Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-18-15502/USCOURTS-ca9-18-15502-0/pdf.json

Nature of Suit Code: 245
Nature of Suit: Real Property Product Liability
Cause of Action: 

---

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

COUNTY OF SAN MATEO,

individually and on behalf of the

People of the State of California,

Plaintiff-Appellee,

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

No. 18-15499

D.C. No.

3:17-cv-04929-VC

Case: 18-15502, 05/26/2020, ID: 11700225, DktEntry: 194-1, Page 1 of 34
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,

individually and on behalf of the

People of the State of California,

Plaintiff-Appellee,

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

No. 18-15502

D.C. No.

3:17-cv-04934-VC

Case: 18-15502, 05/26/2020, ID: 11700225, DktEntry: 194-1, Page 2 of 34
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

and on behalf of the People of the

State of California,

Plaintiff-Appellee,

v.

CHEVRON CORPORATION;

CHEVRON U.S.A. INC.;

EXXONMOBIL CORPORATION; BP

No. 18-15503

D.C. No.

3:17-cv-04935-VC

Case: 18-15502, 05/26/2020, ID: 11700225, DktEntry: 194-1, Page 3 of 34
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.

Case: 18-15502, 05/26/2020, ID: 11700225, DktEntry: 194-1, Page 4 of 34
COUNTY OF SAN MATEO V. CHEVRON CORP. 5

COUNTY OF SANTA CRUZ,

individually and on behalf of The

People of the State of California;

CITY OF SANTA CRUZ, a

municipal corporation,

individually and on behalf of The

People of the State of California;

CITY OF RICHMOND, individually

and on behalf of The People of

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

No. 18-16376

D.C. Nos.

3:18-cv-00450-VC

3:18-cv-00458-VC

3:18-cv-00732-VC

OPINION

Case: 18-15502, 05/26/2020, ID: 11700225, DktEntry: 194-1, Page 5 of 34
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

Case: 18-15502, 05/26/2020, ID: 11700225, DktEntry: 194-1, Page 6 of 34
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 federalofficer 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 nonreviewability 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.

Case: 18-15502, 05/26/2020, ID: 11700225, DktEntry: 194-1, Page 7 of 34
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.

Case: 18-15502, 05/26/2020, ID: 11700225, DktEntry: 194-1, Page 8 of 34
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. ZwangWeissman, Morgan Lewis & Bockius LLP, Los Angeles,

California; for Defendant-Appellant Anadarko Petroleum

Corporation.

Case: 18-15502, 05/26/2020, ID: 11700225, DktEntry: 194-1, Page 9 of 34
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 DefendantAppellant 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 DefendantsAppellants 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.

Case: 18-15502, 05/26/2020, ID: 11700225, DktEntry: 194-1, Page 10 of 34
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 DefendantAppellant 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.

Case: 18-15502, 05/26/2020, ID: 11700225, DktEntry: 194-1, Page 11 of 34
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.

Case: 18-15502, 05/26/2020, ID: 11700225, DktEntry: 194-1, Page 12 of 34
COUNTY OF SAN MATEO V. CHEVRON CORP. 13

Bruce Reed Goodmiller and Rachel H. Sommovilla, City

Attorney’s Office, Richmond, California, for PlaintiffAppellee 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.

Case: 18-15502, 05/26/2020, ID: 11700225, DktEntry: 194-1, Page 13 of 34
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.”

Case: 18-15502, 05/26/2020, ID: 11700225, DktEntry: 194-1, Page 14 of 34
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,2and 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).

Case: 18-15502, 05/26/2020, ID: 11700225, DktEntry: 194-1, Page 15 of 34
16 COUNTY OF SAN MATEO V. CHEVRON CORP.

grounds on which the Energy Companies relied for subjectmatter 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 “nonreviewability 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

Case: 18-15502, 05/26/2020, ID: 11700225, DktEntry: 194-1, Page 16 of 34
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).

Case: 18-15502, 05/26/2020, ID: 11700225, DktEntry: 194-1, Page 17 of 34
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

Case: 18-15502, 05/26/2020, ID: 11700225, DktEntry: 194-1, Page 18 of 34
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).

Case: 18-15502, 05/26/2020, ID: 11700225, DktEntry: 194-1, Page 19 of 34
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).

Case: 18-15502, 05/26/2020, ID: 11700225, DktEntry: 194-1, Page 20 of 34
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).

Case: 18-15502, 05/26/2020, ID: 11700225, DktEntry: 194-1, Page 21 of 34
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

Case: 18-15502, 05/26/2020, ID: 11700225, DktEntry: 194-1, Page 22 of 34
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. RamosMedina, 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

Case: 18-15502, 05/26/2020, ID: 11700225, DktEntry: 194-1, Page 23 of 34
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).

Case: 18-15502, 05/26/2020, ID: 11700225, DktEntry: 194-1, Page 24 of 34
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

Case: 18-15502, 05/26/2020, ID: 11700225, DktEntry: 194-1, Page 25 of 34
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

Case: 18-15502, 05/26/2020, ID: 11700225, DktEntry: 194-1, Page 26 of 34
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

Case: 18-15502, 05/26/2020, ID: 11700225, DktEntry: 194-1, Page 27 of 34
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.

Case: 18-15502, 05/26/2020, ID: 11700225, DktEntry: 194-1, Page 28 of 34
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

independentsource analyze the products provided [byCITGO],” 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

Case: 18-15502, 05/26/2020, ID: 11700225, DktEntry: 194-1, Page 29 of 34
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’slength 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

agreement11for 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 agreedupon proportions.” United States v. Standard Oil Co. of California,

545 F.2d 624, 627 (9th Cir. 1976).

Case: 18-15502, 05/26/2020, ID: 11700225, DktEntry: 194-1, Page 30 of 34
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

Case: 18-15502, 05/26/2020, ID: 11700225, DktEntry: 194-1, Page 31 of 34
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.

Case: 18-15502, 05/26/2020, ID: 11700225, DktEntry: 194-1, Page 32 of 34
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 EnergyCompanies have not

carried their burden of proving by a preponderance of the

Case: 18-15502, 05/26/2020, ID: 11700225, DktEntry: 194-1, Page 33 of 34
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.

Case: 18-15502, 05/26/2020, ID: 11700225, DktEntry: 194-1, Page 34 of 34