The US government on Friday filed a request with the 5th Circuit Court of
Appeals to stay a lower court's injunction against a six-month deepwater
drilling moratorium.
"The district court committed legal error and abused its discretion in
issuing its preliminary injunction order," according to the filing.
On June 22, Federal Court Judge Martin Feldman ruled that the federal
government's decision to ban drilling activity in water deeper than 500 feet
for six months was "arbitrary and capricious" and would lead to irreparable
harm to companies operating in the deepwater Gulf of Mexico.
Feldman's ruling followed a suit asking for relief from the moratorium
from a dozen offshore companies, including Hornbeck Offshore.
In its arguments for a stay, the government said the "district court
second-guessed [the Department of the Interior's] decisions and held that the
challenged suspensions were 'blanket, generic, indeed punitive.' The district
court erred, and Interior respectfully requests that this court issue a stay
of the district court's order."
The filing also argues that the court "overruled those decisions and
substituted its own views about the proper balance of risk and cost."
The government says in its filing that the deepwater suspensions "are
crucially important to protect human health and the environment from another
deepwater drilling disaster while Interior investigates the Deepwater Horizon
event and acts to prevent another similar disaster from happening."
The government argues against Hornbeck's filing with the court that the
moratorium will harm it by using Hornbeck's own statements made to investors.
"Just before challenging the suspension orders, Hornbeck filed a
statement telling investors that only 21 of its 55-vessel 'upstream'
fleet was supporting deepwater drilling operations in the Gulf," the
government filing said.
"Of these 21 vessels, only nine were operating under time charter
contracts. Hornbeck told investors that it would 'mitigate its exposure' to
the uncertainties in the regulatory environment 'by bidding additional vessels
into foreign markets and domestic non-oilfield markets,' and that it remained
'reasonably optimistic about its ability to further diversify its revenue
base," the filing said.
The motion for a stay is accompanied by a declaration from Walter
Cruickshank, deputy director of the Bureau of Ocean Energy Management in which
he says that an injunction "will allow risky drilling in deepwater conditions
to resume, relying on blowout preventers resting on the seafloor hundreds of
thousands of feet below the surface, difficult to access in the event they
fail to function as intended."
He added: "If [the government] is denied the ability to suspend
operations while enhanced technology is installed and tough regulatory
standards are put in place, it has no means of insisting that its lessees
operate with a greater margin of safety than BP and Transocean did."
--Pam Radtke Russell, newsdesk@platts.com
Appeals to stay a lower court's injunction against a six-month deepwater
drilling moratorium.
"The district court committed legal error and abused its discretion in
issuing its preliminary injunction order," according to the filing.
On June 22, Federal Court Judge Martin Feldman ruled that the federal
government's decision to ban drilling activity in water deeper than 500 feet
for six months was "arbitrary and capricious" and would lead to irreparable
harm to companies operating in the deepwater Gulf of Mexico.
Feldman's ruling followed a suit asking for relief from the moratorium
from a dozen offshore companies, including Hornbeck Offshore.
In its arguments for a stay, the government said the "district court
second-guessed [the Department of the Interior's] decisions and held that the
challenged suspensions were 'blanket, generic, indeed punitive.' The district
court erred, and Interior respectfully requests that this court issue a stay
of the district court's order."
The filing also argues that the court "overruled those decisions and
substituted its own views about the proper balance of risk and cost."
The government says in its filing that the deepwater suspensions "are
crucially important to protect human health and the environment from another
deepwater drilling disaster while Interior investigates the Deepwater Horizon
event and acts to prevent another similar disaster from happening."
The government argues against Hornbeck's filing with the court that the
moratorium will harm it by using Hornbeck's own statements made to investors.
"Just before challenging the suspension orders, Hornbeck filed a
statement telling investors that only 21 of its 55-vessel 'upstream'
fleet was supporting deepwater drilling operations in the Gulf," the
government filing said.
"Of these 21 vessels, only nine were operating under time charter
contracts. Hornbeck told investors that it would 'mitigate its exposure' to
the uncertainties in the regulatory environment 'by bidding additional vessels
into foreign markets and domestic non-oilfield markets,' and that it remained
'reasonably optimistic about its ability to further diversify its revenue
base," the filing said.
The motion for a stay is accompanied by a declaration from Walter
Cruickshank, deputy director of the Bureau of Ocean Energy Management in which
he says that an injunction "will allow risky drilling in deepwater conditions
to resume, relying on blowout preventers resting on the seafloor hundreds of
thousands of feet below the surface, difficult to access in the event they
fail to function as intended."
He added: "If [the government] is denied the ability to suspend
operations while enhanced technology is installed and tough regulatory
standards are put in place, it has no means of insisting that its lessees
operate with a greater margin of safety than BP and Transocean did."
--Pam Radtke Russell, newsdesk@platts.com
