02 September 2010

Legal challenge to drilling ban scores court victory

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White House efforts to maintain ban on offshore drilling will face further days in court
The US ban on deepwater oil and gas drilling could be overturned for a second time after a federal judge yesterday rejected the Obama administration's request to dismiss an oil industry lawsuit challenging the six month moratorium.

US district judge Martin Feldman, who controversially overturned the administration's first ban, yesterday ruled that a second ban imposed by the Interior Department in July "arguably fashions no substantial changes from the first moratorium" and as such the oil industry's case against the ban should be allowed to proceed.

The decision means that legal action to conclusively overturn the ban led by Hornbeck Offshore Services Inc. and backed by a dozen oil services firms will now continue.

Lawyers from the Interior Department had argued that the case should be thrown out as it was challenging the administration's initial moratorium, which was withdrawn in July to be replaced a few weeks later with a second ban.

They said in a court filing that Interior Secretary Ken Salazar examined new evidence before imposing the second ban, which was also worded differently, albeit in a manner that still effectively banned drilling in depths of over 500 feet.

"The secretary conducted significant additional fact finding and analysis relevant to the various conclusions presented in the July directive," the administration's lawyers said.

But lawyers for the oil industry said that the second moratorium was illegal as it constituted a "carbon copy" of the first ban.

Judge Feldman said that he was not ruling on the validity of the second moratorium, but agreed that it was "arguably" the same as the first ban and as such the case should continue.

The second ban is also subject to a separate oil industry challenge as drilling firms pursue a number of avenues to get the moratorium quashed.

The ruling was welcomed by Louisiana Governor Bobby Jindal who has long argued that the ban is disproportionate and is contributing to job losses across the Gulf region.

(BusinessGreen)

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