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The Situation Room

Judge Blocks Parts of Arizona Law; Pres. Obama on "The View"; Fisherman Fears for Gulf

Aired July 28, 2010 - 18:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

SUZANNE MALVEAUX, CNN HOST: You're in THE SITUATION ROOM.

Happening now, breaking news. A federal judge blocks controversial parts of immigration's -- Arizona's immigration law just before it goes into effect. Now, the legal battle is not over yet. We're going to take you to the front lines of the fight.

And 100 days after a blowout led to the disaster in the gulf, what happened to all the oil? If we can't see it, is it still a big problem?

And billions of dollars meant for rebuilding Iraq now vanished. The Pentagon can't figure out what happened to the money. We're on the case.

We welcome our viewers in the United States and around the world. Wolf Blitzer's off today. I'm Suzanne Malveaux, and you're in THE SITUATION ROOM.

We begin with the breaking news out of Arizona. Just hours before that state's controversial immigration law is due to take effect, a federal judge blocks key parts of it, including one provision that required police to question people about their immigration status.

Now, the Justice Department, which filed suit against the law, is hailing the ruling. Arizona Governor Jan Brewer calls it a bump in the road. Well, the battle lines are still drawn, and further legal fights certainly lie ahead.

I want to go straight to our CNN national political correspondent Jessica Yellin. She's in Phoenix, and Jessica, what has been the reaction to this very rollercoaster-type of day, and, obviously, a lot of emotion.

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: That's right, Suzanne, fierce and impassioned responses on both sides, as you might imagine. Advocates who have been pushing for the law are disappointed but say the fight goes on, and those who were fighting against it say that they see a window of hope here, but they also know that it's not over.

First, we spoke this morning with the man, the state senator, who introduced this bill to begin with. He said he wrote it to take it all the way to the U.S. Supreme Court, so he's not surprised for -- if the judge enjoins it as she did. This is Russell Pearce, the state senator who wrote this immigration law, saying he plans to fight on.

(BEGIN VIDEO CLIP)

RUSSEL PEARCE (R), ARIZONA STATE SENATE: Now, all of the sudden, instead of suing sanctuary cities that are in violation of the law, they're going to sue Arizona for enforcing the law, for protecting our citizens? This is one of the most outrageous battles that's ever occurred in modern history of federal government suing the state over state's inherent authority, for protecting citizens, you know.

So I'm asking for her to stand behind Arizona, the rule of law and our ability to protect our citizens.

(END VIDEO CLIP)

YELLIN: Suzanne, on the other side, there are -- there was not just the federal government suing, but also some local folks. And I spoke to one of the Phoenix police officers, the Phoenix police officer who brought his own case against the law, saying that it would put him in an incredibly difficult position having to enforce it. He wanted to stop it, and was pleased with the judge's injunction today.

Here is what David Salgado, police officer, said in response to her injunction.

(BEGIN VIDEO CLIP)

DAVID SALGADO, LAWSUIT PLAINTIFF: This bill, basically, with the language it was -- that it has written on there has me picking, choosing certain people, classifying certain people as second-class citizens, second-class people and I -- that was uncomfortable for me.

(END VIDEO CLIP)

YELLIN: So, he said that this is a -- a relief, but he knows it's not done, Suzanne, and, as you can see, the fight will go on -- Suzanne.

MALVEAUX: And Jessica, give us a sense of -- of the mood there where you are. Obviously there were a lot of people who were talking about massive protests. There was concern about people, mass exodus that was going to happen. Can you give us a sense of how people are feeling, how they're dealing with this -- this news today?

YELLIN: Yes. There's a sense that the pressure has slightly let up, but no dramatic shift, really, of the people who support the law, who wanted to see it go into effect. From them, I hear intense frustration. They were already upset that they felt the federal government wasn't doing its job enforcing the law, as they said. Arizona was going to step in and do the fed's job. And now the feds are even preventing Arizona from doing that, they say.

On the other hand, we're told the people who are critics of the law are still planning to come in and protest tomorrow, the day pieces of it go into effect. They're still planning acts of civil disobedience because nobody on either side thinks that it simply ends here.

So Arizona is still a very -- still very tense environment here over the immigration fight, Suzanne.

MALVEAUX: OK. Thank you, Jessica.

