Court lifts Gulf of Mexico deep-water oil moratorium, Administration to appeal

"Action speaks louder than words, but not nearly as often." - Mark Twain

In the wake of the destruction of the Deepwater Horizon drill rig, the United States Department of Interior Minerals Management Services issued a six-month moratorium on deep-water drilling for oil in the Gulf of Mexico.  The Administration wanted a pause in operations so that it could study the causes of the blowout and develop new policies to ensure such an event could not happen again.  However, this policy suffered a setback when, in the matter entitled "Hornbeck Offshore Services, LLC v. Kenneth Lee "Ken" Salazar," Federal District Court Judge Martin L.C. Feldman granted the plaintiffs' motion for preliminary injunction, effectively reversing the Administration's moratorium.  If unsuccessful on appeal, the Obama Administration may not be able to wait for its commission to come up with conclusions before being forced to act on ensuring that currently operating deep-water rigs operate safely.

The plaintiff, Hornbeck Offshore Services, supports a variety of services for nearly all 33 deep-water oil rigs using its ships.  The moratorium apparently caused great hardship and layoffs in the company.  In addition to Hornbeck, other entities supported Hornbeck's lawsuit, like the State of Louisiana.  The upshot of their arguments was that the Administration acted arbitrarily and capriciously by issuing a blanket moratorium on deep-water drilling and that Hornbeck and others similarly situated would suffer irreparable harm if the moratorium remained in effect.

The deep-water oil rigs operate pursuant to leases issued by the United States, which owns the sea bed in jurisdictional waters, under the terms of Outer Continental Shelf Lands Act.  The Department of Interior administers the leases.  Among the Department's powers includes the temporary suspension or prohibition of activity, which formed the legal authority for the moratorium.  Under the terms of Act, leases can be suspended "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 . . . "

Judge Feldman considered the Plaintiffs Motion for Preliminary Injunction, which is the means by which a litigant can obtain a preliminary ruling while the case continues to a final determination, although victory on a preliminary injunction motion often is enough to obtain the relief a litigant wants.  To win a preliminary injunction motion, the party filing the motion has to show four things: "(1) the likelihood that the party seeking the preliminary injunction will succeed on the merits of the claim; (2) whether the party seeking the injunction will suffer irreparable harm without the grant of the extraordinary relief; (3) the probability that granting the injunction will cause substantial harm to others; and (4) whether the public interest is advanced by the issuance of the injunction."   When challenging the decision of a governmental agency, the plaintiff must show that the agency acted in an arbitrary and capricious matter, that is, that the decision was the "result of a deliberate, principled reasoning process and is supported by substantial evidence."

Judge Feldman concluded that the blanket moratorium was not supported by the evidence provided by the Department, thereby concluding that it was not supported by substantial evidence.  As for irreparable harm, the Court determined that the loss of jobs as a result of the moratorium would be devastating to the community.  In all, the Court sided with those companies currently servicing existing wells and the people they employ over what it saw as scant support for the moratorium.

At a White House press briefing, Press Secretary Robert Gibbs confirmed that the decision will be appealed.  We can expect that the briefing for the appeal will be expedited.  Ultimately, whether the moratorium stands or not will depend on how persuasive the appeals court the Administration's support for it is.  In the meantime, if the Administration is serious about protecting the Gulf of Mexico from additional well blowouts from deep-water wells, it should step up its inspections and beef up its regulations.  It is doubtful that currently operating oil rigs will be getting much of a break from regulators from here on out.

The author, Saulius Mikalonis, is an environmental attorney with over 25 years of experience in the Bloomfield Hills offices of Plunkett Cooney.  He is also the author of The Green Blawg, in which he writes about environmental law issues for the non-lawyer.  In addition to practicing law, Mr. Mikalonis is an adjunct professor at the Thomas M. Cooley Law School, Auburn Hills Campus, at which he teaches a course entitled "Sustainable Development Law & Policy" and a Board Member of the Detroit Regional Chapter of the United States Green Building Council (USGBC).