Deepwater-Drilling Ban to Get Appeals Court Ruling Next Week `at Latest'

A federal appeals court that heard arguments on whether to lift the Obama administration’s ban on deep-water oil drilling will rule next week “at the latest,” U.S. Circuit Judge Eugene Davis said today at a hearing.

The government is seeking to delay an order by U.S. District Judge Martin Feldman that scrapped the six-month drilling moratorium, imposed May 27 after the explosion and sinking of the Deepwater Horizon oil rig in April.

Feldman’s June 22 ruling came in a lawsuit against U.S. regulators by oil service companies claiming the suspension would cause them irreparable economic harm. Feldman rejected the ban as too broad. The U.S. said the moratorium was necessary to protect public safety and avoid the risk of another oil spill.

“You haven’t looked at the individual case at all,” Circuit Judge Jerry Smith told the U.S. at today’s hearing. “The secretary just issued a blanket moratorium.”

“The individual case is we have an oil spill we haven’t contained,” replied Michael Gray, a Justice Department attorney. “ Our resources are taxed to the max. It makes perfect sense.”

Hornbeck Offshore Services Inc. and more than a dozen other offshore service and supply companies sued U.S. regulators, including Interior Secretary Kenneth Salazar, last month, seeking to block the moratorium.

They were joined by Louisiana’s Governor Bobby Jindal and Attorney General Buddy Caldwell, who said the drilling suspension is turning an “environmental disaster into an economic catastrophe.”

Catastrophe ‘Trifecta’

The combination of the hurricanes, the economic recession and the Deepwater Horizon have created a “trifecta of economic catastrophe that has left Louisiana hanging on by a thread,” Henry Dart, counsel for Jindal, told the judges today. “The drilling moratorium would be the coupe de grace.”

The case is Hornbeck Offshore Services LLC v. Salazar, 2:10-cv-01663, U.S. District Court, Eastern District of Louisiana (New Orleans). The appeal case is 10-30585, 5th U.S. Circuit Court of Appeals (New Orleans).

To contact the reporters on this story: Laurel Brubaker Calkins in Houston at laurel@calkins.us.com; Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net.

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