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.
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.
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
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
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. …