I want to turn now to our CNN's John King. He is with the CNN Express in Phoenix. And John, obviously, you know, they're certainly not toasting at the White House yet, but they -- they're looking at this and thinking, well, perhaps, just perhaps, we have avoided what could have been a real disaster, a chaotic situation on the ground. What is your take?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Well, legally, Suzanne, the White House has a victory, at least temporarily. But it can celebrate tonight because the injunction it won was on the very key arguments about the most controversial aspects of the law, and the judge said it appears now -- she will rule on the merits of the case later, but she issued the injunction because she said at first glance she seemed to agree with the federal argument that only Washington can say whether somebody has to carry papers proving their citizenship or proving their residency, that only Washington has purview over immigration matters so that Arizona police cannot be required to ask somebody about their status.

So, legally, the White House won today. It's the first round. This will go on to the district court, to a full hearing, perhaps all the way up to the Supreme Court. Politically, it's the open question. We don't know if there's a winner politically in Arizona most -- both sides of this debate now are (ph) saying nobody wins, because, Suzanne, the legal fight will continue in the courts, and the political battle, you could hear it loud and clear today and you will hear it at least through the November elections, and I'll bet you well beyond.

MALVEAUX: And -- and John, I guess it's difficult to say how this is going to play out for midterm elections, but, on the one hand, a lot of Americans, the polls show, that they -- they actually supported this Arizona immigration law. Does this have some sort of political backlash, perhaps, for the Obama administration, or do they look at this and say, hey, you know what? We might do better with Hispanic voters come the midterm elections, because of our stance?

KING: There is no question, if you look at the public opinion polling, that Latino voters have trended toward the Democrats, and of all the troubles the Democrats are having this year, the one bright spot has been the support among Latinos.

However, if you look at what we know politically about this, Governor Jan Brewer, she waited and waited, finally decided to sign the law. What was once a very competitive Republican primary, she now appears to be coasting toward victory in that Republican primary.

On the ground here in Arizona, the supporters of the law have carried the day politically, at least so far, 97 days or so until the election day. And if you saw the reaction across the country today, Suzanne, in a handful of states or more, legislators, they're saying they want to pursue these laws, a number of candidates -- some candidates saying, you know, amen to the judge, but a lot of the conservative candidates believing that if they stress this issue, that it can help them between now and November.

Many Republicans would say long term, having -- picking a fight with Latino voters will hurt the party, but in the next 97 days, do not expect for one second the supporters of this law in Arizona and across the country to retreat. They will not.

MALVEAUX: OK. Thank you so much, John. Both sides may be preparing, obviously, for the next round of the legal fight over Arizona's immigration law.

I want to bring in our senior legal analyst, Jeffrey Toobin, who's joining us. Jeff, we've been -- we've been watching this very closely. You know, basically, she split the difference here. Were you surprised?

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: Well, not really, give her arguments that she was -- her response to arguments at the oral argument a couple of weeks ago. She seemed very interested in this argument that immigration was a federal area that states intruded on at their peril, but I wouldn't say it's splitting the difference. This is really a win for the Obama administration.

This is the key part of the law. If you ask anyone about the Arizona immigration law, the provision that is known is the provision that says cops can say show me your papers at any time. That's why there's a consumer boycott and a tourist boycott of Arizona. That's why people have been so outraged, and that's why conservatives liked the law so much, because it really gets the cops involved in enforcement of immigration law.

The -the judge said too much involvement, but it's just the beginning. There's going to be a significant appellate process and I think this is a close, difficult question and higher courts may see this differently.

MALVEAUX: Do we see this, Jeff, possibly going all the way to the Supreme Court?

TOOBIN: I think there is a very good chance this case goes all the way to the supreme Court, because it's the kind of fundamental issue that really only the Supreme Court can -- can resolve. You know, what is the relationship between state and local governments and the federal government when it comes to this very incendiary issue of immigration, one that's of concern all over the country? And there is not an obvious or clear answer here.

It's obvious that Arizona does not have the right to declare war on Mexico. That is a unique federal responsibility. But when it comes to immigration, traditionally, it's been mostly a federal responsibility, but not exclusively, so drawing those lines, that's really a responsibility of the Supreme Court, and I think they'll find it -- it obligatory to step in and settle this question.

MALVEAUX: Jeff there are a lot of other states that are looking at Arizona as a potential model and even introduced their own legislation. What does this mean now that this ruling has come down for these other states and the kinds of immigration laws that they're putting forward?

TOOBIN: Well, it means that no state can come up with precisely the law that Arizona did and think that it's going to be confirmed, at least -- at least for now. But, you know, I don't think politicians care, frankly, a great deal about what a district court in Arizona said. They want to get political advantage and if they think that a tough immigration law, even one very similar to this, will get them attention, will get passed, they're going to go ahead and do it, and they'll worry about the courts later.

