Salazar: I will issue imposing drilling moratorium
NEW ORLEANS, LA
The White House promised an immediate appeal. The Interior
Department had imposed the moratorium last month in the wake of the
BP disaster, halting approval of any new permits for deepwater
projects and suspending drilling on 33 exploratory wells.
White House spokesman Robert Gibbs said President Barack Obama
believes that until investigations can determine why the spill
happened, continued deepwater drilling exposes workers and the
environment to "a danger that the president does not believe we
can afford."
Several companies that ferry people and supplies and provide
other services to offshore rigs argued that the moratorium was
arbitrarily imposed after the April 20 explosion that killed 11
workers and blew out a well 5,000 feet underwater. It has spewed
anywhere from 67 million to 127 million gallons of oil.
U.S. District Judge Martin Feldman, who was appointed by
President Ronald Reagan and has owned stock in a number of
petroleum-related companies, sided with the plaintiffs.
"If some drilling equipment parts are flawed, is it rational to
say all are?" he asked. "Are all airplanes a danger because one
was? All oil tankers like Exxon Valdez? All trains? All mines? That
sort of thinking seems heavy-handed, and rather overbearing."
He also warned that the shutdown would have an "immeasurable
effect" on the industry, the local economy and the U.S. energy
supply.
Interior Secretary Ken Salazar said in a statement late Tuesday
that within the next few days he will issue a new order imposing a
moratorium that eliminates any doubt it is needed and appropriate.
Feldman's ruling was welcomed by the oil and gas industry and
decried by environmentalists.
Feldman's financial disclosure report for 2008, the most recent
available, shows holdings in at least eight petroleum companies or
funds that invest in them, including Transocean Ltd., which owned
the Deepwater Horizon drilling rig that blew up. The report shows
that most of his holdings were valued at less than $15,000; it did
not provide specific amounts.
It was not clear whether Feldman still has any of the energy
industry stocks. Recent court filings indicate he may no longer
have Transocean stock. The 2008 report showed that he did not own
any individual shares in big companies such as BP, which leased the
rig that exploded, or ExxonMobil.
Feldman did not immediately respond to a request for more
information about his current holdings.
Josh Reichert, managing director of the Pew Environment Group,
said the ruling should be rescinded if the judge still has
investments in companies that could benefit. "If Judge Feldman has
any investments in oil and gas operators in the Gulf, it represents
a flagrant conflict of interest," Reichert said.
Feldman's ruling prohibits federal officials from enforcing the
moratorium until a trial is held. At least two major oil companies,
Shell and Marathon, said they would wait to see how the appeals
play out before resuming drilling.
In his ruling, the judge called the spill "an unprecedented,
sad, ugly and inhuman disaster," but said Salazar's rationale for
the moratorium "does not seem to be fact-specific and refuses to
take into measure the safety records of those others in the Gulf."
Feldman said he was "unable to divine or fathom a relationship
between the findings and the immense scope of the moratorium."
The judge said the blanket moratorium "seems to assume 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."
The lawsuit was filed by Hornbeck Offshore Services of
Covington, La. CEO Todd Hornbeck said after the ruling that he is
looking forward to getting back to work. "It's the right thing for
not only the industry but the country," he said.
Earlier in the day, executives at a major oil conference in
London warned that the moratorium would cripple world energy
supplies. Steven Newman, president and CEO of Transocean, called it
unnecessary and an overreaction.
"There are things the administration could implement today that
would allow the industry to go back to work tomorrow without an
arbitrary six-month time limit," Newman said.
BP CEO Tony Hayward skipped the event after coming under fire
for attending a yacht race in England on Saturday rather than
dealing with the spill.
BP stock dropped 81 cents, or 2.7 percent, to $29.52, near a
14-year-old low for the company in U.S. trading. The stocks of
other companies associated with the spill remained low despite
Feldman's ruling.
The drilling moratorium was declared May 6 and originally was to
last only through the month. Obama announced May 27 that he was
extending it for six months.
Rep. Edward Markey, D-Mass., chairman of the Select Committee on
Energy Independence and Global Warming, slammed the ruling.
"This is another bad decision in a disaster riddled with bad
decisions by the oil industry," said Markey, who was at the
forefront of the effort to force BP to make underwater video of the
spill public. "The only thing worse than one oil spill disaster in
the Gulf of Mexico would be two oil spill disasters."
In Louisiana, Gov. Bobby Jindal and corporate leaders had
complained that the moratorium would cost the region thousands of
lucrative jobs, most paying more than $50,000 a year.
Feldman agreed, writing: "An invalid agency decision to suspend
drilling of wells in depths over 500 feet simply cannot justify the
immeasurable effect on the plaintiffs, the local economy, the Gulf
region and the critical present-day aspect of the availability of
domestic energy in this country."
He said Gulf drilling accounts for 31 percent of total domestic
oil production and 11 percent of domestic natural gas production,
and an estimated 150,000 jobs are directly related to offshore
operations.
Tim Kerner, mayor of the fishing town of Lafitte, La., cheered
the ruling. "I love it. I think it's great for the jobs here and
the people who depend on them," he said.
The American Petroleum Institute, one of the industry's main
lobbying groups, also welcomed the decision: "With this ruling,
our industry and its people can get back to work to provide
Americans with the energy they need, and do it safely and without
harming the environment."
In its response to the lawsuit, the Interior Department had
argued the moratorium was necessary while the effort to stop the
leak and clean the Gulf continues and new safety standards are
developed. "A second deepwater blowout could overwhelm the efforts
to respond to the current disaster," the department said.
The government also challenged contentions that the moratorium
would cause long-term economic harm. There are still 3,600 oil and
natural gas production platforms in the Gulf.
As Feldman was issuing his ruling, the people in charge of a $20
billion fund to compensate those whose livelihoods have been ruined
by the spill were on the coast Tuesday to talk with officials about
the claims process.
Kenneth Feinberg, tapped by the White House to run the fund, has
pledged to speed payments to fishermen, business owners and others.
He was to meet with Alabama Gov. Bob Riley.
BP claims director Darryl Willis visited a claims center in a
rundown strip mall in Bayou La Batre, Ala., and said the company
has already cut 37,000 checks for $118 million. Claims totaling
about $600 million have been filed so far.
"Anyone who feels like they have been damaged or hurt or harmed
has every right to file a claim," Willis said. "These are
complicated in some cases, and in some cases they're
straightforward. But every person should file their claim, and they
will be looked at fairly."
------
Associated Press Writers Pauline Arrillaga in Lafitte, La., and
Jane Wardell and Robert Barr in London, and Mitch Stacy in Bayou La
Batre, Ala., contributed to this report.