Offshore Drilling Moratorium

[Guest EB]

Washington, D.C. - Congressman Frank Pallone, Jr. Tuesday released the following statement in response to a federal judge in New Orleans, LA blocking a six-month federal moratorium on deepwater drilling in the Gulf.

 

“This is a reckless decision that goes against both the president’s decision to enact a moratorium and the recommendations of the president’s bi-partisan commission to study the Gulf of Mexico oil spill. In the two months since the spill occurred, we have found neither a cause of the spill or a way to fix the leaking pipe. Given this, how can we possibly move forward with deepwater drilling? I’m emphatically opposed to any new offshore drilling in the Gulf of Mexico or anywhere off America’s coastline and support the administration’s decision to challenge this ruling.”

[Guest wiki]

If some drilling equipment parts are flawed, is it rational to say all are? Are all airplanes a danger because one was? All oil tankers like Exxon Valdez? All trains? All mines? That sort of thinking seems heavy handed and rather overbearing - Martin Leach-Cross Feldman

 

Federal judge Feldman for the United States District Court for the Eastern District of Louisiana. blocked a six-month moratorium that the Obama administration placed on new deepwater drilling projects in response to the 2010 BP oil spill in the Gulf of Mexico. Feldman ruled that the Interior Department failed to provide adequate reasoning for the moratorium, warning that the shutdown would have an "immeasurable effect" on the industry, the local economy and the U.S. energy supply.

 

The Department of Justice has said that they will immediately appeal the decision to the Fifth Circuit.

 

Feldman was nominated to the United States District Court for the Eastern District of Louisiana by President Ronald Reagan on September 9, 1983 to a seat vacated by Jack Gordon. Feldman was confirmed by the U.S. Senate on October 4, 1983 on a Senate vote and received commission on October 5, 1983.

 

Clipper Estates case Controversy

 

Judge Feldman dismissed a lawsuit filed by fifty people who live in Clipper Estates in suburban New Orleans under allegations of violations of the Racketeering Influenced and Corrupt Organizations (RICO) Act. The residents sued on allegations that the owner of Clipper Estates - also the President of the New Orleans Home Builders Association - used money he assessed against them after Hurricane Katrina for personal purposes instead of improving the subdivision as he promised. Feldman dismissed the lawsuit claiming the plaintiffs had no standing under RICO; it is unknown if attorneys for the homeowners will file an appeal to the Fifth Circuit.

 

In 2008 Feldman had financial holdings with Transocean, the company that owned the faulty oil rig.

[Guest LAW]

http://www.laed.uscourts.gov/GENERAL/Notices/10-1663_doc67.pdf

 

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

HORNBECK OFFSHORE SERVICES, L.L.C ET AL.

CIVIL ACTION

VERSUS NO. 10-1663

KENNETH LEE "KEN" SALAZAR SECTION "F"

ET AL.

 

ORDER AND REASONS

 

This case asks whether the federal government’s imposition of

a general moratorium on deepwater drilling for oil in the Gulf of

Mexico was imposed contrary to law. Before the Court is the

plaintiffs’ motion for preliminary injunction. For the following

reasons, the motion is GRANTED.

 

Background

 

The plaintiffs in this case provide a myriad of services to

support offshore oil and gas drilling, exploration, and production

activities in the Gulf of Mexico’s Outer Continental Shelf. They

challenge the six-month moratorium on offshore drilling operations

of new and currently permitted deepwater wells that was imposed on

May 28, 2010 by the Department of the Interior and the Minerals

Management Service.

 

The government edict was in reaction to the Deepwater Horizon

drilling platform explosion on April 20, 2010, and the resulting

devastation. In response to this unprecedented disaster, the

President of the United States formed a bipartisan commission–the

National Commission on the BP Deepwater Horizon Oil Spill and

Offshore Drilling–and tasked it with investigating the facts and

circumstances concerning the cause of the blowout. The President

also ordered the Secretary of the Interior to conduct a thorough

review of the Deepwater Horizon blowout and to report, within

thirty days, "what, if any, additional precautions and technologies

should be required to improve the safety of oil and gas exploration

and production operations on the outer continental shelf."

 

A thirty-day examination was conducted in consultation with

respected experts from state and federal governments, academic

institutions, and industry and advocacy organizations. On May 27,

2010 the Secretary issued a Report, which reviews all aspects of

drilling operations and recommends immediate and long term reforms

to improve drilling safety. In the Executive Summary to the Report,

the Secretary recommends "a six-month moratorium on permits for new

wells being drilled using floating rigs." He also recommends "an

immediate halt to drilling operations on the 33 permitted wells,

not including relief wells currently being drilled by BP, that are

currently being drilled using floating rigs in the Gulf of Mexico."

Much to the government’s discomfort and this Court’s uneasiness,

the Summary also states that "the recommendations contained in this

report have been peer-reviewed by seven experts identified by the

National Academy of Engineering." As the plaintiffs, and the

experts themselves, pointedly observe, this statement was

misleading. The experts charge it was a "misrepresentation." It was

factually incorrect. Although the experts agreed with the safety

recommendations contained in the body of the main Report, five of

the National Academy experts and three of the other experts have

publicly stated that they "do not agree with the six month blanket

moratorium" on floating drilling. They envisioned a more limited

kind of moratorium, but a blanket moratorium was added after their

final review, they complain, and was never agreed to by them. A

factor that might cause some apprehension about the probity of the

process that led to the Report.

 

The draft reviewed by the experts, for example, recommended a

six-month moratorium on exploratory wells deeper than 1000 feet

(not 500 feet) to allow for implementation of suggested safety

measures.

 

The Report makes no effort to explicitly justify the

moratorium: it does not discuss any irreparable harm that would

warrant a suspension of operations, it does not explain how long it

would take to implement the recommended safety measures. The Report

does generalize that "[w]hile technological progress has enabled

the pursuit of deeper oil and gas deposits in deeper water, the

risks associated with operating in water depths in excess of 1,000

feet are significantly more complex than in shallow water."

 

On May 28, 2010, the Secretary also issued a memorandum to the

director of MMS, in which he stated:

 

I find at this time and under current conditions that

offshore drilling of new deepwater wells poses an

unacceptable threat of serious and irreparable harm to

wildlife and the marine, coastal, and human environment

as that is specified in 30 C.F.R. 250.172( b ). I also have

determined that the installation of additional safety or

environmental protection equipment is necessary to

prevent injury or loss of life and damage to property and

the environment.30 C.F.R. 250.172( b ).

 

Therefore, I am directing a six-month suspension of all

pending, current, or approved offshore drilling

operations of new deepwater wells in the Gulf of Mexico

and the Pacific regions.

 

The pattern continues. The one page memorandum, also, fails to

explain the reasons for the suspension of operations or the depth

of operations to be affected. Then on May 30, 2010, the Deputy

Director of MMS abruptly issued a Notice to Lessees in which he

directs that:

 

The Six-Month Deepwater Moratorium . . . directs you to

cease drilling all new deepwater wells . . . and puts you

on notice that, except as provided herein, MMS will not

consider for six months from the date of this Moratorium

NTL drilling permits for deepwater wells and for related

activities as set forth herein. For the purposes of this

Moratorium NTL, "deepwater" means depths greater than 500

feet.

