US appeals court divided on drill verdict

A U.S. appeals court appeared divided over whether to bar deepwater oil drilling from resuming again.

US appeals court divided on drill verdict

 

A U.S. appeals court on Thursday appeared divided over whether to bar deepwater oil drilling from resuming again after the Obama administration's six-month moratorium in response to the BP Plc oil spill was lifted last month.

U.S. District Judge Martin Feldman lifted the six-month suspension on new deepwater drilling after finding it too broad and arbitrary because it failed to take into account the economic impact it would have on the industry and communities.

During a contentious hearing before the U.S. Court of Appeals for the Fifth Circuit, lawyers for the Obama administration said the judge discarded the government's expertise and said the environment was at risk if drilling began again too soon.

Drilling companies like Hornbeck Offshore Services Inc.argued that the government failed to follow the proper procedures in suspending drilling below 500 feet (152.5 meters) and that the economic fallout from an idle drilling industry was greater than the possibility of a second well blowout.

With Louisiana Governor Bobby Jindal in the packed courtroom, the three judges hearing the request to stay Feldman's decision appeared split. A ruling is expected by early next week at the latest.

Judge Jerry Smith, appointed by President Ronald Reagan, questioned why the Interior Department issued a "blanket moratorium" without examining each of the deepwater drill rigs to determine if such an order was justified.

"Why shut down all of them when you don't know" what specifically happened aboard the Deepwater Horizon rig that was drilling the BP well but sank after an explosion on April 20.

A lawyer for the drilling companies complained to the appeals court that the Interior Department failed to follow proper procedures in adopting the ban and should not grant a stay because of a "hypothetical threat" of another well blowout.

But Judge James Dennis, appointed by President Bill Clinton, said that the appeals court would have to find that Interior Secretary Ken Salazar was "irrational" in adopting the six-month moratorium since the U.S. Congress gave him the power to protect the environment.

"That's a pretty big step," Dennis said, adding that he was "satisfied he did not act arbitrarily or irrationally, but he sure could give more reasons."

The White House has defended the ban as necessary to avoid another oil well blowout, pointing to BP's leaking undersea well that has soiled the shores of every U.S. Gulf Coast state.

If the judges refuse to reinstate the moratorium, an Interior Department official said a revised moratorium order would be issued "immediately" to address any deficiencies, which could spark yet another legal battle and leave drillers on the sidelines.

However, if the appeals court sides with the White House, the drilling companies could ask the full appeals court or the U.S. Supreme Court to intervene. Judge Eugene Davis said oral arguments at the appeals court on the merits of the case would be held in August.

Either way, the chances of new deepwater drilling beginning soon is likely remote. Some oil services companies, like Baker Hughes Inc., already have said they are shifting some employees overseas because of the legal quagmire.

Reuters

Güncelleme Tarihi: 09 Temmuz 2010, 14:22
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