Judge blocks Obama moratorium on deep-water drilling
Wednesday, June 23, 2010
The oil industry won a round in the legal battle over offshore drilling Tuesday when a federal judge in New Orleans issued an injunction blocking the six-month moratorium President Obama imposed on deep-water drilling in late May.
The decision, which included a stinging rebuke of the Obama administration, was hailed by oil companies that work in the Gulf of Mexico. But the White House said it would immediately appeal to the U.S. Court of Appeals for the 5th Circuit, which could grant an emergency stay while weighing the case.
Secretary of Interior Ken Salazar said Tuesday evening that "I will issue a new order in the coming days that eliminates any doubt that a moratorium is needed, appropriate and within our authorities."
Oil companies said they would not restart costly, long-term deep-water drilling projects while the legal wrangling continued.
U.S. District Judge Martin L.C. Feldman said in issuing his injunction that the Interior Department had failed to show that the oil spill triggered by the Deepwater Horizon rig blowout in April meant that there was imminent danger on all deep-water drilling rigs in the gulf. By contrast, he said, the "blanket, generic, indeed punitive, moratorium" has clearly harmed the industry and region.
"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," Feldman wrote in a case brought by Hornbeck Offshore Services and three other offshore oil service firms.
Groups supporting the moratorium quickly took aim on Tuesday at the judge, who was appointed to the federal bench in 1983 by President Ronald Reagan. Disclosure forms from 2008 obtained by the group Judicial Watch show that Feldman has invested in companies involved in offshore oil and gas exploration, including deep-water rig owner Transocean, shallow-water drillers Hercules and Rowan, and international rig and tool provider Parker Drilling. The investments were as much as $15,000 each, according to the forms.
The court did not make the 2009 disclosure form available, and Feldman could not be reached for comment.
Decisions by federal agencies are sometimes challenged in courts, however, and a recent law review article said such efforts are successful nearly a third of the time.
David F. Engstrom, a law professor at Stanford University, said there are several justifications for such challenges under the Administrative Procedures Act. In this case, Feldman granted the preliminary injunction after deciding that the oil companies would probably prevail in their arguments that Interior's actions were "arbitrary and capricious" and that they were being harmed irreparably by the moratorium. Under that standard, Feldman -- and the appeals court that will review his order -- must decide whether there is "a rational connection between the facts that the agency found and the action that it took," Engstrom said.
In his order Tuesday, Feldman emphatically said there was not. "The Court is unable to divine or fathom a relationship between the [Interior Department's] findings and the immense scope of the moratorium," he said.
He added that the administration's drilling suspension "does not seem to be fact-specific and refuses to take into measure the safety records of those others in the Gulf." He said that "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."