La. DNR: Federal Ruling Protects GOM's Role in Jobs, Domestic Energy

Louisiana Department of Natural Resources (DNR) Secretary Scott Angelle said that Friday's refusal by the U.S. Court of Appeals for the 11th Circuit to reverse federal regulatory issuance of a Gulf of Mexico deepwater exploration plan approved in May 2011 is an important victory for job creation and economic opportunity in Louisiana and its neighboring Gulf Coast states.


Several environmental groups joined to file suit against federal regulators in June 2011, asking the 11th Circuit to reverse the approval for a Shell Offshore supplemental Exploration Plan (EP) seeking to expand an already existing EP – and calling for the setting of precedent of a level of regulation that would effectively halt the offshore energy exploration industry and further threaten jobs and local economies for years to come.


"The regulatory burdens called for in that suit would have jeopardized everything this state has worked for, and that many working families in this state have prayed for, in restoring a pace of permitting and drilling in the Gulf of Mexico that continues to support new jobs and new economic growth," Angelle said. "I am pleased to see that the Court's decision was based in some of the same values we have promoted in our efforts to work with the industry and federal regulators to create a stable and efficient permitting process – the critical need to approach regulation in a manner that balances the need for energy, the need for economic development and the need to maintain safety and a clean environment."


The Court noted that the federal Bureau of Offshore Energy Management (BOEM) had appropriately taken environmental factors into account in approving the plan, noting specifically that concerns in the wake of the Deepwater Horizon accident had been considered and weighed against changes in regulation since then.


In its written decision, the court stated, "BOEM engaged in extensive consideration of the impact of the Deepwater Horizon disaster on the environment and BOEM's ESA (Endangered Species Act) obligations. BOEM stated that the risks revealed by the Deepwater Horizon disaster are mitigated by 'new notices of lessees and safety regulations,' as well as 'improvements in containment technology.'"


The decisions went on to conclude that "BOEM's decision to approve the Shell EP was not arbitrary or capricious and instead reflects the agency's balance of environmental concerns with the expeditious and orderly exploration of resources in the Gulf of Mexico."


Attorneys representing the federal Bureau of Energy Management (BOEM), the states of Louisiana, Alabama and Mississippi; as well as the Shell Offshore, were part of the team defending against the suit. The Shell EP in question is for a field lying within federal waters designated as Alabama's Outer Continental Shelf (OCS) area, that is also within 72 miles of Louisiana's coast. The plan lays out a significant amount of drilling activity and anticipates making use of Louisiana support facilities, as well as some Mississippi assets.


Angelle, who had been tasked by Gov. Bobby Jindal in 2010 to be the state's point person in working through ongoing regulatory and permitting issues that followed the deepwater drilling ban, recommended that the state of Louisiana intervene in the suit on the side of the federal government and led the effort to bring the other two affected Gulf Coast states – Alabama and Mississippi – to do the same.


"In recent weeks, we have seen the highest level of drilling rig activity in the federal waters of the Louisiana OCS since the moratorium was declared in 2010, but still have not reached the level of activity and production that were expected prior to the moratorium," Angelle said. "While the rest of the nation has experienced a near-tripling in the average number of rigs drilling for oil since that time, we are still working to bring the Gulf of Mexico – which had been the No.1 oil-producing province in the nation – back to where it was two years ago. The results of this week's Central Gulf of Mexico federal lease sale, with the industry committing $1.7 billion in lease bids, shows that companies are ready to get back to work. We must be just as committed in making sure the opportunity for robust and responsible development of the Gulf is not wasted."


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