I think that politicians really see this as a political issue much more than a legal issue. They'll worry about the courts when the courts get involved.

MALVEAUX: All right. We'll be following the courts. Thank you so much, Jeff.

TOOBIN: OK.

MALVEAUX: Well, they were deported to Russia, but they left behind their mug shots, and now we've got them, pictures of those Russian agents that you have not seen before.

Plus, 100 days after the well blew out, where did all the oil go? Is it still a threat to the gulf? We're going to have a debate.

And President Obama is the first president to appear on a daytime talk show. Joy Behar of "The View" is in THE SITUATION ROOM to tell us about it.

(COMMERCIAL BREAK)

MALVEAUX: They're back in Russia now, part of a spying swap with echoes of the Cold War. But 10 Russian agents left behind their mug shots, taken after their arrest by the FBI.

Well, CNN now has obtained those photos and national correspondent Susan Candiotti joins us with the story. And Susan, how did we get these mug shots, and -- and why are we just getting them now? What's the story?

SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT: You know, it took a long time to get them, didn't it, Suzanne? You know, we requested them using the Freedom of Information Act and we did this way back in June, right after the group was arrested by the FBI and photographed by the U.S. Marshals Service.

In this case, it took a long time for the Justice Department to clear these photos. And, of course, one of the most recognizable faces is redhead Anna Chapman, the New York spy who had her own Facebook page. We all remember her.

Now, at one point, we were told they were being held up because of a national security issue, but that was after they pleaded guilty and were deported to Russia. So, finally, now, about three weeks later, we finally have them.

One woman, Patricia Mills, who -- of course that's a fake name -- has her eyes closed in -- in one of the photographs.

MALVEAUX: And Susan, do we know anything more about what these spies have been doing since they've been back in Russia?

CANDIOTTI: You know, we certainly do know that they have been debriefed. And according to Russian Prime Minister Vladimir Putin's website, Putin met with this -- with the group over the weekend. He even singles out Anna Chapman as being there and he says he sang with the spies to live music.

Here's how Putin is quoted in a transcript. He says one song is "From Where the Motherland Begins" and he adds, I'm not kidding you, I'm quite serious, and he adds in other songs of about the same content. And he also says the group was betrayed, but he does not say by whom.

And he adds this, quote, "traitors always meet with a bad end. As a rule, they end drunk or drugged in a ditch. One such person ended his life recently in this way abroad and no one knows why."

And Suzanne, as you know, the U.S. swapped four spies who are in prison in Russia for the 10. Two were flown to the United States. We don't have any word on them.

MALVEAUX: And do we know if all of the children have gone back to Russia to join their parents?

CANDIOTTI: You know, we believe so except for two. The two children who live in New York, the children of Spanish language journalist Vicky Pelaez and Juan Lazaro. Pelaez's attorney says that the children are staying in New York for now with no immediate plans to leave. One of them is a student, a concert pianist.

Now, Putin predicts that the Russian spies will have a good future now that they're back home. He says they will have a good job and a very interesting life. Back to you, Suzanne.

MALVEAUX: OK. Thank you so much. It's a very interesting story.

Well, Lisa Sylvester is monitoring some of the other stories. They are coming into THE SITUATION ROOM right now. Hi, Lisa. What are you working on?

LISA SYLVESTER, CNN CORRESPONDENT: Hi, Suzanne. Well, taking the temperature of the economy, the Federal Reserve says results in recent months are tepid at best. The Feds latest addition of its so-called beige book shows economic activity in 10 of the central banks 12 districts was either up slightly or remain flat.

Meanwhile, Atlanta and Chicago showed signs of an economic slowdown. The Fed says Americans continue to buy clothes and food, improving overall retail sales.

No charges are recommended against New York Governor David Paterson for involving himself with a staffer's domestic violence case. A retired judge overseeing the investigation says Paterson made an error in judgment by contacting the victim, but it wasn't criminal. It is still up to the Bronx County D.A. though to decide if Paterson should be formally charged.

And it is not so a fast for a California man who may be sitting on $200 million worth of Ansel Adams originals. The famous photographer's grandson now wants the glass plates a man says he bought long ago at a garage sale tested for authenticity again. He's asked that the artwork be carbon dated and challenges what he calls inconsistencies in the plates.

And some 57,000 followers are mourning the passing of the world's oldest tweeter. One hundred-four-year-old Ivy Bean died in England today. She's always known for her lovable and mischievous nature on the Tweeter website. Bean also used Facebook. And get this -- she had 25,000 pending friend requests. But Suzanne, she actually found twittering easier to use. Can you imagine that -

MALVEAUX: That is amazing.

