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UPDATE: Court overturns deepwater drilling moratorium

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UPDATE: A Louisiana court Tuesday rolled-back a six-month ban on deepwater oil exploration in the Gulf of Mexico, overturning the Obama administration’s moratorium put in place after the devastating BP oil spill.

The White House said it would immediately appeal the decision, which had suspended the approval of new permits for deepwater projects as well as halted drilling on 33 exploratory wells.

U.S. District Judge Martin Feldman, who made the ruling, called the ban “overbearing” and warned that the shutdown would have an “immeasurable effect” on the oil industry, the economy, and the U.S. energy supply.


Bill Radke: A court is considering whether to roll back President Obama’s six-month moratorium on deepwater oil exploration in the Gulf of Mexico. Well drillers and other oil companies have asked a Louisiana court to overturn the ban, which was put in place after the Deepwater Horizon disaster. Joining us live now with more is Marketplace’s Mitchell Hartman. Hi Mitchell.

Mitchell Hartman: Good morning, Bill.

Radke: What are these companies asking for from the court?

Hartman: Well they say the ban is “arbitrary and capricious.” They went the court to introduce a temporary injunction. Basically, that would let exploratory drilling resume while the court hears their challenge, and the court could rule today. These are companies that are very directly affected — they’re oil services companies, they provide the offshore rigs which are really like little villages with equipment, food, fuel, and they shuttle those supplies back and forth.

Radke: And how are small local businesses there feeling about the moratorium on drilling?

Hartman: Well it’s becoming less and less popular with the state government and politicians. Even some fishermen actually, since a lot of them also work the rigs. These oil services companies employ thousands, and they’re worried that even another few weeks of the ban will put them out of business. Already, eight deepwater rigs have pulled out; 25 are left, and they’re looking for somewhere else to drill. They could go to Europe, the North Sea or anywhere really that there might be new oil fines. BP has pledged $100 million to help workers whose income has dried up because of the moratorium. But the industry says actually it costs three times that in lost wages every month the ban is in effect.

Radke: Marketplace’s Mitchell Hartman. Mitchell, thank you.

Hartman: You’re welcome.

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