Obama's Deepwater Oil Drilling Bans Sent to New Orleans Judge for Review
July 19 (Bloomberg) -- Joseph Mason, a professor of finance at Louisiana State University, discusses the possible economic impact of the moratorium on new deepwater drilling following the BP Plc oil spill in the Gulf of Mexico. Mason is author of a study, commissioned by the American Energy Alliance, that finds the moratorium may cost the Gulf region 8,169 jobs and about $2.1 billion in economic losses in its first six months. The study also predicts that nationwide job losses will reach 12,000 in six months, costing the U.S. economy about $2.8 billion in lost growth and $219 million in tax revenue. Mason talks with Carol Massar and Matt Miller on Bloomberg Television's "Street Smart." (Source: Bloomberg)
The same judge who scrapped a six- month moratorium on drilling in waters deeper than 500 feet in the wake of the Gulf of Mexico oil spill must review both bans issued by the Obama administration, a U.S. appeals court ruled.
U.S. District Judge Martin Feldman in New Orleans, who sided with offshore oil-service firms when he struck down the first moratorium on June 22, was directed to hold hearings on the legality of that measure and a later ban imposed after the sinking of the Deepwater Horizon rig operated by BP Plc.
Last month, lawyers for U.S. Secretary of the Interior Kenneth Salazar asked Feldman to dismiss the industry lawsuit challenging the first ban, arguing it was rendered moot by new rules suspending drilling announced July 12. The U.S. Court of Appeals in New Orleans ruled yesterday the judge must consider both bans, calling witnesses as necessary, and return the moratorium issue to the appeals court for a final decision.
Feldman is to determine “with respect to the scope and substance of the May 28 moratorium and the July 12 moratorium, what are the differences, if any,” a three-judge appellate panel said in an order posted today on the court’s website.
Opponents of the moratorium, including Texas Governor Rick Perry and Louisiana Governor Bobby Jindal, have said the ban unnecessarily damages the Gulf Coast economy.
‘Punitive Moratorium’
The current ban is “still a blanket, punitive moratorium on deep-water drilling,” Carl Rosenblum, an attorney for plaintiff Hornbeck Offshore Services Inc., told Feldman at a hearing last week.
The new rules addressed Feldman’s concerns about the original ban, the government has said. The regulations suspend deep-water drilling until Nov. 30 at the latest. Regulators may lift the ban earlier if officials determine such operations may safely resume.
The original moratorium “has been revoked and superseded by a new directive” based on additional information, separate analysis and a separate administrative record, lawyers for the U.S. said in court papers. “The decision challenged by the plaintiffs’ complaint no longer exists.”
The appeals court ordered Feldman to probe whether Salazar based his second drilling moratorium on a new rationale and evidence that wasn’t available when the first ban was imposed.
The panel also asked Feldman to “issue findings of fact and conclusions of law” on whether Salazar has the legal authority to withdraw the first moratorium after Feldman sided with the industry and issued a preliminary injunction blocking regulators from enforcing the ban.
Department of Interior
Department of Interior spokesman Matt Lee-Ashley declined to comment.
“The court of appeals appears to have focused on the same issue that Judge Feldman focused on during the hearing last week -- whether or not the so-called second moratorium is not simply a repackaging of the first,” Samuel Giberga, general counsel for Hornbeck, said in a telephone interview. “That’s been Hornbeck’s contention all along.”
The appeals court canceled a Sept. 1 hearing at which both sides had planned to present oral arguments.
The case is Hornbeck Offshore Services LLC v. Salazar, 10- 01663, U.S. District Court, Eastern District of Louisiana (New Orleans). The appeal case is 10-30585, U.S. Court of Appeals for the Fifth Circuit (New Orleans).
To contact the reporters on this story: Laurel Brubaker Calkins in Houston at laurel@calkins.us.com and; Allen Johnson Jr. in New Orleanst .
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