County of San Mateo v. Chevron Corp.

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
COUNTY OF SAN MATEO, No. 18-15499
individually and on behalf of the
People of the State of California, D.C. No.
Plaintiff-Appellee, 3:17-cv-04929-VC
v.
CHEVRON CORPORATION;
CHEVRON U.S.A. INC.;
EXXONMOBIL CORPORATION; BP
PLC; BP AMERICA, INC.; ROYAL
DUTCH SHELL PLC; SHELL OIL
PRODUCTS COMPANY LLC;
CITGO PETROLEUM
CORPORATION; CONOCOPHILLIPS;
CONOCOPHILLIPS COMPANY;
PHILLIPS 66 COMPANY; PEABODY
ENERGY CORPORATION; TOTAL
E&P USA, INC.; TOTAL
SPECIALTIES USA, INC.; ARCH
COAL INC.; ENI OIL & GAS, INC.;
RIO TINTO ENERGY AMERICA,
INC.; RIO TINTO MINERALS, INC.;
RIO TINTO SERVICES, INC.;
ANADARKO PETROLEUM
CORPORATION; OCCIDENTAL
PETROLEUM CORPORATION;
OCCIDENTAL CHEMICAL
CORPORATION; REPSOL ENERGY
2 COUNTY OF SAN MATEO V. CHEVRON CORP.
NORTH AMERICA CORP.; REPSOL
TRADING USA CORP.;
MARATHON OIL COMPANY;
MARATHON OIL CORPORATION;
MARATHON PETROLEUM CORP.;
HESS CORP.; DEVON ENERGY
CORP.; DEVON ENERGY
PRODUCTION COMPANY, LP;
ENCANA CORPORATION; APACHE
CORP.,
Defendants-Appellants.
CITY OF IMPERIAL BEACH, No. 18-15502
individually and on behalf of the
People of the State of California, D.C. No.
Plaintiff-Appellee, 3:17-cv-04934-VC
v.
CHEVRON CORPORATION;
CHEVRON U.S.A. INC.;
EXXONMOBIL CORPORATION; BP
PLC; BP AMERICA, INC.; ROYAL
DUTCH SHELL PLC; SHELL OIL
PRODUCTS COMPANY LLC;
CITGO PETROLEUM
CORPORATION; CONOCOPHILLIPS;
CONOCOPHILLIPS COMPANY;
PHILLIPS 66 COMPANY; PEABODY
ENERGY CORPORATION; TOTAL
E&P USA, INC.; TOTAL
SPECIALTIES USA, INC.; ARCH
COUNTY OF SAN MATEO V. CHEVRON CORP. 3
COAL INC.; ENI OIL & GAS, INC.;
RIO TINTO ENERGY AMERICA,
INC.; RIO TINTO MINERALS, INC.;
RIO TINTO SERVICES, INC.;
ANADARKO PETROLEUM
CORPORATION; OCCIDENTAL
PETROLEUM CORPORATION;
OCCIDENTAL CHEMICAL
CORPORATION; REPSOL ENERGY
NORTH AMERICA CORP.; REPSOL
TRADING USA CORP.;
MARATHON OIL COMPANY;
MARATHON OIL CORPORATION;
MARATHON PETROLEUM CORP.;
HESS CORP.; DEVON ENERGY
CORP.; DEVON ENERGY
PRODUCTION COMPANY, LP;
ENCANA CORPORATION; APACHE
CORP.,
Defendants-Appellants.
COUNTY OF MARIN, individually No. 18-15503
and on behalf of the People of the
State of California, D.C. No.
Plaintiff-Appellee, 3:17-cv-04935-VC
v.
CHEVRON CORPORATION;
CHEVRON U.S.A. INC.;
EXXONMOBIL CORPORATION; BP
4 COUNTY OF SAN MATEO V. CHEVRON CORP.
PLC; BP AMERICA, INC.; ROYAL
DUTCH SHELL PLC; SHELL OIL
PRODUCTS COMPANY LLC;
CITGO PETROLEUM
CORPORATION; CONOCOPHILLIPS;
CONOCOPHILLIPS COMPANY;
PHILLIPS 66 COMPANY; PEABODY
ENERGY CORPORATION; TOTAL
E&P USA, INC.; TOTAL
SPECIALTIES USA, INC.; ARCH
COAL INC.; ENI OIL & GAS, INC.;
RIO TINTO ENERGY AMERICA,
INC.; RIO TINTO MINERALS, INC.;
RIO TINTO SERVICES, INC.;
ANADARKO PETROLEUM
CORPORATION; OCCIDENTAL
PETROLEUM CORPORATION;
OCCIDENTAL CHEMICAL
CORPORATION; REPSOL ENERGY
NORTH AMERICA CORP.; REPSOL
TRADING USA CORP.;
MARATHON OIL COMPANY;
MARATHON OIL CORPORATION;
MARATHON PETROLEUM CORP.;
HESS CORP.; DEVON ENERGY
CORP.; DEVON ENERGY
PRODUCTION COMPANY, LP;
ENCANA CORPORATION; APACHE
CORP.,
Defendants-Appellants.
COUNTY OF SAN MATEO V. CHEVRON CORP. 5
COUNTY OF SANTA CRUZ, No. 18-16376
individually and on behalf of The
People of the State of California; D.C. Nos.
CITY OF SANTA CRUZ, a 3:18-cv-00450-VC
municipal corporation, 3:18-cv-00458-VC
individually and on behalf of The 3:18-cv-00732-VC
People of the State of California;
CITY OF RICHMOND, individually
and on behalf of The People of OPINION
the State of California,
Plaintiffs-Appellees,
v.
CHEVRON CORPORATION;
CHEVRON USA INC.; ROYAL
DUTCH SHELL PLC; BP PLC;
SHELL OIL PRODUCTS COMPANY
LLC; BP AMERICA, INC.; EXXON
MOBIL CORPORATION;
CONOCOPHILLIPS;
CONOCOPHILLIPS COMPANY;
ANADARKO PETROLEUM
CORPORATION; APACHE
CORPORATION; DEVON ENERGY
CORPORATION; DEVON ENERGY
PRODUCTION COMPANY, LP;
TOTAL E&P USA, INC.; TOTAL
SPECIALTIES USA, INC.; ENCANA
CORPORATION; CITGO
PETROLEUM CORPORATION; HESS
CORPORATION; MARATHON OIL
COMPANY; MARATHON OIL
6 COUNTY OF SAN MATEO V. CHEVRON CORP.
CORPORATION; REPSOL ENERGY
NORTH AMERICA CORPORATION;
REPSOL TRADING USA
CORPORATION; PHILLIPS 66
COMPANY; OCCIDENTAL
PETROLEUM CORPORATION;
OCCIDENTAL CHEMICAL
CORPORATION; ENI OIL & GAS,
INC.; MARATHON PETROLEUM
CORPORATION,
Defendants-Appellants.
