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Fifth Circuit Court of Appeals Rules that State Oil Pollution Claims Preempted by Federal Law

In a decision issued earlier this year, the Fifth Circuit Court of Appeals ruled that the claims filed by eleven (11) Louisiana coastal parishes (the "Parishes") against BP and various other defendants (the "Appellees") under the Louisiana Wildlife Protection Statute (the "Wildlife Statute") are preempted by the Clean Water Act. In re: Deepwater Horizon, No. 12-30012 (5th Cir. Feb. 24, 2014).

The Parishes' claims arose from the DEEPWATER HORIZON explosion and resultant oil spill in April 2010, which led to the pollution-related loss of aquatic life and wildlife. The Parishes initially filed suit in Louisiana State Court; however, the Appellees removed the actions to the United States District Court for the Eastern District of Louisiana, claiming jurisdiction under the Outer Continental Shelf Lands Act ("OCSLA"), a federal statute. Several of the Parishes filed motions to remand the matter back to State Court. The District Court denied the motions to remand, and then dismissed the Parishes' claims as preempted by federal law.

On appeal, the Fifth Circuit first rejected the Parishes' arguments that their statutory wildlife claims did not arise out of or in connection with the oil production operation on the Outer Continental Shelf ("OCS"), concluding that the oil would not have entered into the State of Louisiana's territorial waters "but for" the drilling and exploration operation. Rejecting the Parishes' additional arguments as "flawed", the Court concluded that the action was properly removed to Federal Court.

With the jurisdictional question resolved, the Court next considered the issue of whether the state Wildlife Statute – and the penalties established therein – could be applied against the Appellees. The Parishes argued that since the harm to wildlife occurred within Louisiana state waters, the Parishes were entitled to pursue penalty claims under Louisiana state law in an exercise of the state's police power. They further argued that provisions in the Clean Water Act and Oil Pollution Act that save state law causes of action under circumstances (i.e. – the "savings clauses") protected their ability to impose penalties under the state Wildlife Statute. The Fifth Circuit rejected both arguments. The Fifth Circuit concluded that the Parishes could not prove Appellees' responsibility for the wildlife injuries without referring to the OCS activities (i.e. – the emissions from a well drilled in the OCS and the errors or omissions related to the DEEPWATER HORIZON's production activity in the OCS) and that the oil originated in federal waters. As such, federal law was to govern the injuries arising from such activities even if the actual injuries occurred elsewhere. The Fifth Circuit relied on the U.S. Supreme Court's 1987 decision in International Paper Co. v. Oulette, wherein the Supreme Court held that the Clean Water Act "precludes a court from applying the law of an affected State against an out-of-state source." Applying Oulette, the Court concluded that federal law – i.e. – the law of the point source – exclusively applies to the claims generated by the DEEPWATER HORIZON oil spill in any affected state or locality. The Court affirmed the District Court's judgment dismissing the Parishes' state law claims.

To read a copy of the Second Circuit's decision, click here.

For more information about the Court's decision and how it may apply to specific facts and circumstances, please do not hesitate to contact us at info@chaloslaw.com.

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