 

While the Administrative Record is not yet complete, the

government draws attention to several documents that were

considered during the creation of the Report (but not necessarily

mentioned in it). The Shallow Water Energy Security Coalition

Presentation illustrates differences between jack-up rigs, which

are used in shallow waters up to 500 feet, and floating rigs, which

are used in deeper waters. The presentation also lists factors

making the shallow water rigs safer, such as having blowout

preventers on the surface and using traditional and proven well

control methods.

 

The plaintiffs' complaint is based on the effect of the

general moratorium on their oil service industry business, on the

local economy, and puts in play the issue of the robustness of a

Gulf-wide industry and satellite trades. Gulf of Mexico drilling

activities rely upon a vast and complex network of technology,

assets, human capital and experience. Indeed, an estimated 150,000

jobs are directly related to offshore operations. The government

admits that the industry provides relatively high paying jobs in

drilling and production activities. Oil and gas production is quite

simply elemental to Gulf communities. There are currently

approximately 3600 structures in the Gulf, and Gulf production from

these structures accounts for 31% of total domestic oil production

and 11% of total domestic, marketed natural gas production. Sixtyfour

percent of active leases are in deepwater, over 1000 feet. The

plaintiffs own and operate vessels, shipyards, and supply services

companies that support deepwater oil exploration and production in

the Gulf. In addition to the vessels and facilities involved in

their work, the plaintiffs together employ over 11,875 people. At

least nineteen other companies, aside from BP’s operations involved

with Deepwater Horizon, are presently operating deepwater drilling

rigs.

 

On June 7, 2010, Hornbeck Offshore Services sued in this Court

for declaratory and injunctive relief against the Secretary, the

Department, the MMS, and the Director of the MMS. Two days later,

more plaintiffs joined the litigation, and a motion for preliminary

injunction prohibiting the government from enforcing the drilling

moratorium is now before the Court. The Court, because of the

national importance of these issues, ordered an expedited hearing

for June 21, 2010. On June 18, 2010, the Florida Wildlife

Federation, the Center for Biological Diversity, the Natural

Resources Defense Counsel, the Sierra Club, and the Defenders of

Wildlife intervened as defendants.

 

Law and Analysis

I. OCSLA

A.

 

The Outer Continental Shelf Lands Act 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 ). OCSLA

establishes 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. California, 464 U.S. 312, 337

(1984). In the preparation and maintenance of this federal leasing

program, OCSLA mandates consideration of the “economic, social, and

environmental values of the renewable and nonrenewable resources

contained in the outer Continental Shelf, and the potential impact

of oil and gas exploration on other resource values . . . and the

marine, coastal, and human environments.” 43 U.S.C. §1344( a )(1).

OCSLA instructs the Secretary of the Interior to prescribe

regulations

 

for the suspension or temporary prohibition of any

operation or activity, including production, pursuant to

any lease or permit . . . if there is a threat of

serious, irreparable, or immediate harm or damage to life

(including fish and other aquatic life), to property, to

any mineral deposits (in areas leased or not leased), or

to the marine, coastal, or human environment.

 

Id. §1334( a )( 1 ). Tracking the statute’s mandate, the federal

regulations provide that the Regional Supervisor may direct a

suspension of operations or a suspension of production “When

activities pose a threat of serious, irreparable, or immediate harm

or damage. This would include a threat to life (including fish and

other aquatic life), property, any mineral deposit, or the marine,

coastal or human environment.” 30 C.F.R. §250.172( b ). The Regional

Supervisor can also declare a suspension “when necessary for the

installation of safety or environmental protection equipment.” Id.

§250.172( c ).

 

B.

 

OCSLA establishes a private right of action to any person

“having a valid legal interest which is or may be adversely

affected” by any violation of OCSLA or the regulations promulgated

under it. 43 U.S.C. §1349( a )( 1 ). Generally, no suit can be filed

“prior to sixty days after the plaintiff has given notice of the

alleged violation, in writing under oath, to the Secretary.” Id.

§1349( a )( 2 )( A ). By way of contrast, however, a lawsuit may also be

brought “immediately after notification of the alleged violation in

any case in which the alleged violation constitutes an imminent

threat to the public health or safety or would immediately affect

a legal interest of the plaintiff.” Id. §1349( a )( 3 ); compare

Chevron, U.S.A., Inc. v. F.E.R.C., 193 F. Supp. 2d 54, 65 (D.C.

Cir. 2002) (holding that plaintiffs faced immediate effect to their

legal interest where a Federal Energy Regulatory Commission order

stated that it would disclose the plaintiffs’ commercially

sensitive information within five days) with Duke Energy Field

Servs. Assets, L.L.C. v. Fed. Energy Regulatory Comm’n, 150 F.

Supp. 2d 150, 156 (D.C. Cir. 2001) (holding that the plaintiffs’

legal interests would not be immediately affected where FERC had

ordered them to publicly file their gas transportation service

rates because this order did not mean the information would

“instantly be made public” since other FERC regulations provided

ways for the information to remain confidential). In the absence of

an imminent threat to the public health or safety or an immediate

effect on a legal interest, a plaintiff must comply with the sixtyday

notice under oath provision. Duke Energy, 150 F. Supp. 2d at

156; see Hallstrom v. Tillamook County, 493 U.S. 20, 25, 33 (1989)

(holding that a nearly identical sixty-day notice provision of the

Resource Conservation and Recovery Act imposed a mandatory

precondition to suit). The D.C. Circuit Court of Appeals has held

that where (as has been established here) the plaintiff’s legal

interests will be immediately affected, the plaintiff provides

adequate notice as long as it gives notice prior to filing the

action. Chevron, 193 F. Supp. 2d at 64.

[Guest LAW]

II. Administrative Procedure Act

A.

 

The Administrative Procedure Act authorizes judicial review of

final agency action where there is no other adequate remedy in a

court. 5 U.S.C. §704; see id. §702 (“A person suffering a legal

wrong because of agency action . . . is entitled to judicial review

thereof.”).5 This right to judicial review “applies universally

‘except to the extent that ( 1 ) the statutes preclude judicial

review; or ( 2 ) agency action is committed to agency discretion by

law.’” Bennett v. Spear, 520 U.S. 154, 174 (1997). In reviewing the

Endangered Species Act, the Supreme Court in Bennett concluded that

the term “violation” in the Act’s citizen suit provision could not

“be interpreted to include the Secretary’s maladministration of the

ESA.” Id. The ESA provision permits suits “to enjoin any person .

. . who is alleged to be in violation of any provision of this

chapter or regulation issued under the authority thereof.” Id. at

171; see 16 U.S.C. §1540( g )( 1 ). Guided by Bennett, the Tenth

Circuit held that the APA, not the citizen suit provision of

OCSLA, is the appropriate vehicle for judicial review of a final

decision by the Secretary that was made in fulfillment of his

duties under OCSLA. Amerada Hess Corp. v. Dep’t of Interior, 170

F.3d 1032, 1034 (10th Cir. 1999). The Fifth Circuit has similarly

written that the OCSLA citizen suit provision should not be used to

challenge agency decisions that “were or will be otherwise subject

to judicial review under the APA.” OXY USA, Inc. v. Babbitt, 122

F.3d 251, 258 (5th Cir. 1997); but see Duke Energy, 150 F. Supp. 2d

150, 155-56 (D.C. Cir. 2001) (refusing to permit judicial review

under APA as a way to circumvent the notice requirement of OCSLA’s

citizen suit provision).

