By Sarah Y. Dicharry and Robert E. Holden
Following the Deepwater Horizon incident in May 2010, the DOI imposed a six-month moratorium on the issuance of new drilling permits in deep water and directed then-operating lessees to stop operations at the soonest time practicable. The DOI implemented the moratorium on issuance of new leases through a directive and Notice to Lessees (NTL), explaining that the DOI would not review applications for leases in deep water for the following six months. The DOI further implemented the moratorium on then-current leases by issuing letters to the lease operators.
In response to the moratorium, Hornbeck (an owner and operator of vessels that support deepwater operations) sued the DOI seeking declaratory and injunctive relief. Specifically, Hornbeck claimed that by issuing the directive and the NTL, the Secretary of the Interior violated the Administrative Procedure Act and exceeded his authority under the Outer Continental Shelf Lands Act. The district court granted the preliminary injunction, which prohibited the DOI from enforcing the Moratorium without providing greater explanation for its authority to do so. The DOI rescinded the initial moratorium and replaced it with second moratorium. The second moratorium was substantively identical to the first, but the DOI provided a more extensive explanation for the moratorium.
After the DOI issued its second moratorium, Hornbeck filed a motion to enforce the preliminary injunction. Specifically, Hornbeck argued that the DOI’s rescission and re-issuance of the moratorium disobeyed the court’s order enjoining enforcement of the initial moratorium. The court denied the motion. Shortly thereafter, the Secretary lifted the second moratorium, effectively mooting Hornbeck’s case.
Hornbeck then sought attorneys fees based on civil contempt and bad-faith litigation tactics. Hornbeck supported the civil contempt claim by demonstrating: (1) the DOI’s failure to seek a remand to the agency before taking additional administrative action; (2) the DOI’s continued public indications that it would reinstate the moratorium; and (3) the DOI’s continued communications to the industry that efforts to establish a new moratorium were underway. The district court found that, through those three actions, the DOI had failed to comply with the injunction. Thus, the district court concluded that Hornbeck established civil contempt by clear and convincing evidence and awarded attorneys fees of approximately $530,000. The district court did not reach the bad-faith litigation tactics issue.
The DOI appealed the district court’s decision to the United States Fifth Circuit Court of Appeals, which considered whether the DOI’s actions, taken without seeking a remand to the agency, violated the written order enjoining the enforcement of the initial moratorium. Hornbeck Offshore Servs., L.L.C. v. Salazar, __F.3d__, 2012 U.S. App. LEXIS 24355 (5th Cir. Nov. 27, 2012). The Fifth Circuit agreed with the district court that the DOI’s actions demonstrated its clear intent to overcome the injunction issued by the district court. However, the Fifth Circuit determined that for the DOI to have been in contempt of the order, the injunction would have had to require that the DOI seek a remand to the agency. Instead, the injunction only mandated that the DOI describe the manner and form of compliance with the injunction within 21 days; it contained no explicit obligation that the DOI seek to remand the decision to the agency before re-implementing a moratorium. Thus, the Fifth Circuit found that neither intending to overcome the injunction nor re-issuing the moratorium actually violated the district court’s order. On this basis, the Fifth Circuit overturned the district court’s award of attorneys fees based on civil contempt.
This Fifth Circuit decision significantly demonstrates that injunctions of regulatory action are limited to their express terms on review. Here it is arguable that the DOI effectively evaded the purpose of the district court’s injunction, and the Fifth Circuit upheld the agency’s actions. Clearly, unless injunctions anticipate and provide for the government’s potential opportunities to evade them, the injunctions may not achieve their purpose.