Rhode Island v. Shell Oil Products Co.

On July 7, 2022, the First Circuit Court of Appeals denied fossil fuel companies’ petition for rehearing and rehearing en banc of the First Circuit’s affirmance of the district court’s remand of Rhode Island’s climate case to state court.

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Fossil fuel companies filed a petition for rehearing and rehearing en banc of the First Circuit’s affirmance of the district court’s remand of Rhode Island’s climate case to state court. The companies first argued that the First Circuit was at odds with “a mostly unbroken string of cases” applying federal law to interstate air pollution disputes. The companies also argued that the First Circuit panel had confused the effect of the Clean Air Act’s displacement of federal common law of interstate pollution. The defendants contended that the displacement was of any remedy under federal common law, not displacement of the “exclusively federal source of law.” They further argued that the First Circuit’s consideration of this issue was at odds with First Circuit precedent, other circuits’ decisions, the position of the United States, and Supreme Court decisions.

The First Circuit Court of Appeals affirmed a district court order remanding Rhode Island’s climate change case against energy companies to state court. The First Circuit noted that this was its “second pass at a climate-change case that requires us to explore the mind-numbing complexities of federal removal jurisdiction.” In 2021, the Supreme Court vacated and remanded the First Circuit’s 2020 affirmance of the remand order after determining in the <a href="https://climatecasechart.com/case/mayor-city-council-of-baltimore-v-bp-plc/">Baltimore</a> case that federal appellate courts have jurisdiction to consider appeals on all grounds for removal when the federal-officer removal statute is one basis for removal. In reviewing the other grounds for removal in Rhode Island’s case, the First Circuit “lean[ed] hard on our sibling circuits’ analyses in comparable climate-change cases,” and agreed with the other courts’ conclusions that there was no federal jurisdiction over Rhode Island’s claims, which the court characterized as seeking to hold the companies liable for climate change-related harms allegedly caused by the companies “deliberately misrepresenting the dangers they knew would arise from their deceptive hyping of fossil fuels.” First, the First Circuit found that even if the well-pleaded complaint rule did not prevent the court from finding that Rhode Island’s state-law claims were necessarily federal common law claims, the companies “cannot premise removal on a federal common law that no longer exists.” The First Circuit said that even if control of interstate pollution, promotion of energy independence, and negotiation of treaties addressing climate change were “uniquely federal interests,” the companies did not satisfy the second requirement for creating federal common law—that there be a “significant conflict … between some federal policy or interest and the use of state law.” The First Circuit also said that even if the companies had not failed to make a showing of a significant conflict, statutes—the Clean Air Act and the Clean Water Act—had displaced any federal common law that previously existed. Second, the First Circuit found that there was no Grable jurisdiction because the companies did not establish that a federal issue was a necessary element of any of Rhode Island’s state-law claims. Third, the First Circuit rejected the argument that the Clean Air Act completely preempted Rhode Island’s claims. Fourth, the court found that federal enclave jurisdiction did not apply since Rhode Island specifically avoided seeking relief for alleged damages to federal lands and because “some of the pertinent events … occurred outside federal enclaves.” Fifth, the First Circuit found that the companies failed to establish that Rhode Island’s claims satisfied the Outer Continental Shelf Lands Act’s jurisdiction requirement that cases arise “in connection with” an operation conducted on the Outer Continental Shelf. Sixth, the First Circuit found that admiralty jurisdiction did not exist because Rhode Island did not allege that a vessel caused its land-based injuries. Lastly, the First Circuit rejected the companies’ invocation of bankruptcy jurisdiction based on Rhode Island’s claims’ relationship to the bankruptcy case of Texaco Inc. or other bankruptcy matters of predecessors, subsidiaries, and affiliates.

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Rhode Island argued that its claims did not arise under federal common law and were not subject to removal under the Outer Continental Shelf Lands Act.

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The Chamber of Commerce of the United States of America filed an amicus brief in support of the defendants, arguing that federal courts had original jurisdiction over cases with claims that have an “inherently federal basis” and that the artful pleading doctrine applied to Rhode Island’s state law claims “about the inherently global problem of climate change.”

In Rhode Island’s case, the defendants submitted their principal supplemental brief on July 28, 2021 arguing that removal of the case was proper because Rhode Island’s claims necessarily arose under federal law and also because the case had a connection with the defendants’ activities on the outer continental shelf.

The First Circuit ordered the parties to file additional briefs addressing the impact of the Supreme Court’s decision in the Baltimore case. The fossil fuel company defendants-appellants’ supplemental brief is due July 28, 2021.

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The First Circuit Court of Appeals affirmed a district court order remanding to state court the State of Rhode Island’s lawsuit that seeks relief from oil and gas companies for climate change injuries allegedly caused by the companies’ actions. The First Circuit—like the Fourth, Ninth, and Tenth Circuits in other climate change cases—concluded that the scope of its appellate review was limited to whether the defendants properly removed the case under the federal-officer removal statute. The First Circuit stated that it was “persuaded that to allow review of every alleged ground for removal rejected in the district court’s order would be to allow [the statutory exception allowing review of federal-officer removal] to swallow the general rule prohibiting review” of remand orders. The First Circuit further concluded that federal-officer removal did not apply in this case, finding that the companies’ actions in connection with three contracts with the federal government concerning oil and gas production did not have a nexus with Rhode Island’s allegations that the companies engaged in misleading marketing about the impacts of products they sold in the state. The First Circuit issued its decision several weeks after the Supreme Court agreed to review the issue of the scope of appellate review of remand orders in Baltimore’s case against energy companies. State court proceedings in Rhode Island’s case were put on hold in August pending the U.S. Supreme Court’s and Rhode Island Supreme Court’s consideration of personal jurisdiction issues in unrelated cases.

