[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]



 
                LEGAL LIABILITY ISSUES SURROUNDING THE 
                        GULF COAST OIL DISASTER

=======================================================================



                                HEARING

                               BEFORE THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 27, 2010

                               __________

                           Serial No. 111-130

                               __________

         Printed for the use of the Committee on the Judiciary


      Available via the World Wide Web: http://judiciary.house.gov




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                       COMMITTEE ON THE JUDICIARY

                 JOHN CONYERS, Jr., Michigan, Chairman
HOWARD L. BERMAN, California         LAMAR SMITH, Texas
RICK BOUCHER, Virginia               F. JAMES SENSENBRENNER, Jr., 
JERROLD NADLER, New York                 Wisconsin
ROBERT C. ``BOBBY'' SCOTT, Virginia  HOWARD COBLE, North Carolina
MELVIN L. WATT, North Carolina       ELTON GALLEGLY, California
ZOE LOFGREN, California              BOB GOODLATTE, Virginia
SHEILA JACKSON LEE, Texas            DANIEL E. LUNGREN, California
MAXINE WATERS, California            DARRELL E. ISSA, California
WILLIAM D. DELAHUNT, Massachusetts   J. RANDY FORBES, Virginia
STEVE COHEN, Tennessee               STEVE KING, Iowa
HENRY C. ``HANK'' JOHNSON, Jr.,      TRENT FRANKS, Arizona
  Georgia                            LOUIE GOHMERT, Texas
PEDRO PIERLUISI, Puerto Rico         JIM JORDAN, Ohio
MIKE QUIGLEY, Illinois               TED POE, Texas
JUDY CHU, California                 JASON CHAFFETZ, Utah
TED DEUTCH, Florida                  TOM ROONEY, Florida
LUIS V. GUTIERREZ, Illinois          GREGG HARPER, Mississippi
TAMMY BALDWIN, Wisconsin
CHARLES A. GONZALEZ, Texas
ANTHONY D. WEINER, New York
ADAM B. SCHIFF, California
LINDA T. SANCHEZ, California
DANIEL MAFFEI, New York
JARED POLIS, Colorado

       Perry Apelbaum, Majority Staff Director and Chief Counsel
      Sean McLaughlin, Minority Chief of Staff and General Counsel


                            C O N T E N T S

                              ----------                              

                              MAY 27, 2010

                                                                   Page

                           OPENING STATEMENTS

The Honorable John Conyers, Jr., a Representative in Congress 
  from the State of Michigan, and Chairman, Committee on the 
  Judiciary......................................................     1
The Honorable Lamar Smith, a Representative in Congress from the 
  State of Texas, and Ranking Member, Committee on the Judiciary.     8
The Honorable Jerrold Nadler, a Representative in Congress from 
  the State of New York, and Member, Committee on the Judiciary..    10
The Honorable Howard Coble, a Representative in Congress from the 
  State of North Carolina, and Member, Committee on the Judiciary    10
The Honorable Robert C. ``Bobby'' Scott, a Representative in 
  Congress from the State of Virginia, and Member, Committee on 
  the Judiciary..................................................    10
The Honorable Darrell Issa, a Representative in Congress from the 
  State of California, and Member, Committee on the Judiciary....    11
The Honorable Steve Cohen, a Representative in Congress from the 
  State of Tennessee, and Member, Committee on the Judiciary.....    12
The Honorable Sheila Jackson Lee, a Representative in Congress 
  from the State of Texas, and Member, Committee on the Judiciary    16
The Honorable Maxine Waters, a Representative in Congress from 
  the State of California, and Member, Committee on the Judiciary    16
The Honorable Henry C. ``Hank'' Johnson, Jr., a Representative in 
  Congress from the State of Georgia, and Member, Committee on 
  the Judiciary..................................................    17
The Honorable William D. Delahunt, a Representative in Congress 
  from the State of Massachusetts, and Member, Committee on the 
  Judiciary......................................................    18
The Honorable Mike Quigley, a Representative in Congress from the 
  State of Illinois, and Member, Committee on the Judiciary......    19

                               WITNESSES

Mr. Keith D. Jones, Baton Rouge, LA
  Oral Testimony.................................................    23
  Prepared Statement.............................................    26
Mr. Douglas Harold Brown, Employee, Transocean, Ltd., Vancouver, 
  WA
  Oral Testimony.................................................    33
  Prepared Statement.............................................    35
Mr. Stephen Lane Stone, Employee, Transocean, Ltd., Katy, TX
  Oral Testimony.................................................    41
  Prepared Statement.............................................    44
Mr. Byron Encalade, President, Louisiana Oysters Association
  Oral Testimony.................................................    47
  Prepared Statement.............................................    49
The Honorable Jim Hood, Attorney General, State of Mississippi
  Oral Testimony.................................................    52
  Prepared Statement.............................................    54
Mr. Daryl Willis, Vice President, Resources, BP America
  Oral Testimony.................................................    85
  Prepared Statement.............................................    87
Ms. Rachel G. Clingman, Acting General Counsel, Transocean, LTD.
  Oral Testimony.................................................    93
  Prepared Statement.............................................    96
Mr. James W. Ferguson, Senior Vice President and Deputy General 
  Counsel, Halliburton
  Oral Testimony.................................................   100
  Prepared Statement.............................................   102
Mr. William C. Lemmer, Senior Vice President and General Counsel, 
  Cameron International Corporation
  Oral Testimony.................................................   108
  Prepared Statement.............................................   109
Mr. Vincent J. Foley, Partner, Holland & Knight, LLP
  Oral Testimony.................................................   111
  Prepared Statement.............................................   114
Mr. Thomas C. Galligan, President and Professor, Colby-Sawyer 
  College
  Oral Testimony.................................................   120
  Prepared Statement.............................................   122

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Prepared Statement of the Honorable John Conyers, Jr., a 
  Representative in Congress from the State of Michigan, and 
  Chairman, Committee on the Judiciary...........................     2
Prepared Statement of the Honorable Steve Cohen, a Representative 
  in Congress from the State of Tennessee, and Member, Committee 
  on the Judiciary...............................................    13
Prepared Statement of the Honorable Mike Quigley, a 
  Representative in Congress from the State of Illinois, and 
  Member, Committee on the Judiciary.............................    20
Material submitted by the Honorable John Conyers, Jr., a 
  Representative in Congress from the State of Michigan, and 
  Chairman, Committee on the Judiciary...........................   180
Material submitted by the Honorable John Conyers, Jr., a 
  Representative in Congress from the State of Michigan, and 
  Chairman, Committee on the Judiciary...........................   182

                                APPENDIX

Material Submitted for the Hearing Record........................   189


     LEGAL LIABILITY ISSUES SURROUNDING THE GULF COAST OIL DISASTER

                              ----------                              


                         THURSDAY, MAY 27, 2010

                          House of Representatives,
                                Committee on the Judiciary,
                                                    Washington, DC.

    The Committee met, pursuant to notice, at 9:41 a.m., in 
room 2141, Rayburn House Office Building, the Honorable John 
Conyers, Jr. (Chairman of the Committee) presiding.
    Present: Representatives Conyers, Nadler, Scott, Watt, 
Jackson Lee, Waters, Delahunt, Cohen, Johnson, Pierluisi, 
Quigley, Chu, Deutch, Baldwin, Gonzalez, Sanchez, Polis, Smith, 
Coble, Goodlatte, Issa, Forbes, King, Franks, and Poe.
    Staff Present: Eric Tamarkin, Majority Counsel; Renata 
Strause, Majority Staff Assistant; Reuben Goetzl, Majority 
Clerk; and Zachary Somers, Minority Counsel.
    Mr. Conyers. Good morning. The Committee will come to 
order. We welcome everyone, particularly the distinguished 
witnesses that are before us, to discuss the legal liability 
issues surrounding the Gulf Coast oil disaster. The 
jurisdictional basis for this hearing in Judiciary is that the 
liability issues under the Federal law fall to the jurisdiction 
of this Committee, particularly the Death on the High Seas Act, 
and the Limitation of Liability Act in particular.
    We all know that the oil spill in the Gulf Coast is one of 
monumental proportions--the worst spill in U.S. history. These 
considerations are particularly within the jurisdiction of this 
Committee.
    The current state of the law is inadequate to deal with 
disasters of this size. The legal landscape the victims of the 
Gulf Coast disaster are navigating is exceedingly complex, 
outdated, and inconsistent. The remedy available under the 
Death on the High Seas Act for the families of those who were 
killed is woefully inadequate. They are limited to recovering 
for the direct loss of economic support the deceased would have 
given to dependent family members. The Death on the High Seas 
Act should be amended so that families who lose a loved one at 
sea can seek relief to the full measure of their loss, 
including the loss of care and comfort provided by the 
deceased.
    I will put the rest of my statement into the record and 
recognize the distinguished gentleman from Texas, Mr. Lamar 
Smith.
    [The prepared statement of Mr. Conyers follows:]
    
    
    
    
    
    
    
    
    
    
    
    
    
    
                               __________

    Mr. Smith. Thank you, Mr. Chairman. Mr. Chairman, I 
appreciate your holding this hearing today on the liability 
issue related to the Gulf oil spill. I understand that it was 
announced just a few minutes ago that the top kill effort has 
been successful. So that is the best news we can probably get 
here today. So the most pressing need right now is to contain 
and remove the oil that has already been spilled.
    As we move forward, it is equally important that we make 
sure that the parties responsible for this spill and not the 
American taxpayers pick up the bill. The cost of this bill goes 
beyond containing and removing spilled oil. Those responsible 
must also pay to remedy the effects of this on America's 
natural resources. Additionally, the responsible parties must 
compensate individuals, businesses, and governments for their 
losses. And I know that has already begun.
    The Oil Pollution Act and our other environmental laws 
ensure that the responsible parties pay the full cost by 
holding them strictly liable for all removal costs, natural 
resources damages, and up to $75 million in economic damages. 
While this bill has already far exceeded the $75 million cap, 
it should not be an obstacle to obtaining more funds from 
responsible parties, since the Act has meaningful exceptions 
and does not apply to State law claims.
    Moreover, British Petroleum repeatedly has called the 
liability cap irrelevant and is committed to pay all legitimate 
claims. However, I am concerned about some of the proposals to 
make changes to our oil pollution legal process. Following the 
Exxon Valdez spill, Congress worked for 15 months to carefully 
research the issue and ultimately write the Oil Pollution Act. 
But some Members did not even wait 15 days after this most 
recent spill to push legislation to change important provisions 
of that Act.
    I understand that there is a temptation to punish BP for 
this tragedy, but proposals such as raising liability caps may 
create legal and financial burdens that force independent 
operators out of the oil exploration business altogether. We 
should not create a situation in which only the so-called super 
major oil companies and foreign state-owned companies are able 
to drill for oil offshore. It would be ironic if legislation 
aimed at punishing BP had the perverse effect of enabling only 
large companies like BP to drill for oil off America's coast.
    I am also concerned that the Obama administration's 
response to the spill has been slow and insufficient. Louisiana 
Governor Bobby Jindal has characterized the government's 
response as a ``disjointed effort to date that has too often 
meant too little to late to stop the oil from hitting our 
coast.'' Unfortunately, the Administration's response to this 
spill has, in large part, consisted of blaming BP and railing 
against big oil, while ignoring its own lack of preparation and 
slow reaction.
    While our response should be swift and targeted to the 
problem at hand, we must be careful not to overreact. Just as 
after the Exxon Valdez spill, we did not stop shipping oil by 
tanker, we cannot stop drilling for oil off America's shores. 
If we banned every industry that had a tragic accident, we 
wouldn't drive, we wouldn't fly, we wouldn't take the train, or 
travel to the Moon. Instead, we have learned from our mistakes 
and made these industries safer for the future.
    We must determine what caused this accident and take steps 
to ensure that it does not happen again. But those steps should 
not include a ban on drilling offshore. At a time when America 
needs to decrease our dependence on foreign oil, now is not the 
time to cut off our own sources of oil. Until we develop viable 
alternatives to fossil fuels, we must continue to drill for oil 
both on shore and off. Our immediate goal should be to make 
sure all possible resources go toward settling claims, stopping 
the spill, cleaning up the mess, and protecting wildlife in the 
Gulf from future spills.
    Thank you, Mr. Chairman. I yield back.
    Mr. Conyers. Are there any other Members that want to 
welcome our distinguished witnesses today or make an 
observation of extreme brevity?
    Jerry Nadler.
    Mr. Nadler. Thank you, Mr. Chairman. Thank you, Mr. 
Chairman, for holding this hearing on the legal liability 
issues. Virtually every aspect of the disaster involves 
different liability issues, which we will get to. I just want 
to make one observation, which I will be going into in the 
questions, and that is with respect to the use of chemical 
dispersants. We are treating chemicals with chemicals which 
don't actually remove or clean up the oil. They simply shift 
them to another part of the ecosystem while increasing the 
toxins in the Gulf, harming, contaminate the water, and 
threatening human life. There is no scientific evidence that 
dispersants can be effective in an oil spill of this magnitude. 
These chemicals make it harder to track how much oil and where 
it is going and thus to determine liability. They are good for 
public relations, but nobody can guarantee they are safe.
    Already, we are hearing of people getting sick because of 
the use of these chemicals. In fact, there is already anecdotal 
evidence people are getting sick from the mixture of oil and 
toxic dispersants. We are basically airdropping this toxic 
stuff all over the Gulf. It reminds me of Agent Orange. And I 
am greatly concerned that during this cleanup we are conducting 
an uncontrolled experiment with all the marine and human life 
in the Gulf Coast region--an uncontrolled experiment that could 
result in thousands of people getting sick and dying as a 
result of the cleanup, not of the original disaster.
    I will be going into questions on that during the question 
period. And I hope that we can prevent a repetition of some of 
the disasters that we have had before. This disaster is 
unprecedented in scope as it is, and I fear we are just going 
to make it worse.
    Thank you. I yield back.
    Mr. Conyers. Howard Coble.
    Mr. Coble. Mr. Chairman, you and the distinguished Ranking 
Member have pretty well covered it. I won't go into any great 
detail at all. Mr. Chairman, I believe you used the word 
``disaster'' to describe it. I think that is an apt descriptive 
term. It is, indeed, a disaster. I am glad to hear the news you 
shared with us, too, Lamar.
    But I appreciate you all being here. I would like to 
associate myself with the remarks of the distinguished 
gentleman from Texas, when he declared that we should not 
abandon plans to drill simply because of this isolated 
disaster. We need to keep that on the table, it seems to me, 
Mr. Chairman.
    And I thank you, Mr. Chairman, for having called the 
hearing. I thank the distinguished panel for being with us 
today. I yield back.
    Mr. Conyers. Bobby Scott.
    Mr. Scott. Thank you, Mr. Chairman. I opposed the oil 
drilling expansion for good reason. The Administration 
announced a few weeks ago--and I didn't think the small gains 
for a few cents per gallon of gasoline saved in outyears is 
worth the risk. The number of jobs that the proponents argue 
might be created by offshore drilling in Virginia pale in 
comparison to the number of jobs we have already seen destroyed 
by this devastating spill. Devastation to sensitive wetland 
areas, tourism, the fishing industry, recreation in the Gulf, 
would not be any different than what would happen off the coast 
of Virginia, particularly when we are looking at the very 
sensitive Chesapeake Bay.
    Thank you for calling the hearing to ascertain the extent 
of the losses already caused by the spill, and helping 
determine who will be legally liable for these damages. Thank 
you very much.
    Mr. Conyers. Darrell Issa.
    Mr. Issa. Thank you, Mr. Chairman. I thank our panel of 
witnesses for being here today. As the Chairman said, it is 
very clear that we have limited jurisdiction. Our jurisdiction 
in this Committee is clearly as to whether or not we change 
liability limitations and their interpretation. For the 
Chairman, I commend him for starting off this hearing by 
reminding us that, in fact, we do not control the Corps of 
Engineers that has failed to act to protect Louisiana. We do 
not control the EPA, who only recently discovered that these 
dispersants might or might not be available for this use after 
oil spill after oil spill have occurred from ships over the 
years. We only recently discovered that we really don't want to 
invoke the Stafford Act, even though it has been on the books 
and would have allowed the President to act--and act more 
assertively.
    There are so many things that are not within the 
Committee's jurisdiction. As Ranking Member on Government 
Oversight, I am pleased to say those will be dealt with in 
other committees of jurisdiction. Today, we are only asked a 
fairly straightforward question: Are the limitations that 
currently are in place for acts which are not in violation of 
any regulation, including no misconduct, no wrongful acts, are 
the caps high enough at $75 million. Under the Oil Pollution 
Act, if there is so much as one regulatory failure, the caps 
are off.
    So let's understand. All the cleanup is already the 
responsibility of the parties, in this case, British Petroleum 
as the leaseholder, to $75 million to be paid if no wrongful 
act is done whatsoever. Not so much as failing to dot the ``i'' 
on an administrative report that may have prevented it. I 
repeat: May have prevented it. If so much as one of those 
occurs, then everyone who says that they had a bad day as a 
result of this, that they lost economic advantage of any sort, 
and even potentially those who were traumatized would all have 
that opportunity. That is what we will be deciding here today.
    I believe that we should consider whether those caps are 
high enough. We should consider within the body whether or not 
a fund that would exceed that should be in place so that 
smaller oil companies--smaller than BP, by definition is, 
everybody--would be able to continue to drill while the 
American people could be confident that the funds necessary not 
just for if you violate, but even if you don't violate, for the 
cleanup should be in place. Those are not within this 
Committee's primary jurisdiction.
    So I do look forward to hearing the narrow question 
answered of: Is the current law for no misconduct whatsoever 
and the cap that goes with it of $75 million sufficient, or is 
Congress in such a hurry that even before we know whether or 
not there was so much as one administrative violation, we want 
to change that cap?
    I look forward to the testimony and I thank the Chairman 
and yield back.
    Mr. Conyers. Steve Cohen.
    Mr. Cohen. Thank you, Mr. Chairman. I have got a statement 
that I will just turn in, and it goes through a litany of 
issues. Some may be more relevant than others. Mostly, it 
concerns the Bush-Cheney-Halliburton administration that is 
responsible for this; the lack of regulation; the lack of 
oversight; and the laissez faire, cowboy-type mentality that 
allowed all of this to happen. We have got to have regulations 
and government needs to act to be sure people and our 
environment and our world is safe. But the main thing I want to 
address is Mr. Jones. I want to express my condolences to you. 
To lose a child, and others have lost children, and parents. 
Eleven lives were lost. There is all kind of destruction and 
damage that pains me, to the Gulf Coast, which is close to 
Memphis. It is part of our worlds. But the lives that were 
lost. I just express my condolences to you.
    [The prepared statement of Mr. Cohen follows:]
    
    
    
    
    
    
                               __________

    Mr. Conyers. Sheila Jackson Lee.
    Ms. Jackson Lee. Thank you very much, Mr. Chairman. I may 
be the only one on the panel that comes from oil country, at 
least as I can recognize who has lived in a community that has 
based its economic independence and contributions to this 
Nation on the energy industry. Maybe the only former oil and 
gas lawyer who worked for entities that range from oil to 
natural gas to pipeline and to larger multinational oil 
companies. But I have a heart.
    Frankly, I first want to thank the Chairman for his 
quickness in moving forward on this hearing. Second, I want to 
say that $75 million is a joke. It is a sad state of affairs as 
we begin to listen to the testimony of which we will remain 
open-minded that we are in this dilemma. To all of the families 
that have lost their loved ones and those that remain injured, 
our deepest sympathy and our apology, for we are all in this 
together.
    There are those of who believe there should be a seamless 
energy policy that includes fossil fuel. But we don't believe 
that the devastation that has appeared over this last month and 
6 weeks. The failing of those who are here who are not victims 
was to be able to have the genius to do deepwater exploration 
but have no genius to be able to fix the consequences. It is 
the same story that happened with the Valdez in Alaska, I am 
told, driven by the same principles. We know how to move it but 
we don't know how to stop it. If that is the case, what I want 
to hear today, Mr. Chairman, is a full ownership on what 
happened and a full commitment to pay every single penny that 
is necessary to make the region whole and certainly the 
families whole.
    I would conclude my remarks by saying that I think it is 
crucial that there is no longer the opportunity to play without 
the opportunity to pay. And if you are to engage in the 
deepwater drilling, as we are doing off the coast of Ghana, you 
have got to be able to respond to crises and emergencies like 
this; a gushing hole that cannot end. And maybe someone will 
tell me whether the last 24 hours have been successful. We have 
not been able to determine that.
    I will say, Mr. Chairman, I think this hearing is about if 
you are going to play, you have got to pay. And $75 million is 
a disgrace.
    I yield back.
    Mr. Conyers. Maxine Waters.
    Ms. Waters. Thank you, Mr. Chair. I would particularly like 
to thank you for the way you manage this Committee and the 
timeliness of the issues that you deal with. I am appreciative 
for this hearing today. At this hearing today we are focusing 
on organizing around the liability issues related to the BP 
Deepwater Horizon oil spill. BP estimated that the oil spill 
continues to gush over 5,000 barrels, that is 21,000 gallons of 
oil each day into the Gulf of Mexico. However, some independent 
estimates put the total as high as 75,000 barrels each day.
    I hope these latest efforts to stop the leak are going to 
be successful, because everything else has failed. This 
disaster has already had a devastating impact on the economy of 
the Gulf Coast region and the way of life for many of its 
residents. Many of these residents are still trying to recover 
from Hurricane Katrina. And the BP disaster has doubled their 
sorrows. During a recent trip to New Orleans, I was 
particularly struck by the stories of the minority fishermen 
and small port business owners along the Gulf Coast. From week 
to week, fishermen don't know how long their jobs will be on 
hold. There are issues that currently exist that must be 
brought to light regarding the plight of minority fishermen 
related to the oil spill.
    Byron Encalade is the President of the Louisiana Oysters 
Association and the President of the Parish Fishermen 
Association. I know there is something else that goes with that 
name. He knows firsthand the effect that the oil spill is 
having on fishermen who depend upon the waters for their very 
sustenance. He is here today. And I thank him for his 
participation in the hearing. I am sure this Committee will 
benefit from his story.
    Fishermen have depended upon this season to be the 
opportunity to recover from the past. But this is not going to 
be the case. The oyster season was supposed to open up on May 
1st and some fishermen prepared their boats and have been ready 
to go out for the first 2 or 3 days. They planned to bring 
their first haul of the season and pay bills. But of course 
that did not happen.
    The National Oceanic and Atmospheric Administration,
    NOAA, has already closed over 54,096 square miles of the 
Gulf of Mexico to commercial and recreational fishing in order 
to assure that seafood will remain safe for consumers. That is 
slightly more than 22 percent of the Federal waters in the Gulf 
of Mexico. A closure of this size is bound to have a 
devastating impact on the fisheries in the Gulf. Their 
commercial fishermen harvested more than 1 billion pounds of 
fish and shellfish in 2008.
    On Monday, Secretary of Commerce Gary Locke determined that 
there had been a fishery disaster in the Gulf of Mexico due to 
the economic impact on commercial and recreation fisheries. The 
affected area includes the States of Louisiana, Mississippi, 
and Alabama. This determination allows the Federal Government 
to provide assistance to affected fishermen and local 
communities under the Magnuson-Stevens Fishery Conservation and 
Management Act. The Administration requests $15 million in 
supplemental appropriations to recover compensation under the 
Magnuson-Stevens Act, while emphasizing that these fund will 
only be used as a last resort.
    Mr. Conyers. The gentlelady's time has expired.
    Ms. Waters. I thank you very much. I am anxious to hear the 
people who are here to provide us with the information. Thank 
you. I yield back.
    Mr. Conyers. Hank Johnson.
    Mr. Johnson. Thank you, Mr. Chairman, for holding this very 
important hearing on the issue of legal liability issues 
surrounding the Gulf Coast oil disaster. First and foremost, I 
want to express my condolences. The April 20 fire and explosion 
that occurred on the Deepwater Horizon oil rig in the Gulf of 
Mexico resulted in the loss of 11 lives. Many more people were 
injured. My deepest sympathy goes out to the family, friends, 
and coworkers of the 11 individuals who lost their lives on 
that day.
    This explosion and fire occurred on the Deepwater Horizon 
drilling rig that BP was leasing to drill an exploratory well 
in the Gulf of Mexico. Transocean, the world's largest offshore 
drilling company, owned and operated the rig. In the aftermath 
of the explosion, the rig capsized and sank to the ocean floor, 
resulting in oil leaks. Millions of gallons of oil have spilled 
into the Gulf since this tragedy occurred.
    What disturbs me most about this spill is that it could 
have been prevented. Recent reports are stating that BP missed 
several warning signs that led to the blowout and fire on the 
Deepwater oil rig. This is unacceptable for a company where the 
first quarter earnings for this year alone was $6.1 billion. As 
a result, lives were lost and the ecosytem and economy are at 
grave risk. The livelihoods of workers and families and the 
small businesses that rely on the Gulf remain in question.
    The family, friends, and coworkers of the 11 people who 
lost their lives want answers and they need to be treated 
fairly. This Committee wants answers. This hearing will give us 
the opportunity to examine the liability issues stemming from 
the April 20 explosion. It will give us the opportunity to 
discuss how Congress could amend current laws such as the Death 
on the High Seas Act and the Oil Pollution Act to ensure that 
they are adequate and allow for punitive damages and 
nonpecuniary damages.
    In this current disaster, BP is subject to a liability cap 
of $75 million under the Oil Pollution Act. Although BP has 
stated that it will disregard the cap and pay all the 
``legitimate claims,'' questions remain about who will 
determine the legitimacy of the claims and how those claims 
will be assessed and resolved. I am eager to hear from the 
witnesses about their thoughts on the current liability laws 
and what could be done to improve them. Most important, I am 
anxious to learn about what Congress can do to ensure that this 
does not happen again.
    I thank the Chairman for holding this hearing, and I yield 
back the balance of my time.
    Mr. Conyers. Mr. Delahunt.
    Mr. Delahunt. Thank you, Mr. Chairman. I will be very 
brief. First, my condolences to the father of the young man 
that was lost. I think that is very important to say; to 
articulate. Please understand that it is heartfelt.
    I guess before we approach the issue of should the cap be 
removed altogether, should it be recalculated, I think it is 
important for this Committee to examine where the $75 million 
figure came from initially. I heard the gentlelady from Texas 
describe that $75 million figure as absurd. I think that was 
her word. I concur and agree. How did that ever happen? It 
clearly wasn't in this session of Congress. It was in the 
aftermath of the Exxon Valdez. But what we learned from that 
particular disaster was the cost far exceeded $75 million. I 
wonder why there should be a cap at all. I think that is the 
question that we should pose to ourselves and to this panel.
    In terms of the issue of punitive damages, there is going 
to be a series of hearings, multiple Committees, to examine how 
this happened, and why; what was the failure. In the criminal 
law, we have the concept of deterrence. I think it ought to be 
implicated in terms of disasters such as this that are clearly 
the result of failure somewhere along the line.
    I dare say, Mr. Chairman, if punitive damage was implicated 
into the equation of assessing the responsible parties, it 
would make a difference. It would make a serious difference. 
Because any CEO, any corporate board, any management, would be 
fully aware of the potential liability. So I think that is an 
important consideration.
    I will conclude my remarks there and thank the Chair for 
calling this hearing. But I think those two questions that I 
just posed are important for us in our deliberations to 
examine. I yield back.
    Mr. Conyers. Thank you. Mike Quigley.
    Mr. Quigley. Thank you, Mr. Chairman. I recognize that we 
are a long panel, so I will just submit my statement for the 
record. But just very briefly, I know we are talking about oil 
today. But in the end, the larger picture is the cost of 
carbon, the cost of exploration, the cost of using fossil 
fuels. Today, it is oil, but we could also be talking about 
blowing the tops off of mountains, polluting streams for all 
time, making moonscapes out of whole tracts of land out West in 
areas like Wyoming. We need to recognize it is part of a larger 
picture that only be solved by conversation and by promoting 
and supporting renewable energy, and that, frankly, we 
sometimes don't like to hear this, but you can't have 
everything you want. There is a cost to driving the biggest car 
you can buy 80 miles an hour. We have to recognize that as 
Americans and have to recognize that conservation is the 
beginning of this and renewable energy is the end. Thank you.
    [The prepared statement of Mr. Quigley follows:]
 Prepared Statement of the Honorable Mike Quigley, a Representative in 
   Congress from the State of Illinois, and Member, Committee on the 
                               Judiciary






