Obama Administration Appeals Deepwater-Drilling Ruling
June 23 2010 - 10:58PM
Dow Jones News
The Obama administration late Wednesday appealed a decision by a
U.S. federal judge, who a day earlier had invalidated a six-month
ban on drilling new deepwater wells in the Gulf of Mexico enacted
after a catastrophic BP PLC (BP) oil spill.
U.S. Interior Secretary Ken Salazar and the Department of the
Interior's newly-created Bureau of Ocean Energy Management filed a
notice of appeal to the Fifth U.S. Circuit Court of Appeals.
Salazar and the bureau separately asked Judge Martin Feldman to
put on hold his Tuesday order, which set aside the six-month
moratorium.
Salazar "will undertake a process to issue a new suspension
decision that reflects information learned since the original
suspension decision and provides further explanation of the need
for a pause in deepwater drilling operations," according to a
document supporting the request for a stay. "A stay pending appeal
would maintain the legal status quo prior to the Court's issuance
of the preliminary injunction while the Secretary undertakes this
process."
Separately, Judge Feldman faced a challenge from a group of
environmentalists, who asked the court to release information
sufficient to determine if the judge "has a financial interest in
the subject matter in controversy or in a party to the proceeding,
or any other interest that could be substantially affected by the
outcome of the proceeding."
Judge Feldman in past years has been an active investor in the
energy sector through an extensive investment portfolio that
included stock holdings in several oil and gas companies, many
based in Houston.
Earlier Wednesday, Salazar had told a U.S. Senate panel that he
was considering issuing a new, scaled-back moratorium in the "weeks
and months ahead." He said that "it might be that there are
demarcations that can be made based on reservoirs where we actually
do know the pressures and the risks associated with that versus
those reservoirs that are exploratory in nature."
The moratorium has been in place since late May, when President
Barack Obama announced that he wanted a ban on new exploratory
wells while a presidential commission studied how to ensure that
offshore drilling could be made safer. The ruling had the effect of
suspending activity at all 33 rigs developing exploratory wells in
deep water. It also posed new hardships for hundreds of
oil-services companies, already hurt by an economic recession, that
supply the steel tubing, engineering services, drilling crews and
marine-supply boats critical to offshore exploration.
In the court filing, the Interior chief also said that Hornbeck
Offshore Services (HOS) and other oil-services companies that had
challenged the moratorium had failed to demonstrate that the Obama
administration's "exercise of their broad discretion" to protect
the environment and human health and safety was "arbitrary and
capricious."
He said that suspending drilling was intended to prevent the
risk of more loss of life and "long-term" environmental damage. The
risk to Hornbeck and other plaintiffs was of "short-term economic
harm," according to the court filing.
According to the filing, "the temporary suspension of
operational drilling will allow the Department to ensure that
operators install additional safety equipment before more deepwater
drilling can take place, and to implement new safety measures and
regulations through the use of various regulatory mechanisms."
Judge Feldman's most recent financial disclosure form for 2009
wasn't immediately available. But in 2008 financial disclosures the
judge indicated that he held shares in Transocean Ltd. (RIG), the
operator of the Deepwater Horizon oil rig at the center of the
current gulf disaster. Feldman's chambers haven't responded to a
request for a copy of the 2009 disclosure form or for comment on
his participation in the case.
Federal judges are required to step aside from cases that
present financial conflicts. They are also required to fill out
annual disclosure forms that are distributed to the public by the
Administrative Office of the U.S. Courts following a written
request.
-By Siobhan Hughes and Brent Kendall, Dow Jones Newswires;
202-862-6654; siobhan.hughes@dowjones.com
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