Welcome to OffshoreEnergyLawBlog

The Delaware Department of Natural Resources and Environmental Control (“DNREC”) announced last week that it became the first state to obtain delegated authority under the Clean Air Act from the Environmental Protection Agency (“EPA”) to enforce and implement offshore wind permitting related to air quality.  Delaware has incorporated the federal air quality requirements into its Outer Continental Shelf Air Regulations, which were promulgated last month.  The new rules extend Delaware’s on-shore air pollution control requirements to offshore sources within 25 miles of the state’s coastline.  DNREC anticipates that the first project subject to the new regulations will be the construction of a meteorological tower associated with the planned Bluewater Mid-Atlantic Wind Farm project.  The DNREC views its new authority to implement and enforce air quality permitting as essential to the development of offshore wind.

On July 21, U.S. District Judge Ralph R. Beistline ruled that the Department of the Interior violated the National Environmental Policy Act by failing to adequately asses the potential environmental impact of proposals to drill in Lease Area 193 in the Chukchi Sea. This is the latest of several setbacks that companies seeking to drill offshore in the Arctic have encountered. According to the LA Times, the ruling may also prohibit companies from conducting pre-drilling operations, which environmental groups argue are harmful to mammals.

Yesterday the U.S. House of Representatives passed two bills focusing on oil spill response. The first, H.R. 2693, reinforces current efforts to research methods of mitigating the effects of oil spills and establishing a committee of executive branch officials to direct these research efforts. The second bill, H.R. 5716, focuses on researching safety measures for deepwater oil and gas wells.

The U.S. Department of Energy (DOE) received 120 responses from 112 different respondents to the Request for Information (RFI) it released June 14, 2010 regarding Offshore Wind Demonstration Projects.  The RFI was a broad solicitation for public input regarding the research, development and deployment of advanced technology offshore wind demonstration projects. The responses, which were due July 14, 2010, have not been released by DOE. DOE Project Officer Michael Hahn explained the responses will be used to "guide program decision-making." For more information, see today's BNA Daily Report for Executives (subscription required).

Yesterday President Barack Obama signed an executive order adopting many of the recommendations put forward by the Interagency Ocean Policy Task Force.  The order sets forth policy guidelines for managing the ocean, U.S. coasts, and the Great Lakes, and mandates that executive agencies follow these new guidelines.  The order also creates a National Ocean Council to “ensure that executive departments’, agencies’, or offices’ decisions and actions affecting the ocean, our coasts, and the Great Lakes will be guided by the stewardship principles” described by the Task Force.

Michael Bromwich, Director of the Bureau of Ocean Energy Management, Regulation and Enforcement (“BOEM”) announced yesterday that he will lead a series of public meetings to collect information and views on offshore deepwater drilling safety, well blowout containment, and oil spill response.  The meetings are designed to collect input from industry representatives, environmental organizations, the public, state and local leaders, and experts in an effort to enhance the safety of deepwater drilling.  The meetings are scheduled to occur in August and September in the following cities: New Orleans, LA; Lafayette, LA; Mobile, AL; Pensacola, FL; Santa Barbara, CA; Anchorage, AK; Biloxi, MS; and Houston, TX.  Director Bromwich plans to release dates and specific locations soon.  Written comments will also be accepted at the meetings, online, and by mail.

A bipartisan group of lawmakers from the East Coast on Wednesday delivered a letter to Interior Secretary Ken Salazar, urging him to create a new office focused on renewable energy projects on the Outer Continental Shelf. Offshore renewable energy development is managed by the former Minerals Management Service, which is now called the Bureau of Ocean Energy Management, Regulation and Enforcement. The lawmakers are concerned that  BOE's attention to the restructuring of its regulation of offshore oil and gas  exploration and production will detract from the agency's ability to focus on offshore wind.

The American Wind Energy Association (AWEA) announced yesterday that it has launched the Offshore Wind Development Coalition, known as OffshoreWindDC.  As noted in AWEA’s press release, “OffshoreWindDC will both expand and sharpen the focus of the industry efforts already underway through AWEA,” and many industry and government stakeholders are expected to take part in the effort.

Revising an earlier offshore drilling moratorium that had been enjoined by a federal court, U.S. Secretary of the Interior Ken Salazar issued a directive yesterday that suspends the drilling of offshore wells that use subsea blowout preventers (BOPs) or employ BOPs on a floating facility.  According to Sec. Salazar, this “pause” in deepwater E&P operations is necessary to allow for the collection of information regarding the ongoing BP oil spill, to assess national resources for wild well interventions, and to provide time for offshore operators to demonstrate that they have the capability to respond to an incident in the U.S. Gulf of Mexico.  Read more in the New York Times.

