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Drilling moratorium: Obama loses the legal battle July 9, 2010

Posted by mytruthaboutoil in Oil (general), Oil giants.
Tags: , , , , , , ,

Barack Obama and the US Administration have lost their first legal dispute against oil companies since the oil spill. A federal court rejected US government bid to reinstate for six months deepwater drilling moratorium. However, the US president can still apply for another deal.

A federal appeals court has refused to reinstate the Obama administration’s six-month moratorium on new deepwater drilling while litigation continues.

But the court order (pdf) said the administration can reapply for an emergency moratorium if drilling activity by deepwater rigs is about to begin.

A three-judge panel of the 5th U.S. Circuit Court of Appeals yesterday ruled 2-1 that the administration had failed to prove that “irreparable injury” is likely if the moratorium is not restored while the administration appeals a lower court’s decision lifting the ban. The administration also failed to show that there is “any likelihood” that deepwater drilling activities will resume before the appeal is heard, the panel ruled.

But the panel also said the Interior Department “has the right to apply for emergency relief” if it can show that deepwater drilling “has commenced or is about to commence.” Any renewed request by the administration to reverse the lower court’s decision “will be evaluated on existing circumstances,” the court said.

The judges also expedited the administration’s appeal of the lower court’s ruling, scheduling arguments for the week of Aug. 30.

President Obama in late May halted approval of new deepwater drilling permits and suspended drilling at 33 exploratory wells while an independent panel conducts a six-month study of offshore drilling safety. Hornbeck Offshore Services, an oil-field service company, and other services and shipbuilding companies sued over the moratorium, saying it would have severe economic consequences.

U.S. District Judge Martin Feldman agreed with the company and ordered the administration on June 22 to lift the moratorium, saying the government had not provided adequate reasoning for it and that it would have a permanent and harmful effect on the economy of the Gulf region.

The administration requested a stay, but Feldman two days later reaffirmed his order and gave the administration 30 days to comply.

The administration asked the appeals court to reinstate the moratorium, saying it needs time to appeal a lower court’s lifting of the ban, implement new safety measures and issue a revamped moratorium. It also argued that hurricane season has raised the stakes, most of the country’s cleanup resources are already devoted to the current spill, and a second spill would cause further environmental and economic harm (Greenwire, July 7).

The Interior Department is expected to issue a new deepwater ban as early as this week. It has said the new moratorium would have some modifications, possibly including differentiating between areas where pressure and depth are known and exploratory areas.

The National Ocean Industries Association praised the appeals court decision but said companies are “extremely hesitant” to proceed with exploration plans for fear Interior will order them to stop, either after the Aug. 30 hearing or under a new moratorium.

“The Department’s announcement that a revised moratorium is waiting in the wings and that the appeal of the lifting of the moratorium continues only adds confusion and uncertainty for the offshore industry at the worst possible time and portends additional economic devastation to an area already on its knees,” the group said in a statement.

But five environmental groups sided with the administration and filed briefs saying the moratorium should be reinstated.



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