The U.S. Supreme Court on Monday examined whether dozens of lawsuits brought by Louisiana communities against major oil and gas companies should remain in state courts or move to the federal system. The decision could reshape not only the future of the long-running coastal damage litigation but also how companies that once worked as government contractors defend similar claims nationwide.
At issue are more than 40 lawsuits filed by Louisiana coastal parishes and the state’s attorney general, seeking billions of dollars from energy companies for alleged environmental harm along the state’s fragile coastline. The cases accuse oil producers of violating Louisiana law by failing to obtain proper permits or by breaching permit conditions while operating in coastal areas.
During oral arguments, the justices focused on a narrow but consequential legal question: whether the companies can shift the cases to federal court by claiming they acted under federal authority during World War II. Energy companies, including Chevron and Exxon Mobil, argue that their oil production tied to wartime refinery contracts places the lawsuits within federal jurisdiction.
Justices question reach of federal contractor defense
Chevron’s lawyer, Paul Clement, told the court that federal law allows contractors acting under federal officers to remove cases from state court. He relied on statutory language expanded in 2011, which allows federal jurisdiction over claims “for or relating to” actions taken under federal authority. According to Chevron, that language covers oil production that supported government-directed wartime refining.
Lower courts have disagreed. In 2024, a divided panel of the Fifth U.S. Circuit Court of Appeals ruled that oil exploration and production did not sufficiently relate to refinery contracts to justify federal jurisdiction. Louisiana urged the Supreme Court to uphold that ruling so the cases can proceed in state court.
Louisiana Solicitor General Ben Aguinaga told the justices that the lawsuits target environmental violations that occurred both before and after 1980, when the state’s coastal management law took effect. He said the companies do not dispute that they discharged billions of gallons of “produced water,” a byproduct of oil extraction, into coastal marshes. Aguinaga argued that this conduct, not wartime contracts, sits at the heart of the cases.
Several justices expressed concern about how far the federal contractor defense could extend. Chief Justice John Roberts questioned where courts should draw the line if “relating to” receives an expansive reading. Justice Ketanji Brown Jackson noted that Congress described the 2011 amendment as a minor, conforming change, not a dramatic expansion of federal jurisdiction.
The stakes remain high for the companies. In April 2025, a Louisiana jury ordered Chevron to pay more than $740 million to Plaquemines Parish in one of the cases. Chevron cited that verdict as evidence that state court proceedings pose significant risks.
The Trump administration backed the companies’ position, despite Louisiana’s Republican leadership. A Justice Department lawyer argued that assisting the federal government during wartime placed the companies under federal supervision. Justice Brett Kavanaugh appeared receptive to that argument and questioned whether concerns about fairness in state courts motivate the push for a federal forum.
The Supreme Court is expected to issue a decision by June. Its ruling could influence not only the Louisiana cases but also future lawsuits involving government contractors seeking to move disputes out of state courts and into federal jurisdiction.
