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Moratorium One of Many Obama Oil Spill Mistakes

Posted By Hans von Spakovsky On June 22, 2010 @ 6:21 pm In Legal | Comments Disabled

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The order by a federal district court in Louisiana overturning President Obama’s six-month general moratorium on deepwater drilling in the Gulf of Mexico illustrates many of the mistakes the administration has made in handling this environmental disaster.  From the unjustified 24-hour ban imposed by the Coast Guard on the barges that were pumping oil out of the water to check on whether they had fire extinguishers and life vests on board to the Army Corps of Engineers’ delays in allowing Louisiana to build berms and sand barriers to protect its wetlands, the administration has acted more like the Keystone Cops than a competent and effective government.

The order by Judge Martin Feldman paints quite a stark picture of both political over-reaction and a lack of sound judgment and expertise.  The plaintiffs include several companies that provide services and equipment for deepwater explorations, everything from ships to shipyards, and they employ over 10,000 people.  They sued Interior Department Secretary Ken Salazar under the federal Administrative Procedure Act, which authorizes a federal court to overturn the actions of a federal agency when they are “arbitrary, capricious, an abuse of discretion, or not otherwise in accordance with the law.”  The court concluded that, in fact, the plaintiffs established a likelihood of successfully showing that “the Administration acted arbitrarily and capriciously in issuing the moratorium.”

The moratorium was based on a Report issued by Salazar on May 27 after a 30-day review that recommended immediate and long term reforms to improve drilling safety as well as a six-month moratorium on permits for new wells and an immediate halt to drilling operations on the existing  wells in the Gulf.  The court was struck by the fact that while the summary of the Report claimed that these recommendations had “been peer-reviewed by seven experts,” those experts had publicly stated that they did not recommend or agree with the six-month blanket moratorium.  In fact, that recommendation was added after their final review of the report.  At a minimum, this was highly misleading and “[a] factor that might cause some apprehension about the probity of the process that led to the Report” according to the court.

The court also noted that the Report made “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.” A subsequent order that Salazar sent to the director of the Minerals Management Service also failed entirely “to explain the reasons for the suspension of operations or the depth of operations to be affected.”

After reviewing all of the evidence submitted by the government, the court was “unable to divine or fathom a relationship between the finding and the immense scope of the moratorium.”  The Report relied on by the government lacked any analysis of the asserted fear or threat of injury or safety hazards posed by the 33 permitted rigs; it was incident-specific and driven only by the Deepwater Horizon accident and no others.  In other words, it completely failed to take into account the safety records of the other rigs in the Gulf.  It assumed that because one rig failed and no one yet fully knows why, “all companies and rigs drilling new wells over 500 feet also universally present an imminent danger.”  The court compared this to the government claiming that “all airplanes [are] a danger because one was” or all oil tankers because of the Exxon Valdez or all trains or all mines because of one accident.  That kind of analysis is “heavy-handed, and rather overbearing.”

The court did what the administration very pointedly failed to do: consider alternatives to a complete ban on deep-water drilling.  As the court concluded, there is no question that the Deepwater Horizon spill “is an unprecedented, sad, ugly and inhuman disaster.”  But the issuance of a blanket moratorium was arbitrary and capricious and “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.”  As the court pointed out, there are 150,000 jobs directly related to offshore operations; there are currently 3,600 structures in the Gulf, and oil and gas production from these structures “accounts for 31% of total domestic oil production and 11% of total domestic, marketed natural gas production.”  Sixty-four percent of active leases are in deepwater over 1,000 feet and at least 19 companies besides BP are operating deepwater frilling rigs.

So far there is no announcement from Salazar that he intends to put his boot on the throat of the federal judge who issued this decision, although the White House has already announced that it plans to try to plug this legal hole in its case by appealing the decision.


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