Judge rules against government's 6-month deepwater drilling moratorium

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A New Orleans federal judge lifted the six-month moratorium on deepwater drilling imposed by President Barack Obama following the largest oil spill in U.S. history.

Obama temporarily halted all drilling in waters deeper than 500 feet on May 27 to give a presidential commission time to study improvements in the safety of offshore operations.

Government lawyers told U.S. District Judge Martin Feldmanthat the sinking of the Deepwater Horizon rig off the Louisiana coast in April was a “game changer’’ that exposed the risks of offshore oil exploration.

“We need to make sure deepwater drilling is as safe as we thought it was the day before this incident,’’ Brian Collins, a lawyer for the government, told Feldman in a court hearing June 21. “It is crucial to take the time because to fail to do so would be to gamble with the long-term future of this region.’’

More than a dozen Louisiana offshore service and supply companies sued U.S. regulators to lift the ban. State officials claim 20,000 Louisiana jobs are in jeopardy if the deepwater drilling suspension lasts 18 months.

BP Plc, which leased the Deepwater Horizon, has two pipes collecting oil and gas from the ocean floor. They collected 25,830 barrels of oil yesterday, the biggest quantity diverted from the Gulf of Mexico since the April 20 spill began, London- based BP said in a statement.

Drilling Companies

Lawyers for the drilling companies told Feldman the moratorium illegally sidesteps a required industry comment period. They also said regulators failed to tell Obama that all active deepwater rigs passed an immediate re-inspection after the Deepwater Horizon exploded and sank, with only two rigs reporting minor violations and the rest getting approval to continue operations.

Louisiana Governor Bobby Jindal asked Feldman on June 20 to lift the ban in 30 days after the judge imposes more stringent safety and oversight procedures. Such rules would incorporate the results of several ongoing drilling safety studies, including that of the presidential commission, Jindal and Louisiana Attorney General Buddy Caldwell wrote in court papers.

Jindal’s proposed compromise would let 33 deepwater rigs idled by the moratorium return to work within a month after their well-design plans were reapproved. His proposal also requires the rigs’ blowout prevention and other safety equipment to be recertified by a regulator stationed on each platform. Jindal and Caldwell suggested the compromise in a filing made in support of the lawsuit against federal regulators.

Failed to Consult

Henry Dart, special counsel for the Louisiana attorney general, told Feldman that federal regulators failed to consult with state officials about the impact of the drilling ban, allegedly violating U.S. law.

“Even after the catastrophic events of Sept. 11, the government only shut down the airlines for three days,’’ Louisiana said in court papers seeking to lift the ban. Diamond Offshore Co., owner of the world’s second-largest floating drilling rig fleet, has filed a separate lawsuit against the regulatory agencies over the ban in Houston federal court. That suit, which accused the government of illegally “taking’’ its drilling contracts, worth up to $500,000 a day, has a scheduling conference in Houston this afternoon before U.S. District Judge Nancy Atlas.

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