Federal Judiciary

Oil drilling case advances

By Akin Gump Supreme Court Practice Group

Taking the dispute over deepwater drilling for oil in the Gulf of Mexico another step closer to the Supreme Court, the Obama Administration on Friday evening asked a federal appeals court to allow the government to put back into effect a six-month moratorium on exploration at 33 wells.  The motion for a stay, filed in the Fifth Circuit Court in New Orleans, can be read here.  The case is docketed there as Hornbeck Offshore Services, Inc., v. Salazar, et al. (10-30585).

The motion said the moratorium, suspended by a federal judge on Tuesday, aims only at “those deepwater operations that present safety concerns” similar to those raised by the explosion of the Deepwater Horizon well, which is still gushing crude oil into the Gulf , as it has for 66 days.   The moratorium should hold while the government appeals, the motion said.  U.S. District Judge Martin L.C. Feldman refused a stay request on Thursday.

If the government gets word that drilling operations at any of the targeted wells  are about to resume, the appeals court may be asked for an emergency order, according to the government’s filing.   The moratorium, it argued, is “crucially important to protect human health and the environment from another deepwater drilling disaster while Interior investigates the Deepwater Horizon event and acts to prevent another similar disaster from happening.”

Judge Feldman ruled that the Interior Department had not justified the shutdown of deepwater drilling, and he chastised the government for using an accident at one well as a rationale for a  disruption of “immense scope” of the Gulf oil industry.   The government told the Circuit Court that Feldman “committed legal error and abused” his court’s discretion.

At the same time, the motion said that the Interior Department is gathering new information about the “safety and reliability of deepwater drilling operations,” and will shortly issue new orders to prevent new drilling.  It did not say how many additional wells could be affected by new orders.  A stay of Judge Feldman’s injunction, the government said, would give Interior more time to develop those additional suspension plans.

The moratorium dispute poses a major test of what a federal law, the Outer Continental Shelf Lands Act, allows the government to do in reaction to the massive oil spill in the Gulf.  That is the law that Interior Secretary Kenneth Salazar relied upon in issuing two moratorium orders; government lawyers note that the Act directs the suspension of any operations on the Shelf that pose a threat to human or aquatic life, or to the “marine, coastal, or human environment.”

Judge Feldman, the motion contended, substituted his “own views about the proper balance of risk and cost.”  Salazar, it said, “had ample basis on which to conclude that deepwater drilling operations” posed the very kind of threat that the Shelf protection law contemplates.  But, it added, the blowout of the Deepwater Horizon well “is itself powerful proof that a ’serious’ threat exists on the rigs that Interior targeted with suspension orders.”  They all were built using the same technology as Deepwater Horizon, according to the motion.

Since no one yet knows why Deepwater Horizon blew, the government filing said, it was hardly arbitrary for Salazar to conclude that continued drilling on similar rigs poses a serious threat.  “Courts,” it argued, “must defer to agency determinations and expertise when agencies are forced to proceed in the face of uncertainty, and especially when agencies impose emergency interim protective measures.”

Protesting the judge’s finding that Interior officials had failed to take into account the past safety and compliance records of deepwater wells, the government motion said that “rig-by-rig compliance reviews under an outdated regime cannot ensure safety.”

Reacting to some of the strongly critical language Judge Feldman had aimed at the scope of the moratorium, the motion said the judge “disregarded the fact that the suspensions apply only to certain drilling operations, only to waters over 500 feet deep, and only for six months.”  And. it noted, the judge’s fear for the Gulf as a key source of oil for the domestic economy was misplaced, because the moratorium “did not suspend any ongoing oil production.”

The filing also questioned whether those who filed the challenge to the moratorium had any legal right to do so.  None of them, it noted, has an offshore lease, and it is not clear that any can show that the suspension will cause them irreparable harm.  The challengers operate businesses that are heavily dependent upon the oil industry; no oil company is among them.

Full post as published by SCOTUSBLOG on June 25, 2010 (boomark / email).