Appeal from the United States District Court
for the Northern District of California
Vince Chhabria, District Judge, Presiding
Argued and Submitted February 5, 2020
Pasadena, California
Filed May 26, 2020
Before: Sandra S. Ikuta, Morgan Christen, and
Kenneth K. Lee, Circuit Judges.
Opinion by Judge Ikuta
COUNTY OF SAN MATEO V. CHEVRON CORP. 7
SUMMARY*
Removal/Subject-Matter Jurisdiction/Appellate
Jurisdiction
On appeal from the district court’s order remanding
complaints to the state court from which they had been
removed, the panel dismissed the appeal in part for lack of
jurisdiction and affirmed in part, holding that defendants did
not carry their burden of establishing the criteria for federal-
officer removal under 28 U.S.C. § 1442(a)(1).
The County of San Mateo and other cities and counties
filed six complaints in California state court against more
than thirty energy companies, alleging nuisance and other
causes of action arising from the role of fossil fuel products
in global warming. The energy companies removed the cases
to federal court. The district court granted plaintiffs’ motions
to remand, rejecting all eight of the grounds on which the
energy companies relied for subject-matter jurisdiction.
Dismissing in part, the panel held that under 28 U.S.C.
§ 1447(d), it had jurisdiction to review the removal order
only to the extent the order addressed whether removal was
proper under § 1442(a)(1). The panel concluded that the non-
reviewability clause of § 1447(d) applied because the district
court remanded based on a lack of subject-matter jurisdiction.
Declining to follow the Seventh Circuit, the panel held that
under the “exception clause” of § 1447(d), authorizing review
of removal pursuant to 28 U.S.C. §§ 1442 and 1443, it had
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
8 COUNTY OF SAN MATEO V. CHEVRON CORP.
jurisdiction to review whether removal was proper under
§ 1442(a)(1), but the exception clause did not subject the
district court’s entire remand order to plenary review. The
panel followed Patel v. Del Taco, Inc., 446 F.3d 996 (9th Cir.
2006), concluding that Patel was not abrogated either by
intervening judicial authority or by Congress’s 2011
amendment of § 1447(d) to insert § 1442.
Affirming in part, the panel held that the district court did
not err in holding that there was no subject-matter jurisdiction
under the federal-officer removal statute. The panel
concluded that the energy companies failed to establish that
they were “acting under” a federal officer’s directions based
on three agreements with the government: CITGO’s fuel
supply agreements with the Navy Exchange Service
Command, a unit agreement for the petroleum reserves at Elk
Hills between Standard Oil Company of California and the
U.S. Navy, and the energy companies’ Oil and Gas Leases of
Submerged Lands Under the Outer Continental Shelf Lands
Act.
COUNSEL
Theodore J. Boutrous, Jr. (argued), Andrea E. Neuman,
William E. Thomson, and Joshua S. Lipshutz, Gibson Dunn
& Crutcher LLP, Los Angeles, California; Herbert J. Stern
and Joel M. Silverstein, Stern & Kilcullen LLC, Florham
Park, New Jersey; Neal S. Manne, Johnny W. Carter, Erica
Harris, and Steven Shepard, Susman Godfrey LLP, Houston,
Texas; for Defendants-Appellants Chevron Corporation and
Chevron U.S.A. Inc.
COUNTY OF SAN MATEO V. CHEVRON CORP. 9
Jonathan W. Hughes, Arnold & Porter Kaye Scholer LLP,
San Francisco, California; Matthew T. Heartney and John D.
Lombardo, Arnold & Porter Kaye Scholer LLP, Los Angeles,
California; Philip H. Curtis and Nancy Milburn, Arnold &
Porter Kaye Scholer LLP, New York, New York; for
Defendants-Appellants BP PLC and BP America, Inc.
Sean C. Grimsley and Jameson R. Jones, Bartlit Beck LLP,
Denver, Colorado; Megan R. Nishikawa and Nicholas A.
Miller-Stratton, King & Spalding LLP, San Francisco,
California; Tracie J. Renfroe and Carol M. Wood, King &
Spalding LLP, Houston, Texas; for Defendants-Appellants
ConocoPhillips and ConocoPhillips Company.
M. Randall Oppenheimer and Dawn Sestito, O’Melveny &
Myers LLP, Los Angeles, California; Theodore V. Wells, Jr.,
Daniel J. Toal, and Jaren E. Janghorbani, Paul Weiss Rifkind
Wharton & Garrison LLP, New York, New York; for
Defendant-Appellant Exxon Mobil Corporation.
Daniel B. Levin, Munger Tolles & Olson LLP, Los Angeles,
California; Jerome C. Roth and Elizabeth A. Kim, Munger
Tolles & Olson LLP, San Francisco, California; David C.
Frederick and Brendan J. Crimmins, Kellogg Hansen Todd
Figel & Frederick P.L.L.C., Washington, D.C.; for
Defendants-Appellants Royal Dutch Shell PLC and Shell Oil
Products Company LLC.
Bryan M. Killian, Morgan Lewis & Bockius LLP,
Washington, D.C.; James J. Dragna and Yardena R. Zwang-
Weissman, Morgan Lewis & Bockius LLP, Los Angeles,
California; for Defendant-Appellant Anadarko Petroleum
Corporation.
10 COUNTY OF SAN MATEO V. CHEVRON CORP.
Thomas F. Koegel, Crowell & Moring LLP, San Francisco,
California; Kathleen Taylor Sooy and Tracy A. Roman,
Crowell & Moring LLP, Washington, D.C.; for Defendant-
Appellant Arch Coal Inc.
Mortimer Hartwell, Vinson & Elkins LLP, San Francisco,
California; Patrick W. Mizell and Deborah C. Milner, Vinson
& Elkins LLP, Houston, Texas; for Defendant-Appellant
Apache Corp.
William M. Sloan and Jessica L. Grant, Venable LLP, San
Francisco, California; for Defendant-Appellant Peabody
Energy Corporation.
Mark McKane P.C., Kirkland & Ellis LLP, San Francisco,
California; Andrew A. Kassof, P.C., and Brenton Rogers,
Kirkland & Ellis LLP, Chicago, Illinois; for Defendants-
Appellants Rio Tinto Energy America, Inc.; Rio Tinto
Minerals, Inc.; and Rio Tinto Services, Inc.
Gregory Evans, McGuireWoods LLP, Los Angeles,
California; Steven R. Williams, Joy C. Fuhr, and Brian D.
Schmalzbach, McGuireWoods LLP, Richmond, Virginia; for
Defendants-Appellants Devon Energy Corp. and Devon
Energy Production Company, LP.