SYLVESTER: -- 25,000 people wanting to friend you.

MALVEAUX: A lot of people wanting to find out what was going on with her.

SYLVESTER: Yes.

MALVEAUX: Very talkative.

SYLVESTER: She looks like she was a sweetheart, though.

MALVEAUX: Yes, absolutely. Thank you, Lisa.

Well, President Obama is the first president to appear on a daytime talk show. Joy Behar of "The View" is in THE SITUATION ROOM to tell us all about it.

Also, it is the worst environmental disaster in U.S. history, but amazingly there is little sign of all of the oil that's spewed into the Gulf of Mexico. We're going to ask the experts where has it all gone.

Plus, the search for Iraq's missing billions -- that's right, billions. Why can't the Pentagon find the money it was entrusted to keep?

(COMMERCIAL BREAK)

MALVEAUX: President Obama on the "The View". His conversation with the ladies taped today will air tomorrow and one of them is here to tell us about all about what happened. You can also see Joy Behar on our sister network, HLN, "The Joy Behar Show" airs seven nights a week at 9:00 Eastern.

Hey, Joy. Very good to see you here in THE SITUATION ROOM. How are you doing?

JOY BEHAR, CO-HOST, "THE VIEW": Hello, Suzanne. How are you?

MALVEAUX: Good. Tell us all about the conversation. You talked to the president today. What did you talk about?

BEHAR: Well, we talked about Afghanistan. We talked about jobs. We talked about -- Whoopi asked him what he had on his iPod. We talked about Chelsea Clinton's wedding. We talked about his family. We gave -- I threw him a few pop culture questions which were fun. We had a lot -- we had some laughs with him.

He was great. He was a gentleman all the way, very charming as usual.

MALVEAUX: Give us a -

BEHAR: The green room was buzzing. We had great food in the green room which we never -- you don't really have that much stuff. This was like, you know, over the top coffee urns and all sorts of stuff that we never saw before.

MALVEAUX: Give us -- give us a piece of news. Give us a news nugget. What was interesting about the interview? What did he say that might have surprised you or interest you?

BEHAR: Well, I can't give that to you, because --

MALVEAUX: Oh.

BEHAR: I can't give you too much, Suzanne.

MALVEAUX: Give us one thing.

BEHAR: Because, first of all, we have to air the show, you know, we have to air the show tomorrow. And then I have to talk about it on my show on HLN tomorrow night at 9:00. So, I can't give you too much. You see.

MALVEAUX: Tell us about -- did he talk about the Arizona immigration law that the decision that came down?

BEHAR: I think he -- you know -- you know what, truthfully I don't remember if it was on the air or during the commercial break, but I remember talking about it. He did. And he talked about the war in Afghanistan and how, you know, they're planning their pullout next year.

MALVEAUX: Does he think it's going well?

BEHAR: Stuff like that. You'll -- you'll have to --

MALVEAUX: How did -- what do you think -

BEHAR: He didn't say whether it was going well. And that you can see, he feels bad about war. You can -- I mean, you know, there was a moment when he talked about, you know, he has to sign the death certificates of these boys and girls and it's terrible for him.

MALVEAUX: What was it like for him to be amongst you? Was he relaxed, was he joking? What was his demeanor like? Did he seem pretty happy?

BEHAR: You know, he was very relaxed. He was very relaxed. You know, he seems at ease with whomever he is speaking to. He doesn't have -- he's not nervous. His hands are calm. He doesn't shake. He doesn't stutter. He doesn't humpa, humpa, humpa (ph), like I do. You know, he's -- he's just a -- he's in control of what he's saying, just you know -

MALVEAUX: Was there anything that --

BEHAR: And he speaks in --

MALVEAUX: Was this the first time? I know that he was on "The View" as a candidate. Did he seem any different as president?

BEHAR: He wasn't a candidate when he was on the last time. He was on before he actually threw his hat in the ring, which is, you know, and a lot of people said we threw softball questions at him at that time, but that's because he wasn't running yet.

MALVEAUX: OK.

BEHAR: You know, when John McCain came on and we -- we were harder on John McCain, he was running for president, so that is when we -- we gave him a little trouble.

MALVEAUX: OK.

BEHAR: Elizabeth asked Obama -- President Obama a question about jobs, and she was, you know, she was pointed. We were asking him very important questions, and we also had a lot of fun.

MALVEAUX: And did he talk about Michelle at all?

BEHAR: And that was it. But, you know, for the -- for -- he mentioned Michelle. He said that Michelle loves "The View" and watches "The View", which we're happy to hear that.

