Sometimes, even with a scorecard, “you can’t tell the players.”

The saga of the Obama administration’s moratorium on Gulf of Mexico drillings operations took another strange turn yesterday.  The U.S. Court of Appeals for the Fifth Circuit entered a “LIMITED REMAND” to the U.S. District Court for the Eastern District of Louisiana for the purpose of holding a hearing, “calling witnesses if necessary” and issuing findings of fact and conclusions of law with respect to three specific questions.  Hornbeck Offshore Services LLC v. Salazar, No. 10-30585, slip op. at 2-3 (5th Cir. August 16, 2010)(capitalization in original).  

The court reasoned that it did not have before it a sufficient record on which to determine whether the second moratorium rendered moot the injunction the District Court had entered with respect to the first moratorium.  The three issues on which it ordered the District Court to rule are:

• Whether Secretary Salazar has the authority to terminate the original moratorium filed on May 28^th due to original decisions held by both the District Court and the U.S. Court of Appeals under the Outer Continental Shelf Lands Act and the Administrative Procedures Act;
• Whether the evidence provided for the July 12^th revision of the moratorium was available or unavailable for Secretary Salazar at the time he originally filed the May 28^th moratorium; and
• Describing the differences, if any, between the May 28^th and the July 12^th moratorium memoranda, what circumstances may have changed since the two were made, and if the issuance of the July 12^th moratorium rendered the May 28^th moratorium moot.

Read the rest of this entry »

For further information about this topic, please contact Akin Gump.

 On July 8, the U. S. Court of Appeals for the Fifth Circuit denied the Obama Administration’s request to stay a lower court’s order lifting a six-month moratorium on offshore drilling. The Department of the Interior issued the moratorium following the explosion of a BP platform in the Gulf of Mexico. The moratorium impacted 33 exploratory drilling projects, but did not interrupt production at established platforms. Hornbeck Offshore Services and other companies that supply vessels and support to offshore drilling rigs quickly challenged the moratorium. These companies argued that the ban unnecessarily compromised much-needed jobs in the Gulf. On June 22, 2010, the U.S. District Court for the Eastern District of Louisiana granted Hornbeck’s motion for preliminary injunction, finding the Interior’s moratorium arbitrary and capricious under the Administrative Procedure Act. The Obama administration immediately appealed to the Fifth Circuit.

The Fifth Circuit’s ruling denied the government’s request to reinstate the moratorium while the Interior’s appeal is pending. According to the court’s brief per curium opinion, Hornbeck Offshore Services, L.L.C. v. Salazar, No. 10-30585, “[t]he motion for stay pending appeal is denied because the Secretary has failed to demonstrate a likelihood of irreparable injury …; he has made no showing that there is any likelihood that drilling activities will be resumed pending appeal.” Judge Dennis dissented in part, indicating that he would have granted the Secretary’s motion to stay. All three judges agreed that the Secretary could apply for emergency relief “if he can show that drilling activity by deepwater rigs has commenced or is about to commence.”

The court set an expedited brief schedule for the Interior’s appeal of the district court’s preliminary injunction. The merits argument will take place the week of August 30.

Some sources have suggested that the Fifth Circuit’s decision will lead the Interior to issue a revised moratorium that addresses the district court’s concerns. The New York Times reported that the Interior is releasing a new moratorium as early as this week.

For further information about this topic, please contact Akin Gump.

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 5^th 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

For further information about this topic, please contact Akin Gump.

Led by New York, a group of twelve states and two cities filed suit yesterday against the EPA in the federal Circuit Court in Washington, DC.

The suit revolves around the New Source Performance Standards (NSPS), a set of federal regulations that create technology-based emissions limits for a variety of large industries.  EPA issued an updated NSPS for petroleum refineries in June 2008, but the rules do not require refineries to install equipment aimed at reducing greenhouse gas (GHG) emissions.  Instead, the new NSPS focuses on “traditional” air pollutants:  nitrogen oxides, sulfur dioxide, and particulate matter.  The suit argues that omitting GHG emissions from the NSPS violated the Clean Air Act.

Read the rest of this entry »

For further information about this topic, please contact Akin Gump.

The Georgia Court of Appeals will hear an appeal of a lower court’s decision revoking an air quality permit for construction of a coal-fired power plant on grounds the state permit failed to control CO2 emissions.  The Court granted review on August 20 based on a request made by the State and supporters of the Longleaf Energy Station in Early County, Georgia.

Superior Court Judge Thelma Wyatt Cummings Moore revoked Longleaf Energy Station’s state air quality permit just last month on grounds the permit must “identify, evaluate, or apply available technologies that would control CO2 emissions” at the plant.  Citing the 2007 Supreme Court decision in Massachusetts v. EPA, Judge Moore wrote that “there is no question that CO2 is ‘subject to regulation under the [Clean Air] Act’” (CAA).

Read the rest of this entry »

For further information about this topic, please contact Akin Gump.

The EPA’s most recent permit approval for construction of a coal-fired power plant is being challenged on climate change grounds. In the third challenge of its kind, opponents of a proposed 1,500-megawatt power plant on Navajo land in northwest New Mexico appealed the EPA’s decision to the Environmental Appeals Board (“EAB”) on grounds the permit violates Clean Air Act (”CAA”) standards for a number of pollutants, including CO2. The EAB heard oral arguments in two similar challenges and a decision in the precedent-setting In re Deseret Power case is expected from the EAB any day.

