Thursday, June 24, 2010

Poor Judgment Overturns Offshore Drilling Moratorium

Today Judge Martin Feldman of the U.S. District Court for the Eastern District of Louisiana refused to delay the effect of the preliminary injunction he issued on Tuesday, overturning the U.S. Department of Interior’s May 28, 2010, Temporary Moratorium on deepwater drilling. (Related court documents available here.)
Several facets of the June 22 decision are truly astonishing.
Nowhere in the decision is there any recognition of the unique, emergency circumstances or the grave threat to the public that the agency was seeking to combat. Nor did the judge pay much attention to the express and explicit congressional intention that offshore oil activities be suspended when necessary to protect against environmental threats. Instead he elevated the desire of private companies to continue their profitmaking activities over the health and safety of an entire region. His decision raises a vital question about where our defaults should be when faced with uncertain threats: should we err on the side of protecting the environment or on the side of protecting business? Judge Feldman clearly opted for the latter. It was a poor choice, but hopefully wiser heads will prevail, and the Moratorium, instituted in the wake of the Deepwater Horizon explosion (left) will be restored. (prior IntLawGrrls posts available here) (photo credit)
On purely legal terms, the decision was not a very good one.
Not only did the court engage in the kind of substantive review that is typically reserved for a full-blown agency rulemaking rather than an emergency order, but the court also clearly substituted its judgment for the agency, even as it acknowledged that it was prohibited from doing so. The court took what is known as a “hard look” at the evidence upon which the Department of Interior acted and found that the agency had been arbitrary and capricious. The court reached this conclusion because it found that the Moratorium was based on general assertions rather than detailed evidence that each deepwater well individually posed an imminent danger. Although a blanket moratorium is unusual, nothing in the statute requires a well-by-well analysis. Given the daily barrage of horrors in the Gulf, and the admitted inability of the entire industry to respond to a deepwater blowout, the judge’s cramped interpretation of the statute seems particularly ill-judged (no pun intended).
Moreover, Judge Feldman’s decision also runs contrary to the spirit of the governing law. The Federal statute governing offshore drilling (the Outer Continental Shelf Lands Act or OCSLA) clearly states that oil production is to be “subject to environmental safeguards.”
To that end, the OCSLA specifically directs that the Secretary of the Interior shall promulgate regulations
for the suspension or temporary prohibition for any operation or activity . . . if there is a threat of serious, irreparable or immediate harm or damage to life (including fish and other aquatic life) . . or to the marine, coastal or human environment.
To fulfill this statutory mandate, the Department of Interior duly promulgated regulations providing for a suspension of offshore drilling activities when the activities “pose a threat of serious, irreparable, or immediate harm or damage” is “necessary for the installation of safety or environmental protection equipment.”
Let me be clear: not only does the statute authorizing offshore drilling explicitly contemplate that those activities might be suspended or prohibited to protect the environment, but so do DOI regulations.
A suspension of drilling is not some after-the-fact invention by the Obama administration. Instead, it is part of the legal regime that authorizes deepwater exploration, drilling and extraction in the first place. That means that it was clear from the outset to all concerned that operations might be suspended because of a “threat of serious, irreparable or immediate harm” to the environmental or human safety. If the various regulatory and industry failures that culminated in the Deepwater Horizon catastrophe do not qualify as a “threat of serious, irreparable or immediate harm or damage” justifying suspension, what would?
The court concluded that the Secretary of the Interior had been arbitrary and capricious in exercising this authority because
the Court is unable to divine or fathom a relationship between the [Department of Interior Deepwater Horizon] Report and the immense scope of the moratorium.
Come again??
The report detailed a litany of equipment failures and a host of regulatory failures in the permit approval process. None of the wells affected by the moratorium were prepared to handle a worst-case scenario, and none had performed a NEPA environmental assessment; all had relied on the same inadequate safety equipment, and all had provided the same glib (and false) assurances that
[i]n the event of an unanticipated blowout resulting in an oil spill, it is unlikely to have an impact based on the industry wide standards for using proven equipment and technology for such responses, implementation of BP’s Regional Oil Spill Response Plan which address [sic] available equipment and personnel, techniques for containment and recovery and removal of the oil spill.

Moreover, testifying before Congress, ExxonMobil’s CEO acknowledged that the industry has no technology for responding to a deepwater gusher. And, as the government pointed out in its briefing, all available personnel, ships and resources are inadequate to respond to the BP disaster—there would be no possible way to respond to a second incident.
A preliminary injunction is an extraordinary remedy that is granted only when a plaintiff carries the burden of proof that:
► a) s/he will suffer irreparable harm if the injunction is not granted;
► b) s/he is likely prevailing on the merits of the case;
► c) harm to the plaintiff outweighs any harms that will occur if the injunction is granted; and
► d) granting the injunction will not harm the public’s interest.
The plaintiffs in this case, all of whom engage in support activities for offshore drilling permit holders, based their complaint on the effect the moratorium would have on their oil service industry business and on the local economy. In effect they asserted a right to the continuation of permitted activities even though they are not the permit holders and even though the Department of Interior determined that the permitted activities posed an imminent threat to the environment.
It is nothing short of astonishing that Judge Feldman could weigh these claims of harm from lost business against the risks to the public from possibility of another massive oil release and find that the balance of equities tipped in favor of the plaintiffs. The law governing deepwater drilling does not guarantee permit holders an unrestricted right to engage in oil extraction activities. It certainly does not guarantee satellite support industries that permit holders will continue to operate and continue to desire their services. To the contrary, suspensions of operation are clearly contemplated and provided for in the legal framework.
While this extensive a moratorium is unprecedented, so is the level of damage caused by the Deepwater Horizon catastrophe. Given the explicit provisions for suspensions as part of the legal environment in which they ply their trade, it is hard to see why the possibility of such a suspension doesn’t come under the umbrella of a risk of doing business.
On page 4 of his opinion, Judge Feldman writes:

The Report makes no effort to explicitly justify the moratorium: it does not discuss any irreparable harm that would warrant a suspension of operations.
This is an astonishing sentence in light of the clear example of irreparable harm we have before us. The phrase “res ipa loquitur” (the thing speaks for itself) leaps to mind. If:
► 100,000 gallons of oil a day gushing into the Gulf;
► contaminated wetlands and beaches across 3 states;
► 1/3 of the Gulf shut to fishing; countless deaths of fish and marine mammals; and
► 11 workers dead
are not enough evidence of a threat to the environment or safety, I wondered what the judge would have found to be adequate evidence to warrant a suspension of operations.
On page 19 of his decision, the judge poses the rhetorical question are “all oil tankers like Exxon Valdez?” as support for his decision to enjoin the deepwater drilling moratorium.
That rhetorical flourish instead reveals how little Judge Feldman understands about the situation he is dealing with.
The scale of the 1989 Exxon Valdez disaster (prior post) was attributable to the single-hulled design of the ship. Indeed, the Coast Guard estimated that a double-hull would have reduced the spill by 20-60%. After the disaster, the United States and MARPOL began requiring double-hulls (a design reform that had long been delayed by industry opposition). Rather than the response being “heavyhanded, and overbearing,” as Judge Feldman charged, it makes good sense to impose sweeping changes when a catastrophe reveals an industry’s shared Achilles heel.

No comments: