Judge Rules Against Obama Drilling Ban

(Judge reversal of drilling ban story updated for White House comment on appeal, details from Judge Feldman written opinion)

NEW YORK (TheStreet) -- A New Orleans federal judge has lifted the six-month moratorium on deepwater drilling, rejecting the Obama administration's case that the BP(BP) oil spill was a game-changer that forced it to put the moratorium in place due to risks of offshore oil exploration.

U.S. District Judge Martin Feldman sided with the oil company, Hornbeck Offshore Services, that brought the case against the Obama administration and Interior Department Secretary Ken Salazar. Judge Feldman was appointed to the federal bench by President Ronald Reagan in 1983.

President Obama temporarily halted all drilling in waters deeper than 500 feet on May 27 until such time as the government could learn the causes of the BP oil spill.

There are several potential ramifications for BP as a result of the court decision. For one, claims by Interior Secretary Salazar that BP would be on the hook for paying claims to oil and gas workers left without work as a result of the moratorium may now not be among the unquantifiable liabilities facing BP. On the day Interior Secretary Salazar made that claim, BP suffered a 15% decline, and Anadarko Petroleum(APC) was down more than 18%.

At a larger level, all of the offshore drilling stocks have been hammered given the uncertainty about deep-water drilling -- many expected the federal ban could last much longer than six months.

The offshore drilling stocks, including Transocean(RIG), spiked from earlier lows on the judge's decision, but the spike was short-lived for many of the stocks.

The White House spokesman Robert Gibbs said the government would appeal the decision.

BP and Anadarko were still trading down on Tuesday afternoon.

Arguments presented to Judge Feldman included: the moratorium illegally sidesteps a required industry comment period, and that regulators failed to note that deepwater rigs had passed regulatory re-inspection after the Deepwater Horizon explosion.