In the latest update to the legal battle underway between the Obama administration and the Fifth Circuit, the Interior Secretary Ken Salazar announced on Monday a new drilling moratorium to halt deepwater oil and natural gas drilling in the Gulf of Mexico until November 30.  Last month, the Obama administration’s original six-month moratorium on all drilling at depths greater than 500 feet was struck down by the Eastern District of Louisiana, and again last week by the Fifth Circuit Court of Appeals.

Immediately after the oil spill, President Obama requested that the Department of the Interior conduct an investigation of offshore drilling.  The Department of the Interior’s Report was used as the basis for a six-month moratorium on deepwater drilling in the Gulf, along with the issuing of new safety standards and procedures.  The report itself, however, was riddled in controversy as soon as it was published.  While the report states that its recommendations were “peer-reviewed by seven experts identified by the National Academy of Engineering,” all of those experts publicly stated that they do not support the six-month moratorium, and that it was only inserted after they signed off on the study.  In sharp contrast, the experts stated that the blanket moratorium “is not the answer,” and that “It will not measurably reduce risk further and it will have a lasting impact on the nation’s economy which may be greater than that of the oil spill.”

The District Court issued a scathing preliminary injunction against the ban.  Rather than being predicated on academic reasoning, the District Judge Martin Feldman argued, the moratorium “seems driven by political or social agendas on all sides.”  One of the most contentious aspects of the drilling ban was that despite the fact that the peer-reviewed report examined “deepwater” wells beyond a depth of 1,000 feet, the moratorium “arbitrarily” banned all wells beyond 500 feet, refusing to consider the safety records and precautions taken by the 33 actual companies to which it applied.  The judge called this logic “incomprehensible,” but did imply that had the moratorium more accurately reflected safety risks of deepwater drilling, it could be acceptable.

Consequently, the Obama administration has attempted to tailor its new moratorium to the court’s logic, applying it to any deepwater floating facility with blowout preventers, the “fail-safe” equipment whose use was implicated in the BP spill.  Despite the definitional differences, however, industry groups have called the new ban “glaringly similar, if not even more restrictive than the original moratorium.”

Under the new rules, suspended drilling rigs could resume operations if they prove that they comply with newly minted safety standards.  Still, the regulatory uncertainty clouding Gulf drilling has caused oil companies to consider moving abroad, with some already doing so.  Looking forward, it is clear that the new moratorium will lead to continued legal battles.

Among the myriad of voices commenting on the moratorium, Judge Feldman’s seems the most cogent.  One of his chief complaints about the original moratorium was that the Obama administration refused to consider any alternatives, such as individualized, rather than blanket, suspensions of certain rigs until they reached compliance with new safety standards.  Such an approach would represent a marked contrast to what Feldman decried as the Department of Interior’s “heavy-handed” and “overbearing” logic.  Cynically, he asked, “If some drilling equipment parts are flawed, is it rational to say all are?  Are all airplanes a danger because one was?  All oil tankers like Exxon Valdez?  All trains?  All mines?”

Yet, rather than substantively responding to these sharp attacks, the Department of the Interior seems to have attempted to superficially adjust its moratorium to take on the guise of legitimate reconsideration.  Still under the jurisdiction of the same court that originally rejected it, such an approach seems likely to fail another legal challenge, but will remain de facto operative due to drawn out litigation preventing any rig from drilling.  The individualized approach Judge Feldman offers would appease environmentalists without driving industry overseas.  It is this type of approach that is needed, setting a tone for sensible environmental regulation based on logic, not politics.

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