June 17, 2010 08:09 PM UTC

The Six Month Moratorium Myth

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• by: Middle of the Road

Reading through the text of Obama’s Oval Office address Tuesday evening, I searched specifically for concrete ideas on how the Gulf’s economy is being addressed long term due to the six month moratorium. Putting aside the jaw dropping loss in the fishing and tourism industry for a minute, how does this affect oil riggers? Oil and gas exploration are two of the main industries in the Gulf and a primary source of income for the four state region–where does this leave tens of thousands of employees looking to make their monthly mortgages?

In the middle of the largest economic downturn since the Great Depression, is a six-month moratorium long enough? Is it too long for the thousands of oil workers and their families? How many jobs are being affected by the moratorium?

Senator Landrieu predicts the moratorium could have devastating, long term results on a region that is only now starting to show signs of recovery after the disastrous effects of Katrina.

Landrieu said a halt in these drilling activities for six months will “wreak economic havoc on the region.” She said as many as 330,000 jobs could be affected in Louisiana alone and cited complaints she has received from a number of companies that support the drilling on shore and on the rigs themselves.

Legitimate concerns raised in regards to President Obama’s six month moratorium for off shore drilling deserve a second look. And while the average rigger might be totally screwed, if you are an oil company, the good news is you are going to be a-okay. Hurray!

For those of you hoping this 6 month break would turn into a permanent cessation of offshore oil drilling, I have bad news. To my great (not really) surprise, I discovered that while existing rigs are currently out of commission, the Department of the Interior approved the sale of more than 400 tracts off the Gulf for leasing to oil and gas companies–specifically the development of Lease 213.  

What is Lease 213? It’s a 36 million acre area that was created by the Bush administration for new leasing of oil and gas. And in November 2009, Secretary of the Interior Ken Salazar gave the thumbs up for the sale of 6,800 tracts of Lease 213 off the coasts of Alabama, Mississippi and Louisiana. In all fairness, the bidding which took place at New Orleans Superdome and attracted $1.3 billion in bids took place a month prior to the oil spill on April 20th. But the reality here is that the Federal Government is not going to reimburse $1.3 billion and cancel the sale of these leases. Biggest environmental disaster in US history or not, we’re drilling, baby. It’s just a matter of when, not if.

…the Department of the Interior’s Minerals Management Service (MMS) has approved the sale of 448 of those tracts, 198 of them in deepwater, which is defined as more than 656 feet below the sea. BP is the proud new leaser of 13 of those tracts.

Here’s where things get messy. As always, if you’re looking for the fox, check the henhouse first.  

The lease sale is the first step in the oil drilling process. Companies must first obtain the right to drill the tracts before they can devise exploration plans, which must be approved by MMS [Minerals Management Service].

And that’s where the problem lies. MMS has been notorious for rubber-stamping the oil industry’s plans. The lease for the well that’s spewing oil into the Gulf, the Macondo, was sold in March 2008. The exploration plan for that well was granted a “categorical exclusion” from the requirements of the National Environmental Policy Act (NEPA) in April 2009, paving the way for drilling to begin.

In 2007, the MMS completed a 900+ page Environmental Impact Statement for 2007 which was basically quoted verbatim in 2009 and used as the basis for giving the go ahead on Lease 213.

According to Mother Jones, Defenders of Wildlife and the Southern Environmental Law Center (SELC) are both bringing suit against MMS as a result of the disaster in the Gulf and are specifically targeting the approval of the 448 tracts in light of the environmental assessment used by the MMS.

The biggest concern..is that once these leases are sold, it’s unlikely the government will reverse course on drilling. Once the oil companies pay for the rights, the government can’t cancel the contract unless it pays back the lessee either the fair market value of that lease or the amount spent to obtain the bid, plus costs and interest.

“It becomes a financial issue for the government to cancel a lease once it’s issued,” says Derb Carter, senior attorney and director of the Carolinas office of the Southern Environmental Law Center. “They should have immediately halted the leasing and gone back and evaluated the potential environmental impact of drilling in light of the BP disaster

If Obama is serious about a moratorium and moreover about regulation and splitting out agencies that for decades have been in cahoots, he picked the right one to start with.

Now, one place we’ve already begun to take action is at the agency in charge of regulating drilling and issuing permits, known as the Minerals Management Service.

Over the last decade, this agency has become emblematic of a failed philosophy that views all regulation with hostility, a philosophy that says corporations should be allowed to play by their own rules and police themselves.

At this agency, industry insiders were put in charge of industry oversight. Oil companies showered regulators with gifts and favors and were essentially allowed to conduct their own safety inspections and write their own regulations.

And when Ken Salazar became my secretary of the interior, one of his very first acts was to clean up the worst of the corruption at this agency. But it’s now clear that the problem there ran much deeper and the pace of reform was just too slow.

The impetus for setting up a $20 billion dividend account for workers being affected by this moratorium seems a whole lot fairer when you compare it to what the oils companies are going to reap in the long run, no?

And for those of you that think “regulation” is a four letter word? I have a few choice, four letter words for you, too.