Oil Service Companies Seek Enforcement of Judge's Order Lifting Drill Ban

Hornbeck Offshore Services Inc. and more than a dozen other oil service companies asked a judge to enforce his order lifting a moratorium on deepwater drilling in the Gulf of Mexico, claiming the U.S. plans a “de facto” continuation of the ban.

The companies sought an emergency hearing from U.S. District Judge Martin Feldman in New Orleans in light of Interior Secretary Kenneth Salazar’s testimony before a Senate Committee today and statements by the department to the media, lawyer Carl Rosenblum said in a court filing today.

“Secretary Salazar’s statements constitute a de facto continuance of the moratorium in direct violation” of Feldman’s order, Rosenblum said.

President Barack Obama temporarily halted all drilling in waters deeper than 500 feet on May 27 to give a presidential commission time to study improvements in the safety of offshore operations. More than a dozen Louisiana offshore service and supply companies sued U.S. regulators to lift the ban.

Feldman yesterday granted a preliminary order lifting the moratorium and barring federal regulators from enforcing their restriction of deepwater drilling. Government lawyers told Feldman the ban was based on findings in a U.S. report following the sinking of the Deepwater Horizon rig off the Louisiana coast in April. Feldman said the six-month ban was too broad a response to its investigation.

‘Divine or Fathom’

“The court is unable to divine or fathom a relationship between the findings and the immense scope of the moratorium,” Feldman said in his 22-page decision. “The blanket moratorium, with no parameters, seems to assume that because one rig failed and although no one yet fully knows why, all companies and rigs drilling new wells over 500 feet also universally present an imminent danger.”

The U.S. yesterday said it would appeal Feldman’s decision. Andrew Ames, Justice Department spokesman, said today he didn’t know when the government would file an appeal.

“I have no guidance on timing at this point,” he said in a phone interview. Salazar’s remarks don’t indicate an intention to defy the court’s order, he said.

“The secretary has said they were in the process of developing a new moratorium,” Ames said.

Environmental groups, including the Sierra Club and the Natural Resources Defense Council, today asked Judge Feldman to disclose any financial interests he has that “could be substantially affected by the outcome of the proceeding,” citing a 2008 disclosure report that showed the judge had stock in several oil and offshore energy companies.

‘The Right Decision’

Salazar yesterday said the U.S. would issue a new moratorium governing deepwater drilling in the Gulf. “The decision to impose a moratorium on deepwater drilling was and is the right decision,” he said in a statement. “I will issue a new order in the coming days that eliminates any doubt that a moratorium is needed, appropriate, and within our authorities.”

“We will in the weeks and months ahead take a look at how it is that the moratorium in place might be refined,” Salazar said today at a hearing of a Senate Appropriations Committee panel. Rules to be issued “will include the criteria under which it is appropriate to take a look at the lifting” of the ban, Salazar said.

Hornbeck and the other companies said in court papers that Salazar’s remarks show “direct defiance” of the court’s preliminary injunction.

‘Very Surprised’

“We were very surprised yesterday and again today to hear from Secretary Salazar that the moratorium is really still in effect,” Samuel Giberga, Hornbeck’s senior vice president and general counsel, said in a telephone interview today. “That’s the very issue Judge Feldman considered, and the very issue the Department of Interior litigated before Judge Feldman and lost.”

Salazar’s testimony referred to a “new moratorium” that would include criteria under which it is appropriate to lifting the drilling ban, Giberga said. “Well, the moratorium has already been lifted,” he said.

Hornbeck didn’t ask Feldman to find Salazar in contempt, he said. “That’s a matter for Judge Feldman to decide,” he said.

The case is Hornbeck Offshore Services LLC v. Salazar, 2:10-cv-01663, U.S. District Court, Eastern District of Louisiana (New Orleans).

To contact the reporters on this story: Laurel Brubaker Calkins in Houston at laurel@calkins.us.com; Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net.

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