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Defendant Chevron notified the First Circuit of the Supreme Court’s granting of review in BP p.l.c. v. Mayor & City Council of Baltimore. The letter indicated that the same issue the Supreme Court agreed to review was pending before the First Circuit in the Rhode Island case and that the Supreme Court was likely to decide the Baltimore case in this term.

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The First Circuit Court of Appeals heard oral arguments in fossil fuel companies’ appeal of a federal district court’s remand of Rhode Island’s climate change case to state court.

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In Rhode Island’s case against fossil fuel companies, which was currently proceeding in state court, the First Circuit scheduled oral argument for September 11, 2020 in the defendants’ appeal of the remand order.

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Rhode Island urged the court to disregard the amicus brief filed by Energy Policy Advocates, arguing that it was “filled with inflammatory, baseless speculation” that was not relevant to the substance of the appeal.

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In response to Rhode Island's letter concerning the Fourth Circuit's decision in Baltimore's case, defendant Chevron Corporation distinguished the Fourth Circuit’s opinion, arguing that the Fourth Circuit viewed itself as bound by precedent regarding the scope of its appellate jurisdiction, which Chevron contended was not the situation in the First Circuit. Chevron also asserted that the Fourth Circuit based its determination that federal-officer removal was inapplicable on an incorrect conclusion regarding the focus of Baltimore’s claims.

The organization Energy Policy Advocates filed a motion for leave to file an untimely amicus brief, saying it had obtained information through public records requests regarding state court bias and Rhode Island’s political and financial motivations for filing the lawsuit.

Rhode Island contended in a letter to the First Circuit that the Fourth Circuit decision affirming the remand order in Baltimore's case “rejects the exact arguments raised … as to the proper scope of … appeal” of the remand order in its case as well as the defendants’ “tenuous justification for federal officer removal.”

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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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Amicus briefs were filed in the First Circuit in support of affirmance of the remand orders. The amicus parties included “three of the nation’s leading local government associations,” which said state law tort claims “provide an important means for cities and local governments to seek abatement of and damages for localized harms arising from activities that cross jurisdictional boundaries.” The organizations argued that the district court’s decision remanding the case “stands in line with a consistent body of jurisprudence that has sustained the availability of state claims for complex cases.” Other amici in the First Circuit included 13 states that asserted “a unique interest in maintaining their state courts’ authority to develop and enforce requirements of state statutory and common law—including monetary remedies—in cases brought against commercial entities causing harm to and within their jurisdictions”; three senators, including both senators from Rhode Island, whose brief contended that courts as well as other branches of government needed to address climate change and urged scrutiny of arguments advanced by amicus party U.S. Chamber of Commerce regarding the merits and justiciability of the case due to the Chamber’s alleged efforts to “stifle” congressional and executive action on climate change; former U.S. diplomats and government officials who contended that corporate liability would not disrupt the U.S.’s international climate negotiations; the Center for Climate Integrity, the Union of Concerned Scientists, and “scholars and scientists with strong interests, education, and experience in the environment and the science of climate change,” who argued that the defendants had engaged in a “coordinated, multi-front effort” to discredit climate science that justified the local government claims; climate scientists whose brief was intended to provide the court with “an understanding of the relevant science and the unavoidable adaptation expenses” communities face; Natural Resources Defense Council, Inc., which argued that neither federal common law nor the Clean Air Act completely preempted Rhode Island’s claims; and Public Citizen, Inc., which cited its concern about removal jurisdiction due to its implications for state court authority “to provide remedies under state law for actions that threaten public health and safety.”

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On December 26, 2019, the State of Rhode Island filed its brief in support of the affirmance of the federal district court order remanding to state court its action seeking relief from fossil fuel companies for climate change-related injuries. Rhode Island argued that it had the right to pursue its causes of action for public nuisance, strict liability and negligent failure to warn, strict liability and negligent design defect, trespass, impairment of public trust resources, and violations of Rhode Island’s Environmental Rights Act in state court. The State contended that the First Circuit only had jurisdiction to review whether federal-officer removal jurisdiction existed and further argued that, in any event, other grounds for removal had no merit.

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The U.S. Chamber of Commerce filed an amicus brief in the First Circuit amplifying the fossil fuel companies’ arguments that federal common law provided a basis for federal jurisdiction and that the appellate court could review the entire remand order.

Fossil fuel companies argued in a brief to the First Circuit Court of Appeal that they had properly removed a case brought by the State of Rhode Island in which the State seeks to hold the companies liable for the impacts of climate change. The companies’ opening brief contended that the appellate court had jurisdiction to review the entirety of the remand order, not just the district court's conclusion that the federal officer removal statute did not provide a basis for removal. The companies further argued that there were multiple grounds for removal, including that the State's claims asserted injuries were caused by nationwide (and worldwide) greenhouse gas emissions and therefore necessarily arose under federal, not state, common law. In addition, the companies argued that the presence of substantial, disputed federal questions invoked federal jurisdiction and that the case was also subject to federal jurisdiction under the federal officer removal statute, the federal bankruptcy statute, the Outer Continental Shelf Lands Act, federal enclave doctrine, and admiralty jurisdiction, and due to complete preemption by the Clean Air Act.

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