HORNBECK OFFSHORE SERVICES, LLC v. Salazar, No. CIV.A.10-1663.

• Decision Date: 22 June 2010
• Docket Number: No. CIV.A.10-1663.
• Citation: 696 F. Supp.2d 627
• Parties: HORNBECK OFFSHORE SERVICES, L.L.C. et al. v. Kenneth Lee "Ken" SALAZAR, et al.
• Court: U.S. District Court — Eastern District of Louisiana

696 F. Supp.2d 627

HORNBECK OFFSHORE SERVICES, L.L.C. et al. v. Kenneth Lee "Ken" SALAZAR, et al.

No. CIV.A.10-1663.

United States District Court, E.D. Louisiana.

June 22, 2010.

Carl David Rosenblum, Alida C. Hainkel, Grady S. Hurley, Marjorie Ann McKeithen, Jones Walker, New Orleans, LA, John F. Cooney, Venable, LLP, Washington, DC, for Hornbeck Offshore Services, L.L.C. et al.

Guillermo A. Montero, Brian M. Collins, U.S. Department of Justice, Washington, DC, Peter M. Mansfield, U.S. Attorney's Office, New Orleans, LA, for Kenneth Lee "Ken" Salazar, et al.

ORDER AND REASONS

Martin L. C. FELDMAN, District Judge.

This case asks whether the federal government's imposition of a general moratorium on deepwater drilling for oil in the Gulf of Mexico was imposed contrary to law. Before the Court is the plaintiffs' motion for preliminary injunction. For the following reasons, the motion is GRANTED.

Background

The plaintiffs in this case provide a myriad of services to support offshore oil and gas drilling, exploration, and production activities in the Gulf of Mexico's Outer Continental Shelf.¹ They challenge the six-month moratorium on offshore drilling operations of new and currently permitted deepwater wells that was imposed on May 28, 2010 by the Department of the Interior and the Minerals Management Service.

The government edict was in reaction to the Deepwater Horizon drilling platform explosion on April 20, 2010, and the resulting devastation. In response to this unprecedented disaster,² the President of the United States formed a bipartisan commission-the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling-and tasked it with investigating the facts and circumstances concerning the cause of the blowout. The President also ordered the Secretary of the Interior to conduct a thorough review of the Deepwater Horizon blowout and to report, within thirty days, "what, if any, additional precautions and technologies should be required to improve the safety of oil and gas exploration and production operations on the outer continental shelf."

A thirty-day examination was conducted in consultation with respected experts from state and federal governments, academic institutions, and industry and advocacy organizations. On May 27, 2010 the Secretary issued a Report, which reviews all aspects of drilling operations and recommends immediate and long term reforms to improve drilling safety. In the Executive Summary to the Report, the Secretary recommends "a six-month moratorium on permits for new wells being drilled using floating rigs." He also recommends "an immediate halt to drilling operations on the 33 permitted wells, not including relief wells currently being drilled by BP, that are currently being drilled using floating rigs in the Gulf of Mexico." Much to the government's discomfort and this Court's uneasiness, the Summary also states that "the recommendations contained in this report have been peer-reviewed by seven experts identified by the National Academy of Engineering." As the plaintiffs, and the experts themselves, pointedly observe, this statement was misleading. The experts charge it was a "misrepresentation." It was factually incorrect. Although the experts agreed with the safety recommendations contained in the body of the main Report, five of the National Academy experts and three of the other experts have publicly stated that they "do not agree with the six month blanket moratorium" on floating drilling. They envisioned a more limited kind of moratorium, but a blanket moratorium was added after their final review, they complain, and was never agreed to by them. A factor that might cause some apprehension about the probity of the process that led to the Report.

The draft reviewed by the experts, for example, recommended a six-month moratorium on exploratory wells deeper than 1000 feet (not 500 feet) to allow for implementation of suggested safety measures.

The Report makes no effort to explicitly justify the moratorium: it does not discuss any irreparable harm that would warrant a suspension of operations, it does not explain how long it would take to implement the recommended safety measures. The Report does generalize that "while technological progress has enabled the pursuit of deeper oil and gas deposits in deeper water, the risks associated with operating in water depths in excess of 1,000 feet are significantly more complex than in shallow water."

