[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
OUTER CONTINENTAL SHELF
OIL AND GAS STRATEGY
AND IMPLICATIONS OF THE
DEEPWATER HORIZON RIG
EXPLOSION: PARTS 1 AND 2
=======================================================================
OVERSIGHT HEARING
before the
COMMITTEE ON NATURAL RESOURCES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
Wednesday and Thursday, May 26 and 27, 2010
__________
Serial No. 111-54
__________
Printed for the use of the Committee on Natural Resources
Available via the World Wide Web: http://www.gpoaccess.gov/congress/
index.html
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----------
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COMMITTEE ON NATURAL RESOURCES
NICK J. RAHALL, II, West Virginia, Chairman
DOC HASTINGS, Washington, Ranking Republican Member
Dale E. Kildee, Michigan Don Young, Alaska
Eni F.H. Faleomavaega, American Elton Gallegly, California
Samoa John J. Duncan, Jr., Tennessee
Frank Pallone, Jr., New Jersey Jeff Flake, Arizona
Grace F. Napolitano, California Henry E. Brown, Jr., South
Rush D. Holt, New Jersey Carolina
Raul M. Grijalva, Arizona Cathy McMorris Rodgers, Washington
Madeleine Z. Bordallo, Guam Louie Gohmert, Texas
Jim Costa, California Rob Bishop, Utah
Dan Boren, Oklahoma Bill Shuster, Pennsylvania
Gregorio Sablan, Northern Marianas Doug Lamborn, Colorado
Martin T. Heinrich, New Mexico Adrian Smith, Nebraska
Ben Ray Lujan, New Mexico Robert J. Wittman, Virginia
George Miller, California Paul C. Broun, Georgia
Edward J. Markey, Massachusetts John Fleming, Louisiana
Peter A. DeFazio, Oregon Mike Coffman, Colorado
Maurice D. Hinchey, New York Jason Chaffetz, Utah
Donna M. Christensen, Virgin Cynthia M. Lummis, Wyoming
Islands Tom McClintock, California
Diana DeGette, Colorado Bill Cassidy, Louisiana
Ron Kind, Wisconsin
Lois Capps, California
Jay Inslee, Washington
Joe Baca, California
Stephanie Herseth Sandlin, South
Dakota
John P. Sarbanes, Maryland
Carol Shea-Porter, New Hampshire
Niki Tsongas, Massachusetts
Frank Kratovil, Jr., Maryland
Pedro R. Pierluisi, Puerto Rico
James H. Zoia, Chief of Staff
Rick Healy, Chief Counsel
Todd Young, Republican Chief of Staff
Lisa Pittman, Republican Chief Counsel
------
CONTENTS
----------
Page
Hearing held on Wednesday, May 26, 2010.......................... 1
Statement of Members:
Grijalva, Hon. Raul M., a Representative in Congress from the
State of Arizona, Prepared statement of.................... 136
Hastings, Hon. Doc, a Representative in Congress from the
State of Washington........................................ 3
Prepared statement of.................................... 5
Rahall, Hon. Nick J., II, a Representative in Congress from
the State of West Virginia................................. 1
Prepared statement of.................................... 3
Statement of Witnesses:
Birnbaum, S. Elizabeth, Director, Minerals Management
Service, U.S. Department of the Interior................... 105
Prepared statement of.................................... 107
Kendall, Mary L., Acting Inspector General, U.S. Department
of the Interior............................................ 67
Prepared statement of.................................... 69
Memoranda and Investigative Reports...................... 70
Lubchenco, Jane, Ph.D., Under Secretary of Commerce for
Oceans and Atmosphere, and NOAA Administrator, National
Oceanic and Atmospheric Administration, U.S. Department of
Commerce................................................... 97
Prepared statement of.................................... 99
Salazar, Hon. Ken, Secretary, U.S. Department of the Interior 6
Prepared statement of.................................... 10
Watson, Rear Admiral James, Deputy, Unified Area Command on
the Deepwater Horizon Fire and MC 252 Oil Spill, U.S. Coast
Guard...................................................... 90
Prepared statement of.................................... 92
CONTENTS
----------
Page
Hearing held on Thursday, May 27, 2010........................... 139
Statement of Members:
Hastings, Hon. Doc, a Representative in Congress from the
State of Washington........................................ 140
Prepared statement of.................................... 141
Miller, Hon. George, a Representative in Congress from the
State of California, Statement submitted for the record.... 270
Rahall, Hon. Nick J., II, a Representative in Congress from
the State of West Virginia................................. 139
Statement of Witnesses:
Foss, Michelle Michot, Ph.D., Head, Center for Energy
Economics, and Chief Energy Economist, University of Texas. 246
Prepared statement of.................................... 247
Garamendi, Hon. John, a Representative in Congress from the
State of California........................................ 235
Prepared statement of.................................... 236
Gerard, Jack N., President and CEO, American Petroleum
Institute.................................................. 142
Prepared statement of.................................... 143
Hirshfield, Michael F., Ph.D., Senior Vice President for
North America and Chief Scientist, Oceana.................. 237
Prepared statement of.................................... 239
Luthi, Randall, President, National Ocean Industries
Association................................................ 226
Prepared statement of.................................... 227
McKay, Lamar, Chairman and President, BP America, Inc........ 152
Prepared statement of.................................... 154
Newman, Steven L., Chief Executive Officer, Transocean, Ltd.. 159
Prepared statement of.................................... 161
Additional materials supplied:
DeGette, Hon. Diana, a Representative in Congress from the
State of Colorado, Chart ``Factors Contributing to
Blowouts'' submitted for the record........................ 272
List of documents retained in the Committee's official files. 271
OVERSIGHT HEARING ON THE ``OUTER CONTINENTAL SHELF OIL AND GAS STRATEGY
AND IMPLICATIONS OF THE DEEPWATER HORIZON RIG EXPLOSION''
----------
Wednesday and Thursday, May 26 and 27, 2010
U.S. House of Representatives
Committee on Natural Resources
Washington, D.C.
----------
The Committee met, pursuant to call, at 10:05 a.m. in Room
1324, Longworth House Office Building, Hon. Nick J. Rahall, II
[Chairman of the Committee] presiding.
Present: Representatives Rahall, Kildee, Pallone,
Napolitano, Holt, Grijalva, Bordallo, Costa, Boren, Heinrich,
Lujan, Miller, Markey, DeFazio, Hinchey, Christensen, DeGette,
Kind, Capps, Inslee, Baca, Herseth Sandlin, Sarbanes, Shea-
Porter, Tsongas, Kratovil, Hastings, Young, Gallegly, Flake,
Gohmert, Bishop, Shuster, Lamborn, Smith, Wittman, Broun,
Fleming, Coffman, Chaffetz, Lummis, McClintock, and Cassidy.
Also present: Representative Castor.
STATEMENT OF HON. NICK J. RAHALL, II, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF WEST VIRGINIA
The Chairman. The Committee on Natural Resources will come
to order, please. I am going to begin with a few housekeeping
chores. Pursuant to Committee Rule 4(g), opening remarks will
be limited to the Chairman and the Ranking Member during
today's hearing. At this time, I ask unanimous consent that the
gentlelady from Florida, Kathy Castor, be allowed to sit with
the Committee today, whenever she arrives. Without objection,
so ordered.
I would also like to take this opportunity to welcome the
newest member of our Committee, Mr. Ben Ray Lujan of New
Mexico. Is he here? Well, whenever he gets here, he will be our
newest member of the Committee. Ben Ray fills the vacancy
created by the departure of our colleague, Neil Abercrombie.
His seniority on the Committee, as determined by the House
Democratic Caucus, places him directly after his New Mexico
colleague, Martin Heinrich. For better or worse, we now have a
New Mexico corner on the Committee.
All right. This morning we begin a series of hearings on
the Deepwater Horizon incident and its implications for future
offshore oil and gas activity in the United States. We are all
extremely frustrated by the fact that the well, which continues
to hemorrhage possibly tens of thousands of barrels of oil into
the Gulf of Mexico each day, has not yet been shut down. The
blame game is in full force right now. But I do think it is
important to determine whether Deepwater Horizon is the Wall
Street of the ocean, privatizing profit while the public bears
the risk.
In the coming weeks, Administration witnesses and outside
experts from across the political spectrum will testify before
this Committee or its subcommittees about this catastrophic
event, the Federal Government's role, if any, in its causes,
and remedial steps that will be necessary to reduce the chance
of such a horrific event occurring again.
This morning, we will hear from my dear friend, the
Secretary of the Interior, Ken Salazar, who has dispatched tens
of thousands of Federal employees into the region. He has met
personally with the involved and responsible parties. He has
been on the scene on numerous occasions himself. As a matter of
fact, he just came back to Washington to be before us today.
And it would seem he is doing all in his power to address this
catastrophe.
We will also hear today from the Acting Inspector General
Mary Kendall on the findings of a just-released investigation,
which found once again misconduct at the Minerals Management
Service, this time among the ranks of the inspectors who were
supposed to be keeping an eye on, not playing around with,
industry operators in the Gulf.
To now learn that certain agency personnel allowed industry
to fill out their inspection reports in pencil with MMS
inspectors then writing on top of the pencil in ink prior to
turning in their reports is truly reprehensible. As the
Committee of jurisdiction over oil and gas leasing in the Outer
Continental Shelf, it falls to us to review the Deepwater
Horizon disaster, the new IG report, and the Administration's
five-year OCS plan and provide the appropriate context in which
to consider the future of offshore leasing in this country.
I believe that just as the disaster at the Upper Big Branch
Mine on April 5th in my district does not signal the end of all
coal mining in the United States, so too, in my opinion, the
Deepwater Horizon incident does not signal the end of all
offshore oil and gas leasing and production in this country.
However, it does raise questions that must be addressed before
we can move forward.
For example, does the OCS Lands Act provide an adequate
structure for regulating energy development? Do MMS regulations
provide for adequate protection of the environment and the
resources that are held in the public trust? Was the MMS
derelict in its implementation of its legal and regulatory
responsibilities? How should the MMS be restructured to ensure
that we effectively address the flaws in the current system
that have led us to this point?
These and other equally important questions will be
examined and answered over the coming weeks and months. If
remedial action is required in law, this Committee will draft
the necessary legislation to ensure that risks inherent in
deepwater drilling and production are minimized.
I now yield to the Ranking Member, Mr. Doc Hastings, from
Washington.
[The prepared statement of Chairman Rahall follows:]
Statement of The Honorable Nick J. Rahall, II, Chairman,
Committee on Natural Resources
This morning we begin a series of hearings on the Deepwater Horizon
incident and its implications for future offshore oil and gas activity
in the United States.
We are all extremely frustrated by the fact that the well--which
continues to hemorrhage possibly tens of thousands of barrels of oil
into the Gulf of Mexico each day--has not yet been shut down. The blame
game is in full force right now. But I do think it is important to
determine whether the Deepwater Horizon is the Wall Street of the
ocean. Privatizing profit while the public bears the risk.
In the coming weeks, Administration witnesses and outside experts
from across the political spectrum will testify before this Committee
or its Subcommittees about this catastrophic event, the federal
government's role, if any, in its causes, and remedial steps that will
be necessary to reduce the chance of such a horrific event occurring
again.
This morning we will hear from Secretary of the Interior, Ken
Salazar, who, has dispatched tens of thousands of federal employees to
the region, has met with all the involved and responsible parties, and
it would seem is doing all in his power to address this catastrophe.
We will also hear from Acting Inspector General Mary Kendall on the
findings of a just-released investigation which found, once again,
misconduct at the Minerals Management Service--this time among the
ranks of the inspectors who were supposed to be keeping an eye on, not
playing around with, industry operators in the Gulf. To now learn that
certain agency personnel allowed industry to fill out their inspection
reports in pencil, with MMS inspectors then writing on top of the
pencil in ink prior to turning in their reports is reprehensible.
As the Committee of jurisdiction over oil and gas leasing in the
Outer Continental Shelf, it falls to us to review the Deepwater Horizon
disaster, the new IG report, and the Administration's 5-year OCS plan
and provide the appropriate context in which to consider the future of
offshore leasing in this country.
I believe that just as the disaster at Upper Big Branch Mine on
April 5th does not signal the end of all coal mining in the United
States, so, too, in my opinion, the Deepwater Horizon incident does not
signal the end of all offshore oil and gas leasing and production in
this country. However, it does raise serious questions that must be
answered before we can move forward.
