U.S. Appeals for Delay in 30-Day Order on Drill Permits

U.S. offshore regulators asked a New Orleans appellate court to postpone a judge’s March 19 deadline for them to act on certain Gulf of Mexico drilling permits delayed by the Obama Administration’s drilling ban.

The Interior Department had asked U.S. District Judge Martin Feldman, also of New Orleans, to delay his own order so that the U.S. Court of Appeals would have time to review it. When Feldman didn’t respond to that request, the U.S. turned to the appellate court.

“The 30-day deadline is a clear abuse of discretion,’’ lawyers for the agency said in their filing today at the New Orleans appeals court. Meeting Feldman’s deadline would require the agency to act “nearly as quickly as it did prior to the Deepwater Horizon disaster, even though the enormously negative consequences of inadequate containment planning in that incident unquestionably altered the landscape for consideration of such applications,’’ they said.

U.S. offshore regulators said they may deny the seven Gulf of Mexico drilling permits Feldman singled out for quick action if they’re forced to act by the judge’s deadlines. Feldman ordered government action by March 19 on five permits and by March 31 on two additional permits.

Regulators claim the permitting process is a cooperative dialogue between the agency and operators, which can take days or months to complete. These seven permit applications are incomplete and “cannot be approved in their current state,’’ according to a March 4 filing by the U.S. Bureau of Ocean Energy Management, Regulation and Enforcement.

Shallow-Water Permits

As of Feb. 25, the agency had 270 shallow-water permits and 52 deep-water permits awaiting regulatory approval, the government lawyers said. The office has just six drilling engineers to process all permit applications pending in the Gulf of Mexico, they said.

“The court’s orders have created a situation in which these applications must take a back seat’’ to the seven permits singled out for rapid decisions by Feldman, Michael Saucier, the agency’s Gulf of Mexico regional field operations supervisor, said in a statement attached to the March 4 filing.

This reprioritization of the agency’s resources isn’t fair to shallow-water drillers with less complicated applications or to operators with more urgent needs for permits, Saucier said. The end result could be a further delay in the resumption of widespread Gulf drilling activity, not the acceleration the judge intends, he said.

Obama Administration

The Obama Administration suspended all drilling in waters deeper than 500 feet in 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 Plc off the Louisiana coast in April.

After offshore companies and regional business and political leaders sued in June, Feldman threw out the government’s moratorium as overly broad and punitive to the Gulf Coast economy.

Interior Secretary Kenneth Salazar immediately announced he’d find a new way to block offshore drilling and, in July, imposed an almost identical ban. When that ban was also challenged in court, Salazar withdrew it in October before Feldman could rule on its validity.

Feldman’s Order

When oil companies and offshore drillers -- led by Ensco Offshore Co. -- complained that regulators were continuing a de facto drill ban by refusing to process new permits, Feldman ordered quick action on the seven stalled permits tied to companies leading the legal challenge. Some of these permits had been pending for as much as nine months, when prior to the BP spill, regulators took, on average, two weeks to approve drilling applications.

Sean O’Neill, vice president of Ensco, didn’t immediately return a phone call today seeking comment on the government’s request for an emergency stay of the judge’s order.

Regulators defended the delays as necessary and prudent until the oil industry improves offshore drilling safety and oil-spill cleanup capabilities. Feldman, in his Feb. 17 order to jump-start the permitting process, said while some delay was reasonable, “not acting at all is not a lawful option.’’

The U.S. Bureau of Ocean Energy Management, Regulation and Enforcement approved the first drilling permit since the Deepwater Horizon disaster on Feb. 28.

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

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