Texas Federal Court Splits Environmental Claims: CERCLA Claims Remain in Federal Court, State Claims are Remanded to State Court

The United States District Court for the Southern District of Texas in May v. Apache Corporation, 2012 WL 156547 (S.D.Tex. May 1, 2012) issued an interesting decision on the relationship between federal and state environmental claims and where they can be heard. The case has some parallels to a case pending in the New Jersey State court captioned the New Jersey Department of Environmental Protection v. Occidental Chemical Corp., et als.

In the May case, plaintiffs had filed various state law claims and a jury demand that lingered for four years in the Texas state court arising out of drilling for and production of oil and gas on the plaintiffs’ property. On the eve of trial, plaintiffs amended their pleadings to advance CERCLA causes of action based on alleged groundwater contamination. The defendants promptly removed the entire case to federal court.

On the remand hearing, the federal court held that CERCLA is an exclusive federal jurisdiction matter and claims brought under CERCLA could not be remanded. Plaintiffs, perhaps regretting the assertion of their CERCLA claims, back-tracked, arguing that their federal causes of action were premature. Premature or not, since they did not dismiss the federal claims, the Court held that those claims had to remain in the federal court.

The next issue was what to do with the state law claims. If the claims were so related to the federal CERCLA claims that they formed a part of the same case or controversy under Article III analysis, the court would have supplemental jurisdiction. If not, then the court would have to sever and remand the state claims under 28 U.S.C. § 1441(c)(2).

The court determined that the claims were sufficiently intertwined for supplemental jurisdiction, but noted that if the State claims raise a novel issue of state law, or the state claims substantially predominate over the federal claims, or the state claims are dismissed or such other exceptional circumstances exist, the court could decline jurisdiction under its analysis of 28 U.S.C § 1367(a).

In reviewing the factors, the court found that the key factor was that the state claims were subject to a jury trial and the federal claims to a bench trial. As a result, the court remanded the state claims. In contrast, in the New Jersey case which was also removed to federal court, the federal court noted that NJDEP had amended its pleadings and pled around CERCLA. See New Jersey Department of Environmental Protection et als. v. Occidental Chemical Corp., et als, docket No. 2006 cv 00 401 (Jan. 27, 2006). In cases where the plaintiff has cast its claims as state claims, the federal court only has very narrow grounds for jurisdiction over removed state claims. The New Jersey federal court determined that unless CERCLA completely preempted the state claims, it did not have jurisdiction. Further, the federal court determined that CERCLA did not completely preempt state law and accordingly, remanded the entire action to the state court.

Both the May case and the Occidental Chemical case illustrate the importance of careful drafting of an environmental complaint.

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