Judge Blocks Moratorium On Deepwater Drilling

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A federal judge in New Orleans has struck down the Obama administration's six month ban on oil drilling in the Gulf of Mexico. The court decided the moratorium, imposed after the BP spill started, was rash. NPR correspondents John Ydstie and Richard Harris explain the suit.

NEAL CONAN, host:

This is TALK OF THE NATION. Im Neal Conan in Washington.

If you tuned in for our conversation with Queen Latifah about her latest book, well, we still hope to bring that to you. She is, however, running a little late.

In the meantime, we're going to focus on a ruling in New Orleans today, where a federal judge blocked the Obama administration's six-month moratorium on deep-water drilling in the Gulf of Mexico. The president imposed the ban after the BP spill.

The White House has promised an immediate appeal of the ruling, and joining us here in Studio 3A is NPR correspondent John Ydstie, who has been covering the story. And John, always good to have you on the program, no matter the exigencies.

JOHN YDSTIE: Always nice to be here.

CONAN: And tell us - the administration said we needed a six-month review to make sure that safety procedures are being followed. We have to remember, 11 people were killed in the explosion that sank the Deepwater Horizon.

YDSTIE: Indeed. The administration put in this six-month moratorium on deep-water drilling, told all the people who were currently drilling wells to stop drilling them at the safest possible moment, and the industry down in Louisiana and on the Gulf Coast said wait a minute, just because one operator has managed to blow out a well doesn't mean we all are guilty, and we should be able to continue to drill. After all, 35,000 wells have been drilled in the Gulf of Mexico. And this is the first - in U.S. waters - and this is the first major blowout.

CONAN: And the suit was filed by the companies that provide services...

YDSTIE: Right.

CONAN: ... to these rigs. And as I understand it, among their concerns is if this moratorium remains in effect, these rigs are mobile, they'll move to Brazil or off the coast of Africa and drill there, and business will be permanently lost, or for a good time.

YDSTIE: For a good period of time, yeah. These rigs are very expensive. You rent them for a half a million to a million dollars a day, and the people that own them have to keep them busy.

So if they see that for six months they're going to be sitting idle in the Gulf, they're going to move them somewhere else. They're in great demand. There's a shortage of these kinds of rigs in the world. Already some are moving out of the Gulf of Mexico to places like Brazil, off the coast of West Africa, the North Sea, et cetera.

So it will take time to get them back, and in the meantime, there's a huge industry that services these wells with hundreds of thousands of workers. And it could cost tens of billions of dollars to the Gulf Coast economy if this injunction remained in place for six months.

CONAN: The U.S. district judge, Martin Feldman in New Orleans, said the government's actions in this case were arbitrary and wrote: What seems clear is the federal government has been pressed by what happened on the Deepwater Horizon into an otherwise sweeping confirmation that all Gulf deep-water drilling activities put us in a universal threat of irreparable harm.

And, well, as you said, just one blowout. Other people might say all it needed was one blowout, and there is irreparable harm that's going on.

YDSTIE: And there is - the judge also made clear, this is a horrible disaster, and regrettable. But he's suggesting, in his decision to put a preliminary injunction in place, that it does not, does not mean that we should endanger the economy of the Gulf, put people out of work and take this critical resource away from the American people.

CONAN: And what happens now? If the government promises - and we heard from Robert Gibbs, the White House press secretary, from the podium this afternoon there would be an immediate appeal of the ruling. So what happens next?

YDSTIE: Well, as Mr. Gibbs said, the government will appeal to the Fifth Circuit Court of Appeals, and the president continues to strongly believe that continuing to drill at these depths without knowing what happened does not make sense and puts the safety of those involved and potentially the safety of the rigs in jeopardy.

So the White House is committed to bringing this through the courts and hopes to get the moratorium reinstated.

CONAN: And that might happen in a matter of days?

YDSTIE: I would think - I can't say for sure, but I think we're talking about a matter of days. I mean, this suit went into court yesterday, and the judge has ruled within 24 hours. So I think this will move along quite quickly.

CONAN: And the other part of this is - the six-month moratorium was not just an arbitrary six months. It was so a review could be completed by a commission, which is studying drilling practices and what's safe and our, you know, is everything adequate...

YDSTIE: Regulatory system...