For example:
Does the OCS Lands Act provide an adequate structure for
regulating energy development?
Do MMS regulations provide for adequate protection of the
environment and the resources that are held in the public trust?
Was the MMS derelict in its implementation of its legal
and regulatory responsibilities?
How should the MMS be restructured to ensure that we
effectively address the flaws in the current system that have lead us
to this point?
These and other equally important questions will be examined and
answered over the coming weeks and months. If remedial action is
required in law, this Committee will draft the legislation necessary to
ensure that the risks inherent in deepwater drilling and production are
minimized.
______
STATEMENT OF HON. DOC HASTINGS, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF WASHINGTON
Mr. Hastings. Thank you, Mr. Chairman, and thank you for
scheduling this hearing. I want to welcome all of the witnesses
that will be appearing before us today.
I think it is clear that stopping the leaking well,
cleaning up the oil, and responding to the needs of the
affected Gulf Coast communities should be the top priority for
everybody, and that includes BP, the Department of the
Interior, the White House, and certainly Members of Congress.
It has been over a month since oil started leaking into the
Gulf of Mexico. Each day that the oil continues to leak is a
day where frustration increases. Both BP and the Obama
Administration have a joint and shared duty to do everything
within their power to stop this flow of oil. While the main
focus must be on addressing the immediate crisis, again stop
the leaking well, tough questions must be asked, and those
responsible held accountable. The time for full disclosure and
honest answers cannot be avoided.
This is the first of at least seven hearings by this
Committee. Hearings are an important part of conducting
thorough oversight and investigation. But as important as the
hearings are, it is critical that the Obama Administration
discloses reports and documents to the public and to Congress
for their review and scrutiny. A true investigation requires
examination of both the causes and responses to the bill.
Questions include: What was done improperly in the drilling
operation? What was the immediate emergency response of the
drilling operators and the government? Was everything that
could be done, done immediately and without delay? Were there
failures in government oversight and inspections before the
explosion? What are the economic impacts on the communities,
businesses, and the fishermen? And what are the impacts on
wildlife and the environment?
We must get to the bottom of all of these questions. We
must know what happened so that informed, educated decisions
can be made and actions taken. We have an important job to do.
We need to get answers and then fix the failures to prevent
another spill, to ensure that American-made energy continues to
operate in a safe manner--in fact, the safest in the world. I
want to note that credit is due to Secretary Salazar for his
statements and the need to understand the economic impacts
before lifting the liability caps.
The bipartisan demand that BP fully pay for the spill is
very, very clear, just as there is bipartisan support for
increasing the cap. Care must be taken, though, to do it right
so that American energy production is not shut down, which
would result in the loss of tens of thousands of jobs. As tough
questions are asked, the action of both the Obama and Bush
Administrations must be put squarely under the spotlight.
Regardless of which party occupied the White House or
controlled the Department of the Interior, it is vital that we
know where failures occurred so that the necessary reforms can
be instituted.
This is not time for finger-pointing. It is time to get all
the facts out in the open so changes can be made to prevent
similar events in the future.
On the matter of MMS, the agency's fundamental failures are
well known, and have been known for several years. For example,
Republicans on the House Committee on Oversight and Government
Reform, led by our colleague from California, Mr. Issa, have
conducted multiple investigations into MMS. Key questions that
need to be answered are: What did the Department do with this
information? What was done to correct these failings? And when
was that action taken?
The Inspector General issued a report yesterday that raised
even more questions about the lack of adequate response to
known problems. I do want to note that back in the summer of
2008, gas prices climbed past $4 a gallon. The response from
the public was clear: produce more energy in America. A
majority of Americans understand the importance of continuing
offshore drilling to our economy and to the jobs that they
create, and to our national security.
The unprecedented spill must be met with real reform and
stronger safety measures, but also to ensure that we continue
to produce oil here in the United States. Turning our back on
offshore energy production would be too costly in lost jobs,
higher gas prices, and increased dependence on foreign sources
from nations that are hostile to our way of life. America needs
an all-of-the-above energy plan that obviously includes solar,
nuclear, hydro, but does not ignore oil and gas.
So, Mr. Chairman, thank you again for scheduling this
meeting. I look forward to today's testimony and opportunity of
our members to ask questions. I yield back.
[The prepared statement of Mr. Hastings follows:]
Statement of The Honorable Doc Hastings, Ranking Member,
Committee on Natural Resources
Stopping the leaking well, cleaning up the oil, and responding to
the needs of affected Gulf Coast communities should be the top
priorities for everyone--whether it's BP, the Department of Interior,
the White House, or Members of Congress.
It's been over a month since oil started leaking into the Gulf of
Mexico. Each day that oil continues to spill is a day that frustration
swells higher. Both B.P. and the Obama Administration have a joint and
shared duty to do everything within their power to stop the flow of
oil.
While the main focus must be on addressing the immediate crisis,
tough questions must be asked and those responsible held accountable.
The time for full disclosure and honest answers cannot be avoided.
This is the first of at least seven hearings by this Committee.
Hearings are an important part of conducting thorough oversight and
investigation. Just as critical is the Obama Administration disclosing
reports and documents to the public and to Congress for review and
scrutiny. A true investigation requires examination of both the causes
and responses to the spill.
Were there failures in government oversight and inspections before
the explosion?
What was done improperly in the drilling operation?
What was the immediate emergency response of the drilling operators
and the government?
Was everything that could be done, done immediately and without
delay?
What are the economic impacts on communities, businesses and
fishermen?
What are the impacts on wildlife and the environment?
We must get to the bottom of all of these questions. We must know
what happened so that informed, educated decisions can be made and
actions taken.
Those in Washington, D.C. must resist the rush to judgments and the
stampede to get in front of the television cameras.
We've got an important job to do: get answers, and then fix the
failures to prevent another spill and ensure American-made energy
continues to operate and is the safest in the world.
For example, credit is due to Secretary Salazar for his statements
on the need to understand the economic impacts before acting to lift
the liability caps. The bipartisan demand that BP fully pay for the
spill is clear, just as there is bipartisan support for reviewing an
increase in the cap. Care must be taken, though, to do it right so that
American energy production isn't shutdown and tens of thousands of
American jobs aren't lost.
As tough questions are asked, the actions of both the Obama and
Bush Administrations must be squarely under the spotlight. Regardless
of which party occupied the White House or controlled the Department of
Interior, it's vital that we know where failures occurred so that the
necessary reforms can be instituted.
This isn't the time for anyone to cover their backsides. It's the
time to get all the facts out in the open so changes can be made to
prevent such a terrible event from ever happening again.
On the matter of MMS, the agency's fundamental failures are well
known and have been for several years.
Republicans on the House Committee on Oversight and Government
Reform, led by Darrell Issa, have conducted multiple investigations
into MMS.
Key questions that need to be answered are: what did the Department
do with this information, what was done to correct these failings, and
when was that action taken?
The Inspector General reports issued yesterday raise even more
questions about the lack of adequate response to known problems.
Back in the summer of 2008, gas prices climbed past four dollars
per gallon. The response from the public was clear: produce more energy
in America. A majority of Americans understand the importance of
continued offshore drilling to our economy, to American jobs, and to
our national security.
This unprecedented spill must be met with real reform and stronger
safety measures to better protect our environment and coastal
communities, but also to ensure we continue to produce oil here in the
U.S.
Turning back on offshore energy production would be too costly in
lost jobs, higher gas prices, and increased dependence on foreign
sources from hostile, unstable nations. America needs an all-of-the-
above energy plan that includes renewables such as wind and solar, new
nuclear power, clean hydropower, and a continued commitment to drilling
oil and natural gas.
I look forward to today's testimony and the opportunity to ask
questions of the witnesses.
______
The Chairman. Thank you, Doc. We will now proceed with our
first witness, as I mentioned in my opening comments, a dear
friend of mine and many of us on this Committee. As we were
talking beforehand, the Secretary reminded me that his first
appearance before this Committee on Natural Resources as
Secretary was to testify on legislation reforming MMS,
including elimination of the royalty-in-kind program.
He has been back before us a couple of times. As I said, he
has poured everything he has at his disposal into trying to not
only cap this oil, but to help all of the affected parties in
Louisiana, and along our coastlines. We are very happy to
welcome you today, Mr. Salazar, the Secretary of the U.S.
Department of the Interior. And he is accompanied by Assistant
Secretary David Hayes, another individual very familiar to us.
Mr. Secretary, you may proceed.
STATEMENT OF THE HONORABLE KEN SALAZAR,
SECRETARY, U.S. DEPARTMENT OF THE INTERIOR
Secretary Salazar. Thank you very much, Chairman Rahall,
and thank you, Ranking Member Young [sic.] and to all the
distinguished members of the Committee on both----
The Chairman. Hastings.
Secretary Salazar.--sides. Hastings, sorry. Got it right,
Hastings. Let me just make a couple of quick points, and then I
would be happy to take your questions. First, let me say that
from day one, what we have been doing in the United States of
America is moving forward with what has been a relentless
effort to deal with this problem. The effort has been directed
by the President to each member of the Cabinet, that we do not
rest, we do not stop, we do everything within our power to try
to deal with the problem, both with respect to the oil spill as
well as with respect to any of the impacts that will flow from
the oil spill.
That relentless effort today includes over 20,000 people
who are deployed along our coastlines to protect the
coastlines. That relentless effort includes over 1,000 ships
and vessels that are out there in the oceans trying to clean up
the spill. That relentless effort includes the body of
scientists that we have in Houston at the command center as we
try to bring this oil spill under control.
So the President's direction, which we have carried out
from April 20th forward, has been that we will spare no effort
to make sure that the people of this country, that the
residents of the Gulf Coast, are protected, and in addition
that we get to the bottom of the story here, which is to
understand exactly what happened so that the facts are known to
the American people, and the appropriate policy decisions can
be made going forward with respect to development of energy in
the Outer Continental Shelf.
The response that is underway today in the Gulf of Mexico
is the single largest response in the history of the United
States of America regarding any oil spill. Now it is true that
there have been many oil spills which have been much larger
than what we are seeing today in the Gulf of Mexico in the
history of this country with respect to OCS development. But
this effort, in terms of the response we have underway in the
Gulf, is the single largest effort in responding to an oil
spill in the history of this country.
The Chairman. Mr. Secretary, would you yield just a moment,
please? If I might--I have been patient here for a few
minutes--ask those that are standing behind the Secretary to
please sit because you are impeding the view of other people,
and I would just ask that you respect the rights of everybody
that is here. Would you please sit down? Would you please sit
down? Thank you. Thank you. You may proceed, Mr. Secretary.
Secretary Salazar. Thank you, Mr. Chairman. So my first
point to you and Congressman Hastings and the members of the
Committee is that this effort is relentless. It is
unprecedented, and it will continue forward until we deal with
this problem effectively, and we have the oil stopped, and
everything has been done to clean up the damage that may occur
from it.
The second point I wanted to make to this Committee is just
a quick update. Today is a very important day in terms of what
is happening in the Gulf. You, I know, have been watching the
newspapers and the television sets with respect to the so-
called top kill action, which should take place sometime today.
I have been in Houston four times since April 20th to oversee
and to understand what it is that BP is doing to make sure that
they are killing this well and stopping the pollution that is
now flowing into the ocean.
We have assembled a group of scientists who have been
deployed into Houston. Today, Secretary of Energy Steven Chu,
along with the other experts from the Department of Energy labs
at Sandia, at Livermore, and at Los Alamos, along with Dr.
Marcia McNutt, who is the Director of the United States
Geological Survey, are there monitoring what is happening as
key decision points are made.
Now, the fervent hope of everyone is that the top kill
effort, which should be executed in the coming hours, that that
will work. But there is a possibility that it will not work.
And if it does not work, then there is a Plan B to move forward
with a cap on the well that hopefully will result in the
controlling of the pollution that currently continues to spew
out into the Gulf Coast.
The bottom line, Mr. Chairman, is that I want to assure you
that no effort is being spared on the part of the United States
of America to try to bring this problem under control.
Third, I want to just make a statement about responsibility
here because it is an issue which I know every member of this
Committee has probably spoken out since this event began on
April 20th. The fact is that we should all know that the
national laws which you, many of you, have been a part of
creating over the last 40 years have created a system of
responsibility here, where BP is the responsible party. It also
is a law that sets forth some limitations relative to
liability.
