Grace Ranch, L.L.C. v. BP Am. Prod. Co.

• Decision Date: 24 February 2021
• Docket Number: No. 20-30224,20-30224
• Citation: 989 F.3d 301
• Parties: GRACE RANCH, L.L.C., Plaintiff—Appellee, v. BP AMERICA PRODUCTION COMPANY; BHP Petroleum Americas, Incorporated, formerly known as BHP Billiton Petroleum (Americas), Incorporated, Defendants—Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

989 F.3d 301

GRACE RANCH, L.L.C., Plaintiff—Appellee,

v.BP AMERICA PRODUCTION COMPANY; BHP Petroleum Americas, Incorporated, formerly known as BHP Billiton Petroleum (Americas), Incorporated, Defendants—Appellants.

No. 20-30224

United States Court of Appeals, Fifth Circuit.

FILED February 24, 2021

REVISED February 26, 2021

Victor L. Marcello, Esq., Diane Adele Owen, Talbot, Carmouche & Marcello, Baton Rouge, LA, David Paul Bruchhaus, Esq., Mudd & Bruchhaus, L.L.C., Lake Charles, LA, for Plaintiff - Appellee.

Kelly Brechtel Becker, Esq., Kathryn Zainey Gonski, Liskow & Lewis, P.L.C., New Orleans, LA, George Arceneaux, III, Esq., Liskow & Lewis, Lafayette, LA, for Defendant - Appellant BP America Production Company.

Russell Keith Jarrett, Esq., Attorney, Kelly Titus Scalise, Liskow & Lewis, P.L.C., New Orleans, LA, for Defendant - Appellant BHP Petroleum Americas, Incorporated.

Before Wiener, Costa, and Willett, Circuit Judges.

Gregg Costa, Circuit Judge:

An unusual Louisiana law raises questions that would make for a tough Federal Courts exam. The statute allows citizen suits to enforce state conservation laws, but any injunction the citizen might obtain must be entered in favor of the Commissioner of Louisiana's Office of Conservation. LA. STAT. ANN. § 30:16. The private plaintiff suing in this case contends that this potential state involvement at the end of the litigation precludes diversity jurisdiction in federal court because there is no such jurisdiction when a State is a party. The district court disagreed and held that it had subject matter jurisdiction. Yet it remanded the case to state court anyway, concluding that Burford abstention¹ was appropriate because the state court offered a better forum for resolving unsettled questions about how the state law applies. With this appeal, another jurisdictional question is added to the mix: Does the general rule that state court remands are not appealable still include an exception for remands on abstention grounds? Resolution of these three issues—diversity jurisdiction; appellate jurisdiction; and Burford abstention—will determine where this case should be heard.

I.

For many years, oil and gas operators in Louisiana disposed of their byproducts in unlined earthen pits, allowing toxic waste to seep into nearby soil and groundwater. In the mid-1980s, the Louisiana Department of Natural Resources banned this practice and ordered the closure of these pits. See LA. ADMIN. CODE tit. 43, pt. XIX, §§ 301 – 23. Louisiana landowners whose property oil and gas operators once leased for fuel extraction have spent decades seeking to recover for contamination caused by unlined pits.²

Few avenues of relief remain for landowners who came into possession of contaminated property after the pits were closed—so-called "legacy plaintiffs."³ The Supreme Court of Louisiana has held that subsequent purchasers of contaminated land cannot sue oil and gas operators in tort or contract for damage inflicted before the purchasers acquired the property. Eagle Pipe & Supply, Inc. v. Amerada Hess Corp. , 79 So.3d 246, 279–83 (La. 2011).

As a result, legacy plaintiffs shifted their efforts to enforcing the State's statutory remedies for contaminated lands. Tureau v. BEPCO, L.P. , 404 F. Supp. 3d 993, 997–98 (W.D. La. 2019). One of these laws tasks the Commissioner of Louisiana's Office of Conservation with taking oil and gas operators to court to enjoin violations of state conservation law. LA. STAT. ANN. § 30:14. If the Commissioner fails to do so after receiving notice from a party adversely affected by the violation, that party may sue in the Commissioner's place. Id. § 30:16. Several legacy plaintiffs have sued under section 30:16 to force compliance with Statewide Order 29–B, a Department of Natural Resources regulation that "require[s] the registration and closure of existing unlined oilfield pits" and that "various enumerated contaminants in the soil be remediated to certain standards." Marin v. Exxon Mobil Corp. , 48 So.3d 234, 240 (La. 2010) ; see Tureau , 404 F. Supp. 3d at 995.

Grace Ranch is one of these unlucky landowners. After acquiring property allegedly contaminated by BP America Production Company and BHP Petroleum Americas, Grace Ranch sued the oil and gas operators in tort and contract. Grace Ranch, LLC v. BP Am. Prod. Co. , 252 So.3d 546, 549 (La. Ct. App. 2018). Applying Eagle Pipe , Louisiana courts tossed the suit. Id. at 552, writ denied , 264 So.3d 450 (La. 2019).

