Thursday afternoon, the Justice Department will try to convince a panel of federal judges to reinstate a moratorium on deepwater drilling in the Gulf of Mexico. A district court struck down the ban on June 22, but appeals court judges could restore the ban temporarily while the Obama administration appeals that decision. The government faces opposition from businesses that rely on offshore drilling and officials in gulf states, who have said the moratorium will sting an already-ailing economy in the area. Here's how the two sides square up.
The Interior Department, backed by the White House, stopped issuing new drilling permits for the Gulf of Mexico in late May and said the ban would stand for six months. The department also halted exploratory drilling in water deeper than 500 feet (drillers use riskier floating platforms beyond this depth), meaning that only rigs already pumping oil from deep under the ocean could keep working. According to the motion the Justice Department filed Tuesday, the Interior Department called time-out on deepwater drilling for two reasons: to minimize the chances of another oil spill in the gulf and to buy time while new safety measures could be put in place. Deepwater rigs elsewhere use the same failsafe mechanism—a blowout preventer positioned on the ocean floor—that failed to prevent the explosion that sank BP's Deepwater Horizon rig April 20. Since then, oil has flowed for 80 days and counting into the gulffrom the well that rig had opened.
The businesses, led by a firm called Hornbeck Offshore Services, which transports supplies to drilling rigs in the gulf, have essentially argued that one bad apple shouldn't ruin the whole batch. They claimed in a complaint filed June 9 that the administration provided no "facts, data, or analysis" showing a systemic problem with deepwater wells overall. Of the 33 already-permitted wells affected by the decision, federal regulators inspected 29 after the Deepwater Horizon explosion and found "no violations of governing regulations or existing permit items on 27 of the 29 ... and only minor violations on the two others," the complaint said. The government offered "an analysis of many known and expected risks involving" deepwater drilling but offered nothing that suggests such drilling "is more dangerous today than it was on the day immediately preceding the tragic accident," the businesses argued. U.S. District Judge Martin L.C. Feldman sided with these plaintiffs on June 22 and lifted the ban.
Now the administration has fired back, claiming in a court filing Tuesday that the moratorium was a "rational exercise, under emergency circumstances" of the Interior Department's power. The government recalled a similar ban issued after the oil spill off the coast of Santa Barbara in 1969. A federal court upheld that decision, in part because Congress was considering canceling the leases and the court reasoned that the ban was justified in order "not to run the risk of substantial environmental damage" while Congress made its decision "even if that risk were not acute," the government's latest complaint noted. The administration is arguing that the current safety risk in the gulf is more serious than in 1969, and so today's ban is even more justified. Its legal reply also notes that Congress expanded the Interior Department's power after the Santa Barbara incident. In writing the law the way it stands today, "Congress intended Interior to immediately suspend leases upon a threat of serious harm," the complaint argues.
Finally, the administration attacks the plaintiffs' claim that the moratorium will cause "irreparable damage" to their businesses, noting that Hornbeck, the company that services drilling rigs, has told its investors otherwise. Indeed, a June 3 press release from Hornbeck did offer evidence that the company could survive the loss of business. Among other reassuring comments, the release said that "based on currently available customer opportunities, the Company is reasonably optimistic about its ability to further diversify its revenue base."
Whether or not the moratorium remains, the Interior Department is charging forward with new safety regulations. By insisting on the ban, it may be trying to send a message to drilling companies about the severity of neglecting safety. One Interior official told Reuters that the department would immediately issue a revised ban if the court does not reinstate the moratorium today. The way the courts rule today will have an impact on the firms that service drilling rigs out of ports like Port Fourchon, La., but any extended ban could have impacts stretching across the industry. A USA Today editorial argued the ban makes the gulf less safe by, among other things, driving top-class rigs away to other locations. If judges again rule against the government, it's possible that drilling could resume again quickly if some companies decide to take the chance. Then again, the Interior Department is already instituting a "moratorium by indecision" by dragging its feet on new permits, even in shallow water, one industry spokesman told the Financial Times. Stay tuned.