Drilling moratorium overturned by judge with oil company holdings

an oil drilling rig offshore

A drilling moratorium in the deep waters of the Gulf of Mexico was overturned by a federal judge who has reportedly invested in oil companies. Flickr photo.

A federal judge has overturned the Obama administration’s six-month deep water drilling moratorium in the Gulf of Mexico. The ruling issued Tuesday cited economic hardship as a result of the ban and said the government overreached by suspending all deep-water drilling operations either in progress or planned in the gulf. Oil companies hailed the ruling. The Department of Justice said it would immediately appeal the decision. Meanwhile, as the oil spill in the Gulf of Mexico 2010 gushed for the 63rd day, about 106 million gallons of crude and counting have spilled into the sea.

Drilling moratorium judge invested in oil

The drilling moratorium was overturned by Judge Martin L.C. Feldman after a group of oil rig service companies filed a complaint. ABC News reports that recent disclosure documents indicate that Feldman, who was appointed to the bench by Ronald Reagan, has had financial holdings in oil companies. Feldman said the Interior Department acted “arbitrarily and capriciously” when it issued a six-month moratorium on drilling new deep-water wells in the Gulf of Mexico and Pacific Ocean. Feldman granted a preliminary injunction to Hornbeck Offshore Services to lift the drilling moratorium, saying that the government “failed to cogently reflect the decision to issue a blanket, generic, indeed punitive, moratorium.”

More deep-water drilling uncertain

The moratorium was imposed to give a presidential panel time to come up with recommendations on how to avoid a repeat of the BP oil spill disaster. The Los Angeles Times reports that it remains uncertain whether the Interior Department would have to begin issuing new permits to drill. With an appeal virtually certain to come from the Obama administration, some analysts doubt that oil companies would want to start a major deep-water drilling operation in the Gulf of Mexico with the possibility it may have to shut down if the appeal succeeds.

Oil companies spin drilling moratorium

The American Petroleum Institute praised today’s ruling, saying in a written statement, “The moratorium was an initial reaction to concerns about the safety of offshore oil and natural gas operations. However, an extended moratorium would have a tremendous impact on the nation’s energy security – and cause significant harm to the region of the country that was already suffering from the spill – without raising safety or improving industry procedures.”

BP oil spill containment failure

Meanwhile, in the gulf, CNN reports that government estimates indicate as much as 60,000 barrels (2.5 million gallons) of oil may be flowing into the Gulf every day, and the gusher has already taken a serious toll on tourism and the fishing industry in Gulf Coast states. BP said Tuesday it had succeeded in collecting less than half of the estimated daily output: 25,830 barrels (1.08 million gallons) of oil over the past 24 hours. The amount is the most ever collected; the previous record was set June 18 when 25,290 barrels were collected. BP said it will donate net revenues it receives from the sale of oil recovered from the spill to help the National Fish and Wildlife Federation deal with the oil it won’t be collecting from the oil spill in the Gulf of Mexico 2010.

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