A three-judge panel of the U.S. Fifth Circuit Court of Appeals ruled late Thursday afternoon against the Obama administration in the ongoing legal battle over a moratorium on drilling for oil in offshore waters. The quick ruling came as a surprise, since Judge W. Eugene Davis had told the overflowing courtroom at the conclusion of the hearing that the decision would be handed down early next week.

The  Department of Interior was petitioning to reinstate its ban on new offshore oil-drilling leases at sites in water more than 500 feet deep. At issue was the June 22 order by Judge Martin Feldman of the Eastern District Court in New Orleans overturning the moratorium. Feldman in ruled in Hornbeck v. Salazar that the drilling moratorium was over-broad and illegal. The case was brought by a coalition of businesses affected negatively by the drilling ban, led by Hornbeck Offshore Services of Covington, La. Interior Secretary Ken Salazar was petitioning for a stay of Feldman’s decision, an order which would keep the moratorium in place pending a full appeal before the court several weeks from now.

Justice Department attorney Michael Gray, appearing on behalf of the Interior Department, told the court that the District Court had “abused its discretion” in overturning the moratorium. Gray went back and forth with the panel over how much harm the plaintiffs in the case could expect if the stay was granted, and if the Interior Department would suffer “irreparable harm” if the stay was denied.

The plaintiffs’ lead counsel, Carl Rosenbloom, told the court that it was not Feldman who abused his discretion, but Salazar. Rosenbloom told the court that “all the plaintiffs want is for the government to follow the rules” and that the rules do not give Salazar carte blanche to suspend drilling operations but rather require a “rational basis” before the interior secretary can use his congressionally authorized emergency power to suspend drilling operations. Plaintiffs argued that Salazar had acted “irrationally” in placing a “blanket indiscriminate moratorium” on all deep-water offshore drilling before gathering the facts on what happened during the Deepwater Horizon rig blowout.

Also at issue in the arguments were comments by the Obama administration that it might impose a second moratorium if this one did not hold up. Hornbeck’s counsel argued “the suggestion of a second moratorium is …  an attempt to intimidate this court. This overarching threat, we suggest, is an affront to the standards of judicial review.”

In his rebuttal, Gray told the court that the second moratorium was being planned by Interior regardless of how the court would rule on the stay.

Appearing before the court was Henry Dart, counsel for the state of Louisiana and Gov. Bobby Jindal, who also attended the hearing. Dart said the moratorium would be the “coup de grace” to Louisiana’s economy, following Hurricanes Katrina and Rita, the nationwide recession and the BP oil-rig fiasco. Asked by the court what the impact of a second blowout would be on the state, Dart replied, “Frankly I don’t know that it could make it worse.” Dart argued that Salazar failed to consult with Louisiana at all before issuing the moratorium, a violation of Title 43 U.S. Code 1334a.

In the 2-1 decision, the court turned down the administration’s application for the stay, saying “Secretary [Salazar] has failed to demonstrate a likelihood of irreparable injury if the stay is not granted; he has made no showing that there is any likelihood that drilling activities will be resumed pending appeal.”  The latter comment was a reference to the de facto moratorium which has been in place since the Deepwater Horizon rig exploded in April.  The decision allowed for the federal government to apply to the court for emergency relief should any deep-water rigs actually commence drilling before the full appeal is heard on an expedited calendar in the week of August 30.

Davis was joined in his decision by fellow Reagan appointee Jerry E. Smith. Dissenting was Clinton appointee James L. Dennis.

James Plummer is a freelance writer based in New Orleans.