Policy and Legal

The NAM urged the Supreme Court to allow a lawsuit against energy manufacturers to proceed in federal court instead of state court, arguing that they were operating as federal contractors at the time of the actions at issue.

Why it matters: Preserving federal officer removal jurisdiction—i.e., the requirement that suits against contractors operating on the government’s behalf take place in federal court—is a crucial protection for businesses that work with the government, the NAM argued in its amicus brief in Chevron U.S.A., Inc. et al. v. Plaquemines Parish, et al.

• Without the guarantee of federal court jurisdiction, federal contractors may be hesitant to take on work that is nationally important but unpopular in certain states.

The background: During World War II, several oil companies obtained federal contracts to refine oil along the Louisiana coast.

• Decades later, these companies were sued in state court by several Louisiana municipalities that sought damages for the drilling’s impact on the coastal environment.

Whose turf? The case was removed to a federal court, as the companies were acting as government contractors when they undertook the drilling.

• The municipalities appealed the change of venue, however, and the Fifth Circuit upheld their appeal—wrongly, as the NAM has charged in a series of amicus briefs.

Bad reasoning: The Fifth Circuit held that for the federal officer removal statute to apply, federal contracts must contain an explicit “directive” from a federal officer, such that parties to the contract are “acting under” the officer.

SCOTUS involved: The case has been on a merry-go-round of appeals and remands, finally resulting in the defendant oil companies seeking U.S. Supreme Court review.

• The Supreme Court granted certiorari in June—giving the NAM the opportunity to file its sixth brief in defense of manufacturers performing work on the government’s behalf.

The NAM’s argument: In its latest brief, the NAM argued that federal contractors have long relied on the protection of the federal officer removal statute when contracting with the government.

• The Fifth Circuit’s “contractual directive” reasoning takes an unjustifiably narrow view of the statute, which is intended to apply to all work “related to” a federal contract, the NAM charged.

Administration agrees: The Department of Justice also filed an amicus brief in the case, supporting the NAM’s position and asserting that the oil production at issue was connected closely to aviation fuel refining efforts for the U.S. military.

Continued advocacy: Through the Manufacturers’ Accountability Project, the NAM is making sure courts uphold long-standing legal protections that enable manufacturers to serve the national interest without fear of politically motivated lawsuits.