Secretary Napolitano, who has been leading this effort and
doing a herculean job in making sure that the Coast Guard and
the efforts that she has under her control--and I have had
several meetings with BP, and we have confirmation from them
that they are not going to hide behind the $75 million
liability cap. What they have stated formally to us, and we
will hold them accountable--we believe we have the legal right
to do this in any event--that they will be responsible for all
costs. That means all response costs to this oil spill, which
is their spill. It means all damages will be paid with respect
to any impacts on natural resources. It means all costs related
to the clean-up. And it means that those who will be affected
in the Gulf Coast from an economic point of view will also
receive compensation.
So, they are not hiding behind the liability cap. So that I
think is something which should provide at least a comfort that
the resources are there. When you think about a company that in
the last year made over $16 billion, I think that they will be
good for paying the compensation that is required here.
Now, as I say, BP is the responsible party. BP must take
the action that is required by law. And it is our job then as
the U.S. Government, to make sure that BP does the job that it
is required to do by law. That has been a role which I and
Secretary Napolitano and others have been playing over the last
36 or 37 days, making sure that BP lives up to the requirements
that it has under the law.
Now, as I look ahead, it is also important not only that
this problem is fixed, but that this problem never happens
again. I would recognize and believe that every member of this
Committee would not ever want this kind of problem to happen
again in the Gulf of Mexico, or in fact for anywhere else in
the world.
So I want to just, in concluding my remarks here, give you
what I think are maybe two keystone lessons that we all ought
to be thinking about. The first is that reform in terms of how
we deal with the development of our natural resources is
essential. It is a reform agenda which I have been on since the
day I came into the Department of the Interior. It is a reform
which led us to establish new ethics provisions for MMS within
10 days after I became Secretary of the Interior. It is the
result of the investigations that we have undertaken, where
people who are doing bad things with MMS are no longer employed
at MMS. And it also results in what the Inspector General of
the Department will be testifying here later on today about
what had been happening with respect to MMS in the days before
we took over in this Administration.
You will find as you read the report that the issues that
are raised in that report are issues that go back to 2005,
2006, 2007, the kinds of improprieties which I think are
reprehensible, such as going off to the Peach Bowl in 2005 and
having the oil companies essentially pay the way for MMS
employees. Those are absolutely inappropriate behaviors. I will
remind this Committee, and I will remind the United States,
that when you read that report, they all refer to a time period
that predated this Administration. And it was focused in on a
time where there was a relationship with the oil and gas world,
where essentially whatever they wanted is what they got.
That day ended when I came in as Secretary of the Interior,
and we have turned the ship, and we have been making progress,
progress which has come frankly at the criticism of some
members who are on this Committee and others. But it is
progress on reform that has to be made.
Having said that, it is not enough to say that we have
solved the problems. There are still other things we have to
do, including, Mr. Chairman, as I suggested in this Committee,
in this chair, I think in September of last year, moving
forward to have organic legislation for the agency that has
such an important responsibility, an agency that has these two
very important missions. First, collecting on average $13
billion a year, over $200 billion since it was first formed by
Secretary Hodel in the 1980s, should in my mind have a robust,
organic legislative enactment that spells out what the
responsibilities of this agency are. And number two, an agency
that has the responsibility for developing the oil and gas
resources in our oceans, which are the places where we have the
most oil and gas energy resources left to discover and to
produce, has got to have the kind of robustness that comes with
organic legislation.
We have it in other agencies in the United States
Department of the Interior, including our National Park
Service, United States Geological Survey, and other agencies.
It is time that MMS be given that same kind of platform to be
able to do the job that has been assigned to it by the United
States of America.
The second point that I would make is a lesson which is
important for all of us to recognize. I think this incident in
the Gulf Coast underscores the importance of what this
Committee has worked on now for a long time, and that is that
we do need to move to a new energy frontier. Yes, oil and gas
will be a part of our energy portfolio. We know that that is
going to have to be the case for decades to come. But the work
of this Committee, the work of President Obama and the
Department of the Interior in his Administration, to harness
the power of the wind off the Atlantic or the High Plains, the
sun off of the deserts of California and the Southwest, the
geothermal efforts throughout the Rocky Mountain region, all of
those efforts are incredibly important as we move forward to
grasping the reality of a new energy frontier.
With that, Mr. Chairman, I would be happy to take
questions. I have the Deputy Secretary of the Department of the
Interior here with me today, David Hayes. David has been
working on this with the same kind of relentless effort since
day one. The day after the explosion on the Deepwater Horizon
occurred--it was in the evening at approximately 10 o'clock--
the following day, I dispatched David Hayes without a change of
clothes and not even a change of underwear to the Gulf of
Mexico because I knew that this was an issue which required the
kind of urgency and focus that we have been giving it since
April 20th. Because of his efforts and the efforts of literally
thousands of people within the Department of the Interior, as
well as the President, members of the White House, my
colleagues on the Cabinet, Secretary Napolitano, the Commandant
Thad Allen, and so many others, I feel confident and resolute
that we are doing everything that can be done, and that in the
days ahead we will be able to forge the kinds of policies and
the kinds of changes that adjust to the realities that we find
today.
So thank you, Mr. Chairman, and thank you, Congressman
Hastings.
[The prepared statement of Secretary Salazar follows:]
Statement of The Honorable Ken Salazar, Secretary,
U.S. Department of the Interior
Thank you, Chairman Rahall, Ranking Member Hastings, and Members of
the Committee, for the opportunity to discuss current activities at the
Department of the Interior related to oil and gas exploration on the
Outer Continental Shelf, particularly about the ongoing response to the
explosion of the Deepwater Horizon drilling rig.
This massive and potentially unprecedented environmental disaster,
which has resulted in the tragic loss of life and many injuries, is
commanding our time and resources as we work to ensure that the spill
is stopped; that our great natural resources along the Gulf Coast are
protected and restored; and that we get to the bottom of what happened
and hold those responsible accountable. Understanding the root causes
of this tragedy will help prevent similar events in the future.
We are fighting the battle on many fronts. At the President's
direction, his entire team will not rest until the oil spill is
stopped, the cleanup is completed, and the people, the communities, and
the affected environment are made whole.
Let me be very clear: BP is responsible, along with others, for
ensuring that -
the flow of oil from the source is stopped;
the spread of oil in the Gulf is contained;
the ecological values and near shore areas of the Gulf
are protected;
any oil coming onshore is cleaned up;
all damages to the environment are assessed and remedied;
and
people, businesses, and governments are compensated for
losses.
From day one my job has been to make BP and other responsible
parties fully accountable. That is why I have been to Houston three
times to see firsthand that BP - and all of industry - is doing
everything within its power to effectively and expeditiously address
the spill. I have also met with BP executives many times here in
Washington to deliver this same message and have required them to
provide daily updates on all fronts related to this disaster.
I have made absolutely clear in those meetings that BP, as a
responsible party, will be held accountable for paying costs associated
with this spill. BP will be held accountable for costs of the
government in responding to the spill and compensation for loss or
damages that arise from the spill. In addition, we will take all other
appropriate actions to the fullest extent of the law.
In a letter to Homeland Security Secretary Janet Napolitano and me
that we received over a week ago, BP has confirmed that it will pay for
all of these costs and damages regardless of whether the statutory
liability cap contained in the Oil Pollution Act applies. The bottom
line is that we will do everything in our power to ensure the United
States and the affected Gulf Coast communities are made whole. There
should be no doubt about that. And while the investigations as to the
root causes are still underway, we will ensure that those found
responsible will be held accountable for their actions.
To see that BP carries through on its responsibilities, I have made
sure that the best science and engineering minds in the United States
place fresh eyes on the BP response and various efforts underway to
stop the flow. In that regard, I asked Secretary Chu to go to Houston
with me to meet with BP executives, their scientists, and engineers to
make sure they were considering every conceivable option to address
this problem.
I also deployed to Houston Dr. Marcia McNutt, Director of the U.S.
Geological Survey, who is one of the nation's most preeminent marine
geophysicists, to provide oversight and to monitor the effectiveness of
the BP command center's activities. Dr. McNutt and the personnel
assigned to the Houston Command Center by Secretary Chu, along with the
Commanders of the U.S. Coast Guard, are there to ensure that no stone
is left unturned as we search for solutions to the problem. In
addition, the White House Office of Science and Technology Policy,
together with Dr. McNutt, convened a meeting on May 19 for the purpose
of hearing from the academic science community concerning the primary
science questions and important research approaches for addressing the
effects of oil in the ocean.
The President has been clear: we will not rest until this leak is
contained and we will aggressively pursue compensation for all costs
and damages from BP and other responsible parties.
Action From Day One
The Department has been actively and aggressively engaged in this
spill from the first events. The morning after the explosion, I sent
Deputy Secretary David J. Hayes to the Gulf to assist with coordination
and response and to provide hourly reports to me and other
administration officials of the ongoing events. I have personally made
seven trips to the Gulf over the last 37 days to keep the pressure on
the containment efforts and lead the Administration's response
activities.
In addition, I have dispatched the top leadership from my natural
resources and science team to the Gulf incident command centers,
including the Assistant Secretary for Fish and Wildlife and Parks, Tom
Strickland; the Director of the National Park Service, Jon Jarvis; the
Acting Director of the U.S. Fish and Wildlife Service, Rowan Gould; and
the Director of the Bureau of Land Management, Bob Abbey. They are
helping to lead the efforts to protect the ecologically complex and
fragile Gulf Coast, including a number of National Wildlife Refuges,
National Parks, and National Seashores under the Department's
jurisdiction.
These leaders, along with public servants from the Department's
various bureaus and offices, are putting in long hours as they work
alongside other federal, state, and local partners to monitor and
respond to immediate threats to fragile habitat; assess and address
long-term damage to impacted resources; and develop and provide data
and information for use by the Unified Command.
I also ordered immediate inspections of all deepwater oil and gas
drilling operations in the Gulf of Mexico. We issued a safety notice to
all rig operators reminding them of their responsibilities to follow
our regulations and to conduct full and thorough tests of their
equipment.
I established a new Outer Continental Shelf Safety Oversight Board
within the Department. Composed of top Departmental officials, it will
strengthen safety and improve overall management, regulation, and
oversight of operations on the Outer Continental Shelf (OCS). It will
also help us evaluate the broader questions that this spill raises
about those activities.
And I have announced that no applications for drilling permits will
go forward for any new offshore drilling activity until we complete the
safety review process ordered by the President.
Reform During the Obama Administration
I came to the Department of the Interior to change the direction of
the Department and to restore the confidence of the American people in
the ability of their government to carry out the functions under my
charge. That confidence had been seriously eroded by well-publicized
examples of misconduct and ethical lapses. This kind of fundamental
change does not come easily, and many of the changes we have made have
raised the ire of industry. In the past 16 months our efforts at reform
have been characterized as impediments and roadblocks to the
development of our domestic oil and gas resources.
But we have not, and we will not, back down on our reform agenda.
We have been making major changes at MMS, and we will continue to do
so.
Under MMS's management, the OCS currently provides 31 percent of
the Nation's domestic oil production and almost 11 percent of its
domestic natural gas production. The MMS is one of the largest
collectors of non-tax and non-trust revenue for the Treasury, and has
collected an average of more than $13 billion annually for the past 5
years.
The OCS has been a major part of our vision for a new energy
future, and we have worked hard over the past 16 months to realize that
vision through change. We have changed the direction of MMS by
balancing its ocean energy portfolio to include offshore wind and
renewable energy production. Within months of my confirmation, we
issued new regulations governing the establishment of offshore wind
generation facilities, and concluded an historic Memorandum of
Understanding with the Federal Energy Regulatory Commission to end a
bureaucratic dispute that had delayed the introduction of renewable
energy projects on the OCS.
Earlier this year, I gave final approval to the Cape Wind project
off Massachusetts' coast. And we have taken the first steps to stand up
major wind projects off the coasts of New Jersey and Delaware. I am
working with the Atlantic Coast Governors to give renewed impetus to
developing the potential for offshore wind projects.
We have also implemented reforms to change the agency's culture of
doing business. We began by issuing new ethics standards for all MMS
employees, effective January 2009, that require all MMS employees to
receive ethics training and to certify compliance to a Code of Ethics
that exceeds general government employee requirements.
Responding to ethical lapses and criminal behavior uncovered during
the previous Administration in connection with the MMS's Royalty-in-
Kind program, I terminated that outdated and flawed program. I made
that announcement last September before your Committee, Mr. Chairman,
because I know how involved you have been on that issue for many years.
We have also implemented recommendations to improve MMS's royalty
collection program. These recommendations have come not only from our
Inspector General but also from the Royalty Policy Committee
Subcommittee on Royalty Management, a committee chaired by former
Senators Bob Kerrey and Jake Garn.
I also asked the National Marine Board, an arm of the highly
respected National Academy of Sciences, to direct an independent review
of MMS's inspection program for offshore facilities. The results of
that review are due to us this Fall.
The Department's fiscal year 2011 budget request has carried
through on this theme of reform. It provides funding for an additional
6 inspectors for offshore oil and gas facilities in the Gulf, an
increase of more than 10 percent.
Additional Reforms Now
This tragedy and the massive spill for which BP and others are
responsible have made the importance and urgency of this reform agenda
ever more clear. With this in mind, I announced last week a set of
reforms that will provide federal inspectors more tools, more
resources, more independence, and greater authority to enforce laws and
regulations that apply to oil and gas companies operating on the OCS.
The MMS has three distinct and potentially conflicting missions -
safety and enforcement, energy development, and revenue collection -
that in order to be most effective should be divided. The
reorganization I announced last week will replace the MMS with the
Bureau of Ocean Energy Management; the Bureau of Safety and
Environmental Enforcement; and the Office of Natural Resources Revenue.
This next step in our reform agenda will enable us to carry out
these three separate and equally-important missions with greater
effectiveness and transparency. These reforms will strengthen oversight
of offshore energy operations, improve the structure for revenue and
royalty collections on behalf of the American people, and help our
country build the clean energy future we need.
Under the supervision of the Assistant Secretary for Land and
Minerals Management, the Bureau of Ocean Energy Management will be
responsible for the sustainable development of the Outer Continental
Shelf's conventional and renewable energy resources, including resource
evaluation, planning, and other activities related to leasing. The
Bureau of Safety and Environmental Enforcement will be responsible for
ensuring comprehensive oversight, safety, and environmental protection
in all offshore energy activities.
Under the supervision of the Assistant Secretary for Policy,
Management and Budget, the Office of Natural Resources Revenue will be
responsible for the royalty and revenue management function including
the collection and distribution of revenue, auditing and compliance,
and asset management.
In addition, we will aggressively look at broader options that may
require new legislation. Agencies with responsibilities of this
magnitude should be governed by thoughtfully considered organic
legislation. Mr. Chairman, I know that you have been pushing very hard
over the years for major reform of MMS. I look forward to working with
you to draft legislation addressing this issue.
The Administration has also submitted to Congress legislation that
requests an additional $29 million for the Department of the Interior
to inspect offshore oil and gas platforms, draft enforcement and safety
regulations, and carry out studies needed in light of this event. The
funds will allow the USGS and the Fish and Wildlife Service to conduct
general environmental studies related to the spill. The legislation
would also extend the time allowed by statute for MMS to review and
approve oil and gas exploration plans from 30 to 90 days.
This legislative package is multi-Department and comprehensive and
also addresses the funding of federal response activities through the
Oil Pollution Act, food safety programs, unemployment and nutritional
assistance, and other help for communities and individuals affected by
the oil spill.
Active Investigation and Independent Review
We are carrying out, with the Department of Homeland Security, an
investigation into the root causes of the April 20th explosion, and
will hold public hearings, call witnesses, and take any other steps
needed to determine the root causes of the spill. In addition, the 30-
day safety review that President Obama ordered us to undertake will
help us understand what safety measures could and should be immediately
implemented.
The National Academy of Engineering has also agreed to my request
to review the Deepwater Horizon spill. This highly respected
organization is a part of the National Academy of Sciences, will bring
a fresh set of eyes to this tragedy, and will conduct an independent,
science-based analysis of the root causes of the oil spill. The NAS has
carried out similar independent investigations into events like the
space shuttle Challenger accident.
We will get to the bottom of this disaster and will hold those
responsible accountable.
Informed Energy Strategy
Much of my time as Secretary of the Interior has been spent working
to advance the President's vision of a new energy future and moving
away from spending hundreds of billions of dollars each year on
imported oil. During the past year we have offered new areas for oil
and gas development, but instituted reforms to ensure we are offering
leases in the right places and in the right way.
Offshore development is a necessary part of that future, and on
March 31st we announced a new, balanced, and science-based strategy for
exploring and developing our oil and gas resources on the OCS - in the
right ways and in the right places, providing order and certainty to
industry and investors, and delivering a fair return to American
taxpayers for the use of their resources. This strategy would use
science and new technologies to expand oil and gas production on the
OCS in new areas; provide for exploration in frontier areas; and
protect areas that are simply too special to drill.
As we evaluate new areas for potential exploration and development
on the OCS, we will conduct thorough environmental analysis and
scientific study, gather public input and comment, and carefully
examine the potential safety and spill risk considerations. The
findings of the Joint Investigation and the independent National
Academy of Engineering will provide us with the facts and help us
understand what happened on the Deepwater Horizon. Those findings, and
the work of the Outer Continental Shelf Safety Oversight Board, will
help inform the implementation of the Administration's comprehensive
energy strategy for the OCS.
At the same time, we are taking aggressive action to verify the
safety of other offshore oil and gas operations, further tighten our
oversight of industry's practices through a package of reforms, and
take a careful look at the questions that this disaster is raising.
Conclusion
Neither time nor space allow for a detailed description of what our
employees and our partners are doing every day on the ground on the
Gulf Coast to respond to the spill and protect and restore affected
natural resources. This Administration is committed to helping the
people and communities of the Gulf Coast region persevere through this
disaster, to protecting our important places, and to learning valuable
lessons that will help prevent similar spills in the future.
______
The Chairman. Thank you, Mr. Secretary. That was perhaps
too much information, but we do appreciate the time that you
have taken to be with us today and your testimony.
You know, on the surface, it appears that this Deepwater
Horizon disaster has been a game change as far as how we manage
our offshore energy resources on behalf of the American people.
It also appears that with the latest Inspector General report,
in which you have these alleged improprieties of MMS personnel,
that this report has put the MMS in the penalty box
indefinitely.
My first question would be to you, as we look to the future
of oil and gas leasing in America, do you think this disaster
has been a game changer as far as managing our offshore energy
resources?
Secretary Salazar. Mr. Chairman, I think that what this
incident brings to light is that the organic legislation which
you had been working on for a year, which I testified in
support of a year ago, that it is time to get those kinds of
initiatives underway. We need to make sure that as we move
forward with development of oil and gas resources in the Outer
Continental Shelf, that it is being done in a safe way, and
that this kind of incident does not ever happen again. To that
end, we are committed to working with you, working with members
of the Committee and other Members of Congress to make sure
that that does in fact happen.
The Chairman. You have described some of the alleged
improprieties and ethical lapses that occurred at MMS as shown
in these Inspector General reports, not only the latest one,
but we recall the one prior to your taking office about what
happened in the Denver office of MMS. It is deeply
reprehensible that such activities would be allowed to occur,
and job offers from the very people they are supposed to be
inspecting, accepting tickets to different events, and even
behavior that goes much beyond that, to alleged drug use on oil
rig platforms.
How culpable do you believe MMS is in this whole affair?
Secretary Salazar. Chairman Rahall, there are 1,700
employees within the Minerals Management Service. Knowing many
of them, having actually visited them in their office to
announce the ethics requirements that we put into place at the
end of January of last year at the beginning of the
Administration, I can tell you that my belief is that most of
the employees of MMS are good public servants. They get up in
the morning, they go to work, and they do their job to the best
of their ability. I can also tell you, as is evident from the
Inspector General report involving the sex and drug scandals at
Lakewood, and the more recent Inspector General report that
deals with the 2005-2006-2007 time frame, that there are bad
apples within the organization. And what we have done is we
have taken appropriate personnel actions. People have been
terminated. People have been referred over to prosecution,
where that has been necessary. That is exactly what we will
continue to do.
We will have zero tolerance with respect to ethical lapses
that occurred at MMS. Having said that, I will say of the 1,700
employees at MMS, they continue to do their job. Even in the
midst of this very difficult crisis, which is occupying the
minds of America today, they continue to work to collect and
distribute the approximately $13 billion a year. They continue
to work to try to make sure that everything that can be done to
stop this oil from continuing its leak is in fact accomplished.
So I would say there are bad apples, and those bad apples
will be rooted out with every power that we have.
The Chairman. You know, I do not mean to insinuate here
that we can legislate 100 percent purity among every government
employee. In a perfect world, perhaps that would be possible,
but I recognize we cannot do that. But it begs the question, if
you have these corruptible people within MMS, does your
proposal to split MMS into three different organizations--is
that going to help clean house, so to speak? Is it going to
address these ethical problems? Has your ethics reform package
taken hold that you announced immediately after you took
office? How are we going to really do our best, again
recognizing we are not going to 100 percent legislate purity?
But how can we do a better job?
Secretary Salazar. Chairman, Rahall, I think it is by
having high standards of ethics first of all, and that is what
we put into place. And you will note, including the cover
letter from Inspector General Kendall, who will testify on the
following panel, the conduct that she was referring to happened
in the days of the prior administration. We need to know the
truth, so I said to her, I want to find out what it is that has
happened from January 20th forward because we need to know what
is happening, whether our ethics reforms have in fact worked.
We have hired people who are high-level people to come in
and provide ethics training. We have them set up in the offices
all around the Department of the Interior now. So there have
been major changes with that. Now, having said that, the second
point that I would make is I do think organizational change is
necessary, and that is why we have proposed and are moving
forward with a new restructuring of the Minerals Management
Service, and it includes several key components of it.
The first is to remove the revenue collectors away from the
leasing and policing functions of MMS. So about 700 employees
who are located within that Revenue Treasury function within
MMS, I will take those people completely out of that part of
the organization and move them over to the Assistant Secretary
for Policy Management and Budget. And so those revenue
collectors will not be dealing at all with the leasing and
inspection functions.
Then we will split the rest of MMS into the two bureaus
that I have described. They are first the Bureau of Ocean
Energy Management. The future of this country is dependent on
having an agency that can deal with energy development in the
Outer Continental Shelf, and that is both with respect to
conventional energy, as oil and gas, as well as the new efforts
we have underway during this last year with respect to offshore
alternative energy. So there has to be a bureau that does that.
Then the second part of it would be the Bureau of Safety
and Environmental Enforcement. And that essentially would be
the place where there would be a director that would carry out
the police and inspection and enforcement functions of the
Department. David Hayes, along with several other members of my
team, is leading the effort to split up the organization into
these separate functions. But I think fundamentally, the
problem--and you raised it well here in this Committee on
numerous occasions--is that you had too much of a mixture
between those who were responsible for collecting the revenue
and those who were at the same time responsible for giving out
leases and then for policing those activities.
So this breakup, I think, will address many of the issues
which this Committee has been dealing with, including the
royalty-in-kind program. The royalty-in-kind program was
eliminated. Frankly, not because people wanted to eliminate the
royalty-in-kind program in some quarters, but it needed to be
eliminated because we needed to make that organizational
improvement. The organizational improvement that we have put on
the table will help us now take it the rest of the way, and we
look forward, Chairman Rahall, to working with you and working
with other members of the Committee to make sure that the
organization will in fact work to address the missions that we
have described for the new organization.
The Chairman. Thank you, Mr. Secretary. We will work with
you, and I do have many more questions on your proposal, which
will come at either later rounds or at a later time. But on
behalf of this Committee on both sides of the aisle, I think we
are--I know we are very serious about working with you. We want
to ensure that the American people, the true owner of these
resources, receive just return for the use of their resources,
and we want to ensure that it is done in a safe and
environmental responsible manner.
With that, I will recognize the Ranking Member, Mr.
Hastings.
Mr. Hastings. Thank you, Mr. Chairman, and thank you, Mr.
Secretary, for being here. I would note this is the second time
that you have been to our Committee, but we appreciate your
being here.