                               __________

    Mr. Conyers. We welcome all witnesses.
    Mr. Tom Galligan; Mr. Vincent Foley; Mr. William Lemmer; 
Mr. James Ferguson; Ms. Rachel Clingman; Mr. Darryl Willis; the 
Attorney General of the State of Mississippi, Jim Hood; Mr. 
Byron Encalade; Mr. Stephen Stone; Mr. Douglas Harold Brown.
    And our first witness is Keith Jones, the father of Gordon 
Jones, who died aboard the Deepwater Horizon on April 20, 2010. 
Mr. Jones is a Louisiana native and a practicing trial lawyer 
for over three decades. Born in Shreveport, he raised his 
family practice. And he is joined by his son, Christopher K. 
Jones, who is here today. Would you stand up, sir? Thank you 
very much. He has worked with his father in preparation for 
this testimony today and has made himself available to the 
Committee for any questions that Members may have.
    We will have all statements entered into the record. We 
invite you to begin our testimony, Mr. Jones.

          TESTIMONY OF KEITH D. JONES, BATON ROUGE, LA

    Mr. Jones. Chairman Conyers, Ranking Member Smith, and 
other Members of the Committee, it is an honor to be allowed to 
speak with you today. My name is Keith Jones. I am a lawyer 
from Baton Rouge, Louisiana. Seated behind me is my older son 
Chris, who is also a lawyer in Baton Rouge. Chris and I are 
appearing before you today, however, not as attorneys but as 
the father and brother of Gordon Jones, who was killed on the 
Transocean Deepwater Horizon. We are here for Gordon's wife, 
Michelle; sons, Stafford and Maxwell Gordon; for his mother, 
Missy; for his sister, Katie.
    At the outset, I want you to know that just because I am 
here and addressing you today does not mean that I believe that 
Gordon's death was more tragic or more important than the other 
10 men that day. I know their families grieve just as much as 
we do. But the only one of the victims I knew was Gordon.
    He was 28. Our youngest child. He is survived by his widow 
Michelle and by his two sons Stafford, who is 2, and Maxwell 
Gordon, who was born 13 days ago. Gordon was a mud engineer for 
M-I Swaco, who had a contract with BP to provide that service. 
He received his bachelor of arts degree from LSU and then 
completed something called Mud School. After spending some time 
observing the work of those more experienced, Gordon began 
working as a mud engineer. As a relative newcomer, Gordon was 
sent to a different rig every 2 weeks, including the Transocean 
Deepwater Horizon. Gordon was good at what he did, as evidenced 
by fact that one of the mud engineers assigned to the Deepwater 
Horizon left, BP was offered a list of mud engineers who had 
worked at Horizon and from that list chose Gordon.
    As you know by now, the Deepwater Horizon was a rig of 
considerable prestige. It was a very large rig that drilled in 
very deep water and found very large deposits of oil. Gordon 
was proud that he had been so successful so soon in his career. 
It allowed his wife Michelle to quit her job last year. With 
one son and another on the way, Michelle wanted to be a full-
time mom. Gordon was chosen from that list not only for his 
skills as a mud engineer but also for his personality. 
Everybody liked Gordon. People who met him liked him--and the 
more they got to know him, the more they liked about.
    Gordon was funny. He loved to laugh. He loved even more to 
make others laugh. To have a friend like Gordon was a special 
gift. To lose a friend like Gordon was, and always, will be a 
bitter loss.
    Gordon even had the ability to make jokes at the expense of 
others, often me, and they would never get mad at him for it. 
It was a gift he had. And Gordon was a gift we had. We had a 
visitation at the oldest funeral home in Baton Rouge the day 
before Gordon's memorial. The line of people who came snaked 
through the funeral home, out the front door, and down 
Government Street. The funeral director said he had never seen 
anything like it. Imagine. And that man for a man who had been 
with us for 28 years.
    The first picture I would like to show you is my favorite. 
It was taken only a few days before Gordon's death. And I was 
standing right behind Michelle when she took it. Gordon was 
giving Stafford his first golf lesson. It was, of course, the 
last golf lesson he will get from his dad. I vividly remember 
driving away from that scene thinking they are so happy.
    The next picture is of Gordon holding Stafford soon after 
Stafford's birth. I have had the pleasure of being with all 
three of my children when their first children came into the 
world but I can't say I ever saw a prouder parent than Gordon. 
You would have thought he was the first man ever to father a 
child. The next picture is of Michelle, Stafford and Maxwell 
Gordon 13 days ago. We are happy and grateful that mother and 
child are healthy, they are home, where together they will all 
have to learn how to live without Gordon.
    The last picture depicts Gordon's presence in the delivery 
room. Gordon was a great father to Stafford. He was tireless. 
Any time Stafford wanted to play, Gordon was ready.
    Perhaps the saddest story about Gordon's death, and there 
are many, is that Stafford is just too young to be able to 
remember anything about his dad in the years to come. Of 
course, Maxwell Gordon will never have been able to know his 
father. His knowledge of his dad will be limited to pictures 
and things that Michelle and friends tell him. We don't have to 
be psychologists to know that is not enough.
    His body was cremated. Then the fireboats washed his ashes 
out to sea. I admit that having nothing to say goodbye to is 
much, much harder than I thought it would be. Call it closure 
or whatever, something is missing for us.
    You may note that I haven't mentioned how much money Gordon 
made. There is a reason for that. The loss of Gordon's income 
is the last thing Michelle grieves for. When Michelle tells her 
boys about their dad, she is not going to show them a pay stub. 
But as I understand the present state of the law, that is all 
Michelle and Stafford will recover from those responsible for 
Gordon's death. We fear that because Maxwell Gordon was born 
after April 20, 2010, the defendants will argue that he is 
entitled to nothing.
    Please believe me. No amount of money will ever compensate 
us for Gordon's loss. We know that. But the paying of damages 
by wrongdoers is the only means we have in this country to make 
things right. As time goes by, we learn more and more about 
whose fault it was that this blowout took our Gordon; whose 
fault it was that the accident happened. And whoever ultimately 
bears the blame for that will have to pay money to compensate 
the families of these 11 dead workers.
    How much that will pay is up to you. But reckless acts by 
employees of corporations, performed to try to make the most 
money the fastest will never be deterred by the payment of mere 
compensatory damages. Payment of punitive damages by 
irresponsible wrongdoers is the only way they may learn.
    These businesses are here to make money. Punishing them by 
making them pay some of that money to victims who suffer most 
is the only way to get their attention. If you want these 
companies, one of which has is headquarters in Great Britain 
and another in Switzerland, to make every effort to be sure 
their employees don't act as these did, putting American lives 
at risks, we must make certain they are exposed to pain in the 
only place they can feel it--in their bank accounts. As a 
friend recently said, make them hurt where their heart would 
be--if they had a heart.
    I am an environmentalist. I worry about the Louisiana 
wetlands, the Florida beaches, all of our precious lands 
endangered by this oil spill. But I do hope and believe this: 
After much work, perhaps for years, this mess will be cleaned 
up. The wrongdoers here can pay enough money to those who have 
lost their ability to earn a living to make that right. And 
eventually the shrimp will be back. The oysters and crabs and 
fish will be back. And BP will be back.
    We have heard over and over that the value of BP's stock 
has fallen. But BP is selling for about the same price it was a 
year ago today. So BP, Transocean, Halliburton, and any other 
company will be back because they have the infrastructure and 
economic might to make more money. But Gordon will never be 
back. Never. And neither will the 10 good men who died with 
him.
    Now the future of those families is in your hands. I urge 
you to do the right thing. Thank you very much for listening. 
Chris and I will be happy to answer any questions you may have.
    [The prepared statement of Keith Jones and Christopher 
Jones follows:]
                  Prepared Statement of Keith D. Jones














                               __________

    Mr. Conyers. Douglas Harold Brown was chief mechanic and 
acting second engineer on Transocean's Deepwater Horizon and is 
a survivor of the April 20 explosion. He served in the U.S. 
Army for more than 11 years, began work with R&B Falcon, an 
offshore oil drilling company that was bought by Transocean, 
and he became a Transocean employee and one of the original 
crew members of the Deepwater Horizon.

TESTIMONY OF DOUGLAS HAROLD BROWN, EMPLOYEE, TRANSOCEAN, LTD., 
                         VANCOUVER, WA

    Mr. Brown. Chairman Conyers, Ranking Member Smith, and 
Members of the Committee, thank you for inviting me to appear 
before you today. My name is Douglas Harold brown. I was the 
chief mechanic and acting second engineer on the Transocean's 
Deepwater Horizon. I am 50 years old, married, have a 10-year 
old stepdaughter, and live in Vancouver, Washington. I sailed 
the original voyage of the Deepwater Horizon from Korea to the 
Gulf of Mexico and I have worked
    onboard the vessel until she exploded would around 10 p.m. 
On April 20, 2010. Since 2004, I worked in the engine control 
room. Here is what happened to me that night.
    Shortly before 10 p.m., I was completing my shift and 
making my log entries in the engine control room where I heard 
a loud hissing noise followed by the sound of gas alarms going 
off. This was followed by the sound of engines ramping up very 
loudly. These engines provide power to the entire rig and are 
equipped with an electrical and mechanical trip. They are 
supposed to automatically shut the engines down if they exceed 
certain RPMs.
    As the engines revved louder and louder, I kept expecting 
the trips to shut the engines down, but they never did. They 
just kept revving higher and higher. The one automatic trip 
that did work disconnected the generators from the control 
panel and plunged us into total darkness. But the engines kept 
revving. Nobody ever radioed the control room to inform us that 
there was a kickback or that mud and seawater was shooting into 
the air.
    I was standing in front of the engine control panel waiting 
for the system to power back up when the first explosion blew 
me into the control panel and into a hole that was created in 
the floor. A short time later, a second explosion blew me to 
the floor again, the ceiling caved in, and debris fell on top 
of me. I could hear people screaming, calling out for help. I 
was terrified. I did not know what was happening, and feared I 
was going to die.
    I followed two of my coworkers and we crawled out of the 
hatch in the back of the room which had been blown up by the 
blast. When I got to the main deck, I saw the fire on the floor 
shooting up through the derrick. The heat coming from the floor 
was like nothing I have ever felt. Mike Williams, the 
electrical technician, and I, made our way around the fire to 
bridge. When we got to the bridge, the captain sent us to the 
lifeboats to find the medic because Mike was bleeding badly 
from his head. When we got to the lifeboats, it was complete 
chaos and mayhem. People were screaming and crying that they 
did not want to die and we had to get off the rig. We stood 
next to the lifeboats and watched as the fire grew larger and 
larger. While I think we were only there for about 10 minutes, 
it seemed like forever.
    Eventually, we were ordered to board the lifeboats and we 
were lowered to the water. We tied up to the Damon Bankston, 
which was a supply boat that had been taking on drilling fluid 
from the rig before the explosion. We were offloaded onto the 
Bankston, and I was taken by helicopter to another rig and 
eventually to a hospital in Alabama.
    I feel very fortunate that I survived this horrible 
tragedy. Eleven of my fellow crew members were not so fortunate 
and my heart goes out to their families and loved ones. I do 
not yet know the full extent of my injuries. I have been 
diagnosed with a fracture in my left leg and damage and 
bruising under my kneecap as well as ligament damage and nerve 
bruising. I have pain in my back and tail bone. I still walk 
with a cane. I am also having problems with my short-term 
memory, loss of fine motor skills, trouble sleeping, nightmares 
and flashbacks to that night. I have been diagnosed with PTSD.
    I will never forget that night though; the loss of my 
friends and the effect this has had on so many people. It is 
important for Congress to understand what happened that day so 
it doesn't happen again. I think it is also important to 
understand how Transocean manning decisions changed over time. 
When we first went to work on the Deepwater Horizon, we had a 
fully manned engine room which consisted of six people: Chief 
engineer, first engineer, second engineer, third engineer, and 
two motormen. As the years went by, for reasons I do not 
understand, the flagging of the vessel changed from Panamanian 
to the Marshall Islands. Transocean eliminated positions so 
that we were only left with three people: Chief engineer, 
second engineer, and one motorman. Three people were left to do 
six people's job. While this often made it difficult to timely 
complete our daily preventive maintenance, we worked hard and 
did the best we have could. In October, 2009, they reinstated a 
first engineer back in the engine room. That still left us two 
people short compared to when the vessel was flagged under 
Panamanian law. Over the years after Transocean began lessening 
the crew, I and others complained that we need more help. They 
just kept telling us they would see what they could do.
    I wish to thank you forgiving me the opportunity to testify 
before you today and I am happy to answer any questions I can 
for you.
    [The prepared statement of Mr. Brown follows:]
               Prepared Statement of Douglas Harold Brown












                               __________

    Mr. Conyers. Stephen Stone was working for Transocean 
aboard Deepwater Horizon and was injured in the April 20, 2010 
explosion.

 TESTIMONY OF STEPHEN LANE STONE, EMPLOYEE, TRANSOCEAN, LTD., 
                            KATY, TX

    Mr. Stone. Thank you. Chairman Conyers, Ranking Member 
Smith, and Members of the House Judiciary Committee. Thank you 
for the opportunity to speak with you today. My name is Steven 
Stone. I have worked for Transocean since February of 2008, as 
a roustabout, which is a general laborer on an oil rig. I was 
onboard Transocean's Deepwater Horizon rig on the night it 
exploded, killing 11 of my crew members and injuring many more. 
I am here today to tell my story not only about the disaster of 
April 20, but also about the events that led to that disaster. 
It is my hope that armed with this information, this Committee 
and the country can prevent another tragedy like this one from 
ever happening again.
    Like many people, I have been following the congressional 
testimony of the executives from Transocean, BP and Halliburton 
blaming each other for the blowout of the well. When these 
companies put their savings over our safety, they gamble with 
our lives. They gambled with my life, that gambled with the 
lives of 11 of my crew members who will never see their 
families or loved ones again.
    The blowout of this well was hardly the first thing to go 
wrong. I was working up on deck, helping to pump drilling mud 
down into the wellbore hole. However, we kept losing drilling 
mud, either because the underground formation was unstable or 
because drilling too quickly caused the formation to crack.
    Either way, about four separate times in the spate of 20 
days, we had to stop pumping drill mud and pump down a heavy 
duty seal compound instead to seal the cracks in the formation 
that was causing us to lose mud.
    On the night of April 20, 2010, I was asleep in my cabin 
two decks below the surface deck on the Deepwater Horizon. 
About 10:00, I woke up to the sound of an explosion. I didn't 
know what the sound was, so I waited for a few seconds to see 
what was happening. And then another explosion went off. The 
force of it ripped through my body and collapsed the upper 
decks of the rig.
    Somehow I opened the door to my cabin, and people were 
running up and down the halls screaming we had to get out. I 
ran through the door of my cabin toward the stairwell to the 
lifeboat deck, but it had collapsed. I ran back to my room to 
get my life jacket, my shoes, and my wedding ring. I then 
followed my crane operator Eugene Moss, who was running another 
way to the other end of the living quarters and used another 
stairwell.
    Once on that deck, one deck below the surface, we ran 
through more living quarters to get to the lifeboat deck. The 
ceiling above the life boat deck had collapsed by the galley. 
The air was smoky and gritty with debris. Eugene and I picked 
our way through the rubble to the lifeboat deck outside.
    Once we were outside, I turned and looked at the derrick, 
which was completely engulfed in flames so bright it seemed 
like daylight. I remember people just staring at the flames. 
Someone was trying to muster, which means to get everyone 
assembled and to get a head count. Some people were getting 
into lifeboats, and some were just in such shock, they just 
stood there unable to move. Suddenly, the flames on the derrick 
intensified, and that is when people started to panic and 
scramble for the lifeboats.
    I got into life boat number two, strapped myself in, and 
waited for what seemed like hours. Some people were getting 
back out of the lifeboat, and another person was still trying 
to muster and get a head count. I was pretty certain I was 
going to die, so I just sat there and waited for something to 
happen, for the derrick to fall down, and take the life boat 
out.
    Finally, the life boat filled up with smoke. Someone made 
the call to lower our boat into the water. We unlatched from 
the rig's cables and motored toward the Damon B. Bankston, a 
nearby supply vessel. The rig medic there tended to the injured 
until the Coast Guard arrived about 30 minutes later. The Coast 
Guard retrieved the injured from the boat by helicopter, which 
took them about 2 hours, until about 12:30 a.m.
    At 8 a.m., the Damon B. Bankston was finally released to 
start heading back to land. Four hours later, and 14 hours 
after the explosion, we pulled up to a platform full of Coast 
Guard investigators about noon on April 21. We were told we had 
to give a written statement before we could leave the boat. 
After that was done, we pulled up to another platform to pick 
up some paramedics to ride back to land with us. At 1:30 a.m., 
20 hours after explosion, we finally made it back to land.
    However, before we were allowed to leave, we were lined up 
and made to take a drug test. It was only then, 28 hours after 
the explosion, that I was given access to a phone and was 
allowed to call my wife and tell her I was okay.
    At last, they arranged to have us all driven to the Crown 
Plaza Hotel in New Orleans where our families were waiting. 
Another 3 hours later, we finally made it to the hotel and to 
our families; 31 hours after explosion, at 5 am, on April 22nd, 
I was given a hotel room and allowed to rest. I was lucky 
enough not to suffer any injury that required paramedic 
treatment, but to say I was not injured isn't true. I breathed 
in lots of thick, dark smoke from the fire and the explosion 
and will need to see a doctor for smoke inhalation.
    Like many other crew members I am suffering from post-
traumatic stress disorder and have had trouble sleeping, memory 
loss, nightmares, and flashbacks to the explosion. Since the 
explosion, I have also developed a nervous twitch in my eyes, 
and my doctor said that this was probably caused by stress, 
too.
    A Transocean representative asked me to sign a document 
stating I was not injured in order to get $5,000 for the loss 
of my personal possessions in general. This happened 10 days 
after the explosion in a Denny's restaurant without my lawyer 
present. I wouldn't sign the part saying I had suffered no 
injury.
    My attorney, Brent Coon, handled the 2005 BP refinery 
explosion in Texas. I was sad to learn after the fact about 
BP's shockingly bad safety record in North America. Also I 
never would have expected from my company, Transocean, to treat 
me like a criminal after I had survived such a disaster by 
making me submit to drug test and then try to attempt to trick 
me into giving up my legal rights by signing forms without a 
lawyer present. If I had known any of these things, I might 
have thought twice before setting foot on the Deepwater 
Horizon.
    Members of the Committee, you cannot allow BP and 
Transocean to continue to conduct business this way.
    And I hope that my testimony here today leads to changes 
that make drilling rigs safer places to work so that a tragedy 
like this never happens again. Thank you.
    [The prepared statement of Mr. Stone follows:]
                  Prepared Statement of Stephen Stone






                               __________

    Mr. Conyers. Byron Encalade is the president of the 
Louisiana Oysters Association.
    He has a business at East Pointe and has fished for his 
entire life in the Gulf of Mexico.

            TESTIMONY OF BYRON ENCALADE, PRESIDENT, 
                 LOUISIANA OYSTERS ASSOCIATION

    Mr. Encalade. Mr. Chairman and other representatives of the 
Committee, I want to thank you for giving me the opportunity to 
tell our story.
    My name is Byron Encalade. I am a third-generation oyster 
fisherman from East Pointe A'La Hache, Louisiana. I currently 
serve as the president of Plaquemines Parish United Fisheries 
Cooperative and Louisiana Oyster Association.
    Pointe A'La Hache is a small fishing village in Plaquemines 
Parish, Louisiana, with approximately 300 people. It is 
primarily an African American community with seafood being its 
primary industry.
    Our family fisheries engage in harvesting oysters and 
shrimps which we transport across Gulf States. As the president 
of our family fisheries and trucking company, I employ eight 
people; my brother, my two nephews, and five cousins.
    Black oyster fishermen have not been able to amass wealth 
to sustain our community. Therefore, a hurricane, such as 
Hurricane Katrina, and the oil spill have caused us stress and 
uncertainty for our already underserved community. We thought 
2010 was the year to finally recover from Hurricane Katrina. We 
have invested moneys in our boats and company infrastructure.
    This oil spill will be devastating for Plaquemines Parish, 
but it will be extremely difficult these next few months for 
fishermen who depend on this livelihood as a source of income 
and food source.
    Once again, we find ourselves crippled by a disaster we did 
not create. And as in the aftermath of the 2005 hurricane 
season, it has been said that the total cleanup and recovery 
will take months if not years to complete.
    On the eve of 2010 hurricane season, which may only make 
this problem worse, I can tell you we do not have that kind of 
time.
    We need your help. We need congressional oversight on the 
funds distributed by BP and the Federal Government. We in 
Louisiana have learned hard lessons about the need for 
transparency in recovery, and call upon this Committee to 
closely monitor the recovery activities.
    Louisiana is a provider of shrimp, oysters, and crabs, and 
crawfish in the United States, providing about one-third of the 
seafood consumed in our Nation and also approximately $2.4 
billion a year to the State of economy. Our request is as 
follows:
    The Federal Government to ensure immediate compensation is 
paid to the fisherman to provide for income replacement and 
family living expense.
    The lack of Federal and State income returns must not 
preclude any fisherman from receiving compensation.
    The claims compensation protocol must include a system of 
classification of claimants.
    Immediate compensation for 6 months of lost income that is 
equivalent to at least an annual income of $24,000 per year. 
Fishermen who can substantiate higher annual income from 
fishing will receive higher payments.
    And at 6 months, somewhere in the period of November, time 
period of November, a sum equal to one-half of a year's lost 
earnings, and no less than $12,000 per worker, shall be paid to 
every fisherman remaining out of work as a result of this 
disaster.
    Within 12 months, of the initial payment, the Federal 
Government must make a final assessment of full damages for the 
lost earnings to be made to fishermen. This determination 
should include evaluation of other long-term losses beyond 
losses of earnings, such as damage to boats, equipment, damage 
to other oyster beds, and fishing grounds, and other long-term 
losses.
    Mr. Chairman, I would like to thank you and give a profound 
thanks to Ms. Waters, if I can, and the fishermen, of course, 
are really pleased that she came down and opened our heart and 
extended the welcome to us up here.
    And you have been very, very kind to us in the fishing 
community, and we thank you from the bottom of our heart.
    If anybody has any questions, I will be glad to answer.
    [The prepared statement of Mr. Encalade follows:]
                  Prepared Statement of Byron Encalade






                               __________

    Mr. Conyers. We are pleased to have the Attorney General of 
the State of Mississippi, Jim Hood, here.
    The attorney general graduated from the University of 
Mississippi, served as a clerk with the Supreme Court of that 
State, and Assistant Attorney General for 5 years, District 
Attorney for 8 years, tried numerous cases and prosecuted 
successfully the 1964 murders of three civil rights workers.
    We welcome you to our hearing today.

