Judge considers request to block drilling ban

A federal judge could decide as early as today whether to block the Obama administration's ban on deep-water drilling, responding to a legal challenge mounted by drilling companies and backed by Louisiana state leaders worried the ban will cost jobs and tax revenue.
U.S. District Judge Martin Feldman said he would rule no later than noon Wednesday in a decision that could dictate the future of the White House plans to pause deep-water oil and gas exploration while an independent commission probes the cause of the April 20 blowout of BP's Macondo well in the Gulf of Mexico. It destroyed the Deepwater Horizon drilling rig, killed 11 workers and triggered the nation's worst oil spill.
Feldman heard arguments on the case Monday. It originally was filed by Hornbeck Offshore Services of Covington, La., and other oil field services companies have since joined the bid to block the ban on deep-water oil and gas exploration.
The companies argue that the ban on drilling in 500 or more feet of water is arbitrary and capricious because it halted activity at 33 permitted wells without any evidence they weren't complying with safety standards.
Separately, Houston-based rig owner Diamond Offshore has filed a lawsuit in federal district court arguing that the ban amounts to an unconstitutional taking of its drilling contracts.
Parties in that case are set to meet today with U.S. District Judge Nancy Atlas of Houston to outline the hearing schedule for that case.
In appealing for a temporary restraining order to block the ban's enforcement, Diamond insists that the moratorium could cause widespread harm to the drilling industry.
"Tens, if not hundreds of thousands of individuals could lose their jobs," Diamond Offshore alleges. And other companies that serve deep-water drillers, such as caterers and tug crews, also are at risk, the plaintiff says.
Louisiana Gov. Bobby Jindal and Attorney General James "Buddy" Caldwell argued in a friend-of-the-court filing in the Hornbeck case that the ban threatens coastal economies and jeopardizes royalty revenue that would have been delivered to state coffers from suspended drilling projects.
The officials cite findings by the Louisiana State University Center for Energy Studies that even if the ban lasts just five months, it will result in the direct layoff of 3,339 Louisiana workers and cost another 7,656 jobs indirectly in the state.
Instead of a blanket moratorium, Jindal and Caldwell argue, the administration can put federal inspectors on all deep-water drilling operations.
The Obama administration defends its ban — formally imposed May 27 - as necessary to prevent a repeat of the Deepwater Horizon disaster.
In a court filing, the administration says the deep-water drilling delay will allow federal regulators time investigate the causes of the disaster and recommend additional safety measures.
Absent a court ruling to the contrary, it appears the ban will stay in place for now. William Reilly, co-chairman of a White House-appointed commission investigating the Deepwater Horizon disaster, told the New York Times it's unlikely the panel will recommend lifting the moratorium before it completes its report early next year.
In other developments Monday related to the oil spill:
The U.S. Chemical Safety and Hazard Investigation Board, which investigated the deadly 2005 explosion at BP's Texas City refinery, said it will study the company anew in a probe of the Deepwater Horizon disaster.
House Energy and Commerce Committee Chairman Henry Waxman, D-Calif., and Bart Stupak, D-Mich., who chairs the investigative subcommittee of the Energy and Commerce Committee, requested the investigation.
In a letter responding to them, board Chairman John Bresland said the investigation team will include some who were involved in the investigation of the March 23, 2005, explosion at the refinery.
The CSB reported in March 2007 that a combination of cost-cutting, a lack of vigilance and a lack of investment in training and mechanical integrity were factors in that disaster, but Bresland said that finding won't prejudice the blowout investigation.
"Although we will be vigilant for any similarities to the Texas City explosion ... we believe it is also important that this investigation be approached without any preconceptions," Bresland wrote.
Former Justice Department Inspector General Michael Bromwich was sworn in to lead a shake-up of the agency formerly called the Minerals Management Service.
Interior Secretary Ken Salazar has renamed it the Bureau of Ocean Energy Management, Regulation and Enforcement, and it's to be split into three separate organizations - the Bureau of Ocean Energy Management; the Bureau of Safety and Environmental Enforcement; and the Office of Natural Resource Revenue.
Retired Coast Guard Adm. Thad Allen, commander of the spill response team, said BP will place flow-rate sensors in a new containment cap that may be placed on the Macondo well in the coming weeks. An existing cap and other equipment are now capturing about 25,000 barrels of oil a day from the well, but it's not certain how much still is entering the Gulf.