In the face of this defeat, Grace Ranch tried another tack, notifying the Commissioner that BP and BHP were in violation of conservation regulations. After nearly two years, during which time the Commissioner declined to take any action, Grace Ranch filed suit against BP and BHP under section 30:16 in Louisiana state court. Styling the suit as "State of Louisiana ex rel. Grace Ranch, LLC v. [BP and BHP]," Grace Ranch sought an injunction ordering BP and BHP to remediate contamination on its property in compliance with state regulation.

Defendants removed the case to federal court, asserting jurisdiction based on diversity of citizenship. Grace Ranch agrees that it is a citizen of Louisiana and that BP and BHP are both citizens of Texas. Yet Grace Ranch opposed removal, arguing that Louisiana is the real party in interest to the litigation, which would mean that this is not a case between "citizens of different States." 28 U.S.C. § 1332(a)(1). In the alternative, Grace Ranch urged the federal court to abstain from exercising jurisdiction under Burford .

A magistrate judge found both arguments unpersuasive and recommended that the case continue in federal court. The district court partially disagreed, denying Grace Ranch's motion to remand for lack of diversity jurisdiction but concluding that the federal court should abstain under Burford .

BP and BHP appealed. Grace Ranch then filed a motion to dismiss the appeal for lack of jurisdiction, continuing to press its view that the State's involvement in this case defeats diversity jurisdiction.

II.

We start with the issue in the motion to dismiss: Grace Ranch's argument that this case had no business being in federal court in the first place.

A defendant sued in state court may remove the suit to federal court so long as the federal tribunal would have had original jurisdiction over the action. 28 U.S.C. § 1441(a). Federal district courts have original jurisdiction over disputes between citizens of different states when more than $75,000 is at stake. Id. § 1332(a)(1). Looking only at the private parties in this case, the requirement of complete diversity is met. One side of the "v. " has a Louisiana citizen; the other side has Texas citizens.

But when a State is party to a lawsuit, or is the real party in interest, diversity of citizenship does not exist. That is because the diversity statute vests federal courts with jurisdiction when the suit is between "citizens of different States," not when the State is one of the parties.⁴ 28 U.S.C. § 1332(a)(1) ; Louisiana v. Union Oil Co. of Cal. , 458 F.3d 364, 366 (5th Cir. 2006) ("[A] state is not a citizen for purposes of diversity jurisdiction." (citation and quotation marks omitted)). Grace Ranch argues that Louisiana is a party to this litigation, pointing out that its section 30:16 suit is a vehicle for enforcing state conservation law in the wake of the Commissioner's inaction and that an injunction can only be entered in the Commissioner's name.

The argument that the State is a party requires us to explore more fully the Louisiana conservation statute we have mentioned. Section 30:16 authorizes citizen suits to enforce state conservation law when the Commissioner declines to act. That seems simple enough. The rub is what happens if the private citizen prevails: "If the court holds that injunctive relief should be granted, the commissioner shall be made a party and shall be substituted for the person who brought the suit and the injunction shall be issued as if the commissioner had at all times been the complaining party." LA. STAT. ANN. § 30:16. Grace Ranch maintains that Louisiana must be party to a section 30:16 suit all along if an injunction can only be issued in the name of a Louisiana state official. However intuitively appealing, this argument does not withstand scrutiny.⁵

A.

Despite Grace Ranch's listing of Louisiana in the style of the case, the State is not a proper party because it has not authorized landowners to sue in its name. Though the state legislature "can authorize non-state officers or entities to sue to protect the State's interests in specific situations," not everyone can initiate lawsuits in the State's name. Par. of Plaquemines v. Total Petrochemical & Refining USA, Inc. , 64 F. Supp. 3d 872, 888 (E.D. La. 2014). "Louisiana law does not brook self-appointed interlopers who institute legal action on behalf of the State without the legal authority to do so." Id. at 889. Who has the authority to sue on the State's behalf? Those whom the State empowers through a specific legislative grant. Id. at 888–89.

Some Louisiana laws expressly provide that entities may sue for the State. See, e.g. , Williams v. Belle of Orleans, L.L.C. , 890 So.2d 670, 675 (La. Ct. App. 2004) (concluding that "express provisions" of state law empowered municipal tax assessor to "bring suit to protect the state's interest"); Union Oil , 458 F.3d at 367 (noting that statute allowed parish school board to hire attorneys "on the part of the State of Louisiana ... to recover [damages] for the state" (quoting LA. STAT. ANN. § 41:961 ) (emphasis omitted)). Others outline litigation authority that, when viewed in context, encompasses suit on the State's behalf. Compare Par. of Plaquemines , 64 F. Supp. 3d at 890–91 (holding that statute granted parishes power to sue on State's behalf by authorizing recovery for violations of state permits through "state-local partnership"), with In re La. Riverboat Gaming Comm'n , 659 So.2d 775,...