Federal Appeals Court Rejects Obama Offshore Moratorium

John Minor Wisdom U.S. Court of Appeals Building in New Orleans

Today the Fifth Circuit Court of Appeals in New Orleans rejected the Obama administration's bid to keep a moratorium on deepwater drilling while it appealed a federal judge's decision overturning the ban. The three-judge panel ruled that Interior Secretary Ken Salazar didn't prove the U.S. would suffer irreparable harm without an immediate ban on exploratory drilling in deep waters.

President Barack Obama enacted the six-month ban on exploratory drilling in water of depths of 500 feet or greater on May 27 in the weeks following the blowout of a BP PLC-owned well off Louisiana's coast. The government argues that it needs time to determine what caused the disaster and how it can be prevented in other wells. A few oil-services companies led by Hornbeck Offshore Services LLC sued to overturn the ban, arguing that it unfairly hurt companies with good operating records. On June 22, U.S. District Judge Martin Feldman sided with the oil-services companies and struck down the moratorium, saying that it was arbitrary.

The Obama administration wanted permission to stop any drilling in deep water until the appeals court ruled on Judge Feldman's decision later. The panel indicated it expected to hear arguments next month on the appeal of the decision to strike down the ban. (WSJ, 7/9/2010)