* Opening statements in oil industry suit in New Orleans
* Offshore firms say drilling moratorium unjustified
* Louisiana governor sides with offshore operators
By Mary Rickard
NEW ORLEANS, June 21 A U.S. judge on Monday was
hearing opening statements in an oil industry lawsuit
challenging the Obama administration's decision to place a
six-month moratorium on deepwater drilling in the Gulf of
Mexico in the wake of the worst oil spill in U.S. history.
The lawsuit -- originally filed by Louisiana-based Hornbeck
Offshore Services LLC (HOS.N) and joined by more than a dozen
companies involved in offshore drilling operations -- is the
first legal action seeking to reverse the drilling ban imposed
by the U.S. Department of Interior.
In its legal complaint, Hornbeck says the moratorium is
"arbitrary and capricious" and will result in job losses that
could decimate the labor force needed to service offshore oil
The moratorium, imposed on May 28, has spurred the shutdown
of 33 deepwater drilling rigs. The Obama administration says
the moratorium is needed to ensure safety after BP Plc's (BP.L)
(BP.N) Gulf of Mexico oil spill.
Judge Martin Feldman was hearing opening statements in the
case in U.S. District Court, Eastern District of Louisiana, in
Deputy Interior Secretary David Hayes told the court in a
written brief last week that the ban was lawful and was needed
"to ensure that no further drilling accidents occur pending
review and implementation of safety protocols and procedure."
The ban followed the explosion at a BP oil well drilling
site in the Gulf of Mexico on April 20 that killed 11 workers
and unleashed a gushing leak of oil.
'THE PUBLIC INTEREST'
"The short-term economic harm asserted by plaintiffs fails
to meet their burden of demonstrating irreparable harm," Hayes
said. "In contrast, the public interest is overwhelmingly
served by the limited six-month suspensions."
Louisiana Gov. Bobby Jindal has sided with the offshore
operators in the case. Environmental groups have joined the
Interior Department in defending the ban in court.
In a filing, Jindal warns that the moratorium could cripple
the offshore industry, which contributes about $3 billion a
year to his state's economy.
The moratorium will turn "an environmental disaster into an
economic catastrophe," the state of Louisiana said in its
filing. "Every day that the moratorium is in effect costs the
state untold millions of dollars."
The moratorium could also worsen the state's current
budgetary crunch -- about 32 percent of revenues from energy
production in its waters go to the state.
The oil and gas industry is Louisiana's biggest economic
engine and accounts for about 16 percent of the state's gross
domestic product, vastly overshadowing fishing (1 percent) and
tourism (4 percent), according to the Tulane University Energy
The case is Hornbeck Offshore Services LLC v. Kenneth
Salazar et al in U.S. District Court for the Eastern District
of Louisiana, No. 10-cv-1663.
(Additional reporting by Jeremy Pelofsky in Washington;
writing by Chris Baltimore; editing by Mary Milliken and Will