The CAA Prevention of Significant Deterioration (“PSD”) permit for the plant was issued after supporters of the facility filed suit arguing that EPA failed to act within the statutory 12-month window. The $3 billion project, which is financed by Sithe Global Power subsidiary Desert Rock Energy Company and the Navajo-owned Diné Power authority, has been held up since 2003. The proposal is opposed by environmental groups and New Mexico Governor Bill Richardson, who indicated that the state will join in the EAB appeal.

The appeal alleges that the EPA failed to analyze the impact of the plant on greenhouse gases or to require appropriate pollution control technologies. The EPA has consistently argued that CO2 is not subject to permitting restrictions until the agency makes an endangerment finding, which the agency is now considering as part of an Advanced Notice of Proposed Rulemaking. The EAB will rule on the legality of EPA’s argument in the In re Deseret Power decision, which is expected to have a widespread effect on pending challenges to coal-fired power plants.

For further information about this topic, please contact Akin Gump.

Last week, the Riverside County Superior Court invalidated an environmental impact report (EIR) for a 1,766-acre residential and commercial project that had been proposed for development in the northwest open space areas of Coachella Valley near Joshua Tree National Park in Southern California. The Court cited the EIR’s failure to analyze the project’s greenhouse gas (GHG) emissions and other climate change impacts. [Center for Biological Diversity, et al. v. City of Desert Hot Springs, et al. (Riverside County Superior Court - Case No. RIC 464585) (August 6, 2008)].

The Palmwood Project proposed nearly 2,700 homes, 1 million square feet of commercial space, a 400-unit hotel, a commercial amphitheater, and golf courses comprising 45 holes. Environmental groups Center for Biological Diversity and Sierra Club challenged the Project, arguing, inter alia, that respondent City of Desert Hot Springs’ failure to make a meaningful attempt to analyze the Project’s climate change impacts violated the California Environmental Quality Act (CEQA), the state version of the National Environmental Policy Act.

Read the rest of this entry »

For further information about this topic, please contact Akin Gump.

Approximately 90 cities, 29 counties, and 20 towns across the United States have adopted some type of green building program.  So far, even what are considered the most aggressive green building codes, such Los Angeles’ and San Francisco’s, have not drawn any notable legal attacks.  On July 3, 2008, however, a group of national HVAC industry groups and local companies sued the City of Albuquerque, New Mexico, in federal district court to challenge two recently adopted green building city ordinances.

In 2007, the Albuquerque City Council unanimously adopted a High Performance Building Ordinance and a two-volume local Energy Conservation Code, which established air conditioner, furnace, heat pump, and water heater energy efficiency requirements that were more stringent the federal requirements.  For example, the new regulations would raise the standards for HVAC equipment in all new and retrofit commercial and residential projects to a Seasonal Energy Efficiency Ratio (SEER) of 15 for air conditioning and an Annual Fuel Utilization Efficiency (AFUE) of 90% for heating.  By comparison, the current U.S. Department of Energy (U.S. DOE) minimum standards for the same equipment are lower - at 13 SEER and 78% AFUE.

Read the rest of this entry »

For further information about this topic, please contact Akin Gump.

Residents of a small Alaska village recently sued a group of large oil companies, electric utilities, and a coal company, alleging that the defendants’ greenhouse gas emissions are destroying the village.

The Inupiat village of Kivalina, home to roughly 400 people, is located “on the tip of a six-mile barrier reef located between the Chukchi Sea and the Kivalina and Wulik Rivers on the Northwest coast of Alaska, some seventy miles north of the Arctic Circle.” The suit contends that “[g]lobal warming is destroying Kivalina and the village thus must be relocated soon or be abandoned and cease to exist” as a result of the loss of arctic sea ice that protects the village from storms. The complaint estimates the cost of relocating the village to be from $95 million to $400 million.

Read the rest of this entry »

For further information about this topic, please contact Akin Gump.

One year ago today, the Supreme Court issued a landmark decision in Massachusetts v. EPA, holding that “EPA has the statutory authority to regulate the emission of [greenhouse] gases from new motor vehicles.” The court ordered the agency to make a determination on whether greenhouse gases “cause[s], or contribute[s] to, air pollution which may reasonably be anticipated to endanger public health or welfare” (quoting 42 U. S. C. §7521(a)(1)).

Since that decision, EPA has not issued its determination. As a result, Massachusetts - joined by a large group of states, cities, and environmental organizations - filed suit today against EPA in an attempt to force the agency to comply with the Supreme Court’s order.

The petition asks the Court of Appeals for the District of Columbia Circuit to issue a writ of mandamus “requiring EPA to issue within sixty days its determination on whether the air pollution to which greenhouse gas emissions from motor vehicles contribute ‘may reasonably be anticipated to endanger public health or welfare.” A writ of mandamus is “an extraordinary remedy reserved for extraordinary circumstances” but is argued to be appropriate here because the “agency’s unreasonable delay . . . signals the ‘breakdown of regulatory processes.’”

Read the rest of this entry »

For further information about this topic, please contact Akin Gump.