Sometimes there are policies in this government that have
unintended consequences. The reason I say that is because there
have been Democrats in Congress and members of the Obama
Administration that have been critical of the oil and gas
industry for their failure to develop their leases quickly
enough. And both those Members of Congress and the
Administration have pushed various use-it-or-lose-it policies,
which presumably is put in place to pressure the oil and gas
companies to get their wells operating much sooner. For
example, in the President's budget this last February, he had a
new tax that proposed to--a new $760 million tax on non-
producing leases, now presumably to get those leases active.
So I have two questions in that regard. Number one, would
the Administration rescind that proposal on this new tax? And,
second, does this use-it-or-lose-it pressure from the
government sometime move these companies to move in a less than
environmentally safe manner in order to get these leases in
production?
Secretary Salazar. Congressman Hastings, on your first
question, the answer is no. The proposal is one intended to
make sure that you do not have vast acreage, including hundreds
of millions of acres out there, which are simply sitting idle
and are not being looked at for the possibility of development.
We felt that was sound as a proposal when it was proposed in
the President's budget. It was sound then; it is in our view
still sound today.
Second, on your question as to whether it requires these
companies to really accelerate what they do, and whether that
would somehow contribute to these issues of what happened here
with the Deepwater Horizon and others, my answer to that is no.
There is a safety report that will be delivered to the
President. There have already been preliminary investigations
that have been done about the causes with respect to this
Deepwater Horizon incident. There are significant enhancements
that can be made with respect to the safety of Outer
Continental Shelf oil and gas development, and I think that is
the way for us to go. But I do not think it has anything to do
with the use-it-or-lose-it doctrines.
Mr. Hastings. Well, OK. Like I say, sometimes you have
unintended consequences, and that is the reason I asked that.
That is obviously something we need to look at.
Let me get back briefly to MMS and the employees, and
specifically the IG reports that came out yesterday. One of the
IG reports I think is only one page long, but it reported that
one of those employees was fired by the Bush Administration in
2007. So that was three years ago that this employee was fired
for whatever he did.
I guess my question is this, and I think it is probably a
question that most American people would be asking. If there
are individuals that have been identified as doing the wrong
things, are they still on the payroll? If they have done the
wrong things, why they would not be terminated immediately if
they were doing the wrong things? What I heard you say is we
are doing whatever we can. But the American taxpayer has to be
asking the question, for goodness sakes, if they are doing the
wrong, are they still on the government payroll. And that is my
question to you.
Secretary Salazar. The answer is that if we know that they
have done something wrong that requires termination, they have
been terminated. And indeed, they have been referred over to
prosecution if the facts surrounding the particular incident
are harmful enough. I will remind you, Congressman Hastings,
that within this Department, the former Deputy Secretary of the
Interior went to prison, and other people have been prosecuted
for their failures to do what is required of them of law.
We came into this Department to clean up that mess, and to
clean up this house. And we have been working relentlessly from
day one to clean it up, and it is an agenda which we will
continue to work on.
Mr. Hastings. Well, just very quickly, my understanding is
some of those employees were there at the end of the Bush
Administration, and my understanding is they are still on the
job. That is my----
Secretary Salazar. And I will have David, Deputy Secretary
David Hayes, answer specifically with respect to that issue.
Mr. Hastings. OK.
Mr. Hayes. Congressman, we just got this report from the
Inspector General, literally within the last couple of weeks.
We are in the process of reviewing the report. The Inspector
General indicated, because of the interest in the issue, that
she was going to release it, and she did. We immediately put
all of the individuals identified in that report on
administrative leave, and have started proceedings to determine
whether more disciplinary action is appropriate.
So we moved as soon as we got the information from the
Inspector General.
Mr. Hastings. OK. So maybe I should ask the Inspector
General why this was not made earlier. OK. Thank you very much.
Thank you, Mr. Chairman.
The Chairman. The gentleman from California, Mr. Miller.
Mr. Miller. Thank you, Mr. Chairman, and thank you, Mr.
Secretary, for being here. And I appreciate the comments you
have made in response to both Chairman Rahall and Mr. Hastings,
and I would like to join Mr. Hastings. I appreciate the actions
that have been taken, and I recognize we knew we had a full-
fledged scandal in the past administration, sort of like we had
in the Fish and Wildlife Service with people acting in almost
what I believe is criminal fashion. I think we have to go back
through this with a fine-toothed comb.
When I was Chair of this Committee, I would say that MMS
provided a great deal of assistance to this Committee and a
great deal of expertise. But I think that agency just went to
hell in a handbasket. And we need to know what we are dealing
with. And the reason I say that is this. I have been involved
in several oil spills. I did the Exxon Valdez--for this
Committee. And when you go back through the record, you see the
same assurances then that they were giving us today.
You see back in 1982, they are telling us that any oil
spill like people were talking about from a tanker in traffic
in Prince William Sound is highly unlikely. Do those words
sound familiar? Yes. Highly unlikely that anything would go
wrong on this drilling rig. These assurances are not worth
spit. They are made all of the time, and if you read the
internal documents, as I am going back through the history, the
companies refused to buy the equipment. Their own internal
people tell them, in the case of the consortium in Alaska, to
buy this equipment, to update the equipment, and the board
turns it down. And yet assurances are given.
They said that they could clean up 30 percent of the oil
within 48 hours in Exxon Valdez. They did not clean up 1
percent of the oil. The equipment they needed was all going to
be present. No. They had to go to London to get equipment. They
had to go to the Middle East to get dispersants, in spite of
the assurances to the people of Alaska and to the people of
this nation.
So that is why I am being harsh here, because we have to
know the integrity of this agency. It is very, very valuable.
The regulatory regimes that they provide are for the
protection, as we now see, of vast, vast geographical areas of
our nation. And so I appreciate your remarks. They are very,
very important, as are the actions to follow. In light of the
new updated Inspector General's report, I think that is
essential.
You know, we are faced here with a situation where clearly
the drilling technology has just so outpaced the cleanup
technology. What is very clear--my involvement in Exxon Valdez,
my involvement in the recent San Francisco Bay spill, and
numerous local spills, because I represent refinery and
shipping areas in San Francisco Bay--once the oil hits the
water, you lose. The people of this nation lose. Oil in the
water, the cleanup is a public relations operation.
We go back and review how much oil we have ever picked up
out of any oil spill in this country or anywhere else in the
world, and especially in open water like the Gulf of Mexico. So
these assurances about whether or not we are going to have an
accident, you cannot go to the bank on them. And then the
question of what is the technology that is in the place to deal
with the, quote, ``accidents.'' And what is our ability to
clean it up?
Our ability to clean it up today, if you read all of the
documents from what used to be the Office of Technology
Assessment from the academies, we are basically where we were
with the Santa Barbara oil spill in 1969. The booms are longer;
they are made out of synthetic materials; they are bigger; they
can operate in four-foot seas instead of two-foot seas or one-
foot seas. We are still shoveling sand on a beach. That is what
we did in 1969 in Santa Barbara.
I think that this Department and this government has got to
call back any of these leases that have been let since you have
come to office or that have been put in progress based upon old
assurances that were made previously. We have to call back
whichever of those leases we can so that they can be reviewed.
And I really think we have to consider whether or not we can
just give a pass to what is really incredible technology,
incredible technology. Much of the science for this has
developed in my district.
But the cleanup is not there, not there. I mean, we are
still throwing diapers on oil. We are putting straw on the
water. We are shoveling sand on the beaches, and we are rubbing
wounded wildlife with some kind of solvents. You cannot go into
8,000 feet of water, 5,000 feet of water, and I believe that is
the response when something like this happens, especially now
that we know technically how difficult it is to work in 5,000
feet of water.
So we have to think about putting a circuit breaker on
activities in this Department until we know about it, and I
mean we, the Congress, the Administration, the American people.
And I think we also have to review the categorical exclusions
that were given to drilling here because we now see that those
add up to be a catastrophe, both economically and
environmentally.
Thank you for your time, and I look forward to working with
you on this problem.
Secretary Salazar. Thank you, Congressman Miller. If I may
respond to just two of your points. You are correct that there
is a lot more information, a lot more science, and a lot more
to come in terms of safety measures. We have been on this, and
indeed that is why when you look at the cancellation of the
lease sales that have been scheduled by the prior
administration in the Beaufort and Chukchi Seas in Alaska and
in Bristol Bay, we canceled those leases.
That is probably 200 million acres of leases to be
canceled, and precisely for the kinds of issues that you raise
here today, and that is that there are questions about oil
spill response capability and about the distances, especially
when you start working in those kinds of environments. So you
raise very important questions that we have been working on.
The second thing on the categorical exclusions, it is a
mandate here of this Congress and our national framework over
many administrations, Republican and Democrat I might add, that
essentially have put a requirement on Interior and MMS to
essentially turn around 30 days on approval of an exploration
plan. That is not appropriate. We have asked that that be
changed, and hopefully that will be one of the reform measures
that comes out as part of the President's reform package, which
has already been submitted to the Congress.
Mr. Miller. Well, I appreciate that. I will just say, Mr.
Chairman, that if you look at the forensics, what you will find
out is this oil spill was the result of a series of activities
that were taken over time. It did not happen on that day for
that particular reason. And if you go back into almost all of
these oil spills, it was a lack of decision-making prior, much
prior, to the action, whether it is a tanker spill, or whether
it is fixed platform, or a pipeline.
Secretary Salazar. I will, Mr. Chairman and Congressman
Miller, just add it is the reason why President Obama has set
forth a Presidential commission to conduct a thorough and
comprehensive investigation. It will be the kind of
investigation that was conducted after the Challenger explosion
and after Three Mile Island. And the results of that
investigation will inform the American public and this Congress
on many of these fronts. And in addition to that, there are a
host of other investigations that are underway that will get to
the root causes of exactly what happened.
Mr. Miller. That is very encouraging. Thank you.
The Chairman. The Ranking Member and the Chair will
recognize members for questioning by the order in which they
arrived at today's hearings. Mr. Flake of Arizona is
recognized.
Mr. Flake. I thank the Chair and thank you for this
testimony. There has been a lot of talk about MMS and criminal
behavior that has happened there in the past. I want to talk
about just normal bureaucratic behavior, what seems to be, and
I would like your response. The Louisiana Governor, Bobby
Jindal, has said that he has been seeking permits to build
berms on some of the Barrier Islands for days or weeks now, and
has yet to get them.
That seems to be a typical Federal bureaucrat response, to
hear someone who wants and apparently has some resources at
least to go ahead and do this, yet he is being held back
because what seems to be a typical bureaucratic response. Can
you answer to that? What permits does he need, and which ones
can he not get at this point?
Secretary Salazar. Congressman Flake, it is a live issue
that is under consideration. Let me say to you that there are
conversations that have been going on yesterday and even today
between the national commander, which is Thad Allen, in charge
of this incident and Congressman Jindal to make sure that what
it is that we do with respect to Barrier Islands and protection
mechanisms in fact make sense. The one thing that we do not
want to do is to move forward and do something that ultimately
will be environmentally worse than other measures that may be
more thoughtful.
And so those conversations are going on. I have met with
Governor Jindal. The President spoke with him the day before
yesterday on the phone. So we are very aware of their request,
and we are taking every action that is humanly possible to make
sure that those measures that make sense are in fact being
implemented as expeditiously as possible.
Mr. Flake. This gets back to what Mr. Miller was talking
about. It seems that we do not learn anything from prior
spills. It begs the question, what is being done by this
Administration and the last one between spills. Do we not study
whether it is useful to construct a berm on barrier island in
case of an oil spill? The case we are talking about now with BP
dumping dispersants in the water, and telling them no, we do
not know the effect of that; why don't you stop or look for
other dispersants in the meantime.
The oil is spreading. Perhaps that could help; perhaps it
would not. But it just is baffling that every new spill, which
is much like the old one--as Mr. Miller said, we are still
shoveling sand on the beach or doing some of the same things,
washing off birds with Handi-Wipes or whatever else. It just
seems that we do not learn. So, when the spill happens,
something occurs here; we are still wrangling and questioning
with a Governor who wants to move for literally weeks, debating
whether or not it is good to construct a barrier--I am sorry, a
berm on a barrier island, when that should have been studied
beforehand.
That is something that somebody within Interior or EPA or
somebody should be doing this, and so we can have more of a
rapid response.