CONAN: And what do we know about where that review is proceeding?

YDSTIE: Well, it's - this committee is just being organized, and the committee made a statement yesterday, leaders of the committee, suggesting that this moratorium might be in place even longer than six months because they suggested it would take them six months at least and maybe more to come to some conclusions on this.

So what's being argued, even people who - a number of experts who reviewed the Interior Department's recommendations on this issue suggest that the moratorium was going too far. They suggest a more targeted moratorium. They say there are some - clearly some rigs and operators out there who are less safe, operating in less safe manners than others, and they should - and the safer ones should be allowed to operate.

On the other hand, other experts who were involved in developing these recommendations say the core problem here is that the Minerals Management Service does not have adequate regulation. It needs to be overhauled, and it will take six months or more to make sure that federal regulators can effectively regulate this industry.

CONAN: The Mineral Management Services, of course, is that department, previously obscure, in the Department of the Interior, which has - there have been a couple scandals back in the Bush administration. In one case literally members of the MMS office were in bed with...

YDSTIE: Literally.

CONAN: ...with some of the people they were supposed to be regulating. But there was also a question - and the president has accepted the resignation of the head of the MMS, which had been changed since he came into office, and has appointed somebody new, but the...

YDSTIE: Who is currently reorganizing, charged with reorganizing.

CONAN: Interior Secretary Henry Salazar says we ought to have not one agency but in fact three, that this agency is asked to do something which is basically impossible to do, both to take in the huge amount of royalties that the United States government earns off these oil leases, and this is the second-largest source of income for the U.S. government, other than the IRS; and at the same time regulate these people, has an interest both in making sure the oil is flowing and making sure that things are done safely. Those two things are not always easy to do.

YDSTIE: And I think it is a good argument. It's an effective argument to say that while you're overhauling a whole agency like this, you might not be able to effectively regulate something as critical and something as difficult and dangerous as deep-water drilling.

CONAN: And the danger represented here, again, well, if this was lifted, would, for example, it be okay to start drilling again off the coast of Alaska, where there were some questions about wells going in there too.

YDSTIE: Actually, the deep-water injunction covers all of the U.S. federal waters. So even in Alaska, where deep-water drilling actually is 60 feet, not a thousand feet and beyond, drillers are prohibited from drilling there until this moratorium is lifted as well.

CONAN: Because of the different definitions, and obviously the great difficulties had this blowout - you see the efforts being mounted to get boom and skimmers to the Gulf Coast off Louisiana, Alabama, Mississippi and Florida. Imagine trying to do that off the north coast of Alaska.

YDSTIE: Exactly.

CONAN: So your best guess as to where this goes - the Fifth Circuit Court of Appeals will presumably treat this with expedition, as you suggest.

YDSTIE: I would think that the farther this decision gets from the Gulf Coast, the more likely a judge is to rule in favor of safety as opposed to the economic effects.

The judge in his decision makes clear that there are serious economic effects on the Gulf Coast. I think once you move that back out of Louisiana, you might see a judge be more concerned about safety.

So I think it's unpredictable at this point.

CONAN: All right, NPR correspondent John Ydstie is with us. We're - if you tuned in to hear our conversation with Queen Latifah about her new book, "Put On Your Crown," she has been unavoidably delayed on her way to the studios at NPR West in Culver City, California. We - we'll figure this out. It's live radio, people.

In the meantime, if you have questions for John about the effect of this ruling in the Gulf, in New Orleans, about deep-water drilling in the Gulf of Mexico - and again, earlier today a federal judge lifted the government's six-month moratorium on deep-water drilling there - give us a call, 800-989-8255. Email us, talk@npr.org. Let's see if we can get Jerry(ph) on the line, Jerry's with us from Norwalk in Ohio.

JERRY (Caller): Hi. I was struck by what the president said, that we should stop all the drilling because we don't know what happened. And I'm pretty certain that BP, all their mechanics - maybe not all their mechanics but their mechanics and their engineers do know what happened. And that does not necessarily mean that all other drilling operations are going to be prone to this same type of catastrophic failure.

CONAN: Well, that's what this commission, one of the things this commission, John, is supposed to figure out.

YDSTIE: Yeah, and I think you can also say that while there are some pretty good suspects in terms of the failures on the drill rig at the time, there is still some question about what happened to regulation.