             TESTIMONY OF THE HONORABLE JIM HOOD, 
             ATTORNEY GENERAL, STATE OF MISSISSIPPI

    Mr. Hood. Thank you, Mr. Chairman, thank you for that kind 
introduction.
    And Members of the Committee, I won't go through what we 
have accomplished as attorneys general. Our five coastal 
attorneys general have been working with British Petroleum. I 
have a letter attached as appendix C in which have we made 
several demands.
    BP has come forward on most of them. However, there is one 
that creates a problem for the States, and that is why I ask 
that this Committee consider amending some Federal legislation 
to allow our States to recover the full amount of our damages. 
We are still working with BP in hopes that they will waive the 
right to try to remove our State court actions to Federal 
Court. They will not agree to that thus far.
    The difference between the Exxon Valdez case going on over 
20 years and the tobacco litigation, which was filed by my 
predecessor Mike Moore as attorney general of the State of 
Mississippi--I was the assistant AG when the tobacco wars were 
started and ended. And I am familiar with that litigation. And 
the reason, do you know why, that it was settled? Because it 
was in State court. The tobacco industry was about to have to 
walk into a courtroom down on our coast in Pascagoula, 
Mississippi. That case was settled because we were in State 
court. The Exxon Valdez case went on for 20 years because they 
were in Federal Court.
    As a result of some of the tobacco litigation, there were 
amendments made here in Congress that have allowed corporations 
to draw in States into multidistrict, multi-State litigation, 
and that is a problem for the States. You see, even though you 
may have put good language in OPA, for example, that says that 
there can be a concurrent State action and the State actions 
will be recognized, well, that doesn't mean that a Federal 
judge is going to follow what you said. And in fact, a Federal 
judge in the State of Louisiana has said that, under OPA, that 
your case can be removed from State court to Federal Court.
    And the problem with that is that my colleagues here at the 
table, British Petroleum and Transocean have already started a 
sucking sound coming out of Houston, Texas, by two actions that 
they filed before friendly Federal judges in Houston, Texas.
    One of those was filed by Transocean, a limiting action in 
which they try to pull in everybody to a judge in Houston, 
Texas. BP has done the same thing with a consolidation action.
    And the problem for the States is, we don't need to be 
pulled into some type of a huge class action where we are just 
treated like another plaintiff out there, and there is no 
respect for a separate sovereign. In fact, I won't be able to 
plead in our State litigation, if it occurs, hopefully these 
companies will come forward, and we are trying every way to 
work with them, and they have worked with us, but if there is 
going to be a fight, I want it to be in our State court.
    We are not going to recover a dime more than we are 
entitled. We don't want a dime more than what we are entitled 
in State court. But what happens in Federal Court is that these 
Federal judges get these huge mass actions and all their duty 
is, is just to beat people into submission, and that includes 
States and people don't recover what they are entitled to.
    I won't be able to plead a claim under OPA because I know 
what is going to happen. They are going to take that Federal 
District Judge's case out of Louisiana and try to suck 
Mississippi into Federal district litigation.
    That happened in the insurance litigation. If you recall, 
after Katrina, I was the attorney general that filed a suit 
against most of the insurance industry. That is what they did. 
They drug us off into Federal Court on a motion to remove, and 
it sat there and lingered in Federal Court for 15 months. 
Finally, it was remanded back to State court. We reached a 
settlement with the insurance industry, but we carried forth 
that issue to our State supreme court to make a decision on 
Wind v. Water Liability. Well, it took 4 years to get to a 
State supreme court. Everybody settled. It was a hollow 
victory. I won 9-zero.
    But what happened is the Fifth District didn't defer to the 
State as it should have under--it is a contract law. It is a 
State issue. The Fifth Circuit didn't defer to the State court, 
and they got it all wrong. It is too late to back up.
    So we don't want to wind up before Federal Court where they 
are going to drag us in with another group and treat us like 
any other plaintiff.
    Secondly, the Class Action Fairness Act was passed by 
Congress, and in that, on all the comments from the Senators on 
the floor, oh, well, the States won't be included in this, the 
States won't be sucked into a class action fairness action. 
Well, guess what? The Fifth Circuit said--actually a district 
judge in Louisiana said that, yes, the States belong into it. 
In a case called Caldwell v. Allstate, the court, the Fifth 
Circuit held that, yes, the States are subject to CAFA, the 
Class Action Fairness Act, in which we get jerked into all this 
multidistrict litigation. And it creates such a problem that 
the States are beaten into submission.
    The Federal judge in Alaska case beat--there was a State 
court judge making parallel rulings at the time just ignored 
the State completely, didn't even accept the separate 
sovereign, beat those fishermen and plaintiffs into submission, 
and I suspect the State and Federal Government as well.
    I do not want to see that happen, and therefore, I have 
submitted to this Committee several changes that I believe will 
allow the States to seek our damages in State court and protect 
our citizens.
    Lastly, the parens patriae authority of attorney general is 
as one recognized by our United States Supreme Court as a 
supreme duty of an attorney general. It means protect those who 
cannot protect themselves. Parens patriae is the Latin term for 
that.
    I will not be able to plead parens patriae claims. The 
reason for that is because of that Caldwell case, the Fifth 
Circuit will say, oh, you are just a mass action, you are 
bringing that on behalf of your citizens and trying to drag us 
into Federal Court.
    And that is where we do not want to be. We want our 
decision made in State court so we can quickly resolve our 
issues, if there are any, and we will not be subject to a lot 
of the other problems that the Limitations of Liability Act can 
bring States in forward.
    Thank you for the opportunity for being here, and I will be 
glad to try to answer any questions afterwards.
    [The prepared statement of Mr. Hood follows:]
              Prepared Statement of the Honorable Jim Hood






























































                               __________

    Mr. Conyers. Darryl Willis, vice president of resources at 
BP.
    On April 29, 2010, he accepted the role of overseeing BP's 
claims process.
    Born in Louisiana, undergraduate Northwestern State 
University in Louisiana, master's degree in geology and 
geophysics in Louisiana State University, MBA from Stanford 
University, and he has been with BP since 1996 when he started 
as the lead operations geoscientist for BP North American gas.

   TESTIMONY OF DARRYL WILLIS, VICE PRESIDENT, RESOURCES, BP 
                            AMERICA

    Mr. Willis. Chairman Conyers, Ranking Member Smith, Members 
of the Committee, I'm Darryl Willis, vice president of 
resources for BP America.
    On April 29, 2010, I accepted the role of overseeing BP's 
claims process, which was established in the wake of the 
explosion and fire aboard the Deepwater Horizon drilling rig 
and the ensuing oil spill. I'm here to share information with 
you about the claims process.
    This horrendous incident, which killed 11 workers and 
injured 17 others, has profoundly touched all of us. There has 
been tremendous shock that such an accident could have happened 
and great sorrow for the lives lost and the injuries sustained.
    I would like to make one thing very clear. BP will not rest 
until the well is under control and we discover what happened 
and why in order to ensure that it never happens again.
    As a responsible party, under the Oil Pollution Act of 
1990, we will carry out our obligations to mitigate the 
environmental and economic impact of this incident.
    I would also like to underscore that the causes of the 
accident remain under investigation, both by the Federal 
Government and by BP itself. So I'm prepared today to answer 
your questions regarding the claims process.
    I cannot, however, respond to inquiries about the incident 
itself or the investigation.
    Above all, I want to emphasize that the BP claims process 
is integral to our commitment to do the right thing. We will be 
fair and expeditious in responding to claims. We have already 
paid out more than 35--$37 million in claims.
    We understand how important it is to get this right for the 
residents and businesses as well as for the State and local 
governments. To that end, we have established 24 walk-in claims 
offices operating in Louisiana, Mississippi, Alabama, and 
Florida. And we have a call center that is operating 24 hours a 
day, 7 days a week. We have also established an online claims 
filing system to further expand and expedite our capacity to 
respond to potential claimants.
    All together, we have nearly 700 people handling claims 
with over 400 experienced claims adjusters on the ground 
working in the impacted communities. We will continue adding 
people, offices, and resources as required and are committing 
the full resources of BP to making this process work for the 
people across the Gulf Coast.
    Our focus is on individuals and small businesses whose 
livelihoods have been directly impacted by the spill and who 
are temporarily unable to work. These are fishermen, the 
crabbers, the oyster harvesters and shrimpers with the greatest 
immediate financial need. BP is providing expedited interim 
payments to those whose income has been interrupted. 
Approximately 13,500 claims have already been paid totaling, as 
I said, $37 million to date.
    The claims process was established to fulfill obligations 
as a designated responsible party under the Oil Pollution Act 
of 1990, OPA. Thus we are guided by the provisions of OPA 90 as 
well as the U.S. Coast Guard regulations when assessing claims.
    I am not an attorney and therefore cannot speak to 
particular legal interpretations or applications of OPA 90. I 
can, however, reiterate that BP does not intend to use the $75 
million cap in the OPA 90 statute to limit our obligation to 
pay these claims. We expect to exceed it, and we will not seek 
reimbursement from the oil spill liability trust fund.
    In closing, I would like to add a personal note. My ties to 
the Gulf Coast run deep. I was born and raised in Louisiana. I 
went to high school there, college there and graduate school 
there.
    My family spent many, many summers vacationing along the 
Gulf Coast. My mother lost her home of 45 years in Hurricane 
Katrina, and the recovery process was time-consuming and at 
many times incredibly frustrating. I know firsthand that the 
people in this region cannot afford lengthy delays in 
addressing economic losses caused by this spill.
    I volunteered for this assignment because I am passionate 
about the Gulf Coast. It is the place I call home, and I want 
to be part of the solution.
    Finally, as we respectfully informed the Committee, I have 
been asked to testify at a hearing chaired by Senator Landrieu 
of Louisiana this afternoon. Therefore, I may need to excuse 
myself if this hearing runs past 2:30 p.m.
    If that happens, I will be pleased to answer any additional 
questions from this Committee in writing.
    And with that, I welcome your questions.
    [The prepared statement of Mr. Willis follows:]
                  Prepared Statement of Darryl Willis












                               __________

    Mr. Conyers. Thank you. But if we need you for additional 
questions, we will want you to be present.
    Attorney Rachel Clingman, acting general counsel for 
Transocean, partner in charge of Sutherland's Houston office 
who specializes in energy, transportation and commercial 
litigation, graduate of Rice University, University of Texas 
Law School, and has been honored regionally and nationally for 
legal excellence.

               TESTIMONY OF RACHEL G. CLINGMAN, 
            ACTING GENERAL COUNSEL, TRANSOCEAN, LTD.

    Ms. Clingman. Thank you, Chairman.
    Chairman Conyers, Ranking Member Smith and other Members of 
the Committee, thank you for the opportunity to speak with you 
today. I am a partner with Sutherland Asbill & Brennan, but at 
present, I am working at Transocean, helping to address the 
legal issues related to the Deepwater Horizon incident.
    The last few weeks have been a time of great loss, sadness 
and frustration for many, including all of us at Transocean. 
Our hearts and prayers are with the widows, children and 
families of the 11 lives who were lost, nine of whom were 
Transocean employees. Our hearts are with those who were 
injured and with those who evacuated and survived. We and I 
offer our deepest sympathies.
    We are committed to protecting the memory of those who were 
lost and to providing for their families.
    I am here today to report to the Committee on various legal 
issues facing Transocean. First and foremost, Transocean is 
fully prepared to meet all of its legal obligations arising 
from the Deepwater Horizon accident. I want to assure the 
Committee and those represented here today that addressing and 
resolving the claims of Transocean employees who were injured 
and the families who lost loved ones is a top company priority. 
Those discussions are beginning now, and it is our hope that we 
can resolve these claims fairly, quickly and amicably.
    The Deepwater Horizon accident has resulted in many legal 
challenges for the courts and the companies and the families 
and claimants represented here. These involve class-action 
lawsuits as well as claims under the two frameworks of the Oil 
Pollution Act and general maritime law, including the Jones 
Act.
    As you know, this Congress enacted OPA, the Oil Pollution 
Act, in 1990 to compensate on a no-fault basis people and 
businesses for damages caused by oil spills and contamination. 
The statute establishes a claims process that enables anyone 
damaged by an oil spill to obtain compensation from a 
responsible party. In this case, the Coast Guard designated BP 
as the responsible party for oil and gas flowing from the 
subsea well. As you have heard again today, BP accepted that 
designation and has testified that it will pay all legitimate 
claims regardless of the statutory $75 million cap.
    As we understand, BP has established that process and paid 
a substantial number of claims to date.
    The U.S. Coast Guard designated Transocean as a responsible 
party under OPA, and we have accepted that responsibility for 
any contamination from the mobile work space, the rig. There 
has been no indication thus far of any contamination from the 
rig itself. However, we stand ready to meet any legal 
obligation that arises from that status.
    The OPA claims process allows someone to file a lawsuit 
only if and when BP has denied a claim or not reached a claim 
to the claimant's satisfaction. Nonetheless, as you know, a 
great number of lawsuits have already been filed, including 
approximately 135 against Transocean across eight States. Most 
of these are class actions in which small business interests 
and other commercial interests claim a current or potential 
future loss of business in the aftermath of the spill.
    There is substantial overlap in the lawsuits. Florida 
property owners, for example, are included in the proposed 
class of at least three lawsuits today. Louisiana residents who 
derive income from the coastal zone are claimants in at least 
four class actions. And overarching all of these suits are 
class actions on behalf of all persons damaged in the Gulf of 
Mexico.
    These multiple and duplicative lawsuits create confusion. 
They strain judicial resources and could lead to disparate 
treatment for litigants who are similarly situated. For these 
reasons, both plaintiffs and defendants have filed motions 
asking to establish a multidistrict litigation or MDL 
proceeding to bring all of these lawsuits together in one court 
and consolidate those claims.
    The second category of claims as I indicated are not the 
class actions but personal injury and death claims covered by 
general maritime law, as mentioned by Chairman Conyers.
    These include the Jones Act, which provide seamen
    the right to sue and which create favorable presumptions 
that ease their path to recovery. This maritime body of law 
applies to the crew members of the rig.
    At the same time that that law enacted by Congress makes it 
easier for seamen to pursue and recover claims, it also 
provides limitation actions on total damages for such claims.
    Under the maritime law, Transocean has filed a maritime 
limitation of liability action in the United States district 
Court for the Southern District of Texas. This law, recently 
reviewed and recodified by Congress in 2006, allows ship owners 
to consolidate actions and define their liability in a 
situation like this. We have filed the action. We have 
requested consolidation, and we have indicated an initial 
proposed limitation of liability based on the statutory 
calculation at just under $27 million.
    The ultimate amount and what will be included will be left 
to the court governing that action.
    I want to stress that limitation does not apply to claims 
asserted against Transocean under the Oil Pollution Act. 
Transocean has asked the limitations court to clarify the 
existing order to make that clear, and that order has been so 
amended.
    Transocean filed this limitation action for several 
reasons. We believe it is important to have a central venue for 
these actions to maintain some continuity and consistency that 
will not be possible if lawsuits proceed in various States and 
Federal courts.
    In addition, our underwriters instructed us to file the 
limitation action, and we did so to avoid losing any insurance 
coverage that will help pay claims.
    Overridingly, however, Transocean is committed to resolving 
all of the interrelated legal matters diligently expeditiously 
and fairly.
    Our overriding mission in connection with BP, the unified 
command, government officials and other contractors is to 
stopping the leak, containing contamination, and determine the 
cause of explosion.
    And my heart is lightened to hear Chairman Conyers say that 
the top kill, kill-shot method may have been successful.
    I thank you again for the opportunity to speak with you 
today, and I look forward to answering any of the questions you 
may have.
    [The prepared statement of Ms. Clingman follows:]
                Prepared Statement of Rachel G. Clingman








                               __________

    Mr. Conyers. Attorney James Ferguson, senior vice president 
and deputy general counsel for Halliburton.
    Included in his responsibilities are litigation, 
environmental employment law activities in the company's law 
department. He began in 1988, assumed the deputy general 
counsel position in 2007, and served as director of risk 
management and assistant general counsel for Halliburton.

   TESTIMONY OF JAMES W. FERGUSON, SENIOR VICE PRESIDENT AND 
              DEPUTY GENERAL COUNSEL, HALLIBURTON

    Mr. Ferguson. Chairman Conyers, Ranking Member Smith 
Members of the Committee, I thank you for the ability to appear 
here today and the opportunity to share Halliburton's 
perspective as you review the legal issues related to the 
Deepwater Horizon catastrophe.
    Halliburton looks forward to continuing to work with the 
Congress, the Administration, and now the Presidential 
commission to understand what happened and what we can do to 
ensure that oil and gas production is undertaken in the safest 
and most environmentally responsible manner.
    The catastrophic blow out and the spread of oil in the Gulf 
of Mexico are tragic events for everyone. Halliburton extends 
its deepest sympathy to the family, to the friends and the 
colleagues of the 11 people who lost their lives and to those 
workers that were injured in this tragedy.
    Halliburton has and will continue to fully support and 
cooperate with the ongoing investigations into how and why this 
tragic event happened. We will continue to make our personnel 
available, and we have produced approximately 50,000 pages of 
documents.
    As you can no doubt appreciate, there has already been an 
immense amount of litigation filed in connection with the blow 
out. As of May 23, Halliburton, has been named in 112 suits 
involving pollution damage claims and four suits bringing 
personal injury claims. With current investigations underway, 
it is still premature for Halliburton to offer theories about 
what happened. Thus I will not be addressing technical and 
operational issues, which, in any event, are not within my 
expertise, but instead will focus on the issues that you posed 
in your invitation to testify.
    Mr. Chairman, you ask that we discuss legal liability 
issues surrounding the Gulf Coast disaster. In addition, you 
have expressed concern about waivers individuals were asked to 
sign as they returned to shore from the Deepwater Horizon. With 
respect to the waivers, Halliburton did not ask any of our four 
employees to sign a waiver or any other document as they 
returned to shore. Our employee assistance personnel were 
already in contact with their families and provided whatever 
aid and support the employees needed.
    Since then, we have reached a settlement with one employee 
which did involve a release by the employee.
    As you consider broader liability questions, it is 
important to understand the structure of the oil and gas 
exploration and production business and, in particular, the 
roles and responsibilities of the various parties involved in 
drilling a deepwater well. In the Gulf of Mexico, an oil 
company obtains a lease from the government with rights to 
explore for and produce hydrocarbons. After meeting applicable 
regulatory requirements, the oil company, as the well owner, 
will engage a drilling contractor and many other service and 
equipment companies to work on that well.
    The construction of a deepwater well is a complex operation 
involving the performance of numerous tasks by multiple parties 
led by the well owner's representative, who has the ultimate 
authority for decisions on how and when various activities are 
conducted.
    With respect to the Mississippi Canyon 252 Well, 
Halliburton was contracted by the well owner to perform a 
variety of services on the rig. That included certain aspects 
of the cementing process, but contrary to some press reports, 
Halliburton did not provide and hold equipment such as casing 
wellheads, seal assemblies, float equipment.
    Halliburton is a service provider to the well owner who is 
contractually bound to comply with the well owner's 
instructions on all matters relating to the performance of all 
work-related activities. That does not extend however to acts 
that would create an imminent safety hazard. Our employees are 
authorized to stop work in such situations.
    Over the years, certain industry practices have developed 
with respect to the allocation of potential liabilities. Since 
it is the well owner that is entering into agreements with the 
drilling contractor and with the various other contractors and 
suppliers, the well owner will often establish a system of 
reciprocal indemnity obligations through these contracts. Also, 
it is customary for the well owner to take responsibility for 
certain potentially catastrophic events, including loss of 
control of the well and pollution emanating from the well.
    Accordingly, the well owner assumes the obligation to 
indemnify the contractors for liability arising from such 
occurrences.
    The terms of the applicable Halliburton contract are 
consistent with this common liability allocation arrangement. 
Therefore, Halliburton is obligated to indemnify and hold the 
water well owner and the other contractors harmless with 
respect to claims by our employees and with respect to loss or 
damage to our equipment.
    In like manner, the well owner and each of the other 
contractors are bound to hold Halliburton harmless against 
claims by their employees and for loss or damage to their 
property.
    Finally, the well owner has assumed the obligation to hold 
Halliburton harmless against the costs for controlling the well 
as well as for the cleanup and damages caused by the oil 
pollution.
    In closing, Halliburton will continue to cooperate with the 
effort to understand what happened and what can be done to 
ensure that oil and gas production is undertaken in a safe and 
environmentally responsible manner.
    Thank you for the opportunity to share our views, and I 
will be happy to answer questions later on.
    [The prepared statement of Mr. Ferguson follows:]
                Prepared Statement of James W. Ferguson












                               __________

    Mr. Conyers. Attorney William Lemmer, general counsel for 
Cameron International Corporation, was previously with Oryx 
Energy Company where he served as vice president, general 
counsel, corporate secretary, and as chief counsel. He has also 
held senior management positions at Sunoco and is a graduate of 
Michigan State University Honors College and a juris doctor 
from University of Virginia law school.

   TESTIMONY OF WILLIAM C. LEMMER, SENIOR VICE PRESIDENT AND 
       GENERAL COUNSEL, CAMERON INTERNATIONAL CORPORATION

    Mr. Lemmer. Chairman Conyers, Ranking Member Smith, Members 
of the Committee, good morning.
    My name is Bill Lemmer, and I am the senior vice president 
and vice president of Cameron International Corporation.
    I wish I could say I appreciate the invitation to be here 
today, but the fact of the matter is that we are here to 
discuss a truly tragic event and the consequences it has and 
will continue to flow from it. Cameron continues to lend its 
assistance and efforts relating to capping the well, and we 
continue to work with everyone involved to try to understand 
what happened and how this happened.
    Cameron is based in Houston, Texas, and is the leading 
provider of equipment and services to the energy industry, with 
eleven different operating divisions and approximately 18,000 
employees in more than 300 locations. The Cameron product used 
by the Deepwater Horizon is called a blow-out preventer, or 
BOP, a product that Cameron invented in the 1920's that allows 
our customers to control the pressure in a well while being 
drilled.
    There are over 400 Cameron BOPs operating sub-sea; 130 are 
operating in deep water. Each individual BOP stack is made up 
of components specified by our customers and configured to 
their specific operating specifications. Each is manufactured 
and tested in accordance with industry standards and applicable 
regulations.
    Our BOPs have a very long history of reliable performance, 
including performance in some of the harshest operating 
conditions in the world. The BOP in the Deepwater Horizon was 
operating at 5,000 feet below sea level at the time of the 
incident. As soon as Cameron was notified of this incident, we 
mobilized a team of our best drilling specialists to work with 
BP, Transocean, and others to assist with efforts to shut in 
this well.
    Our people have been working around the clock to assist in 
this effort, and we will continue to provide all of the 
resources at our disposal until this well is shut in.
    On the subject of today's hearing, it is difficult to state 
anything with precision at this stage. Efforts to cap the well 
are ongoing, and the facts relating to the explosion and its 
impact on the BOP and its ability to function properly are 
simply unknown at this point. The present challenges involved 
in determining causes and effects are many, in particular, from 
our standpoint, the inability to examine the Deepwater 
Horizon's BOP. Therefore, it appears to be far too early to 
draw factual conclusions about how this incident occurred.
    And so, too, is it with respect to questions of liability, 
which are by their very nature closely linked to these 
presently unanswered factual questions. Anything specific we 
might say in this connection would be speculative and perhaps 
misleading or potentially so to the Committee and to the 
public.
    Given the very limited extent of everyone's present 
understanding of the facts, is it possible for anyone to make 
any liability determinations at this point? Nonetheless every 
one of us is mindful of the personal, environmental and 
economic concerns associated with this incident. We understand 
the need to discover the facts relating to what went wrong and 
to do all that is possible to prevent the occurrence of such an 
incident in the future. I am here to answer any of your 
questions. Thank you.
    [The prepared statement of Mr. Lemmer follows:]
                Prepared Statement of William C. Lemmer




                               __________

    Mr. Conyers. Attorney Vincent Foley, partner with Holland & 
Knight in the Maritime Practice Group, practicing primarily in 
the area of international litigation arising out of vessel 
casualties, including collisions, groundings, explosions, 
fires, and oil spills. He has participated in all aspects of 
oil spill litigation, oil pollution prevention seminars, formal 
response drills and oil spill response training, a graduate of 
the Merchant Marine Academy and the Tulane Law School.

