Wednesday, June 23, 2010

Judge Blocks Drilling Moratorium; Feds Will Appeal to 5th Circuit


NEW ORLEANS (CN) - A federal judge on Tuesday blocked the federal government's 6-month moratorium on deepwater drilling in the Gulf of Mexico - a decision the Obama administration immediately said it would appeal. U.S. District Judge Martin Feldman issued a preliminary injunction against the May 28 moratorium on offshore drilling in more than 500 feet of water, which also halted the granting of new permits for such drilling. Judge Feldman ruled that the administration had failed to show the need for the "blanket moratorium," which he described as "punitive."
Feldman, a 1983 appointee of President Reagan, found that the government had presented no factual basis to show "that because one rig failed and although no one yet fully knows why, all companies and rigs drilling new wells over 500 feet also universally present an imminent danger."
White House spokesman Robert Gibbs said the administration would appeal Feldman's order to the 5th Circuit.
"The president strongly believes, as the Department of Interior and Department of Justice argued yesterday, that continuing to drill at these depths without knowing what happened does not make any sense," Gibbs said. He said that more drilling "puts the safety of those involved, potentially puts safety of those on the rigs and the safety of the environment and the Gulf at a danger that the president does not believe we can afford right now."
Oil-service businesses claimed the moratorium would unjustifiably punish the Gulf Coast's already battered economy. But with the appeal certain, National Public Radio reported that some local businesses said that the uncertainty of the 5th Circuit's decision might make them hold off rehiring workers they had laid off.
Judge Feldman heard arguments in the case on Monday, as scientists whose expertise inadvertently contributed to the ban met with Interior Secretary Ken Salazar to try to persuade him to soften the ban. The scientists say the government misrepresented their views on the moratorium, which they say "will have a lasting impact on the nation's economy which may be greater than that of the oil spill."
The scientists complained that after they consulted with Salazar for a drilling safety report, Salazar falsely implied they favored the 6-month moratorium.
Salazar's May 27 report to President Barack Obama claimed that a panel of seven experts peer-reviewed his recommendations for the drilling moratorium in waters deeper than 500 feet. But the scientists told the Times-Picayune that they reviewed an early version of Salazar's report, which suggested a 6-month moratorium only on new drilling, and only in waters deeper than 1,000 feet.
The scientists say they told Salazar the moratorium on all drilling went too far.
The Times-Picayune reported that the Department of the Interior said later it did not mean to imply that the experts favored the moratorium, but that Salazar stands firm in his decision to stop drilling so long as there's uncertainty about how another spill might be contained.
Neither the federal government nor BP has had much success containing the spill, which recent estimates place at 2.5 million gallons a day.
The oil industry estimates the moratorium will cost rig workers as much as $330 million a month in direct wages. Add to that the financial impact the ban will have on oil industry support workers, and the so-called "multiplier effect" by which wages are said to account for as much as 10 times their actual value on the economy, as the money is passed from hand to hand, and the impact reaches into the billions.
The Wall Street Journal reported on Monday that BP successfully argued behind closed doors last week that it should not be liable for the economic distress the president's moratorium will cause. And BP allegedly has refused to be held accountable for restoring the Gulf to a better condition than it was before the catastrophe.
The Journal reported that BP made those arguments during the same meeting where it agreed to set aside $20 billion for environmental and wage claims, but "it was in the interest of neither to discuss such details" publicly at the time.
BP claims it should not be held liable for the moratorium because it was a White House decision.
The Journal reported that BP's pledge of $100 million for oil rig workers, on top of the $20 billion, came late in the meeting, after White House counsel Robert Bauer called BP's refusal to cover damages from the moratorium "cynical," and asked why the company was "lawyering" after telling Congress and the administration it would not duck its financial responsibility.
In other oil spill news, as the catastrophe started on its third month, The Associated Press reported that vast amounts of natural gas contained in the crude oil are escaping from BP's blown-out well on the sea floor, and could threaten marine life by creating "dead zones" where oxygen is so depleted life is impossible.
The dangers presented by methane have been largely overlooked while the world has focused on other aspects of the catastrophe, according to the AP.
At least 4.5 billion feet of natural gas, and possibly twice that amount, have leaked since April 20, according to estimates from the U.S. Geological Survey's "flow team," which estimates that 2,900 cubic feet of natural gas are escaping for every barrel of oil.
Scientists are increasingly worried because the gas can suffocate sea creatures in high concentrations.
The Christian Science Monitor reported that the Coast Guard has increased its efforts to keep the Deepwater Horizon oil spill from the Gulf Coast states by calling in skimming boats and equipment from the Netherlands, Norway, France and Spain. The Monitor reported that the United States had been recalcitrant to seek help from foreign ships, citing the 1920 Jones Act, which prohibits foreign-flagged ships and crews from doing port-to-port duty within 3 miles of the U.S. coast.
Last week, White House spokesman Robert Gibbs said the United States has not had a "problem" with the Jones Act, but in Friday, Senator Kay Bailey Hutchinson, R-Texas, filed legislation to waive the Jones Act and bring in more high-tech foreign clean-up ships, saying the Jones Act was standing in the way.
Senator George LeMieux, R-Fla. wrote to President Obama on Friday that "There is a breakdown of communication and it is critically important the situation get fixed and we see an armada of skimmers at work."
The Monitor reported that one day after Fox News quoted Adm. Thad Allen saying, "To date, nobody has come for a Jones Act waiver," Coast Guard Capt. Roger Laferriere, second-in-command to Allen in the oil spill response, told ABC World News that both Allen and President Obama had waived the Jones Act to allow more foreign vessels in to battle the spill.
Government documents tracking the Deepwater Horizon response effort list 23 countries that have offered oil spill assistance: booms and skimmers. All of the countries want compensation for the supplies, except Mexico, which offered free boom but skimmers for a cost.
The government document does not include Iran among the 23 countries, but Reuters reported in early May that Iran offered assistance. Haidar Bahmani, managing director of the National Iranian Drilling Co., said his firm was ready to provide assistance, according to the May 3 Reuters report.
"Our oil industry experts can curb the rig leakage in the Gulf of Mexico and prevent an ecological disaster in that part of the world," Bahmani told Reuters, with no further comment.
Iran, the world's fifth-largest exporter of crude oil, has a long and tangled history with the United States and BP.
In 1953, partly at the behest of the British-owned Anglo-Iranian Petroleum Co., the CIA staged a coup against Iran's progressive prime minister, Mohammed Mossadegh, and installed the Shah, who proceeded to rule by force and terror until the Islamic Revolution overthrew him in 1979. The Anglo-Iranian Petroleum Co. later became British Petroleum, and then BP.

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