Spill Panel to Press Obama Team on Drilling Ban

NEW ORLEANS (Dow Jones Newswires), July 14, 2010

The leaders of a presidential panel investigating the Gulf of Mexico oil spill expressed skepticism Tuesday about a six-month moratorium on deepwater oil drilling and said they would press the Obama administration on why a prolonged ban is needed.

"We're going to look over their shoulder and have some comments to make as to whether we think the judgments they made are appropriate," said Bob Graham, one of the two co-chairmen of the National Commission on the BP-Deepwater Horizon Oil Spill and Offshore Drilling.

The comments by Mr. Graham and William K. Reilly represent a sharp shift. A day earlier, both men had said that assessing the merits of the moratorium wasn't part of their panel's mission.

But on Tuesday, during a break in the second of two days of hearings on the environmental and economic impact of the spill, Messrs. Reilly and Graham said they had been persuaded by Louisiana elected officials, business people and ordinary citizens to weigh in on the issue.

Mr. Reilly said he was "quite moved" by the testimony of Sen. Mary Landrieu (D., La.), who said the government should be able to move faster than six months to determine the safety levels of the 33 rigs covered by the ban. Mr. Reilly said he was also surprised that representatives of Louisiana's fishing industry, which has been rocked by the spill, had called for lifting the moratorium.

"Frankly, I have less understanding why it's going to take so long to reassure people that the existing rigs are safe," Mr. Reilly said during a news conference with Mr. Graham. Mr. Graham drew an analogy to a recent order by the Federal Aviation Administration directing airlines to inspect the cockpit window heaters on roughly 1,200 Boeing (BA) airliners, amid concerns that the heaters could have contributed to incidents involving in-flight fires, smoke and shattered windshields.

"I'm sure they [aviation companies] didn't wait until all 1,200 airplanes had been evaluated to release the first ones" back into service, Mr. Graham said. "Why couldn't we have something like that with these [drilling] rigs, once we're satisfied they have met safety guidelines and the [Interior] Department is satisfied with its capacity to" carry out and enforce relevant safety rules.

Messrs. Graham and Reilly spoke after hearing testimony from the director of the Bureau of Ocean Energy Management, Regulation and Enforcement, Michael Bromwich. Mr. Bromwich said the administration continues to believe a temporary ban on deepwater drilling is necessary, not only to give the government sufficient time to implement new safety measures but also to investigate the cause of the April 20 explosion of the Deepwater Horizon rig.

Mr. Bromwich said the oil and gas industry needs to "show us and show the public they have developed more effective containment strategies" for dealing with oil spills "than they have developed to date." The administration has said its moratorium on deepwater drilling will continue until Nov. 30 or "such earlier time that" Interior Secretary Ken Salazar determines that such operations can proceed safely.

The Interior Department on Monday issued an order banning most new deepwater-drilling activities until Nov. 30. The ban replaces an order issued by the department in May that was struck down by a federal court last month, and sets up the possibility of a fresh legal challenge. Hornbeck Offshore Services, which challenged the initial moratorium, declined to comment.

It's not clear how the Interior Department's new moratorium will affect litigation between the oil industry and the Obama administration over the earlier ban. A Justice Department spokeswoman said that Mr. Salazar's new order "expressly supersedes" the earlier one. As a result, she said, the administration plans to ask the U.S. District Court for the Eastern District of Louisiana to dismiss a lawsuit filed by the oil industry against the government over the earlier ban.

But Carl Tobias, a law professor at the University of Richmond in Virginia, said he thought it unlikely that the judge in the case, Martin Feldman, would grant the administration's request. "It's a new order, but he still has jurisdiction over the subject matter," Mr. Tobias said. "I think he'd try to maintain that."

Messrs. Graham and Reilly didn't commit to issuing a formal conclusion on the moratorium by a specific date. Mr. Reilly said the speed with which the commission could move to examine the issue would be determined by how quickly it can hire additional staffers. The Obama administration is seeking $15 million to fund the panel, but Congress has yet to approve the request, forcing the panel to rely on temporary funding from the Energy Department.

Nevertheless, Mr. Reilly said, "we probably have a contribution to make to the thinking" on the moratorium.

Mr. Reilly said he also wants the panel to quickly address the use of chemical dispersants in combating the spill, and whether they have affected the environment even more than the spill.

"The major question for this commission, and one we haven't fully resolved, is whether this [accident] was a one-off event or [evidence of] a systemic weakness in the technology of deep-sea drilling," Mr. Reilly said.

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