            TESTIMONY OF VINCENT J. FOLEY, PARTNER, 
                     HOLLAND & KNIGHT, LLP

    Mr. Foley. Thank you, Mr. Chairman, and distinguished 
Members of the Committee.
    I am grateful for this opportunity, honor, and privilege to 
address the Committee today. I am here to discuss the oil spill 
liability and compensation scheme in place in the U.S.
    The Oil Pollution Act of 1990 is the primary Federal 
statute dealing with liability and compensation for the 
discharge of oil in navigable waters. OPA is part of a larger 
statutory scheme which includes the Federal Water Pollution 
Control Act, or the Clean Water Act, which also provides for 
civil and criminal penalties for oil spills on a per-day, per-
barrel basis, with no limits of liability.
    The OPA compensation and liability scheme, the objective of 
the scheme was to provide compensation to claimants for oil 
spills. OPA works by designating a responsible party to set up 
a claims process to allow claimants to seek compensation. For a 
vessel, the responsible party means the owner or operator or 
basically the entity responsible for day-to-day activities. And 
the OPA limits of liability for a vessel are calculated based 
on the gross tonnage, which is the total overall internal 
volume of the vessel.
    The OPA also has a provision for offshore facilities. The 
responsible party for an offshore facility is the lessee or 
permittee of the area in which the facility is located. The 
offshore facility limit is a more complicated analysis which 
involves, because unlike gross tonnage for a vessel, which has 
a certain maximum capacity, an offshore facility has access to 
an oil field in the sea bed. The OPA limit for an offshore 
facility is $75 million for damages, but importantly, it is 
unlimited for removal costs.
    Now, in addition to setting up a liability scheme, OPA also 
set up a compensation scheme through the National Pollution 
Fund Center and the Oil Spill Liability Trust Fund. The Oil 
Spill Liability Trust Fund is an emergency fund for payments to 
claimants over the OPA limits. The fund is sourced by a per-
barrel petroleum tax as well as collection of fines and 
penalties for violation of other environmental statutes and 
recoveries by the National Pollution Fund from responsible 
parties.
    The fund steps in to pay claims that are either denied by a 
responsible party or that are over the responsible party's set 
limits of liability.
    Now, with respect to the limits of liability, it is 
important to point out that the OPA limits of liability require 
the participants in the industry to show evidence of financial 
responsibility up to those limits. And the purpose of that 
financial responsibility is so that there are immediate funds 
available to set up this compensation scheme and to start 
paying claimants.
    When I mentioned the offshore facility, the $75 million 
limit for damages and unlimited for removal costs, those are 
the two primary types of OPA claims. The removal costs include 
the cleanup, the prevention, minimizing the extent of the oil 
spill, mitigation and disposal of the oil. The damages are the 
economic loss damages, such as injury to natural resources, 
injuries to real or personal property, loss of revenue from use 
of natural resources, loss of profits and earning capacity and 
public services rendered during or after removal activities.
    With respect to both types of claims, whether they are 
removal or damages, there is supporting documentation needed to 
establish that you have a compensable claim under the statute, 
whether you make the claim to the responsible party or to the 
National Pollution Fund.
    And the way the system is set up, the claimants are 
required to make the claim first to the responsible party to 
seek payment. If that claim is not paid within 90 days, they 
may, they have the option to litigate against the responsible 
party or to seek compensation from the National Pollution Fund 
Center, which will be an adjudication also based on 
documentation of that claim.
    So that is the system set up by OPA.
    With respect to the limits of liability, there have been 
increases in OPA limits with respect to vessels. There was a 
recent increase for vessel OPA limits in the 2006 Delaware 
River Protection Act. It increased the OPA limits of liability 
for vessels and also increased the responsible party payments 
to the trust fund.
    And in 2010, just recently, we had a consumer price index 
increase in the vessel limits for liability.
    There have not been increases to the OPA limit of 
liability, the damage limitation of $75 million, but, again, 
there is an unlimited amount for removal costs.
    Now also when we talk about limits of liability, it is 
important to understand that there is unlimited liability under 
OPA. A responsible party will lose their liability limits and 
be strictly liable on an unlimited basis in two situations: 
One, there is a situation where they lose their limits for 
gross negligence or willful misconduct, violation of an 
applicable Federal safety construction operating regulation by 
a responsible party or by a party under contract with a 
responsible party, or the third category where you would lose a 
limit would be a failure after the spill to report the spill, a 
failure to provide reasonable cooperation or a failure to 
follow a governmental order.
    If any of those circumstances exist in the aftermath of a 
spill, the responsible party would lose their limits of 
liability and have unlimited liability.
    The second area where you have unlimited liability is that 
OPA allows States to impose supplemental liability over and 
above the OPA limitations. So here is another opportunity to 
have unlimited liability that is already built into the 
statute.
    With respect to the industry experience with the OPA 
liability schemes that I have just described, it has been a 
positive experience. The system works within the responsible 
party limits for the vast majority of oil spills. For 
exceptional spills which exceed the OPA limits, the Emergency 
Trust Fund is available to make payments. And the Emergency 
Trust Fund is based on a per-barrel petroleum tax. 
Alternatively, the responsible party will pay in the excess of 
their limits without seeking reimbursement for the reasons I--
because of the threat of an unlimited liability for violation 
of a Federal safety--applicable Federal safety regulation or 
gross negligence or potentially criminal liability under the 
Federal statutes that impose criminal liabilities for oil 
discharge.
    It is important when you are considering an increase to the 
OPA limits, it is important to carefully study the overall 
liability and compensation scheme. A precipitous change in OPA 
limits could have adverse and unintended impacts on this 
functioning and reliable compensation system for oil spills.
    There is also a potential to disrupt U.S. oil imports 
because an increase in OPA limits comes with an increase to the 
participants in the industry to provide this financial 
responsibility certificate. This essentially will require 
extraordinary and, in most cases, unaffordable premiums for the 
participants in the industry and may cause most small, mid-
sized and even large owner and operators out of business, 
leaving only major players who can self-insure to continue with 
the U.S. oil import business.
    Thank you for the opportunity to address you this morning, 
and I look forward to your questions.
    [The prepared statement of Mr. Foley follows:]
                 Prepared Statement of Vincent J. Foley












                               __________

    Mr. Conyers. Tom Galligan, is the president of Colby-Sawyer 
College. From 1986 to 1998, he taught at the Paul M. Hebert Law 
Center at Louisiana State University. He was previously dean 
and professor of law at the University of Tennessee College of 
Law and has published numerous books and articles on torts and 
admiralty. His scholarship has been cited in the restatement of 
torts and by numerous legal scholars. He has been cited by the 
United States Supreme Court and other Federal and State 
appellate trial courts.

   TESTIMONY OF THOMAS C. GALLIGAN, PRESIDENT AND PROFESSOR, 
                      COLBY-SAWYER COLLEGE

    Mr. Galligan. Thank you. Chairman Conyers, Ranking Member 
Smith and Members of the Committee, thank you for inviting me 
to appear before you today.
    My name is Tom Galligan, and I am the president of Colby 
Sawyer-College in New London, New Hampshire.
    The oil spill in the Gulf of Mexico and the ensuing 
disastrous consequences have forced our Nation to consider its 
damage recovery regimes for injuries and deaths arising from 
maritime and environmental catastrophes. Doing so reveals 
inequities and inconsistencies that you in Congress have the 
chance and ability to repair by amending the relevant statutes.
    I would like to begin with a discussion of wrongful death 
recovery under the Jones Act, which is applicable to the 
negligence-based wrongful death actions by the survivors of a 
seaman, and the Death on the High Seas Act, which defines the 
rights to recover for wrongful death in all other cases arising 
from incidents occurring on the high seas.
    As interpreted, neither of these statutes allows recovery 
for loss of society damages to the survivors of those killed in 
maritime disasters.
    Now what are loss of society damages? They are compensation 
for the loss of care, comfort, and companionship caused by the 
death of a loved one. The majority of American jurisdictions 
today do recognize some right to recover for loss of society 
damages in wrongful death cases. But the Jones Act, and DOHSA 
do not.
    Now one might arguably understand the unavailability of 
loss of society damages in 1920, when the Jones Act and DOHSA 
were passed. It was a different world. But to deny recovery of 
loss of society damages to a loved one in a wrongful death case 
in 2010 is out of the legal mainstream, and it is a throwback 
to a past era. A spouse, child, or parent who loses a loved one 
suffers a very real loss, a loss of care, comfort and 
companionship, and the law should recognize that loss.
    Congress can appropriately make the law consistent with 
current moral, social, and familial realities by amending the 
relevant statutes to provide recovery for loss of care, 
comfort, and companionship in maritime wrongful death cases.
    Now, interestingly, there is one exception to the rule 
barring recovery of loss of society damages under DOHSA. And 
that exception points up current inconsistencies in the law. In 
2000, after the Korean Airline and TWA disasters, you amended 
DOHSA to provide recovery of loss of society to the survivors 
of those killed in high-seas commercial aviation disasters. 
Thus, in commercial aviation disasters, DOHSA is consistent 
with modern law and values.
    But for anyone else killed on the high seas, someone killed 
on a cruise ship, someone killed on a semisubmersible floating 
rig, or someone killed on a helicopter, the survivors may not 
recover loss of society damages.
    The proposed amendment would provide all survivors of those 
killed in maritime disasters with the recovery now available in 
commercial aviation wrongful death cases.
    And I would like to pause here and say one thing about OPA 
90. OPA 90 does not cover and does not provide recovery in 
personal injury and wrongful death cases. Those are outside the 
scope of OPA 90.
    I would like to shift from wrongful death to survival 
actions and note that the Supreme Court in a high seas death 
case has held that predeath pain and suffering is not 
recoverable in a maritime survival action when the death arises 
on the high seas. Thus, in any case covered by that rule, no 
matter how much the decedent may have suffered before his or 
her death, those damages are not recoverable. They should be 
available.
    Another subject of significant import arising out of this 
disaster is the potential recoverability of punitive damages in 
various types of maritime cases. The United States Supreme 
Court has twice in the last 2 years held that punitive damages 
are recoverable under general maritime law. But it has limited 
that recovery in admiralty to a one-to-one ratio of punitive 
damages to compensatory damages.
    Today, America might well consider if that one-to-one ratio 
cap frustrates the deterrent aspects of punitive damages in 
certain maritime cases.
    It is less clear if punitive damages are available in Jones 
Act and DOHSA cases. Until the most recent Supreme Court case 
on this subject, I would have said no. Now I am less sure.
    A final critical point in this analysis is the effect and 
applicability of the Limitation of Liability Act to these 
events. Originally passed in 1851 to encourage investment in 
maritime shipping and commerce, the act allows a vessel owner 
and some others to limit liability to the post-voyage value of 
the vessel plus pending freight if the liability is incurred 
without the privity or knowledge of the owner. One may 
justifiably wonder whether an act, passed at a time before the 
modern development of the corporate form and before the 
evolution of modern bankruptcy law, is still salient in 
personal injury and wrongful death cases. However, limitation 
still exists and in this case presents this Committee with an 
opportunity to consider and discuss its amendment to assure 
personal injury and wrongful death victims more just 
compensation.
    Thank you very much, and I would be happy to answer any 
questions.
    [The prepared statement of Mr. Galligan follows:]
             Prepared Statement of Thomas C. Galligan, Jr.
































