Case 2:10-cv-01941-MLCF-JCW Document 229 Filed 02/17/11 Page 1 of 17

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

ENSCO OFFSHORE CO., ET AL CIVIL ACTION

VERSUS NO. 10-1941

KENNETH LEE "KEN" SALAZAR, SECTION "F"

ET AL

ORDER & REASONS

Before the Court is plaintiff’s pending motion for preliminary

injunction, which, after oral argument, the Court denied without

prejudice on January 13, 2011 and ordered supplemental briefing.

The Court now RESCINDS and VACATES its previous Order1 and GRANTS

the plaintiff’s motion.

Background

After Deepwater Horizon’s explosion and the catastrophic oil

spill that followed, the Secretary of Interior twice in succession

imposed a blanket moratorium on deepwater drilling in the Gulf of

Mexico. For the five months that the bans were in place, no

permits were issued for deepwater drilling. But, even after the

Secretary formally lifted the second moratorium on October 12,

2010, permits for deepwater drilling activities have not been

processed; little to no deepwater drilling has resumed.2

1
The January 13, 2011 Order (Dkt. No. 180) is VACATED
only to the extent that it applies to the plaintiff’s motion for
preliminary injunction as to Count IV (Dkt. No. 139).
2
Permitting for shallow water drilling also has
suffered delays.

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In the past ten months, the Department of Interior and the

Bureau of Ocean Exploration Management, Regulation, and Enforcement

(BOEMRE) have been centrally involved in plugging the culprit well

and clearing the Gulf of millions of gallons of renegade oil. The

government, as a result of the spill, adopted new regulations

covering drilling in the Gulf of Mexico. Operators seeking permits

to drill must comply with some of these new regulations before

their permit applications may be processed. Beyond these new

regulations, permit applications are also subject to the

requirements of the National Environmental Policy Act. Plaintiff

charges the government’s continuous delays are intentional. The

government responds that its strained resources and the demands of

regulatory compliance necessarily produce the delays at issue.

Seeking action (any action) from the government, Ensco sought

a preliminary injunction on five specific permit applications in

which the company holds a contractual stake: Cobalt’s application

for a permit to drill on GC 814 using ENSCO 8503, filed April 30,

2010; Cobalt’s revised application for a permit to drill on GB 959

using ENSCO 8503, filed October 21, 2010; Nexen’s application to

drill filed July 27, 2010; and two other applications filed by

Nexen on October 12, 2010. The government contends that four of

these permits are not technically pending before it because they

were returned to the applicants with instructions to correct

certain deficiencies. But Cobalt attests that it has not received

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any indication from the government about inadequacies in its permit

applications and that BOEMRE merely contacted Cobalt to inform it

that its application would move to the end of the queue because of

Ensco’s sublease of a relevant rig to an operator in French Guiana.

It is undisputed that before the Deepwater Horizon disaster,

permits were processed, on average, in two weeks’ time. In stark

contrast, the five permits at issue have been pending from four to

some nine months.3 It is also undisputed that these delays have

put off indefinitely drilling in the Gulf of Mexico. Ensco has

incurred significantly reduced standby rates on its rigs and has

been forced to move some of its rigs to other locations around the

world. It is unclear when Gulf drilling will resume. The

government’s assurances have been inconsistent.

At the outset, the Court denied the plaintiff’s motion for a

preliminary injunction because the Court had questions about

whether it has the judicial review authority to impose a time frame

for agency decision and, if so, what a reasonable time frame would

be to mandate government action, whether it be denial or approval

of permit applications. The parties’ supplemental briefing has

resolved the Court’s questions; the Court now RESCINDS and VACATES

its Order denying without prejudice a preliminary injunction and

GRANTS the plaintiff’s motion for a preliminary injunction as to

3
Discounting the time the two moratoriums were in
place, all five applications have suffered delays of at least four
months.

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Count IV, subject to the confines of this Order.

Law & Analysis

I.

The Court is sensitive to the unequaled remedy of the

preliminary injunction. The “preliminary injunction is an

extraordinary remedy that should not be granted unless the party

seeking it has ‘clearly carried the burden of persuasion.’”

Bluefield Water Ass’n v. City of Starkville, Miss., 577 F.3d 250,

253 (5th Cir. 2009) (quoting Lake Charles Diesel, Inc. v. Gen.

