Louisiana parishes — the state's equivalent of counties — sued oil and gas companies in state court, arguing that the companies' predecessors violated state environmental laws during and before World War II by failing to obtain proper permits, violating permit terms, and failing to follow prudent industry practices. The parishes sought damages including restoration of the areas where the companies operated. The companies sought to move the case to federal court under the federal officer removal statute, pointing to wartime contracts under which Chevron's predecessors were required to produce aviation gasoline, known as avgas, for the federal government — work that required them to refine crude oil.
The U.S. Court of Appeals for the 5th Circuit had agreed that the companies were "acting under" a federal officer for purposes of the statute's first prong, but a divided three-judge panel held that the lawsuit was not "for or relating to" those federal acts. The panel majority reasoned that the companies' refinery contracts said nothing about oil production and that federal wartime regulation of crude oil production was minimal — noting that the contracts gave the companies complete latitude to forego producing any crude and instead to buy it on the open market. The full 5th Circuit declined to rehear the case by a vote of 7-6.
The Supreme Court, in an opinion by Justice Clarence Thomas, rejected that reasoning. Thomas wrote that the phrase "relating to" sweeps broadly, so that a defendant need not show that federal duties specifically required or strictly caused the challenged conduct. At the same time, he cautioned that the phrase's ordinary meaning is not so broad that it is meaningless, and that it requires a connection that is not tenuous, remote, or peripheral.
Thomas concluded that Chevron's case fits comfortably within that range because the lawsuit implicates acts by Chevron that are closely connected to the performance of its federal duties. He noted that much of the crude oil Chevron produced in the field at the center of the dispute was ultimately used for its own avgas refining, and that the parishes' suit will challenge Chevron's actions that allowed it to increase its production of crude oil in that field during wartime.
Justice Ketanji Brown Jackson agreed that the companies could transfer their case to federal court, but for a different reason. In a separate concurring opinion, she argued that an indirect relationship between the conduct targeted by the lawsuit and the asserted federal duties is not enough, and that the statute requires a cause-and-effect relationship between the duties and the conduct — a test she concluded the oil companies can satisfy here.
Justice Samuel Alito did not participate because he owns stock in the parent company of one of the defendants.