Judge Drills Hole in Deepwater Ban; Obama Promises Immediate Appeal

WASHINGTON, June 22, 2010— -- A federal judge ruled today that the Interior Department had acted "arbitrarily" when it issued a six-month moratorium on all pending, current or approved drilling plans for new deepwater wells in the Gulf of Mexico and Pacific Ocean and agreed to lift the ban.

Judge Martin L.C. Feldman granted a preliminary injunction to Hornbeck Offshore Services to lift the moratorium, saying that the government "failed to cogently reflect the decision to issue a blanket, generic, indeed punitive, moratorium."

The Administrative Procedure Act authorizes judges to review the actions of executive branch agencies only if the action is found to be "arbitrary, capricious, and abuse of discretion, or not otherwise in accordance with the law."

Feldman said a report by Secretary of the Interior Ken Salazar calling for the moratorium went too far and that he was "unable to divine or fathom a relationship between the findings and the immense scope of the moratorium."

Recent disclosure documents indicate that Feldman, who was appointed to the bench by President Ronald Reagan, has had financial holdings in energy companies.

The Department of Justice said it would immediately appeal the decision.

"We will immediately appeal to the Fifth Circuit," White House Press Secretary Robert Gibbs said at today's daily media briefing. "The president strongly believes, as the Department of Interior and the Department of Justice argued yesterday, that continuing to drill at these depths without knowing what happened -- does not make any sense."

Gibbs said President Obama is concerned that continuing to drill in deepwater potentially endangers crews on the rigs as well as the environment in the Gulf.

"The president does not believe that we can afford (that) right now," Gibbs said.

According to one industry report, the blowout protectors that failed on the Deepwater Horizon rig don't work almost half of the time.

"The companies have no technology to address a blowout once it happens," said Amy Myers-Jaffe, a research analyst at Rice University.

But the workers that support those rigs say their entire industry is in danger if they don't get back to drilling quickly. It costs an oil company $500,000 a day to keep an idle rig in the water.

Workers say they're anxious to get back on the water after weeks of waiting.

"What are you doing every day? Hoping and praying," said one oil rig worker. "I believe we've already had eight rigs leave the gulf, and they're not coming back."

In his ruling, Judge Feldman said that the Salazar report "patently lacks any analysis of the asserted fear of threat of irreparable injury or safety hazards posed by the thirty-three permitted rigs also reached by the moratorium. "

"If some drilling equipment parts are flawed, is it rational to say all are? Are all airplanes a danger because one was? All oil tankers like Exxon Valdez? All trains? All mines? That sort of thinking seems heavy handed and rather overbearing," Feldman wrote.

"The Deepwater Horizon oil spill is an unprecedented, sad, ugly and inhuman disaster," he wrote. "What seems clear is that the federal government has been pressed by what happened on the Deepwater Horizon into an otherwise sweeping confirmation that all Gulf deepwater drilling activities put us all in a universal threat of irreparable harm."

Oil Companies Praise Decision to Lift Moratorium

Judge Feldman said that the decision to suspend drilling in wells in depths greater than 500 feet "simply cannot justify the immeasurable effect on the plaintiffs, the local economy, the Gulf region and the critical present-day aspect of the availability of domestic energy in this country."

The American Petroleum Institute praised today's ruling, saying in a written statement, "The moratorium was an initial reaction to concerns about the safety of offshore oil and natural gas operations. However, an extended moratorium would have a tremendous impact on the nation's energy security – and cause significant harm to the region of the country that was already suffering from the spill – without raising safety or improving industry procedures."

"With this ruling, our industry and its people can get back to work to provide Americans with the energy they need, and do it safely and without harming the environment," the petroleum institute said.

Judge Feldman in 2008 had holdings in companies with links to the massive oil spill. In a 2008 financial disclosure form posted online by Judicial Watch, Feldman listed interests in Transocean, which owned the Deepwater Horizon rig.

According to the Associated Press the president of Transocean, Steven Newman, has been critical of the six-month ban.

Public advocates, meanwhile, said the temporary ban doesn't go far enough.

"A federal judge's decision today to block a six-month moratorium on new deep-water drilling projects is extremely shortsighted," said Tyson Slocum, Director of Public Citizen's Energy Program."If anything, the temporary ban that President Barack Obama declared in May should be made permanent."