What happened to regulators? Why did the government regulators from the Minerals Management Service not take stronger action as it became clear that this well was in trouble?

So you know, I think we can say, well, we don't know what happened and we'll just make sure that the rest of the operators don't make the same mistakes, but you've got to have an effective regulatory system to do that, and right now it appears that we don't have that.

CONAN: Thanks very much for the call, Jerry, appreciate it.

JERRY: Can I say something else?

CONAN: If you make it quick.

JERRY: Okay, well, just because OSHA says that a four-foot height is something that needs to have a harness on doesn't stop anyone from falling from four feet. The regulation itself is not going to be the deterrent, and I'm certain that BP did not want to have to spend all this money because of the failure.

CONAN: Well, they may have wanted to take some shortcuts, which is what some people said too. So they were spending money...

YDSTIE: They were hoping to save money by taking these shortcuts.

CONAN: By the way, the - there is - Tony Hayward, the CEO of British oil company BP, which was leasing the rig, skipped the event. There's a major oil conference underway in London, where executives warned that the moratorium would cripple world energy supplies.

Steve Newman, president and CEO of Transocean, said there are things the administration could implement today that would allow the industry to go back to work tomorrow without an arbitrary six-month time limit. So that may be something the courts take into account as well.

John Ydstie, stay with us. I'm Neal Conan. You're listening to TALK OF THE NATION from NPR News.

(Soundbite of music)

CONAN: This is TALK OF THE NATION. Im Neal Conan in Washington.

In her new book, "Put On Your Crown," Queen Latifah speaks several times about the importance of showing up on time. Well, sometimes things are not always as - do as I say, not as what I do. She has been unable to make it to the studios at NPR West today, and we'll see what we can do. It's live radio.

In the meantime, we're talking about a judge's ruling today that set back the Obama administration's plans for deep-water drilling in the Gulf. As you'll remember, after the BP disaster - what, 60 days ago now - the administration imposed a six-month moratorium on deep-water drilling.

A commission has been named to investigate what happened on the Deepwater Horizon when that oil rig exploded and sank, costing the lives of 11 men, and to find out what happened, if the regulations are adequate, the structure of the federal agency that oversees this - these kinds of operations, the Minerals Management Service, already the head of that agency has been replaced. And the secretary of the Interior, under whom it operates, has proposed that it be broken up into three different agencies.

And in any case, a federal judge in New Orleans today ruled that the administration's actions in imposing a six-month moratorium were capricious and arbitrary, that there's no need to punish everybody for what happened on the Deepwater Horizon.

NPR correspondent John Ydstie has been following this story, and John, this has been - apparently this kind of issue has been - even before the moratorium was issued, these kind of conversation were underway.

YDSTIE: Yeah. Actually, there was a report, or there was a review of regulation going on, just as the Deepwater Horizon exploded. Now this new commission that the president has set up will take the lead in trying to figure out how best to regulate deep-water drilling.

And - but as we said earlier, the - you know, the reorganization of Minerals Management Service on the fly, the people who are supposed to be regulating, make it very difficult to, I think, for the administration and for a lot of other people to feel good about allowing deep-water drilling to continue during that period.

But it's a fraught issue from the beginning. The president imposed this, I think because he felt like the broader public would feel that it would be unsafe to continue this deep-water drilling with this horrible disaster occurring.

But on the other hand, the folks involved in the business are adamant that it is not necessary and that there is huge economic damage going on in the Gulf Coast as a result of shutting down these drills.

CONAN: Well, shutting down the drills is a result of the disaster. BP has been held responsible for that disaster. These companies that ferry workers out to the rigs and those things, if they're losing money, can't they get paid back by BP?

YDSTIE: Well, you know, that's an interesting question, and remember last week, when the BP executives were at the White House, there was a $20 billion fund set up to compensate businesses and individuals harmed by the spill itself.

And on the side, there was a $100 million fund set up to compensate oil-rig workers who lost their jobs.

Now, BP is making it very, very clear that it does not take, will not accept any liability for the problems that stem from the moratorium that the president has put in place, but they did agree as a goodwill gesture to put together this fund that would compensate oil-rig workers.