Christopher W. Keegan, Kirkland & Ellis LLP, San
Francisco, California; Andrew R. McGaan, P.C., Kirkland &
Ellis LLP, Chicago, Illinois; Anna G. Rotman, P.C., Kirkland
& Ellis LLP, Houston, Texas; Bryan D. Rohm, Total E&P
USA, Inc., Houston, Texas; for Defendants-Appellants Total
E&P USA, Inc.; and Total Specialties USA, Inc.
COUNTY OF SAN MATEO V. CHEVRON CORP. 11
Michael F. Healy, Shook Hardy & Bacon LLP, San
Francisco, California; Michael L. Fox, Duane Morris LLP,
San Francisco, California; for Defendant-Appellant Encana
Corporation.
Craig A. Moyer and Peter Duchesneau, Manatt Phelps &
Phillips LLP, Los Angeles, California; Stephanie A. Roeser,
Manatt Phelps & Phillips LLP, San Francisco, California;
Nathan P. Eimer, Lisa S. Meyer, Pamela R. Hanebutt, and
Raphael Janove, Eimer Stahl LLP, Chicago, Illinois; for
Defendant-Appellant CITGO Petroleum Corporation.
Christopher J. Carr and Jonathan A. Shapiro, Baker Botts
L.L.P., San Francisco, California; Scott Janoe, Baker Botts
L.L.P., Houston, Texas; Evan Young, Baker Botts L.L.P.,
Austin, Texas; Megan Berge, Baker Botts L.L.P.,
Washington, D.C.; for Defendants-Appellants Hess Corp.,
Marathon Oil Company, Marathon Oil Corporation, Repsol
Energy North America Corp., and Repsol Trading USA Corp.
Steven M. Bauer and Margaret A. Tough, Latham & Watkins
LLP, San Francisco, California; for Defendant-Appellant
Phillips 66 Company.
David E. Cranston, Greenberg Glusker Fields Claman &
Machtinger LLP, Los Angeles, California; for Defendant-
Appellant Eni Oil & Gas, Inc.
Marc A. Fuller and Matthew R. Stammel, Vinson & Elkins
L.L.P., Dallas, Texas; Stephen C. Lewis and R. Morgan
Gilhuly, Barg Coffin Lewis & Trapp LLP, San Francisco,
California; for Defendants-Appellants Occidental Petroleum
Corporation and Occidental Chemical Corporation.
12 COUNTY OF SAN MATEO V. CHEVRON CORP.
Shannon S. Broome and Ann Marie Mortimer, Hunton
Andrews Kurth LLP, San Francisco, California; Shawn
Patrick Regan, Hunton Andrews Kurth LLP, New York, New
York; for Defendant-Appellant Marathon Petroleum Corp.
Victor M. Sher (argued), Matthew K. Edling, Katie H. Jones,
and Martin D. Quiñones, Sher Edling LLP, San Francisco,
California; Kevin K. Russell, Sarah E. Harrington, and
Charles H. Davis, Goldstein & Russell P.C., Bethesda,
Maryland; for Plaintiffs-Appellees.
John C. Beiers, Paul A. Okada, David A. Silberman, Margaret
V. Tides, and Matthew J. Sanders, Office of the County
Counsel, Redwood City, California; for Plaintiff-Appellee
County of San Mateo.
Brian E. Washington, Brian C. Case, and Brandon Halter,
Office of the County Counsel, San Rafael, California, for
Plaintiff-Appellee County of Marin.
Jennifer Lyon and Steven E. Boehmer, McDougal Love
Boehmer Foley Lyon & Canlas, Office of the City Attorney,
La Mesa, California, for Plaintiff-Appellee City of Imperial
Beach.
Dana McRae and Jordan Sheinbaum, Office of the County
Counsel, Santa Cruz, California, for Plaintiff-Appellee
County of Santa Cruz.
Anthony P. Condotti, City Attorney, Santa Cruz, California,
for Plaintiff-Appellee City of Santa Cruz.
COUNTY OF SAN MATEO V. CHEVRON CORP. 13
Bruce Reed Goodmiller and Rachel H. Sommovilla, City
Attorney’s Office, Richmond, California, for Plaintiff-
Appellee City of Richmond.
Steven P. Lehotsky, Michael B. Schon, and Jonathan D.
Urick, U.S. Chamber Litigation Center, Washington, D.C.;
Peter D. Keisler, C. Frederick Beckner III, Ryan C. Morris,
and Tobias S. Loss-Eaton, Sidley Austin LLP, Washington,
D.C.; for Amicus Curiae Chamber of Commerce of the
United States of America.
Gerson H. Smoger, Smoger & Associates P.C., Dallas, Texas;
Robert S. Peck, Center for Constitutional Litigation P.C.,
Washington, D.C.; for Amicus Curiae Senator Sheldon
Whitehouse.
Scott L. Nelson and Allison M. Zieve, Public Citizen
Litigation Group, Washington, D.C., for Amicus Curiae
Public Citizen, Inc.
James R. Williams, County Counsel; Greta S. Hansen, Chief
Assistant County Counsel; Laura S. Trice, Lead Deputy
County Counsel; Tony LoPresti, Deputy County Counsel;
Office of the County Counsel, County of Santa Clara, San
José, California; for Amicus Curiae California State
Association of Counties.
Ian Fein, Natural Resources Defense Council, San Francisco,
California; Peter Huffman, Natural Resources Defense
Council, Washington, D.C.; for Amicus Curiae Natural
Resources Defense Council.
14 COUNTY OF SAN MATEO V. CHEVRON CORP.
OPINION
IKUTA, Circuit Judge:
In this appeal, we consider a district court’s order
remanding complaints to state court after the defendants had
removed the complaints to federal court on eight separate
grounds. Under 28 U.S.C. § 1447(d), we have jurisdiction to
review the remand order only to the extent it addresses
whether removal was proper under § 1442(a)(1), see Patel v.
Del Taco, Inc., 446 F.3d 996, 998 (9th Cir. 2006), which
authorizes removal by “any person acting under” a federal
officer, 28 U.S.C. § 1442(a)(1). We conclude that the
defendants did not carry their burden of establishing this
criteria for removal. Because we lack jurisdiction to review
other aspects of the remand order, we dismiss the remainder
of the appeal.
I
The County of San Mateo, the County of Marin, and the
City of Imperial Beach filed three materially similar
complaints in California state court against more than
30 energy companies in July 2017.1 The complaints allege
that the Energy Companies’ “extraction, refining, and/or
formulation of fossil fuel products; their introduction of fossil
fuel products into the stream of commerce; their wrongful
promotion of their fossil fuel products and concealment of
known hazards associated with use of those products; and
their failure to pursue less hazardous alternatives available to
them; is a substantial factor in causing the increase in global
1
We refer to the plaintiffs collectively as the “Counties” and to the
defendants collectively as the “Energy Companies.”
COUNTY OF SAN MATEO V. CHEVRON CORP. 15
mean temperature and consequent increase in global mean sea
surface height.” Based on these allegations, the complaints
assert causes of action for public and private nuisance, strict
liability for failure to warn, strict liability for design defect,
negligence, negligent failure to warn, and trespass.
