Skip to: Content
Skip to: Site Navigation
Skip to: Search


Obama loses in court again over deepwater drilling moratorium

A deepwater drilling moratorium, issued in May and struck down as too broad June 22, was not reinstated Thursday by a federal appeals panel, but drilling is unlikely to resume any time soon.

By Bill SasserCorrespondent / July 9, 2010

A truck passes a sign in support of deepwater oil drilling, in Houma, La., on June 24. A moratorium on offshore drilling was lifted June 22, and a challenge to that order was struck down Thursday.

Gregory Bull/AP

Enlarge

New Orleans

A federal appeals panel in New Orleans on Thursday denied the federal government's bid to reinstate a six-month moratorium on offshore deepwater oil drilling issued by the Department of Interior, as part of the Obama administration’s response to the ongoing BP oil spill in the Gulf of Mexico.

Skip to next paragraph

The ruling, though it buttresses the position of companies fighting the moratorium, is not likely to mean a return to drilling in the deepwater Gulf any time soon. The Obama administration will challenge Thursday's court decision, and companies are likely to wait for the legal issues to be fully settled before incurring the expense of reinstalling drilling equipment.

The moratorium, issued six weeks ago, suspended operations on 33 exploratory wells and halted the approval of new permits for deepwater drilling. The suit to lift the moratorium was brought by Hornbeck Offshore Services Inc. and a dozen other oil industry service providers, who say the ban will cause them irreparable economic harm.

The federal government says the risks of another spill in the Gulf, while the blown well remains uncontained and before new safety rules have been implemented, outweigh the potential economic effects of the drilling ban. Rejecting the ban as too broad, US District Judge Martin Feldman struck down the moratorium on June 22, and on Thursday a panel of the Fifth US Circuit Court of Appeals refused, in a 2-to-1 ruling, to delay Judge Feldman's order to scrap the moratorium.

A hearing before the full appeals court is scheduled for Aug. 30. The Justice Department says Feldman committed legal error and abused his discretion in his decision. The Obama administration said Thursday it is developing a new, refined moratorium, based on findings about the April 20 accident on the Deepwater Horizon rig and assessments of the spill response and containment efforts, and will issue a revised ban if the appeals court blocks it from reinstating the original six-month moratorium.

The three-judge appeals panel showed a diversity of opinion in questioning government and plaintiffs lawyers on Thursday. Judge Jerry Smith aggressively questioned US Attorney Michael Gray on the government’s challenge to Feldman’s ruling, the rationale for the moratorium, and whether a stay from the panel was even necessary to prevent new drilling before the full hearing in August.

"We give deference, as you should, to what that court has done," Judge Smith said in reference to Feldman's ruling. Pointing out that the burden was on the government in the appeals process to prove that drilling would not cause irreparable injury, Smith – recalling that 27 of 29 deepwater rigs in the Gulf passed safety inspections after the disaster – called the government’s claims speculation. “You haven’t looked at the individual case at all. The secretary [of the Interior] just issued a blanket moratorium.”

Permissions