 

The APA cautions that an agency action may only be set aside

if it is “arbitrary, capricious, an abuse of discretion, or not

otherwise not in accordance with law.” 5 U.S.C. §706(2)(A); see

Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416

(1971). The reviewing court must decide whether the agency acted

within the scope of its authority, “whether the decision was based

on a consideration of the relevant factors and whether there has

been a clear error of judgment.” Overton Park, 401 U.S. at 415-16;

see Motor Vehicle Manf. Ass’n of the U.S. v. State Farm Mutual

Auto. Ins. Co., 463 U.S. 29, 42-43 (1983). While this Court’s

review must be “searching and careful, the ultimate standard of

review is a narrow one.” Overton Park, 401 U.S. at 416; see Delta

Found., Inc. v. United States, 303 F.3d 551, 563 (5th Cir. 2002).

The Court is prohibited from substituting its judgment for that of

the agency. Overton Park, 401 U.S. at 416. “Nevertheless, the

agency must examine the relevant data and articulate a satisfactory

explanation for its action including a ‘rational connection between

the facts found and the choice made.’” State Farm, 463 U.S. at 43

(quoting Burlington Truck Lines v. United States, 371 U.S. 156, 168

(1962)).

 

The Supreme Court has explained that:

Normally, an agency rule would be arbitrary and

capricious if the agency has relied on factors which

Congress has not intended it to consider, entirely failed

to consider an important aspect of the problem, offered

an explanation for its decision that runs counter to the

evidence before the agency, or is so implausible that it

could not be ascribed to a difference in view or the

product of agency expertise. The reviewing court should

not attempt itself to make up for such deficiencies . .

. . [but the court] will, however, ‘uphold a decision of

less than ideal clarity if the agency’s path may be

reasonably discerned.’

 

State Farm, 463 U.S. at 43 (quoting Bowman Transp. Inc. v.

Arkansas-Best Freight Sys., 419 U.S. 281, 286 (1974)). In State

Farm, the Supreme Court held the agency’s decision was arbitrary

and capricious because the agency had failed to give any

consideration to an obvious alternative. Id. at 46-47. That

rationale resonates in this dispute.

 

A court determining whether some agency action is arbitrary

and capricious under the APA makes its decision on the basis of the

“whole record.” 5 U.S.C. §706; see Dep’t of Banking & Consumer Fin.

of Miss. v. Clarke, 809 F.2d 266, 271 (5th Cir. 1987). This record

“consists of the administrative record compiled by the agency in

advance of litigation, not any record thereafter constructed in the

reviewing court.” AT&T Info. Sys., Inc. v. Gen. Servs. Admin., 810

F.2d 1233, 1236 (D.C. Cir. 1987). Indeed, because the Court’s

concern is with the rationality of the agency’s decision making,

“post hoc explanations . . . are simply an inadequate basis for the

exercise of substantive review of an administrative decision.”

United States v. Garner, 767 F.2d 104, 117 (5th Cir. 1985). Those

principles will set the parameters of merits-resolution. For now,

the Court turns to the propriety of preliminary relief.

 

III. Preliminary Injunction

 

It is well settled that “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). The

Court can issue an injunction only if the movant 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).

 

"Speculative 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, 77 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 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)).

 

IV.

A. Jurisdiction

 

The plaintiffs focus on the APA as providing the basis for the

judicial review they seek. They seem to abandon attention to the

presuit requirements of OCSLA’s §1349 because they urge they do not

seek to enforce the OCSLA regulations, nor do they seek to recover

the civil penalties provided under OCSLA. Instead, plaintiffs

insist, they simply seek judicial review of final agency action as

provided by the APA. The Court agrees that the APA certainly

applies here.

 

The central thrust of the plaintiffs’ argument is that the

Secretary was arbitrary and capricious in fulfilling his duties

under OCSLA. Indeed, the issue does not seem to be whether the

Secretary is in “violation” of OCSLA or its regulations. See OXY,

122 F.3d at 257 (observing that the citizen suit provision

establishes a mechanism for citizens to participate in OCSLA’s

enforcement). Rather, as the Tenth Circuit has held, the APA, and

not the citizen suit provision under OCSLA, is the appropriate

vehicle to challenge a decision by the Secretary rendered in

fulfillment of his OSCLA duties. See Amerada Hess, 170 F.3d at

1034; see Bennett, 520 U.S. at 174. The D.C. Circuit’s seemingly

contrary conclusion in Duke Energy is based on the determination

that all OCSLA cases are subject to the presuit conditions in

§1349( a ). See 150 F. Supp. 2d at 155-56. That decision is not

helpful. A closer reading of §1349( a ) reveals that the conditions

apply only to actions brought under subsection §1349( a )( 1 ). The

judicial review of a final agency action that the plaintiffs seek

must proceed under the APA, making the requirements of §1349(a)

irrelevant.

 

B. Arbitrary and Capricious

 

The federal moratorium expansively suspends all pending,

current or approved drilling operations of new deepwater wells in

the Gulf of Mexico and in the Pacific for six months. As declared

by the MMS, “deepwater” is defined as depths greater than 500 feet.

The Secretary based his decision on a finding that new deepwater

wells pose an unacceptable risk of serious and irreparable harm to

life and property and a finding that the installation of additional

safety or environmental protection equipment is necessary to

prevent injury or loss of life and damage to property and the

environment. The government also suggests that the Secretary’s

decision was influenced by a concern that the government’s

resources, stretched thin by the oil spill, could not cope with

another blowout were one to occur.

 

After reviewing the Secretary’s Report, the Moratorium

Memorandum, and the Notice to Lessees, the Court is unable to

divine or fathom a relationship between the findings and the

immense scope of the moratorium. The Report, invoked by the

Secretary, describes the offshore oil industry in the Gulf and

offers many compelling recommendations to improve safety. But it

offers no time line for implementation, though many of the proposed

changes are represented to be implemented immediately. The Report

patently lacks any analysis of the asserted fear of threat of

irreparable injury or safety hazards posed by the thirty-three

permitted rigs also reached by the moratorium. It is incident specific

and driven: Deepwater Horizon and BP only. None others.

While the Report notes the increase in deepwater drilling over the

past ten years and the increased safety risk associated with

deepwater drilling, the parameters of "deepwater" remain confused.

And drilling elsewhere simply seems driven by political or social

agendas on all sides. The Report seems to define "deepwater" as

drilling beyond a depth of 1000 feet by referencing the increased

difficulty of drilling beyond this depth; similarly, the shallowest

depth referenced in the maps and facts included in the Report is

“less than 1000 feet.” But while there is no mention of the 500

feet depth anywhere in the Report itself, the Notice to Lessees

suddenly defines “deepwater” as more than 500 feet.

