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July 8, 2010

Hollow victory for industry as Salazar loses another round in court

A federal appeals court on Thursday rejected the Obama administrationŐs request stay the June 22 preliminary injunction by U.S. District Judge Martin Feldman prohibiting the administration from enforcing its six month moratorium on offshore drilling.

The victory was a slight one for the offshore industry. The motion for stay pending appeal was denied not only because Interior Secretary Ken Salazar "failed to demonstrate a likelihood of irreparable injury if the stay is not granted," but also because he "made no showing that there is any likelihood that drilling activities will be resumed pending appeal."

One positive development from an industry perspective was that the court ordered that the appeal be expedited to a merits panel, so that the appeal of the preliminary injunction can be argued on its merits during the week of August 30.

Nobody is likely to start drilling until that appeal is decided. And even if the court decision is favorable to industry, there are many more obstacles being placed in its way by the administration. Not the least of these is a de facto moratorium in place as a result of Secretary Salazar's announcement that he will issue a new moratorium order to replace that rejected by Judge Feldman.

What's more, companies wanting to start drilling will face new regulatory hurdles. The New Orleans Times Picayune quotes Interior Department spokeswoman Kendra Barkoff as saying any resumption of drilling on the deepwater exploratory wells would require the companies to seek revised permits and the approval of the department's Bureau of Ocean Energy Management, Regulations and Enforcement. She said any deepwater drilling operation would have to comply with new safety directives issued June 8 and 18.

Read the Times Picayune story HERE


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