New evidence reveals willful failure to recuse from oil drilling moratorium case despite full knowledge of conflicts-of-interest...
By Ernest A. Canning on 6/26/2010, 4:06pm PT  

Guest blogged by Ernest A. Canning

On Thursday The BRAD BLOG posted an article in which I offered the legal underpinnings supporting the case for the impeachment of U.S. District Court Judge Martin Feldman in light of his failure to recuse himself due to conflicts-of-interest in Hornbeck Offshore Services vs. Salazar [PDF].

The case for unseating the federal judge has grown still stronger at week's end, with new disclosures of his investments in the off shore oil drilling industry and what appears to be a very conscious decision to remain on the case despite them.

New evidence now suggests that the actions of Judge Feldman, at the very outset of the moratorium case, are particularly damning. Those new revelations support not only a case for impeachment against the Reagan-appointee who, as has also come to light, is reportedly a very close friend of Supreme Court Justice Antonin Scalia, but they also reveal a lifetime appointee to the federal bench who is simply unfit to remain in office...

Worse Than Previously Known

Last Tuesday, the Louisiana federal judge rendered an astounding decision to overturn the Obama Administration's six month moratorium on deep water exploratory drilling, affecting some 30 rigs in the Gulf, even as more than three thousand production rigs would remain in full operation. Judge Feldman ruled that the moratorium, adopted in the wake of the disaster still unfolding in the Gulf, was "arbitrary" and "capricious" --- the language required for a federal judge to overturn an agency's decision under the Administrative Procedures Act. The government has said they will appeal the decision.

Quoting from a Democracy Now! news report --- though I could have done so by linking to any number of media reports --- I noted that Judge "Feldman has extensive stock holdings in energy companies, including Transocean, which owned the Deepwater Horizon oil rig where the explosion occurred, and Halliburton, which also performed work at the site. Judge Feldman also owns stock in two of BP’s largest shareholders, BlackRock and JPMorgan Chase."

That original report resulted in a number of anonymous oil industry apologists quickly descending on our comments section to level uncited claims that Judge Feldman had divested his industry holdings two years ago.

"He owned those stocks in 2008. He didn't own them when he was assigned the case," anonymous commenter "URSheep" sniffed, adding: "EPIC FAIL".

"Who knew stocks he no longer holds can be held up as a conflict of interest...oh, that's right, this blog and most media outlets," snarked "Menlo Bob" who concluded: "Thanks guys for the mis-information."

As it turns out, however, the original media reports on Judge Feldman's holdings in the oil industry were based on his 2008 financial disclosure statement, the latest available at the time. They were not, as his newly released 2009 financial disclosure statement has since revealed, fully up to date. Indeed, we now learn that Judge Feldman sold-off his interest in Halliburton and some of his offshore holdings, but did not divest his interest in "all" of those holdings --- not by a long shot.

Judge Feldman continues to be heavily invested in the oil industry, including in BP's top shareholder, BlackRock, and, perhaps even more incredibly, until the very day he announced his finding in the case, he owned stock in Exxon-Mobil, owner of one of the Gulf rigs temporarily shut down by the moratorium.

Exxon-Mobil Stock Sold on Day of Ruling

As reported Friday by Bloomberg Businessweek, on June 22 --- just last Tuesday --- the very day that he issued his extraordinary decision, Judge Feldman's stock broker, under his direction, sold off the judge's investment in shares of Exxon-Mobil. As Businessweek observed, "Exxon, who was not a party litigant in the moratorium case, nevertheless had one of the 33 rigs in the Gulf..." which would have been directly affected by Judge Feldman's decision.

In his new financial disclosure, Judge Feldman stated:

The Exxon stock…was sold at the opening of the stock market on June 22, 2010 prior to the opening of a court hearing on the Oil Spill Moratorium Case.

But that statement is deceptive. Upon closer inspection, Judge Feldman's June 22 decision reveals that Hornbeck Offshore Services filed its federal lawsuit on June 7; that, on June 9, Hornbeck filed "a motion for preliminary injunction prohibiting the government from enforcing the drilling moratorium" and that Judge Feldman, ostensibly "because of the national importance of these issues, ordered an expedited hearing for June 21, 2010."

In other words, the "hearing" on the preliminary injunction motion took place one day before the federal judge hearing the case dumped his Exxon-Mobil stock. A "hearing" on the 22nd would have merely been a formality wherein Judge Feldman announced his finding --- the one he had come to while he was still the proud owner of the Exxon-Mobil stock. That ownership was an impropriety which Judge Feldman obviously understood to constitute a conflict-of-interest. Why else would he have instructed his broker to dump it?