MALVEAUX: Was she invited to come on the show?

BEHAR: And he was he happy to come on the show. You know, yes, but I think for this particular time she was. She can -- she's always invited to come on, if she has time between gardening and whatever else she's doing. She's so busy.

But if she wants to come on, she's always invited. We love Michelle. She would be great on the show.

MALVEAUX: Well, Joy, we know you're very busy, too. So I'm really looking forward to seeing the interview on your show and obviously on "The View". And you can catch Joy's show on HLN at 9:00 P.M. Eastern.

Joy, thank you so much. Great to see you again, Joy.

BEHAR: So great to see you, Suzanne. You -- you're one of my faves.

MALVEAUX: Well, maybe I'll -- maybe I'll come join the show some time. We'll talk. We'll chat.

BEHAR: I'd love to see you on my show. Yes, come and visit me. OK. Bye-bye.

MALVEAUX: All right. Take care.

A mystery in the Gulf of Mexico, where are all of those millions of gallons of spilled oil? We have two experts standing by to help explain why there's little sign of the massive disaster.

Also, schools are already feeling the impact of Arizona's controversial immigration law even with key provisions on hold, and why some teachers may lose their jobs.

(COMMERCIAL BREAK)

MALVEAUX: BP's incoming boss Bob Dudley said today the worst may be over in the Gulf of Mexico. He believes that no more oil will flow from the damaged well.

But 100 days after the disaster's blowout and 13 days after the well was capped, nearly a quarter of the federal waters in the gulf remain closed to fishing. That is more than 57,000 square miles and there's still a ban on commercial fishing in state waters of Louisiana, Mississippi, Alabama and a small part of Florida.

A CNN crew followed one Louisiana fisherman who is still very concerned.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: I have been fishing these waters since about 1958. I think I've caught more fish on a rod and reel, especially speckled trout with an artificial bait than probably any man that's ever walked the earth.

That boom right there is protecting the oil from getting to these estuaries here. Fill them. Fill them (ph). They went over the boom. Fill them (ph).

Well, there's boom right here across this bayou right here, across this canal. Those guys just went across it, ran across the boom. That's a better fishing area in there. I mean it is the gateway to the eastern marshes. That just shows you the widespread abuse. You got first hand view of it right there. We are in the business, the charter business and we do it professionally for money, and we can't do it, because we could lose our license.

Hold on, I'm going to run it a little bit. You can 100 miles due west of here and never leave the marsh. Just miles and miles and miles of marsh, bays and estuaries, the most productive estuaries in the world. I look out over the marsh right now, maybe not to you, everything looks fine, but to me, I don't see any birds working. I don't see any bait. I don't see any mullets jumping. I don't see much life in the water. Something is not right and I could not put my finger on right in here, but you just don't see any life.

We should be seeing some shrimp jump, we should be seeing birds working, and you don't see any activity along the bank. You don't see any crabs moving around in the water. You know, you just don't see much. We just don't know. We don't know the future. We don't know the potential of what it has done. We don't know what's going on under the water. The BP storm. The black storm. The oil storm. It really worries me, because it is not normal in here. I'm really concerned about it. You know.

(END VIDEOTAPE)

MALVEAUX: There are millions of gallons of oil that spewed into the Gulf of Mexico for months on end, but now 100 days since the start of the disaster, there is very little sign of all of that crude. So, you know, the big question here is where did it go? I want to ask two experts. Ed Overton is professor emeritus at Louisiana State University specializing in environmental toxicology, and Stan Senner, he is director of conservation science with the Ocean Conservancy. Thank you, gentlemen for joining us here in THE SITUATION ROOM. This is a question that's bothering a lot of folks here and it remains a mystery. Can you can help us explain how it is that all of this oil has vanished and disappeared that we don't see the oil anymore. Ed?

ED OVERTON, LOUISIANA STATE UNIVERSITY: Well, I can give you my opinion, you know. We are not at the end of this, and we are still in the mid of the spill. It is not quite the middle, but on the back side of the spill, so we can give you an estimate about where the oil is, but what I think that has happened is over the last 87 days prior to the shutoff, the gulf became acclimated with a petroleum degrading bacteria, and we had a gigantic petroleum degrading treatment pond if you will.

On day 87, the flow of oil was cut off, and you still have all of the bacteria out there, and think are degrading the residual oil that is floating around in the environment very quickly. I think they are degrading the easy to degrade components of the oil first. Those are the components that would sheen, so you are seeing the residual of the component of the oil out there that don't sheen very much and it makes it much more difficult to see. I think there is a lot of oil in environment, and there is a lot of bacteria and biomeds in the environment, and there is still going to be some shoreline impacts over the next several days, but I think we also clearly are on the downside of this thing.

