Federal regulators have asked a judge to scrap a lawsuit that aims to overturn the Obama administration's deepwater drilling ban.

During a hearing today in New Orleans, lawyers for Interior Secretary Ken Salazar asked U.S. District Judge Martin Feldman to throw out a lawsuit they say is irrelevant because the department revised the moratorium that sparked the case. Feldman said he would not make an immediate decision. He has directed both sides to file additional briefs before next Wednesday.

At issue is the Obama administration's six-month moratorium on deepwater drilling that was imposed in late May as a result of the Gulf of Mexico oil spill. Hornbeck Offshore Services and other oil-field services companies sued Salazar and regulatory agencies in June, saying the ban would have severe economic consequences. Feldman overturned the moratorium in late June after the first hearing on the suit, and an appeals court panel last month refused the government's bid to put Feldman's order on hold before it decides the case.

Shortly after the appeals decision, Salazar issued a new directive to reinstate a new -- but similar -- moratorium. Now, Interior Department lawyers want the Hornbeck suit dismissed, arguing that the new rules make the litigation moot.

"No matter what happens to this case, the July directive will remain in place and drilling operations suspended under it will remain suspended," Guillermo Montero, a lawyer for Interior, said at today's hearing, Bloomberg reported.

Lawyers for Hornbeck said the current ban is still having a negative economic impact.

"What the government calls the July 12 moratorium is the same animal," said Carl Rosenblum, Hornbeck's lawyer, at today's hearing.

But the judge replied, "You've not hunted that same animal. You've hunted an animal that's extinct."

Feldman, who said the original ban was overly broad, wants the government to provide a "specific comparison" of the information it used to issue the May moratorium and the information that led to the July moratorium. He said he wants to ensure that the government did not use the BP PLC spill "and generalize it to the entire industry."

Feldman is slated to preside over a separate hearing later this month in a suit filed by Ensco Offshore Co. that seeks to overturn the July 12 order.

Markey wants BP to accept flow-rate estimate

Rep. Ed Markey (D-Mass.) wants BP to own up to the amount of oil that has spilled into the Gulf this summer.

The federal government last week estimated some 175 million gallons of crude sullied Gulf waters over the life of the spill, but BP has remained quiet on the issue. Markey, chairman of the House Energy and Environment Subcommittee and the House Select Committee on Energy Independence and Global Warming, is calling on the oil giant to accept the government's estimate so damage claims can move forward.

In a letter to BP America President and CEO Lamar McKay, Markey said BP's acceptance of a flow rate number is "fundamental to its claim that it 'is doing everything it can to make this right' for the families and businesses of the Gulf."

"Oil may have stopped flowing from the well, but the suffering in the region continues," Markey wrote. "Low-balling or litigating the flow-rate estimate would be just one more insult to the people of the Gulf."

Groups battle BP's compensation fund plan

Environmental and liberal groups are attacking a potential White House proposal to use money from BP's future production as collateral for the $20 billion claims fund it set up under administration pressure.

In a letter today to Obama, Public Citizen energy program director Tyson Slocum urges the president to reconsider using revenue from BP's existing 149 Gulf wells as collateral for the fund. The Natural Resources Defense Council and other groups have also blasted the idea, saying it could encourage more drilling.

The concerns come after The Wall Street Journal yesterday reported that administration officials and BP discussed the idea as a way to ensure BP makes good on its promise to shore up the fund. The company made its initial $3 billion investment into the fund earlier this week.

"[The proposal] ensures that BP maintains a robust presence in offshore oil drilling despite indications that BP's management of such operations have placed workers and the environment at risk," Slocum wrote. "The company has the worst environmental and worker safety record in the business. But the administration might be less likely to address those problems if it means the company can't continue its profitable business-as-usual style."

IEA warns about spill's impact

The International Energy Agency today warned that the Gulf spill has imperiled the industry's ability to find new oil reserves.

In its monthly oil market report, the Paris-based energy watchdog said legislation being considered in Congress could increase companies' potential financial liabilities so much that small and medium-size companies would be driven out of the deepwater industry.

"Macondo also places the ability of the industry to access important new reserves on a knife edge," the report says. "Some 30 percent of existing global oil, and nearly 50 percent of new supplies by 2015, needs to be sourced from offshore, much of it from deep water."

BP delays Libyan project

BP has delayed the start of its new exploration project off the coast of Libya.

The company said it would start drilling its first well there at some point later this year and stressed that it and Libyan authorities believe the drilling would be safe.

Environmental and activist groups in Europe have raised concerns that an accident similar to the one in the Gulf of Mexico could spur an ecological disaster in the Mediterranean. BP did not tie its decision to postpone drilling to the European concerns, instead saying it needed more time to ensure all its plans are in order, The Wall Street Journal reported.

Last month, BP had said it would be ready to start drilling the new project "within weeks."

Click here to read Markey's letter.

Click here to read Public Citizen's letter to Obama.