CONAN: Let's see if we can get a caller on the conversation. This is Brian, Brian with us from Grand Rapids.

BRIAN (Caller): Good afternoon, Neal. I've got a comment. Can they break these wells down into different categories, like shallow wells, you know, 60 to 100 or 200 feet, and then the super-deep wells and then allow the shallower wells that have been proven safe to continue working while they're working on these extra-deep wells?

YDSTIE: Well, I'll tell you, actually the judge's opinion today made a distinction between 500 feet and 1,000 feet. The moratorium is for any well being drilled beyond 500 feet in depth, and the judge suggested that 1,000 feet would make more sense, and a lot of people in the industry have suggested that as well.

And remember, there are deep-water wells that are producing, and they continue to produce. They do not fall under this moratorium. And there are many thousands of wells closer in, in more shallow water, that continue to produce. And wells can continue to be drilled in shallower water.

So there is still an industry going on in the Gulf. It hasn't been totally shut down by this moratorium. What we're talking about is about 33 wells that were in progress, being drilled, or had been permitted that are being shut down.

CONAN: Brian, good question, thank you. Let's see if we can go next to -this is Bill, Bill is with us from Hardeeville in South Carolina.

BILL (Caller): Yeah. So I just think that they're - it's not mutually exclusive by all means, that, you know, they could start the investigation without doing the moratorium, and, you know, it seems so counter-intuitive.

I mean, I'm wondering: Who's consulting with the president? It seems like he really doesn't have, you know, he's not getting good advice like he should. Who would he consult typically in his Cabinet, you know, to make a decision like that?

And also, when is not doing your job considered stealing? Because I know, you know, I crossed over from blue-collar to white-collar work, and when I sat around or I didn't do my job, that would be considered stealing time. So it's not enough to just replace these, it's that these people lose their jobs as regulators. When are we going to, you know, get their money back or prosecute them? There needs to be harder punishment when you're a civil servant and you have such responsibility, you know?

CONAN: Well, that's another issue. We'll get the ethics committee working on that. But clearly, this commission was going to go ahead with their work regardless of whether there's a moratorium or not. But nevertheless, in terms of imposing the moratorium, the president, who is he consulting?

YDSTIE: Well, he - he certainly...

CONAN: He starts with the secretary of the Interior.

YDSTIE: The secretary of the Interior, Ken Salazar, was chief consultant, and Mr. Salazar was in discussions with about seven petroleum engineers on a panel who reviewed recommendations that he had made. Another eight or so experts also reviewed them.

He then took their recommendations for safety issues on rigs and drilling issues and then added his 60-day moratorium to the recommendations that he gave to the president without showing these various experts that this was what he was going to do.

A number of them, about half a dozen of them, objected and said they had not given their imprimatur to this, these recommendations, with the understanding there would be a six-month moratorium. And they have suggested to Mr. Salazar - I've talked to several of them in recent days - they're now in discussions with Mr. Salazar, arguing there should be a more targeted moratorium, not a blanket moratorium. And...

CONAN: But wouldn't that require them to say these are the good guys, these are the bad guys?

YDSTIE: I think that's right, yeah. And that's a very difficult thing for an administration to do. And it's difficult if you don't have a Minerals Management Agency...

CONAN: To say we - and here's the paperwork to prove it.

YDSTIE: Exactly.

CONAN: All right. Thanks very much for the call, Bill.

BILL: Why after the fact? Shouldn't this be something - once they've already approved the, you know, the deep-water drilling, this should have already been beforehand, right? Why after the fact, all of a sudden they're going to take a look at it?

I mean, it's - inherently it's going to have some risk. So as long as we approve it and we accept that risk, it has some risk, and you know, so I don't know why the moratorium now.

CONAN: All right, well, thanks very much. And to Bill's earlier point about stealing time, we're now going to steal some time from Richard Harris, NPR science correspondent, who's joined us here in Studio 3A. Richard, thanks very much for coming in.

RICHARD HARRIS: Hi, Neal, good to be here.

CONAN: And we're hearing some numbers today - Richard's been following the - sort of the nuts and bolts and the flow of this operation at the bottom of the Gulf of Mexico, and we're hearing some numbers today that BP has begun to recover quite a bit more of the oil that's been erupting out of this well.

