Court rejects push to reimpose drilling ban

The decision, by a three-judge panel of the US Circuit Court of Appeals for the Fifth Circuit, opens the door to resumed drilling in the Gulf of Mexico while the legal fight continues.

US District Judge Martin Feldman struck down the moratorium June 22, and the government appealed.

The Interior Department argued that keeping the moratorium was necessary while it studied deepwater drilling risks following the Deepwater Horizon explosion and subsequent oil disaster. Government lawyers asked the appeals court to let the temporary drilling ban stand until the Fifth Circuit ruled on their appeal of the lower court’s ruling.

A spokeswoman for the Interior Department did not immediately return a call seeking comment.

Michael Gray, a Justice Department lawyer, argued that Feldman abused his discretion when he overturned the moratorium, which halted the approval of any new permits for deepwater projects and suspended drilling on 33 exploratory wells.

Lawyers for several oilfield service companies that sued to block the moratorium, including Hornbeck Offshore Services, said the Obama administration has failed to show that the government would suffer “irreparable harm’’ if the drilling ban is lifted.

Two of the circuit judges seemed to disagree about whom should be shown more deference: Feldman or Interior Secretary Ken Salazar, who imposed the moratorium.

“We give deference, as you should, to what that court has done,’’ Judge Jerry E. Smith said of Feldman’s ruling.

Judge James L. Dennis said Salazar “is entitled to a lot of deference’’ when the court evaluates whether the moratorium should be allowed to stand. Dennis partially dissented in the ruling, saying he would have let the moratorium remain in place.

“Why are we in a position to second-guess the secretary on whether or not there’s a threat of irreparable harm?’’ the judge asked at the hearing.

Yesterday’s ruling won’t be the final word. Judge W. Eugene Davis said the three-judge panel is likely to hold a hearing on the overall merits of the appeal in late August or early September.

After Feldman overturned the moratorium on June 22, Salazar announced he would issue a new, refined moratorium that reflects offshore conditions. Gray, the Justice Department lawyer, told the judges he did not know when Salazar would issue the new moratorium.

“The secretary is looking at a new decision based on new information,’’ Gray said. “It is not tied to this court’s decision.’’

Governor Bobby Jindal of Louisiana, a vocal critic of the moratorium, observed the hearing from the courtroom gallery. Outside the courthouse, Jindal said a second moratorium would further chill plans for drilling in the gulf and lead to thousands of job losses.

“The federal government not being able to do its job is not a reason for thousands of Louisianans to lose their jobs,’’ Jindal said.

In the gulf, BP executives and federal officials yesterday offered a ray of hope in a summer of setbacks for crews trying to stop the oil leak: The first of two relief wells could be done by the end of this month, weeks ahead of schedule.

But officials were quick to add that meeting such an optimistic timetable would require ideal conditions every step of the way.

That has not happened since the gusher began more than two months ago a mile below the water’s surface.

The promising news was met with cynicism from some involved in the cleanup.

“BP’s credibility is basically shot,’’ said John Young, chairman of the Jefferson Parish Council. “I hope they plug it as soon as they can, but I’m not holding my breath.

“They’re unreliable, and they haven’t been transparent or open.’’

Several times in the past week, Robert Dudley, BP managing director, has said drilling for a relief well is progressing quickly and could be done before August.

“In a perfect world with no interruptions, it’s possible to be ready to stop the well between July 20 and July 27,’’ Dudley told The Wall Street Journal.

Retired Coast Guard Admiral Thad Allen, the Obama administration’s point man on the crisis, has confirmed that the operation is ahead of schedule, but he won’t budge from the expected August completion date.

“There are certain things that can move that date up, but my official position is the middle of August,’’ Allen said yesterday.