Also, there has been reports, many reports, of fishermen
and others who have been willing to work to lay boom or
absorbent material or whatever else, and have been told, we
cannot, or we cannot use you, or do not want to use you at this
point. It just seems wrong to turn away help that is there and
willing for what seems to be a typical bureaucratic response
that we are looking that is under consideration when the
livelihood of a lot of people is at stake.
Do you have any response, particularly first to the--what
are we learning? Why aren't we between spills doing something
that actually will inform us for the next spill so we do not
have to spend literally weeks deciding whether it is in our
best interest to build a berm?
Secretary Salazar. Congressman Flake, I would respond to
you in two ways. First, with respect to the broader question
about what is being done, this is the largest response of the
U.S. Government with respect to an oil spill in history. There
are 20,000 people out there. There are 1,000 vessels that are
out there. The President has authorized the National Guard and
all of the states to be stood up to do whatever it takes to
protect the Gulf Coast. So no effort, no resources, is being
spared on this protective measure.
Now your second--let me get to your second question, on the
barrier island. Some have said that you can construct this
thing, but it will get washed out right away. So one of the
things that needs to be done is it has to be--whatever is
constructed out there--and I have been on bulldozers out there,
putting out whatever protections need to be put out there in
different places in Alabama and Mississippi and Louisiana. They
will be done.
So what the commandant is doing now is working with
Governor Jindal to come up with a program moving forward that
does in fact make sense. And he is not--and I can tell you, in
watching him work this thing 18 and 19 hours a day--and I guess
a final point that I would make on your comment on preparedness
for spills, you would not see this kind of global response that
you see underway in the Gulf if lessons from the past had not
been learned.
So there is a lot that has been learned. Maybe it is not
everything that needs to be learned, and there will be a lot of
lessons that will come from this particular response. But what
you see going on in the Gulf Coast is in essence a
manifestation of lessons that have gone on from past spills
around the world.
Mr. Miller. Mr. Chairman, I ask unanimous consent that the
letter that I was reading from to the District Court be made a
part of the record of this hearing.
The Chairman. Without objection, so ordered.
Mr. Miller. Thank you.
[NOTE: The letter submitted for the record has been
retained in the Committee's official files.]
The Chairman. The Chair recognizes the gentleman from New
Jersey, Mr. Holt.
Mr. Holt. Thank you, Mr. Chairman. Thanks for arranging for
this hearing. Mr. Secretary, I think the American people are
right to be demanding of Congress to hold BP accountable. Now,
you have said in your testimony that you are sure they will pay
all of the--or they have said they will pay all legitimate
costs, and you have elaborated on that to say that they will
pay all of the response costs, all damages, all costs related
to cleanup, all economic damages.
It sounds good, but what I picture happening is we will
exhaust the trust fund, which is not so large right now, and
then spend years trying to recover money. And the fishing
companies and the tourist businesses and everybody else will
spend years trying to recover this. You said you have a letter
to the effect that this is good. I think we need more.
Fifty-five of us, I along with 55 co-sponsors, have
legislation, the Big Oil Bailout Prevention Act, which would
significantly raise the cap on liability, which is at the
laughably small number of $75 million. Would you join us? Would
you support a legislative increase in the liability on behalf
of American taxpayers, on behalf of the fisheries, on behalf of
the small businesses in the tourism industry, on behalf of
people all across America who want justice and accountability,
for the Big Oil Bailout Prevention Act so that we can be sure
that there is formal liability?
Secretary Salazar. Congressman Holt, I am going to have
Deputy Secretary David Hayes respond to the specific question
on liability because he testified in another committee
yesterday on the same question. Let me say two things before he
speaks. The first is from the executive branch side and the law
that we currently have, we have pushed BP as far as we can,
including getting their written and very public----
Mr. Holt. Within the law that we have.
Secretary Salazar. Within the law that we have. Second,
within the law that we have, there are also major exceptions to
the liability limitation, including gross negligence and
violation of operational regulations, and a whole host of other
things.
Mr. Holt. To be adjudicated over many years.
Secretary Salazar. Some of them may be. OK. So we are doing
what we can within the limits of the executive branch to make
sure they are held accountable. In changing the law, we are
supportive. The President sent a package here to Congress.
There was testimony yesterday from the Department of Justice
and Deputy Secretary David Hayes that focused in on the changes
that we were supporting with respect to liability limitation.
So I will have the deputy secretary address that issue.
Mr. Hayes. Congressman, the Administration yesterday took
the position, and we take the position, that for the highest
risk activities in terms of offshore oil and gas development,
there should not be a limit in terms of liability on damages.
And the Administration would like to work with the Congress to
establish essentially a sliding scale of potential liability
caps that focus on the relative risks associated with the
activities. But for the type of activity that occurred here,
the Administration does not believe there should be a liability
cap.
Mr. Holt. Let me just say some of the discussion has had to
do with the smaller or independent companies and their ability
to pay. The consideration should not be that, but rather the
ability to harm. A mom and pop operation, if you want to call
it that, could do a billion dollars worth of damage, so we have
to keep that in mind.
To follow on Mr. Flake's, Mr. Miller's, and the other
concerns, what troubled Americans so much about this recent--
the ongoing tragedy is that the Department of the Interior,
with all of its agencies, including MMS, not only seemed not to
know the answers to the questions, but they did not even know
what questions to ask. They did not have in place a mechanism
for figuring out even what the size of the leak was. Is it
1,000 barrels a day? No. It is 5,000. Well, no, maybe it is
tens of thousands of barrels. Well, maybe it is over 100,000.
You know, as Mr. Flake and Mr. Miller are saying, what were
we spending our time doing? How can you assure the people that
we have an organization that is putting in place the procedures
to deal with things? You know, this you say is unprecedented,
but it was not unimaginable. In fact, it was not even
unexpected. And yet the procedures for asking the right
questions and getting the answers to those questions were not
in place.
Secretary Salazar. Well, Congressman Holt, I would say that
our view is we have been transparent from day one, as we always
have in this Administration relative to providing information
that we are requested to provide. And we do have a lot of this
information that we have provided with respect to what
happened. Issues relating to the investigation themselves,
those are under investigation, and there will be findings.
Those will all be made available to the public.
Just last night or yesterday, the question of whether or
not there would be live streaming of the so-called kill today
was one of the questions that was addressed. We pushed for
transparency, and so as a result of the White House and our
intervention, there is full transparency of what is happening
on the shore.
Now there is a lot of information that we have provided,
not only through the hearings here in the Congress on the oil
spill response plans that were in place in the Gulf of Mexico
and a whole host of other things. There are science issues
which are important that we want to make sure that we get right
because of the consequences. And so I can only tell you that
even as we are speaking here today, one of the top scientists
in the world, Marcia McNutt, who I brought in to run the United
States Geological Survey, is working with a group of scientists
to give us our United States of American independent
affirmation of what the spill amounts have been.
That is to say, we are not dependent on BP or anybody else
to give us that information.
Mr. Holt. Thank you, Mr. Chairman.
The Chairman. The gentleman from Pennsylvania, Mr. Shuster.
Mr. Shuster. Thank you, Mr. Chairman. Thank you, Mr.
Secretary for being here today. Certainly, we all have
questions as to who is at fault, what happened, and we are
going to have time to be able to figure all of that out. I
think the priority, and I think it seems to be the priority,
has been to first stop the leaking oil, but also to be focused
on the cleanup. And I have become aware that BP has received
some reports, as many as 10,000, up to 40,000 call-ins on
technology, new technology, new processes to clean up the Gulf.
And my concern is that they are getting so many. Is that a
place that the Federal government should be deeply involved
with helping to sift through and try to analyze and find and
evaluate new technology, a process that can clean up the Gulf
quickly and efficiently?
I am concerned that we are not aiding in that effort. Could
you respond to that?
Secretary Salazar. Yes. Let me say that first of all, good
ideas have been welcomed. And the BP command center in Houston
is taking the ideas from the national labs. In fact, the
national laboratories and the United States Geological Survey
have allowed for the diagnosis to take place that essentially
is coming up with many of the decisions that are being made
today. And so there have been those efforts, as well as other
ideas that have come in that have been evaluated for their
efficiency. And that is the same to be said with respect to the
cleanup efforts, which are underway, and will be underway. And
I am going to ask the deputy secretary to comment on that
question as well.
Mr. Hayes. Congressman, you ask a very important and good
question. The national incident commander, Commandant Thad
Allen, has established in the national incident command a
repository of all ideas that are coming together. So these
folks also have the ability to put them into BP, but those are
all coming to the Federal government, the national incident
command, and BP is not making the decisions about whether those
are good ideas or not. The national incident command is.
Mr. Shuster. I understand there is supposed to be a 48-hour
response time, and I hear that many of them are not getting 48
hours. There has been weeks. And I understand there are
thousands of them coming in. But it just seems that we really
need to be, as the Federal government, focused, working with BP
and others to evaluate these ideas.
Mr. Hayes. And Commandant Allen has greatly increased the
capacity of the national incident command to sort through those
issues. As you would expect, they are of varying quality, but
some have been useful and are being followed up on.
Mr. Shuster. OK. Thank you very much. I yield back my time.
The Chairman. The gentleman from Arizona, Mr. Grijalva.
Mr. Grijalva. Thank you very much, Mr. Chairman, and thank
you, Mr. Secretary, for being here. Mr. Hastings made an
important point, I believe. He said this is not really a time
for finger-pointing, but a time for accountability. I could not
agree more. But I also believe that there is an historical
context to this spill that we have to have the accountability
for that, and I think that is vital and necessary for anything
we do policy wise and preventing these things.
I really believe that removing total liability caps is a
way to protect the taxpayer. This culture of industry
facilitation and coziness and promotion by responsible Federal
agencies is part of the historical context. And I think part of
that historical context has I think been the policy and
political impulse to drill first and ask questions later. And
that was never a sustainable energy policy, and now the bill
for this negligent regulatory attitude is coming due.
I do not believe that, ``Drill, baby, drill,'' was ever a
balanced call for energy development, and hopefully some of the
calculated slogans like that that led to irresponsibility are
going to be put at bay so that we can have an ample time and a
dispassionate time to do some real structural and
transformational changes in the way we conduct our energy
development on public lands and offshore.
But one of the questions I have is just looking ahead. In
response to the BP spill, as you mentioned, Mr. Secretary,
20,000 personnel, 970 vessels, boats, aircraft have all gone
into the area to help clean and contain the spill. Soon we will
be looking at Shell beginning its drilling process in the
Arctic Ocean. Does this, Mr. Secretary, what is going on in the
Gulf of Mexico, does that require or should it require us to
pause until we know the root causes, the impact, and the
devastation that is occurring in the Gulf of Mexico? The Arctic
is much deeper, much more shallow, and I really think that this
would be an opportunity for us to take a deep breath and look
at the consequences that we are seeing now, intended or not,
and potentially avoid some unintended consequences in the
Arctic region. Do you think this is a reason for pause?
Secretary Salazar. Congressman Grijalva, two responses to
your comments and your questions. First, with respect to the
culture, that is in fact what we have been doing, trying to
move forward with a balanced view toward development that says
you do not drill everywhere, and when you do allow for
exploration and development, you are doing it in the right
places and in the right ways. And you know from what has
happened out in the West that there are reform efforts, and
they have been met with some very stiff resistance from our
efforts to push it, but we continue to push; the same thing
with respect to the offshore.
And specifically with respect to the Arctic, there were
five proposed lease sales that were put forth in the 2007-2012
plan. We announced a month ago, a month and a half ago, that
those lease sales would be pulled back because we felt that
there was additional information that needed to be developed
with respect to science and with respect to oil response
capabilities, and a whole host of other issues.
With respect to the five exploratory wells in the Arctic
that are under the approved exploration plans, those are being
examined, and adjustments will be made in the days or weeks
ahead that will address that particular issue.
Mr. Grijalva. And back to one of the structural questions
that I believe Mr. Miller brought up as well. Part of the
historical context has to do with a simple EA analysis or a
categorical waiver, as opposed to an EIS, an impact statement.
Mr. Secretary, do you feel that it is now the prudent route to
require full EIS on all potential drilling sites before a lease
or a sale is conducted?
I know you extended the period to 90 days. That is
appreciated. I think the question still lingers, not only is
that enough time, but are we getting the full look at potential
unintended consequences by doing a full blown EIS?