The Energy Companies removed the three complaints to
federal court, asserting seven bases for subject-matter
jurisdiction, including jurisdiction under the federal-officer
removal statute, 28 U.S.C. § 1442(a)(1). The three cases
were assigned to Judge Vince G. Chhabria.
Shortly thereafter, the County of Santa Cruz, the City of
Santa Cruz, and the City of Richmond filed materially similar
complaints in California state court. The Energy Companies
removed these cases to federal court as well, asserting the
same seven bases for subject-matter jurisdiction,2 and they
were also assigned to Judge Chhabria.3
The Counties, in all six cases, moved to remand to state
court based on a lack of subject-matter jurisdiction. In a
reasoned opinion, the district court rejected all eight of the
2
Marathon Petroleum Corporation raised an eighth ground for
removal: that the complaints raised issues concerning maritime activities,
giving rise to admiralty jurisdiction. See 28 U.S.C. § 1333.
3
The city attorneys of Oakland and San Francisco filed similar
actions in California state court. Those cases were removed and assigned
to Judge William H. Alsup, who subsequently dismissed the action for
failure to state a claim and for lack of personal jurisdiction. See City of
Oakland v. BP p.l.c., 325 F. Supp. 3d 1017 (N.D. Cal. 2018); City of
Oakland v. BP p.l.c., 2018 WL 3609055 (N.D. Cal. July 27, 2018). In a
concurrently filed opinion, we resolve the appeal from those cases. See
City of Oakland v. BP p.l.c., — F.3d — (9th Cir. 2020).
16 COUNTY OF SAN MATEO V. CHEVRON CORP.
grounds on which the Energy Companies relied for subject-
matter jurisdiction, but the district court stayed its remand
orders to give the Energy Companies an opportunity to
appeal. “[W]e have jurisdiction to determine whether we
have jurisdiction to hear [a] case.” Atl. Nat’l Tr. LLC v. Mt.
Hawley Ins. Co., 621 F.3d 931, 933 (9th Cir. 2010) (citation
omitted).
II
Our authority to review an order remanding a case to state
court is limited. Under 28 U.S.C. § 1447(d), “[1] [a]n order
remanding a case to the State court from which it was
removed is not reviewable on appeal or otherwise, [2] except
that an order remanding a case to the State court from which
it was removed pursuant to section 1442 or 1443 of this title
shall be reviewable by appeal or otherwise.” We consider the
Energy Companies’ arguments that we may conduct a plenary
review of the district court’s remand order under both of these
clauses.
A
Although the first clause in § 1447(d) (the “non-
reviewability clause”) broadly prohibits review of “[a]n order
remanding a case to the State court from which it was
removed,” the Supreme Court has interpreted this language
narrowly as prohibiting review only if a remand order was
issued based on a ground enumerated in § 1447(c).4 Atl. Nat’l
4
Section 1447(c) states, in pertinent part:
A motion to remand the case on the basis of any defect
other than lack of subject matter jurisdiction must be
COUNTY OF SAN MATEO V. CHEVRON CORP. 17
Tr., 621 F.3d at 934 (citing Thermtron Prods., Inc. v.
Hermansdorfer, 423 U.S. 336, 343 (1976)). When a district
court bases its remand order on one of the grounds in
§ 1447(c)—i.e., the district court “remands based on subject
matter jurisdiction [or] nonjurisdictional defects”—as
opposed to, for example, based on a merits determination or
concerns about a heavy docket, id. at 934–35, “review is
unavailable no matter how plain the legal error in ordering the
remand,” Briscoe v. Bell, 432 U.S. 404, 413 n.13 (1977).
“[R]eview of the District Court’s characterization of its
remand as resting upon lack of subject-matter jurisdiction, to
the extent it is permissible at all, should be limited to
confirming that that characterization was colorable.”
Powerex Corp. v. Reliant Energy Servs., Inc., 551 U.S. 224,
234 (2007).
The Energy Companies argue that the district court’s
order remanded the complaints on a ground that cannot be
“colorably characterized as subject-matter jurisdiction.” Id.Specifically, the Energy Companies contend that the district
court remanded the complaints based on a merits
determination when it held that “federal common law d[id]
not govern the [Counties’] claims” and therefore “d[id] not
preclude [the Counties] from asserting . . . state law claims.”
We reject this argument. The district court ordered
remand based on its view that the cases were “improperly
made within 30 days after the filing of the notice of
removal under section 1446(a). If at any time before
final judgment it appears that the district court lacks
subject matter jurisdiction, the case shall be remanded.
28 U.S.C. § 1447(c).
18 COUNTY OF SAN MATEO V. CHEVRON CORP.
removed to federal court” because the Energy Companies
failed to show that “the case[s] . . . fit[] within one of a small
handful of small boxes” providing for subject-matter
jurisdiction. Put simply, the district court concluded that it
“lack[ed] subject matter jurisdiction.” 28 U.S.C. § 1447(c).
Even if the district court erred in reaching this conclusion,
“review is unavailable no matter how plain the legal error in
ordering the remand.” Kircher v. Putnam Funds Tr.,
547 U.S. 633, 642 (2006) (citing Briscoe, 432 U.S. at 413
n.13). To the extent Powerex requires that we determine
whether the district court’s conclusion that “federal common
law [d]id not govern the [Counties’] claims” was “at least
arguable,” Townsquare Media, Inc. v. Brill, 652 F.3d 767,
775 (7th Cir. 2011) (citing Atl. Nat’l Tr., 621 F.3d at 937–38,
940), we hold that it was, see City of Oakland v. BP p.l.c.,
— F.3d — (9th Cir. 2020) (holding that the district court
erred in concluding that there was subject-matter jurisdiction
on the ground that the plaintiffs’ state-law nuisance claims
were “necessarily governed by federal common law”).
B
We next consider the Energy Companies’ argument that
the second clause of § 1447(d) (the “exception clause”)
requires us to conduct plenary review of the district court’s
remand order. We have interpreted the exception clause as
giving us the authority to review the district court’s remand
order only to the extent that the order addresses the statutory
sections listed in the clause. See Patel v. Del Taco, Inc.,
446 F.3d 996, 998 (9th Cir. 2006). In Patel, the defendants
removed a state-court complaint to federal court under
§ 1443(1), which provides for removal of civil-rights cases.
Id. The district court granted the plaintiff’s motion for
remand on the ground that removal was not proper under
COUNTY OF SAN MATEO V. CHEVRON CORP. 19
either § 1441 or § 1443(1). Id. We held that, under
§ 1447(d), we lacked jurisdiction “to review the remand order
based on § 1441” and thus dismissed the defendants’ appeal
to the extent it was based on that section. Id.5 At the same
time, we held that we had jurisdiction “to review the remand
order based on . . . § 1443(1).” Id. The reasoning in Patel
applies directly to our case. Under § 1447(d), as interpreted
in Patel, we have jurisdiction to review the Energy
Companies’ appeal to the extent the remand order addresses
§ 1442(a)(1), but we lack jurisdiction to review their appeal
from the portions of the remand order considering the seven
other bases for subject-matter jurisdiction.