The environment is incredibly resilient. It will return to normal, and the bacteria are out there, and they are helping. We are also helping with some tropical weather that dispersed the residual oil that breaks it into much smaller components and the concentrated oil can't be degraded very fast, and the dispersed oil can be and bonnie helped in that respect.

MALVEAUX: Stan, do you agree? Do you believe that there has been bacteria that has eaten the oil, and that the oil is so dispersed and that is why we can't see it?

STAN SENNER, OCEAN CONSERVANCY: Well, there is no doubt that there is action by things like bacteria that can degrade the oil, but it is way too soon to say where the oil has gone. Who knows where it will pop up next. One of the things that we are concerned about is that oil can be buried in sediment and work its way under marsh grasses where it may take a lot longer to degrade and could linger for years and following the spill in Mexican waters of the gulf of Mexico, 30 years later, there is still oil several inches down buried under sediment in the man grove swamps.

MALVEAUX: How dangerous is that potential that the oil is there, but we can't see it or detect it? We saw Rob Marciano with a wonderful piece showing UV rays that actually could detect the oil, but we could not see it ourselves until he shined that special light on it. Could that be harmful for people on their bodies, on their clothes if you eat the fish, if you swallow the water? How dangerous could this be that the oil is still out there, Ed?

OVERTON: Well, oil that is in the aerobic environment, and that is where there is oxygen up where the fish swim degrade pretty quickly. So right now, undoubtedly, there are oil parts per million oil in the water column and maybe even washing up on the beach. That will be fairly quickly degraded. Oil that gets buried down in the sediments or under the marsh that is in what we call the anaerobic environment, no oxygen and it will stay there for an extremely long time, but the good news is that it does not cause gigantic impacts. Some of it leaches out. It is having impacts but they are not massive impacts like we have seen over the last 87 days. We have seen an acute horrible disaster coating of the marshlands, coating of animals, killing dolphin and that portion of the spill is over. There will be a long-term impact. We don't know what they are, but I am predicting that they will be relatively mild and that they will start decreasing in intensity. Some long-term impacts will be found.

MALVEAUX: Do you agree, Stan with that assessment and also the same question about the dispersants, do we have enough information to know whether or not the dispersants are dangerous? SENNER: No, we don't have enough information on the dispersants. It's really a massive uncontrolled experiment. I think the concern -- there are two concerns with the lingering oil. One is that if it is buried under sediment and under the marsh grasses, you may have storms that stir up that toxic soup again and that oil re-enters the environment. Also, we learned from the Exxon "Valdez" experience where I worked for seven years for the state of Alaska, that even concentrations of oil as low as parts per billion can reduce survival of the salmon that come out of eggs exposed to that oil.

MALVEAUX: Do we know if this oil is still in those Louisiana marshes? We have had many of the CNN crews and reporters who have been there who saw all of that oil and then that piece from the fisherman who says that there is no life. Do we know if the oil still exists there?

SENNER: Well, I --

OVERTON: I am sure it does, but I think that it is down in the marshland and causing a deprivation of the amount of oxygen down in the coastal marsh and that is t I think probably what he is seeing is that biomass uses up the oxygen and causes it to, the biotic life not to be normal so that's what you are seeing. The oil is being degraded as long as it is in the anaerobic environment. One other point I'd like to make is you know we have seen these pelicans for example totally covered in oil. This is a heartbreaking scene, but those pelicans are captured, they are treated by humans and cleaned up and released and by and large, they are surviving so that should tell us a little bit about the toxicity of this oil.

MALVEAUX: All right. Ed Overton and Stan Senner, thank you so much for joining us here in the CNN SITUATION ROOM. Appreciate your analysis. Thank you.

OVERTON: Thank you very much.

SENNER: You're welcome.

MALVEAUX: Billions of dollars meant for rebuilding Iraq, and now the money has disappeared and federal auditors can't figure out what happened to it.

Plus a federal judge may have blocked parts of the Arizona immigration law, but the law is already having an impact on the state's schools.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

MALVEAUX: Even with key provisions of Arizona's controversial immigration law on hold now, its impact is already being felt in the state's schools. Our CNN's Amber Lyon is in Phoenix.

