Recent offshore oil developments

It’s been another busy week in the world of offshore oil regulation. Here are links to a few developments:

  • In the courts, the 5th Circuit Court of Appeals dismissed as moot Interior’s appeal from the District Court’s preliminary injunction of the first moratorium on new deep-water drilling permits. That makes sense to me even though the U.S. has gone back and forth in its views on mootness, arguing to the District Court that the first challenge was mooted by the new moratorium decision, but then taking the opposite position in the Court of Appeals. Interior withdrew that moratorium and issued a new one in July. Because the first moratorium no longer has any effect, there’s no point in litigating its legality. Meanwhile, the District Court heard a challenge to the second moratorium and promised a quick ruling.
  • The moratorium is scheduled to end November 30 in any case, so whatever ruling eventually comes out of the 5th Circuit is unlikely to have much practical effect. Bloomberg reports that Interior’s lawyers have said in court that the moratorium may be lifted earlier than that, but in a speech yesterday Interior Secretary Ken Salazar declined to speculate on when the moratorium would end. Bureau of Ocean Energy Management head Michael Bromwich, who is expected to deliver his report on the disaster soon, said that new drilling would not begin immediately when the moratorium ends.
  • Salazar used his speech to announce that Interior is issuing two new rules for offshore drilling, one designed to reduce the risk of a blow-out and increase oversight of blow-out prevention mechanisms, the other requiring that operators develop safety and environmental management systems. The major provisions of both rules were signaled this summer; indeed, the second rule was under consideration before the Deepwater Horizon blowout. The new rules are a welcome step toward increasing safety and oversight on the back end, when drilling operations are underway. Much more remains to be done at the front end, in the OCSLA, which prioritizes drilling above environmental protection, and in implementing pre-permitting environmental review. The Center for Progressive Reform issued a white paper yesterday with some excellent suggestions for reform of the upstream process. (Full disclosure: I am a Member Scholar of CPR, and participated in drafting of the white paper.)