The Gulf Oil Spill - Moratorium on Off-Shore Drilling

Updated: 11/08/10

Moratorium on Off-Shore Drilling

On May 28, 2010, the Department of Interior instituted a moratorium on deepwater offshore drilling in water deeper than 500 feet. That ban was challenged by drilling companies and a preliminary injunction was issued preventing the government from enforcing the ban. Hornbeck Offshore Services v. Salazar, No. 10-1663 (E.D. La., filed 6/7/10). After the preliminary injunction was upheld by the Fifth Circuit Court of Appeals, the government issued a second moratorium having the same effect but based on different grounds. The second ban has also been challenged. Ensco Offshore Co. v. Salazar, No. 10-1941 (E.D. La., filed 7/9/10).

There has been considerable debate regarding the economic impact of the moratorium. Although the Department of Interior initially estimated  job losses of up to 23,000, it appears from a recent government report that job losses have been between 8,000 to 12,000 and are only temporary. The ban was set to expire on November 30, 2010, but was lifted early by the government on October 12, 2010. Concerns remain, however, that new safety regulations that must be complied with before operations may resume will act as a continuing de facto moratorium for several more months to come.