Motors Corp., 328 F.3d 192, 196 (5th Cir. 2003)); see also PCI

Transport., Inc. v. Ft. Worth & W. R.R. Co., 418 F.3d 535, 545 (5th

Cir. 2005). “Mandatory preliminary relief . . . is particularly

disfavored, and should not,” we are instructed, “be issued unless

the facts and law clearly favor the moving party.” Martinez v.

Matthews, 544 F.2d 1233, 1243 (5th Cir. 1976).

The Court can issue a preliminary injunction only if Ensco

shows:

(1) a substantial likelihood of prevailing on the merits;

(2) a substantial threat of irreparable injury if the
injunction is not granted; (3) the threatened injury
outweighs any harm that will result to the non-movant if
the injunction is granted; and (4) the injunction will
not disserve the public interest.

Ridgely v. FEMA, 512 F.3d 727, 734 (5th Cir. 2008). “In each case,

courts ‘must balance the competing claims of injury and must

consider the effect on each party of the granting or withholding of

the requested relief.’” Winters v. Natural Res. Def. Council, 129

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S. Ct. 365, 376 (2008) (quoting Amoco Prod. Co. v. Vill. of

Gambell, Alaska, 480 U.S. 531, 542 (1987)). “‘In exercising their

sound discretion, courts of equity should pay particular regard for

the public consequences in employing the extraordinary remedy of

injunction.’” Id. at 376-77 (quoting Weinberger v. Romero-Barcelo,

456 U.S. 305, 312 (1982)). Even if all persuasion elements are

satisfied, an injunction remains “a matter of equitable discretion;

it does not follow from [a substantial] success on the merits as a

matter of course.” Id. at 381; see Romero-Barcelo, 456 U.S. at 313

(“[A] federal judge sitting as chancellor is not mechanically

obligated to grant an injunction for every violation of law.”).

The first question the Court must answer is whether the

plaintiff has shown a substantial likelihood of success on the

merits of Count IV.

II.

A.

1.

Section 706(1) of the Administrative Procedure Act proclaims

a national policy and requires a reviewing court to “compel agency

action unlawfully withheld or unreasonably delayed.” Id. § 706(1);

see Telecommc’ns Research & Action Ctr. v. FCC, 750 F.2d 70, 79

(D.C. Cir. 1984) (“Claims of unreasonable agency delay clearly fall

into that narrow class of interlocutory appeals from agency action

over which we appropriately should exercise our jurisdiction.”).

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The failure to act, as contemplated by Section 706, is

“properly understood as a failure to take . . . agency actions

(including their equivalents) . . . defined in § 551(13).” Norton

v. S. Utah Wilderness Alliance, 542 U.S. 55, 62 (2004); see Sierra

Club v. Peterson, 228 F.3d 559, 565 (5th Cir. 2000) (“Absent a

specific and final agency action, [courts] lack jurisdiction to

consider a challenge to agency conduct.”). Section 551(13) defines

final agency action as “the whole or a part of an agency rule,

order, license, sanction, [or] relief.” 5 U.S.C. § 551(13). The

term “license” includes “the whole or a part of an agency permit.”

Id. at § 551(8). And so, agency delay in issuing or denying a

permit, or the failure to act at all, is a final agency action made

reviewable by the APA.

But although “[f]ailures to act are sometimes remediable under

the APA,” they are “not always” so. SUWA, 542 U.S. at 61. Section

706(1) “empowers a court only to compel an agency ‘to perform a

ministerial or non-discretionary act,’ or to ‘take action upon a

matter, without directing how it shall act.’” Id. at 64 (quoting

approvingly the Attorney General’s Manual on the Administrative

Procedure Act 108 (1947)) (emphasis removed). A Section 706(1)

claim therefore “can proceed only where a plaintiff asserts that an

agency failed to take a discrete agency action that it is required

to take.” Id. (emphasis in original); Section 706 vests federal

courts with the discretion to decide whether agency delay is

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unreasonable “when an agency is required to act—either by organic

statute or by the APA—within an expeditious, prompt, or reasonable

time.” Forest Guardians v. Babbitt, 174 F.3d 1178, 1190 (10th Cir.

1999). Anything less would paralyze the established judicial

review authority fashioned by the APA. Anything more would be an

unacceptable disrespect for the institution of the separation of

powers.