                               __________

    Mr. Conyers. I invite Ranking Member Lamar Smith to begin 
the questions.
    Mr. Smith. Thank you very much. I know we have a vote 
coming up, and so I won't use up all of my time.
    Let me direct my first question to Mr. Willis.
    And Mr. Willis, I just want to confirm what I believe BP's 
position is, and that is that you don't feel that taxpayers 
should pick up any of the cost of the oil spill, is that 
correct?
    Mr. Willis. Representative Smith, we are going to pay all 
legitimate claims associated with damages caused by that spill. 
We are going to pay for damages to people's livelihood. We are 
going to pay for lost wages. We are going to pay all claims 
that are substantiated.
    Mr. Smith. I understand.
    Mr. Willis. We are going to pay all claims that are 
reasonable and necessary.
    Mr. Smith. And you don't feel that taxpayers should pay any 
of the costs attributable to the oil spill?
    Mr. Willis. I'm sorry, I didn't hear your question.
    Mr. Smith. You don't feel that the taxpayers should pick up 
any of the cost of the oil spill?
    Mr. Willis. We realize that we are going to be judged by 
our response to the spill, and we will pay for all damage that 
has been caused that is directly related to this spill to 
people, to governments, to communities.
    Mr. Smith. And BP, not the taxpayers?
    Mr. Willis. BP is going to pay for all damages that have 
been caused by this spill.
    Mr. Smith. Thank you, Mr. Willis.
    Mr. Foley, I was going to ask you if you felt that the 
liability cap needed to be raised. I think you have actually 
explained very well in your opening remarks why that is not 
necessary and why people can still be adequately compensated. 
So let me go to Attorney General Hood and ask you a question if 
I may.
    Attorney General Hood, do you feel that your State of 
Mississippi has received all the equipment and permits that you 
need to address the oil spill from the Federal Government?
    Mr. Hood. I am sorry, I couldn't hear your question.
    Mr. Smith. I am speaking into the mike. Do you feel that 
the State of Mississippi has received all the equipment and 
permits it needs from the Federal Government in order to 
adequately address the oil spill?
    Mr. Hood. Yes, sir. We have been satisfied with the efforts 
of the Federal Government. And BP gave $25 million to the State 
so that local governments could draw down the money to prepare 
for this bill coming.
    Mr. Smith. So you have everything you need for equipment 
and permits from the Federal Government?
    Mr. Hood. Yes, sir.
    Mr. Smith. Mr. Willis, last question. You have a background 
in oil exploration. Do you feel that we should consider 
limiting or eliminating all offshore drilling?
    Mr. Willis. By training, I am a geologist. I grew up on the 
Gulf Coast. Born and raised in New Orleans, Louisiana. Spent 
many summers in Biloxi and Bay St. Louis, Pascagoula, and when 
my folks had a lot of money, we actually went over to Destin. I 
actually studied in the marshes of Louisiana, and I realize 
that there is a very delicate existence in Louisiana in 
particular between the oil industry and the fishing industry. I 
have family members who work in the oil industry who love to 
fish. One of my uncles who worked in the oil industry taught me 
how to crab. I think they can both exist together.
    Mr. Smith. Both offshore exploration and fishing and 
crabbing.
    Mr. Willis. Yes.
    Mr. Smith. Thank you, Mr. Willis.
    Thank you, Mr. Chairman. I yield back.
    Mr. Conyers. Chairman of the Constitution Committee, Jerry 
Nadler.
    Mr. Nadler. Thank you.
    First of all, let me just say that I hope we can have 
Attorney General Hood back here before this Committee to really 
explore the issues he raised about the class action suits; 
about Federal courts removing these cases, perhaps not 
properly; and about why it is so bad in the Federal court, in 
any event. Even if it is removed, why should you get less 
justice in a Federal court, which obviously you think you do, 
than in a State court? So I hope we can examine that at a 
subsequent occasion.
    Let me ask Mr. Willis, does BP have sole liability for 
damages caused by the use of dispersants as well as by the use 
of oil?
    Mr. Willis. Sir, my involvement to date in response to the 
oil spill has been directly associated with the claims process.
    Mr. Nadler. Fine. If someone files a claim, I got sick from 
breathing air made poisonous by the dispersants, would you 
award that person an award?
    Mr. Willis. We have an open claims process, and anyone who 
feels like they have been damaged or hurt or harmed directly by 
this spill has every right----
    Mr. Nadler. Directly by that spill. Does that mean the 
dispersants or only the oil? Are we going to have to determine 
Jones got poisoned by the oil, but Smith got poisoned by the 
dispersants, and therefore you are not liable; or are you 
willing to tell us it doesn't matter, you are willing to cover 
people who got sick for any cause?
    Mr. Willis. What we are going to do is follow the law.
    Mr. Nadler. Do you feel that the law--do you feel that the 
law covers the dispersants or only the oil?
    Mr. Willis. I am not an attorney, but I will tell you that 
we have a claims process. It can be accessed three ways--
through a 1-800 number----
    Mr. Nadler. Stop, stop. You are wasting my time. I am not 
interested in the fact that you have a claims process, that it 
can be accessed. We know that. The question is: What will you 
respond to in the claims process? Can anyone answer these 
questions?
    Mr. Willis. I will tell you what we will respond to in our 
claims process.
    Mr. Nadler. What kind of claims?
    Mr. Willis. To date, as I mentioned in my testimony, we 
have paid over 13,000 claims. Some of them have been for lost 
income. Some of them have been to fishermen.
    Mr. Nadler. I am asking a different question. If someone 
breathes in air on the Louisiana coast and claims that that air 
is poisoned as a result of the dispersant, and can show that 
that is the case, is that a valid claim in your process?
    Mr. Willis. They can file a claim, yes.
    Mr. Nadler. I didn't ask if they can file a claim. I have 
said if they can prove that claim that they are poisoned 
because of the dispersants, is that a valid claim that you will 
pay?
    Mr. Willis. Every claim will be evaluated----
    Mr. Nadler. Can you answer yes or no, please? Do you 
consider poisoning by the dispersants your responsibility?
    Mr. Willis. What I am telling you, sir, is that we will 
evaluate every single claim that we get.
    Mr. Nadler. I know you will evaluate it, but you are 
evading my question. Let me read you something. I will read you 
a different question. Fishermen responders who are working BP's 
giant uncontrolled slick in the gulf are reporting bad 
headaches, hacking coughs, stuffy sinuses, sore throats, and 
other symptoms. The Material Safety Data Sheets for crude oil 
and the chemical products being used in the dispersants list 
these varying ailments as symptoms of overexposure to volatile 
toxic organic carbons, hydrogen sulfide, and other chemicals 
boiling off the slick.
    BP is not offering people respirators. We just finished in 
the other room 2 days ago voting on $10.5 billion to compensate 
people who are poisoned by breathing in toxic air after the 
World Trade Center disaster because the Secretary of--the head 
of EPA at that time lied and said there were no ill health 
effects and the air was fine.
    I very much fear we are recreating the same thing right 
now, and that BP--and I have a whole group of stories here. 
Seven people admitted into the West Jefferson Medical Center in 
New Orleans, receiving treatment for having contact with 
dispersants. Marine toxicologist Riki Ott said the chemicals 
used by BP can wreak havoc on person's body, even lead to 
death. Like other cleanup workers, Jackson, had attended a 
cleaning class and was told not to pick up oil-related waste. 
But he wasn't provided with protective equipment. The BP 
officials told us if we ran into oil, it wasn't supposed to 
bother us, which is clearly untrue.
    I fear that what BP is doing now is going to get thousands 
and thousands and thousands of people sick, maybe dead. And my 
question is: Do you undertake the responsibility--not to 
evaluate the claims. Do you recognize that the toxic air 
produced by the oil and by the dispersants can make people 
sick, and it is your responsibility, yes or no? And what will 
you do to prevent this from happening, since you are obviously 
allowing and requesting people to work without proper 
protection?
    Mr. Willis. I realize and I understand your question. We 
have received as a part of our claims process claims related to 
bodily injury. However, OPA does not contemplate personal 
injury, but as a part of our claims process, we will accept 
those claims, we will evaluate those claims, and we will 
address them as they come in.
    Mr. Nadler. But in your evaluation are you going to reject 
them because they are caused by dispersants, not by oil? That 
is the real question. Are you going to protect the workers, or 
are we going to recreate thousands of people who are sick and 
who we are going to be debating a few years from now how to 
compensate?
    Mr. Willis. We are going to do the right thing. We are 
going to respond to this in an effective manner. And we realize 
we will be judged on our response.
    Mr. Nadler. I will just observe, since my time has expired, 
that the answers are totally unresponsive to the questions. And 
I hope that after this hearing you can get us answers to the 
specific questions I ask. One, do you accept responsibility for 
the poisoning of people by the dispersants in the air or the 
water as well as by the oil, or is that not direct under your 
definition? Two, what steps will you take to make sure that the 
people working on the recovery are not poisoned, as is now 
clearly happening to them? I hope you can get direct answers to 
those questions and not simply say, we will evaluate it.
    Mr. Conyers. Senior Member of the Committee Howard Coble.
    Mr. Coble. Thank you, Mr. Chairman.
    I thank the panelists again for appearing here today.
    Mr. Willis, let me put a procedural question to you. If a 
claimant submits a claim for immediate compensation, and 
compensation is, in fact, afforded, is that claimant permitted 
to subsequently submit claims if the damages are increased? You 
don't require a release upon delivery of the first response to 
a claim, I guess is the question.
    Mr. Willis. Just to make sure I understand your question, 
you are asking whether a release is required when the first 
claim is delivered? A release is not required.
    Mr. Coble. I assumed that. Thank you, sir.
    Mr. Attorney General, Mr. Hood. Mr. Hood, in your testimony 
you suggest that State actions related to this oil spill should 
not be removable to the Federal court. Now I am told, and I may 
be wrong about this, that tort reform advocates rate 
Mississippi at or near the bottom of their ratings in every 
category study. Now, why should we bar removal related to this 
spill if, in fact, Mississippi's liability system is a poor 
record? It may not be a poor record. My information may be 
flawed. What do you say to that?
    Mr. Hood. I suspect that the information that you have is 
probably biased.
    Mr. Coble. I have been the beneficiary of biased reports as 
well as you have.
    Mr. Hood. You see, you have Florida, you have Texas, 
Alabama, and Louisiana. You have all our States that our 
attorneys general want to bring our actions in our State courts 
and have the Federal judiciary recognize that we are a separate 
sovereign. We will be making claims under our Clean Water Acts, 
under our Coastal Wetlands Protection Acts. We are trying to 
recover resources for our States. If we get thrown into a mass 
tort action in Houston, Texas, we won't recover all that we are 
owed. That is all we want--all we are owed--and nothing else.
    Mr. Coble. Thank you, sir.
    Mr. Lemmer, let me put a two-part question. Has Cameron 
International made an assessment yet as to whether it is 
exposed in any liability under the Oil Pollution Act, A? B, 
what is Cameron International's previous experience with 
malfunctioning in its blowout preventers?
    Mr. Lemmer. Congressman, the answer to the first one is we 
believe we are not a responsible party under OPA; that that is 
initially BP and, as we heard today, Transocean. We don't 
believe that we are.
    With respect to the history of blowout preventers, they 
have performed excellently over the years. They have gone from 
the surface to shallow waters to deep water, and we have never 
had an incident like this before.
    Mr. Coble. Thank you, sir.
    Mr. Foley, I think you touched on this in your statement, 
but if you will discuss briefly the civil and criminal 
penalties that are relevant to this spill under OPA and other 
environmental laws.
    Mr. Foley. There are civil and criminal penalties under the 
Federal Water Pollution Control Act for the negligent release 
of oil, and the penalties are on a per-day, per-barrel basis. 
And there are no limits of liability with respect to those 
criminal and civil penalties. In addition, there are several 
Federal statutes that are used criminally to prosecute in oil 
discharge cases for environmental damage, such as the Migratory 
Birds Treaty Act for oiling birds. That is a strict-liability 
statute. There are a number of others. I don't have them all 
listed here.
    Mr. Coble. Thank you.
    Mr. Chairman, I want to join my colleagues in extending 
condolences to those who did lose loved ones in this tragedy, 
and I yield back the balance of my time.
    Mr. Conyers. Crime committee Chairman Bobby Scott.
    Mr. Scott. Thank you, Mr. Chairman.
    Mr. Willis, there are number of different areas in terms of 
direct and indirect and even remote losses. If a seafood 
processing plant--if a waterman can't work because the seafood 
has been damaged, seafood processing plant has nothing to 
process, they would be losing money. Workers who work with 
these plants could lose their jobs because there is nothing to 
do. A restaurant may not able to get seafood, so they would 
lose money in terms of sales, and the waiters would lose their 
jobs because the restaurant is closing. Even the local movie 
theater might suffer losses because nobody in the neighborhood 
is working.
    Who sets the standards on who gets paid in all these 
situations?
    Mr. Willis. Congressman Scott, the starting point for the 
standard is the law. And it is OPA, which was established by 
Congress for these types of situations. What we are doing is 
following that law in terms of damages, in paying for damages 
that are directly related and directly caused by the spill; 
paying for losses of income that are directly caused by the 
spill; paying those claims that have been substantiated, those 
costs that are reasonable and necessary as damages have been 
described in OPA. We are actually being guided by how the Coast 
Guard has interpreted this law for the last 20 years.
    Mr. Scott. Now, can we get periodic reports as to what is 
actually being paid so that we can get an idea of what is 
getting paid and what isn't getting paid?
    Mr. Willis. Yes, sir. As a matter of fact, every day we 
provide the Coast Guard with a report by State, by type of 
claim.
    Mr. Scott. Now, there have been allegations of fraud, 
misrepresentations, pressure, and everything else. Let me ask 
the attorney general. This is a Judiciary Committee, and we are 
trying to figure out what kind of damages and liability there 
ought to be. What kind of standard should there be for punitive 
damages and criminal liability?
    Mr. Hood. That is, of course, going to depend on what the 
facts are in this case. If we find that there was gross 
negligence, that they should have taken some action that they 
did not, then that would elevate it to the level of punitive 
damages, which are available under some of our separate State 
actions.
    As far as a criminal investigation, it will be up to the 
Department of Justice. That will be outside of our State 
jurisdictions to make that decision. And I am aware that it is 
being looked into from a possible criminal angle. But the facts 
will have to lay that out, and I am not really able to lay out 
any particular standards that will require for either of those 
causes of action to occur.
    Mr. Scott. Mr. Chairman, I yield back.
    Mr. Conyers. Steve King, Ranking Member of Immigration 
committee.
    Mr. King. Thank you, Mr. Chairman.
    It has been an interesting panel of witnesses here this 
morning. Listening to the testimony and the questions that have 
been asked by the Members of this Committee, I hear the 
reflection of what was said and done up at Ground Zero in New 
York City as if that might inform us as to what we might do 
here. I would recognize that we can't have any ex post facto 
laws, and whatever is in place now I believe should be what 
controls the liability. I don't intend to support anything that 
is going to do something retroactively. I hear a tone of 
something otherwise, and I am not going to try to quote some 
Member on that. I just want to make that point.
    As I listen to the panel, it occurs to me that I haven't 
heard what went wrong. Of all the experts we have, is there 
anyone on the panel that can tell us what went wrong down hole?
    Let the record reflect that there isn't an answer right now 
to that.
    I will perhaps direct my question to Mr. Willis then, and 
that would be: Would it be reasonable, in your opinion, that 
before this Congress passed judgment on what mistakes were made 
by which entity, that we should determine what went wrong 
before we actually took some action to try to fix something?
    Mr. Willis. I am not sure I understand your question.
    Mr. King. We have got a blowout preventer that apparently 
failed. We don't seem to know why. We don't know if there was a 
super-high-pressure gas bubble down there. I don't have any 
measurements of pressure. I don't know what went in the hole 
for mud. I don't know if it was replaced with seawater. I don't 
know what the control was of the blowout preventer. All those 
things down hole, I haven't seen those reports from BP or 
anybody else. I hope you are forthcoming with that data and 
that information so we can find out what you may know that you 
have not yet told America.
    I see a whole Congress that is wrestling with this. I see 
hearings all over the Hill. There is a lot of media focus. It 
is on every day. But yet we haven't focused--the first thing I 
believe that we should do is find out what went wrong. We don't 
know. Is there information that BP has that America would be 
interested in, do you think, Mr. Willis?
    Mr. Willis. Congressman, all I can tell you is since April 
29, my focus has been making sure that the people that have 
been hurt in Louisiana and Mississippi and Alabama and Florida 
by this spill are compensated for their losses in real time. 
That has been my total focus.
    Mr. King. Mr. Ferguson, representing Halliburton, I presume 
you were involved in preparations to cement the well.
    Mr. Ferguson. The company was on the well, yes.
    Mr. King. You are here as an expert not on the geology of 
it, but the legality of it.
    Mr. Ferguson. That is right.
    Mr. King. So that is where I am going to run into my blank 
here, and I just turn this into a statement rather than a 
question. I will just say, Mr. Chairman, to the members of this 
panel, I have great difficulty going down a path of trying to 
determine how Congress might deal with potential liabilities or 
what kind of message we might like to send if we are unable to 
actually determine what went wrong.
    Holding people accountable for something that may have 
never been encountered before geologically occurs to me to be a 
little bit premature. I would like to have done this 
examination on the other side of the geological report that 
hopefully we will get; the technological report that will come 
from BP, from MMS, from Halliburton and other companies that 
are involved, and at that point we can be objective. But I 
think it is premature to be at this point in this testimony 
that is here today. And I am going to turn my focus on figuring 
out what went wrong, learning what went wrong, and at that 
point start to put some of my conclusions together on whether 
Congress needs to act and how we might do that with the best 
amount of judgment.
    So I would just thank the witnesses for coming to testify 
today, and yield back the balance of my time.
    Mr. Conyers. Mel Watt, senior Member of the Judiciary 
Committee.
    Mr. Watt. Thank you, Mr. Chairman.
    And I don't disagree substantially with what Mr. King has 
said. It is unusual. But it is interesting that people are 
already starting to point the finger at each other.
    Mr. Lemmer, I take it you all have already concluded that 
your blowout prevention system didn't cause this accident. You 
have testified to that affirmatively. Yet you have also 
testified that as soon as this occurred, you had people down 
there investigating and doing what was necessary to respond.
    So I guess the first question I have picks up where Mr. 
King left off. Has anybody made any preliminary assessments of 
what did cause this?
    Mr. Lemmer, you seem to know what didn't cause it. Perhaps 
you could tell us your theory on what did cause it?
    Mr. Lemmer. Congressman, at this point we don't have the 
necessary facts to make that determination.
    Mr. Watt. You made the determination that your company's 
system didn't fail. You must have made some kind of 
determination in order to be able to make that assessment. So 
what are the possible theories of how this occurred?
    Mr. Lemmer. First of all, Congressman, what I said is we 
don't have enough information at this time to make any such 
determination.
    Mr. Watt. I don't think you said that at all. I am looking 
pretty much at your testimony. You seem to have eliminated--in 
response to somebody's question, you said your company doesn't 
have any liability; it was BP and the other folks. So the 
question I am asking you is: What are--I mean, I am not asking 
you to tell me what caused this. What are the range of 
possibilities of what caused it, I guess is the question I am 
asking?
    Mr. Lemmer. First of all, I want to go back to the point. 
The question was about our liability under OPA. That is a 
particular statute, not liability in general under common law 
or other statutory law.
    Mr. Watt. I am sorry if I misrepresented what you said. Can 
you answer the question now?
    Mr. Lemmer. The theories have been well expounded on in 
some of the other hearings. They go anywhere from a catastrophe 
down hole where there was a failure----
    Mr. Watt. We know there was a catastrophe now. Come on.
    Mr. Lemmer. Did the casing fly into the blowout preventer; 
did the casing hanger fly up into the blowout preventer; did 
the blowout preventer try to close on a tool joint? There are a 
number of instances that would prevent the BOP from closing.
    Then there are the issues of controls. From what I 
understand from reading the paper and watching 60 Minutes and 
whatnot, the attempt to close the emergency disconnect did not 
occur until after the explosion. It could well be, although we 
don't know at this point--it could well be that that explosion 
cut the communication between the control and the actual 
operation of the BOP on the seabed.
    Mr. Watt. We got your theory. What about the Halliburton 
theory? Tell me why Halliburton is not responsible.
    Mr. Ferguson. Like Mr. Lemmer, we do appreciate the 
investigations are still going on.
    Mr. Watt. I understand that. I am asking you what you think 
happened.
    Mr. Ferguson. I can comment like Mr. Lemmer did that there 
were a number of things that were going on with this well. 
There were a lot of operations that were being done. There was 
a lot of equipment, and there were a lot of parts that were in 
the well that could have failed. The manner of doing the 
operations could have been a problem. Until the investigation 
is over with and we have seen all the facts, we just can't 
identify which one of those.
    Mr. Watt. All of which would have been under the control, I 
presume, of BP, at some level.
    Mr. Ferguson. BP is ultimately in control of the operation.
    Mr. Watt. Let me ask this question, Mr. Willis. There are 
already families of deceased people who died as a result of 
this incident. What efforts are you currently making to try to 
address the needs of those families? Are you just waiting on 
the lawsuits to come and be resolved at the end of the process?
    Mr. Willis. Congressman Watt, the first thing I would say 
is that our heart go out to the family.
    Mr. Watt. I understand that, Mr. Willis. We all have that 
response.
    Mr. Willis. My understanding is that each company is 
addressing the needs and claims of its own employees and 
survivors.
    Mr. Watt. How many of those employees were employees of BP?
    Mr. Willis. None of them were employees of BP.
    Mr. Watt. Who were they employees of?
    Mr. Willis. M-I Swaco, Transocean.
    Mr. Watt. Transocean, where are you? What are you doing to 
address the needs of the survivors currently as opposed to just 
waiting on them to go in and prove whatever claim they may 
have?
    Ms. Clingman. Yes, sir. Of the 11 lives that were lost, 9 
of those were Transocean employees. And we do take, happily, 
responsibility for addressing the needs of those families.
    Mr. Watt. What are you doing right now?
    Ms. Clingman. We have made the conscious decision to wait 
until after a memorial service our company held on this past 
Tuesday to hold any financial discussions with the families. We 
held the memorial with all of the families.
    Mr. Watt. So you are not taking any steps right now, other 
than waiting on the legal liabilities to be determined. That is 
what you are saying?
    Ms. Clingman. No, sir. We waited until after the memorial 
and are now in touch with those families and/or their legal 
representatives. We have actually started that process before 
the memorial. We did not want to have any financial discussions 
until after the memorial. We thought it was inappropriate to 
interrupt the grieving process.
    Mr. Watt. To the extent that Mr. King has said we can't do 
things retroactively, I agree with that, but we can inform 
ourselves about what the future state of law should be. And I 
would just remind my colleagues that in the upcoming financial 
regulatory reform debate, this same issue about to what extent 
the Federal law preempts all State law is the same preemption 
question. All national companies would like to have one 
national standard and never answer to any State law, be subject 
to any liability from any attorney general's lawsuit, State 
attorneys general lawsuit. But you are going to get an 
opportunity in other contexts to address this same issue, and I 
hope we will remember this gentleman Mr. Hood's testimony when 
we get there.
    I yield back, Mr. Chairman.
    Mr. Conyers. Darrell Issa.
    Mr. Issa. Thank you, Mr. Chairman.
    Ms. Clingman, obviously, the loss of employees' lives are 
covered by more than just the caps that we are dealing with 
here today. I am not asking you to tell us about the settlement 
per se, but in overall terms what is the company's anticipated 
dealing with the loss of lives, and is any part of it affected 
by the $75 million cap that we are discussing here today?
    Ms. Clingman. Yes, Representative. No, the $75 million cap 
that has been referenced applies only to OPA, which are 
environmental claims. That cap has nothing to do with our 
responsibility for our employees. They are, however, subject to 
the limitation of liability action that has been filed in Texas 
Federal court. How we address that depends on how those claims 
play out.
    What I can commit to you and to the families involved is 
that from our CEO down, we have testified and will proactively 
resolve those claims fairly, and we are at the very outset of 
that process now, but it is one of our top priorities.
    Mr. Issa. The business of drilling rigs, whether on land or 
at sea, it is pretty dangerous business, isn't it?
    Ms. Clingman. I would say no more dangerous than many 
industrial workplaces. There are obviously a lot of risk 
factors in offshore drilling. It has been historically safe. 
Our rig involved here has not had a single incident for 7 years 
of even minor injuries on board.
    Mr. Issa. Isn't it true that on the very day that this 
disaster occurred, your people were receiving a safety award 
for its operation of that rig?
    Ms. Clingman. Yes, sir. As ironic as that sounds now, the 
operation had been conducted so well and with so little safety 
or other concern, that there was being an award given, and 
executives were on board the rig that day for that purpose.
    Mr. Issa. I am going to continue on with you, if you don't 
mind, because there are too many to spread it around. Isn't it 
true that you had concluded your basic drilling 2 days before?
    Ms. Clingman. Yes, sir. Transocean was brought in to drill 
the rig by BP--it is a subcontractor--and that drilling had 
been completed on April 17, 3 days before the Deepwater Horizon 
incident. Ironically, we were in the process of concluding our 
work and were in the very short future going to remove the 
blowout preventer and the riser package and depart the well 
site, at the request of BP.
    Mr. Issa. So going through that line of questioning, isn't 
it true that the subcontractor for the concrete portion, 
Halliburton, was on site?
    Ms. Clingman. Yes, sir. Halliburton as well as M-I Swaco 
were performing the cementing.
    Mr. Issa. So we have British Petroleum that owns the lease. 
They have some oversight. We have at least three other 
contractors. You are in a transition phase. Is it a 
particularly dangerous time historically, this transition?
    Ms. Clingman. It is a good question. And I would say 
generally, not being a drilling engineer myself, it is actually 
considered one of the more safe times. One of the things that 
is so astoundingly unusual about this incident is it happened 
after a well had been cemented and cased. Normally you would 
anticipate during the drilling process, as you are reaching 
different geologic depths, you would see greater risks from 
hydrocarbons emanating from the structure. Here the well had 
been cemented, cased, and concluded. So it is extraordinary, 
and I have heard that repeated from everyone in the industry, 
that there would be such a catastrophic failure.
    Mr. Issa. So, going through that line of questioning for 
our edification, one, you are going to take care of your people 
based on laws unrelated to our hearing here today. Two, your 
work had been completed; but, more importantly, there were 
multiple different folks, companies represented there. There is 
a whole series of logs, not all of which you probably have, 
that will have to be reviewed. The failing device may or may 
not have been the one that was inspected days before. The 
blowout preventer. The concrete is a factor of why and how it 
failed to perform.
    So summarizing it, we don't know whether there was any 
failure that could have been anticipated. We don't know, and we 
are not representing here Mineral Management Service, who has a 
primary responsibility to ensure that, and yet we are talking 
about removing a cap that may or may not apply based on whether 
there was or wasn't wrongdoing by any of the companies 
represented here. Would you say that synopsizes what we are 
doing here today?
    Ms. Clingman. I agree with many of the statements you have 
just made. It is incredibly difficult to try and either 
prejudge liability or responsive action that should have been 
taken. I am thrilled to hear the report that perhaps the well 
leak has been stopped. That will allow more resources to be 
dedicated to the investigation. I wholly agree that until we 
know the cause of the incident, it is completely inappropriate 
to start to assign blame or liability. What is important, I 
believe, today is that claims are being paid, and people who 
are injured are being taken care of. And that is my commitment.
    Mr. Issa. I, for one, will be looking at how the companies 
handle their obligations, and obviously would like to have 
further research once there are more facts as to whether this 
was an inevitable event or something that could have been 
prevented by compliance.
    Mr. Chairman, I thank you for your diligence in this and 
