Texas Oil and Gas Operator Obtains Deepwater Drilling Permit After Federal Drilling Moratorium – Part I
As a Texas oil and gas attorney, I have followed with great interest the actions of the US Department of Interior (DOI) to finally lift the post-BP Oil Spill moratorium on deepwater drilling. It has been a long and legally complex road, but finally the DOI has taken the initial steps necessary to end the moratorium and re-start deepwater drilling in the Gulf of Mexico. So far, three deepwater drilling projects have been approved. A project sponsored by a Texas corporation, ATP Oil & Gas, was one of the lucky three.
In my next two blog posts, I'll discuss the legal background behind the two deepwater drilling moratoriums issued by the Obama administration, the litigation challenging those moratoriums, and the current state of deepwater drilling operations.
Immediately after the BP oil spill disaster, the DOI issued a “Moratorium Notice to Lessees and Operators,” which: 1) directed oil and gas lessees and operators to cease drilling new deepwater wells; 2) prohibited the spudding of any new deepwater wells; and 3) notified oil and gas lessees and operators that, with only a few exceptions, no new deepwater drilling permits would be issued for six months. The moratorium affected deepwater drilling operations occurring at depths greater than 500 feet, and operators whose wells fell under the moratorium were told to take the next safe opportunity to secure their wells, cease operations, and temporarily abandon their wells until they received further guidance from the DOI. It is interesting to note that, at this point, Salazar had no real proof of what had caused the problems with the BP well.
US Secretary of Interior, Ken Salazar, argued that the moratorium was justified in light of the recent environmental disaster in the Gulf, at least until a thorough safety review could be completed.
The DOI's drilling moratorium was challenged in the US District Court for the Eastern District of Louisiana by a group of plaintiffs who perform various services to support oil and gas drilling. The plaintiffs argued that the drilling moratorium did nothing to improve environmental safety in the Gulf of Mexico, and that the moratorium unfairly and hastily punished all deepwater drillers for the allegedly unsafe practices of one company.
Judge Martin Feldman agreed with the plaintiffs and ordered the DOI to lift the deepwater drilling moratorium. Under the Administrative Procedure Act (APA), an agency action may only be set aside if it is “arbitrary, capricious, an abuse of discretion, or not otherwise not in accordance with law.” Judge Feldman ruled that because the moratorium was overly broad and had no clear relationship to the DOI's own advisory report on deepwater drilling safety, it should be set aside as “arbitrary” and “capricious” under the APA.
Despite its defeat in federal court, the DOI had no intention of immediately lifting the deepwater drilling moratorium. So, instead of complying with the district court's order, the DOI issued a second deepwater drilling moratorium on July 12, 2010.
In my next blog post, I'll describe the second drilling moratorium, the litigation challenging it, and finally the federal government's recent issuance of deepwater drilling permits.