 

Of course, the present state of the Administrative Record

includes more than the Report, the Notice to Lessees, and the

Memorandum of Moratorium. It includes a great deal of information

consulted by the agency in making its decision. The defendants have

submitted affidavits and some documents that purport to explain the

agency’s decision-making process. The Shallow Water Energy Security

Coalition Presentation attempts at some clarification of the

decision to define “deepwater” as depths greater than 500 feet. It

is undisputed that at depths of over 500 feet, floating rigs must

be used, and the Executive Summary to the Report refers to a

moratorium on drilling using “floating rigs.” Other documents

submitted summarize some of the tests and studies performed. For

example, one study showed that at 3000psi, the shear rams on three

of the six tested rigs failed to shear their samples; in the follow

up study, various ram models were tested on 214 pipe samples and

7.5% were unsuccessful at shearing the pipe below 3000psi. How

these studies support a finding that shear equipment does not work

consistently at 500 feet is incomprehensible. If some drilling

equipment parts are flawed, is it rational to say all are? Are all

airplanes a danger because one was? All oil tankers like Exxon

Valdez? All trains? All mines? That sort of thinking seems heavyhanded,

and rather overbearing.

 

The Court recognizes that the compliance of the thirty-three

affected rigs with current government regulations may be irrelevant

if the regulations are insufficient or if MMS, the government’s own

agent, itself is suspected of being corrupt or incompetent.

Nonetheless, the Secretary’s determination that a six-month

moratorium on issuance of new permits and on drilling by the

thirty-three rigs is necessary does not seem to be fact-specific

and refuses to take into measure the safety records of those others

in the Gulf. There is no evidence presented indicating that the

Secretary balanced the concern for environmental safety with the

policy of making leases available for development. There is no

suggestion that the Secretary considered any alternatives: for

example, an individualized suspension of activities on target rigs

until they reached compliance with the new federal regulations said

to be recommended for immediate implementation. Indeed, the

regulations themselves seem to contemplate an individualized

determination by authorizing the suspension of “all or any part of

a lease or unit area.” 30 C.F.R. §250.168. Similarly, OCSLA permits

suspension of “any operation or activity . . . pursuant to any

lease or permit.” 28 U.S.C. §1334( a )( 1 ). The Court cannot

substitute its judgment for that of the agency, but the agency must

“cogently explain why it has exercised its discretion in a given

manner.” State Farm, 463 U.S. at 48. It has not done so.

 

The Deepwater Horizon oil spill is an unprecedented, sad, ugly

and inhuman disaster. What seems clear is that the federal

government has been pressed by what happened on the Deepwater

Horizon into an otherwise sweeping confirmation that all Gulf

deepwater drilling activities put us all in a universal threat of

irreparable harm. While the implementation of regulations and a new

culture of safety are supportable by the Report and the documents

presented, the blanket moratorium, with no parameters, seems to

assume that because one rig failed and although no one yet fully

knows why, all companies and rigs drilling new wells over 500 feet

also universally present an imminent danger.

 

On the record now before the Court, the defendants have failed

to cogently reflect the decision to issue a blanket, generic,

indeed punitive, moratorium with the facts developed during the

thirty-day review. The plaintiffs have established a likelihood of

successfully showing that the Administration acted arbitrarily and

capriciously in issuing the moratorium.

[Guest LAW]

C. Irreparable Harm

 

The plaintiffs assert that they have suffered and will

continue to suffer irreparable harm as a result of the moratorium.

The Court agrees. Some of the plaintiffs' contracts have been

affected; the Court is persuaded that it is only a matter of time

before more business and jobs and livelihoods will be lost. The

defendants trivialize such losses by characterizing them as merely

a small percentage of the drilling rigs affected, but it does not

follow that this will somehow reduce the convincing harm suffered.

Furthermore, courts have held that in making the determination of

irreparable harm, "both harm to the parties and to the public may

be considered." In re Nw. Airlines Corp., 349 B.R. 338, 384

(S.D.N.Y. 2006) (quoting Long Island R.R. v. Int'l Ass'n of

Machinists, 874 F.3d 901, 910 (2nd Cir. 1989)). The effect on

employment, jobs, loss of domestic energy supplies caused by the

moratorium as the plaintiffs (and other suppliers, and the rigs

themselves) lose business, and the movement of the rigs to other

sites around the world will clearly ripple throughout the economy

in this region.

 

This Court is persuaded that the public interest weighs in

favor of granting a preliminary injunction. While a suspension of

activities directed after a rational interpretation of the evidence

could outweigh the impact on the plaintiffs and the public, here,

the Court has found the plaintiffs would likely succeed in showing

that the agency's decision was arbitrary and capricious. An invalid

agency decision to suspend drilling of wells in depths of over 500

feet simply cannot justify the immeasurable effect on the

plaintiffs, the local economy, the Gulf region, and the critical

present-day aspect of the availability of domestic energy in this

country.

 

Accordingly, the plaintiffs' motion for preliminary injunction

is GRANTED. An Order consistent with this opinion will be entered.

New Orleans, Louisiana, June 22, 2010.

 

MARTIN L. C. FELDMAN

UNITED STATES DISTRICT JUDGE

[Guest LAW]

Todd Hornbeck, Chairman, President and Chief Executive Officer, provided the following statement: "We are very pleased that the court has ruled in our favor. We also appreciate Judge Feldman having considered this case on an expedited basis. All of us here at Hornbeck Offshore are deeply saddened over the recent tragic events involving the Deepwater Horizon. Our thoughts and prayers are with the families that were affected and all of our fellow citizens of the Gulf Coast region whose lives and livelihoods have been impacted by the severe environmental consequences of this disaster. While the federal government has announced its intent to appeal this decision, we, at Hornbeck Offshore, are ready to continue serving the needs of our customers in a safe and environmentally sound manner."

 

Hornbeck Offshore Services, Inc. is a leading provider of technologically advanced, new generation offshore supply vessels in the U.S. Gulf of Mexico and in select other domestic and international markets, and is a leading short-haul transporter of petroleum products through its coastwise fleet of ocean-going tugs and tank barges in the northeastern U.S., the domestic Gulf of Mexico, the Great Lakes and in Puerto Rico. Hornbeck Offshore currently owns a fleet of over 80 vessels primarily serving the energy industry.

[Guest Enron Ex]

I just heard on CNN that the case's next destination, the U.S. Fifth Circuit Court of Appeals in New Orleans, is likely to put the case on a fast track. Thanks for the post.

[Guest Kendra Barkoff]

Secretary of the Interior Ken Salazar issued the following statement regarding a decision today in U.S. District Court regarding the deepwater drilling moratorium:

 

“The decision to impose a moratorium on deepwater drilling was and is the right decision. The moratorium is needed to protect the communities and the environment of the Gulf Coast, and DOJ is therefore appealing today’s court ruling.

 

“We see clear evidence every day, as oil spills from BP's well, of the need for a pause on deepwater drilling. That evidence mounts as BP continues to be unable to stop its blowout, notwithstanding the huge efforts and help from the federal scientific team and most major oil companies operating in the Gulf of Mexico. The evidence also continues to mount that industry needs to raise the bar on blowout prevention, containment, and response planning before deepwater drilling should continue.

 

“Based on this ever-growing evidence, I will issue a new order in the coming days that eliminates any doubt that a moratorium is needed, appropriate, and within our authorities.”

[Guest State of Louisiana]

Today, Governor Bobby Jindal stood with hundreds of workers impacted by the Obama Administration’s deepwater drilling moratorium at Gulf Island Fabrication’s facility in Houma for the Economic Survival Rally. Calling the moratorium a second manmade disaster, Governor Jindal urged the White House to not double down on the drilling moratorium – which a federal judge has already ruled against – and instead to protect thousands of Louisiana jobs.

