong interests, education, and experience in the environment and the science of climate change, with particular interest in public information and communication about climate change and how the public and public leaders learn about and understand climate change,” along with organizations that advocate for climate change policies; (3) Natural Resources Defense Council; (4) a group of climate scientists and scholars that submitted a brief to assist the court with its “understanding of the relevant science and the unavoidable adaptation expenses … communities are facing”; (5) nine states; (6) Senators Sheldon Whitehouse and Edward Markey; and (7) Public Citizen, which expressed concern about improper invocation of removal jurisdiction.

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On August 27, 2019, the Mayor and City Council of Baltimore (Baltimore) filed a brief arguing that the Fourth Circuit should reject oil and gas companies’ appeal of a district court’s order remanding Baltimore’s climate change lawsuit to state court. Baltimore argued that the appellate court only had jurisdiction to consider the companies’ argument that the federal-officer removal statute provided jurisdiction; Baltimore further argued that the district court correctly rejected this basis for removal. In addition, Baltimore contended that the district court properly rejected the companies’ other asserted grounds for removal.

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