yield back.
    Mr. Conyers. We have now been called to some votes on the 
floor. We will take a recess. Mr. Brandon Johns will lead you 
and direct you to restaurants, delicatessens, restrooms, et 
cetera.
    The Committee stands in recess.
    [Recess.]
    Mr. Conyers. The Committee will come to order. Thank you 
for your return.
    The Chair recognizes Sheila Jackson Lee, a senior Member of 
the Committee and chairwoman of the Transportation Security 
Subcommittee of the Homeland Security Committee.
    Ms. Jackson Lee. Mr. Chairman, again, thank you
    for your leadership, and I thank this Committee for its 
wisdom in proceeding forward on what I believe is an enormously 
important process.
    I disagree with my colleague and friend who is not here 
from California about the order of things; determining what 
happened before you can address the question of liability. This 
is a tort action. Whether it is an accident or not, there will 
be degrees of negligence--gross negligence, willful--and there 
is a question of the form of liability and whether or not 
punitive damages are too low, exist, and how are you to 
structure what may ultimately be the largest tort litigation in 
the history of this Nation.
    One of the disappointments that I have, and certainly sad 
that we have come to this, is that we did not learn our lesson 
with the incident in Alaska, the Valdez, if you will, in 
structuring a scheme that will be responsive to the potential 
catastrophic event that this is. This will go down in the 
history books.
    I recognize the value of those who are here. Allow me just 
to own up, because I do come from the energy capital of the 
world. And, frankly, the presence of BP is in Houston; the 
presence of Transocean is in Houston; the presence of 
Halliburton was in Houston. They are headquartered in Dubai, 
leaving a gaping hole in our economy. And, of course, the 
presence of Cameron International in Houston. So I speak now 
for a sense of balance for the jobs that are created.
    But I also come from a region that is not far from the Gulf 
Cost, and I recognize the vitality and the importance of the 
fishing and shrimping and oyster industry. And I have never 
found that industry to disturb the oil industry or the gas 
exploration industry. So why do we have a situation now where 
there is a constant referring that we are not ready to discuss 
liability when we have a whole entire industry shut down?
    First of all, I want to association myself with the past 
president of Plaquemines Parish, and I want the Federal 
Government to give them everything they need and let them be in 
charge to clean up what is an additional liability and is the 
horrific marsh or wetlands that are being literally destroyed 
as we speak.
    I have some quick questions for those who I have already 
extended my personal sympathy and concerns, and forgive me for 
just asking you quick questions so that I can focus on the 
question of liability.
    Mr. Jones, has any of these particular corporations come to 
offer you a settlement, sought you to sign papers, or brought 
any issues to your attention regarding the tragic loss of your 
son?
    Mr. Jones. Well, no. Nothing of the kind. I should say that 
M-I Swaco, Gordon's employer, has been very generous in their 
attention and their time. The day we knew Gordon was dead, the 
top five executives of M-I Swaco, which has its office in 
Houston, came to the house, sat around the dining room table 
and talked to us.
    Ms. Jackson Lee. No one has asked you to sign a settlement 
agreement?
    Mr. Jones. I am sorry?
    Ms. Jackson Lee. No one has asked you to sign a settlement 
agreement? You have not signed a settlement agreement?
    Mr. Jones. Oh, no, no, no.
    Ms. Jackson Lee. If you will forgive me, I just wanted to 
try and precisely focus in on that.
    Mr. Brown, has anyone approached you to sign away your 
rights?
    Mr. Brown. No, they haven't.
    Ms. Jackson Lee. Mr. Stone, I understand you were met in a 
store, a restaurant, and someone asked you to sign away or to 
say that you were not injured. Is that correct?
    Mr. Stone. Yes, ma'am. That was for the personal items lost 
on the rig. They reimbursed us for that. But there was also a 
waiver that said I was not injured and I wasn't----
    Ms. Jackson Lee. Where were you located? Where was this 
meeting at?
    Mr. Stone. It was at a Denny's.
    Ms. Jackson Lee. Did you have a physician there assessing 
you?
    Mr. Stone. No, ma'am.
    Ms. Jackson Lee. Did you have a psychiatrist or 
psychologist assessing you?
    Mr. Stone. No, ma'am.
    Ms. Jackson Lee. Did you have your own physician there 
assessing you while they were speaking to you?
    Mr. Stone. No, ma'am.
    Ms. Jackson Lee. Did you have a lawyer there?
    Mr. Stone. No, ma'am.
    Ms. Jackson Lee. Did it strike you as strange to be 
assessed as having not been injured by I don't know whether it 
was a claims adjuster in a Denny's restaurant?
    Mr. Stone. Yes, ma'am.
    Ms. Jackson Lee. Can you tell me how soon that was, sir, 
after the occurrence?
    Mr. Stone. I think maybe a week.
    Ms. Jackson Lee. Less than 2 weeks you were asked to sign a 
settlement. What company was that?
    Mr. Stone. I believe it is Shuman Consultants. I think it 
is Transocean's insurance.
    Ms. Jackson Lee. Thank you.
    Let me quickly try to answer these questions. First of all, 
in the Wall Street Journal today, they have mentioned three 
items that suggest that BP might have short-circuited, short-
cut procedures that might have created the explosion, the 
rising gas. We are not here to determine that. That ultimately 
may be in a court of law. But quickly I go down to the 
companies that are involved: Transocean, BP, Halliburton, and 
the attorney general.
    Quickly, to the attorney general. If I can pursue this 
question quickly, what is the fix that you need--and if you can 
be very quick on that. Let me let you be last--the fix that you 
need on liability.
    To Mr. Willis, let me ask you directly, will you pay 
everything that is determined to be your fault to the maximum, 
including the environmental impact? Is BP prepared to pay it 
all?
    Mr. Willis. Representative Jackson Lee, BP is prepared to 
pay for all of the damage associated with the impact of this 
spill.
    Ms. Jackson Lee. So that means health and safety, the 
oyster farmers and all to the maximum amount necessary to make 
them whole?
    Mr. Willis. We are going to do the right thing and----
    Ms. Jackson Lee. Without litigation?
    Mr. Willis. We are going to pay the damages caused by the 
spill.
    Ms. Jackson Lee. Who will determine the damages; a court of 
law?
    Mr. Willis. The damages--I will give you an example. We 
have opened the claims process, and to date we have seen over 
25,000 people in our claims office. We have paid over 13,000 
claims, and we are doing it every single day.
    Ms. Jackson Lee. So what you are saying to me, and I guess 
the concern I have and I will have to pursue this later, is 
that you will pay the maximum, but the question is: Are you 
dumbing down the claims? I can't get that answered.
    Let me ask the Transocean representative, please, as to why 
you would have a representative in a Denny's restaurant asking 
one of the victims to sign off on whether they were injured or 
not? And is this the mode of operations that you are doing to 
people who are now victimized, frightened, and without 
sufficient legal representation? Can I ask you to cease and 
desist this kind of method of approaching victims and asking 
them to sign away their rights?
    Ms. Clingman. Yes, Congressman. That has not been our 
course of conduct. The circumstances of this particular meeting 
were on April 30, 10 days after the accident, a guy by the name 
of Mr. Steven McClellan, who is not a lawyer, met with Mr. 
Stone to give him the $5,000 that was paid to all persons on 
board, not in settlement of anything, but just for personal 
belongings on board. That was the standard amount paid out to 
employees.
    Ms. Jackson Lee. But he understands you were trying to get 
him to sign away his release.
    Ms. Clingman. No release was signed. I have no release on 
file.
    Ms. Jackson Lee. I know. But he refused it. How many signed 
it out of fear, apprehension, and lack of knowledge? I am 
asking will you cease and desist putting forward these kinds of 
papers in front of anybody from now on?
    Ms. Clingman. It is an easy answer to say yes because we 
have not done so. No one has been asked to file a release of 
Transocean. They were asked some basic factual questions to 
help our investigation. That has already been included. Some 
employees participated; some did not. None has been asked to or 
has signed a release of liability in connection with the 
incident.
    Ms. Jackson Lee. Thank you.
    Halliburton, you were responsible for the cementing, which 
has been characterized as erroneous. Are there any existing 
liability that you now owe that you are not willing to pay, or 
are you willing to pay the maximum that may be required because 
of further determinations?
    Mr. Ferguson. Well, we certainly are willing to honor any 
obligations that we have.
    Ms. Jackson Lee. Attorney General Hood, I quickly need to 
finish with you and ask: What is the fix, and do we need to 
lift the $75 million liability, and do we need to have 
legislation to allow you to be in your State courts--Texas, 
Louisiana, Mississippi, Florida, and Alabama and others that 
may be impacted?
    Mr. Hood. Yes, ma'am. Our recommendation is--and I have 
that attached to my comments, an actual draft of legislation--
prevent removal of State causes of action when the State is the 
plaintiff. There is no respect in the Federal judiciary for the 
11th Amendment any more. So we need to try to fix that.
    The Class Action Fairness Act, there were 47 attorneys 
general signed letters to Congress asking that we be excepted 
from the Class Action Fairness Act, and it was done because 
many said the States won't be subject to it. Well, the fifth 
circuit said that they are. We need to amend that and expressly 
except the States.
    OPA 90. The States needs to be expressly excepted, although 
it is clear that the statute contemplates State concurrent 
jurisdiction. Federal judges have said, oh, that raises a 
Federal question; therefore you can be removed to Federal 
court.
    The other would deal with the limitation of liability. We 
need to be excepted from that. Transocean has filed a 
limitation of liability before a Federal district judge in 
Houston, Texas, where they are trying--the Federal Government 
just got out of it yesterday, and we want out as well. And we 
believe it should be amended. It is just an antiquated 1851 
statute where they are trying to drag us into Federal court.
    Lastly, rule F that applies to admiralty matters, we 
suggest that it be amended.
    So we just want to have our causes of action heard in the 
State court.
    Ms. Jackson Lee. Over all, do you think that $75 million--
speak for yourself, but there are other victims here, 
individuals--do you think that $75 million that was placed in 
law is too low?
    Mr. Hood. I think it was. I think the industry had a 
tremendous impact of the drafting of that legislation in 1990, 
and I think it is too low. Certainly I am proud to see that BP 
committed in writing to five of us attorneys general they would 
not raise that cap. But we probably won't be--we probably won't 
even plead any actions under OPA because we are afraid some 
Federal judge is going to drag us out to Houston, Texas. And so 
we are probably going to just restrain and file State causes of 
actions. And so that OPA cap is somewhat--hopefully, won't be 
applicable to the States.
    Ms. Jackson Lee. Let me just thank the Chairman.
    If I might just point to Mr. Encalade, who I know will be 
questioned, but are you without income now at all, sir? Are the 
300 connected members of your community totally impacted right 
now, and do you see this as a long-range impact?
    Mr. Encalade. Congresswoman, 90 percent of the fishermen in 
our community are completely out of income, though there are 
questions about some oyster beds being open, available for 
harvest, but the conditions are horrible. These fishermen also 
take it upon themselves to have a responsibility to the public, 
and they are not going to go into waters that they may feel 
could cause harm. So, yes, 90 percent of them are out of work 
in our community.
    Ms. Jackson Lee. Mr. Willis, can you help him? Can you help 
him right here today? Can you get to his location and deal with 
this harm?
    Mr. Willis. As a matter of fact, Representative Jackson 
Lee, I actually met Mr. Encalade in Louisiana about 7 days ago 
at a town hall in Port Sulfur. I was on the phone last night 
with some folks who are working on the ground for BP in Pointe 
a la Hache, the community that he is describing. We have a 
claims office that we located in Pointe a la Hache. We have a 
community outreach center that we opened in Pointe a la Hache. 
We are seeing people there. We are bringing checks to them in 
Pointe a la Hache if they can't come across the water to our 
office in Venice. We are working with that community. As a 
matter of fact, I have personally written a check on behalf of 
BP for the food pantry in Pointe a la Hache, given the fact 
that so many people in that community rely on that water in 
Louisiana to make their living.
    In that area, in Plaquemines Parish, we have paid over 
1,000 claims. The claims office, as a matter of fact, 
Representative Lee, in Venice, which is not too far from Pointe 
a la Hache, I was physically there and opened it myself.
    Ms. Jackson Lee. I am going to yield back. I just want to 
make sure that you are not making these farmers, these 
fishermen sign any of their rights away to get a minimum 
baseline check to help them get bread, water, and fruit.
    Mr. Willis. Absolutely not.
    Ms. Jackson Lee. All right. I yield back, Mr. Chairman.
    Mr. Conyers. Senior Member Trent Franks, Ranking Member of 
the Commercial Law committee.
    Mr. Franks. Thank you, Mr. Chairman.
    Mr. Chairman, I want to begin by offering my sincerest and 
warmest condolences to the people who have lost loved ones in 
this tragic event.
    As it happens, unlike most of the Members of the Committee, 
I have been intrinsically involved in this industry, having 
started out when I was a very, very young man working on a 
drilling rig. I am familiar with the Transocean Drilling 
Company. I am familiar with Halliburton. They have actually 
cemented wells that I have been on. And I have owned Cameron 
blowout preventers. So this is something that I am very 
familiar with.
    I guess in some ways that is a little bit of a disadvantage 
to me, Mr. Chairman, because I understand the very difficult 
nature of going out into the middle of the ocean, a mile off 
the ocean floor, and drilling the total from top to bottom of 
18,000 feet and recognizing some of the horrific bottom hole 
pressures there that are dealt with. I know that it is a very 
difficult environment.
    We always used to hold up roughnecks as some of the 
toughest guys in the world because they had the courage to go 
out there and make that happen. So there is sort of a 
brotherhood that I feel toward some of the people that have 
done this kind of work.
    And again, I understand there is just the intrinsic risk 
involved. It is not easy. Part of it, I will say, perhaps it 
will sound political but I don't mean for it to, part of it is 
that a lot of the major companies they would like to be 
drilling onshore, because it is about one-tenth as expensive if 
they could find the reserves and the opportunity to do that, 
but a lot of times they can't, and they are forced offshore and 
it is in an extremely difficult environment.
    So when I ask these questions here, I don't know how long I 
am going to be offered here, but I am not trying to assign 
anything because I think one of the things that has been 
mentioned earlier today is we do not really know all of what 
happened. There are a few who do. But I do know that the 
primary protections against horrific bottom hole pressures in 
this case, if it is 18,000 hydrostatic gradient alone would 
probably be over 8,000 pounds per square, which is a volcano 
that very few people understand when it is completely 
unleashed, the destruction of the drilling rig is probably some 
sort of and example to people.
    But having said that, there are two main protections that 
one has against the pressures like this, and that is the weight 
of the column of drilling mud, the drilling fluid and, of 
course, the blowout preventer if that fails. And I am told that 
that there was a small boat that they said it felt like it was 
raining and it looked like black rain.
    I am absolutely convinced that was drilling mud that was 
blowing out of the hole at the time. Of course, a roughneck 
knows that when drilling mud blows out of the hole, that it is 
time to leave the premises. And I know that 11 people didn't 
get off in time, and again, I offer my most profound apologies 
and condolences, because I lost a very, very dear friend on a 
drilling rig at one time.
    And in one case in my earlier life, there were five men 
that I knew not working for me at the time, but five men that I 
knew that were killed within a space of a month in the Texas 
oil fields drilling to the Ellenberger shallow 4,000 foot or 
less. So I know this is a very hazardous environment.
    With that said, rather than my trying to talk about 
liabilities here, I would like the try to figure out a little 
bit about the echelons of the engineering process that took 
place. I am assuming that somehow the drilling column was 
diminished in density, whether it was mixing with seawater or 
something along those lines when they were staging the cement 
job, I am guessing, that happened, and I am not suggesting that 
I am just guessing it, but I guess I would ask, I know that 
Halliburton, Halliburton has worked for me at times and they 
have always done a fantastic and very professional job. But I 
know that sometimes they are sort of a team of engineers; it is 
sort of a joint effort between the Halliburton engineers or the 
cementing engineers and the engineers that worked for BP or the 
ones that worked for the operator, or, in some cases, the 
contractor hasan engineer too, but can anyone on the panel--it 
asks for a lot of courage, I suppose, but can anyone on the 
panel give me some idea of what the engineering protocol was 
there?
    Who was in charge of the cementing process at the time? 
Again, I am talking about who was the ultimate last word in the 
process? And I probably should ask the Halliburton 
representative first.
    Mr. Ferguson. Yes, sir, I can't really go into all the 
technical details of it, but I can say that we did the cement 
placement on this well. We have an engineer who specializes in 
cementing who is actually in the BP offices in Houston. What we 
will do is they will come to us and they will ask us they will 
give us information on the well and on the temperatures and on 
the type of pressures and that sort of thing.
    Mr. Franks. Were they able to give you a bottom hole 
pressure?
    Mr. Ferguson. We get a lot of different information from 
them in the beginning. It is that way on all wells. We don't go 
down and we don't have any way to get that ourselves. We get 
that information, we design what we feel is a good cementing 
program for that. We make proposals to them. It goes back and 
forth. There are a lot of other elements of the cementing 
process that is really controlled by the well owner on the rig 
that we don't have any control over, but we can run computer 
simulations and tell them if you do this, then it looks like 
you are going to have a certain result on the cement at the 
bottom.
    And you go back and forth with that until such time that 
the owner decides what they are doing to do. And then at that 
point they go ahead and conduct the operation.
    Mr. Franks. But BP's engineers, I have never worked for BP 
but their engineers are the ones that essentially had the last 
word, and Halliburton engineers probably gave them their 
volumetric calculations and their projections.
    Mr. Ferguson. Certainly we do that. We even give them 
computer simulations, if you run it this particular way, this 
is likely to be the result, and it gives them charts and shows 
them how it looks.
    Mr. Franks. That makes sense. Mr. Chairman, if you will 
indulge me again, the two aspects of this is the weight of the 
column of mud which did blow out. There was some miscalculation 
there. It could have been a methane bubble, whatever, something 
happened that the hydrostatic pressure of the drilling column 
became less than the bottom hole pressure, and that is what 
caused the blowout.
    So if you will indulge me to ask the Cameron 
representative, I have owned Cameron blowout preventers, and I 
am guessing that this probably had a blind ram, and probably a 
pipe ram and a shear ram, and there has been some discussion 
that the shear ram hit a joint which is a much heavier element 
of the pipe and didn't shear it. And I am wondering is that, 
first of all, I guess I would ask you, are my conclusions, were 
these three or four rams present in the Cameron stack blowout 
preventer?
    Mr. Lemmer. Congressman, yes, there were four rams. One was 
a test ram, there were a couple pipe rams, a shear ram, and I 
think there was an annular also. We don't know what happened, 
why this didn't work. One theory is it could have hit a pipe 
joint, but we don't know that for a fact, and we won't until we 
can retrieve it.
    Mr. Franks. I understand that. And I fully embrace that 
because I think it would be speculation on anyone's part at 
this point especially since you probably lost communication 
with the BOP at the time when the rig, when it blew out. Am I 
correct in assuming that you probably had some sort of a 
hydraulic actuator and an electronic actuator and perhaps even 
a dead man switch on the BOP and that you probably lost contact 
with all of those, or at least the floor of the rig lost 
contact with all those when it went in the ocean.
    Mr. Lemming. Again, we don't know. We assume that the EDS 
lost contact, electrically or communications. We are not sure 
whether it lost it hydraulically or not. For the dead man to 
fire it requires all three to be lost. So the EDS could not 
work if the power is gone or the communication capabilities are 
gone, but if the hydraulics stay in place, then it doesn't get 
the message to fire, but neither does the dead man work because 
all three weren't cut.
    Mr. Franks. One last thought, Mr. Chairman. A lot of the 
blowout preventers I have used have a nitrogen accumulator to 
actuate the closing the preventer or hydraulics. In this case, 
what was the actual energy source to close the blowout 
preventer? Was that something, was that sort of a accumulator 
on the ocean floor?
    Mr. Lemmer. This is way beyond my area of competence but I 
understand that there were multiple accumulators on this BOP.
    Mr. Franks. Mr. Chairman, I guess I will stop there.
    Again, my condolences first and foremost to those who lost 
their lives and to those who have been left behind. It is a 
very, very difficult challenge, meeting the energy needs of 
this country, and I know that there will be, in my judgment, 
personal and human error discovered here, or at least 
miscalculation, and those will have to, those things will have 
to bear out as they will. But I guess I would remind all of us 
that we only produce about 40 percent of our own oil in this 
country, and the 60 percent that we buy, some of that finds its 
way into terrorist coffers and so there are big implications 
here to losing our ability to produce our own energy.
    And certainly countries like Iran and Saudi Arabia will 
probably be less inclined to curtail their drilling operations 
because of a tragic accident.
    And I hope we can do whatever is necessary to make sure 
this never happens again. But we should not lose sight of the 
fact that there is a very challenging environment like so many 
other things in this enterprise of humanity. And thank you, Mr. 
Chairman, for indulging me.
    Mr. Conyers. Senior Member, Maxine Waters, chair of the 
Housing Committee and Financial Services.
    Ms. Waters. Thank you so very much, Mr. Chairman. First, 
let me say to Mr. Jones I am just so sorry about the loss of 
your son. I thank you for being here today. And to Mr. Brown, I 
am pleased that you survived, but I am so sorry about what you 
have had to go through and what you are still going through. 
And Mr. Stone and all of the families, I am just terribly 
pained about the loss of all of the personnel and the harm that 
has been caused in what I think will be the greatest ecological 
and geological disaster in the history of this country.
    I had wanted to spend some time with you, Mr. Encalade, to 
talk about the history of the Black oyster fishermen down 
there, but I want to pass over that for a moment because BP is 
here today represented by Mr. Willis saying all the right 
things about what all they are prepared to do, and all the 
responsibility that they are going to accept. But I can't trust 
that. I can't trust that because of the history of BP that we 
have learned about since this disaster has taken place.
    Over the past two decades, BP subsidiaries have been 
convicted three times of environmental crimes in Alaska and 
Texas, including two felonies. It remains on probation for two 
of them. It has also received the biggest fine for willful work 
safety violations in the U.S. history, and is the subject of a 
wide range of safety investigations, including one in 
Washington State that resulted in a relative minor $69,000 fine 
for 13 serious safety violations at its Cherry Point refinery, 
Ferndale, Washington.
    As a matter of fact, a review of BP's history shows a 
pattern of ethically questionable and illegal behavior that 
goes back for decades. BP's best known disaster took place in 
2005 when an explosion at its refinery in Texas City near 
Galveston killed 15 workers, injured 180 people and forced 
thousands of nearby residents to remain sheltered in their 
homes.
    An investigation of the explosion by the U.S. chemical 
Society and Hazard Investigation Board blamed BP for the 
explosion and offered a scathing assessment of the company. It 
found organizational and safety deficiencies at all levels of 
the BP Corporation and said management failures could be traced 
from Texas to London. It goes on and on and on. The company 
eventually pleaded guilty to a felony violation of the Clean 
Air Act and was fined $50 million and sentenced to 3 years 
probation. The Occupational Health and Safety Administration 
assessed BP the largest fine in OSHA history, 87 million, after 
inspectors found 270 safety violations that had been previously 
cited but not fixed, and 439 new violations. BP is appealing 
that fine.
    But BP's legal and ethical problems go back much further. 
So we don't trust you. We don't trust what you say. We are 
watching what you do.
    And I want to tell you that some of us are dedicated to the 
proposition that we are going to see that the people in 
communities that have been harmed get compensated and get 
compensated generously, and that we are prepared to do whatever 
we have to do to make sure that that happens.
    And I want to tell you further as this disaster has 
occurred, when you first set up your claims offices and you are 
here to talk about claims, Mr. Willis, and you are talking 
about what you did, you didn't have a claims office that was in 
the minority community and in this village that Mr. Encalade 
comes from here today. They had to fight for that. And we also 
know that there was some attempt to have people sign 
settlements rather than claims.
    So we don't trust you.
    And I want you to know that in addition to the lack of 
trust that we have, we have people that we have had to organize 
who have organized themselves to come here today to be of 
assistance to Mr. Encalade in this testimony. We had to--
Minister Edwards, he has to get all involved in this.
    Mr. Encalade's son-in-law had to stop what he is doing, get 
all involved in this; young attorneys out of New Orleans that 
we have been working with because we had the same kind of 
situations where the small people were not being taken care of 
after Katrina that had been working with this situation, and 
they are doing it as volunteers. You aren't paying for any of 
that.
    As a matter of fact, did you ask Mr. Encalade how he got 
here today? Halliburton? BP? Any of you rich corporate guys, do 
you know who paid their way here today? How they got here? And 
the people that accompany them? Would you ask them after this 
Committee hearing, and would you offer to be of assistance to 
them so that these people, especially Mr. Encalade, who has 
lost 90 percent of his income or all of it, would you assist 
him and in reimbursing him for the money he had to pay out of 
his pocket and all of those that accompanied him?
    We have to tell you that we want to see better efforts and 
better work if you want us to believe you when you come here. 
Why do we have to keep struggling and fighting? Is it true, Mr. 
Encalade, that you all had to go and fight because you had to 
travel 300 miles to get to the claims office?
    Mr. Encalade. Yes. Congresswoman Waters, yes. That is true. 
We had no claims. We had anything and it is something that I 
think BP still doesn't understand. You know, food stamps and 
welfare is fine for elderly people that are home that cannot 
support themselves that is living off of $500 a month. These 
fishermen work hard. They have boats that values in excess of 
100-somethousand dollars, they have oyster beds, they work 
bedded, and everything. I don't feel I should have to go up to 
a food stamp office to get food stamps to support my family for 
something that was out of my control, I had no doing with, for 
someone else to put me out of business.
    And I say we live in a country that I love dearly. I am a 
veteran and I know anywhere if we did harm to any country or 
any citizen in another country, we would have to pay it. The 
United States Government would take care of that family just as 
we have done in the past. And what I am saying is no I am 
sorry, we are a proud people. Food stamps and welfare belongs 
with people that cannot feed or work or take care of 
themselves. We are proud people.
    Ms. Waters. Mr. Willis, I just reviewed your claims 
process. And I understand that people are calling in, they ask 
for certain information, and they don't send a claims adjuster 
out. They ask the people to come in there to the claims office. 
And you are basically getting 5 grand or $2,500, but what 
about, is that some kind of temporary holding compensation 
until there is an assessment done of the total damage that has 
been done to the individual? How does that work?
    Mr. Willis. I am happy to answer your question, 
Representative Waters. And I wanted to start by just saying 
that in Louisiana alone, of the claims we have paid, over 60 
percent of the moneys that have been paid out to date, over 60 
percent of the 35 or so million, the $37 million has been paid 
in Louisiana. We paid a total of----
    Ms. Waters. Just tell me how the claims process works.
    Mr. Willis. How the claims process works, we have three 
ways that the claims process can be accessed. It can either be 
accessed through our 1-800 number, which is 1-800-440-0858. 
That number is available 24 hours a day 7 days a week. People 
can go online and file a claim at www.bp.com/claims, or they 
can walk into one of our claims offices. As I mentioned in my 
testimony, we have a total of 24 claims offices open to date, 
nine of those in Louisiana. We have one in Venice, we had one 
in Pointe a la Hache----
    Ms. Waters. I know where they are. How do they work?
    Mr. Willis. The way they work is you go into an office, and 
if you are a boat captain or a fishermen, you bring in a tax 
return. If you don't have a tax return, you can bring in 
payroll, pay stub for a month, you can bring in deposit slips, 
you can bring in boat tickets or shrimp tickets or anything 
that shows how much money you make for a month.
    What we have tried to do is not put a cumbersome process in 
place. When I got involved in this----
    Ms. Waters. Please, when you bring in all your 
documentation and it is agreed upon how much money can you 
receive?
    Mr. Willis. You will be fully compensated for your losses. 
But what we have done, Representative Waters, in order to 