 

Governor Jindal said, “The last time I was here we announced that Gulf Island Fabrication was expanding their Houma facility and adding a fifth subsidiary, Gulf Island Marine Fabrication LLC. That expansion creates at least 200 new, permanent jobs, with an average annual salary of $53,000 per year, not including benefits, in addition to retaining 1,300 jobs here. Unfortunately, today we are here to talk about job losses – resulting from what a federal judge has already ruled is an ‘arbitrary and capricious’ six-month deepwater drilling moratorium that is estimated to kill 20,000 Louisiana jobs and cost us between $65 to 135 million in lost Louisiana wages each month.

 

“Thankfully, earlier this week we had a rare moment of common sense in this disaster from a federal judge who issued an injunction against the six-month deepwater drilling moratorium imposed by the federal government.

 

“You are going to hear from a lot of folks today on how this second disaster – caused by this moratorium – is impacting their lives. The federal judge who ruled to overturn the moratorium is not here today, so I want to share some of his words on what supported his decision.

 

“The words of this federal judge are especially important today because last night the Administration asked the court to continue their drilling moratorium and we know the Administration is also looking at implementing a second moratorium – just to make sure they have shut this drilling down. Here is some of what the federal judge said when he ruled to block the moratorium. He said, ‘The court is persuaded that it is only a matter of time before more business and jobs and livelihoods will be lost. The defendants trivialize such losses by characterizing them as merely a small percentage of the drilling rigs affected, but it does not follow that this will some how reduce the convincing harm suffered.’

 

“That is why we are here today. That is why this rally is called an Economic Survival Rally. We are in a fight for our survival against the oil spill disaster and that struggle has only been compounded by the second disaster of this ‘arbitrary’ and ‘capricious’ shut down of drilling off of our coast.

 

“Our message to the White House is simple – don’t double down on this six-month drilling moratorium that a federal judge has already ruled against.”

 

Governor Jindal cited the federal judge’s opinion in the case to highlight the Administration’s misguided approach in having a moratorium. The Governor said, “The federal judge said the Department of Interior’s report to shut down deepwater drilling was inaccurate and misleading. He said the Department’s statement that their report’s recommendations were ‘peer-reviewed by seven experts identified by the National Academy of Engineering’ was misleading and that five of the National Academy experts and three of the other experts have publicly stated that they ‘do not agree with the six month blanket moratorium.’

 

“The judge also said, ‘Of greater concern is the misleading Executive Summary that seems to assert that all the experts agree with the Secretary’s recommendation. The government’s hair-splitting explanation abuses reason, common sense, and the text at issue.’ The judge went on to say that the Minerals Management Service memo of May 28, 2010 ‘also fails to explain the reasons for the suspension of operations or the depth of operations to be affected.’

 

“I want to again quote you what the judge concluded. He said: ‘After reviewing the Secretary’s Report, the Moratorium Memorandum, and the Notice to Lessees, the Court is unable to divine or fathom a relationship between the findings and the immense scope of the moratorium. The Report, invoked by the Secretary, describes the offshore oil industry in the Gulf and offers many compelling recommendations to improve safety. But it offers no time line for implementation, though many of the proposed changes are represented to be implemented immediately. The Report patently lacks any analysis of the asserted fear of threat of irreparable injury or safety hazards posed by the thirty-three permitted rigs also reached in the moratorium. It is incident-specific and driven: Deepwater Horizon and BP only. None others.’”

 

The Governor added, “The judge says plainly that the Secretary’s determination that a six-month moratorium on issuance of new permits and drilling by existing rigs is necessary “does not seem to be fact-specific and refuses to take into measure the safety records of those others in the Gulf. There is no evidence presented indicating that the Secretary balanced the concern for environmental safety with the policy of making leases available for development. There is no suggestion that the Secretary considered any alternatives: for example the individualized suspension of activities on target rigs until they reached compliance with the new federal regulations said to be recommended for immediate implementation.”

 

In addition to the Governor, speakers at the rally included Gulf Island Fabrication Chairman & CEO Kerry Chauvin, ENSCO Offshore Co. VP/General Manager John Knowlton, Allport Services CEO Dwayne Rebstock, Rig Chem Owner Lori Davis, Offshore Towing, Inc. President Cory Kief, Shelia Rouse of K&S Trucking Company, NREC Mechanic Jamie Thibodaux, Captain Eric Hemmingway and Anthony Thibodeaux of Edison-Chouest, Parish President Michel Claudet, State Senator Norby Chabert and State Representative Gordon Dove.

 

Governor Jindal blasted the federal government’s inability to do their own jobs at the expense of tens of thousands of Louisiana jobs. He said, “The bottom line is this: Thousands of Louisianaians shouldn’t have to lose their jobs because the federal government can’t do their job”

 

“Not only does the moratorium threaten thousands of direct jobs in our state, it also jeopardizes many other industries that supply our oil and gas industry and the entire communities that depend on them. It is also deeply concerning that the Administration’s moratorium was enacted against the judgment of the Department of the Interior’s own expert advisors and scientists.

 

“The Administration already asked the court to continue their ban – and also enact a new moratorium. They just don’t seem to understand that you can’t just turn a switch on and off with these rigs. When they leave our coast to produce oil in other parts of the country or the world, the jobs that support them go too.

 

“We absolutely do not want another spill or one more drop of oil on our coast or in our water, but thousands of Louisianians should not have to lose their jobs because the federal government can’t adequately do their job of ensuring drilling is done safely. The federal government has an entire agency dedicated to monitoring safe drilling. It shouldn’t take them six-months or longer for a new national commission to ensure safety measures are in place and their laws and regulations are being followed. Instead of an arbitrary moratorium, the Administration should listen to their own experts and enact the specific recommended steps from their own experts to ensure proper oversight and safe drilling.”

 

Governor Jindal railed against the new national commission set up by President Obama to study deepwater drilling saying the commission will not even have the first meeting until next month and they may not even finish their report until next year. The Governor also noted the need for a clear answer on how wage losses will be handled for the thousands of workers impacted by the oil spill.

 

Governor Jindal said, “The new national commission they are forming to study the moratorium for the President for six months now says they won’t have their first meeting until mid-July and they won’t finish their report until next year.

 

“Moreover, the $100 million set aside by BP to offset the wage losses of deepwater rig workers will cover only a few weeks of lost wages for those workers – and these funds will do nothing to offset the hundreds of millions in wage losses for workers in support industries that count on deepwater drilling activity for their livelihood. BP now tells us they will not pay for moratorium-related losses. The President said BP would pay. We know the President’s new point-man for the claims process will be here tomorrow and we hope he has some answers for our families.

 

Governor Jindal highlighted the potential total wage loss per month if the moratorium remains in effect and the Governor also called on the new national commission to hold each of their meetings in Louisiana so the members can have a first-hand look at how this industry impacts Louisiana.