Secretary Salazar. Congressman Grijalva, I would first say
that it is important to look at the environmental reviews that
actually do take place with respect to all these leases. This
particular lease sale underwent seven different environmental
reviews, including major environmental impact statements, and
they start out at the point where you do a major environmental
impact statement before you put together an LCS plan. You have
another environmental impact statement before you move forward
to conduct a lease sale. And so there are a variety of
environmental reviews that are done before the drilling
actually commences.
There are changes that have to be made, and there are two
things that are underway with respect of what we will do with
environmental analysis. The first is the joint efforts with the
Council of Environmental Quality, directly Nancy Sutley, taking
a look at the environmental reviews within the Department of
the Interior to see how it is that they might be improved. And
so that report will give us some guidance on whether there are
places for improvement.
Second, the President's proposal to this Congress that you
eliminate the 30-day mandatory requirement for approval of
exploration plans, that would be helpful as well because it is
difficult to do the rigorous environmental assessment when you
are compressed by the law to turn it around in 30 days.
Mr. Grijalva. Thank you, Mr. Secretary. Thank you, Mr.
Chairman.
The Chairman. The gentleman from Colorado, Mr. Lamborn.
Mr. Lamborn. Thank you, Mr. Chairman, and thank you for
having this hearing. And, Mr. Secretary, thank you for being
here today.
In previous testimony that you have given, you have said
that you have concerns about raising the liability for
companies under the Oil Pollution Act to high, which could
drive out small and medium-sized operators in the OCS. And also
in your statement you have acknowledged that BP has, quote,
``confirmed that it will pay for all of these costs and
damages,'' unquote.
Do you believe that we should take the simple step, as some
in the Senate have proposed, of legislating a fix that would
accept the offer made by BP to alter its contract with the
Federal government to put into law their offer to pay all costs
associated with this disaster?
Secretary Salazar. Congressman Lamborn, I think as Deputy
Secretary David Hayes testified, it is important that we be
thoughtful and that we do in the right thing. You know, in the
heat of the moment of a crisis like this, sometimes decisions
are made that have unintended consequences. And so the
Administration has taken an approach that the deputy secretary
and the Department of Justice testified yesterday, that would
look at the liability limitations that are related to the level
of risk associated with it.
And so as we work with the members of the Congress in
fashioning the liability regime going forward, it is important
that we be thoughtful about the different risks and realities.
Mr. Lamborn. OK. Thank you for that answer. And second, we
all want to get to the bottom of this tragedy. And I think we
all agree that finger-pointing will not get us there. I do not
understand, I have to just be real honest here, why you and
others keep harping on what MMS did or did not do in the
previous administration when you did know about these problems
when you came into office, and you have been in charge of them
for more than a year now. Why aren't we talking about the here
and now?
Secretary Salazar. Well, we are talking, Congressman
Lamborn, about the here and now, and that is why people have
been terminated, people have been referred over to prosecution,
and we have done a lot to clean the house at MMS. Unlike the
prior administration, this is not the candy store of the oil
and gas kingdom, which you and others were a part of.
So we have moved forward in a manner that is thoughtful,
that is responsible, that holds those accountable. And those
who violate the law, Congressman Lamborn, will be terminated,
and whatever other sanctions of law are appropriate, those
sanctions of laws will be applied.
Mr. Lamborn. OK, thank you. Mr. Chairman, for the remaining
moments of time, I would like to defer to my colleague from
Louisiana, Representative Cassidy.
Mr. Cassidy. Thank you, Mr. Lamborn. Secretary Salazar,
just to be specific, although we are breaking up MMS at this
time, are you stating or implying that there is a direct
relationship between the actions or inactions of MMS with this
particular spill?
Secretary Salazar. The testimony that I provided here in
September of last year referenced two different things. The
first is that the efforts of the Chairman of this Committee,
Nick Rahall, and other members of this Congress, as well as the
Senate, were very appropriate, and that is that we needed to
move forward with organic legislation given the importance of
the missions of this Department. I believe that very much to be
the case.
Now with respect to administrative actions that we have
taken within the Department----
Mr. Cassidy. No, no. This particular spill--in fact, BP
just about a document where they go by half hour by half hour,
and they show from their perspective what happened. I am just
wondering, does MMS, in their brief, initial internal review,
have they seen for themselves a specific thing that they should
or should not have done as regards this particular spill?
Secretary Salazar. First, Congressman, this is a BP mess,
and----
Mr. Cassidy. I understand that. But there is a role for
government. The President said there is blame all the way
around.
Secretary Salazar. Let me just finish. And I think what I
hear from members of the Committee here, that it is important
that we know the truth and the whole truth, and that includes
the truth about the government and what the government did do
or did not do. I ordered the Inspector General, Mary Kendall,
to take a look at this particular issue to find out what MMS
did do or did not do. And so we will have investigative
information that will come forward.
Everybody needs to be held accountable, and that includes
the Federal government.
Mr. Cassidy. So I am not sure I heard the answer. I guess
what the answer is, if I may interpret, is that you do not yet
know if there is a specific role that MMS had in the event,
beyond the general kind of laxness----
Secretary Salazar. Let me tell you what I do have, OK? What
I have is a preliminary internal investigation report about the
incident itself, which is where the focus has been that has
been provided to me. We have--and the members, I think, of this
Committee have also now at my request--I have ordered British
Petroleum to give us the result of their investigation. I have
80 or so people who have been working on that investigation,
and we have a copy of that investigation. And we have asked
Mary Kendall to do two things. She is the Inspector General of
the Department. The first is to look at the issues relating to
this matter of the Deepwater Horizon, and she is involved in
doing that investigation.
And fourthly, I have asked her to look specifically at the
conduct of MMS employees that would update the report, which
will be the subject of her testimony in the panel that follows
this one, because I want to know whether or not the ethical
mandates and orders and additional people and the consequences
that were brought to people who violated ethics rules in the
past, which we began to implement right after January of 2009,
have been effective or whether they have not. And she----
Mr. Cassidy. But that is not related to this specific
incident.
Secretary Salazar. Well, there is an investigation with
respect to this specific incident, yes.
Mr. Cassidy. OK, thank you. Thank you, Congressman Lamborn.
The Chairman. The gentleman from Michigan, Mr. Kildee.
Mr. Kildee. Thank you, Mr. Chairman. Mr. Secretary, in
scripture we read that, who will watch the watchman. And what
system of internal surveillance and security--sometime in
police departments it is called ``internal affairs''--does
Interior, and specifically MMS, have to, or had to watch those
who are supposed to approve the project for safety and
compatibility with the environment around it? Who inside--do
you have an internal security to watch those people who
obviously, according to the reports, were misbehaving? Do you
have that system now? Did you have it before? Or do you propose
to increase the system of internal surveillance to make sure we
have someone who watches the watchman?
Secretary Salazar. The existing system consists of the
ethics programs that we have put into place, including having
full-time ethics personnel that are involved in training and
oversight, including people that we have hired at places like
the MMS in Lakewood, Colorado.
Second, the Inspector General, who has been very involved
not only in this Administration, but the prior administration,
helping watch what is going on and reporting freely to this
Congress and to the American people, has done an exemplary job
in terms of identifying where these lapses have happened.
And third, we have proposed the creation of a bureau of
safety and environmental enforcement within the reorganized
agency that will help us make sure that you have the
appropriate policemen on the job.
Mr. Kildee. So the Ethics Committee goes beyond just
inspiring people to do what is right. But does it actually
watch to make sure that they are doing what is right, certain
internal surveillance?
Secretary Salazar. You know, from day one, we have had a
zero tolerance policy with respect to ethics violations. And
when the Inspector General has informed us of ethics violations
in the past, appropriate action has been taken, including
referrals, which I have direct, to go over to the Department of
Justice for review. So that kind of an effort has been in
place. The reorganization that will include doing an organic
act, as the Chairman has suggested, should take a look at that
issue to see how it can be enhanced.
Mr. Kildee. How common was the dereliction or misconduct of
those in MMS? Was it part of a culture? Was it becoming
contagious before your tenure?
Secretary Salazar. You know, Congressman Kildee, I have to
say that in my view, the events that happened in the first
Inspector General report, which we dealt with right after my
coming into office that dealt with the sex and drug scandal in
Lakewood, Colorado, at the MMS offices there, was scandalous
and reprehensible. I also have to say, Congressman Kildee, that
the newest report from the Inspector General, again that
addresses the conduct which is pre-Obama Administration, also
is equally reprehensible. I think when inspectors are taking
trips on company-paid jets to go to places like the Peach Bowl,
I think that is absolutely wrong on reprehensible, and indeed
criminal.
And so I think that we need to have a tough hand, and we
will have a tough hand with respect to people who have violated
the ethical standards that we expect of our public servants.
Mr. Kildee. Was it becoming, or beginning to become, part
of the culture of MMS?
Secretary Salazar. My own view, Congressman Kildee, is that
it was a part of the culture of MMS, and part of the culture of
the prior administration. There was a coziness with industry
where industry was running the show. We have changed that. We
recognize the importance of industry, and the oil and gas
industry will continue to play, I am sure, an important role in
the future of the development of oil and gas resources in the
country. But the relationship is one which we have worked very
hard at changing so it is the appropriate arms length
relationship that should exist between those who regulate and
those who are regulated.
Mr. Kildee. That is what is scary to me because I have been
in government for 45 years, and when you see a bad cop, that
breaks your heart. But when you see a culture developing within
a department, then you have a very, very serious problem. And
so I would certainly commend you for trying to change that
culture. And then we want to put some people in jail perhaps.
But putting people in jail does not undo the damage that took
place in the Gulf. So we can change that culture. That will be
a very important thing. Thank you, Mr. Secretary.
Secretary Salazar. If I may, Mr. Chairman, Congressman
Kildee, you raise a very important question that I think this
Committee and Chairman Rahall have been working on, and that is
that there is need for statutory configuration for an agency
that has these very important functions. As I testified here in
September of last year, an agency that has these
responsibilities of collecting and in some years over $23
billion, on average $13 billion a year, an agency that has this
responsibility of developing the nation's energy programs in
our oceans, should have organic legislation. And yet this
agency, MMS, has existed by fiat of Secretary Hodel that has
been in place since 1982.
So the proposal that the Chairman and other members of the
Congress as well as senators have been working on now for a
year to do organic legislation is something that I testified in
support of here last year, as well as doing the kinds of
organizational changes that we have been doing on the ground.
But I would expect that when we emerge from this, that we will
be in a much stronger position to address the concerns that you
raise with respect to a culture which has not served the
American people well.
Mr. Kildee. Thank you very much, Mr. Secretary. Thank you.
The Chairman. The gentleman from Virginia, Mr. Wittman.
Mr. Wittman. Thank you, Mr. Chairman. Thank you, Mr.
Secretary, for joining us today. I thank you for your efforts,
and I want to begin by saying that as my colleagues have said
previous to this, I see this process as being a constructive
process, a process to make sure we learn the things that have
gone on to make sure that things that happen in the future--
make sure that these things that have happened are prevented.
I had the opportunity a couple of weeks ago to travel to
the Gulf to visit with some folks down there, fly over the area
from Moss Point, Mississippi to Cameron, Louisiana, and really
understand what was going on. And I had a couple of concerns
that I saw. And one is, I was really moved by the frustration
with people in the area, whether it is fishermen or citizens.
Second was, looking at the process there, there seemed to be a
disjointedness to it, a lack of coordination. And I know there
is an oil response plan. I know that local governments, state
governments, Federal governments get together and go through an
exercise to look at that. Whether it is a tabletop exercise or
the completeness of that exercise I think is something that
needs to be looked at.
I know there is an incident command there looking at making
sure that things are coordinated. But it did seem like to me
that where oil began to appear, that was not a timeliness in
making sure that the response was there. There was also, I
think, some frustration with the local fishermen there as to
including them in the process. And it seemed like to me that
the whole idea of adaptively managing to these crises was not
part of this process of looking at how we put together a
response plan.
A spill is a pretty dynamic event, and making sure that we
have the ability to adaptively manage, I think, is as critical
as having a plan that looks at all of the different scenarios.
One element that was very compelling to me is I know the
use of dispersants was a critical element of this, and we all
know what happens with dispersants. It breaks the oil up into
smaller particles, and then it stays--instead of coming to the
surface, it stays suspended in the water column, or eventually
goes to the bottom.