expedite the process, this was a process that was initially 
going to take 45 days to get a check into someone's hands, we 
can do it in 48 hours now. And what we have done is bias the 
process toward getting money to people quickly, $5,000 for boat 
captains, $2,500 for deck hands.
    Ms. Waters. So you have this amount that you give that is a 
temporary and expedited process, and then the rest will come 
along?
    Mr. Willis. Absolutely.
    Ms. Waters. In what length time?
    Mr. Willis. It is going to come along as we continue to 
evaluate the process.
    Ms. Waters. You are not going out to do the adjustments, 
how do you figure out whether or not these claims are 
authentic.
    Mr. Willis. We will be going out to do the adjustments----
    Ms. Waters. You are going to do that before you give the 
rest of the money----
    Mr. Willis. It is an ongoing process. What I was most 
concerned about, what BP has been most concerned about is 
getting the money into the hands of the people who are hurting 
and been hurt by this oil spill sooner rather than later.
    Ms. Waters. Here is one of the problems. You can call your 
number and they will ask you for your Social Security number, 
they will ask you for a few other things. They will give you a 
claims number. Then they will ask you to come into the office, 
you will get the 5,000, but if you have got problems, your 1-
800 number, 573 8249 is not a 24-hour number and this is where 
we run into problems. You run into problems because people are 
trying to follow up to find out when the rest of their money is 
going to come, what other documentation they have to have, what 
do they have to do, but this is where you are going to have 
problems. Why isn't that a 24-hour number also?
    Mr. Willis. It is--the number for the claims line----
    Ms. Waters. 1-800-573-8249, 8 a.m. To 8 p.m. Not a 24 hour 
number. That is the follow-up number.
    Mr. Willis. That is not a 24-hour number.
    Ms. Waters. Why don't you make it a 24-hour number?
    Mr. Willis. We will definitely do that. I can make that 
happen.
    Ms. Waters. Mr. Chairman, as I wrap up, we have worked with 
the road home program from your beloved State, Louisiana. There 
are still people who have not been compensated. The system bogs 
down and it literally ignores small people, small people who 
don't have money to go get lawyers to fight the bureaucracy. 
And that is what we want to avoid.
    Some of us are far away from Louisiana, but we care so much 
about these issues, we are coming. We are going to follow up on 
it. Just as I walk through your claims process, I am going to 
knock on the doors of the claims adjusters. I am going to come. 
I am going to follow up to make sure that these people are 
compensated. These small fishermen, these Black fishermen, 
these oyster fishermen have been doing this for years in third 
and fourth generations. They have got to be treated fairly and 
we want to make sure.
    Transocean, I am suspicious of you, too. You have dodged 
paying your U.S. corporate taxes by locating headquarters in 
Switzerland. You know you can't be trusted. And aside from 
that, I want the Honorable Jim Hood to tell me about what have 
you filed, are you trying to limit liability in the way that 
they have filed, Mr. Hood?
    Mr. Hood. Transocean filed in Houston, Texas, an action to 
try to pull in as many people as they possibly could. BP filed 
a consolidation action before another Federal judge in Houston, 
Texas to try to consolidate as many as possible.
    We, States, and that includes Florida, some of the 
Republican colleagues will recall, Bill McCollum was a Member 
of this honorable body, is an attorney general in Florida 
running for Governor there, and I assure you that every one of 
my colleagues want to have our cases heard in our State courts 
and not be pulled off by some of their actions before some 
judge in Houston Texas.
    So we have asked that there be some amendments to some 
legislation to prevent that. Those are procedural amendments. 
They are not some ex post facto problem. We believe that it 
would relieve the States from having to fight for 20 years as 
did people that were victims of the Exxon Valdez spill.
    Ms. Waters. Thank you so much, Mr. Chairman. I appreciate 
the extra time you have given me. This gentleman has a 
legitimate concern in that amendment that he is asking for and 
as Chairman, I will take your leadership on that. But we have 
to watch Transocean. Okay? Thank you.
    Mr. Conyers. Judge Ted Poe of Texas.
    Mr. Poe. Thank you, Mr. Chairman. I know you have had a 
long day. I have some questions and concerns, of course.
    I represent Southeast Texas. We border south western 
Louisiana across the Sabine River, or as you all say in 
Louisiana, the Sabine River, and probably represent more 
refineries than any Member of Congress there in Jefferson 
County, 22 percent of the Nation's refineries. We love the oil 
and gas industry and we want to them stay in business because 
it supplies thousands of jobs for Southeast Texas. And most of 
those folks work in refineries. They work offshore. I think 
those are the toughest jobs in America. That is my opinion.
    But right now, 180,000 people are affected by job loss 
because of this disaster.
    And Mr. Hood, being an old trial judge in Houston, a State 
Judge, not a Federal judge, I agree you on the 11th amendment, 
just your legal opinion, do you think the current law allows 
you to file suit and have lawsuits in your State and this 
circuit misinterpreted it or they think you think they got it 
right and we need to fix it? Just a quick answer.
    Mr. Hood. The answer is that we have a cause of action we 
can file in State court. OPA contemplates State court actions. 
The Federal District Court in Louisiana is one that 
misinterpreted that. Fifth circuit misinterpreted CAFA and all 
the Senators agree that were on the floor, we had the minutes 
of it saying, States won't be subject to CAFA. It was 
bipartisan, 47 attorneys general signed a letter here, and I 
have a copy of it here, but we asked that we expressly accepted 
from CAFA and the fifth circuit who put that in their opinion 
but they ignored it. So you have Federal courts sapping up 
authorities that belong to the sovereign States, and we want to 
protect that.
    Mr. Poe. But you say, in your opinion, you can sue in State 
court.
    Mr. Hood. Yes, sir.
    Mr. Poe. My concern, and I think is really four issues 
here, first of all, we are going to need to deal with the loss 
of life and injuries. We haven't heard a lot about that through 
the national media. Then we have to deal with the loss of 
businesses that are directly affected. We have to deal with the 
damage caused to the environment, and we have to find out what 
happened, and we have to find out what happened probably first. 
We don't know really.
    My question and Mr. Foley may be the expert on this, who is 
in charge? We have heard that BP is in charge, the Federal 
Government is charge, nobody is in charge. Mr. Willis, who is 
supposed to be in charge of this situation?
    Mr. Willis. Representative Poe----
    Mr. Poe. That is me. Guilty as charged.
    Mr. Willis. All I can tell you is that I know who is in 
charge of the claims process for BP, and who is in charge for 
making sure folks are compensated for their losses, and that is 
me.
    Mr. Poe. And that is you. Is BP in charge of this whole 
cleanup operation?
    Mr. Willis. I know that I am in charge of The Coast Guard--
--
    Mr. Poe. So you don't know.
    Mr. Willis. I don't know.
    Mr. Poe. Mr. Foley who is supposed to be in charge of this?
    Mr. Foley. In a Federal incident response, the Federal 
incident commander is in charge and is usually from a 
government agency.
    Mr. Poe. Like the Coast Guard?
    Mr. Foley. He has 51 percent of the vote, but it is a 
collaborative effort between stakeholders and the responsible 
party and a number of different people involved in the spill 
response.
    Mr. Poe. So who is in charge? Is the Federal Government in 
charge?
    Mr. Foley. The incident commander has the decision maker.
    Mr. Poe. And that is a Federal employee?
    Mr. Foley. Yes. And right now, that is the Coast Guard.
    And they are overseeing the responsible party's efforts to 
respond to the spill.
    Mr. Poe. So when the blowout happens, it seems to me we 
just kind of waited to see how much damage was done, I say we, 
the system, kind of waited to see what damage was done and then 
everybody started saying, pointing fingers at other people.
    When it happens like this, blowout, oil spill, who is 
supposed to respond first?
    Mr. Foley, can you answer that? We have 12 people here. Can 
anybody answer that question?
    Mr. Foley. There is a scheme in place for oil spill 
response. The responsible party is supposed to report it to the 
National Pollution Fund Center and the National Pollution Fund 
Center sends out a notice to claimants to set up a claims 
process. In terms of----
    Mr. Poe. Cleanup. I am talking about cleanup right now.
    Mr. Foley. For cleanup, usually the Coast Guard sets up 
different response centers in the areas that are going to be 
affected and the responsible party is responsible to bring the 
resources, there is a response an where they have to activate 
their oil spill response contractors and act, in this case, it 
is a spill of national significance, so it is going to be the 
biggest response that they have trained for, for these oil 
spills.
    Mr. Poe. So Coast Guard is in charge of the cleanup.
    Mr. Foley. The government agencies have oversight 
responsibility for their responsible party who has to bring all 
the resources to bear on responses.
    Mr. Poe. I am not arguing with you, Mr. Foley. Is the Coast 
Guard in charge or not? Do you know under the law? You are the 
expert in this law.
    Mr. Foley. I have not been in involved with the spill 
response in any way, and I am not familiar with any of the 
details.
    Mr. Poe. Can any of you answer that question? This 
happened, I assume the different corporations are trying to 
clean up, but who is in charge of making sure cleanup occurs? 
Even to this day?
    Can any of you answer that question? At least FEMA is not 
in charge. But, who is in charge? Nobody knows?
    Mr. Hood. Judge, the Coast Guard has the responsibility. 
But the problem is that they have got, they are having to rely 
on information that is provided to them by BP so it is kind of 
a joint authority. But the end line, top line authority is 
supposed to be the Coast Guard.
    Mr. Poe. What concerns me is this has been 5 weeks and 
because--this is my opinion--the response to the cleanup seemed 
to delay, and I don't know if it is the Coast Guard or who, but 
that just increases damages because the cleanup, if it is not 
contained, of course, it eventually hits Louisiana or 
Mississippi or Texas.
    And the longer we wait on cleanup, and we have heard these 
comments from different people that are affected that no one is 
really trying to clean up the mess or is in charge, it 
increases damages, and somebody is going to have to pay for 
that.
    So Mr. Hood, do you want to give me some insight on that?
    Mr. Hood. Yes, sir. I flew over Chandelier Island, which is 
about a 60-mile island running north and south. The northern 
tip is about 30, 40 miles from Mississippi, our coast. On 
Thursday, 2 weeks after it occurred, Secretary Janet Napolitano 
came down and there were booms already around, so we have had 
the booms around our barrier island. I think the Coast Guard 
did a pretty good job in responding getting the booms out 
there, but they don't work. It was a sea of red around 
Chandelier Island, and there was some great fishing around that 
area.
    So I think they got it out there, but they just don't have 
the capability of dealing with it. Booms just don't really 
work, especially in rough water.
    Mr. Poe. I understand in Louisiana there were people in--
the fishermen that were willing to help on the cleanup and it 
got bogged down in red tape. Mr. Encalade, can you help me out 
with that? Is that true?
    Mr. Encalade. Congressman Poe, yes. It is true, and I have 
to be honest with you, we stood, our old people, we stood on 
these banks and watched them deploy these booms in this rough 
water with a southeast wind coming in on the shores of 
Louisiana and Mississippi. And sir, I have to be honest with 
you. We told them they were wasting their time. But nobody 
listened. And it is those kind of things that--this is why I am 
here, because as Congresswoman Waters said, we can't afford to 
keep making mistakes, and we are paying the price for them.
    And just like she stated, going home and all of this, we 
are still being affected. We haven't gotten our lives together 
completely by, from that. And now to go down these same roads 
to see BP following the same path, it just boggles the mind. 
You are still not listening to the people. And you are not 
listening, our parish president, Billy Nungesser, and I would 
love to make this comment if you don't mind, sir, the night 
this incident happened, the first thing he did, and we were on 
the phone 11, 12 o'clock at night, he called his entire fishing 
community and got advice and he knew what he had to do by the 
next day. Problem is, nobody listened to him.
    Mr. Poe. You have to know who to talk to.
    Mr. Encalade. And it is the same thing. We just keep going. 
We have been begging for those islands to be pumped back for 
over 40 years. And so it is the same thing. That is the 
problem.
    Mr. Poe. One more question. Top kill apparently is working 
now, and at least so far today, who made that decision to use 
that procedure? Did BP make that decision? Mr. Willis, do you 
know.
    Mr. Willis. I will preface my comments by saying that I was 
not involved in that decision. I have been involved in the 
claims process but----
    Mr. Poe. We need to have somebody from BP to make some 
other decisions besides claim here, Mr. Chairman, at some 
point, if that is appropriate.
    I was just curious, but nobody apparently can answer that, 
since it probably works. Why wasn't it tried 3 weeks ago? Maybe 
we will find somebody else who can answer that question for us, 
Mr. Chairman. I want to thank you all for being here. Thank 
you, Mr. Chairman, I yield back.
    Mr. Conyers. Steve Cohen, Chairman of the Commercial Law 
Committee.
    Mr. Cohen. Thank you, Mr. Chairman. Let me ask Mr. Willis, 
I was reading your statement, where did you go to school?
    Mr. Willis. I went to High School at McDonogh 35, and I 
went to Northwestern State University in Natchitoches, 
Louisiana.
    Mr. Cohen. You are going to pay all these damages and some, 
where it says directly related to, what if there is a 
restaurant that doesn't have--like Galatoire's, I was saying, 
or Acme Oyster Bar, they don't have any oysters or oysters, 
whatever you want to call them. Who is going to pay the Acme 
Oyster Bar? Are you going to do that?
    Mr. Willis. Congressman Cohen, what we are going to do is, 
and we have put a process in place so that any business that 
feels like it has been directly hurt or impacted by this oil 
spill in the Gulf of Mexico can go in and file a claim through 
our process and it will be reviewed.
    Mr. Cohen. It will be reviewed. And that is your stock 
answer, and I realize that is the limit of your authority, but 
the problem you have got is every restaurant in Louisiana in 
the Gulf Coast, particularly New Orleans, is going to be hurt. 
People go to New Orleans for a couple of reasons, and one of 
them is to eat. And if you ain't got any oysters, we can't go 
down to eat and if you are a seafood restaurant you are really 
going to be hurt.
    So Felix is bad news, Acme is bad news. And while you can 
eat steak down there, you really go for the seafood. Rent a car 
business, they are going to be hurt. Hotels are going to be 
hurt. Casinos are going to be hurt because people aren't going 
to go down there. They all can file claims. Give me your 
thoughts of the probability of those people being compensated 
by BP oil because really you need to subsidize the State of 
Louisiana for a long time.
    Mr. Willis. I will start by saying that I love the Acme 
Oyster House. It is one of my favorite places to eat.
    Mr. Cohen. I hope I can meet you there some time in the 
future, and we will have to be real old.
    Mr. Willis. What I would add to my comments is that this 
claims process is very specific. Individual claims would be 
very specific. Some of the easiest claims to resolve are those 
around individuals, fishermen, crabbers, oystermen. Business 
claims are coming in now and we are looking at every one 
individually. We are using the best resources available and we 
will make fair decisions.
    Our goal through this whole process is to be reasonable, is 
to be reasonably efficient, and to be fair, and do the right 
thing.
    Mr. Cohen. I got what you are saying. It is just going to 
be tough because to do the right thing, you are really going to 
have to take over that State and part of Mississippi and part 
of Alabama, I guess, because the damages you have caused are 
going to affect those States for the rest of my life probably, 
a long time. Several decades. And that is just fact. You are 
going to have to advertise every Tulane basketball game, even 
if nobody goes, LSU football games. You need to be the sponsor 
for all of them. Baseball teams. Everything. What was the 
profit of BP oil last year?
    Mr. Willis. The profits of BP last year, I don't know that 
number offhand.
    Mr. Cohen. Give me a ballpark figure.
    Mr. Willis. I would guess it was on the order of $20 
billion.
    Mr. Cohen. That is not enough. You all have to work harder. 
That is not going to take care of what you owe. Are you all 
going to go out of business?
    Mr. Willis. We are going to do the right thing, and we are 
going to mitigate all of the damage that we have caused as a 
result of this spill that we are obligated to do under the law. 
But in addition, there are some other things we are going to do 
as well. For example, we offered up the $25 million block 
grants to the State to expedite the cleanup process. We 
recently offered $70 million to the State to help sort of 
publicize tourism.
    Mr. Cohen. How about all the losses they are going to have 
from sales tax revenue from folks not going down there? And how 
about when the marshes are destroyed and the next big 5 
hurricane comes in, and the city gets wiped out, are you going 
to compensate the city of New Orleans for its path and for 
another evacuation of the city?
    Mr. Willis. We will cover the expenses, the legitimate 
expenses that have been substantiated and are related to the 
spill.
    Mr. Cohen. Mr. Willis, you are doing your job good and you 
have a tough job because legitimate, directly, and recorded in 
this bill, there is going to be a lot of people in this Nation 
that are going to suffer and the government is going to end up 
being the surety, because we are going to have to pay for it 
and make up for Louisiana's losses and all the cities it is 
going to fall on the backs of the United States taxpayer, and 
we are going to have to come to the rescue because you are 
going to say they are not direct, et cetera, et cetera. Not 
your fault. It is the fault of your company. You are doing your 
job.
    Mr. Lemmer, you know something about the Safety Valve 
Program, I guess, is that right?
    Mr. Lemmer. I am a lawyer, not an engineer. I know 
something about it generally, yes.
    Mr. Cohen. Well, when Judge Poe was throwing around, not 
him, Mr. Franks was throwing around those words, it seemed like 
you understood them. Should BP or somebody have seen the worst 
possible case scenario that this would have occurred and then 
prepared to respond? Should they not have been prepared to 
respond in some manner?
    Mr. Lemmer. Sir, that is a difficult question for me to 
answer, because we are an equipment and service supplier, and 
BP is the operator.
    Mr. Cohen. But as service supplier, wasn't there a 
possibility that what you supplied, would have a problem, which 
it apparently did, and that they should anticipated that and 
seen the worst possible case scenario and had top kill ready to 
go before this ever happened?
    Mr. Lemmer. Should BP have foreseen something like this 
occurring? BP has testified that they viewed this as a failsafe 
device when, in fact, it is not. It is the last chance, but it 
is not a failsafe. So should they have foreseen it? I don't 
know. That is going to be for the courts to decide in the 
future.
    Should they have a top kill ready to go? That is a 
different question. That procedure, I understand, has been used 
on the surface, it has never been used at these depths. I don't 
know that it has every been called on to be used in these 
depths before. It was talked about early on after the blowout. 
But why other efforts got priority over the top kill, I can't 
tell you.
    Mr. Cohen. I don't know who is the right person to answer 
this question, maybe nobody can, but it doesn't seem to me it 
is right to allow us to let any company drill at depths where 
we don't have the ability to go in there and stop a leak. We 
don't have that benefit, well, top kill wasn't done at that 
depth, the first thing we had were the dome, we didn't have the 
Superdome ready, we couldn't do that either because we hadn't 
done it at that depth. We didn't know it was going to freeze 
when it got down there in the saltwater, and all that stuff and 
there was going to be a problem.
    If they don't know how to do it, we shouldn't let them 
drill. It was the negligence of the Bush-Cheney-Halliburton 
regime that gave them that authority, and we are suffering from 
it today because they allowed this to occur, and it never 
should have been permitted. And for 8 years after they had 
their secret meetings in 2000 and 2001 that we still haven't 
seen the results of with the oil companies, and BP was there, 
and Conoco was there, and ExxonMobil was there, and Cheney was 
there. They came up with an energy program that has hurt this 
country to this day and continues to hurt the country. And it 
is the responsibility for this goes back to Bush, Cheney and 
Halliburton.
    Thank you, Mr. Chairman.
    Mr. Conyers. Magistrate Hank Johnson, chair of Courts 
Committee from Georgia.
    Mr. Johnson. Thank you, Mr. Chairman.
    Mr. Willis, I think you have the bearing and the manner of 
an attorney or a public relations professional. And I want to 
just, yeah, I want to commend you for the way in which you have 
handled the task that you were called upon to do today which is 
to represent British Petroleum.
    And let me ask you, I have heard you say earlier that you 
have a degree in geology?
    Mr. Willis. In geology and geophysics, a master's degree.
    Mr. Johnson. And have you been to law school or----
    Mr. Willis. I have not.
    Mr. Johnson. And now do you report to a lawyer?
    Mr. Wilson. I do not.
    Mr. Johnson. You do not. Now, who do you report to? What 
division, if you will, of BP?
    Mr. Willis. In my day job outside of the response 
associated with the spill, I report to the executive Vice 
President for North America Gas. I am the VP of resources, 
which essentially means I am the VP for geology and geophysics 
and petrophysics for the lower 48 onshore business.
    Mr. Johnson. And you have no responsibility for dealing 
with legal issues whatsoever?
    Mr. Willis. I do not deal with legal issues.
    Mr. Johnson. But you have been assigned to deal with claims 
issues?
    Mr. Willis. I volunteered to be a part of this claims 
process for two reasons: One is because I lived through Katrina 
with my mother. I lived through the Road Home, as a matter of 
fact, the check for the Road Home came; by the time we got the 
check from the Road Home, my mother was dead.
    Mr. Johnson. Now you are kind of filibustering me right 
now, though. Let me proceed on. So you volunteered to serve 
your company in any way that they thought would be good, and so 
they assigned you to be the claims representative?
    Mr. Willis. Actually, they didn't assign me to be claims 
representative. I saw that as an emerging need once the well 
continued to flow.
    Mr. Johnson. Got you. Now having volunteered to handle the 
task of handling claims, are you working with an insurance 
company as you handle these claims?
    Mr. Willis. We are actually working with a company called 
ESIS, which is a catastrophic--a company that deals in managing 
catastrophic claims for businesses. They are not an insurance 
company, although they are owned by an insurance company called 
Ace.
    Mr. Johnson. So essentially, Gulf Oil is--excuse me, BP 
petroleum is self-insured with respect to this kind of 
catastrophe?
    Mr. Willis. That is my understanding.
    Mr. Johnson. And the claims process is a process that 
traditionally you adjust the claims and you limit your 
liability. Is that your understanding?
    Mr. Willis. My understanding of the process that we have in 
place is that we are going to make sure we put a process in 
place that is efficient, that is fair, that is reasonable and 
that pays people comparable to the losses they incurred.
    Mr. Johnson. Let me ask you this question. We have all 
these lawyers here, we have a professor of law, the hearing--we 
got lawyers all across the room. And the hearing is on legal 
liability issues surrounding the Gulf Coast oil disaster.
    Can you think of any person at BP who would perhaps be more 
appropriate to handle this task than what you volunteered to 
take on? When I say this task, I mean preparing to appear 
before this Committee today. Is there someone who could have 
done it perhaps a little better than yourself?
    Mr. Willis. I think in terms of coming to this Committee to 
talk about how BP is responding to the needs of the folks in 
the community in regards to the damage that has been caused, 
being caused by the spill, I am the best person to do that.
    Mr. Johnson. Okay, well, did you bring your claims package 
here? I assume that you have a package, claim forms, if you 
will, that people would have to fill out? Isn't that correct?
    Mr. Willis. There are claims forms that people will have 
will have to fill out yes.
    Mr. Johnson. Last night, or excuse me, last week I had the 
opportunity to ask questions as a Member of the Transportation 
and Infrastructure Committee, the Water Resources Subcommittee, 
I had the opportunity to question your president, and he 
promised to send the entire claims package to us, which we have 
not received yet. Did he entrust you with that claims package 
to bring here today since you are the person in charge of 
claims for BP international, if you will?
    Mr. Willis. When you say ``claims package,'' can you tell 
me what you mean?
    Mr. Johnson. All of the forms that one would have to sign 
in order for their claim to be considered?
    Mr. Willis. I did not bring those forms with me today.
    Mr. Johnson. Why not?
    Mr. Willis. I was not aware that I needed to bring those 
forms with me today.
    Mr. Johnson. Since you are in charge of the claims process, 
can you list for me, as you sit here today, all of the forms 
that are in the claims package?
    Mr. Willis. Yes. And it depends----
    Mr. Johnson. Well, now hold on now. It depends. Only thing 
I want is just the name of each form in the claims package, all 
claims packages combined.
    Mr. Willis. I will start by saying that the claims form is 
available on our Web site at www.bp.com/claims. And on that Web 
site, we are going to have a claims manual that summarizes 
everything that is involved in the claims process. That manual 
is about 52 pages.
    Mr. Johnson. And I am asking you for the forms that must be 
filled out, whether or not they are over the Internet or 
whether or not they are hard copies. I just want to get--yeah.
    Mr. Willis. Okay.
    Mr. Johnson. So you have a claim application form.
    Mr. Willis. There is a claim application form, and that 
form differs slightly if you are a fisherman.
    Mr. Johnson. What else do you have other than the claim 
application form which may differ, whether or not it is an 
economic damage, an environmental damage or an injury claim, 
personal injury claim, so you got the claim application?
    Mr. Willis. Yes.
    Mr. Johnson. What else do you have?
    Mr. Willis. That is the form that has to be filled out.
    Mr. Johnson. How many pages is it? That is the only form?
    Mr. Willis. That is the only form that needs to be filled 
out. In addition to that form, there is some documentation that 
is required.
    Mr. Johnson. Yes. Release of information, or something like 
that?
    Mr. Willis. What we ask for is some proof that of income. 
It could be a tax return. It could be payroll stubs. It could 
be deposit receipts. It could be fish tickets or shrimp tickets 
showing that you actually transported and delivered a load for 
sale.
    Mr. Johnson. Let me ask you this question. You said the 
other day, excuse me, you said earlier in this hearing that you 
paid out about 37 million claims--$37 million in claims on, 
with 400 adjusters, 24 walk-in clinics, and those kinds of 
things, Internet filing claims and everything, the $37 million, 
25 of that went to Mississippi, was that the 25 million?
    Mr. Willis. No. That is something totally separate. The 37 
million is associated with money that is directly put into the 
hands of fisherman, shrimpers, oyster harvesters and 
businessmen in local communities from Louisiana to Florida.
    Mr. Johnson. So what about releases, release of any and all 
liability in return for the payment that would be generated by 
the claim application?
    Mr. Willis. There is no release required in our claims 
process.
    Mr. Johnson. Okay, and the conversations that were had at 
the disembarking location when the workers were brought back to 
land, about 28 hours or so after the tragedy occurred, were 
those interviews tape recorded, either audio or video?
    Mr. Willis. I do not know anything about what happened and 
what you just described. I took over the--and started running 
the claims process associated with responding to the oil spill 
on the 29th of April.
    Mr. Johnson. All right. Thank you, sir.
    Ms. Clingman. Basically, what you are arguing is that you 
are indemnified, or, in other words, Transocean is indemnified 
for any and all liability that it may have for everyone as a 
result of this catastrophe. You are indemnified by BP.
    Ms. Clingman. Yes, Congressman our contractual arrangements 
are similar to the OPA statute, and also for the organizational 
chart for rigs. So BP as the operator is responsible for the 
well and any hydrocarbons from the well. That is OPA law, and 
that is reflected in our contract as well. You are exactly 
correct.
    Mr. Johnson. And as you know or as you may know Transocean 
approved a $1 billion dividend to shareholders, just back on 
May 15, May 14, actually. Some have argued that that dividend 
makes it more difficult for victims of the Deepwater Horizon to 
pursue liability claims against your company. Others have 
likened this to a fraudulent transfer in bankruptcy. When a 
debtor transfers money or property immediately before filing a 
bankruptcy petition. Is this within 45 days of the event? 
Actually within about 2, 3, weeks before the event we have this 
transfer of wealth, if you will, from the corporation to the 
shareholders, and I don't know who those shareholders are, but 
I would assume them to be closely associated with the company 
in terms of management.
    Was that an appropriate time, in your opinion, for 
shareholders to take those profits?
    Ms. Clingman. I am very glad, Congressman, you asked that 
question because there had been some confusion about the 
declared dividend and if I could clarify some of the timing.
    Mr. Johnson. Mmh hmm. I am sorry would you repeat that, 
please.
    Ms. Clingman. Yes, sir. I am glad you asked the question. 
There has been some confusion about the declared dividend and I 
would like to address that. First and foremost, the dividend 
declared, none of which has been paid to date, in no way 
affects Transocean's responsibility or ability to meet its 
legal obligations to persons involved in this incident. So 
there is no, in terms of relation to bankruptcy or depleting 
assets, there is no concern whatsoever that Transocean will not 
be able to meet its liabilities.
    Addressing the dividends specifically, I agree with you 
that the timing does not look as good as it might given the 
incident. It was, however, put in place significantly before 
the Deepwater Horizon incident. This had been board approved 