 

Governor Jindal said, “I want to be very clear on this point: Each month that the work of the commission is delayed means another month that thousands of Louisiana people won’t be able to work. Each month that the work of the Commission is delayed, we expect additional energy companies to move existing deepwater rigs to other parts of the world and/or to plan new deepwater drilling capacity for other parts of the world in lieu of the Gulf – further extending and expanding job losses in Louisiana. Each month that the work of the commission is delayed will result in the loss of approximately $65-135 million in Louisiana wages.

 

“There is no reason this Commission should wait to have even their first meeting until next month and then take well into next year before they finish their work. In fact, today, we ask that this national commission hold all their meetings right here in Louisiana – and that they do so quickly. Not only will this help bring more economic investment to businesses along the coast that are suffering from the oil spill and now the drilling shut-down, but these Commission members should get a first-hand look at what our working coast looks like and how vital this industry is to our many coastal communities and our state.

 

“Finally – If anyone here has not yet done so – visit www.GEST.La.gov today and sign our petition against this arbitrary and capricious six-month moratorium that is killing our Louisiana jobs.”

[Guest Defenders of Wildlife]

Defenders of Wildlife and several other environmental and conservation groups intervened in Hornbeck v. Salazar, supporting the administration in defense of its decision to enact a temporary moratorium on deepwater drilling. Allowing deepwater drilling to continue before the completion of an adequate investigation of the unprecedented Gulf oil disaster, and the implementation of measures to decrease the risk of future spills, imposes further grave risks to the already jeopardized environment and economy of the Gulf region. Over 1,746 birds, 528 sea turtles, and 51 marine mammals have been reported impacted by the atrocious April 20 oil spill. The actual numbers of affected wildlife are expected to be much higher.

 

In his ruling, Judge Feldman states that the government “failed to cogently reflect the decision to issue a blanket, generic, indeed punitive, moratorium with the facts developed during the thirty-day review.” With this finding, Judge Feldman ruled on the side of an industry that is responsible for substantial and irreparable damage that its actions have wrought upon our nation’s priceless wildlife and coastal communities (see: Prudhoe Bay, Alaska, 2006; Port Sulphur, La., 2000; Bolsa Chica State Beach, Calif., 1990; Price William Sound, Alaska [the Exxon Valdez], 1989, etc.). If erring on the side of caution after the greatest environmental disaster in our nation’s history is not adequate reasoning, what is?

 

Read More and Get Involved!

[Guest PAM]

Yesterday, Randi Rhodes was talking about how haliburton and bp are ruining the New York city water supply by "fragging" shales in Delaware to release the natural gas. One fragging operation takes up to 5 million gallons of clean water which they suck out of nearby streams. Then they add a "secret" concoction of Benzene and many other cancer causing chemicals to this water before they inject it into the drill hole to break the shale and release the natural gas.

 

Well guess what, there have been a rash of cancers and other sicknesses caused by haliburtion and bp. Here we go again. Cheney snuck a little item into the law when he was president that allows the oil companies to destroy our drinking water. The bill prohibits the EPA from interfering in their operations. In other words they have no regulations.

 

They have not only poisoned our Gulf of Mexico but now they have destroyed the water supply for millions of people. What next, the entire planet?

 

I think I know what they have in store for us next. I heard that bp is being allowed to drill offshore in Alaska where they have had hundreds of spills over the last 20 years and are destroying Alaska. They are drilling off shore where I thought it was prohibited. They got around the stupid bastard administrators hand picked by Cheney in Washington by calling their "little islands" dry land. Just you watch. The next major spill will be on the pristine shores of the north slope of Alaska.

 

Why are we letting these SOB, POS republicans destroy our nation.

 

PUT IT TO A STOP NOW or we will in November!!!!

 

We are going to kick republican asses all the way to Leavenworth, that is if we ever get an attorney general with balls like Bobby Kennedy and a president like Teddy Roosevelt.

[Guest Uncommon Wisdom]

It only gets worse. BP's leaking "Well from Hell" in the Gulf of Mexico has economic as well as environmental impact. Louisiana's fishing industry and oil industry is getting hammered. Florida's $60-billion-a-year tourism industry is in danger. Texas is getting hit, too, because many of the deepwater oil rig crews live in that state.

 

In just the oil industry alone, pessimists estimate the drilling ban could cost all parties involved — companies, workers and support personnel — about a billion dollars a month. The optimists figure the cost is about half that. Either way, it's a huge hit to the economy. And as long as the well isn't capped, the damage will continue to grow.

[Guest LAW]

Press Gaggle by Deputy Press Secretary Bill Burton en route Kansas City, Missouri

 

Aboard Air Force One

En Route Kansas City, Missouri

 

Q Anything to say about today’s oral arguments in the appeals court over the drilling ban, drilling moratorium?

 

MR. BURTON: Well, as the President said, the moratorium was important so that -- because we needed to do everything that we could in order to ensure the safety of workers who are working on there and ensure the protection of our environment. So obviously we’re involved here and following it closely.

 

Q When will you guys announce a new drilling moratorium? Wasn’t that the response -- isn’t Interior working on a new one? Is that forthcoming?

 

MR. BURTON: Yes, I would stay tuned on that. I would say that sooner than later.

[Guest LAW]

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 10-30585

HORNBECK OFFSHORE SERVICES, L.L.C.; BEE MAR - WORKER BEE,

L.L.C.; NORTH AMERICAN FABRICATORS, L.L.C.; BEE MAR, L.L.C.;

OFFSHORE SUPPORT SERVICES, L.L.C.; ET AL,

Plaintiffs - Appellees

v.

KENNETH LEE SALAZAR, also known as Ken Salazar, In His Official

Capacity as Secretary, United States Department of the Interior; UNITED

STATES DEPARTMENT OF THE INTERIOR; ROBERT ABBEY, also known

 

as Bob Abbey, In His Official Capacity as Director, Bureau of Ocean Energy Management, Regulation and Enforcement; BUREAU OF OCEAN ENERGY MANAGEMENT, REGULATION AND ENFORCEMENT, formerly known as Minerals Management Service,

Defendants - Appellants

 

FLORIDA WILDLIFE FEDERATION; CENTER FOR BIOLOGICAL

DIVERSITY; NATURAL RESOURCES DEFENSE COUNCIL; SIERRA

CLUB; DEFENDERS OF WILDLIFE,

Intervenor Defendants - Appellants

Appeal from the United States District Court for the

Eastern District of Louisiana, New Orleans

 

Before DAVIS, SMITH and DENNIS, Circuit Judges.

PER CURIAM:

 

1. The motion for stay pending appeal is denied because the Secretary has failed to demonstrate a likelihood of irreparable injury if the stay is not granted; he has made no showing that there is any likelihood that drilling activities will be resumed pending appeal.

 

2. The Secretary has the right to apply for emergency relief if he can show that drilling activity by deepwater rigs has commenced or is about to commence. Any renewed motion for stay will be evaluated on existing circumstances.

 

3. It is further ordered that this appeal be expedited to a merits panel. The clerk will establish an expedited briefing schedule so the appeal of the preliminary injunction can be argued on its merits during the week of August 30.

 

DENNIS, Circuit Judge, concurring in part and dissenting in part: I would grant the Secretary’s motion to stay the district court’s preliminary injunction pending appeal, and to this extent, I respectfully dissent from the majority’s order. I concur, however, in reserving the Secretary’s right to apply for emergency relief and ordering an expedited appeal and briefing. I will assign reasons for my dissenting view at a later date.

