June 24, 2010 / 4:49 PM / in 8 years

UPDATE 1-US judge denies stay on drill ban ruling

(Adds details from ruling, background)

By Jeremy Pelofsky

WASHINGTON, June 24 (Reuters) - A U.S. judge refused on Thursday to put on hold his decision blocking the federal government from enforcing its six-month ban on deepwater oil drilling after the Gulf of Mexico oil spill.

U.S. District Judge Martin Feldman in New Orleans rejected the Obama administration’s request to stay his decision that allowed deepwater drilling to resume. The Interior Department suspended drilling after the ruptured BP Plc (BP.L) (BP.N) well began gushing oil into the Gulf more than two months ago.

Fifteen hours after the Justice Department appealed Feldman’s ruling and requested a stay pending that appeal, Feldman issued a brief order denying the request for the same reasons he gave in his Tuesday decision.

In that opinion, Feldman strongly criticized the Obama administration’s moratorium, saying that it was “indeed punitive” because it was too broad, arbitrary and was not adequately justified given the impact on thousands of oil industry workers and on local communities.

The Obama administration can still ask the U.S. Court of Appeals for the Fifth Circuit -- also based in New Orleans -- for a stay as it seeks the appeal there.

Administration officials have defended the six-month moratorium as necessary to provide time to investigate the cause of the BP oil well spill and to ensure that other wells being drilled below 500 feet (152 meters) of water are safe.

    The initial deepwater drilling ban suspended work on 33 rigs.

    The Justice Department had no comment.

    The challenge to the moratorium was mounted by Hornbeck Offshore Services Inc (HOS.N) and was quickly joined by other drilling and oil services firms. Some companies said they were considering drilling outside U.S. waters because of the ban.

    In addition to seeking the appeal, Interior Secretary Ken Salazar said on Wednesday that he would issue a revised moratorium order and would include criteria for ending the ban, an apparent bid to satisfy the court.

    However, the companies accused the administration of trying to flout the judge’s order, pointing to Salazar’s remarks, and asked the judge to issue an order enforcing his injunction that blocked the moratorium.

    Feldman denied the request for such an enforcement order, saying it was “premature.”

    Reporting by Jeremy Pelofsky, editing by Doina Chiacu and Frances Kerry

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