Arguing against this conclusion, the Energy Companies
contend that when a suit is “removed pursuant to section
1442,” 28 U.S.C. § 1447(d), the district court’s entire remand
order is subject to plenary review. The Energy Companies
base this argument on a Seventh Circuit case, Lu Junhong v.
Boeing Co., which concluded that because § 1447(d)
authorizes appellate review of “an order,” it authorizes review
of “the order itself,” not just “particular reasons for an order.”
792 F.3d 805, 812 (7th Cir. 2015). In reaching this
conclusion, the Seventh Circuit relied on Yamaha Motor
Corp., U.S.A. v. Calhoun, which construed a statute
(28 U.S.C. § 1292(b)) giving appellate courts jurisdiction to
review interlocutory orders that a district court certifies for
5
Patel considered an earlier version of § 1447(d), which did not
include § 1442 in the exception clause. See Removal Clarification Act of
2011, Pub. L. No. 112-51, § 2, 125 Stat. 545, 546 (2011).
20 COUNTY OF SAN MATEO V. CHEVRON CORP.
immediate appeal. 516 U.S. 199 (1996).6 Yamaha concluded
that § 1292(b) gives an appellate court jurisdiction over “any
issue fairly included within the certified order because ‘it is
the order that is appealable, and not the controlling question
identified by the district court.’” Id. at 205 (citation omitted).
The Energy Companies urge us to follow Lu Junhong
notwithstanding our decision in Patel for two reasons. First,
they argue that Patel has been abrogated by an act of
Congress. After Patel was decided, Congress enacted the
Removal Clarification Act of 2011, which amended
§ 1447(d) to allow for review of remand orders in cases
removed pursuant to § 1442. See Removal Clarification Act
of 2011, Pub. L. No. 112-51, § 2, 125 Stat. 545, 546 (2011).
According to the Energy Companies, Congress’s failure to
amend the reference in § 1447(d) to orders “reviewable by
appeal,” means that Congress intended to adopt Yamaha’s
interpretive approach and therefore authorized plenary review
of remand orders for cases removed pursuant to § 1442.7
Second, the Energy Companies argue that we are not bound
by Patel because it was not well reasoned: it did not provide
6
Section 1292(b) provides that “[w]hen a district judge, in making . . .
an order not otherwise appealable” determines that the order meets certain
criteria and that “an immediate appeal from the order may materially
advance the ultimate termination of the litigation, he shall so state in
writing in such order,” and “[t]he Court of Appeals . . . may thereupon, in
its discretion, permit an appeal to be taken from such order.” 28 U.S.C.
§ 1292(b).
7
The Energy Companies do not argue that Yamaha abrogated Patel,
nor could they, given that Yamaha was decided in 1996—a decade before
Patel—and thus is not “intervening higher authority.” Miller v. Gammie,
335 F.3d 889, 893 (9th Cir. 2003) (en banc).
COUNTY OF SAN MATEO V. CHEVRON CORP. 21
any grounds for its conclusion that we lacked jurisdiction to
conduct a plenary review of the remand order.
Both of these arguments implicate our doctrine of stare
decisis. We have long held that “one three-judge panel . . .
cannot reconsider or overrule the decision of a prior panel,”
United States v. Gay, 967 F.2d 322, 327 (9th Cir. 1992),
unless “our prior circuit authority is clearly irreconcilable
with the reasoning or theory of intervening higher authority,”
Miller v. Gammie, 335 F.3d 889, 893 (9th Cir. 2003) (en
banc).
There is no intervening judicial authority that would
abrogate Patel. Neither the Supreme Court nor an en banc
panel of this court has issued a decision after Patel was
decided in 2006 that is clearly irreconcilable with Patel’s
conclusion that § 1447(d) limits our review to the grounds for
removal covered by the exception clause. Therefore, we
consider only the effect of Congress’s amendment of
§ 1447(d) in 2011.
Before Congress’s amendment of § 1447(d), every circuit
court that had addressed this issue agreed with our reading of
§ 1447(d).8 Although Yamaha was decided in 1996 (ten years
before we decided Patel), no circuit court had applied
Yamaha to § 1447(d) or discussed its applicability in that
context. Therefore, when Congress amended § 1447(d) to
8
See Alabama v. Conley, 245 F.3d 1292, 1293 n.1 (11th Cir. 2001);
Davis v. Glanton, 107 F.3d 1044, 1047 (3d Cir. 1997); Thornton v.
Holloway, 70 F.3d 522, 524 (8th Cir. 1995); State Farm Mut. Auto. Ins.
Co. v. Baasch, 644 F.2d 94, 97 (2d Cir. 1981); Detroit Police Lieutenants
& Sergeants Ass’n v. City of Detroit, 597 F.2d 566, 567 (6th Cir. 1979);
Robertson v. Ball, 534 F.2d 63, 66 & n.5 (5th Cir. 1976); Noel v. McCain,
538 F.2d 633, 635 (4th Cir. 1976).
22 COUNTY OF SAN MATEO V. CHEVRON CORP.
insert “1442 or” before “1443,” Removal Clarification Act of
2011 § 2, it was against a backdrop of unanimous judicial
interpretation of § 1447(d) as permitting review of only the
grounds for removal identified in the exception clause.
Congress did not give any indication that it intended to
overrule the then-unanimous interpretation of § 1447(d) as
limiting judicial review of a remand order to the grounds
listed in the exception clause. We “presume that Congress
acts ‘with awareness of relevant judicial decisions.’” United
States v. Alvarez-Hernandez, 478 F.3d 1060, 1065 (9th Cir.
2007) (quoting United States v. Male Juvenile, 280 F.3d
1008, 1016 (9th Cir. 2002)). And “when ‘judicial
interpretations have settled the meaning of an existing
statutory provision, repetition of the same language in a new
statute indicates, as a general matter, the intent to incorporate
[the statute’s] . . . judicial interpretations as well.” Id.(quoting Merrill Lynch, Pierce, Fenner & Smith Inc. v. Dabit,
547 U.S. 71, 85 (2006)). Accordingly, we conclude that
Congress did not abrogate Patel sub silentio but rather
“inten[ded] to incorporate” Patel’s (and six other circuits’)
interpretation of § 1447(d). Id. (citation omitted). The
Fourth Circuit has reached the same conclusion. See Mayor
& City Council of Baltimore v. BP P.L.C., 952 F.3d 452, 461
(4th Cir. 2020) (“[T]he fact that Congress later added § 1442
as an exception to § 1447(d)’s no-appeal rule for remand
orders does not undermine our holding . . . that appellate
courts only have jurisdiction to review those grounds for
removal that are specifically enumerated in § 1447(d).”). We
therefore conclude that Congress’s amendment of § 1447(d)
did not abrogate our interpretation in Patel.
