Drilling Moratorium's Length to Be Set by Interior Department, Not Panel

The length of a U.S. moratorium on deep-water oil drilling will be decided by the Interior Department, not the presidential commission investigating the BP Plc spill in the Gulf of Mexico, the panel’s co-chairman said.

The Obama administration’s six-month drilling ban “has very complicated parts to it,” and the commission may help answer some of the questions, Bob Graham, a former senator from Florida, told reporters prior to the commission’s first hearing today in New Orleans. “The actual decision is going to be made by groups primarily in the Department of Interior,” he said.

One of the biggest questions for the commission established by President Barack Obama last month is whether the Deepwater Horizon drilling rig that exploded April 20 and triggered the largest oil spill in U.S. history, is an “outlier,” he said.

“Was it an oil rig that was outside the normal standard of safety or was it representative of other rigs?” Graham asked.

Obama temporarily halted drilling in waters deeper than 500 feet on May 27 to give his commission time to study improvements in the safety of offshore operations. The administration is revising the moratorium to comply with a judge’s preliminary injunction that lifted the ban after more than a dozen Louisiana offshore service and supply companies sued.

A three-judge panel of the U.S. Court of Appeals for the Fifth Circuit refused last week to reinstate the drilling ban while the government appeals the earlier decision.

Local Economy

Graham said commissioners met with local officials in the Gulf in preparation for the hearings today and tomorrow. Graham said he is concerned that a “fishing moratorium” may harm the economy in states along the Gulf.

“These consequences are an important part of the assignment,” Graham said.

The panel today is hearing from representatives of the Louisiana Shrimp Association, an oyster company and a tourism board, as well as Larry Dickerson, chief executive officer of Diamond Offshore Drilling Inc.

The BP Deepwater Horizon Oil Spill and Offshore Drilling Commission is also looking into whether federal agency oversight is sufficient. The review will include this year’s reorganization of the Minerals Management Service, the industry’s principal regulator.

The damaged Macondo well has been gushing as much as 60,000 barrels of oil a day, according to government scientists, after the initial explosion killed 11 workers and sank a $365 million Transocean Ltd. rig being leased by BP. London-based BP had spent about $3.1 billion on containment efforts, cleanup and legal claims as of July 6, according to company data.

To contact the reporter on this story: Jim Snyder in Washington at jsnyder24@bloomberg.net

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