HARRIS: That's true, almost 26,000 barrels in the last 24 hours, yesterday's day, which is quite a bit better than they have been doing. They've gotten close on a couple of occasions, but that was their best day yet in terms of getting it.

They've now recovered and either stored away or burned more oil than was spilled in the Exxon Valdez spill, but of course there have been many multiples of Exxon Valdez spills equivalent here. So that's the good news and the bad news mixed together.

CONAN: And the bad news. And there's even talk - I'm told one of their problems is what do you do with the oil once it comes up to the surface, putting it into ships, and there's talk of, well, you know, just down the road there's a reservoir that we tapped before. Maybe we could put it back in there.

HARRIS: Yeah, that possibility came up today as well. That's very much in just the sky blue thinking phase because it is true that they're having trouble handling as much oil as they're getting up.

They can handle about 16,000 barrels a day for the ship that's actually capturing the oil. They can then put that onto a barge and bring it to refineries and actually sell it. Actually, the money then from the sale gets donated to that National Fish and Wildlife Service, I believe. BP decided today that would be the recipient of that money.

But they are also burning, just burning off, 10,000 barrels of oil a day, just with a massive flamethrower, essentially, in the Gulf that will just get rid of it, because the philosophy is it's better to do a nice reasonably clean burn of it in the atmosphere than it is to let all that oil go into the ocean.

CONAN: And that's - we see - and we still don't understand the full effect of that. We're seeing oil that's coming onto the beaches and into the marshlands. We're told this is going to be tremendously damaging. But there's millions of gallons of oil that's still in the water beneath the surface, and we don't know what the effect of that is going to be.

HARRIS: That's absolutely true. And there was a - NOAA put out a - I'm sorry, NASA actually had a satellite view that was released yesterday that shows just enormous streamers of oil coating a huge portion of the Gulf. And it's on the surface. It's below the surface a little bit. And some of it's also in the deep water.

And let's not forget that this is not just oil coming up. This is a mixture of oil and gas. And even though the gas doesn't wash up onto the beach and make ugly tar balls, the gas does have very significant impact when it goes into the water because bacteria love to eat gas, and when bacteria eat gas, they consume oxygen.

So there are a few - I guess the word is maybe knock-on effects of this that are not really well understood. There are scientists out there right now in the Gulf trying to make better sense of it. But it's - no one has really dealt with this much oil or this much gas, certainly, going into the water all at once and trying to figure out what that really means.

CONAN: Let's get Tom on the line, Tom with us from Peninsula, Ohio.

TOM (Caller): Hi. I'm wondering why these rigs can't be used to put in relief wells before there's a problem. Other countries require that relief wells be in place in case there is an emergency like this.

CONAN: Is that accurate?

HARRIS: There have certainly been discussions about it. And Canada was talking about doing that, particularly in the high Arctic, where if -you have a very short oil drilling season. And if you can't get a relief well - if you have a problem trying start to drill a relief well and winter sets in, you're stuck. You cannot do the relief well. And my understanding is that Canada has been talking about that, but it's not actually a regulation that Canada has imposed.

And the short answer of why not do this is it's very expensive. This drill - this particular well probably costs 150 to $200 million to drill. And if you say, okay, you always drill two wells, then you double the cost of doing that. And it's clear that this reservoir of oil will repay that investment very handily, but that's not always the case. This was an exploratory, developmental well. They didn't know exactly what they will get when they got down there. And so that makes it a much riskier - financially riskier proposition to drill two wells every time you want to go to one place.

CONAN: Tom, thank you.

TOM: Is it riskier than letting the entire coast get polluted?

HARRIS: Well...

CONAN: That's another question, yes.

HARRIS: That's a good question. But, obviously, this is a - obviously, a huge, huge problem, but it's also a very rare problem.

CONAN: Thanks, Tom. We have heard in the past couple of days from Thad Allen, the Coast Guard admiral who's the incident commander here, that the drilling on the relief wells - two of them - is going ahead of schedule. They're still targeting mid-August for their completion.

HARRIS: Yeah. The timing of it is highly confusing because, actually, they are very ahead of schedule, but they're also afraid at the same time to say we're going to get this done early. So even though the drilling is way ahead of schedule, they're still sticking with their August time scale for being done with this.