2.

The Court finds that the Outer Continental Shelf Lands Act

(OCSLA) establishes a non-discretionary duty on the Department of

the Interior to act, favorably or unfavorably, on drilling permit

applications. Although OCSLA grants the Secretary discretion to

decide whether to review permit applications, see 43 U.S.C. §

1340(d), the Court holds that once the Secretary exercises that

discretion, the government is under a duty to act by either

granting or denying a permit application within a reasonable time.

Not acting at all is not a lawful option. To discharge the

Secretary’s oversight responsibility, without any time-sensitive

obligation to do so, as the government now starkly urges, unmasks

the fiction of transparency in government.

Not acting on permit applications seems contrary to OCSLA’s

command that drilling development be “expeditious,” 43 U.S.C. §

1332(3), and the APA’s command that a permit must be processed

“within a reasonable time.” 5 U.S.C. § 555; see Forest Guardians,

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174 F.3d at 1190. Together, OCSLA and the APA inform the

government’s action on permits and require that the government

should act expeditiously to advance development in the Outer

Continental Shelf, and not to curtail drilling unpredictably or

indefinitely.

Because the Court holds that the government has a non-

discretionary duty to act on the applications identified by the

plaintiff in its motion for a preliminary injunction, and because

it is beyond quarrel that the government has failed to act, the

government’s action on permit applications is judicially reviewable

under Section 706(1). See SUWA, 542 U.S. at 64. Whether the

plaintiff has established a “substantial likelihood of success on

the merits” therefore turns on whether the government’s delay in

processing those permits is unreasonable.

B.

1.

To evaluate whether the plaintiff has met the “difficult

burden” of showing that the government’s delays on the five permit

applications are unreasonable, Ingalls Shipbldg., Inc. v. Asbestos,

17 F.3d 130, 133 (5th Cir. 1994), the U.S. Court of Appeals for the

D.C. Circuit has gathered a sextet of guiding factors.4 See id. at

4
The D.C. Circuit notes that these factors, developed
to determine when a writ of mandamus should issue, are “hardly
ironclad, and sometimes suffer from vagueness” but “nevertheless
provide[] useful guidance in assessing claims of agency delay.”
Id. at 80.

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80.

They are:

(1) the time agencies take to make decisions

must be governed by a “rule of reason[;]”

(2) where Congress has provided a timetable or

other indication of the speed with which it
expects the agency to proceed in the enabling
statute, that statutory scheme may supply
content for this rule of reason[;]

(3) delays that might be reasonable in the

sphere of economic regulation are less
tolerable when human health and welfare are at
stake;

(4) the court should consider the effect of

expediting delayed action on agency activities
of a higher or competing priority;

(5) the court should also take into account

the nature and extent of the interests
prejudiced by delay; and

(6) the court need not “find any impropriety

lurking behind agency lassitude in order to
hold that agency action is ‘unreasonably
delayed.’”

Id. (internal citations omitted). Of these factors, the first is

the “most important.” In re Core Commc’ns, Inc., 531 F.3d 849, 855

(D.C. Cir. 2008). It is clear that “where Congress has provided a

timetable or other indication of the speed with which it expects

the agency to proceed in the enabling statute, that statutory

scheme may supply content for this rule of reason.” TRAC, 750 F.2d

at 80. What follows from these thoughts is that a timetable need

not be express for federal courts to find agency delay to be

unreasonable.

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Applying its standard in In re Barr Laboratories, Inc. v.

National Association of Pharmaceutical Manufacturers, 930 F.2d 72,

73 (D.C. Cir. 1991), the D.C. Circuit held that even though the

Food & Drug Administration failed to comply with statutory

deadlines for generic drug applications, equitable relief was

inappropriate. The FDA had systematically delayed the processing

of generic drug applications, blaming the lag on a scandal in its

generic drug division, which forced some employees out and diverted

others from their usual work. Although the court of appeals found

that “judicial intervention could assist [the plaintiff], it would

likely impose offsetting burdens on equally worthy generic drug

producers, equally wronged by the agency’s delay.” Id. The

“prompt disposition of [the plaintiff’s] applications would benefit

users of generic drugs,” but disposition of other companies’

applications would benefit users just as much; speeding up the

process for the generic drug applicant would inevitably result in

delays for other companies’ applications. Id. Supporting this

conclusion was the court’s finding that “putting [the plaintiff] at

the head of the queue simply moves all others back one space and

produces no net gain.” Id. at 75. But, the appeals court warned,

had the plaintiff “shown that the FDA had singled it out for

mistreatment, judicial relief would then advance the cause of equal

treatment and, despite the lack of any immediate net advancement of

Congress’s policy objectives, could make sense.” Id. The court

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concluded that “especially shabby treatment of one applicant” would

support a finding of egregiousness warranting judicial

intervention. Id.