[Guest Maggie Kao]

Today, Interior Secretary Ken Salazar announced a renewed ban on deepwater oil drilling in the Gulf of Mexico, where a BP oil rig has been pouring out millions of gallons of oil for the past two months.

 

Shortly after the disaster began, the Obama administration issued a temporary ban on more deepwater drilling in the area. However, the oil industry challenged that ban in court. The Sierra Club and other groups have since intervened to support the federal government in its decision to temporarily halt drilling in the disaster area.

 

In an effort to protect the Gulf Coast communities, water and wildlife that have already been devastated by the BP disaster, the administration today issued a new moratorium.

 

Statement of Sierra Club Executive Director Michael Brune

 

“We’re encouraged to see the Obama administration protect Gulf Coast communities and wildlife from more of the deepwater drilling that created this disaster. At a time when oil is still gushing into the ocean and destroying more wildlife, communities and jobs each day, it doesn’t make sense to open up more drilling.

 

The oil industry is using this tragedy as an excuse to push for even more dangerous drilling. Companies like BP would like to see the Gulf declared a dead zone in which the only jobs to be had are from oil drilling.

 

The Gulf Coast deserves better. Fishing, shrimping and tourism have been a way of life in this region for years. Those industries and jobs need to be restored. More drilling now would only put this area at risk for a second spill, or a third. Proposing new drilling while oil is still gushing is a slap in the face to Gulf Coast communities.

 

We need to make sure this never happens again. A moratorium on new deepwater drilling addresses the immediate risk to the Gulf Coast but we also need a long term plan to prevent further oil disasters. We need President Obama to chart a course that will end America’s oil dependence in the next twenty years.”

[Guest Kendra Barkoff]

Secretary Salazar Issues New Suspensions to Guide Safe Pause on Deepwater Drilling

07/12/2010

 

Bromwich to Engage Public, Industry and Stakeholders in Deepwater Drilling Safety Reforms

 

WASHINGTON, D.C. – Secretary of the Interior Ken Salazar today directed the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEM) to issue new suspensions of deepwater drilling on the Outer Continental Shelf (OCS), saying a pause is needed to ensure that oil and gas companies first implement adequate safety measures to reduce the risks associated with deepwater drilling operations and are prepared for blowouts and oil spills.

 

Shallow water drilling activities that use different technologies do not present the same type or level of risks as deepwater drilling operations and can continue to move forward if operators are in compliance with all safety and environmental requirements, including new safety and environmental requirements implemented through recent Notices to Lessees. Production activities in federal waters of the Gulf are not affected by the deepwater drilling suspensions.

 

“More than eighty days into the BP oil spill, a pause on deepwater drilling is essential and appropriate to protect communities, coasts, and wildlife from the risks that deepwater drilling currently pose,” said Secretary Salazar. “I am basing my decision on evidence that grows every day of the industry’s inability in the deepwater to contain a catastrophic blowout, respond to an oil spill, and to operate safely.”

 

Secretary Salazar’s decision to impose new deepwater drilling suspensions is based on his authorities and responsibilities under the Outer Continental Shelf Lands Act (OCSLA) to ensure safe operations on the OCS. The new decision is supported by an extensive record of existing and new information indicating that allowing new deepwater drilling to commence would pose a threat of serious, irreparable, or immediate harm or damage to the marine, coastal, and human environment.

 

In a decision memorandum to BOEM Director Michael R. Bromwich, Salazar said that a temporary pause on deepwater drilling will provide time to implement recent safety reforms and for:

 

1. The submission of evidence by operators demonstrating that they have the ability to respond effectively to a potential oil spill in the Gulf, given the unprecedented commitment of available oil spill response resources that are now being dedicated to the BP oil spill;

 

2. The assessment of wild well intervention and blowout containment resources to determine the strategies and methods by which they can be made more readily available should another blowout occur; and

 

3. The collection and analysis of key evidence regarding the potential causes of the April 20, 2010 explosion and sinking of the Deepwater Horizon offshore drilling rig, including information collected by the Presidential Commission and other investigations.

 

In this period, the Department and BOEM will also be issuing and implementing interim safety rules in accordance with recommendations in the 30-Day Safety Report that Secretary Salazar submitted to the President on May 27, 2010.

 

The suspensions ordered today will last until November 30, 2010, or until such earlier time that the Secretary determines that deepwater drilling operations can proceed safely.

 

To help inform decisions about deepwater drilling safety reforms Secretary Salazar today also asked Director Bromwich to engage in an active public outreach effort with industry, academic experts, the public and other interested parties, and to prepare a report with recommendations on deepwater drilling.

 

“I remain open to modifying the new deepwater drilling suspensions based on new information,” said Secretary Salazar, “but industry must raise the bar on its practices and answer fundamental questions about deepwater safety, blowout prevention and containment, and oil spill response.”

 

The new suspensions apply to drilling operations that use subsea blowout preventers (BOP) or surface BOPs on floating facilities.

 

Like the deepwater drilling moratorium lifted by the District Court on June 22, the deepwater drilling suspensions ordered today apply to most deepwater drilling activities and could last through November 30. The suspensions ordered today, however, are the product of a new decision by the Secretary and new evidence regarding safety concerns, blowout containment shortcomings within the industry, and spill response capabilities that are strained by the BP oil spill. Moreover, the new decision by the Secretary establishes a process through which BOEM will gather and analyze new information from the public, experts, stakeholders, and the industry on safety and response issues, which could potentially provide the basis for identifying conditions for resuming certain deepwater drilling activities. In addition, the May 28 moratorium proscribed drilling based on specific water depths; the new decision does not suspend activities based on water depth, but on the basis of the drilling configurations and technologies.

[Guest LAW]

Q’S AND A’S

NEW DEEPWATER DRILLING SUSPENSIONS

JULY 12, 2010

 

Q1. Why is Secretary Salazar issuing new deepwater drilling suspensions?

 

A1. Secretary Salazar has issued a new decision to suspend deepwater drilling activities based on an extensive record of existing and new information. The Secretary has concluded new suspensions are necessary because he has determined that new deepwater drilling would pose a threat of serious, irreparable, or immediate harm or damage to the marine, coastal, and human environment. The temporary pause on deepwater drilling will provide time for the implementation of safety reforms and for:

 

1. The submission of evidence by operators demonstrating that they have the ability to respond effectively to a potential oil spill in the Gulf, given the unprecedented commitment of available oil spill response resources that are now being dedicated to the BP oil spill;

 

2. The assessment of wild well intervention and blowout containment resources to determine the strategies and methods by which they can be made more readily available should another blowout occur; and

 

3. The collection and analysis of key evidence regarding the potential causes of the April 20, 2010 explosion and sinking of the Deepwater Horizon offshore drilling rig, including information collected by the Presidential Commission and other investigations.

In addition, suspending these particular operations until November 30 will allow BOEM and the Department to develop the interim rules required to address the safety issues that have recently come to light. Some of these interim rules are expected to be issued within 120 days of the issuance of the May 27, 2010, Departmental report entitled “Increased Safety Measures for Energy Development on the Outer Continental Shelf” (the “Safety Report”), and additional time will be required after these rulemaking actions are completed for operators to implement the new requirements established by those rules. Other rules will have a longer development or implementation timeline, and Secretary Salazar will determine whether their implementation is essential before suspended operations may resume.