"When he began hearings on the case, right up until the day of the ruling, he was still an Exxon shareholder," MSNBC's Rachel Maddow Show reported on Friday night (full video at end of article). "He was holding hearings on a case that would directly affect his own financial future --- the financial future of a company he held stock in."

If we are to take Judge Feldman at his word; that he did not appreciate the significance of his financial interest in Exxon-Mobil until after the market had closed on the 21st --- Maddow reports they were told by his office that "he didn't learn that he was an Exxon shareholder until Monday night, the night before his ruling --- the appropriate course would not have been to race to dispose of his stock holdings even as he was drafting his decision. An ethical judge would have, at that point, come to the realization that his role in the case was hopelessly compromised by --- at the very least --- the appearance of a serious conflict-of-interest. The appropriate course was an immediate recusal so that the issue could be taken up by a judge who was not burdened by such a conflict.

Invested in BP, Invested in Transocean

It gets worse. As Maddow reported on Friday, Judge Feldman remains "significantly invested" in several funds managed by the investment firm BlackRock, far and away BP's largest single shareholder.

In covering the new "bombshell", Maddow notes a June 17th New York Times report finding that "No single institution has more money riding on BP than BlackRock, the money management firm that is BP’s largest shareholder."

BlackRock holds "more than one billion shares of BP's stock," explains Maddow. "When BP's financial future is at stake in the Gulf of Mexico, so is BlackRock's."

Moreover, contrary to Bloomberg Businessweek's report, Judge Feldman did not fully divest his interest in Transocean, Inc. As revealed by a May 14, 2010 Minute Order [PDF] Judge Feldman issued in Williams vs. Transocean, Ltd., the judge acknowledged:

"The Court owns stock in Ocean Energy, Inc. which is owned by Transocean, Inc.

Counsel shall within ten days notify the Court if there is any relationship between Transocean, Inc. and Transocean, Ltd., Transocean Offshore Deepwater Drilling, Inc. or Transocean Deepwater, Inc."

The order is quite revealing as it demonstrates that Judge Feldman has taken an exceedingly narrow view of when his duty of recusal arises. He recognizes that he must recuse himself if one of the parties to a case is affiliated with his financial interest.

There may well be oil industry litigation that comes before him that would not give rise to a conflict, such as a contract dispute between an oil company and an oil services company. Absent a financial interest in either party or the outcome of the dispute, it would be well within the judicial cannons of ethics for Judge Feldman to handle the dispute

In the moratorium case, while Judge Feldman may have no direct ties to the litigating party, Hornbeck Offshore Services, his various investments mean that he has a very direct financial interest in the issue to be decided. The conflict-of-interest that arises from Judge Feldman's financial connection to the issue mandated a recusal.

Unfit to Serve

The alacrity with which he both scheduled the hearing on the motion for a preliminary injunction and in which he issued his decision, coupled with his eleventh hour dumping of his Exxon-Mobil stock, provide an overwhelming inference that Judge Feldman had a result in mind even before he received the government's responsive pleadings or heard any argument or evidence from either side.

When I wrote my original piece on Judge Feldman, I suggested his failure to recuse himself in the face of an obvious conflict-of-interest warranted impeachment. The new evidence becomes even more troubling, offering an even stronger case for his impeachment.

Judge Feldman's statement that "the Exxon stock…was sold at the opening of the stock market on June 22, 2010 prior to the opening of a court hearing" is so disingenuous as to amount to a deception. The only pertinent hearing took place one day before Judge Feldman sold his stock. He used the words "prior to the opening of a court hearing" rather than "prior to the announcement of the court's decision" to hide the basic reality that the "hearing" was a sham; a facade erected only to hide the venality that formed the basis for a pre-determined decision.

Despite having served as a federal judge for 27 years, Judge Feldman is unfit to sit in judgment of others. The only appropriate recourse is for a member of the U.S. House of Representatives, who takes his or her oath of office seriously, to introduce articles of impeachment against Judge Martin Leach-Cross Feldman.

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Rachel Maddow’s June 25, 2010 segment on Judge Feldman’s conflict-of-interest ...


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Ernest A. Canning has been an active member of the California state bar since 1977. Mr. Canning has received both undergraduate and graduate degrees in political science as well as a juris doctor. He is also a Vietnam vet (4th Infantry, Central Highlands 1968).