Opinion: A CEO Fights Feds, But Feds Don't Fight Fair

(Dow Jones Newswires), Sep. 3, 2010

Todd Hornbeck beat the Obama administration once again on Wednesday, and yet he is still losing.

Hornbeck was first to challenge the administration's industry-crippling moratorium on deep-water drilling in the Gulf. He handily won an order striking down the moratorium in federal district court. He won again in federal appeals court.

Yet with the stroke of a pen, Interior Secretary Ken Salazar simply imposed a second moratorium after the court blocked his first.

For Hornbeck, it's been like getting an eviction notice from the landlord, and successfully fighting the landlord in court, only to see the landlord write the eviction notice all over again.

Salazar's second drilling moratorium "is substantially the same as the first one," Martin Feldman, U.S. District Judge in New Orleans wrote Wednesday.

After throwing up this second moratorium, Salazar had the additional temerity to argue that Hornbeck's suit should be dismissed since it is only about the first moratorium, not the second, and the second is what counts, so na-na-na-na-na-na.

Doesn't it cost millions to keep suing the feds only to watch them do whatever they want, anyway, despite what the judge says?

"Yes, it's expensive," Hornbeck said. "But we've got billions of reasons to do it."

Hornbeck is CEO of Hornbeck Offshore Services, Covington, La., which he started in 1997 at age 28.

He grew up in a family that had been making its living from the Gulf of Mexico since 1956, first with oyster and shrimp boats and then drilling supply vessels. His father ran a company by the same name.

In 1997, Hornbeck foresaw drilling companies moving into deeper and deeper waters. He figured they would need the most technologically advanced ships to deliver supplies and gear. So he began raising capital and building them.

At age 42, Hornbeck oversees an enterprise with in-house architects and engineers, designing vessels with advanced propulsion systems that keep them precisely in place as they unload heavy equipment in the deep, roiling seas. These ships take advantage of every evolving technology, from satellites and computers to infrared beams and hydro-acoustics, to get everything on a drilling rig just so.

Hornbeck Offshore now has 80 ships and 1,200 employees, serving energy companies the size of Exxon Mobil on down.

When BP's well exploded, Hornbeck joined the emergency response, providing everything from skimmers and tankers to deep-sea robots. He is one of the reasons why the oil spill hasn't been as bad as predicted.

But now that the well is capped, and most of the oil appears to have been cleaned up or dispersed, Hornbeck is running out of work. He says he is now laying off hundreds of people and pulling ships out of the Gulf.

"Right now, we're seeing massive layoffs in our industry," he said. "We're stacking equipment...And we are proactively seeking work in a lot of different countries."

When his ships go to Brazil, they'll hire Brazilian crews. When his ships go to the Middle East, they'll hire crews there, too.

For all its complaining about big corporations that ship jobs overseas, the Obama administration is sure shipping jobs overseas. It is even shipping shipping jobs overseas.

"The damages the moratorium is doing today will be realized in a year or two from now," Hornbeck said.

Gasoline prices will likely be higher, unemployment in the Gulf states will likely be higher, America's dependence on foreign oil will like be higher, and people will be wondering why the U.S. economy still stinks.

The Obama administration has said it needs a six-month moratorium to investigate what went wrong, not just at BP, but with itself.

It's essentially acknowledged it is too incompetent to oversee drilling in the Gulf and wants time to figure out how to be competent--a position that is just as bizarre as saying, "Oh, you don't like that moratorium, judge, how about this one?"

And on top of moratoriam, which were aimed at deep-water drilling, the government's permitting process for shallow-water drilling is at a standstill, too, Hornbeck said.

The Gulf drilling industry has effectively been shut down, and it isn't going to learn from its mistakes if it is closed, Hornbeck said.

The second moratorium remains a victory for environmentalists. And it channels justifiable public rage over BP's big blunder. But America is still happily burning oil. And as more oil industry experts, and more advanced ships and equipment, leave the Gulf, the government will be even less prepared to respond to a spill in the future, Hornbeck said.

Other companies have joined Hornbeck's battle. Offshore driller Ensco has challenged the second moratorium, arguing what Judge Feldman just found: It is essentially the same as the first one.

So Ensco, which is also arguing before Feldman, will likely prevail as well. But what's to keep the administration from a third, or a fourth, moratorium? Or what's to keep the administration from double-speak, like, "there are no moratoriam, we're just not issuing permits today"?

Hornbeck says it's a defining moment for his company.

"We have billions invested in equipment and manpower," he said. "We've got to go where the work is."

Copyright (c) 2010 Dow Jones & Company, Inc.


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