New Orleans Federal Judge Must Review Oil-Drill Bans, Appeals Court Rules

July 19 (Bloomberg) -- Joseph Mason, a professor of finance at Louisiana State University, discusses the possible economic impact of the moratorium on new deepwater drilling following the BP Plc oil spill in the Gulf of Mexico. Mason is author of a study, commissioned by the American Energy Alliance, that finds the moratorium may cost the Gulf region 8,169 jobs and about $2.1 billion in economic losses in its first six months. The study also predicts that nationwide job losses will reach 12,000 in six months, costing the U.S. economy about $2.8 billion in lost growth and $219 million in tax revenue. Mason talks with Carol Massar and Matt Miller on Bloomberg Television's "Street Smart." (Source: Bloomberg)

A New Orleans federal judge must consider the legality of both oil drilling bans issued by the Obama administration in the wake of the BP Plc oil spill in the Gulf of Mexico, a U.S. appeals court ruled.

On June 22, U.S. District Judge Martin Feldman scrapped a six-month ban on drilling in waters deeper than 500 feet, imposed in May following the sinking of the Deepwater Horizon rig. Offshore oil-service firms sued in an effort to lift the ban.

Lawyers for U.S. Secretary of the Interior Kenneth Salazar asked Feldman to dismiss the lawsuit, contending it was rendered moot by new rules suspending drilling announced July 12. The U.S. Court of Appeals in New Orleans today ruled that Feldman must consider both bans.

Opponents of the moratorium, including Louisiana Governor Bobby Jindal, have said the ban unnecessarily damages the Gulf Coast economy.

The current ban is “still a blanket, punitive moratorium on deep-water drilling,” Carl Rosenblum, an attorney for Hornbeck Offshore Services Inc., told Feldman at last week’s hearing. Hornbeck and other oil-service companies sued Salazar and regulatory agencies in June after the six-month ban was imposed. Feldman sided with the industry and rejected the ban, finding it overly broad.

The new rules announced by Salazar addressed Feldman’s concerns about the original ban, the government has said. The regulations suspend deep-water drilling until Nov. 30 at the latest. The government may lift the ban earlier if officials determine such operations may safely resume.

The original moratorium “has been revoked and superseded by a new directive” based on additional information, separate analysis and a separate administrative record, lawyers for the U.S. said in court papers. “The decision challenged by the plaintiffs’ complaint no longer exists.”

The case is Hornbeck Offshore Services LLC v. Salazar, 10- 01663, U.S. District Court, Eastern District of Louisiana (New Orleans).