The Supreme Court is expected to issue a decision that could broaden – or restrict – a federal contractors’ ability to remove litigation into federal district court.

Looking Back at the Federal Officer Removal Statute and Chevron

Since the early nineteenth century, federal law protected only federal officers from state court litigation. Over time, this protection expanded to include anyone acting on behalf of the federal government in any capacity, including federal government contractors. Removal to federal court can be a powerful option for contractors.

The Chevron USA Inc. v. Plaquemines Parish, Louisiana case, argued January 12, 2026, comes out of events from almost a century ago.  During World War II, the U.S. Government contracted with Chevron to produce a quantity of high-octane aviation gasoline (“avgas”), a type of aircraft fuel made from crude oil. To meet demand for avgas, Chevron agreed to produce and conduct a variety of offshore and coastal oil drilling. In 2013, Plaquemines Parrish and the State of Louisiana filed suit against Chevron (and several other related oil companies) alleging ecological damage in Louisiana’s coastal wetlands violated the State and Local Coastal Resources Management Act of 1978. In response, Chevron sought to remove the case to a U.S. District Court under the Federal Officer Removal Statute (28 U.S.C. § 1442). A divided Fifth Circuit panel ruled on appeal that Chevron did not have “sufficient connection with directives in their federal refinery contracts” because only the oil companies refinery activities were “acting under” a federal officer but not the production activities, and therefore failed under a connection or association test.

Looking Forward: Clarifying the Standard under the Federal-Officer Removal Statute

The U.S. Supreme Court will address the narrow question, whether a federal contractor can remove litigation to federal court when sued for oil-production activities undertaken to fulfill a federal oil-refinement contract, that could have broad implications. The decision could impact how easily government contractors can remove state court litigation into federal court, effectively deciding whether government contractors enjoy the benefit of removal when acting on behalf of the government.

The Court’s decision will turn on how it interprets the following three issues, each with significant implications for contractor liability:

  • Causal Nexus vs “Relating To” Standard: Chevron argued that its activities were “relating to” direct support of fulfilling their WWII-era government contracts as a critical resource in supporting U.S. warfighting efforts. However, Plaquemines Parrish argues that a causal nexus is required for Chevron to invoke the federal officer removal statute, since their contract did not require oil production that they would refine themselves.
  • Expanding the Colors: If Chevron prevails, removal will reach conduct “relating to” federal direction, not simply acts expressly directed by the government. That would make it easier to remove suits over second- and third-order effects of fulfilling federal contracts (e.g., litigation arising from environmental damage caused by the supply chains used to meet wartime requirements).
  • Narrowing the Scope: If Plaquemine Parrish prevails, contractors will need to show that specific acts being challenged were required or tightly constrained by federal contract language or directives. Here, the alleged lack of federal direction of Chevron to not specifically produce oil they were contracted to refine would be enough to prevent removal.

Looking Ahead

Whether the Supreme Court will interpret the 2011 amendment to the law in a way that will “broaden the universe of acts that enable removal” remains to be seen.  Contractors may ultimately need to scrutinize their federal obligations more carefully, potentially seeking clarification or negotiating protective clauses, to avoid exposure to state or local lawsuits stemming from federally directed work. This will be especially important for contractors operating in states with active regulatory schemes and enforcement.

Drawing on extensive experience supporting contractors, Fluet’s Government Contracts, Litigation + Investigations, and Corporate + Transactional Practices are closely monitoring this related cases and are ready to assist clients in navigating these complex issues.