The Fifth Circuit Court of Appeals has declined to hold the U.S. Department of Interior (DOI ) in contempt for issuing a new drilling moratorium in the Gulf of Mexico after its prior moratorium had been enjoined by a federal district court. Hornbeck Offshore Servs., L.L.C. v. Salazar, No. 11-30936 (5th Cir. 11/27/12).

On May 28, 2010, DOI suspended deepwater (more than 500 feet) drilling in the Gulf for six months in the aftermath of the Deepwater Horizon oil spill. In response to a challenge filed by companies involved in oil and gas drilling, exploration and production, a Louisiana federal court enjoined that moratorium. On July 12, 2010, DOI issued a second six-month moratorium, which it eventually suspended on October 22. Lifting the second moratorium effectively mooted the underlying litigation, and plaintiff Hornbeck Offshore Services, L.L.C. sought to recover attorney fees, claiming it could do so because DOI was in civil contempt of the order enjoining the first moratorium. The district court agreed.

DOI appealed the contempt finding, and the Fifth Circuit reversed, essentially determining that the district court’s initial preliminary injunction prohibited enforcement of the May 28 deepwater drilling moratorium only and did not expressly prohibit the subsequent imposition of an identical moratorium. The district court and a dissenting Fifth Circuit panel member had focused on the DOI secretary’s actions immediately after the preliminary injunction issued.

The secretary announced an intent to reinstitute a moratorium hours after the district court’s decision. The following day, testifying before Congress, the secretary again indicated his intent to issue an identical moratorium, and the second moratorium was issued just a few weeks after the injunction. According to the district court, these actions showed a DOI plan to thwart the preliminary injunction, and the Fifth Circuit dissent concluded, “the totality of the circumstances supports the able district court’s decision.”

According to the Fifth Circuit majority, however, the preliminary injunction decision did not conclude that DOI had exceeded its power, but only that the way the initial moratorium was supported and issued was procedurally flawed. The initial moratorium relied on a report assessing safety and environmental impacts of deepwater drilling in the Gulf following the Deepwater Horizon event. The report’s executive summary included a recommendation to institute a six-month drilling moratorium. But while the report as a whole had been peer reviewed, the district court found that the moratorium recommendation was a late addition and had not been subject to peer review by neutral scientists. This formed one basis for the district court’s determination that “the process leading to the first moratorium lacks probity” and its preliminary injunction.

DOI issued the second moratorium on an expanded administrative record that, according to DOI , more fully reflected the scientific and policy bases for the moratorium. The Fifth Circuit held, “there is no clear and convincing evidence that Interior’s actions after the injunction violated the clear terms of the injunction as drafted . . . .” The dissent suggests that the majority’s approach “weakens the contempt power of federal district courts by making unreasonably restrictive fact findings of its own to reach a narrow and unworkably technical result.”