Judge: Settlement discussed in drilling lawsuit

A federal judge said Tuesday that settlement possibilities were discussed at a closed-door hearing at which lawyers for the government and oil and gas industry sparred over delays in issuing deepwater offshore drilling permits.

U.S. District Judge Martin Feldman, who barred reporters from the status conference that he decided to hold in his chambers rather than the courtroom, issued a filing later that mentioned the settlement issue but did not provide details.

It was unclear if the settlement possibilities that were raised involved Ensco Offshore's concerns about the permitting and inspection process or some other issue in the litigation that was prompted by the government's ban on deepwater drilling that was imposed after the Gulf of Mexico oil spill.

The ban was lifted Oct. 12. Ensco, a company that owns and operates drilling rigs, said that since then, the government has not issued a single permit that would allow the resumption of any previously suspended drilling activities.

The government doesn't seem to dispute that allegation, saying in a late Monday filing that it must ensure applications meet regulations toughened after the Gulf of Mexico oil spill.

Since Oct. 12, the government has received one application for a permit to drill a new well and one to drill a sidetrack. It also received three revised applications for permits to drill. All are pending. The government said it also is reviewing an unspecified number of applications filed before the moratorium was lifted to make sure they comply with toughened regulations.

The moratorium was ordered in the wake of the April 20 explosion on the BP-leased Deepwater Horizon rig. The blast killed 11 workers and spawned a massive oil spill in the Gulf of Mexico off the Louisiana coast.

Feldman set a July 25, 2011, date for a bench trial on the remaining issues in the litigation over the drilling moratorium.

Feldman has already ruled that the Interior Department improperly issued new safety rules after it imposed the initial moratorium. Feldman said the rules imposed in a June 8 notice to offshore operators can't be enforced because the government issued them without soliciting public comment.

The Interior Department has said it was replacing the June 8 safety rules with new guidelines.

Feldman struck down the Interior Department's first moratorium on deepwater drilling in June, saying the government didn't justify the limits on existing and proposed deepwater projects.

But the judge hasn't decided whether officials were justified in imposing a second moratorium on July 12.