State v. Federal Jurisdiction: The Federal Officer Removal Statute in the Case of Oil Companies

Chevron USA, Inc. v. Placquemines Parish, Louisiana was decided on the 17th of April, 2026. The case concerned oil companies, federal court jurisdiction, and its relation to federal contracts.

A list of parishes in Louisiana — the equivalent of counties in the state — launched state court lawsuits against oil and gas companies, including Chevron USA, Shell Oil Company, and others, in 2013. Plaquemines and other parishes on the Louisiana coast argued that these oil companies were acting in violation of Louisiana’s State and Local Coastal Resources Management Act of 1978 (SLCRMA), which requires drilling activities to meet certain environmental standards, including an environmental permitting system. The SLCRMA included a grandfather clause, which was the basis of this case: petroleum operations that took place in the state before the law’s enactment had to have been “lawfully commenced” to not run afoul of the statute. The parishes argued that these oil companies engaged in drilling without getting the proper permits, and that their drilling in the World War II-era to help the American war effort was not “lawfully commenced” under the law’s grandfather clause. The parishes sought to use the Federal Officer Removal Statute– allowing the case to move to federal court– due to the World War II federal contracts that allowed the companies to drill petroleum to assist with the war effort. The District Court for the Eastern District of Louisiana and the Fifth Circuit Court of Appeals both remanded the case to state court, asserting a lack of jurisdiction. The case was then taken up by the U.S. Supreme Court on appeal by Chevron.

The Court ruled 8-0 that the case could be moved from state to federal court, as the contracts that the oil companies had with the federal government dating back to the Second World War meant that there was jurisdiction in this case to warrant federal court arbitration. Justice Samuel Alito recused himself from the decision in this case due to stock holdings in one of the companies related to the case.

Justice Thomas wrote the majority opinion, in which he argued that Congress has allotted to federal courts “jurisdiction over some suits against federal officers or those acting under them.” The discussion in this case is whether Chevron and the other oil companies were acting under federal officers, which, in this context, the majority held that they do. The majority listed certain criteria for the federal officer removal statute, being that the removing defendant has to be:

1) The United States, a federal officer or agency, or acting under a federal officer
2) Suits must relate to actions “under color of such office.”
3) The defendant must have a colorable federal defense

As the first and third prongs were met, the Court turned to the second prong, arguing that the actions of Chevron and others to drill and extract petroleum for the war effort, and their provision of aviation gasoline for planes that were critical to the war, were entirely in collaboration with the federal government. The Petroleum Administration for War, established by President Franklin Roosevelt, explicitly sought to oversee the oil industry and ensuring the supply of aviation gas. The connection between the federal government and Chevron and other oil companies was an indication of such companies acting under the color of being under a federal agency, meriting the suit having standing in federal court.

Justice Jackson wrote an opinion concurring only in the judgment in which she disagreed with the requirement of the majority for only an “indirect relationship” between federal duties and what the lawsuit is seeking to address. Jackson believes a stricter analysis is necessary, that there must be a “causal nexus between the targeted conduct and the federal duties,” which Chevron inevitably does meet because of the connection between the conduct of drilling and exploring for petroleum in Louisiana and the federal government’s war effort.

This case outlines the delicate balance between state and federal jurisdiction, and how federal contracts can warrant a case having federal jurisdiction, even if the contract was from the past century. Although the merits of the suit were not decided by the Supreme Court, its ability to be decided in federal court, where they could potentially obtain a more favorable verdict and less liability, rather than state court, emphasizes the importance of jurisdiction and how it can be used to a company’s benefit.