Rep. Darrell Issa, chair of the House Oversight and Government Reform Committee, is using the one-year anniversary of the BP Deepwater Horizon oil spill disaster as an opportunity to criticize the Obama administration for exercising more caution when issuing offshore drilling permits. After the spill, “the Administration’s subsequent assault on off-shore drilling has [damaged] economically vulnerable communities,” Issa says.

Issa’s sympathy would be touching if it weren’t so obviously contrived. (Issa’s committee has held at least 40 hearings this year, none on the spill.) If Issa were so concerned with the economic well-being of the Gulf region, he would be interested in preventing future spills. As a new report from the Economic Policy Institute shows, lax regulation in the drilling arena led to the oil spill, which continues to wreak havoc on Gulf businesses.

Issa said yesterday, “The legacy of this spill should be an increased emphasis on safety, not a full-scale retreat from off-shore energy production.” Of course, Issa has no real interest in an “increased emphasis on safety.” In fact, Issa’s role in the Republican attack on regulation is undermining the future safety of drilling.

For example, in December, when Issa wrote to businesses and industry lobbyists asking them for a hit list of regulations they want to see undone, one of the companies in his address book was ConocoPhillips. The energy giant wrote back to Issa to complain about new safety standards for offshore drilling (meant to protect both the environment and workers) set in the wake of the BP spill.

The Interior Department announced yesterday that it would be pursuing even more safety standards for oil rigs. During the announcement, Interior official Michael Bromwich also dispensed with the notion that the administration’s moratorium on Gulf drilling is somehow responsible for severe economic distress. From BNA news (subscription):

Deepwater drilling was banned by the Obama administration immediately after the BP oil spill. The moratorium was lifted in October, but Interior did not grant the first deepwater permit until Feb. 28. Since then, 11 other deepwater permits have been issued.

The agency has issued 49 drilling permits for new wells in shallow water since last summer, Bromwich said. While the pace is slightly below historical levels, there is no big backlog of pending permit applications for shallow-water drilling, as some critics have suggested, he added. 

If anything, Bromwich’s comments indicate that the Obama administration continues to play fast and loose with drilling safety. Interior has issued 12 deepwater permits even though – as evidenced by the announcement that more safety regulations are needed and under development – the administration is not fully confident that existing safeguards are sufficient to prevent another catastrophe.

The lesson may be that, one-year after the worst oil spill in U.S. history, neither Issa and his congressional colleagues nor the Obama administration are in the right place on deepwater drilling. Those who fail to learn from history…

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?

A Texas-based deepwater drilling contractor has filed a lawsuit in federal district court, seeking to block the Obama administration’s latest effort to temporarily halt new offshore drilling operations while the Department of the Interior investigates safety and technology concerns in light of the April 20 explosion of BP’s Deepwater Horizon oil rig. Ensco Offshore argues in their July 20 suit that the drilling suspension issued by the Interior is “substantially the same” as an earlier moratorium that was struck down in federal district court.

The administration originally issued a moratorium on deepwater drilling on May 28 that prohibited certain drilling operations from beginning work until November 30. However, this moratorium was struck down when a federal district court ruled in favor of a coalition of oil industry representatives, including Ensco, holding that the administration had not made sufficient findings that the banned drilling operations posed a threat of irreparable harm. The Fifth Circuit Court of Appeals then denied the administration’s motion to temporarily reinstate the moratorium pending the appeal. Read more.

Interior Secretary Ken Salazar issued a new drilling suspension on July 12 to address many of the concerns that prompted the district court to grant the injunction against the May 28 moratorium. While the suspension still prohibits many offshore drilling operations until November 30, it is based on new findings that some operations pose a substantial risk of irreparable harm due to safety concerns, insufficient blowout containment resources, and the strain on cleanup capabilities caused by the ongoing BP disaster. Unlike the May 28 moratorium, the suspension largely focuses on drilling technology, rather than water depth.

Ensco’s July 20 suit argues that the administration’s revised ban on offshore drilling is a “thinly-veiled and impermissible attempt” to comply with the district court’s original order. The suit alleges that the new suspension creates “a state of uncertainty and confusion with resulting dire consequences upon the domestic offshore drilling industry in the Gulf of Mexico.” Ensco filed its suit before Judge Martin Feldman, the district court judge who struck down the first moratorium.

Feldman will also consider the administration’s motion to dismiss the original case in light of the revised drilling ban, which the administration claims supersedes the May 28 moratorium and renders the original case moot. Oil industry representatives claim that Feldman’s order should stay in place because the moratoria are substantially the same. Feldman recently issued an order declining to recuse himself from the proceedings, despite having a significant financial interest in the success of the oil industry’s case. Feldman has not commented or issued an order in either case, but his past rulings and financial holdings indicate that he may be more sympathetic to the oil industry.

On the same day that Ensco filed its suit, Salazar and two former Interior secretaries testified before a House joint committee hearing to discuss the BP oil disaster. Salazar defended the administration’s decision to continue fighting for the drilling ban, saying that he believes “it would be irresponsible to take our hand off the pause button given the current circumstance." If Feldman again strikes down the drilling ban, it is likely that the administration will appeal to the Fifth Circuit.
 

The Obama administration is attempting to reassure Americans that seafood from the Gulf of Mexico is safe to eat amid the BP-Deepwater Horizon oil spill disaster. President Obama discussed food safety yesterday during a trip to the Gulf. "Let me be clear: Seafood from the Gulf today is safe to eat," Obama said.

In his remarks, Obama discussed the roles of the National Oceanic and Atmospheric Administration (NOAA) and the Food and Drug Administration (FDA). The agencies yesterday issued a joint statement outlining the steps they have taken and will continue to take in order to protect the Gulf food supply.

“The first line of defense is NOAA’s fishery area closures, which began May 2 and are adjusted as the spill trajectory changes,” the statement says. It continues to test seafood samples from outside the closure areas to check for contamination and to ensure fishermen are abiding by the restrictions.

FDA is focusing on shellfish for the time being: “FDA will first target oysters, crab, and shrimp, which due to their biology retain contaminants longer than finfish, for additional sampling. Finfish rapidly metabolize the oil so the risk of exposure is far less than the other seafood species previously mentioned.”

FDA also says:

The sample collection will target primarily seafood processors who buy seafood directly from the harvester. Monitoring this first step in the distribution chain will help to keep any potentially contaminated seafood from consumers.

FDA has also created a focused inspection assignment designed to help seafood processors review their individual source controls to ensure proper documentation and exclusion of any seafood obtained from unknown sources from entering commerce.

That prompts a question: Given the FDA’s struggles in recent years, will the agency have the necessary resources and adequate regulatory muscle to keep contaminated seafood away from consumers?

Fishermen and consumers are already getting screwed by the mess BP has made. One of the few things that could make it worse would be a foodborne illness outbreak traced back to the Gulf’s shores. That would truly be a nightmare scenario.