OFFSHORE DRILLING:

Appeals court halts judge's order for action on deepwater permits

A federal appeals court yesterday put a temporary halt to a district court order requiring the Interior Department to take action on seven deepwater drilling permits by the middle of the month.

The 5th U.S. Circuit Court of Appeals in New Orleans granted the agency's request for a temporary stay of U.S. District Judge Martin Feldman's February orders to issue decisions on deepwater drilling permits from Ensco Offshore Co. and ATP Oil & Gas Corp. (E&ENews PM, Feb. 17).

While the Bureau of Ocean Energy Management, Regulation and Enforcement is working to comply with the orders, Interior Secretary Ken Salazar earlier this month said Feldman had likely overstepped his court's jurisdiction (Greenwire, March 2).

Interior two days later filed an appeal with the 5th Circuit in which it warned that Feldman's deadline could ultimately jeopardize the companies' chances of obtaining their permits.

"The orders only work to disrupt BOEMRE's more efficient, iterative practice of communicating application inadequacies to the applicant so that they can be corrected," said a 12-page filing from federal attorneys. "BOEMRE instead now may be required to deny the applications outright, which in turn would frustrate Congress' stated preference that the Outer Continental Shelf be made available for 'expeditious and orderly development subject to environmental safeguards.'"

The appeals court's ruling yesterday drew immediate rebuke from Louisiana lawmakers who have criticized the government's pace of permitting in the Gulf of Mexico.

"While I am disappointed to hear that the court ordered the stay, it doesn't change the issue that the agency isn't issuing offshore permits in a timely manner," said Sen. Mary Landrieu (D) in a statement.

Landrieu said an acceleration in permitting is needed to support jobs in her home state and produce more domestic oil and gas amid uncertain global supplies and rising energy prices.

Sen. David Vitter (R) -- who is maintaining a hold he placed last month on the Fish and Wildlife Service's nominee for director, Dan Ashe, until Interior approves 15 deepwater permits -- issued a similar reaction to the stay.

"[Department of Justice's] filing to Judge Feldman's ruling highlights that the Interior Department's math is not adding up," Vitter said. "It is not possible for there to be 'too few permits' awaiting review, and simultaneously 'too many' permits being reviewed to make issuing a particular handful problematic."

Since late February, Interior has permitted two deepwater permits for drilling activities previously banned under a pair of moratoriums last year in the wake of the BP PLC oil spill in the Gulf of Mexico.

Interior has permitted 24 additional drilling activities in deepwater since the moratorium was lifted last October. The agency in March has received 11 shallow water and 10 deepwater permit applications, a rate of increase that suggests industry is becoming more confident in the new regulations established since the BP spill, Interior said.

Salazar in a conference call yesterday said Interior is hopeful it will issue additional deepwater permits in the coming days.

But in budget hearings earlier this month, Salazar warned that returning to a pre-Macondo rate of offshore permitting in the Gulf was largely dependent on whether BOEMRE receives adequate funding increases from Congress.

Click here to read Interior's appeal.