Bid To Restore Drilling Moratorium Rejected

An appeals court has ruled that deepwater drilling can continue in the Gulf of Mexico. The judges upheld a lower court ruling against the government's attempt to impose a moratorium.

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While the Obama administration is expecting a victory with the financial overhaul, it has suffered a setback on another front. The president wants a six-month moratorium on drilling new deepwater oil wells. But a court rejected the moratorium last month, and yesterday a federal appeals court upheld that ruling.

NPR's Kathy Lohr reports from New Orleans.

KATHY LOHR: The arguments were animated as all the judges sought to get their questions answered. Judge Jerry Smith asked Michael Gray, who represented the government, whether the plaintiffs in this case were harmed by the moratorium.

Mr. MICHAEL GRAY (Attorney): It is still our position that the plaintiffs have not suffered irreparable harm, at least as far as their declarations do not support a finding of irreparable harm here.

Mr. JERRY SMITH (Judge): That's not what I asked you. I asked you whether it's still the secretary's position that these plaintiffs are not harmed by the moratorium.

LOHR: Gray had to admit they were, but said that harm didn't rise to the level that should prevent the moratorium from going into effect. Then the judges asked attorneys for the lead plaintiff, Hornbeck Offshore, whether the explosion in the Gulf justifies any kind of moratorium. Attorney John Cooney finally admitted there might be justification for a targeted suspension but not the kind of blanket ban, he says, the government ordered.

Mr. JOHN COONEY (Attorney, Hornbeck Offshore): The problem with a moratorium, which I'm trying to distinguish, is it's a one size fits all mechanism. The industry leader is treated the same way as the industry laggard. They are all frozen into limbo for an extended period of time.

LOHR: IN their order, issued shortly after the hearing ended, the judges said the government failed to demonstrate irreparable harm if the moratorium did not go into effect. And the judges said the government did not show there's any likelihood drilling will be resumed immediately.

Catherine Wannamaker with the Southern Environmental Loss Center supported the drilling ban, which affects 33 deepwater wells.

Ms. CATHERINE WANNAMAKER (Southern Environmental Loss Center): We think that a moratorium is a very rational response to a disaster of the magnitude that we are currently experiencing.

LOHR: Wannamaker, who represents a coalition of environmental groups, says she's disappointed in the ruling. She also says it's unclear whether deepwater drilling will resume.

Ms. WANNAMAKER: If they did start drilling in deep water while the moratorium is sort of on hold, we'd be prepared to go back to the court of appeals and revisit this issue.

LOHR: Spokeswoman for Interior Secretary Ken Salazar says he's believes it's not appropriate to drill new deepwater wells until the government can be assured that future drilling is conducted in a safe and environmentally responsible manner. And the secretary reiterated that he will issue a new moratorium, exactly the kind of talk that worries the oil industry.

Mr. SAMUEL GIBERGA (General Counsel, Hornbeck Offshore): We're looking forward to getting back to work.

LOHR: Samuel Giberga is general counsel for Hornbeck Offshore, one of the companies that challenged the moratorium. He says Salazar's statements have created a lot of uncertainty.

Mr. GIBERGA: That has the effect of chilling the willingness, the operators, the owners of the oil and gas interests and the drillers, to go out and begin drilling again. And that's really the main issue now.

LOHR: The stat of Louisiana also filed a brief on behalf of the oil industry. After the hearing, Louisiana Governor Bobby Jindal said the issue is not resolved. He says while the fight continues in court, a de facto moratorium exists which prevents companies from drilling in the Gulf and sends jobs out of the country.

The federal appeals court said it will expedite the case and plans to hear arguments on the merits of the moratorium in late August.

Kathy Lohr, NPR News, New Orleans.

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