Supreme Court Won't Hear Case Over Rejected Offshore Oil Drilling Permit

Supreme Court Won't Hear Case Over Rejected Offshore Oil Drilling Permit

WASHINGTON, D.C. - (Mealey's) The U.S. Supreme Court on April 25 denied ATP Oil & Gas Corp.'s petition for certiorari seeking review of a Fifth Circuit U.S. Court of Appeals ruling affirming the August 2006 denial of an application that would have allowed the company to commence offshore drilling in the Outer Continental Shelf (OCS) in the Gulf of Mexico (ATP Oil & Gas Cop. v. Department of the Interior, et al., No. 10-1072, U.S. Sup.).

In February 2006, the U.S. Department of the Interior's Mineral Management Service (MMS) implemented the Lack-of-Rig Notice to Lessees (Lack-of-Rig NTL) in response to the shortage of drilling rigs in the OCS as a result of damage caused by Hurricanes Katrina and Rita.  According to ATP, the requirements in the Lack-of-Rig NTL were intended to make it easier to have requests for Suspension of Operations (SOO) approved.  After working with the MMS and the owner of a contracted rig, ATP filed its Lack-of-Rig NTL for a 60-day SOO in July 2006 that would have allowed it to commence offshore drilling.  Although the MMS tentatively agreed to grant the extension, it denied the application on Aug. 29, 2006, on the ground that ATP did not have an approved exploration plan or an application for permit to drill. 

ATP appealed the ruling to the Interior Board of Land Appeals (IBLA), which upheld the MMS's decision.  The company then asked the U.S. District Court for the Eastern District of Louisiana for judicial review of the decisions.  On Aug. 29, 2009, Judge Mary Ann Vial Lemmon concluded that the decisions of the MMS and IBLA were not arbitrary or capricious. 

The company then asked the Fifth Circuit for review, asserting that Judge Lemmon erred in her ruling because she based her decision on arguments by MMS that were first raised on appeal.  ATP also requested that the federal appeals panel address whether the MMS's decision was proper even though it was contrary to the newly enacted Lack-of-Rig NTL standards.  A Fifth Circuit panel conducted a de novo review of the MMS's and IBLA's decisions and rejected ATP's arguments in a per curiam opinion issued Sept. 23, 2010.  The panel found no error in the MMS's and IBLA's decisions because ATP did not have an executed drilling-rig contract, an approved exploration plan or application for a permit to drill when it applied for its SOO. 

ATP filed a petition for certiorari on Feb. 28, and it was addressed by the high court in its April 22 conference. 

[Editor's Note:  Full coverage will be in the May issue.  For all of your legal news needs, please visit www.lexisnexis.com/mealeys.] 

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