back in February 2010 after several years of Transocean being 
in a growth mode not paying shareholder dividends and so the 
board had decided mainly based on competitive factors and other 
companies paying dividends that it was time to reward loyal 
shareholders with an approximately $4 per share dividend. That 
was put out in a recommendation in a proxy filed with the SEC 
and distributed to shareholders before the Deepwater Horizon 
incident.
    Now, you should also know there are safeguards in place to 
prevent the eventuality you described from being true.
    Mr. Johnson. I don't want you to go into that because I 
want to yield back the balance of my time. But I do want to say 
that I feel that you have been very knowledgeable and 
communicative with me, and the time that I was here in this 
hearing, you have also been very forthright.
    I would love for BP, I would love to be able to look at 
that position on the table, because this is not personally 
directed at you, Mr. Willis, but I would love to be able to say 
the same thing about BP. I feel like we have gotten bamboozled 
by BP with you being here to answer in the questions of Members 
of Congress.
    And if I could, Mr. Chairman, I have been asked for a short 
yield to Mr. Cohen. And I shall so yield.
    Mr. Cohen. Thank you, Mr. Johnson, and thank you, Mr. 
Chairman. I guess I needed to follow up a question of Mr. 
Ferguson here, since he is with Halliburton. What knowledge do 
you have, and did you attend any of those meetings with Vice 
President Cheney when they brought about the oil policy for the 
United States of America?
    Mr. Ferguson. I have no knowledge of that whatsoever. I 
have never attended any meeting. My understanding is nobody 
from Halliburton attended any such meeting.
    Mr. Cohen. So you haven't seen any memos, any papers?
    Mr. Ferguson. No, sir, I have not no.
    Mr. Cohen. You don't know anything about those meetings at 
all?
    Mr. Ferguson. Only what I have read in the newspapers.
    Mr. Cohen. Is Mr. Cheney involved with Halliburton now.
    Mr. Ferguson. Not in any way that I know of.
    Mr. Cohen. In Transocean and Halliburton and BP, do you all 
have any members of one of the other companies on your boards? 
Does anyone here, do you know? Mr. Willis, do you know who is 
on the board of BP?
    Mr. Willis. I do not have those names in my head, no.
    Mr. Cohen. Ms. Clingman?
    Ms. Clingman. I don't know of any members of these 
companies serving on our board. I will absolutely find out and 
get back to you.
    Mr. Cohen. It is public knowledge, I am sure.
    Mr. Ferguson?
    Mr. Ferguson. There is no current person at BP that is on 
our board. There is one board member that is retired some years 
ago from BP that is on our board right now.
    Mr. Cohen. He is retired. What is his name?
    Mr. Ferguson. His name is Robert Malone.
    Mr. Cohen. What was his position at BP?
    Mr. Ferguson. Don't hold me to this. I think he had a 
similar position to what Mr. Lamar McKay does.
    Mr. Cohen. President.
    Mr. Ferguson. Of BP Americas.
    Mr. Cohen. And he is now on the board of Halliburton?
    Mr. Ferguson. Right. Although like I said, he is completely 
separated from BP.
    Mr. Cohen. Ms. Clingman, what were the profits last year at 
Transocean?
    Ms. Clingman. The Transocean entity that paid the dividend 
out of Switzerland, I would have to get the number. I don't 
know. I don't have any figure.
    Mr. Cohen. Ballpark? No? Mr. Ferguson what is the ballpark 
on Halliburton last year?
    Mr. Ferguson. Again, we can get the number, but it is 
something under a billion dollars.
    Mr. Cohen. Thank you. Thank you, Mr. Johnson.
    Mr. Johnson. And I yield back. Thank you.
    Mr. Conyers. Dr. Judy Chu of California.
    Ms. Chu. Thank you, Mr. Chairman. First let me ask the 
panel even though only a dozen of Transocean's employees are 
physically located in Zug, Switzerland, and more than 100 are 
based in Houston Texas. Transocean moved its headquarters 2 
years ago. To me, it seems the apparent underlying purpose is 
to avoid U.S. corporate income tax. We know now that the 
Transocean flag of the Deepwater Horizon is in the Marshall 
Islands, can anyone on the panel explain why a vessel that is 
flagged in a particular country, whether such company seek to 
avoid safety regulations by flagging the vessel outside of the 
United States?
    Ms. Clingman. Yes, Congresswoman, I would be happy to 
address that. You are correct; the Deepwater Horizon is flagged 
in the Marshall Islands. Transocean is an international 
company. Of our approximately 139 drilling rigs, all but 15 are 
outside of the United States. And so very few of our vessels 
are flagged in the United States.
    Most importantly, that does not result in any break in 
operational requirements for operating in U.S. waters and we 
remain under U.S. Coast Guard jurisdiction for our operations 
in United States waters such as the Gulf of Mexico.
    Logistically, however, if a rig is flagged in the United 
States, what that requires under Coast Guard regulations is 
that a member of the U.S. Coast Guard conduct a physical 
inspection of that rig annually. When the rig itself is 
traveling around the world and it is sometimes in the Middle 
East or the Far East that becomes a logistical issue.
    Another requirement is that a U.S. flagged vessel be 
captained by a U.S. citizen. We do that for every in rig in the 
Gulf and all the members on board the Deepwater Horizon 
Deepwater Horizon were citizens of the United States. However, 
when those rigs are moved to less hospitable jurisdictions, we 
have great difficulty employing a U.S. citizen to command and 
chair those rigs.
    And so the flagging is predominantly a logistical issue as 
a majority of our rigs are working outside of the United 
States. There is also a financial tax benefit to doing that but 
importantly there is no regulatory or compliance benefit from 
flagging the vessel in a foreign country as opposed to in the 
United States.
    Ms. Chu. Does anybody else have any comment on that?
    Okay, well, then I will turn to another topic. Actually, I 
am very anxious to ask questions pertaining to the Vietnamese 
fishermen in the area. I have been in touch with 
representatives from the area. They are experiencing particular 
problems, so Mr. Willis, I would like to ask you questions 
pertaining to their plight. There are, today, tens of thousands 
of Vietnamese shrimpers that are making their livelihoods in 
the waters of the Gulf Coast, and, in fact, they represent 
about one-third of the shrimping community in the Gulf Coast. 
Because of that strong Diaspora in Louisiana, Mississippi, and 
other Gulf States, there is a problem with English proficiency.
    And in fact, with one community in Louisiana, English 
language proficiency in Louisiana is about 10 percent. They 
have expressed concerns over access to BP and government 
programs due to the language barrier. The translators provided 
by BP have been unable to communicate clearly the legalities 
for seeking damages for lost income, cleanup employment 
opportunities and unemployment assistance.
    And in fact, Vietnamese fishermen have been encouraged to 
sign contracts written in English by BP representatives that 
provided $5,000 in damages in exchange for waiving one's right 
to sue and similar liability waiver was required to access 
employment for the vessel of opportunity program which hires 
local boat operators to assist with response activities, so in 
other words, to get the job, they would have to sign that 
liability.
    First of all, are you still requiring people to sign the 
liability?
    Mr. Willis. We never required any sort of signing of waiver 
of liability for the claims process. Never.
    There was a waiver of liability, as I understand it, 
associated with the vessels of opportunity program that you 
described. That was destroyed and a very simple form was put in 
place. It was a mistake and it was corrected quickly.
    Ms. Chu. So you were not requiring----
    Mr. Willis. Absolutely not.
    Ms. Chu. I want to hear you say that that you are not 
requiring that waiver of liability.
    Mr. Willis. We are not requiring a waiver of liability.
    Mr. Hood. Dr. Chu, I am sorry to correct the record. I am 
Jim Hood, AG from Mississippi. We have many Vietnamese 
fishermen on our coast who did sign some of those waivers. We 
got a commitment out of BP to give us a list of those names, 
and we sent translators down to make sure that they know that 
that waiver has been withdrawn. So we are going to make sure 
that--it did occur. It did occur for when they hired them to 
pull booms and so forth, so I want to make sure that was 
correct.
    Mr. Willis. I want to make sure you understand what I said. 
For the claims process, there was never at any time a waiver 
required.
    For the vessels of opportunity program that Attorney 
General Hood just referenced, in the beginning, there was and 
it was destroyed. It was taken out of the process.
    Ms. Chu. Well, is there something on the forms that say 
that there is a $5,000 limit for the claims themselves?
    Mr. Willis. Can you repeat the question. Please.
    Ms. Chu. In terms of the claims form, does it suggest that 
there is some kind of $5,000 initial limit?
    Mr. Willis. No, it does not. What we said about the claims 
process is that we are going to compensate people for their 
losses. But in order to expedite the process, we are making 
advance payments interim payments to get money into people's 
hands within 48 hours versus having to wait 45 days or 30 days 
to make it happen. It does not say anything about $5,000 on the 
form.
    Ms. Chu. Are these claims documents, these claims forms, 
are they translated into Vietnamese?
    Mr. Willis. They are translated into Vietnamese and Spanish 
and they can actually be accessed on our Web site at 
www.bp.com/claims.
    Ms. Chu. I want to point out that there have been some 
problems with the translation, and a Vietnamese priest told me 
that for instance, the translation for ``deck hands'' was 
translated into something like ``hands growing out of decks.'' 
And I want to really emphasize that you have to have a 
culturally sensitive and culturally appropriate translation for 
these forms and for the outreach kind of program that you have 
for these fishermen.
    And what kind of assistance will there be for people who 
are going through the process besides the translation of the 
forms?
    Mr. Willis. I will tell you a little bit, Congresswoman 
Chu, what we have been doing, and I will talk specifically 
about what I have been involved in in Louisiana and 
Mississippi, in Louisiana in Venice and in New Orleans and in 
Mississippi in Biloxi. We have about 122 local people that we 
hired in our Venice community outreach center. Half of those 
people, actually 60 percent of them are either Vietnamese, 
Taiwanese, or from Cambodia.
    We have people working there to help us in a variety of 
ways, one to get connected with the Vietnamese and Asian 
communities in the Louisiana area, but we have also moved some 
of those people in the claims center to help us get those folks 
do their claims process as quickly and efficiently as we can.
    In New Orleans, just on Monday, Congressman Cao had an expo 
where we had 5 to 600 Vietnamese present. He asked us if we 
would offer a vessel of opportunity training. He asked us if we 
would open up a claims center for the day on site and we did, 
recognizing that the process we have in place is not perfect, 
but we are going to correct the problems we see with it, he 
recommended eight or nine, as I recall, translators that we 
should hire in our New Orleans office. We are in the process of 
bringing those folks in so that we can better connect with the 
community in the most effective way possible.
    In Mississippi we have had training, specifically for the 
Vietnamese community around the vessel of opportunity program. 
We have had that training done in Vietnamese.
    So we are continuing to work it every day and to make it as 
good as it can possibly can be.
    Ms. Chu. And you are going to get back to the people who 
signed those waivers and make sure you do adequate outreach to 
them?
    Mr. Willis. Absolutely, absolutely, we have to.
    Ms. Chu. There are so many assistance programs available, 
but what steps will you take to educate the Vietnamese 
community through the media? You know, they don't partake 
necessarily of the mainstream media. Are you accessing the 
ethnic media?
    Mr. Willis. I do not know the answer to that question, but 
it is definitely something I will find out.
    Ms. Chu. Well, they need to know of these assistance 
programs, and I do have a list of the Vietnamese media outlets, 
so here so I would like you to make sure that they are part of 
this assistance and outreach program.
    Mr. Willis. I will be happy to do that.
    Ms. Chu. Thank you. And I yield back.
    Mr. Conyers. Attorney Ted Deutch of Florida.
    Mr. Deutch. Thank you, Mr. Chair. First of all, Mr. Jones, 
my sympathy to you and condolences to your family and the ten 
other families who are suffering, and Mr. Stone and Mr. Brown, 
to you and the other 15 injured, I appreciate very much your 
being here today.
    The goal of this hearing I think for the families of those 
who lost their lives and those who are injured Mr. Encalade 
whose businesses have been so impacted is ultimately figure out 
how we obtain justice. And along those lines, Mr. Willis, you 
said that BP has stated you have stated throughout that you are 
going to pay all legitimate claims notwithstanding the cap in 
the Oil Pollution Act. And I know that you have paid thus far 
13,500 claims. What is the total dollar amount?
    Mr. Willis. It is around $37 million.
    Mr. Deutch. And the analysis that you used to determine 
whether those claims were legitimate and how they are paid is 
there any consideration of the amount of the claim when those 
claims are fired.
    Mr. Willis. No, based on the claim that was submitted.
    Mr. Deutch. And will it change when you hit the $75 million 
cap and beyond?
    Mr. Willis. It will not.
    Mr. Deutch. And Mr. Willis, if there is no--if BP has made 
the determination that if, in fact, it is responsible for these 
losses and will pay well in excess of the 75 million, is 
there--is that simply a company determination? I guess the 
question was for Mr. Ferguson, Ms. Clingman.
    Ms. Clingman, the Transocean seems to be the counterpart to 
BP. BP, according to Mr. Willis, tells us they are going to pay 
in excess of the $70 million cap, Transocean, on the other 
hand, has filed a claim trying to limit its liability to 27 
million.
    Why, in my case, I represent southeast Florida, if this oil 
comes into the loop current and hits the southeast coast, the 
damages will be well in excess of millions, well in excess of 
the billions. Why is it appropriate for liability to be 
limited?
    Ms. Clingman. Because it goes back, Congressman, to the two 
separate types of claims, and although there are many, many 
lawsuits they fall into two big categories. One are the OPA 
claims such as you are describing, damages to beach front, to 
fishermen, to commercial industries, tourism industries, those 
fall into the Oil Prevention Act. Those are the claims for 
which BP has been designated and has accepted responsible party 
status. Those are the ones going through the claim process. The 
lawsuit that we filed does not relate in any way to those types 
of claims. The limitation of liability action applies only to 
claims asserted under maritime law.
    Mr. Deutch. Then in which case under the Oil Pollution Act, 
if there were claims you would be limited by the 75 million?
    Ms. Clingman. With respect to Transocean, Transocean has 
accepted responsible party status under OPA only with respect 
to oil or fuels or diesel that would emanate from the rig 
itself on the sea floor. I have no evidence that that has 
happened.
    Mr. Deutch. Ms. Clingman, let's assume that it happened. 
Let's assume that this entire mess was Transocean's fault just 
for the sake of this discussion. In that case, would Transocean 
acknowledge that the $75 million cap under OPA is inadequate 
and that you would be responsible or should be responsible for 
more than that?
    Ms. Clingman. Nothing under OPA puts us in a responsible 
party position for the oil well leak, which is what is leaking. 
I can't wear BP's cap, but----
    Mr. Deutch. Let me try it this way, Ms. Clingman. For Mr. 
Ferguson the question is this: There is a $75 million cap under 
OPA. The fact is the estimates are that this may cost $14 
billion; it may cost considerably more. We may not know for 
some time. Why shouldn't that cap be raised to a level that 
helps compensate those whose lives have been turned upside down 
by this environmental disaster?
    Mr. Ferguson. In our position we are just not involved in 
the cap, but as a general proposition on the hypothetical that 
you mentioned, I think we would support any reasonable change 
in the law. I can't commit without seeing what is written, what 
it is about. But the cap itself, as I have heard discussed here 
today, may be too low.
    Mr. Deutch. Mr. Willis, I know you have agreed to this, but 
the way to confirm that BP has agreed to this is to acknowledge 
the importance of increasing that cap beyond the $75 million. A 
reasonable amount, I would suggest to the three of you, is an 
amount necessary to compensate those for their losses. BP would 
be willing to see an increase in that cap, presumably?
    Mr. Willis. We have said, and I will say again, that we 
believe that cap is not relevant, and that we accept that we 
will exceed this cap, and we will pay all legitimate claims 
above it.
    Mr. Deutch. And, therefore, Mr. Willis, if we introduce 
legislation to increase that cap, to remove that cap 
altogether, to cover all legitimate claims, BP would then 
support that legislation?
    Mr. Willis. We will follow the law.
    Mr. Deutch. I would like to turn to the Death on the High 
Seas Act for a moment. Under that statute there is a 
discrepancy that we have heard about earlier, that the 
surviving family members of a person who dies on a vessel on 
the high seas versus the damages available to those relatives 
whose--to the family members of a relative who died in a plane 
crash on the high seas, there is a discrepancy. I would like to 
know if there is anyone who can speak to why we shouldn't take 
action, why this Congress shouldn't take action immediately to 
change that law so that the families of those who perished in 
this accident should receive the same treatment as the families 
of those who lost relatives in an airplane crash in precisely 
the same location?
    Mr. Galligan. I would be happy to address that, and my 
answer would be that you should; that the current state of the 
law provides an inconsistency which allows recovery, as you 
have stated, to the victims of commercial aviation disasters, 
but it doesn't allow recovery to the other victims of maritime 
disasters.
    Today, right now, and I don't want to use the Joneses as an 
example, I hope they will forgive me, but if they were to 
pursue their legal redress, and if they were to establish 
liability, nobody in the family would recover anything for the 
loss of care, comfort and society that they have suffered.
    Mr. Deutch. Mr. Galligan, if I may follow up on that. In 
his opening statement we heard Mr. Jones say that he worries 
about his newborn grandson Maxwell and whether Maxwell will be 
eligible for any damages under the Death on the High Seas Act 
because he was born after his father Gordon died in this 
explosion. Can you comment on that? Can you give him some 
comfort in knowing that that is not the case?
    Mr. Galligan. I am not sure I can give him comfort. I can 
tell him that the state of the law is somewhat confusing. In 
DOHSA cases, in general maritime law cases, what the courts 
will frequently do in situations to define relationship, 
whether it is parent, spouse, child, is they will look to 
applicable State law to determine the relationship.
    So in this case they would probably look to Louisiana law 
to decide whether or not a viable fetus subsequently born after 
the death of a parent has a right to recover. So Mr. Jones 
would have to go and consult what the law of Louisiana was; 
which, of course, means that the recovery of different people 
under DOHSA cases in different States may be different 
depending upon the relevant State law. Certainly something that 
could be done here would be to say that a child includes a 
viable but not yet born fetus.
    Mr. Deutch. Mr. Galligan, just to wrap up this important 
topic, in order for us to ensure that Mr. Jones and the 
families of those others who perished in this accident--in 
order to ensure that they receive the treatment under law that 
they deserve and the compensation that should be rightfully 
theirs, the approach should be, one, to address this 
discrepancy that exists between airplane crashes and these 
types of accidents?
    Mr. Galligan. Yes.
    Mr. Deutch. And, number two, to specifically address the 
types of family members and the occasions when this will be 
applicable?
    Mr. Galligan. Yes. And I think there is something else you 
would have to address, and that would be the effective date of 
any amending legislation. You would have to consider whether or 
not you would make that amending legislation applicable to 
events that occurred before the passage of the legislation. And 
in doing that, the questions that arise are two: One is policy, 
and the other is constitutionality.
    On the policy standpoint, the questions are adequate 
compensation, which I have already discussed; modernizing the 
law, which I have already discussed; and making the law 
consistent with other aspects of maritime law and State law. 
And on constitutionality, unless a statute retroactively 
applied is going to inhibit some other constitutional right, 
the balance and test is is there a reasonable, rational basis 
to do that? And the rationality would be supported by what: By 
the same things that would justify the policy change.
    Interestingly, you did exactly that when you amended DOHSA 
in 2000 to make loss of society recoverable by the survivors, 
the victims of commercial aviation disasters.
    Mr. Deutch. Mr. Chairman, before I yield back, I would just 
like to again thank Mr. Jones and give Mr. Jones my commitment 
that I will work with you, Mr. Chair, and this Committee to do 
what we need to do in an effort to amend DOHSA so that you and 
the other families can receive the appropriate respect that you 
deserve under law.
    I yield back, Mr. Chairman.
    Mr. Conyers. Judge Charles Gonzalez of Texas.
    Mr. Gonzalez. Thank you very much, Mr. Chairman.
    First to Mr. Jones and his son Chris, you are lawyers, most 
of us up here are lawyers, lots of lawyers are witnesses today, 
and we are taught that words are powerful, and they can convey 
a message, and they can express every human emotion--until you 
experience what you have experienced, and then we know they are 
not. As inadequate as the words are that you may find from 
Members, it is sincerely felt. I just wish there was a way we 
could convey them adequately.
    Let us talk about adequacy. It is something that Mr. Jones 
brought up. His statement was about responsibility, liability. 
What is the law supposed to accomplish? Coming full circle, 
because we started off with Mr. Conyers' opening statement, 
what is the jurisdiction of this Committee? There are many 
things that we have asked today, and we may not be able to do 
much about them, but there is something we can do about the 
laws that govern the parties, the laws that allow remedies to 
the victims of what transpired in the Gulf, and looking at 
things prospectively.
    So my question is going to be just to a few of you, I am 
going to assume certain things, and I am going to ask that you 
assume them with me, that the purpose of law would be two-fold. 
I am going to try to make it as simple as possible, and I am 
going to follow up on something that Mr. Deutch touched on. But 
if the law is to accomplish anything, it would be two things: 
One, it instills responsibility because of liability. That is 
human nature. The law does not assume that people are just 
going to do the right thing. The law is not going to assume 
that a party is not going to be negligent. It assumes 
negligence. It assumes carelessness. It assumes acts that are 
intended, actually. That is what we have to prepare for.
    Now, there are consequences to those; they are called 
victims. And so what the law then proposes to do is to make the 
victim whole. That is justice. So it is really simple.
    I think we all started off in law school kind of 
understanding those concepts, and we lost our way somewhere 
along that whole process. But nevertheless, if we apply that 
test, and we look at what we have today in the way of laws 
governing incidents that have occurred in the Gulf, and I would 
say may occur again--hopefully not to this degree, but we know 
there will be accidents--are the laws that are presently on the 
books adequate, adequate to instill responsibility, and 
adequate to make victims whole for their losses?
    Mr. Willis, I know you are not a lawyer, but I am still 
going to ask you, do we need to amend the laws that govern 
instances of this nature?
    Mr. Willis. Representative Gonzalez, you are right, I am 
not a lawyer, but what I will say to you is one of the things I 
worked very hard to understand, as I have been involved in this 
process, is what the law is around the damage that is being 
caused by this spill. What I can tell you is whatever the law 
is, BP is going to follow it. I have said and I will keep 
saying that we are going to go past this $75 million cap 
because it is just not going to be enough to repair the damage 
that is being done by this oil well that has been flowing into 
the Gulf of Mexico. We are going to follow the law.
    Mr. Gonzalez. It goes way beyond the $75 million. It goes 
into the types of remedies, the types of causes of action, the 
elements of damages. I mean, this goes way beyond certain 
numbers.
    And I don't mean to pass over Mr. Hood: What is your 
opinion? Do we need to amend the laws? You have asked us to, so 
I assume your answer is going to be yes?
    Mr. Hood. Yes, sir. And I have attached our comments about 
five different ways that we thought would benefit the States 
just to protect the States' interests and the damages that we 
may be subject to incur.
    What affects the States also, some of these amendments, 
also affects these individual claimants from Mississippi. I 
mean, a company, by the time this thing is over, I suspect will 
have caused damage to hundreds of Mississippians. Yet they, 
under the Class Action Fairness Act or different Federal 
procedural moves, they will have them in your State, 
Mississippi claimants, because a company has come to 
Mississippi and caused damage, down there in a multidistrict 
litigation or a class action court, and that court will decide 
categories of people, their damages, and they don't get--some 
will get more than they should, and some will get less than 
they should. And I think everybody ought to be paid what they 
are owed, and that is it, no more.
    I would ask the Committee in addition to considering the 
proposed amendments that I have proposed expressly dealing with 
States, excepting States from cap, I would ask the Committee to 
go back and look at the Class Action Fairness Act and some of 
the abuses that are occurring by Federal judges just to get a 
case settled. When you have thousands of cases, it is human 
nature, you are going to try to do everything you can to force 
a settlement, and then people are left out, and it is not fair. 
It is not a fair process. Other than those written things that 
I have mentioned, I think the professor was dead on on some of 
the inequities among the different admiralty acts as well.
    Mr. Gonzalez. Ms. Clingman, present law is adequate or 
inadequate?
    Ms. Clingman. Congressman, I am an attorney, and I take the 
laws as Congress has enacted them and then make my legal 
recommendations based on the facts. We are not there yet in the 
case because we don't have the facts, and I would urge Congress 
to have that same deliberateness in finding out first what has 
happened.
    It is inherently imperfect to compensate losses like this, 
the loss of human life, the loss of livelihood, the loss of 
recreational beach shore, with money. However, I do believe the 
U.S. justice system is the best in the world, and our U.S. 
justice system has dealt with complexities, torts, loss, 
damages for more than 100 years, and has done it very well. So 
I would encourage this Committee and other Members of Congress 
to let the judicial system do its job, to let the U.S. Coast 
Guard do its investigative job, and then to take, as we will in 
looking at our liability, a deliberate look at the legal regime 
and see if any changes need to be made.
    Mr. Gonzalez. But the courts can only apply the laws that 
we enact. And if we restrict recoveries, we restrict causes of 
action, we restrict damages, we cap, we limit, do we need to be 
addressing that so that we can give the courts maybe a little 
bit more latitude to address what are legitimate complaints, 
legitimate damages, and losses?
    See, I tend to believe we are going to do something. What 
we have in place today, it is antiquated, obviously; but it is 
just not fair. I understand what you are saying, we can let 
this thing play out, but I am not sure that is exactly going to 
happen because there are some glaring shortcomings as we even 
start the process.
    I will ask Mr. Ferguson, is the law adequate or inadequate?
    Mr. Ferguson. Well, I think we are certainly going to find 
out. And the lesson that is learned from that is going to drive 
the policy that determines how do we change these laws. The 
position we are in is that our policy is we comply with laws. 
If the laws are changed, we are going to comply with the way 
they are changed. It is clear that there is issues that are 
immediately obvious from what is happening here. It is up to 
Congress to address that policy and to change those laws as 
appropriate.
    Mr. Gonzalez. And I know, Mr. Foley, you have touched on 
it. You have said sometimes there are reasons that laws may 
look somewhat inadequate because they need to promote what 
might be commerce and such. And to some extent I might even 
agree, and I am not going to totally disagree with the Ranking 
Member Mr. Smith, my neighbor in San Antonio, but I don't think 
this would be the death knell of drilling. It would just have a 
little more justice in what is available to folks.
    I will ask the professor, and I don't want to put words in 
your mouth, but I assume that you are saying, just as the 
attorney general is, ``you guys need to change the laws and 
make them a lot more fair.''
    Mr. Galligan. Yes. Obviously there will need to be 
investigations, and the facts still have to come out. But the 
laws in this area are imperfect.
    You said it. Tort law ought to be about fairness. Aristotle 
called it corrective justice. It ought to compensate people to 
make them whole. If we don't compensate for loss of society in 
maritime wrongful death cases, we are not making them whole. 
Tort law ought to deter. It ought to encourage appropriate, 
efficient investments in safety. If we undercompensate, by 
definition we underdeter, and the Limitation of Liability Act 
of 1851, which applies to the personal injury and wrongful 
death claims here, is a further potential underdeterrent 
because it is a further potential limitation of liability.
    Mr. Gonzalez. Thank you very much.
    I yield back, Mr. Chairman.
    Mr. Conyers. I thank the witnesses for their endurance and 
their testimony. We will have 5 days in which questions may be 
submitted to you that we ask be returned, and 5 days for any 
additional materials that might be submitted.
    I introduce into the record written materials from Michael 
Russell and Steven Gordon.
    [The prepared statement of Mr. Russell follows:]
                 Prepared Statement of Michael Russell




                               __________

    [The prepared statement of Mr. Gordon follows:]
    
    
    
    
    
    
    
    
    
    
    
    
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    Mr. Conyers. We thank you very much, and we declare this 
hearing at an end.
    [Whereupon, at 2:50 p.m., the Committee was adjourned.]
                            A P P E N D I X

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