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Tengasco, Inc. v. Jewell

United States District Court, E.D. Louisiana

July 15, 2015

TENGASCO, INC
v.
SARAH JEWELL, Secretary of the United States Department of the Interior, ET AL

ORDER AND REASONS

IVAN L.R. LEMELLE, District Judge.

Before the Court are cross-motions for summary judgment filed by Plaintiff, Tengasco, Inc. and Defendants, the United States Department of the Interior, and Bureau of Safety and Environmental Enforcement.[1] The parties have filed responses and replies.[2] The cross-motions, set for submission on August 5, 2015, are before the Court on the pleadings, without oral argument. After careful consideration of the cross-motions, responses, replies, competent summary judgment evidence, record, and applicable law, IT IS ORDERED that Defendants' Motion for Summary Judgment is GRANTED, Plaintiff's Motion for Summary Judgment is DENIED, and Plaintiff's suit is DISMISSED.

I. FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff, Tengasco, Inc. ("Tengasco") challenges a civil penalty assessment levied by the Bureau of Safety and Environmental Enforcement ("BSEE"), and affirmed by the Interior Board of Land Appeals of the U.S. Department of the Interior ("IBLA" or "Department").[3] Tengasco's claims challenge a federal agency action and are based upon the Outer Continental Shelf Lands Act (OCSLA), 43 U.S.C. § 1331, et seq., the Administrative Procedure Act (APA), 5 U.S.C. § 551, et seq., and the U.S. Constitution.[4]

Tengasco is the lessee and facility operator of a lease on the outer continental shelf in the Gulf of Mexico, namely, the High Island Block 176 Platform B.[5] On February 23, 2011, BSEE conducted an onsite inspection of the platform facility and determined that certain prior testing records were not available at the time for review on the platform.[6] These included: (1) testing records from June 9, 2010 to February 23, 2011 for the surface controlled subsurface safety valves associated with five wells on the platform; and, (2) testing records from September 1, 2010 to January 25, 2011 for other production safety devices on the platform.[7]

During the time period at issue, Tengasco had contracted with Rhino Offshore, Ltd., to conduct and document the required testing.[8] Tengasco contends that undisputed evidence in the administrative record shows that the required testing was in fact conducted.[9] However, by letter dated October 26, 2011, BSEE informed Tengasco of its intention to impose 22 separate civil penalties totaling $476, 000 resulting from the onsite inspection.[10] BSEE divided the 22 proposed civil penalties into 8 different categories, each of which was associated with an Incident of Non-Compliance ("INC") that the BSEE field inspector had issued.

Tengasco responded by letter dated November 22, 2011, requesting a meeting to discuss the proposed civil penalties and asking for additional time to respond due to difficulties in obtaining records from Rhino Offshore.[11] Tengasco filed a response and made a presentation to BSEE staff.[12] Tengasco also submitted an affidavit of Randy Walker, a former Rhino employee who worked as an operator-foreman on the platform from June 1, 2010 through December 21, 2010.[13] In his affidavit, Mr. Walker stated that the required safety tests were in fact conducted, that he was personally present on the platform during the tests, and that he completed and submitted the necessary forms to document the completion of the tests.[14] Attached to the affidavit were recompleted testing records for the periods at issue.[15] Tengasco also submitted flight logs from two helicopter companies purportedly showing that Rhino inspectors, including Mr. Walker, made regular trips to the platform during the period June 2010 to December 2010. On February 1, 2012, BSEE issued a subpoena to Rhino for all testing records associated with the safety devices in question from June 2010 through February 2011.[16] In response, Rhino submitted several documents, including a Safety Compliance Inspection Report for the Platform dated September 13, 2010.[17]

On July 20, 2012, the BSEE Reviewing Officer issued its decision, reducing the number of penalties, for a civil penalty assessment total of $386, 000.[18] Tengasco appealed BSEE's decision to the IBLA, which issued a final decision on June 23, 2014, affirming BSEE's order in full.[19] Following the IBLA's affirmance of the BSEE decision, Tengasco filed this action for judicial review against defendants, Sarah Jewell, in her official capacity as Secretary of the U.S. Department of Interior, and Brian Salerno, in his official capacity as Director of the BSEE.[20]

The parties agreed that this case should be resolved by dispositive motions, and jointly proposed a "Joint Case Management Statement, " providing a briefing schedule whereby the administrative record would be filed, followed by cross-motions for summary judgment, and reply briefs.[21] The Joint Case Management Statement was adopted by the Court.[22] Briefing is now complete and the cross-motions for summary judgment are ripe for decision.[23]

II. LAW & ANALYSIS

a. The Outer Continental Shelf Lands Act

The Outer Continental Shelf Lands Act (OCSLA) governs federal offshore oil and gas leasing and declares as national policy that "the outer Continental Shelf is a vital national resource reserve held by the Federal Government for the public, which should be made available for expeditious and orderly development, subject to environmental safe-guards, in a manner which is consistent with the maintenance of competition and other national needs." 43 U.S.C. § 1332(3). The OCSLA further provides that, "operations in the outer Continental Shelf should be conducted in a safe manner by well-trained personnel using technology, precautions, and techniques sufficient to prevent or minimize the likelihood of blowouts, loss of well control, fires, spillages...." 43 U.S.C. § 1332(6).

