Appeals court revises opinion on offshore drilling prohibition case

NEW ORLEANS – The U.S. Court of Appeals for the Fifth Circuit has withdrawn its original opinion in a case that pitted oil and gas exploration companies against the federal government.

The appeal has to do with the Department of the Interior’s six month prohibition of drilling on the Outer Continental Shelf of the Gulf of Mexico following the Deepwater Horizon accident.

Hornbeck Offshore Services LLC, Bee Mar-Worker Bee LLC, North American Fabricators LLC, Bee Mar LLC and Offshore Support Services LLC were among the some 40 companies that filed suit seeking declaratory and injunctive relief. The district court preliminarily enjoined enforcement of the drilling ban.

The appeal focused on whether the government’s actions following the ruling violated a provision of the court’s injunction. The district court held that it did, issuing a ruling of civil contempt. The United States Department of Interior and Bureau of Safety and Environmental Enforcement appealed.

About a month after the Deepwater Horizon accident, the Department issued the “May Directive” that said, in part, that “offshore drilling of new deepwater wells poses an unacceptable threat of serious and irreparable harm to wildlife and the marine, coastal, and human environment” and ordered “ a six month suspension of all pending, current, or approved offshore drilling operations of new deepwater wells in the Gulf of Mexico and the Pacific regions.”

The oil and gas companies subsequently filed the original suit, claiming that the Department’s orders were not adequately explained and violated the Administrative Procedures Act. The district court ruled that the Department was “immediately prohibited from enforcing the Moratorium.” The government immediately announced plans to appeal the injunction, at the same time takings steps to comply with it.

The Department of the Interior appealed the injunction order to the 5th Circuit and filed a motion for a stay of the injunction. In that appeal, a divided panel denied the stay request. The Interior then rescinded the May Directive and substituted a “July Directive.” The directives were essentially identical although the latter contained a more thorough explanation and more evidence.

The 5th Circuit remanded the case to the district court so that the court could consider whether the injunction of the May Directive was moot. The companies argued that by replacing the May Directive, the government had violated the district court’s order.

The moratorium was lifted a few weeks before its six-month expiration, which “effectively mooted the Hornbeck suit.” The companies then asked for attorneys’ fees based on the government's alleged civil contempt and bad-faith litigation tactics.

The district court ruled that the civil contempt claim was legitimate and awarded fees and costs of around $530,000 to the companies.

The Fifth Circuit reversed the decision and the award, saying that although the Interior took action to avoid the effect of the injunction, this action did not violate the court’s order and the government did not commit civil contempt.

Circuit Judge Leslie Southwick, writing the majority opinion on behalf of himself and Circuit Judge J.L. Wiener Jr., maintained that “If the purpose were to assure the resumption of operations until further court order, it was not clearly set out in the injunction.”

Circuit Judge Jennifer Walker Elrod dissented from the majority, writing that if its orders are not enforced the judiciary may become “toothless” and “the majority opinion’s approach may give incentive for litigants creatively to circumvent district court orders.”

Case No. 11-30936.