The Energy Companies also argue that we are not bound
by Patel because it was not well reasoned and failed to
analyze Yamaha or the statutory interpretation arguments
COUNTY OF SAN MATEO V. CHEVRON CORP. 23
discussed in Lu Junhong. Were we writing on a clean slate,
we might conclude that Lu Junhong provides a more
persuasive interpretation of § 1447(d) than Patel. But see
Baltimore, 952 F.3d at 459–60. Precedents, however, do not
cease to be authoritative merely because counsel in a later
case advances new arguments. See United States v. Ramos-
Medina, 706 F.3d 932, 939 (9th Cir. 2013) (“This panel is not
free to disregard the decision of another panel of our court
simply because we think the arguments have been
characterized differently or more persuasively.”). Therefore,
we remain bound by Patel until abrogated by an intervening
higher authority.
Applying Patel’s reading of § 1447(d), we may review
the district court’s remand order only to the extent it
addresses § 1442(a)(1). 446 F.3d at 998; accord Baltimore,
952 F.3d at 461. Accordingly, we dismiss the Energy
Companies’ appeals for lack of jurisdiction to the extent the
Energy Companies seek review of the district court’s ruling
as to other bases for subject-matter jurisdiction. See Patel,
446 F.3d at 1000.
III
We now turn to the single ground of removal that we have
jurisdiction to review: the question whether the district court
erred in holding that there was no subject-matter jurisdiction
under the federal-officer removal statute, 28 U.S.C.
§ 1442(a)(1). We review questions of statutory construction
and subject-matter jurisdiction de novo. Ritchey v. Upjohn
Drug Co., 139 F.3d 1313, 1315 (9th Cir. 1998). The
defendant has the burden of proving by a preponderance of
the evidence that the requirements for removal jurisdiction
24 COUNTY OF SAN MATEO V. CHEVRON CORP.
have been met. Leite v. Crane Co., 749 F.3d 1117, 1122 (9th
Cir. 2014).
As currently drafted, § 1442(a)(1) provides for removal
of:
A civil action . . . that is against or directed to
. . . [t]he United States or any agency thereof
or any officer (or any person acting under
that officer) of the United States or of any
agency thereof, in an official or individual
capacity, for or relating to any act under color
of such office or on account of any right, title
or authority claimed under any Act of
Congress for the apprehension or punishment
of criminals or the collection of the revenue.
28 U.S.C. § 1442(a)(1) (emphasis added).
In order to invoke § 1442(a)(1), a private person must
establish: “(a) it is a person within the meaning of the statute;
(b) there is a causal nexus between its actions, taken pursuant
to a federal officer’s directions, and [the] plaintiff’s claims;
and (c) it can assert a colorable federal defense.” Riggs v.
Airbus Helicopters, Inc., 939 F.3d 981, 986–87 (9th Cir.
2019) (quoting Fidelitad, Inc. v. Insitu, Inc., 904 F.3d 1095,
1099 (9th Cir. 2018)). To demonstrate a causal nexus, the
private person must show: (1) that the person was “acting
under” a federal officer in performing some “act under color
of federal office,” and (2) that such action is causally
connected with the plaintiffs’ claims. See Goncalves ex rel.
Goncalves v. Rady Children’s Hosp. San Diego, 865 F.3d
1237, 1244 (9th Cir. 2017).
COUNTY OF SAN MATEO V. CHEVRON CORP. 25
The parties focus on the first prong: whether the Energy
Companies were “acting under” a federal officer’s directions.
We begin by providing some background. The federal officer
removal statute has existed in some version since 1815.
Willingham v. Morgan, 395 U.S. 402, 405 (1969). Although
Congress has amended the statute on a number of occasions,
see Watson v. Philip Morris Cos., 551 U.S. 142, 147–49
(2007), most recently in 2011, see Removal Clarification Act
of 2011 § 2, the purpose of the statute has remained
essentially the same: “The statute’s history and th[e] Court’s
cases demonstrate that its basic purpose is to protect the
Federal Government from the interference with its operations
that would ensue were a State able, for example, to arrest and
bring to trial in a State court for an alleged offense against the
law of the State, officers and agents of the Government acting
. . . within the scope of their authority.” Watson, 551 U.S.
at 150 (cleaned up) (quoting Willingham, 395 U.S. at 406).
Congress thought that allowing a federal officer to remove a
state action was necessary because “[s]tate-court proceedings
may reflect ‘local prejudice’ against unpopular federal laws
or federal officials” and “deprive federal officials of a federal
forum in which to assert federal immunity defenses.” Id.(citation omitted). Moreover, state-court proceedings may
have the effect of impeding or delaying the enforcement of
federal law. Id. The federal officer removal statute should be
“liberally construed” to fulfill its purpose of allowing federal
officials and agents who are being prosecuted in state court
for acts taken in their federal authority to remove the case to
federal court. Id. at 147 (citation omitted).
When Congress first enacted § 1442(a)(1), the phrase
“officer of the United States” was generally understood as a
term of art that referred to federal officers who “exercis[ed]
significant authority.” Int’l Primate Prot. League v. Adm’rs
26 COUNTY OF SAN MATEO V. CHEVRON CORP.
of Tulane Educ. Fund, 500 U.S. 72, 81 (1991) (quoting
Buckley v. Valeo, 424 U.S. 1, 126 (1976)). In 1948, Congress
amended the statute to include the language “person[s] acting
under” any officer of the United States. Act of June 25, 1948,
ch. 646, § 1442, 62 Stat. 869, 938 (codified at 28 U.S.C.
§ 1442). At the time, this change was understood as
extending the section to apply to employees, as well as
officers. Int’l Primate Prot. League, 500 U.S. at 84 (quoting
H.R. Rep. No. 80-308, at A134 (1947)).
The Supreme Court subsequently interpreted the term
“person acting under that officer” as extending to a “private
person” who has certain types of close relationships with the
federal government. See Watson, 551 U.S. at 152–53. The
Supreme Court has identified a number of factors courts
should consider in determining whether a private person is
“acting under” a federal officer for purposes of § 1442(a)(1).
Among other things, the Court considers whether the person
is acting on behalf of the officer in a manner akin to an
agency relationship. See id. at 151 (private person must be
authorized to act “with or for federal officers”); see also
Goncalves, 865 F.3d at 1246 (holding that a private person
qualified as “acting under” a federal officer when it was
“serving as the government’s agent”); Cabalce v. Thomas E.
