Just got notice (from a very reliable source) that a judge has ruled against the Obama Adminstration, blocking their proposed 6-month moratorium on offshore drilling. Didn't see anything on the internet about it yet, so no source URL - should be something shortly.
Here it is:
A New Orleans federal judge lifted the six-month moratorium on deepwater drilling imposed by President Barack Obama following the largest oil spill in U.S. history. Shares of drilling services companies jumped on the news.
Obama temporarily halted all drilling in waters deeper than 500 feet on May 27 to give a presidential commission time to study improvements in the safety of offshore operations. More than a dozen Louisiana offshore service and supply companies sued U.S. regulators to lift the ban.
U.S. District Judge Martin Feldman today granted a preliminary injunction, halting the moratorium. Government lawyers told Feldman that ban was based on findings in a U.S. report following the sinking of the Deepwater Horizon rig off the Louisiana coast in April.
"The court is unable to divine or fathom a relationship between the findings and the immense scope of the moratorium," Feldman said in his 22-page decision. "The blanket moratorium, with no parameters, seems to assume that because one rig failed and although no one yet fully knows why, all companies and rigs drilling new wells over 500 feet also universally present an imminent danger."
Ouch! That's going to leave a mark!
"The court cannot substitute its judgment for that of the agency, but the agency must 'cogently explain why it has exercised its discretion in a given manner," Feldman said, citing a previous ruling. "It has not done so."
The U.S. said it would appeal the decision. "Continuing to drill at these depths without knowing what happened does not make any sense," White House press secretary Robert Gibbs said.
Transocean Ltd., which leased the Deepwater Horizon to BP Plc, jumped as much as 3.5 percent in New York trading after the decision was announced. Hornbeck Offshore Services Inc., which brought the suit, surged as much as 11 percent.
The U.S. argued that the moratorium was necessary to assure public safety. "We need to make sure deepwater drilling is as safe as we thought it was the day before this incident," Brian Collins, a lawyer for the government, told Feldman in a court hearing June 21. "It is crucial to take the time because to fail to do so would be to gamble with the long-term future of this region."
BP has two pipes collecting oil and gas from the ocean floor. They collected 25,830 barrels of oil yesterday, the biggest quantity diverted from the Gulf of Mexico since the April 20 spill began, London-based BP said in a statement.
Drilling Companies
Lawyers for the drilling companies told Feldman the moratorium illegally sidesteps a required industry comment period. They also said regulators failed to tell Obama that all active deepwater rigs passed an immediate re-inspection after the Deepwater Horizon exploded and sank, with only two rigs reporting minor violations and the rest getting approval to continue operations.
Henry Dart, special counsel for the Louisiana attorney general, told Feldman that federal regulators failed to consult with state officials about the impact of the drilling ban, allegedly violating U.S. law.
Filed Separate Suit
"Even after the catastrophic events of Sept. 11, the government only shut down the airlines for three days," Louisiana said in court papers seeking to lift the ban. Diamond Offshore Co., owner of the worlds second-largest floating drilling rig fleet, has filed a separate lawsuit against the regulatory agencies over the ban in Houston federal court. That suit, which accused the government of illegally "taking" its drilling contracts, worth up to $500,000 a day, has a scheduling conference in Houston this afternoon before U.S. District Judge Nancy Atlas.
The case is Hornbeck Offshore Services LLC v. Salazar, 2:10-cv-01663, U.S. District Court, Eastern District of Louisiana (New Orleans).