Texas sues feds over offshore drilling moratorium in the Gulf of Mexico

By Phaedra Friend Troy

The state of Texas has sued the federal government over the deepwater drilling moratorium imposed offshore the US.

In a suit filed Aug. 11, 2010, by Texas Attorney General Greg Abbott in Houston against the federal government, Texas Governor Rick Perry and Land Commissioner Jerry Patterson claimed that the US administration needed to coordinate with coastal states, namely Texas, that might be affected by the drilling moratorium, according to the Outer Continental Shelf Lands Act (OCSLA).

“Under federal law, affected states are guaranteed the right to participate in offshore drilling-related policy decisions, but the Obama Administration did not bother to communicate, coordinate or cooperate with Texas,” said Attorney General Abbott. “Worse, the Secretary of the Interior failed to consider the economic consequences of his decision, which will cost the Texas economy millions of dollars – and threatens far too many hard-working Texans’ jobs.”

The suit names the US Department of the Interior; DOI Secretary Kenneth Salazar; the Bureau of Ocean Energy Management, Regulation and Enforcement; and BOEM Director Michael Bromwich as defendants.

Under the OCSLA, the Interior Secretary is required to coordinate with affected states and weigh the economic impact a drilling ban would have before imposing any restrictions.

“Once again, the Obama Administration has demonstrated a flagrant disregard for the rights and economies of states and the well-being of those whose jobs depend upon a safe and vibrant energy industry, many of whom live in Texas,” Gov. Perry said.

Houston serves as the US headquarters for the oil and gas industry, with myriad companies officing in the city and across the state. Baker Hughes (NYSE:BHI) has already relocated 300 Gulf Coast employees because of the drilling moratorium, adding that Houston stands to lose its energy business if the ban continues.

“It is unfortunate Texas must take such action against the federal government, but I will do everything in my power to preserve our state’s economy and the jobs that feed our families,” Gov. Perry added. “The jobs and livelihoods of too many Texans are at stake for them to be denied a voice by the Obama Administration and their federal bureaucracy.”

The suit also states that “the defendants having issued a ‘blanket’ or ‘global’ moratorium, acted arbitrarily and capriciously and in a manner not authorized by or in accordance with the defendants’ authority and regulations.”

Following the April 20, 2010 blowout and explosion aboard the Deepwater Horizon drilling rig and subsequent oil spill in the deepwaters of the Gulf of Mexico, the first drilling moratorium was enacted in May, and then a federal judge blocked the ban.

In July, the moratorium was replaced by a drilling “suspension” that focused on BOPs, rather than water depths, but restricted even more drilling operations.

The restrictions stopped drilling for rigs using subsea BOPs and all floating rigs with BOPs situated onboard. Jackups, which have legs that connect to the ocean floor, only drill in shallow waters (up to 500 feet). All deepwater drilling is conducted by floating rigs, but BOPs may be located subsea on some jackups as well.

Operators have already declared force majeures on a number of drilling rigs – both deepwater and shallow water – and rigs have begun to relocate to waters offshore other countries with more favorable drilling and regulatory environments.

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