Last night the U.S. Court of Appeals for the Fifth Circuit issued an order denying Secretary of the Interior Ken Salazar’s request to stay a lower court’s decision to grant a preliminary injunction of a moratorium preventing offshore E&P activities in water deeper than 500 feet.  The order notes that the government failed to demonstrate that an irreparable injury would be suffered if the stay were not granted but that Secretary Salazar can apply for emergency relief if deepwater drilling activity “has commenced or is about to commence.”  The appeal examining the merits of the moratorium will be handled on an expedited scheduled so that oral arguments can take place during the week of August 30, 2010.

The oral arguments in this case are available on the Fifth Circuit’s website here.  In the argument, counsel for the government noted that DOI continues to work on developing new moratorium parameters

On June 30, the Department of the Interior announced its decision to delay public hearings on the expansion of offshore drilling to an unspecified date.  
 
The same day, according to BNA [subscription required], Secretary Salazar welcomed the prospect of an organic statute to govern the Interior Department and its new offshore energy agencies before a hearing of the House Natural Resources Committee.

The University of Houston has been selected to receive a $2.3 million grant from DOE to establish an offshore wind testing facility. Research efforts will focus on improving the materials used to make wind turbine blades.

The Department of Interior and the Department of Energy announced today a new Memorandum of Understanding (MOU) which seeks to prioritize and facilitate environmentally responsible deployment of commercial-scale offshore wind and marine hydrokinetic energy technologies on the Outer Continental Shelf.  Under the MOU, the two agencies will facilitate such development by pursuing priority leasing and efficient regulatory processes for sites with high commercial-scale offshore wind and water power development potential, as well as exchange information and collaborate on research projects.  "We have a major opportunity to tap the energy in waves and offshore wind," said Energy Secretary Steven Chu.  "Increasing cooperation between our agencies will help make clean, renewable energy a reality."

A coalition of environmental groups filed a lawsuit in federal court today claiming the Cape Wind farm approved for offshore Massachusetts violates federal law by endangering shorebirds and migrating whales.

The coalition, which includes the Alliance to Protect Nantucket Sound, the Public Employees for Environmental Responsibility, Californians for Renewable Energy Inc., and the Texas group Lower Laguna Madre Foundation, allege that the Bureau of Ocean Energy Management and the U.S. Fish and Wildlife Services violated the Endangered Species Act, the Migratory Bird Treaty Act, and the National Environmental Policy Act in approving the Cape Wind project.  Specifically, the coalition claims that the government failed to conduct required scientific studies and ignored protective measures.  Interior Secretary Ken Salazar approved construction of the wind farm last April.

Senator Mary Landrieu (D-LA) sent a letter to William Reilly, co-chair of the commission investigating the Gulf of Mexico oil spill, asking the commission not to leave the six-month moratorium on deepwater E&P activities in place while it finishes its investigation.

Speaking before a Senate subcommittee yesterday, Michael R. Bromwich,  the recently-appointed director of the renamed Bureau of Ocean Energy Management, Regulation and Enforcement, said that his goal was to “break up the cozy relationship between some agency workers and the oil and gas industry,” promising “zero tolerance”  for “corruption and coziness.” Congressional Quarterly [subscription required] provides additional coverage.

Separately, Sens. Jeff Bingaman (D-NM) and Lisa Murkoski (R-AK) introduced S. 3516, the Outer Continental Shelf Reform Act, that would give Secretary of the Interior Ken Salazar new authority to overhaul offshore E&P regulations. A hearing has been scheduled for the Senate Energy Committee to consider the bill.

The New Jersey Department of Environmental Protection on June 18 announced the release of a draft report which shows that the development and operation of offshore wind farms off the southern New Jersey coast would have minimal environmental impact.  An ongoing study will collect data on the abundance, distribution and migratory patterns of bird species, fish, marine mammals and turtles in the offshore area where wind development may be feasible.  The final report, which is likely to affect the evaluation of the proposed Fisherman's Energy project, is expected to be issued in early July.

The Boston Globe reports that Cape Wind Associates, LLC has narrowed down the list of contractors to build the proposed Cape Wind offshore wind farm, which is slated for the waters off of Nantucket Sound, Massachusetts.  Jim Gordon, president of Cape Wind Associates, declined to name any bidders, but said that negotiations were ongoing.  Meanwhile, on Monday, the Massachusetts Department of Public Utilities held its second public hearing on the proposed power purchase deal between Cape Wind and National Grid PLC.

On June 18, 2010, Secretary of the Interior Ken Salazar issued an order renaming the U.S. Minerals and Management Service to the Bureau of Energy Management, Regulation and Enforcement. The Bureau of Energy Management will eventually be reorganized into three different agencies to oversee royalty collection, energy leasing, and safety enforcement.