Later, the U.S. Courts of Appeals for the Tenth Circuit was

called on to evaluate the Environmental Protection Agency’s failure

to timely designate critical habitat for the endangered silvery

minnow in Forest Guardians v. Babbitt, 174 F.3d 1178 (10th Cir.

1999). Rejecting the Secretary of Interior’s claim that a

recently-lifted Congressional spending moratorium made the timely

designation of critical habitat fiscally impracticable, the Tenth

Circuit held that limited resources cannot excuse an agency’s non-

discretionary duty to act.5 Id. at 1191.

2.

OCSLA is silent as to the length of time required for permit

applications to process; indeed it offers little guidance on

permits in general. But that does not mean this Court is powerless

to act. See TRAC, 750 F.2d at 80. Beyond dispute is that before

the Deepwater Horizon oil spill, permit applications were resolved

in some two weeks. Also clear is that the permit applications at

issue here have experienced delays of four months, if not more.

With this in mind, and in light of the TRAC insights, the Court

5
The Tenth Circuit recognized it “must consider
resource availability,” but it concluded that “the agency defense
of unavailable resources must be reserved as a defense against
contempt if an injunction issues.” Id. at 1189.

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concludes that the time delays at issue here are unreasonable such

that the plaintiff has established a substantial likelihood of

success with respect to the five permits identified in its motion

for a preliminary injunction. But when must the government act?

And what clues do we have that might define what is reasonable?

Ensco urges the application of the thirty-day time period

Congress has mandated in which BOEMRE must act to approve or deny

exploration plans. The Court agrees; it is a common sense marker

“of the speed with which [Congress] expects the agency to proceed.”

TRAC, 750 F.2d at 80. Why? OCSLA structures four distinct stages

in the administrative process: (1) formulation of a five-year

leasing plan by the Secretary; (2) lease sales; (3) exploration by

the lessees; and (4) development and production. Sec’y of the

Interior v. Cal., 464 U.S. 312, 337 (1984). The third and fourth

steps are described in the statute at 43 U.S.C. § 1340(c) and (d).

Section 1340(c) describes the approval process for an exploration

plan in great detail: Once submitted or modified, “[t]he Secretary

shall approve [or deny] such plan, as submitted or modified, within

thirty days of its submission.” Section 1340(d) explains that

“[t]he Secretary may, by regulation, require any lessee operating

under an approved exploration plan to obtain a permit prior to

drilling any well in accordance with such plan.” Section 1340(d)

speaks of no express time limit; but, indeed, it does not even

require permits to issue at all.

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The government offers its cramped statutory reading. The

government maintains that Congress’s decision to impose no time

frame on BOEMRE’s review of applications to drill was

intentional—and thus blessed that the decision of whether to act on

permit applications belonged to the unchecked whim of the

administrative process. Its view would produce autocratic

discretion at best. It seems to the Court that Congress

anticipated a process that would generally embrace a rational time

frame for agency action; one faithful to OCSLA’s mandate of

expeditious development. The thirty-day action period Congress

imposed on the approval of drilling exploration plans, and the fact

that Congress, through OCSLA, commands development to be

expeditious, as a national policy, indicate that Congress gave its

blessing to a time frame for action no longer than thirty days; the

former two-week time processing period preceding the oil spill also

confirms this.

