By JENNIFER A. DLOUHY
WASHINGTON BUREAU
June 23, 2010, 12:43AM
WASHINGTON — A federal judge on Tuesday struck down the Obama administration’s ban on deep-water drilling and rebuked the government for imposing a moratorium that would cause “irreparable harm to businesses” along the Gulf Coast.
The administration imposed the ban May 27 to allow time for an independent commission’s investigation into the blowout of a BP well in 5,000 feet of water that destroyed the Deepwater Horizon drilling rig, killed 11 workers and unleashed the nation’s worst oil spill.
The administration promised an immediate appeal.
Interior Secretary Ken Salazar defended the ban, and promised late Tuesday to issue a new order soon that will eliminate “any doubt that a moratorium is needed, appropriate and within our authorities.”
White House Press secretary Robert Gibbs said President Barack Obama believes that continuing to drill at such depths without knowing what happened to BP’s Macondo well endangers the environment as well as rig workers.
The decision by U.S. District Judge Martin Feldman of New Orleans, who heard arguments in the case Monday, was a victory for oil services and drilling companies that argued the ban threatened thousands of jobs along the Gulf Coast.
But it was unclear what immediate practical effect the ruling would have on the 33 rigs in the Gulf of Mexico that have been idled by the ban on drilling in water more than 500 feet deep.
Federal regulators already issued new safety requirements for deep- and shallow-water drilling, and those mandates probably would have to be satisfied before any exploration could resume. Although the administration lifted a moratorium on shallow-water drilling weeks ago, those projects have been stalled while federal regulators refine the new requirements.
Industry pleased
Environmentalists and industry leaders said it is unlikely that companies leasing rigs will try to resume drilling immediately, given the legal uncertainties and the high costs of moving workers and equipment back to those stalled projects.
Still, the oil industry praised the ruling.
Bruce Vincent, chairman of the Independent Petroleum Association of America and president of Houston-based Swift Energy, said Feldman was right to block a “misguided, hastily implemented moratorium” that “fundamentally failed to recognize how critical America’s oil and natural gas industry is to the livelihoods of so many Gulf families.”
But environmentalists said Feldman overlooked the risk of another oil spill in the Gulf.
Luke Metzger, of Environment Texas, compared the judge’s decision to “putting a drunk back in the driver’s seat after handing him a cup of coffee.”
David Guest, a lawyer with Earthjustice, one of the groups that intervened in the New Orleans case, said he was shocked that Feldman’s opinion seemed to focus mostly on the economic losses from a moratorium with scant attention to the environment and public safety.
Judge’s reasoning
Feldman said the administration had not justified “the immense scope of the moratorium” and had likely violated federal laws covering how the government can impose new regulations.
He faulted the government for issuing a blanket moratorium based on the assumption that one well failure means others are at risk.
“If some drilling equipment parts are flawed, is it rational to say all are?” Feldman asked, in a 22-page opinion. “Are all airplanes a danger because one was? All oil tankers like Exxon Valdez? All trains? All mines?”
Lawmakers from Texas and Louisiana, who have been pushing the administration to lift the deep-water drilling ban, praised the ruling. Rep. Pete Olson, R-Sugar Land, said Feldman’s decision “was the right course of action for the livelihood of the 150,000 rig and drilling support workers in the Gulf Coast.”
Texas Sen. John Cornyn, urged the White House to consider replacing the ban with more narrowly drafted requirements that would “address only truly essential safety issues, without compounding the economic harm to the Gulf region.”
Anadarko Petroleum Corp., based in The Woodlands, and other deep-water leaseholders have cited the ban in invoking termination clauses in contracts to lease rigs for hundreds of thousands of dollars a day.
The case leading to Tuesday’s ruling began June 7, when Hornbeck Offshore Services challenged the ban. Several other vessel owners and oil service companies later joined the lawsuit.
A Houston challenge
In a separate challenge, Houston-based Diamond Offshore, a rig owner, argues the ban violates the constitutional protection against taking private property without due process and just compensation.
In a hearing on that case in Houston on Tuesday, U.S. District Judge Nancy Atlas told lawyers for the government and Diamond Offshore that the case in New Orleans might pre-empt the one in Houston.
Feldman’s ruling makes the question before Atlas moot at the moment, she told the lawyers, and any appellate decision on Feldman’s order could preclude her from further action. But she asked the lawyers to continue briefing the issues so she can determine whether the case should go forward.
Atlas also asked if the parties wanted her to step off the case because she’s casual friends with a member of the board of a company that owns a large share of Diamond Offshore. That board member also has a brother on the Diamond board.
Government lawyer Michael Thorp asked for a few days to get a ruling from Washington on whether the government wants a new judge.
Feldman may have ties to the industry through investments, the Associated Press reported.
His financial disclosure report for 2008, the most recent available, shows holdings in at least eight petroleum companies or funds that invest in them, including Transocean, which owned the Deepwater Horizon. The report shows that most of his holdings were valued at less than $15,000; it did not provide specific amounts.
It was not clear whether Feldman still has any of the energy industry stocks.
Reporters Mary Flood and Sharon Hong contributed to this report.
