OFFSHORE DRILLING:

Obama admin weighs appeal of contempt ruling in moratorium case

When a federal judge held the Interior Department in contempt earlier this month over its imposition of a second moratorium on deepwater oil drilling, it left the Obama administration with a tricky decision.

The ruling was a boon to those critical of the administration's approach to the oil industry, so the question for the Justice Department is whether it should appeal, in the hope of reversing the ruling, or let it stand and hope industry doesn't see it as a sign of things to come.

U.S. District Judge Martin Feldman of the Eastern District of Louisiana sided with an oil company in concluding that instituting the second moratorium showed "a flagrant and continuous disregard" for his earlier decision to strike down the first moratorium (E&E Daily, Feb. 3).

He ordered the administration to pay the attorneys' fees incurred by Hornbeck Offshore Services LLC, a Louisiana drilling company that had challenged the government's policy. The amount of the fees has yet to be determined, and if the government were to appeal, it would likely be after that occurs.

Although the decision did not get huge media attention, it did not go unnoticed within conservative political circles and the blogosphere.

The ruling, which came the same week that another federal judge struck down the recently enacted health care reform act, prompted outrage from conservative pundits, who sought to link the two rulings as part of a wider argument that the administration is riding roughshod over the courts.

These are all factors the administration might consider when deciding whether to appeal. The Justice Department declined to comment.

"There are considerations either way," said Holly Doremus, an environmental law professor at University of California, Berkeley, School of Law.

Her instinct is that the Justice Department won't appeal, for the simple reason that "they won't want to piss off the judge any more than they already have."

That's in part because Feldman is also overseeing litigation concerning alleged delays in the permitting process.

Although the contempt ruling has prompted criticism of the Obama administration from conservatives, who have emphasized the word "contempt" in blog posts, Doremus said government officials had little to gain from appealing, especially since they could well lose before the New Orleans-based 5th U.S. Circuit Court of Appeals that has a number of judges with what Doremus called "strong ties" with the energy industry.

"If you appeal and lose, it gets worse," she said.

Government lawyers might have an eye on a 5th Circuit case last year on whether greenhouse gases can be regulated under federal common law.

The court, which was due to rehear the case, was unable to issue a ruling because eight of the 16 active judges on the court had to recuse themselves due to what were assumed to be conflicts of interest (Greenwire, June 1, 2010).

The 5th Circuit also denied the government's stay request that would have prevented Feldman's original decision to lift the moratorium from going into effect.

'An outlier'?

The fact that the government is only required to pay attorneys' fees should also be a factor in deciding whether to appeal, according to Jack Coleman, a former Interior Department lawyer who is now a partner at EnergyNorthAmerica.

The underlying legal question over the moratorium is no longer an issue, as the government lifted it in October (Greenwire, Oct. 12, 2010).

"If they only have to pay attorneys' fees, what's the deal?" Coleman said. An appeal would not be "a wise use of government resources and taxpayer money."

Lawyers for environmental groups that participated in the case in support of the government's position believe the Justice Department could mount a strong defense of Interior's actions on appeal, but they doubt that will happen.

The government has "legally strong" grounds to appeal but would be concerned about a "very bad adverse decision" from the appeals court, which could potentially make the case significantly more influential, said Brendan Cummings, an attorney at the Center for Biological Diversity.

Absent an appeal, it's unlikely the ruling will have a broad impact, Cummings said, because it is "such an outlier."

But Cummings remains concerned that the ruling is based on what he views as a misreading of the law.

"Feldman seems to be setting a standard where the government can never quickly issue a new decision through a new process after an adverse court ruling without running the risk of contempt," he said. "Such a result is at odds with decades of case law on administrative decisions."

One lawyer who is holding out hope that the government will appeal is Adam Babich, an environmental law professor at Tulane University Law School who represents the Sierra Club in the case.

The second moratorium was "clearly different" from the first, he said.

Feldman's reason for striking down the first moratorium was because the government had failed to explain its reasoning, which was somewhat understandable since the explanation took up just one and a half paragraphs, he added. But the second decision document was 22 pages long.

"I think the government certainly has a basis to appeal," he said.

Ultimately, the Justice Department might just conclude that the only people paying close attention to the case are those who are never going to support what it does, such as conservative viewers of Fox News, said Berkeley's Doremus.

Administration officials "may think there's no point trying to convince the Bill O'Reillys," she said.