The same week that the burning Deepwater Horizon rig collapsed through its pontoons and sank to the bottom of the sea, Fred Hiatt of the Washington Post admiringly observed that Obama accomplishes “usually by executive action” those priorities that he can’t achieve through the normal political process. Hiatt didn’t know the half of it.
America’s economic strength has always depended upon a healthy legal climate for business activity — an environment in which rights and obligations are legally enforceable. Obama has discovered that, using federal regulatory action to create uncertainty and prohibitive risk for private commerce, he has almost unchecked power to advance his green-energy agenda by shutting down entire sectors of the U.S. economy. And there isn’t anything that any court or any legislature can do about it — at least, not fast enough to make a difference.
On May 28, Obama declared a sweeping moratorium on existing and future offshore drilling below the depth of 500 feet — in other words, the vast majority of all new offshore oil development in the United States. Just a few weeks later, a federal district court in Louisiana struck down the moratorium, calling it “arbitrary and capricious.” Then the government’s interlocutory appeal sped to the Fifth Circuit, where it was summarily dismissed. There was simply no logical justification for a moratorium on offshore drilling that didn’t take into account each rig’s compliance with safety measures or how close it might be to a high-pressure oil and gas reservoir. As far as the judicial branch of the federal government was concerned, Obama had no right to declare such a sweeping moratorium.
The administration promptly issued a new decree, replacing the ban on drilling below 500 feet with a ban on drilling from floating platforms. But as the government’s own lawyers had explained to the Fifth Circuit panel, the purpose of the 500-foot threshold was to ban drilling by the most common floating platforms — which are used for almost all projects at depths greater than 300 feet. If anything, the change of focus from the depth to the type of drilling apparatus only expanded the moratorium.
Meanwhile, in the Gulf of Mexico, not a single stopped rig has started drilling again. For businesses and working families along the Gulf Coast, Obama’s officially “arbitrary and capricious” moratorium is a looming disaster. It has already wiped out thousands of jobs. According to one study, even if the moratorium lasts only until November, it will eliminate more than 8,000 jobs — nearly 2,500 in Texas alone. But the risk horizon is longer: Unless Obama reverses course, the cloud of prohibitive uncertainty will not be lifted until the litigation has run its course in 18 months. In Louisiana, 20,000 jobs could be lost — eventually affecting most of the 15 percent of household income statewide that depends on the offshore-oil industry. According to one recent study, more than 400,000 American jobs could be lost if the moratorium is not lifted soon.
Courts are supposed to protect rights from infrimgement, but there is little courts can do when the injury stems from government actions that create clouds of legal uncertainty over economic activity.
Alas, in their own version of “creative destruction,” Obama and his supporters may see that as a good thing. As Obama said in his Oval Office address, the crisis is an incentive to end “America’s century-long addiction to fossil fuels.” Comprehensive energy and climate legislation has been part of Obama’s green policy ever since he ran for senator, and one way to get there is to make oil uneconomical. Hence, Obama may be trying to advance his agenda by causing a fuel shortage.
The moratorium is just one piece of a larger puzzle. The browbeating of BP into disgorging assets regardless of actual liability; the EPA’s de facto revocation of licenses for most of the refineries in Texas by means of shutting down a state permitting program that it had found acceptable for 16 years; the Interior Department’s failure to process license renewals for a slew of shallow-water wells, which are much less dangerous than those in deep water — all these actions bespeak a desire to create a hostile regulatory environment for oil extraction.