Fourth Circuit Holds That Climate Change Lawsuit Belongs in State Court

With oil and gas companies increasingly the target of "climate change” lawsuits, federal courts have and are continuing to be asked to decide where these suits should be heard. The Fourth Circuit is the first circuit court to address the issue in a recent opinion holding that a climate change lawsuit belongs in Maryland state court, not federal court. Other courts have allowed similar cases to proceed in federal court and dismissed on the merits.

In Mayor and City Council of Baltimore v. BP P.L.C., et al., the city of Baltimore sued oil and gas companies in state court, accusing them of knowingly contributing to climate change-related harms. Two companies removed the case to federal court, after which Baltimore moved to remand the case back to state court. The district court granted Baltimore's motion for remand, rejecting each of the eight removal theories offered by the companies. On appeal, the Fourth Circuit affirmed the remand order. 

Addressing first the scope of appellate review, the Fourth Circuit held that it lacked jurisdiction to review seven of the eight removal theories offered by the companies. Appellate courts are generally barred by 28 U.S.C. § 1447(d) from reviewing district courts' remand orders. Nonetheless, the companies argued that, because one of the eight grounds they offered for removal—federal officer removal—was excepted under § 1447(d), the court had jurisdiction to review the entire remand order. The Fourth Circuit rejected this argument and dismissed the appeal insofar as it challenged the district court's decision on the seven removal grounds not exempted from the § 1447(d) bar. In doing so, the Fourth Circuit created a circuit split with the Seventh Circuit, which holds that appellate courts may consider the entire remand order on review. The Fifth and Sixth Circuits also have conflicting authority within their respective circuits on this issue. 

The court then considered the only ground for removal it viewed as reviewable under § 1447(d): federal officer removal. Although this theory typically provides for removal of suits against federal officers, it has been extended to private defendants who can show: (i) that they acted under a federal officer; (ii) that they have a colorable federal defense; and (iii) that the charged conduct was related to the asserted official authority. 

The companies based their claim for federal officer removal on three contractual relationships with the federal government: (i) fuel supply agreements between a defendant and the U.S. Navy; (ii) oil and gas leases administered by the Secretary of the Interior; and (iii) a 1944 agreement between a defendant's predecessor and the U.S. Navy for the joint operation of a strategic petroleum reserve. Based on the unique facts of this case, the Fourth Circuit held that none of these relationships was sufficient to qualify for federal officer removal, either because they were not truly "acting-under” a federal officer, or because they were "insufficiently related” to the acts alleged in Baltimore's complaint.

While the Fourth Circuit is the first circuit court to address the issue, federal district courts are divided. For example, the Northern District of California recently denied a plaintiffs' motion for remand in a similar case because the case raised national and international issues governed by federal common law. However, another judge in the Northern District of California granted motions for remand in several other climate-related actions because the Clean Air Act displaced the federal common law claims, so the plaintiffs' state common law claims were not precluded. See the previous Jones Day Commentaries, Another Federal Court in California Grants Remand of Climate Change Litigation and Federal Court in California Denies Remand of Climate Change Litigation. 

Importantly, the Fourth Circuit based its decision solely on procedural grounds without reaching the merits of the claims. By contrast, the federal district courts that have reached the merits of climate change lawsuits have dismissed the cases because they involve issues that should be resolved by the political branches and not the judiciary. The Second Circuit and Ninth Circuit recently heard oral arguments in these appeals.