Lawsuits Stop Offshore Drilling in Its Tracks

By Yanmie Xie – Oil and gas companies appeared to score an all-out victory over the summer when President Bush lifted an executive ban on offshore drilling and congressional Democrats let a moratorium expire soon after. But those who think nothing stands between oil rigs and the outer continental shelf are dead wrong.

"Every lease that has been granted in the last several years has been immediately challenged in the lawsuits � 100 percent," said Rep. Virginia Foxx, R-N.C.

When the ban was lifted, the federal government was permitted to sell drilling leases three miles off the nation's coastlines, free of state objections.

The Interior Department has already started surveying the water and has drawn up maps for lease sales. So far, the government has collected $8.4 billion from the five-year leasing plan that covers 2007 to 2012. Another round of sales will be held next March.

But several environmental groups have sued the federal government over the offshore plans, arguing that the Interior Department failed to consider drilling's impact on endangered marine life such as bowhead whales and polar bears.

"It is something that has put a cloud over the lease sales," said Erik Milito, general counsel of the American Petroleum Institute, which has filed a brief in support of the government. "There's a lot of money at stake in terms of the government receiving the bonus bids already, and there's also the potential for delay in oil and gas activity."

The lawsuits were brought by a wide array of plaintiffs, the majority of which are conservation groups. The rest include state governments, businesses and individuals.

In February 2008, the administration issued 487 leases in Alaska's Chukchi Sea. The Sierra Club, the Center for Biological Diversity and Alaskan Native groups challenged all of them in court. That's on top of 108 cases filed against federal agencies over drilling permits in 2006.

Supporters of the lawsuits don't see themselves as litigation-happy.

"Over the history of the offshore drilling program, litigation has been generally brought only as a last resort, where the Interior Department is trying to proceed in drilling in a very sensitive area," said Richard Charter, who lobbies on behalf of Defenders of Wildlife, a conservation group.

Defenders of Wildlife sued the Bush administration in 2005 over the government's decision to extend 37 undeveloped oil and gas leases off the central California coast.

Charter said he prefers to fight against oil and gas drilling in Congress, rather than in the courts. Last November, he helped fend off an 11th-hour move by Republicans to lift the offshore oil and gas drilling ban.

This year, however, the line of defense against offshore drilling crumbled in Congress. The 27-year-old drilling moratorium is now gone, and conservationists like Charter are eying the court as the next possible battleground.

"We are kind of entering a new era here," Charter said, "Without the congressional oversight the moratorium has brought, I think litigation will become more frequent. It could become more protracted."

Court decisions have swung both ways in the past, with the majority of the results favoring the defendants.

Charter acknowledged that litigation is an imperfect but necessary tool, as "it generally in the past has resulted in delays, but has never successfully stopped drilling."

But delays are costly to oil and gas companies.

"The litigation has thrown a lot of uncertainty into the business," said Milito of the API. "We've seen many projects that have been delayed, if not stopped, causing companies to lose hundreds of millions of dollars that have been invested."

Congressional Republicans have sought to limit lawsuits against oil exploration. South Carolina Sen. Jim DeMint, for example, introduced a bill last month that would allow only 90 days to submit a legal case.