The government urges that delays are inevitable in a more

regulated environment; in the wake of the disastrous BP spill, some

delays are of course understandable. But now, nearly a year after

the spill occurred, delays, particularly those of the length at

issue here, become increasingly unreasonable. BOEMRE has taken

over management from a formerly crumbling and disreputable agency;

the leaking culprit well has been contained; the revised

regulations are no longer new; and the threat of rigs leaving the

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Gulf becomes more forceful each day. The permitting backlog

becomes increasingly inexcusable. Perhaps it is reasonable for

permit applicants to wait more than two weeks in a necessarily more

closely regulated environment. Delays of four months and more in

the permitting process, however, are unreasonable, unacceptable,

and unjustified by the evidence before the Court. Strained

resources do not amend the government’s duty to act on permit

applications that pass before it. Forest Guardians, 174 F.3d at

1191. OCSLA’s text infers that delays beyond thirty days are

unreasonable; that a decision regarding all drilling activities

should be made during a thirty-day period of scrutiny. The Court

concludes such delays contravene Congress’s expression of a

national purpose and OCSLA’s overriding policy of expeditious

development.

Unlike in Barr, it does not appear that ordering the

government to act here would disrupt a queue; indeed, it appears

that the government has considered no applications for any

activities falling within the scope of the moratorium. Where there

should be a queue, there is instead an untended pile. Finding that

the government should act within thirty days on the five permits

identified by plaintiff would not displace other permit

applications, because it appears the government has neglected to

act at all on permits that were once covered by its blanket

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moratorium.6

Having concluded that the plaintiff has established a

substantial likelihood of success on the merits, the Court turns to

the remaining factors in its preliminary injunction analysis.

III.

The Court concludes that the other requirements for a

preliminary injunction are met.

The plaintiff has shown a substantial likelihood of

irreparable injury if preliminary relief is not granted. As the

Court noted in its previous Orders, “[s]peculative injury is not

sufficient [to make a clear showing of irreparable harm]; there

must be more than an unfounded fear on the part of the applicant.”

Holland Am. Ins. Co. v. Succession of Roy, 777 F.2d 992, 997 (5th

Cir. 1985); see Wis. Gas Co. v. F.E.R.C., 758 F.2d 669, 674 (D.C.

Cir. 1985) (“[Irreparable] injury must be both certain and great;

it must be actual and not theoretical.”). Where the injury is

merely “financial” and “monetary compensation will make [the

plaintiff] whole if [the plaintiff] prevails on the merits,” there

is no irreparable injury. Bluefield, 577 F.3d at 253. But when

the nature of economic “rights makes ‘establishment of the dollar

6
Courts in circumstances more remote than in this case
have, with approval, imported time-sensitive mandates into statutes
that were silent as to time. See In re Am. Rivers & Idaho Rivers
United, 372 F.3d 413, 418-20 (D.C. Cir. 2004) (finding the Federal
Energy Regulatory Commission lacked the discretion not to act on a
petition and requiring that it act within forty-five days).

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value of the loss . . . especially difficult or speculative,’” a

finding of irreparable harm is appropriate. Allied Mktg. Group,

Inc. v. CDL Mktg., Inc., 878 F.2d 806, 810 n.1 (5th Cir. 1989)

(quoting Miss. Power & Light Co. v. United Gas Pipe Line Co., 760

F.2d 618, 630 n.12 (5th Cir. 1985)). The rights involved here are

more than economic: the plaintiff’s operations in the Gulf of

Mexico are threatened with endless disability. It has already sent

a rig to French Guiana; its contracts and skilled labor necessarily

will follow.

The plaintiff has also shown the threatened injury outweighs

any harm that will result to the government if preliminary relief

is granted and that the injunction will not disserve the public

interest. As the first anniversary of the Deepwater Horizon

disaster draws near, any reason that would have justified delays

has, under a rule of reason, expired. Beginning to process permit

applications will restore normalcy to the Gulf region and repair

the public’s faith in the administrative process. See TRAC, 750

F.2d at 79 (“The delay[s] at issue threaten the [government’s]

credibility.”).

The Court concludes that the government’s inaction on the five

permits identified by the plaintiff justifies the grant of a

preliminary injunction.

IV.

The Court therefore ORDERS that BOEMRE is required to act on

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the five pending permit applications within thirty days of this

Order and simultaneously report to the Court its compliance.

Ensco’s application for a preliminary injunction meets all the

requirements of Rule 65 of the Federal Rules of Civil Procedure and

is GRANTED.

New Orleans, Louisiana, February 17, 2011.

____________________________
MARTIN L.C. FELDMAN
UNITED STATES DISTRICT JUDGE

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