Feldman Rules Against Ensco, Permitorium To Continue

A lawsuit filed in the New Orleans-based Eastern District of Louisiana federal court by Ensco Offshore Co. attempting to force the Department of the Interior to speed up permits for deepwater offshore exploration fell short of its mark today, as federal judge Martin Feldman ruled in favor of the government.

Feldman’s 29-page ruling found no legal support for Ensco’s proposition that the law requires the government approve drilling permits within a specific time period, indicating that the only avenues truly available to Louisiana’s offshore oil indusry to resurrect itself in the face of hostile action by the feds since the Deepwater Horizon accident last April are legislative or regulatory.

Ensco Offshore Co., an offshore services company, claims the government has wrongfully delayed the issuance of permits for deepwater drilling since it lifted a moratorium on the projects in October.

During a hearing Wednesday, a company lawyer noted that offshore operators have submitted 13 permit applications for drilling activities that were barred under the moratorium, and none have been approved in the past three months. The attorney, Adam Feinberg, suggested Feldman could rule that BOEM must process these applications within 30 days.

Feldman, however, said he isn’t prepared to set deadlines for the government to act on five pending permit applications in which Ensco has a contractual stake. He denied Ensco’sClick here to find out more! motion for a preliminary injunction “without prejudice,” which means the company can renew its request at a later date.

Ensco “fails to show how the public interest weighs in favor of granting a preliminary injunction because this court’s authority to order time-sensitive permits needs more briefing,” the judge wrote in his 29-page ruling.

The issue of the 30-day time period for permit approval has come up before. Last year, when the CLEAR Act was being debated and then-U.S. Rep. Charlie Melancon (D-Napoleonville) tried to take credit for offering an amendment that would supposedly end the then-existent moratorium on deepwater drilling, part of the stink which ensued when Melancon asserted that his legislation was similar to that offered by Sen. David Vitter. Both had in their amendments legislation essentially saying the following:

(b) Determination on Permit- Not later than 30 days after the date on which the Secretary makes a determination that an applicant has complied with paragraphs (1) and (2) of subsection (a), the Secretary shall make a determination on whether to issue the permit.

At the time, the Louisiana Oil & Gas Association put out a communique criticizing that language, and particularly in Melancon’s amendment, as insufficient…

The Louisiana Oil & Gas Association strongly opposes this amendment to the CLEAR Act, which is soon to be up for debate. While the title of this amendment perceives to lift the ban on deepwater drilling in the Gulf of Mexico, it in fact will grant overarching authority to the Secretary of the Interior.

Concerns center around “Clause B – Determination of Permit” located on page 2 of the amendment. As it is written, this language would grant the Secretary the authority to “make a determination on whether to issue” a permit. We believe a better structuring of this section should read that if an applicant complies with paragraphs (1), (2) and (3) of subsection (a) the Secretary shall issue the permit.

It appears, at least from the standpoint of getting offshore drilling back up and running, that LOGA was right – though the fact that the CLEAR Act died in the Senate anyway makes the question moot. Feldman can’t find anything in the law which requires that the federal organ tasked with approving drilling permits actually approve drilling permits, and Congress has failed to create a statute making that obligation manifest.

Which means that if the Obama administration wants to choke off the offshore oil business, there isn’t an enormous amount anyone can do about it until after the 2012 elections.

Crude oil sits at 91 dollars and change right now, though. Nobody really thinks it’s going down anytime soon. That’s a fact which more than any other may offer some relief to the desperate companies along the Gulf Coast.



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