U.S. Must Act on Six Drilling Permits, Federal Judge Rules

The U.S. “unlawfully and improperly delayed” permits for deep-water drilling after the BP Plc (BP/) Gulf of Mexico oil spill last year, a federal judge ruled.

U.S. District Judge Martin Feldman in New Orleans today ordered offshore energy regulators to act within 30 days on six pending permit applications filed by companies that have contracts with Ensco Offshore Co., the Louisiana drilling company leading the legal challenge to the government’s offshore drilling bans.

Federal law “establishes a non-discretionary duty on the Department of Interior to act, favorably or unfavorably, on drilling permit applications within a reasonable time,” Feldman said in a written order. Ensco was harmed by “the government’s failure to act on pending permit applications contemplating the use of Ensco’s rigs,” he said.

The Obama administration suspended all drilling in waters deeper than 500 feet last May in response to the worst offshore oil spill in U.S. history. More than 4.1 million barrels of crude leaked into the Gulf after the Deepwater Horizon exploded and sank while drilling a subsea well for BP off the Louisiana coast in April.

“We’re reviewing the judge’s ruling,” Wyn Hornbuckle, a spokesman for the U.S. Justice Department, said in an e-mail. He declined to comment further “at this time.”

Previous Moratorium

After offshore companies and regional business and political leaders sued in June, Feldman threw out the government’s deep-water drilling moratorium as overly broad and punitive to the Gulf Coast economy. Interior Secretary Kenneth Salazar imposed a second ban in July. That ban was also challenged in court, and Salazar withdrew it in October before Feldman could rule on its validity.

Ensco continued its lawsuit after the second moratorium was lifted, contending that regulators were continuing a de facto ban by refusing to process new permits. The government argued that the lawsuit was made irrelevant by the end of the moratorium and that any delays in granting permits were required to prevent future incidents such as the BP spill.

The government has “unlawfully and improperly delayed” Ensco permit applications, Feldman said today.

“Although the government has begun to issue some permit applications, plainly because of this lawsuit, the future of drilling in the Gulf of Mexico remains elusive,” he said. “Moreover, the government’s conduct of delay in deepwater drilling in the Gulf dramatically presents far more than the mere possibility of persistent and repetitious intentional delays” in processing permit applications, he said.

Feldman said officials “presented no credible assurances that the permitting process will return to one marked by predictability and certainty.”

The case is Ensco Offshore Co. v. Salazar, 2:10-cv-01941, U.S. District Court, Eastern District of Louisiana (New Orleans).

To contact the reporters on this story: Margaret Cronin Fisk in Detroit at mcfisk@bloomberg.net; Allen Johnson Jr. in New Orleans at allenmct@gmail.com.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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