Blanchard & Assocs., Inc., 797 F.3d 720, 729 (9th Cir. 2015)
(noting that a company’s independent-contractor status
supported the conclusion that it was not acting under a federal
officer). The Court also considers whether the person is
subject to the officer’s close direction, such as acting under
the “subjection, guidance, or control” of the officer, or in a
relationship which “is an unusually close one involving
detailed regulation, monitoring, or supervision.” Watson,
551 U.S. at 151, 153 (citation omitted); see also Leite,
749 F.3d at 1120, 1124 (holding that a defense contractor
COUNTY OF SAN MATEO V. CHEVRON CORP. 27
properly removed a case under § 1442(a)(1) based, in part, on
“the Navy’s detailed specifications regulating the warnings
that equipment manufacturers were required to provide”).
Third, the Court considers whether the private person is
assisting the federal officer in fulfilling “basic governmental
tasks” that “the Government itself would have had to
perform” if it had not contracted with a private firm. Watson,
551 U.S. at 153–54; see also Goncalves, 865 F.3d at 1246–47
(holding that private person fulfilled a basic governmental
task by pursuing subrogation claims on behalf of a
government agency). Finally, taking into account the purpose
of § 1442(a)(1), the Court has considered whether the private
person’s activity is so closely related to the government’s
implementation of its federal duties that the private person
faces “a significant risk of state-court ‘prejudice,’” just as a
government employee would in similar circumstances, and
may have difficulty in raising an immunity defense in state
court. Watson, 551 U.S. at 152 (citation omitted).
As the Supreme Court has indicated, and circuit courts
have held, a government contractor may meet the criteria for
“acting under” an officer under certain circumstances. See id.at 153–54. Watson cited with approval a Fifth Circuit case,
Winters v. Diamond Shamrock Chemical Co., which held that
a government contractor could remove a state action under
§ 1442(a) because the contractor was acting on behalf of the
government to produce Agent Orange, a carcinogenic
herbicide used as part of the war strategy in Vietnam, and was
acting under the close direction of the federal government
which had provided “detailed specifications concerning the
make-up, packaging, and delivery of Agent Orange,” as well
as “on-going supervision . . . over the formulation, packaging,
and delivery of Agent Orange.” 149 F.3d 387, 399–400 (5th
Cir. 1998). Further, the contractor provided a product that
28 COUNTY OF SAN MATEO V. CHEVRON CORP.
was “used to help conduct a war” and at least arguably
“performed a job that, in the absence of a contract with a
private firm, the Government itself would have had to
perform.” Watson, 551 U.S. at 153–54; see also Goncalves,
865 F.3d at 1246–47 (holding that a private contractor was
“acting under” a federal officer when it was serving as an
agent for the government and assisting the government in
fulfilling basic duties).
By contrast, a person is not “acting under” a federal
officer when the person enters into an arm’s-length business
arrangement with the federal government or supplies it with
widely available commercial products or services. See
Cabalce, 797 F.3d at 727–29; Baltimore, 952 F.3d at 463–64;
cf. Goncalves, 865 F.3d at 1244–47; Winters, 149 F.3d
at 398–400. Nor does a person’s “compliance with the law
(or acquiescence to an order)” amount to “‘acting under,’ a
federal officer who is giving an order or enforcing the law.”
Watson, 551 U.S. at 152. This is true “even if the regulation
is highly detailed and even if the private firm’s activities are
highly supervised and monitored.” Id. at 153. We may not
interpret § 1442(a) so as to “expand the scope of the statute
considerably, potentially bringing within its scope state-court
actions filed against private firms in many highly regulated
industries.” Id.
The Energy Companies argue that they meet the criteria
under § 1442(a) to remove the Counties’ complaints because
they were “persons acting under” a federal officer based on
three agreements with the government.9 They also argue that
9
We have held that corporations are “person[s]” under § 1442(a)(1),
Goncalves, 865 F.3d at 1244, so there is no dispute that the Energy
Companies meet this requirement.
COUNTY OF SAN MATEO V. CHEVRON CORP. 29
there is a causal nexus between their actions under those
agreements and the Counties’ claims. We consider each of
these agreements in turn.
We first consider CITGO’s fuel supply agreements with
the Navy Exchange Service Command (NEXCOM). Under
these contracts, CITGO agreed to supply gasoline and diesel
fuel to NEXCOM for service stations on approximately forty
U.S. Navy installations. The government resold the CITGO
fuel at NEXCOM facilities to individual service members.
The Energy Companies point to three sets of contractual
requirements in the fuel supply agreements which they claim
establish the “subjection, guidance or control” necessary to
invoke federal jurisdiction, namely: (1) “fuel specifications”
that required compliance with specified American Society for
Testing and Material Standards and required that NEXCOM
have a qualified independent source analyze the products for
compliance with those specifications; (2) provisions that give
the Navy the right to inspect delivery, site, and operations;
and (3) branding and advertising requirements.10
10
The Energy Companies cite the following sections in the fuel
supply agreements. First, the fuel specification provisions require CITGO
to “provide high quality gasoline product identical to or the same product
as supplied [by] the contractor[’]s commercially operated gasoline service
station [e.g., regular leaded, regular unleaded, and premium unleaded].”
The “[m]otor fuel products supplied” by CITGO were required to comply
with the generic standards promulgated by the American Society for
Testing and Materials, and the Navy agreed to “have a qualified
independent source analyze the products provided [by CITGO],” including
any product that was “suspected of being faulty/inferior.” Second, the
inspection provisions gave the Navy the right to “visually check truck
compartment(s) before and after deliveries” of fuel and to conduct
“general operational reviews,” which “might also include inspections of
. . . vehicles.” Third, the branding provisions require CITGO to “supply
all necessary equipment, including signage, for each facility,” to
30 COUNTY OF SAN MATEO V. CHEVRON CORP.
This argument fails. The provisions on which the Energy
Companies rely “seem typical of any commercial contract”
and are “incidental to sale and sound in quality assurance.”
Baltimore, 952 F.3d at 464. The contracts evince an arm’s-
length business relationship to supply NEXCOM with
generally available commercial products. See id. Supplying
gasoline to the Navy for resale to its employees is not an
activity so closely related to the government’s
implementation of federal law that the person faces “a
significant risk of state-court prejudice.” Watson, 551 U.S.
at 152. Accordingly, we hold that CITGO was not “acting
under” a federal officer by supplying gasoline and diesel fuel
to NEXCOM pursuant to fuel supply contracts.
Second, the Energy Companies point to the 1944 unit
agreement11 for the petroleum reserves at Elk Hills between
Standard Oil Company of California (Chevron Corporation’s
predecessor in interest) and the U.S. Navy. We have detailed
the history of this unit agreement at length in our prior
decisions. See United States v. Standard Oil Co. of Cal.,
545 F.2d 624, 626–28 (9th Cir. 1976). In brief, Standard
owned one-fifth and the Navy owned four-fifths of the
“incorporate the Government logo on at least three . . . provided signage
fixtures,” and to supply “[a] standard service station rotating-fixed neon
or incandescent street corner station identification sign . . . for each
Government fueling station.” And CITGO could submit “proposals on
[CITGO] branded products,” but the government was not obligated to
market “said product under [CITGO’s] brand or trade name.”
