Although the Deepwater Horizon rig explosion and sinking is a "sad, ugly and inhuman disaster," judge says it does not justify the sweeping moratorium on deepwater drilling.

A federal judge in New Orleans Tuesday granted a motion by oil service companies for a preliminary injunction barring the federal government from enforcing its industrywide moratorium on deepwater oil and natural gas drilling in the Gulf of Mexico (GOM) for six months. The White House signaled that it planned to immediately appeal the judge's ruling.

U.S. District Court Judge Martin Feldman said the Interior Department failed to justify its decision to impose a prolonged ban on deepwater drilling in the wake of the explosion on board the BP plc-leased Deepwater Horizon rig, and essentially sought swift retribution against an entire industry for the actions of one company -- BP.

Interior Secretary Ken Salazar's "determination that a six-month moratorium on issuance of new permits and on drilling by 33 rigs is necessary does not seem to be fact-specific and refuses to take into measure the safety records of those [other companies] in the Gulf," Feldman said. Thirty-three deepwater sites in the GOM were suspended as a result of the moratorium, although they were reinspected following the rig explosion and deemed safe.

"There is no suggestion that the secretary considered any alternatives [to the moratorium]: for example, an individualized suspension of activities on targeted rigs until they reached compliance with new federal regulations said to be recommended for immediate implementation."

Hornbeck Offshore Services LLC, a small oil services company in Covington, LA, asked the court for the preliminary injunction earlier this month (see Daily GPI, June 22). Within days, a number of other oil services and shipbuilding companies joined the lawsuit.

The National Ocean Industries Association, which represents offshore companies, said it was encouraged by the court's ruling. "The lawsuit's success underscores that federal decisions must be made on the basis of demonstrable proof that ongoing operations pose some risk, not on the simple political expediency of declaring a stop-work order," it said.

Thomas J. Pyle, president of the Institute for Energy Research, echoed the sentiment. "This moratorium, wisely overturned, was never about safety -- it was about politics, and politics at its worst," he said. Both the American Petroleum Institute and the Independent Petroleum Association of America also applauded the court's ruling.

The oil and gas industry realizes, however, that this is only the beginning of what may turn out to be a prolonged legal battle.

Salazar recommended the moratorium in a May 27 report to President Obama after a 30-day safety inspection review of the Gulf rigs was conducted in the wake of the April 20 explosion and sinking of the Deepwater Horizon rig off the southeastern coast of Louisiana (see Daily GPI, May 28). In its arguments before the court, Feldman said Interior "failed to cogently reflect the decision to issue a blanket, generic, indeed punitive, moratorium with the facts developed" in that report.

The court also cited its "uneasiness" with Interior's claim that the report had been peer-reviewed by seven experts identified by the National Academy of Engineering. "Although the experts agreed with the safety recommendations contained in the body of the report, five of the National Academy experts and three...other experts have publicly stated that they 'do not agree with the six-month blanket moratorium' on floating drilling. They envisioned a more limited kind of moratorium, but a blanket moratorium was added after their final review," Feldman said in his ruling.

"After reviewing the secretary's report, the moratorium memorandum [to the Minerals Management Service] and the Notice to Lessees, the court is unable to divine or fathom a relationship between the findings and the immense scope of the moratorium.

"The report patently lacks any analysis of the asserted fear or threat of irreparable injury or safety hazards posed by the 33 permitted rigs [covered] by the moratorium. It is incident-specific and driven: Deepwater Horizon and BP only. None others."

While the Deepwater Horizon oil spill is an "unprecedented, sad, ugly and inhuman disaster, what seems clear is that the federal government has been pressed by what happened on the Deepwater Horizon into an otherwise sweeping confirmation that all Gulf deepwater drilling activities put us all in a universal threat of irreparable harm."

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