The U.S. District Court for the Eastern District of Louisiana yesterday issued a preliminary injunction lifting the Department of Interior’s six-month moratorium on deepwater oil drilling. Hornbeck Offshore Services v. Salazar, E.D. La., No. 2:10-cv-01663, preliminary injunction 6/22/10.
Following the explosion of the Deepwater Horizon drilling platform on April 20, the U.S. Department of Interior issued the moratorium after completing a report reviewing the safety of deepwater drilling. The Secretary of Interior made a finding that, under current conditions, deepwater drilling poses an unacceptable threat of serious and irreparable harm or damage to wildlife and the marine, coastal and human environment, as set forth in 30 C.F.R. 250.172(b). The Secretary further 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, as set forth in 30 C.F.R. 250.172(c). The moratorium prohibits drilling at depths greater than 500 feet for the 33 permitted wells located in the Gulf.
Led by Hornbeck Offshore Services, a company that operates vessels and supplies support services needed for deepwater drilling in the Gulf filed suit, alleging that Interior’s action in ordering the moratorium was arbitrary, capricious, an abuse of discretion and otherwise not in accordance with the Administrative Procedure Act (APA), the Outer Continental Shelf Lands Act (OCSLA) and its implementing regulations. Hornbeck sought an injunction precluding the government from enforcing the drilling ban.
The court entered the requested injunction, finding numerous flaws in the study that Interior used as the grounds for the moratorium. The court noted that:
- Interior’s report failed to justify the moratorium in terms of the irreparable harm it would avert or the time it would take to put in place adequate safety measures; and
- there were also unexplained discrepancies between the report’s recommendations and the moratorium, such as the report recommended halting drilling beyond 1,000 feet, not 500 feet as the moratorium required
Finally, the court found that “the blanket moratorium…seems to assume that because one rig failed although no one yet fully knows why, all companies and rigs drilling new wells over 500 feet also universally present an imminent danger.” This “patent lack of analysis,” in the court’s view, rendered Hornbeck likely to succeed on the merits of its claim.
The court then turned to the harm suffered by Hornbeck. The court noted that 150,000 jobs are directly connected to the drilling industry, adding, “[o]il and gas production is quite simply elemental to Gulf communities.” This public interest, the court concluded, when weighed alongside Hornbeck’s likelihood of succeeding on the merits, supported granting the motion for a preliminary injunction.
Press Secretary Robert Gibbs says the government plans to immediately appeal the decision to the 5th Circuit. The likelihood of success of this appeal is uncertain. Under the Administrative Procedure Act, courts are required to give Interior’s decision to issue the moratorium a great deal of deference, overturning it only when it finds the agency acted arbitrarily and capriciously. The discrepancies between the report and the moratorium, the scope of the moratorium, its lack of timelines and the immensity of the economic harm to the industry may be enough to satisfy Hornbeck’s heavy burden of proof. Still, the enormity of the environmental damage and the unprecedented nature of this national emergency weigh heavily in the government’s favor.
Industry has applauded the injunction as ensuring a more thoughtful decision-making process. The Sierra Club called lifting the moratorium “one of the worst ideas ever proposed.” Secretary Salazar announced his intention to issue a new directive, after providing additional factual support for the moratorium. If that ploy is not effective, the district court’s decision means that until a trial is held or the court of appeals acts to overturn or stay the district court’s ruling, Gulf oil drillers could be going back to work
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