Judge Martin Feldman of the U.S. Federal District Court for the Eastern District of Louisiana has granted a preliminary injunction against the imposition of a general moratorium on deepwater drilling for oil in the Gulf of Mexico. Judge Feldman found that the Department of Interior's decision to halt E&P operations in waters deeper than 500 feet was arbitrary and capricious.

Yesterday President Obama announced that Michael R. Bromwich has been selected to lead efforts to reorganize and reform MMS. Bromwich is a former Assistant U.S. Attorney and previously served as Inspector General of the U.S. Department of Justice.

The U.S Department of Energy (DOE) on Tuesday released a Request for Information (RFI) seeking input from the public regarding the research, development and deployment of advanced technology offshore wind demonstration projects.  DOE anticipates that such demonstration projects will be carried out via collaborative partnerships with a wide range of eligible organizations.  Information responsive to this RFI is due by July 14, 2010.

Today the U.S. Department of the Interior made public its response to the Advisory Council on Historic Preservation regarding Interior’s Record of Decision that provisionally approved the Cape Wind project. Further details are available in the Federal Register.

Today President Obama announced the remaining members of the offshore drilling commission to be co-chaired by former Sen. Bob Graham (D-FL) and William Reilly.

Yesterday the U.S. Department of Interior issued a Notice to Lessees (NTL) that outlines increased safety requirements for offshore E&P operations. Specifically, the NTL requires new certifications by a well operator's CEO that the company is operating the well in compliance with all regulations and testing standards, new  certifications from a professional engineer that the well casing and associated equipment meet installation standards, and a number of other inspection and reporting requirements.

The DOI has entered into a Memorandum of Understanding with nine states along the Atlantic Coast to form the Atlantic Offshore Wind Energy Consortium.  The Consortium will serve as a first step toward the goal of broader collaboration and coordinated efforts among the Atlantic states and relevant federal agencies that are critical to the development of the offshore wind industry.  Randall Luthi, the President of the National Ocean Industries Association, applauded the announcement.  "Future energy development on the Outer Continental Shelf, whether it be wind, wave, ocean current, solar, or conventional oil and natural gas will further diversify the nation's energy sources while generating new jobs for Americans, and reducing our dependence on foreign energy sources."

Noting confusion among offshore energy industry players, President of the National Ocean Industries Association (NOIA) Randall Luthi requested that MMS issue further guidance on the parameters of the new offshore drilling moratorium.  In his letter to the acting director of MMS, Robert Abbey, Luthi suggests that the agency should release new “guidance, possibly in the form of a Notice to Lessees,” as soon as possible.  Luthi also says that if MMS pursues a formal rulemaking on the safety requirements for offshore E&P, interim guidance should be released to allow drilling during the rulemaking process.

Louisiana Governor Bobby Jindal, in a letter dated June 2, urged President Obama and Interior Secretary Ken Salazar to overturn the moratorium on deepwater drilling activities in the Gulf of Mexico.  Gov. Jindal argues that the six-month deepwater moratorium, which applies to 33 permitted exploratory wells in the Gulf, will eliminate an estimated 3,000-6,000 Louisiana jobs in the next few weeks, and potentially over 10,000 within a few months.  Gov. Jindal asks that "the federal government move quickly to ensure that all deepwater drilling is in proper compliance with federal regulation and is conducted safely so that ... thousands of jobs ... are not in limbo."  
 
Senator David Vitter (R-LA) sent a similar letter to President Obama the following day, arguing that the moratorium should be replaced by more aggressive rig inspections.

Earlier this week, MMS Acting Director Bob Abbey announced that additional information regarding potential risks and safety concerns will need to be incorporated into plans for the exploration and development of the OCS.  Moreover, any previously approved plans must be resubmitted with the additional information before any new wells are drilled.  Abbey also urged Congress to enlarge the 30-day congressionally-mandated deadline for MMS to review exploration plans to 90 days to allow time for additional environmental and safety reviews.  He explained that these measures are designed to facilitate a more cautious approach to OCS development.

In a press release issued June 2, 2010, the National Ocean Industries Association (NOIA) warns that President Obama's moratorium on exploratory wells in the Gulf of Mexico and new deepwater drilling could cost Americans thousands of jobs and the government billions of dollars in revenue.  NOIA also suggests that the President’s actions may end up increasing U.S. dependence on foreign oil, urging the government to take “less harmful solutions such as increased inspection and recertification of equipment.”  According to NOIA, the offshore industry provides approximately 200,000 jobs in the Gulf of Mexico and an average of $13 billion a year in government revenue.