(BEGIN VIDEOTAPE) AMBER LYON, CNN CORRESPONDENT: We are in an apartment complex in central Phoenix, far away from the courtroom and the politics with SB- 1070, and this is three generations of her family. They have lived here for 20 years, and despite that, they say they are so fearful of the new law, they will pack up their bags and leave. [ speaking foreign language ]

She says that the children grew up here in the United States, and she's obviously, you know, very sad about this. She has lived here for 20 year, and she is from Mexico. [ speaking foreign language ]

What do you feel when you wake up in the morning and know that you could be headed back to Mexico within the next couple of days and a country, you have not been in years?

UNIDENTIFIED MALE: Scary.

LYON: One quarter of the 40 apartments in this complex are now empty, vacated by families fleeing SB-1070 before it even goes into effect. There are beds still here. Look at the shoes, and it still has the flip-flops on the ground.

UNIDENTIFIED MALE: And another one empty.

LYON: You might lose your job?

UNIDENTIFIED MALE: Yeah, yeah.

LYON: It is a trickle down effect of SB-1070. So the kids helped to plan for this?

UNIDENTIFIED MALE: Well, it is a community garden and we had many volunteers.

LYON: At the elementary school nearby, the community garden is shriveling like the school's population. Some of the plants over here have not been cared for in a while and the superintendent suspects that's probably because the parents who planted these are no longer living here in Phoenix. So far the school district says that the attendance for the first day of school is down 30 percent from this same time last year.

JEFF SMITH, SUPERINTENDENT, BALSZ SCHOOL DISTRICT: If you have fewer children, then you need fewer teachers. Different programs may not be able to be offered. They may have to be scaled back, afterschool programs, tutoring programs.

LYON: Okay. Three kids there. And two here. And how much more? So just in this one family alone if they leave if 1070 go into effect, Balsz school district will lose ten more students. The district is hopeful that the students will trickle back, but like the school's future, her family future is in limbo.

UNIDENTIFIED FEMALE: I'm very sad. [ speaking foreign language ]

LYON: Amber Lyon, CNN, Phoenix, Arizona.

(END VIDEOTAPE)

MALVEAUX: Dozens of homes destroyed, a state of emergency in effect, we are watching a California wildfire that is burning out of control.

Plus another oil disaster is unfolding, more than 3/4 million of gallons spilled in and upper Midwest river.

(COMMERCIAL BREAK)

MALVEAUX: Lisa Sylvester is monitoring the other top stories coming into THE SITUATION ROOM right now. Hi, Lisa. What are you working on?

LISA SYLVESTER, CNN CORRESPONDENT: Hi, Suzanne. Well three are now twice as many crews trying to clean up an 800,000 gallon oil spill that's made its way to Michigan's Kalamazoo River. Even so, a Canadian energy company does not know what caused a 30 inch pipeline to break Monday. Officials say that the leak has spread 16 miles downstream. The spill is not expected to affect Lake Michigan.

A state of emergency continues in southern California where two separate wildfires have destroyed more than 16,000 acres and close to 40 homes. More than 2,000 people have been forced to evacuate. Crews in Kern County fire have been forced to call in for reinforcements to help to try to contain this blaze. Investigators suspect that this fire was started by humans.

Senator Olympia Snowe of Maine is now the fourth Republican to give Supreme Court nominee Elena Kagan her stamp of approval. Snowe says that she meets the standards of a Supreme Court justice, is smart and respects the rule of law. The solicitor general and former Harvard law school dean is expected to be confirmed, but seemingly with fewer GOP backers than Justice Sonia Sotomayor had last year.

And while the country is all abuzz about a floppy hat. There's the hat. The floppy straw hat. This shot of soon to be married Chelsea Clinton was snapped outside of Vera Wang in New York City yesterday. You get a slight peek of a possible wedding up-do. Women's' Wear Daily reports that Hillary Clinton also made a stop at Oscar De La Renta, but the question of who Chelsea will wear is a big mystery. I have to imagine for Chelsea, it has to be so difficult to get around and try to be it a secret, because you have secret service wondering around.

MALVEAUX: Well, the floppy hat helped.

SYLVESTER: It's a big hat and she may have had a hairdo under there.

MALVEAUX: Well, Lisa, we are waiting for the invite. It is in the mail, I am sure.

SYLVESTER: Well, it is coming up, so it better be in the mail soon.

MALVEAUX: OK. Thank you, Lisa.

Well, the pentagon is now unable to account for billions, yes, billions that were supposed to be used to rebuild Iraq. We're going to take a closer look at a troubling audit.

And music stars young and old at the white house. Our CNN's Jeanne Moos takes a most unusual look.

(COMMERCIAL BREAK)

MALVEAUX: Billions of dollars meant for rebuilding Iraq. Now the money has vanished. And the pentagon is unable to figure out what happened to it. Our Lisa Sylvester has been looking into this. Lisa, what do we know about this money that, now, seems to be unaccounted for?

