Court Strikes Down Drilling Safety Notice

A federal court invalidated an Interior Department notice imposing greater safety requirements on offshore drilling operations, enacted in response to the BP oil spill. Judge Martin Feldman of the U.S. District Court for the Eastern District of Louisiana ruled on Tuesday that the June notice to lessees violated administrative procedure.

Drilling company Ensco Offshore sued the Interior Department over the notice, saying the notice should have gone through a public comment period in the way a regulation would. Based on my reading of Feldman’s opinion, Interior did not dispute that the notice was, in fact, a regulation. Instead, it claimed the notice was an “interpretive rule” – a type of regulation not subject to public notice and comment under the Administrative Procedure Act, because it is of little consequence. Feldman disagreed, finding the notice to be the equivalent of a “substantive rule.”

The ruling does not have significant implications for offshore drilling. Interior’s notice to lessees has since been supplanted by an interim final regulation that more formally adopted many, if not all, of the safety requirements in the notice (and added protections for rig workers). The interim final regulation took effect when Interior published it on Oct. 14. At that point, the June notice to lessees was basically irrelevant.

But this week’s decision does raise some questions about those interim final rules. U.S. courts, and Judge Feldman in particular, have shown no mercy for the Obama administration’s efforts to instill more caution in offshore drilling operations. In June, Feldman struck down Interior’s deepwater drilling moratorium. The Fifth Circuit Court of Appeals then denied the administration’s appeal. (Not for nothing, Feldman and both of the appellate court judges that ruled against the administration have financial interests in the oil industry.)

If industry challenges Interior’s interim final regulation, how will the courts view it? Like the challenge to the notice to lessees, the case could center on the Administrative Procedure Act and the legally required steps for a rulemaking. A major issue could be the administration’s “good cause” finding for issuing an interim final regulation, which goes into effect immediately, instead of a proposed rule, which would have to be finalized before taking effect. Interior lays out its “good cause” justification in the interim final regulation, highlighting the urgency of the situation and the need to take immediate steps to prevent another disaster:

[T]he obvious failures of well intervention and blowout containment systems demonstrate that previous regulatory assumptions concerning their reliability are inaccurate. The importance of these systems in preventing catastrophic blowouts and oil spills indicate that genuine harm could result from delay… 

This is all speculation at this point, but if the situation arises, will Feldman or other judges buy the argument?

back to Blog