The OCSLA, 43 U.S.C. § 1350 provides:

(b) Civil penalties; hearing

(1) Except as provided in paragraph (2), if any person fails to comply with any provision of this subchapter, or any term of a lease, or permit issued pursuant to this subchapter, or any regulation or order issued under this subchapter, after notice of such failure and expiration of any reasonable period allowed for corrective action, such person shall be liable for a civil penalty of not more than $20, 000 for each day of the continuance of such failure. The Secretary may assess, collect, and compromise any such penalty. No penalty shall be assessed until the person charged with a violation has been given an opportunity for a hearing...
(2) If a failure described in paragraph (1) constitutes or constituted a threat of serious, irreparable, or immediate harm or damage to life (including fish and other aquatic life), property, any mineral deposit or the marine, coastal or human environment, a civil penalty may be assessed without regard to the requirement of expiration of a period allowed for corrective action.

Pursuant to the OCSLA, the Department of the Interior adopted safety regulations, including rules requiring installation, inspection, and testing of safety decisions on OCSLA rigs to minimize the potential for catastrophic events on the rig. 30 C.F.R. § 250.804 ("Production safety-system testing and records"). The regulations provide that safety system devices shall be successfully inspected and tested by the lessee at specified intervals. 30 C.F.R. § 250.804 (a)(1)-(12). Additionally, the "lessee shall maintain records for a period of 2 years for each subsurface and surface safety device installed... These records shall show the present status and history of each device, including dates and details of installation, removal, inspection, testing...". 30 C.F.R. § 250.804(b).

b. The Administrative Procedure Act

The Administrative Procedure Act authorizes judicial review of final agency action. 5 U.S.C. § 704; see id. § 702 ("A person suffering a legal wrong because of agency action... is entitled to judicial review thereof.").[24] Per the APA, 5 U.S.C. § 706(2)(a), federal courts are empowered to "hold unlawful and set aside agency action, findings, and conclusions" if they fail to conform with any of six specified standards. 5 U.S.C. § 706(2); Marsh v. Oregon, 490 U.S. 360, 375, 109 S.Ct. 1851, 104 L.Ed.2d 377 (1989). Under the APA, the administrative record is reviewed to determine whether the challenged agency action was arbitrary or capricious, an abuse of discretion, or otherwise not in accordance with law, contrary to constitutional right, in excess of statutory jurisdiction, authority or limitation, or without procedure required by law, or unsupported by substantial evidence. 5 U.S.C. § 706(2)(A-E).

Ordinarily, review of administrative decisions is to be confined to consideration of the decision of the agency... and of the evidence on which it was based. Marsh, 490 U.S. at 331; Federal Power Commission v. Transcontinental Gas Pipe Line Corp., 423 U.S. 326, 96 S.Ct. 579, 46 L.Ed.2d 533 (1976). The focal point for judicial review should be the administrative record already in existence, not some new record made initially in the reviewing court. Marsh, 490 U.S. at 331. If the decision of the agency is not sustainable on the administrative record made, then the... decision must be vacated, and the matter remanded... for further consideration.' Federal Power Commission, 423 U.S. at 331.

c. Summary Judgment Standard of Review over Final Agency Decisions

Where the Court is reviewing the decision of an administrative agency, a motion for summary judgment stands in a somewhat unusual light, in that the administrative record provides the complete factual predicate for the Court's review. As a result, the movant's burden in prevailing on summary judgment is similar to his ultimate burden on the merits: preponderance of the evidence. See Butts v. Sec'y of Health and Human Services, 706 F.2d 107, 108 (2nd Cir. 1983). Summary judgment is an appropriate procedure for resolving a challenge to a federal agency's administrative decision when review is based on the administrative record even though the Court does not apply the standard of review set forth in Fed.R.Civ.P. 56. Tex. Comm. on Nat. Res. v. Van Winkle, 197 F.Supp.2d 586, 595 (N.D. Tex. 2002)(quoting Fund for Animals v. Babbitt, 903 F.Supp.96, 105 (D. D.C.1995)).

When reviewing administrative agency decisions, the function of the district court is to determine whether as a matter of law, evidence in the administrative record permitted the agency to make the decision it did, and summary judgment is an appropriate mechanism for deciding the legal question of whether an agency could reasonably have found the facts as it did. Id. (quoting Sierra Club v. Dombeck, 161 F.Supp.2d 1052, 1064 (D. Ariz. 2001)). Although an agency's legal conclusions are reviewed de novo, the court's overall review is "highly deferential to the administrative agency whose final decision is being reviewed." Buffalo Marine Services Inc. v. United States, 663 F.3d 750 (5th Cir. 2011).

d. Arguments of the Parties

Tengasco moves the Court for summary judgment vacating the final decision of the IBLA affirming the decision of the BSEE, ordering Tengasco to pay $386, 000 in civil penalties for alleged violations of 30 C.F.R. § 250.804(a). The core of Tengasco's challenge before the Court concerns the sufficiency of the administrative record to support the civil penalties imposed. Tengasco argues that "the IBLA's decision is arbitrary... an abuse of discretion, and unsupported by the administrative record, " in violation of the OCSLA, the APA and due process.[25] Tengasco argues that the undisputed evidence in the administrative record shows that the requisite testing was in fact conducted, that there is no evidence that the safety devices and other equipment at issue ...


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