Oil spills, personal finance, and judicial ethics

By now, most people know that after the sinking of British Petroleum’s Deepwater Horizon rig, and the resulting oil spill in the Gulf of Mexico, the Obama administration imposed a six-month moratorium on offshore drilling.

A number of companies that ferry people and supplies and provide other services to offshore rigs challenged the moratorium in the U.S. Federal Court.

On June 21, 2010, Judge Martin Feldman issued a ruling that overturned the moratorium.

It’s since emerged that Judge Feldman has a number of investments in the oil industry, which has lead WSJ Law Blog to ask if he should have stepped aside.

Probably not.

The Guide to Judiciary Policy, as adopted by United States Federal Courts, provides that a judge should disqualify himself where he, a fiduciary, spouse or minor child residing in the judge’s household had a financial interest in the matter that is likely to be “substantially” affected by the outcome of the proceeding.

Apparently, Judge Feldman held less than $15,000 worth of stock in each of a number of companies that offered contract offshore drilling services, and operated rigs in the Gulf of Mexico.  He also held between $15,000 and $50,000 in a company that designed submersible drilling rigs.

The reports are quick to point out, fairly, that none of the companies in which Judge Feldman is invested was a party to the litigation.  That said, the Guide contains much of the usual language about avoiding the appearance of impropriety.

That appearance only arises, however, where a reasonable person, apprised of all the facts, might conclude that there might be bias.  The question becomes whether his decision might substantially affect the value of his investments.

Firstly, none of the companies in which he is invested was a party to the litigation.

While it is easy for media to point to dollar value of the investments, the reality is that there was a moratorium in place until 2008.  In any event, a moratorium might affect exploration around American coastal areas, but there is a very large amount of offshore exploration taking place in many places around the world.  How substantially would Judge Feldman’s decision affect the value of his investments?

In all likelihood, not that much, it at all.

It should also be noted that Judge Feldman’s investments are a matter of public record, yet none of the lawyers involved in the case objected to his presiding over the hearing.

All of this is indicative of the importance the parties gave to his investments, and how they might affect his decision-making.

In the end, the reality is that no reasonable person apprised of the facts could conclude that he was likely to be influenced by his financial interests.  The media attention surrounding Judge Feldman’s private investments is unwarranted.