ELR Citation: ELR 21026
No(s). 90-7174 (11th Cir. Mar 1, 1991)

The court holds that a district court abused its discretion by discharging Alabama from liability on a $564,970 bond that the state posted in connection with its action to enjoin the shipment of hazardous waste into the state from Texas. The bond was required under Federal Rules of Civil Procedure Rule 65(c) to protect the Environmental Protection Agency (EPA) against damages that might be incurred if the preliminary injunction against the shipment was found to be wrongfully granted. In a previous decision, 19 ELR 20956, the court did find that the injunction was wrongfully granted. In this decision, the court first holds that the district court misinterpreted the court's previous decision, which only disposed of the state's challenge to the scope of the bond. Following precedent in the former Fifth Circuit, the court next holds that the judicial discretion standard should be applied when assessing whether the defendants are entitled to an award of damages on the bond. Under the interpretation of that standard adopted by the court, a prevailing defendant is entitled to damages on an injunction bond unless there is a good reason for not requiring the plaintiff to pay. The court holds that the equitable factors that the district court cited as the basis for its decision were insufficient to justify discharge of the bond. Good faith of the party seeking injunctive relief alone does not tip the scales of equity in favor of discharging the bond. In finding that Alabama's action was undertaken to protect the public interest on an issue of environmental concern, the district court failed to consider the competing interests of Texas citizens and United States citizens that undeniably were implicated in this lawsuit. Finally, any causal connection between Alabama's suit and EPA's change of policy on announcing interstate shipments of waste is not readily apparent.

[A previous decision in this litigation is published at 19 ELR 20956.]

Counsel for Appellant
David C. Shilton
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Counsel for Appellee
Marshall Timberlake
Balch & Bingham
P.O. Box 306, Birmingham AL 35201
(205) 251-8100

Before COX and BIRCH, Circuit Judges, and GIBSON^*, Senior Circuit Judge.