Judge Lifts Obama's Moratorium on Deepwater Oil Drilling

June 22, 2010— -- A six-month moratorium on new deepwater drilling was blocked by a federal judge in New Orleans today. President Obama proposed the moratorium as a reaction to the Gulf oil spill that began April 20, halting approval of new permits for deepwater drilling and suspending drilling at 33 exploratory wells.

White House Press Secretary Robert Gibbs responded immediately, saying the administration would appeal to the 5th Circuit Court of Appeals.

"Continuing to drill at these depths without knowing what happened does not make any sense," Gibbs said, adding that it puts workers and the environment at risk.

U.S. District Judge Martin Feldman overturned the moratorium that was proposed May 6 after several companies that relied on business from offshore drilling argued that the ban had been imposed pre-emptively.

A financial disclosure report for the 2008 calendar year revealed that Feldman has had financial holdings in oil and gas companies, including Transocean.

The moratorium was originally supposed to last only until the end of May, but Obama announced May 27 that he would extend it for six months.

Feldman argued that the failure of one rig does not mean that all rigs pose immediate danger.

"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 [pose] a universal threat of irreparable harm," Feldman wrote.

The American Petroleum Institute released a statement in support of Feldman's ruling.

"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."

The drilling moratorium illustrated mounting concern about oil companies moving to drill farther out at sea and at deeper levels than ever before. Supporters of the drilling ban argued that drilling is expensive, risky and largely untested.

However, many in the oil industry said it is necessary to continue deepwater drilling to keep oil supplies from running out, and that a ban on deepwater drilling would significantly harm energy supplies around the world.

Many also fear that a ban on drilling would cut thousands of jobs and cost millions in lost worker wages.

Louisiana Gov. Bobby Jindal said the moratorium would further cripple the state's economy by forcing rigs to leave the Gulf for better-paying work overseas.

Challenges to the Deepwater Drilling Ban

Steven Newman, president and CEO of Transocean Ltd., which owns the Deepwater Horizon rig where the April 20 Gulf explosion occurred, said a deepwater ban is an unnecessary overreaction.

"There are things the administration could implement today that would allow the industry to go back to work tomorrow without an arbitrary six-month time limit," he said, while attending a large oil conference in London.

Hornbeck Offshore Services in Covington, Louisiana, is one of the companies that challenged the moratorium in court, saying the government had no proof that current drilling operations posed a threat.

"It's the right thing for not only the industry but the country," Hornbeck CEO Todd Hornbeck said.

But still the Interior Department argued the moratorium is necessary until new safety measures are adopted.

"A second deepwater blowout could overwhelm the efforts to respond to the current disaster," the Department said.

The Associated Press Contributed to this report.