Judge blocks Gulf offshore drilling moratorium
Published 1:43 am Wednesday, June 23, 2010
A federal judge struck down the Obama administration’s six-month ban on deepwater oil drilling in the Gulf of Mexico on Tuesday, saying the government rashly concluded that because one rig failed, the others are in immediate danger, too.
The White House promised an immediate appeal. The Interior Department had halted approval of any new permits for deepwater drilling and suspended drilling of 33 exploratory wells in the Gulf.
Press Secretary Robert Gibbs said President Barack Obama believes strongly that drilling at such depths does not make sense and puts the safety of workers “at a danger that the president does not believe we can afford.”
Several companies that ferry people and supplies and provide other services to offshore drilling rigs asked U.S. District Judge Martin Feldman in New Orleans to overturn the moratorium.
They argued it was arbitrarily imposed after the April 20 explosion on the Deepwater Horizon drilling rig that killed 11 workers and blew out the well 5,000 feet underwater. It has spewed anywhere from 67 million to 127 million gallons of oil into the Gulf.
Feldman sided with the companies.
“What seems clear is that the federal government has been pressed by what happened on the Deepwater Horizon into an otherwise sweeping confirmation that all Gulf deepwater drilling activities put us all in a universal threat of irreparable harm,” he wrote.
Feldman’s financial disclosure report for 2008, the most recent available, shows holdings in at least eight petroleum companies or companies that invest in them, including Transocean Ltd., which owned the Deepwater Horizon. The report shows that most of his holdings were valued at less than $15,000, though it did not provide specific amounts.
It’s not clear whether Feldman still has all of the energy industry stock listed in the report. Recent court filings indicate he may no longer have Transocean shares. He did not own any shares in big companies such as BP PLC, which was leasing the rig that exploded, or ExxonMobil.
Feldman did not immediately respond to a request for comment about his current holdings.
Josh Reichert, managing director of the Pew Environment Group, said his ruling should be rescinded if he still has investments in companies that could benefit from Tuesday’s ruling.
“If Judge Feldman has any investments in oil and gas operators in the Gulf, it represents a flagrant conflict of interest,” he said. “It is possible that he has sold off those assets. We just don’t know.”
Feldman’s ruling prohibits federal officials from enforcing the moratorium until a trial is held. He did not set a date.
The lawsuit was filed by Hornbeck Offshore Services of Covington, La., and company CEO Todd Hornbeck said after the ruling he is looking forward to getting back to work.
“It’s the right thing for not only the industry but the country,” he said.
Earlier in the day, executives at a major oil conference in London warned the moratorium would cripple world energy supplies. Steven Newman, president and CEO of Transocean, called it an unnecessary overreaction.
“There are things the administration could implement today that would allow the industry to go back to work tomorrow without an arbitrary six-month time limit,” Newman told reporters on the sidelines of the conference.
BP CEO Tony Hayward skipped the event after coming under fire for attending a yacht race in England on Saturday rather than dealing with the spill.
Shares of BP, which owns 65 percent of the blown-out well, dropped 81 cents, or 2.7 percent, to $29.52, near a 14-year-old low for the shares in U.S. trading. Shares of other companies associated with the spill remained low despite Feldman’s ruling.
The drilling moratorium was declared May 6 and originally was to last only through the month. Obama announced May 27 that he was extending it for six months.
In Louisiana, Gov. Bobby Jindal and corporate leaders said that would force drilling rigs to leave the Gulf of Mexico for lucrative business in foreign waters.
They said the loss of business would cost the area thousands of lucrative jobs, most paying more than $50,000 a year. The state’s other major economic sector, tourism, is a largely low-wage industry.
Feldman agreed, writing: “An invalid agency decision to suspend drilling of wells in depths over 500 feet simply cannot justify the immeasurable effect on the plaintiffs, the local economy, the Gulf region and the critical present-day aspect of the availability of domestic energy in this country.”
Tim Kerner, the mayor of Lafitte, La., cheered the ruling.
“I love it. I think it’s great for the jobs here and the people who depend on them,” said Kerner, whose constituents make their living primarily from commercial fishing or oil.
In its response to the lawsuit, the Interior Department had argued the moratorium was necessary as attempts to stop the leak and clean the Gulf continue and new safety standards are developed.
“A second deepwater blowout could overwhelm the efforts to respond to the current disaster,” the Interior Department said.
The government also challenged contentions the moratorium would cause long-term economic harm. Although 33 deepwater drilling sites were affected, there are still 3,600 oil and natural gas production platforms in the Gulf.
Catherine Wannamaker, a lawyer for environmental groups that intervened in the case and supported the moratorium, called the ruling “a step in the wrong direction.”
“We think it overlooks the ongoing harm in the Gulf, the devastation it has had on people’s lives,” she said. “The harm at issue with the Deepwater Horizon spill is bigger than just the Louisiana economy. It affects all of the Gulf.”