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Obama Administration Lifts Deepwater Drilling Moratorium

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In this June 24, 2010 file photo, oil workers from the Gulf Island Fabrication Yard listen to Louisiana Gov. Bobby Jindal during a speech in Houma, La., where he spoke out against the six-month moratorium on deepwater drilling, saying it would kill thousands of Louisiana jobs. (AP)

The Obama administration is lifting the moratorium on deepwater oil drilling in the Gulf of Mexico -- as long as oil companies comply with several new rules that opponents of the ban say could hamper recovery of the Gulf Coast economy six months after the BP oil spill.

Interior Secretary Ken Salazar announced a lifting of the moratorium on Tuesday after reviewing progress of safety reforms, availability of spill response resources, improved blowout containment capabilities and a report by Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEM) Director Michael R. Bromwich.

Bromwich is head of the office that succeeded the Minerals Management Agency blamed with not doing enough inspections on oil platforms like the Deepwater Horizon rig that exploded on April 20 and created the worst environmental disaster in U.S. history. 

"In light of the Deepwater Horizon oil spill, we must continue to take a cautious approach when it comes to deepwater drilling and remain aggressive in raising the bar for the oil and gas industry's safety and environmental practices," said Salazar, who announced the moratorium on July 12. 

"The oil and gas industry will be operating under tighter rules, stronger oversight, and in a regulatory environment that will remain dynamic as we continue to build on the reforms we have already implemented," he said. 

Even though the ban is being lifted immediately, it will likely take a couple weeks for new permitting to be approved.  In addition to new safety rules, the BOEM will conduct inspections and require certifications from oil rig operators about operator compliance as well as mechanisms to contain failures of the blowout preventers (BOPs) designed to shut down a well that has an accident.  

The removal of the ban also does not mean that U.S. companies will operate at the pace and levels they did before the accident 40 miles off the coast of Louisiana. A de facto moratorium has also been in place on shallow-water drilling, with only four permits for such work approved by the federal government since the explosion, as contrasted with an average of 14 such permits having been approved per month for the 11 months that led up to the explosion. 

This slow-walking approach to drilling has been blamed for uncertainty in not only the drilling industry but other industries where the current regulatory and recession-era climate has made it difficult to hire or plan for the future. 

Sen. David Vitter, R-La., called on Salazar to expedite distribution of drilling permits, saying a new study by Southern Methodist University shows that the slowdown in new shallow-water permits has placed nearly 40,000 jobs in jeopardy.

"I guess this is movement in the right direction, but it's painfully slow. It's clear that President Obama is going to preside over a continuing de facto moratorium for months or years, with new drilling held back to a fraction of previous levels. I'll keep fighting until real drilling happens and jobs are actually created," Vitter said. 

Sen. Mary L. Landrieu, D-La., agreed with Vitter in spirit, adding that she is not going to remove a hold she put on Jacob Lew, President Obama's nominee to be director of the Office of Management and Budget, whom Landrieu is preventing from joining the administration until the Gulf of Mexico oil industry is back to work. 

"I will take this time to look closely at how BOEM is handling the issuing of permits and whether or not drilling activity in both shallow and deep water is resuming. When Congress reconvenes for the lame-duck session next month, I will have had several weeks to evaluate if today's lifting of the moratorium is actually putting people back to work," she said. 

Nonetheless, supporters of the moratorium and the additional rules said they were pleased with the outcome but wanted additional authority for an independent commission to question BP about the spill. 

"Because there was a suspension of belief on the part of the oil industry that an accident like this could ever happen, a suspension of drilling was necessary to bring those companies back to reality," said House Environment and Natural Resources Committee Chairman Ed Markey, D-Mass.

"Much more is left to be done in the wake of the BP spill. Senate Republicans continue to block subpoena power for the independent commission investigating the spill, and the Senate has still yet to take up the spill safety legislation that the House approved last summer," he added.

White House spokesman Robert Gibbs said that the new rules are not aimed at chasing away companies from future business nor were politics a consideration. He expressed disappointment that Landrieu is holding up Lew's nomination in the aftermath of the accident.

"Our feeling is that the nomination isn't connected to the moratorium. He didn't have any connection to issuing (the moratorium)," Gibbs said. "I hope that as we work through this process the senator will judge Jack Lew on the merits of being a director, not on politics."