 

Q2. What are the differences between the May 28 deepwater drilling moratorium and the new deepwater drilling suspension?

 

A2. Like the deepwater drilling moratorium lifted by the District Court on June 22, the deepwater drilling suspensions ordered today apply to most deepwater drilling activities and could last through November 30. The suspensions ordered today, however, are the product of a new decision by the Secretary and new evidence regarding safety concerns,

blowout containment shortcomings within the industry, and spill response capabilities that are strained by the BP oil spill. Moreover, the new decision by the Secretary establishes a process through which BOEM will gather and analyze new information from the public, experts, stakeholders, and the industry on safety and response issues, which could potentially provide the basis for identifying conditions for resuming certain deepwater drilling activities. In addition, the May 28 moratorium proscribed drilling based on specific water depths; the new decision does not suspend activities based on water depth, but on the basis of the drilling configurations and technologies.

 

Q3. What is the purpose of the meetings that Secretary Salazar is directing BOEM to hold?

A3. During the suspension, BOEM should continue to develop information about the relative risks posed by the various types of drilling activity, compliance with workplace and drilling safety requirements, status of blowout containment capabilities, and compliance with oil spill response requirements. Specifically, Secretary Salazar has directed Michael R. Bromwich, Director of BOEM, to conduct public meetings and outreach to gather additional information, on an expedited basis, on the primary issues that the Secretary identified as raising the most significant risks regarding the resumption of deepwater drilling:

 

1. Drilling and workplace safety requirements as outlined in the Safety Report and a timeline for the implementation of such safety requirements and others that may be necessary to ensure safe drilling practices;

 

2. Well intervention and blowout containment technology and methodology designed to effectively address and expeditiously contain any blowouts that could occur;

 

3. A review of additional and necessary oil spill response plans for offshore drilling and production facilities, and an evaluation of industry capacity to address a worst case discharge scenario under 30 CFR part 254.

 

This information gathering will be critical to addressing the serious risks presented by oil and gas drilling activities in deepwater environments. This additional information potentially could provide the basis for identifying conditions for resumption of drilling activities if certain conditions are met, and/or the identification of any oil and gas drilling activities that might be allowed prior to the expiration of the suspensions based on the relative level of risk associated with those activities.

 

Q4. The Secretary’s decision memo said that inspections of the BOPs on the new relief wells has identified unexpected performance problems with those BOPs. What were those performance problems and does that mean that the drilling of the relief wells is being conducted in an unsafe manner?

 

A4. The BOPs used in BP’s relief wells were subject to augmented testing procedures. These tests identified and allowed the repair of several problems, including:

 

During ROV hot stab testing, the Lower Marine Riser Package disconnect function was unsuccessful because of a leaking shuttle valve.

 

A failed shuttle valve caused an unsuccessful test of the All Stabs Retract function.

 

A failure of the deadman test because a shuttle valve was installed that should not have been.

 

A broken solenoid connection on the blue pod that prevented that pod from closing the casing shear rams.

Because these problems were identified by the new testing procedures, they were repaired, and the tests were successfully re-run. Interior is closely monitoring the drilling of the relief wells to ensure safety.

 

Q5. The Secretary’s decision allows certain low risk operations to occur in deepwater in spite of the suspensions. What are these activities and what’s the rationale for allowing them?

 

A5. Secretary Salazar has directed BOEM to direct the suspension of any authorized drilling of wells using subsea or surface BOPs on a floating facility. Secretary Salazar has further directed BOEM to cease the approval of pending and future applications for permits to drill wells using subsea or surface BOPs on a floating facility. These suspensions shall apply in the Gulf of Mexico and the Pacific regions through November 30, 2010, subject to modification if the Secretary determines that the significant threats to life, property, and the environment set forth in this memorandum have been sufficiently addressed.

 

These suspensions do not apply to production activities, drilling operations that are necessary to conduct emergency activities, such as the drilling operations related to the ongoing BP Oil Spill, nor do they apply to drilling operations necessary for completions or workovers (where surface BOP stacks are installed, they must be utilized during these operations), abandonment or intervention operations, waterflood, gas injection, or disposal wells. The exceptions to the drilling suspensions have been carefully considered based on their relative risk and their necessity to maintain ongoing production. Waterflood, injection and disposal wells are drilled into production reservoirs for which all the relevant geologic information is known to the operator. The drilling equipment and procedures, including the casing and cementing programs, are similar to those already used for the project. Such wells are typically considered routine and low risk. Completion and abandonment operations are conducted when the drilling of the well has been finished, and are necessary to, respectively, allow the well to produce or to secure and close the well. Workover operations are performed on wells drilled into a production reservoir with known geologic information and these operations are necessary to maintain production from these wells. All of these drilling operations must comply with NTL-N05.

 

Q6. How many drilling operations are affected by the suspensions ordered today?

 

A6. Any count of deepwater offshore drilling rigs in a particular region represents a snapshot in time. When the BP Oil Spill occurred, there were 36 floating drilling rigs that were either operating in the Gulf of Mexico, were between wells in the Gulf of Mexico, or were scheduled to come to the Gulf of Mexico to begin operations before the end of 2010. In addition, there were 19 platform rigs on floating production facilities in the Gulf of Mexico at that time. When the May 28 suspensions were put into effect, there were a total of 33 drilling rigs conducting operations in water depths of at least 500 feet – 26 floating rigs and 7 platform rigs. A total of 21 rigs of these rigs were required to reach a safe stopping point and to suspend drilling operations, and all have done so. The remaining 12 rigs have been conducting operations allowed under the moratorium.

 

Q8. What is the status of shallow water drilling permits?

 

A8. BOEM has been tracking drilling permit requests and well modification permit requests that are required to include the information outlined in NTL-N05 (Safety NTL) and/or NTL-N06 (Environmental NTL).

 

As of Monday, July 12, 9:00 a.m. EDT:

For those applications required to comply only with NTL-N05, 16 applications have been approved and 16 are pending.

 

For those applications required to comply with NTL –N05 and NTL-N06, 12 requests are pending.

This information is updated every business day, and can be found at: http://www.gomr.mms.gov/homepg/offshore/safety/well_permits.html

 

In addition, since June 8, BOEM has approved 18 other shallow water permits, and 4 others are pending, to which there were no permit-specific requirements in either NTL. However, the applicants had to comply with NTL-N05’s general (company-wide) certification requirements before these applications could be processed.

 

The requirements of the NTLs affect the timing of the approvals.

 

One of the requirements of NTL-N05 was that the companies needed to submit certifications that they were complying with BOEM regulations and the joint BOEM-Coast Guard safety alert, and that they had conducted 4 specific reviews of their operations. These certifications were due on June 28. All but one operator has complied (the lone exception being in bankruptcy proceedings).

 

NTL-N06 requires companies to submit additional information on blowout and worst-case discharge scenarios, as well as measures to prevent a blowout, reduce the likelihood of a blowout and to conduct early and effective intervention in case of a blowout. This NTL was issued June 18. Currently, there are 33 submitted exploration or development plans to which NTL-N06 applies. Companies have submitted information for 11 of these plans, 5 of which have been returned for additional information and the other 6 of which are currently being reviewed.