On May 28, 2010, the Secretary also issued a memorandum to the director of MMS, in which he stated:

I find at this time and under current conditions that offshore drilling of new deepwater wells poses an unacceptable threat of serious and irreparable harm to wildlife and the marine, coastal, and human environment as that is specified in 30 C.F.R. 250.172(b). I also have 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. 30 C.F.R. 250.172(b).

Therefore, I am directing a six-month suspension of all pending, current, or approved offshore drilling operations of new deepwater wells in the Gulf of Mexico and the Pacific regions.

The pattern continues. The one page memorandum, also, fails to explain the reasons for the suspension of operations or the depth of operations to be affected. Then on May 30, 2010, the Deputy Director of MMS abruptly issued a Notice to Lessees in which he directs that:

The Six-Month Deepwater Moratorium. . . directs you to cease drilling all new deepwater wells . . . and puts you on notice that, except as provided herein, MMS will not consider for six months from the date of this Moratorium NTL drilling permits for deepwater wells and for related activities as set forth herein. For the purposes of this Moratorium NTL, "deepwater" means depths greater than 500 feet.

While the Administrative Record³ is not yet complete, the government draws attention to several documents that were considered during the creation of the Report (but not necessarily mentioned in it). The Shallow Water Energy Security Coalition Presentation illustrates differences between jack-up rigs, which are used in shallow waters up to 500 feet, and floating rigs, which are used in deeper waters. The presentation also lists factors making the shallow water rigs safer, such as having blowout preventers on the surface and using traditional and proven well control methods.

The plaintiffs' complaint is based on the effect of the general moratorium on their oil service industry business, on the local economy, and puts in play the issue of the robustness of a Gulf-wide industry and satellite trades. Gulf of Mexico drilling activities rely upon a vast and complex network of technology, assets, human capital and experience. Indeed, an estimated 150,000 jobs are directly related to offshore operations. The government admits that the industry provides relatively high paying jobs in drilling and production activities. Oil and gas production is quite simply elemental to Gulf communities. There are currently approximately 3600 structures in the Gulf, and Gulf production from these structures accounts for 31% of total domestic oil production and 11% of total domestic, marketed natural gas production. Sixty-four percent of active leases are in deepwater, over 1000 feet. The plaintiffs own and operate vessels, shipyards, and supply services companies that support deepwater oil exploration and production in the Gulf. In addition to the vessels and facilities involved in their work, the plaintiffs together employ over 11,875 people. At least nineteen other companies, aside from BP's operations involved with Deepwater Horizon, are presently operating deepwater drilling rigs.

On June 7, 2010, Hornbeck Offshore Services sued in this Court for declaratory and injunctive relief against the Secretary, the Department, the MMS, and the Director of the MMS. Two days later, more plaintiffs joined the litigation, and a motion for preliminary injunction prohibiting the government from enforcing the drilling moratorium is now before the Court. The Court, because of the national importance of these issues, ordered an expedited hearing for June 21, 2010. On June 18, 2010, the Florida Wildlife Federation, the Center for Biological Diversity, the Natural Resources Defense Counsel, the Sierra Club, and the Defenders of Wildlife intervened as defendants.⁴

Law and Analysis

I. OCSLA

A.

The Outer Continental Shelf Lands Act governs federal offshore oil and gas leasing and declares as national policy that "the outer Continental Shelf is a vital national resource reserve held by the Federal Government for the public, which should be made available for expeditious and orderly development, subject to environmental safe-guards, in a manner which is consistent with the maintenance of competition and other national needs." 43 U.S.C. § 1332(3). OCSLA establishes four distinct stages in the administrative process: (1) formulation of a five-year leasing plan by the Secretary; (2) lease sales; (3) exploration by the lessees; and (4) development and production. Sec'y of the Interior v. California, 464 U.S. 312, 337, 104 S.Ct. 656, 78 L.Ed.2d 496 (1984). In the preparation and maintenance of this federal leasing program, OCSLA mandates consideration of the "economic, social, and environmental values of the renewable and nonrenewable resources contained in the outer Continental Shelf, and the potential impact of oil and gas exploration on other resource values . . . and the marine, coastal, and human environments." 43 U.S.C. § 1344(a)(1).

OCSLA instructs the Secretary of the Interior to prescribe regulations

for the suspension or temporary prohibition of any operation or activity, including production, pursuant to any lease or permit . . . if there is a threat of serious, irreparable, or immediate harm or damage to life (including fish and

...