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Federal Regulations Advisor Insight and Commentary on U.S. Government Regulatory Affairs

Deepwater Horizon – Agency Actions, Injunctions, and (Not) Contempt

Posted in Judicial Review & Remedies

On April 20, 2010, the Deepwater Horizon exploded and sent a gusher of oil into the Gulf of Mexico.  Deepwater Horizon also sent a gusher of litigation into the federal courts:  the recent decision in Hornbeck Offshore Services, LLC v. Salazar illustrates the care needed in seeking and enforcing an injunction against an agency of the United States.  While Hornbeck may have been right that Salazar violated the Administrative Procedure Act (APA) in barring deepwater oil trilling for six months, all of its efforts were for naught, undercut by an injunction tailored to a too-specific situation, rather than a specific result.  When a court enjoins an agency from taking a specific action, that injunction is narrowly construed and does not preclude the agency taking action not encompassed within the injunction.

Background:  The legal drama truly begins a week after the Deepwater Horizon disaster when Department of the Interior (DOI) Secretary Salazar decreed in May 2010 a six month suspension of all offshore drilling operations of deepwater wells in the Gulf of Mexico and the Pacific, including a cessation of current operations.  Hornbeck filed suit and was granted a preliminary injunction that DOI, its subsidiary components, and

their servants, agents, successor agencies and employees, and all persons in active concert of participation with them, who receive actual Notice of this Preliminary injunction [were] immediately prohibited from enforcing the Moratorium, entitled “Suspension of Outer Continental Shelf (OCS) Drilling of New Deepwater Wells” dated May 28, 2010, and NTL No. 2010-N04 seeking implementation of the Moratorium, as applied to all drilling on the OCS in water at depths greater than 500 feet.

DOI took appropriate steps to comply, but also appealed the preliminary injunction, and did not stop there.  Secretary Salazar announced that, based on “ever-growing evidence, I will issue a new order in the coming days that eliminates any doubt that a moratorium is needed, appropriate, and within our authorities.”

DOI rescinded the enjoined May 2010 directive and substituted a new directive having the same effect “in scope and substance” in July 2010, but with substantially more analysis and justification.  After additional jockeying, Hornbeck moved to enforce the preliminary injunction, arguing that by rescinding and replacing the May Directive, DOI had chosen to disobey the district court’s order rather than permit an orderly judicial review.  The district court denied the motion, noting the intervening court of appeals decision that the underlying appeal was mooted by the rescission of the May Directive.  The district court, however, found DOI in contempt and awarded attorneys fees for violating the preliminary injunction.

Decision:  On appeal of the contempt and attorney fee order, the United States Court of Appeals for the Fifth Circuit reversed.  The court of appeals found that DOI’s actions were not barred by the preliminary injunction, and, in detail, that DOI was not required to seek relief from the injunction before proceeding further as it did:

The injunction did not state that Interior had to seek permission for a remand before developing additional rules on offshore drilling in the Gulf.  The only mandate about returning to the court was that Interior provide a report describing “the manner and form” of its compliance with the injunction within 21 days.  There has been no allegation that it failed in that duty.  For Interior to have been in contempt, the injunction would have had to include an obligation to petition for a remand.

The issue presented by this case is not whether DOI violated the Administrative Procedure Act:

The district court dealt expeditiously and forcefully with extremely significant litigation.  The potential APA violations that led to the initial injunction are not at issue today, but such violations, if significant, would justify a district court’s consideration of an injunction.  Our decision is a narrow one.  We conclude that there is no clear and convincing evidence that Interior’s actions after the injunction violated the clear terms of the injunction as drafted. Therefore, there was no civil contempt.

And further:

In essence, the company argues that by continuing in its pursuit of an effective moratorium, the Interior Department ignored the purpose of the district court’s in-junction.  If the purpose were to assure the resumption of operations until further court order, it was not clearly set out in the injunction.  A more broadly worded injunction that explicitly prohibited the end-run taken by Interior would have set up issues more clearly supportive of contempt.

Dissent:  The decision was not unanimous, befitting the fact-intensive nature the contempt issues.  The dissent suggests that permitting DOI to avoid the injunction undermined the independence of the judiciary and took a different view of the totality of the facts:

Here, the purpose of the district court’s order was clear:  Interior could not enforce the May Moratorium on drilling.  By, among other things, referring to the May Moratorium as “in place” without simultaneously indicating that drilling could proceed pursuant to the court’s injunction, emphasizing its immediate intent to issue a new, identical moratorium, and notifying only the thirty-three wells that were being drilled at the time of the Deepwater Horizon incident, Interior ensured that the May Moratorium remained de facto in place.  Considering these circumstances as a whole, the district court concluded that “each step the government took following the Court’s imposition of a preliminary injunction show-case[d] its defiance” of the court’s order.

The dissent accordingly would have affirmed the contempt citation.

Lesson:  Injunctions, whether preliminary or final, against an agency of the United States are very specific, narrowly drawn, and narrowly construed.  In this instance, the injunction barred only limited actions, and DOI acted to reinforce its position outside the strictures of the injunction.

Attorneys need to be thoroughly familiar not only with an agency’s substantive authorities, but the complex of administrative law tools available to the agency and to private parties in contest with the agency to ensure that an agency may not avoid (or evade) an injunction by taking other administrative actions.  Private attorneys must craft a proposed injunction and the court adopt an injunction that bars the agency from a result, not just a document.

No aspect of Deepwater Horizon or the administrative process that followed can be considered an exemplary lesson – whether oil drilling or administrative law and litigation.  Hornbeck exemplifies the need for great care in constructing injunctions against the United States and its agencies.