I think there is some possibility that we will see a relief well in some success in July. I'm not making any promises - just the way the government is not making any promises - but they're - you know, that's a possibility. Also, it depends upon what happens with the weather in the Gulf, because if a hurricane comes in, four to seven days, it will take them to shut down operations and to scamper off to safety someplace, wait for the storm to blow over and then probably another week or so for them to come back and reestablish things. So if that happens between now and the relief well, finishing it...

CONAN: All bets are off.

HARRIS: Yeah. That puts it off.

CONAN: NPR science correspondent Richard Harris. Also with us, NPR economics correspondent John Ydstie.

You're listening to TALK OF THE NATION from NPR News.

And, again, we apologize. We had scheduled an interview today with Queen Latifah about her new book, "Put on Your Crown." She was unavoidably detained on the way to our studios in Culver City, California, so we're going to try to reschedule that and bring that to you at a later time.

In the meantime, let's see if we can get another caller on the line. Let's go to - this is Nina, Nina with us from Englewood in Florida.

NINA (Caller): Hi.

CONAN: Hi. Go ahead, please.

NINA: I have a couple of questions that I thought maybe somebody else would ask, but they haven't. I hear a lot of talk about how we need the oil from the Gulf for the United States. But I'm also sort of under the impression that we don't get most of that. I was wondering if you know how much we get and what happens to the rest. Is it sold on the open market, or what? And also, all the stuff that they've sunk down into that well to attempt to plug it up, they've got millions of gallons, I've heard, of mud with lots of chemicals in it...

CONAN: Drilling mud, yeah.

NINA: ...and toys, tennis shoes, golf balls - is that like coating the Gulf and killing the bottom of it, anyway?

HARRIS: Well, that's a - in terms of the drilling mud, that's a very small amount compared with the amount of oil that's gotten into the Gulf.

CONAN: And the number of gallons of dispersants that they've also put in the Gulf.

HARRIS: Yes. That is true, also. But...

YDSTIE: And I think Tony Hayward actually said the other day on Capitol Hill that the mud that they were using was non-reactive and, basically, inert.

HARRIS: It's a water-soluble mud...

YDSTIE: Right.

HARRIS: ...which is not as nasty as the oil soluble muds that they also use. But it's mostly up on - it mostly ended up on the sea floor, no question about it, along with the knots of rope and the other odd ball things that they stuck in there. I think that on the scale of environmental concerns, that's pretty close to the bottom.

CONAN: On other point, we always hear oil is a fungible quality. Obviously, no matter where you pump it, you could sell it anywhere. But from BP's point of view, if you're pumping it from the Gulf of Mexico, the nearest big market is the United States.

YDSTIE: Yeah. I'm not sure about where it gets sold, but I would presume most of it goes to refineries in the United States. And I think it's about 25 percent of the total production, U.S. production, comes out of the Gulf of Mexico right now. And most of that is still coming. We haven't really shut down any production. We've shut down drilling. So, right now, we may not be feeling the effects of the spill in terms of the amount of oil we're refining and the amount of gas available. But if this - but all of those wells that are producing have to be replaced at some point. And if we don't drill wells in the Gulf of Mexico, at some point, the production coming from there will begin to go down.

HARRIS: All right. And in terms of this one particular well, if you look at it, it's - I figured it would probably give us about four minutes a day of driving in the United States.

CONAN: Okay. That's another way to put it in perspective. Nina, thank you very much for the call. Appreciate it.

NINA: Thank you very much.

CONAN: And, John Ydstie, NPR correspondent, economics correspondent with us here in Studio 3A, Richard Harris, have you ever sat in before for Queen Latifah?

(Soundbite of laughter)

HARRIS: Never.

CONAN: First time for everything.

YDSTIE: I was hoping I could get my crown.

CONAN: Well, you'll get your crown on later, John.

YDSTIE: Okay.

CONAN: Thank you, gentlemen, both very much...

HARRIS: Sure.

CONAN: ...for your time today.

YDSTIE: You're very welcome, Neal.

CONAN: Coming up, the story of three child soldiers abducted into war. A new documentary introduces us to Grace, Milly and Lucy. We'll talk with the filmmaker next.

Stay with us. I'm Neal Conan. It's the TALK OF THE NATION from NPR News.

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