US Interior to Act on Permits by March Deadline

WASHINGTON(Dow Jones Newswires), March 2, 2011

A U.S. official said Wednesday that the Interior Department will meet a court-imposed deadline to act on five deep-water drilling permit applications before the end of this month.

Interior Secretary Ken Salazar also said more permits approvals are coming.

"There are other [permits] that will be issued in the days ahead that will become a template for other deep-water permits to be issued," Salazar said before the Senate Energy and Natural Resources Committee.

A federal judge on Feb. 17 ordered the department to act on five pending applications for offshore-drilling permits within 30 days, ruling in favor of London-based Ensco, which had sued the Interior Department.

The judge's ruling addressed the length of time the Interior Department had taken to review the permits. The ruling extended the order to two other applications Tuesday.

"We will comply with the court order and make the decision up or down within the time frame required," David Hayes, deputy secretary of the Interior Department, said at the hearing.

Since the Obama administration lifted a moratorium on deep-water permits last year, it has slowed the pace at which new drilling permits are issued, drawing intense criticism from the drilling industry and its congressional allies, pressure that continued on Wednesday.

"When it comes to the energy policy, this administration is picking winners. It is picking losers" Sen. John Barrasso (R., Wyo.) said Wednesday.

The administration said it has needed more time to evaluate whether new permit applications demonstrate the ability to contain an underwater spill, among other safety considerations.

As Congress considers the Interior Department's funding levels, Salazar also said his department needs a larger budget to pick up the permitting pace. Without more funding, "we may never return to the pre-Macondo rate of permitting," Salazar said, referring to the spill at BP's Macondo well in the Gulf of Mexico last year.

Earlier this week, the Interior Department issued the first permit since the moratorium was lifted. That decision followed the industry's announcement in February that it had developed a system capable of containing some underwater spills.

But Interior Department officials said Wednesday that other permits could still be held up because the system isn't quite ready to cover all deep-water wells. Hayes noted that the system couldn't, for example, contain at depths below 10,000 feet.

"There is additional work that needs to be done," Salazar said of the containment systems. Industry groups are working to improve the systems.

The department also indicated it could be challenging the federal judge's authority to order it to act on permits within a given time frame.

"The judge in this particular case, in my view, is wrong," said Salazar. "We'll argue the case because I don't believe the court has a jurisdiction to basically tell the Department of Interior what my administrative responsibilities are."

"We are examining our options in terms of an appeal," Salazar later added.

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