SYLVESTER: The first thing I should say is this is not U.S. taxpayer money but it's Iraq's money we were entrusted to control until their government started functioning. We are talking $8.7 billion between 2004 and 2007. The new audit by the U.S. special inspector general overseeing Iraq reconstruction says the pentagon really can't properly account for what happened to that money.

(BEGIN VIDEOTAPE)

SYLVESTER: Revenue from Iraqi oil, frozen Iraqi assets and leftover funds from the United Nations oil for food program, money set aside to develop and rebuild Iraq. More than $9 billion went to the department of defense to pay for reconstruction contracts in Iraq. But a new audit finds the pentagon is having trouble accounting for most of it, $8.7 billion of that money. Of particular concern to the inspector general's office in charge of overseeing reconstruction, $2.6 billion transferred to the defense department in cold, hard cash with absolutely no paper trail.

STUART BOWEN, SPECIAL INSPECTOR GENERAL: We continue to pursue this. I've got auditors down in Georgia now trying to find out where those records might be. We were told by the officials in Iraq that they think the records are state side. They weren't sure where.

SYLVESTER: D.O.D. agencies were supposed to establish separate accounts to deposit foreign money that does not belong to the U.S. federal government. That wasn't done except in one case. D.O.D. should have named a point person within the agency to make sure controls were in place. Also not done. And D.O.D. was supposed to keep track of how much Iraqi money it currently is holding. That hasn't been done. The special inspector general found no incidence of criminal wrongdoing so far but no one knows what happened to the money. The project on government oversight is an independent watchdog group.

SCOTT AMEY, PROJECT ON GOVERNMENT OVERSIGHT: Certainly the federal government should know who it's paying and what we're paying for. At the end of the day, are we getting the humanitarian need to the Iraqis that we need? Are we getting the appropriate reconstruction projects completed that are desired? And the government can't prove that now.

SYLVESTER: The pentagon, under secretary of defense comptroller agrees with most of the report's recommendations. D.O.D. central command, however, says, "The fact that deposit accounts were not established does not translate to 8.7 billion being unaccountable." Centcom believes many financial records were sent for archiving and says they're very difficult to find.

(END VIDEOTAPE)

SYLVESTER: This isn't the first time the pentagon has been criticized for poor record keeping of Iraqi funds. Five years ago, D.O.D. was not able to account for nearly $100 million. That case resulted in ten convictions of officials for fraud, bribery and money laundering. Suzanne.

MALVEAUX: Thank you, Lisa.

A most unusual look at music up next.

(COMMERCIAL BREAK)

MALVEAUX: It's not every day you see the Jonas brothers with Paul McCartney. Here's CNN's Jeanne Moos.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT: While the Bush White House put out behind the scenes videos of Barney the dog, the Obama White House just released behind the scenes video of these three young pups.

UNIDENTIFIED MALE: The Jonas brothers.

MOOS: They performed at the White House last month to honor Paul McCartney. Who could forget the presidential sing-along? Who could forget -- commander in chief karaoke.

And the Jonas brothers seemed to love hanging out at the white house.

UNIDENTIFIED MALE: The biggest honor we may have had in our career.

MOOS: Hobnobbing with Seinfeld and McCartney. Slightly awestruck. Gawking like tourists as the presidential chopper lands. That was Elvis Costello snapping photos. McCartney asked the Jonas brothers to cover a Beatles song.

McCartney was awarded a Library of Congress prize. And the whole event is now a PBS special. But there was one memorable moment from that evening's festivities that got chopped. Remember Paul McCartney's dig at former President Bush?

PAUL MCCARTNEY, SINGER: After the last eight years, it's great to have a president who knows what a library is.

MOOS: Ooh. Well, the producers of the PBS special decided to delete that, saying the comment had been made after the official program had ended and after President Obama had already left the room.

Hard to believe it was almost 50 years ago that Paul and the Beatles were being chased by teeny boppers. Nowadays, it's Justin Bieber who's working like a dog and getting mobbed by teenaged girls. There he was on a segway scooter the other day in Glendale, Arizona trying to escape the mob. Eventually, he stopped and signed autographs but not before the girls literally fell for him. Bieber later tweeted, not a good idea, got a little nervous. Still love the ladies.

At least Malia Obama didn't go all Bieber on the Jonas brothers.

Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

MALVEAUX: I'm Suzanne Malveaux in the SITUATION ROOM. "JOHN KING USA" starts right now.