11
“A unit agreement was at that time and still is a common
arrangement in the petroleum industry where two or more owners have
interests in a common pool. Under such an arrangement, the pool is
operated as a unit and the parties share production and costs in agreed-
upon proportions.” United States v. Standard Oil Co. of California,
545 F.2d 624, 627 (9th Cir. 1976).
COUNTY OF SAN MATEO V. CHEVRON CORP. 31
approximately 46,000 acres comprising the Elk Hills
reserves. As is common in the oil exploration and production
industry, the two landowners entered into a unit agreement to
coordinate operations in the oil field and production of the
oil. Because the Navy sought to limit oil production in order
to ensure the availability of oil reserves in the event of a
national emergency, the unit agreement required that both
Standard and the Navy curtail their production and gave the
Navy “exclusive control over the exploration, prospecting,
development, and operation of the Reserve.” To compensate
Standard for reducing production, the unit agreement gave
Standard the right to produce a specified amount of oil per
day (an average of 15,000 barrels per day). Both parties
could dispose of the oil they extracted as they saw fit, and
neither had a “preferential right to purchase any portion of the
other’s share of [the] production.”
Standard’s activities under the unit agreement did not give
rise to a relationship where Standard was “acting under” a
federal officer for purposes of § 1442. Standard was not
acting on behalf of the federal government in order to assist
the government perform a basic government function.
Rather, Standard and the government reached an agreement
that allowed them to coordinate their use of the oil reserve in
a way that would benefit both parties: the government
maintained oil reserves for emergencies, and Standard
ensured its ability to produce oil for sale. When Standard
extracted oil from the reserve, Standard was acting
independently, see Cabalce, 797 F.3d at 728–29, not as the
Navy’s “agent,” Goncalves, 865 F.3d at 1246; see also H.R.
Rep. No. 112-17, pt. 1, at 3 (2011) (“Removal is allowed only
when the acts of Federal defendants are essentially ordered or
demanded by Federal authority . . . .”). And Standard’s
arm’s-length business arrangement with the Navy does not
32 COUNTY OF SAN MATEO V. CHEVRON CORP.
involve conduct so closely related to the government’s
implementation of federal law that the Energy Companies
would face “a significant risk of state-court ‘prejudice.’”
Watson, 551 U.S. at 152.12
Finally, we consider the Energy Companies’ lease
agreements, entitled “Oil and Gas Leases of Submerged
Lands Under the Outer Continental Shelf Lands Act.” Under
these standard-form leases, the government grants the lessee
the right to explore and produce oil and gas resources in the
submerged lands of the outer Continental Shelf, and in
exchange the lessee agrees to pay the government rents and
royalties. The Energy Companies argue that the lessee
Energy Companies were “acting under” a federal officer
because the leases require that the lessees drill for oil and gas
pursuant to government-approved exploration plans and that
the lessees sell some of their production to certain buyers;
specifically, lessees must offer twenty percent of their
production to “small or independent refiners” and must give
12
At oral argument, the Energy Companies argued for the first time
that Standard was “acting under” a federal officer pursuant to the Naval
Petroleum Reserves Production Act of 1976, Pub. L. 94-258, § 201,
90 Stat. 303 (1976), which directed the Secretary of the Navy to “produce
such reserves [including the Elk Hill reserve] at the maximum efficient
rate consistent with sound engineering practices for a period not to exceed
six years” and to “sell or otherwise dispose of the United States share of
such petroleum produced from such reserves.” § 201, 90 Stat. at 308.
Nothing in the record indicates that the Secretary of the Navy “ordered or
demanded,” H.R. Rep. No. 112-17, pt. 1, at 3 (2011), reprinted in 2011
U.S.C.C.A.N. 420, 422, that Standard produce oil on behalf of the Navy,
see also Baltimore, 952 F.3d at 471 (“[W]e are left wanting for pertinent
details about Standard’s role in operating the Elk Hills Reserve and
producing oil therefrom on behalf of the Navy.”). Therefore, the Energy
Companies’ reliance on this Act is misplaced.
COUNTY OF SAN MATEO V. CHEVRON CORP. 33
the United States the right of first refusal in time of war or
“when the President of the United States shall so prescribe.”
This argument also fails. The leases do not require that
lessees act on behalf of the federal government, under its
close direction, or to fulfill basic governmental duties. Nor
are lessees engaged in an activity so closely related to the
government’s function that the lessee faces “a significant risk
of state-court ‘prejudice.’” Id. In fact, the lease requirements
largely track legal requirements, for instance, that the lessee
offer 20 percent of the “crude oil, condensate, and natural gas
liquids produced on [the] lease . . . to small or independent
refiners,” 43 U.S.C. § 1337(b)(7), and that “[i]n time of war,
or when the President shall so prescribe, the United States
shall have the right of first refusal to purchase at the market
price all or any portion of any mineral produced from the
outer Continental Shelf,” 43 U.S.C. § 1341(b). Mere
“compl[iance] with the law, even if the laws are ‘highly
detailed, and thus leave [an] entity ‘highly regulated,’” does
not show that the entity is “acting under” a federal officer.
Goncalves, 865 F.3d at 1245 (quoting Watson, 551 U.S.
at 151–53). We agree with the Fourth Circuit that “the
willingness to lease federal property or mineral rights to a
private entity for the entity’s own commercial purposes,
without more” cannot be “characterized as the type of
assistance that is required” to show that the private entity is
“acting under” a federal officer. Baltimore, 952 F.3d at 465.
Accordingly, the leases on which the defendants rely do not
give rise to the “unusually close” relationship where the
lessee was “acting under” a federal officer. Watson, 551 U.S.
at 153.
Because we conclude that the Energy Companies have not
carried their burden of proving by a preponderance of the
34 COUNTY OF SAN MATEO V. CHEVRON CORP.
evidence that they were “acting under” a federal officer, we
do not reach the question whether actions pursuant to the fuel
supply agreement, unit agreement, or lease agreement had a
causal nexus with the Counties’ complaints, or whether the
Energy Companies can assert a colorable federal defense.
See Fidelitad, 904 F.3d at 1099.
***
We affirm the district court to the extent it held there was
no subject-matter jurisdiction under 28 U.S.C. § 1442(a)(1),
and we dismiss the remainder of the appeals for lack of
jurisdiction under § 1447(d).
AFFIRMED IN PART; DISMISSED IN PART.13
13
The Counties’ Motion for Partial Dismissal (ECF No. 41) is
GRANTED. See Patel, 446 F.3d at 1000. Costs shall be taxed against
the Energy Companies.