Page 20: of Marine News Magazine (October 2010)

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20 MN October 2010 facilities. Despite this small descriptive change, the second deepwater moratorium is materially identical to the first one. The validity of this second drilling moratorium, the one that is currently in place, is currently being challenged in federal court in New Orleans.

Now that we have walked through how the drilling ban affects the entire industry and the drilling ban’s road to implementation, we can turn to why the implementation of this ban is not lawful.

Specifically, the Administrative Procedures Act (APA) mandates that government issued regulations require that decisions be made after a reasoned decision making process is complete, not before it has begun. The APA also requires that regulations be narrowly tailored to meet the desired goal. Furthermore, the APA requires that the

Administration follow various notice and comment requirements of the Administrative Procedures Act prior to issuing new substantive guidelines.

The APA requires federal agencies, before issuing a for- mal or informal rule, to take a hard look at the question before it engages in a good faith, reasoned decision mak- ing process. However, before issuing the current deepwa- ter moratorium, the Department of the Interior did no such thing. Instead of gathering facts and then issuing a decision based upon those facts, the DOI did exactly the opposite; they made a decision to clone the first deepwa- ter moratorium and then attempted to gather evidence to justify it.

In the aftermath of the court’s preliminary injunction on the first moratorium, the Department of the Interior had an opportunity to reconsider issuing a drilling ban, in good faith and with an open mind, pursuant to the requirements of the APA. However, DOI decided and publicly announced immediately after the first drilling ban was halted, that a second moratorium would be issued. The DOI then started out in search of reasons to support the pre-ordained result. Thus, the second drilling ban is arbitrary and capricious and should be set aside as it is not founded on any reasonable factual basis.

Additionally, the moratorium on offshore drilling covers all drilling activity in the Gulf of Mexico and Pacific regions. However, based upon the lessons learned on the

Macondo well, the Department of the Interior could have issued a drilling ban that was narrowly tailored and only took into account the offshore activities that the DOI deemed to be most dangerous. Specifically, the Safety

Report provided a list of drilling activities that were less dangerous. However, the drilling ban does not allow these less dangerous activities to proceed. Specifically, the DOI failed to accurately consider and adopt a moratorium that could have permitted the five categories of deepwater well activities that the government’s own experts recommend- ed be permitted under the moratorium. The Department of the Interior rejected these activities by stating that they “still pose an unacceptable level of risk at this time.” These generalized and conclusory justifications are not permissi- ble under the APA. Thus, the second drilling ban should be held unlawful as it is not narrowly tailored to meet its goal.

Additionally, the APA requires federal agencies to issue notice and provide a comment period ensuring that feder- al agencies have the benefit of the views of effected mem- bers of the industry before it undertakes new regulatory requirements. On June 8, 2010, without any advance notice or opportunity for comment, the BOEM issued

NTL-5 that implemented certain safety measures outlined in the Safety Report.

Because the safety measures imposed by NTL-5 are binding, substantive requirements, they should have been imposed only through the APA’s notice and comment rule making process. However, DOI used an informal letter that was sent without any notice or input from the regu- lated community. As such, NTL-5 was promulgated with- out observance of the procedures required by law and should be set aside as unlawful.

Although it is too early to tell how the courts will han- dle these issues, it is evident that the Administration seems to be dead set on curtailing offshore drilling and that they are willing to avoid prescribed rules when curtailing such activities. Due to the important ramifications to our industry, it is important for everyone to understand where we are with regard to the ban, how we got there, and the legal issues involved in challenging the Administration’s action. The collective efforts of the industry, through applying legal, political, and public relations pressure are needed to overturn this disastrous ban. MN

Lawrence R. DeMarcay, III is a partner at Fowler Rodriguez

Valdes-Fauli in the firm’s New Orleans, La. office. He can be reached at [email protected] or 504-595-5122.

LEGAL PERSPECTIVES