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Jul 9, 2010 6:11 AM by Sharlee Barriere

Court Rejects Bid to Restore Drilling Moratorium

NEW ORLEANS (AP) - A federal appeals court on Thursday rejected
the federal government's effort to restore an offshore deepwater
drilling moratorium, opening the door to resumed drilling in the
Gulf while the legal fight continues.
The ruling is not the final word on the Obama administration's
fight to suspend new drilling projects so it can study the risks
revealed by the disastrous BP oil spill.
The same appeals court is expected to hear arguments on the
merits of the moratorium case in late August or early September.
While it's possible that 33 exploratory wells suspended by the
moratorium could resume drilling, companies might not bother with
the expense while the ultimate future of the projects hangs in the
balance.
Catherine Wannamaker, a lawyer for several environmental groups
that support the moratorium, said she was disappointed by the
ruling but expressed confidence that the Obama administration
ultimately will win its appeal.
Wannamaker said it's unclear whether any offshore companies
would resume drilling because Thursday's ruling doesn't resolve the
case.
"Clearly, it's legally allowed," she said. "The question is,
practically speaking, will anybody do it given the uncertainty?
It's hard to know what will happen."
The CEO of one of the companies that sued to stop the
moratorium, Covington-based Hornbeck Offshore Services, said he
didn't know if any of the companies involved planned to resume
drilling.
"We need to get back to work," Todd Hornbeck said of his
company, which provides vessels that serve the offshore industry.
"We can't work without any drilling units working."
The moratorium, which prompted a lawsuit from oil and gas
service companies, was first rejected June 22 by U.S. District
Judge Martin Feldman.
The Interior Department appealed, asking the 5th U.S. Circuit
Court of Appeals to let the temporary ban stand until it ruled on
the merits of the case.
"We continue to believe that it is not appropriate to drill new
deepwater wells in the Gulf until we can be assured that future
drilling activity can be conducted in a safe and environmentally
responsible manner," said Interior Department spokeswoman Kendra
Barkoff after the ruling.
Justice Department lawyer Michael Gray argued Feldman abused his
discretion when he overturned the moratorium, which halted the
approval of any new permits for deepwater projects and suspended
drilling on the 33 exploratory wells.
Lawyers for the several oilfield service companies argued the
administration failed to show that "irreparable harm" would take
place if the drilling ban was lifted.
A three-judge panel rejected the government's arguments less
than two hours after a hearing on Thursday afternoon.
Two of the 5th Circuit judges seemed to disagree about who
should be shown more deference: the lower-court judge or Interior
Secretary Ken Salazar, who imposed the moratorium.
Judge Jerry E. Smith leaned toward the judge, while Judge James
L. Dennis said Salazar "is entitled to a lot of deference."
Dennis partially dissented in the ruling, saying that he would have
let the moratorium remain in place.
"Why are we in a position to second-guess the secretary on
whether or not there's a threat of irreparable harm?" Dennis asked
at the hearing.
After Feldman overturned the moratorium in June, Salazar
announced he would issued a new, refined moratorium that reflects
offshore conditions. Gray, the Justice lawyer, said Salazar was
still considering crafting a new moratorium. Interior spokeswoman
Barkoff said in her statement that Salazar will issue a new
moratorium.
Hornbeck said he can only "wait and see" whether the Interior
Department tries to impose a new moratorium.
"It's not solving any problems. It's creating new problems,"
he said. "There are better solutions than that."
Louisiana Gov. Bobby Jindal, a vocal critic of the moratorium,
watched the hearing from the courtroom gallery. He said he was
pleased by the ruling, but he remains concerned about the de facto
moratorium that is keeping drilling from resuming and the threat of
a second moratorium from Salazar.
"The federal government not being able to do its job is not a
reason for thousands of Louisianians to lose their jobs," Jindal
said.

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