One of my questions is, is there an element in the planning
process that takes into account the suspension of oil in the
water column, and what we would have to do to respond to that
because I hope it does not turn out to be an out-of-sight, out-
of-mind scenario to say, well, as long as it is not on the
surface, as long as it does not wash up on the beach, then
everything is OK. You know, I think the impact of that
suspended oil, especially dropping to the bottom, is as
detrimental, if not more so, than what may wash up on the
beach.
So I was wondering if you could tell us maybe where the
planning stands with suspended oil or oil that makes its way to
the bottom, and how that is incorporated into the planning
process and the response scenarios.
Secretary Salazar. Congressman Wittman, on the question of
the dispersants and oil that may go to the bottom or will be
suspended in the water column, Lisa Jackson, the administrator
of EPA, has probably spent half of her time in the Gulf from
the beginning of this incident that she is very much on top of
that, working alongside with the Department of Commerce and
NOAA, and they are looking at that. Indeed, they will have the
third meeting.
We have had scientists that have been helping us from the
beginning, including looking at how the well can best be shut
off to other issues, and there is a meeting that is planned,
where the best scientists in the country will come together to
look precisely at that issue. So we are very much working on
it.
On your first observation relative to frustration, it is a
reality that there is frustration out there, but I can tell you
that there is a huge amount of effort to try to address those
specific frustrations. Secretary Napolitano and I, along with
six members of the U.S. Senate, were in Port Fourchon the day
before yesterday meeting with the oyster and commercial
fishermen and others, and what we will do under the commander's
authority, Thad Allen, is to do everything that we can to make
sure that people who are concerned, whose livelihoods are at
risk, who feel concern about what will happen with their long-
term livelihood, that their concerns are addressed.
Mr. Wittman. Very good. And one last comment. I think the
whole concept of adaptive management in these sort of crises is
critical, and I bring together an example. I was talking with
some oystermen there, and they said, we have an area of oysters
that has not been impacted yet by the spill, and clearly that
is the case. They said, we would like to be able to have the
flexibility to go in there and harvest those oysters so we can
take advantage of that resource, and then if the spill comes
in, we would agree that the area should be closed.
But to have in the planning process, the planning
scenarios, the response scenarios, the ability for some
adaptive management--and I realize that there are requirements
in place for closures and those kinds of things. But it seems
like to me in the planning scenarios that there has to be the
idea of being able to adaptively manage, to say, listen, during
these scenarios, let us go ahead and put the bureaucratic
hurdles in the background, and say let us give people the power
to make timely, thoughtful decisions in how these responses
come about.
I think that is critical, and I think that is one of the
elements that sometimes is missing in giving people confidence
in the decision-making elements there on the government side.
And it goes back to whether it is opening oyster grounds or
sand berms or those kinds of things. Timeliness in decision-
making in being able to make decisions on the run, responsible
decisions, but make decisions on the run in these scenarios is
critical. And I certainly hope that that becomes part of the
learning process that we go through as we evaluate how this has
unfolded, or this scenario has unfolded in the Gulf.
Secretary Salazar. Congressman Wittman, I would only say
that Admiral Thad Allen, as the serving--until I think
yesterday as the Commandant of the Coast Guard--is probably the
most experienced person in the country in terms of responding
to these kinds of crises. We are on the phone with him every
day. The Deputy Secretary David Hayes, the White House, and I
get an update on everything that is going on. And when problems
are discovered, we take action to address them, and we will
continue to do that. And part of it, as you describe, being
able to make quick and responsible decisions that would fall
within the rubric of what I think you describe correctly as
adaptive management.
The Chairman. The gentleman from Maryland, Mr. Sarbanes.
Mr. Sarbanes. Thank you, Mr. Chairman. Thank you,
Secretary, for being here today. It is really hard to
overstate, I think, the scope and dimensions of this disaster.
And I was just saying to my colleagues, I think we are on the
one-yard line in terms of our understanding of how much damage
that will do over the long-term.
I wanted to return to the Chairman's question at the outset
of the hearing. He asked you whether this was a game changer.
And I guess you could look at that question from a variety of
angles. I am focused on whether it is a game changer in terms
of our approach to offshore drilling. We have obviously
migrated from a time when we had a moratorium to when we were
then discussing a certain mileage ban offshore, to where now I
guess there are a set of presumptions that operate in terms of
how we go forward. And I understand that we are focused on the
tragedy at hand primarily, but I think it is important to
anticipate where the next tragedy might occur. And I know we
have a number of people on the Committee here today who are
thinking about what could happen in their part of the world, so
to speak.
It is fair, I think, to anticipate this a little bit
because the foundation is being laid now in the various
comments we hear on what the narrative is going to be going
forward. And I would urge you to think about this event as a
game changer, and to stimulate a total reevaluation of the
policy approach that we are having now to offshore drilling. I
speak as somebody who represents a good part of the Chesapeake
Bay. We have Representative Wittman as well, who has got an
interest in that, and Representative Kratovil, who was here
earlier.
There is a parcel called the Virginia parcel. It is oil and
gas lease sale 220, which is about 50 miles off the coast of
Virginia's eastern shore. And this was part of the five-year
plan that was issued for 2007-2012 under the Bush
Administration, and contemplated a lease sale there. The Obama
Administration had announced recently its own intention to
proceed with that lease sale for that parcel, this Virginia
parcel, by 2012, assuming the various due diligence panned out.
Obviously, the Chesapeake Bay is a national treasure. And
we are concerned--I am at least concerned; let me speak for
myself--about plans to proceed with this. And so my question to
you is in this kind of game-changing perspective that I am
urging upon you, do you believe there will be a reevaluation,
serious reevaluation, of whether to proceed with this lease
sale of the Virginia parcel, this oil and gas lease sale 220,
which is 50 miles, as I say, off the eastern shore of Virginia?
Secretary Salazar. Congressman Sarbanes, let me say first,
I believe that the Chesapeake Bay is one of those landscapes of
national significance, and there are others around this
country, and we will move forward in ways that hopefully has a
robust agenda in terms of the restoration and their
development.
With respect to the game changer comment that you make and
the Virginia lease sale, let me just say to this Committee
there are three options. The first option is to shut down all
drilling and development in the Outer Continental Shelf, so no
more OCS development. The second option is to not make any
changes and to simply move forward with the plans as they have
been announced. And the third is to make adjustments based on
the lessons that are being learned.
The President has said from the very beginning of this
effort, we will learn and we will make adjustments as we move
forward. And so I would ask you to stay tuned, and there will
be additional announcements that will be coming as the
President and I consider different options.
Mr. Sarbanes. Well, a fourth option, or a version of one of
those options that you mentioned, it seems to me, would be to
begin establishing presumptions in one direction versus
another. In other words, a presumption against offshore
drilling in certain places. Now, these presumptions can be
overcome. They can be rebuttable based on the evidence that is
brought forward, and the comfort level we have about the
technologies that are available. But I do not see the harm in
beginning a narrative about establishing presumptions against
offshore drilling in certain highly sensitive areas, as opposed
to, for example, a presumption that goes the other way that
then has to be rebutted to stop it.
And I think that that is the game changing nature of this
event. That is the kind of lens we ought to be putting on it
going forward. And I would urge you to adopt that, not just
with respect to the parochial interests I have with the
Chesapeake Bay, but for many other areas around the country.
And I yield back. Thank you.
Secretary Salazar. I will say this, Congressman Sarbanes,
that it was precisely because we were attempting to strike
those kinds of balances that we said that Bristol Bay in Alaska
was a place that was too important to be developed, and it
ought to be taken off the development map, and we said that.
The President said that. It is precisely because of your kinds
of concerns here that we said we do not know enough yet about
the Chukchi and the Beaufort Seas to allow further leasing in
the Beaufort and the Chukchi Sea up in the Arctic. And it is
precisely also because of your comments that when you look at
all of the different factors that are set forth under the Outer
Continental Shelf Lands Act that the Gulf of Mexico was a place
where it was envisioned there would be robust production
because that is where the infrastructure was. That is where you
had the state support and a whole host of other factors.
But I hear what you are saying, that there are places which
are too sensitive, and we ought not to be drilling there. You
know, our plan said no drilling off the Pacific in large part
because of the environmental sensitivities that we see with
many of the marine fisheries in that area. And so it is
something that is on the radar screen.
The Chairman. The gentleman from Colorado, Mr. Coffman.
Mr. Coffman. Thank you, Mr. Chairman and Secretary Salazar
and Deputy Secretary Hayes. Thank you for coming to the
Committee.
I think Mr. Kildee said it best when talking about MMS,
that a concern that there may be a culture that leads this
agency to be a dysfunctional agency. And this is a bipartisan
problem. This has occurred not simply over the last
administration, but the administration before that. And so my
concern is that this goes beyond the consideration of ethics.
It is to competence. Everything I read about this agency is
that it has done--it in fact contributed to the very crisis
that we have today. That it lacks oversight has led us to the
point that we are today.
I am glad to hear that we are in agreement that it is vital
to the United States to develop these offshore energy
resources, and certainly that we are in agreement that it is
necessary to balance the concerns of the economic needs of this
country with safety and environmental concerns. And I do not
think, based on what I have heard--and I look forward to the
testimony of the Inspector General later on today--that MMS is
capable of doing this job going forward. And there is no
question that there needs to be reorganization of this entity,
the separating of the revenue and the royalty side of this
organization from the safety and the environmental enforcement
side of it.
But I also believe, given the history of this organization,
given the fact that there has not been the necessary leadership
from the Department of the Interior in terms of their ability
to turn this around to where the American people can have
confidence that we can do offshore oil development safely and
environmentally in a sound way, that it needs to be moved
outside, that these functions need to be reorganized and moved
outside the Department of the Interior.
And, Mr. Salazar, when you say, I have been on this job
since day one, that since April 20th of 2010--but I do not
think that you have been on this job from January 20th of 2009,
when it comes to cleaning up this mess in this Department. And
so those are my concerns. And so maybe you can certainly tell
me what assurances you can give to the American people that
going forward that you can change really what is an incredible
dysfunctional agency that what is going to be different going
forward in this agency, in MMS, when you were the new sheriff
in town on January 20th, 2009, and you have not been able to
make a difference, obviously, given the fact that we are in a
crisis situation right now in terms of going forward.
Secretary Salazar. Congressman and former Treasurer Mike
Coffman, I will say this, that the employees of this Department
and the history of this Department and the history of this
Congress and the development of the Outer Continental Shelf has
included the development of over 36,000 wells in the Gulf of
Mexico without this kind of an incident. And so when you look
back at the history and the safety record, there has been a lot
of good, and the energy that you have consumed and your
constituents have consumed, and everybody else has consumed,
some 30 percent of it, the domestic production, actually comes
from the Gulf of Mexico.
Now that having been said, there is no doubt that there
does need to be reform of this agency, and we have made major
reforms, including the elimination of the royalty-in-kind
program, the ethics standards that we have put in place, the
ethics personnel, and we have requested, and I have been in
front of this Committee testifying in front of Chairman Rahall,
that the need for organic legislation is something that we need
to embrace.
So my own view on it, Mike, is very simple. You have great
agencies in the Department of the Interior, an agency, a
Cabinet position established back in 1849. And you have
organizations within the agency like the United States
Geological Survey, the United States Fish and Wildlife Service,
the National Parks Service and other agencies. We can do the
same thing with a newly created agency that can manage these
areas in our oceans so that we can safely develop renewable
energy, as well as safely develop our oil and gas resources.
That is my position, and that will be my position as we move
forward and we have learned the lessons from this incident.
Mr. Coffman. Thank you. Mr. Chairman, I yield back.
The Chairman. The gentleman's time has expired. The
gentleman from California, Mr. Costa.
Mr. Costa. Thank you very much, Mr. Chairman. Mr.
Secretary, I want to commend you for your hard work and your
focus on this terrible accident that has taken place, not only
the loss of lives, but the recovery focus that frustrates all
of us, clearly. And I appreciate your--in response to what is a
wide variety of views among this Committee--talking about the
perspective of where we are and the importance of the energy
resource.
I have several questions I want to ask you. I am one of
those that believes we have to use all of the energy tools in
our energy toolbox. You noted the 30 percent of energy resource
that the Gulf has provided, and I think we need to remind
ourselves that every energy source that we utilize in this
country is not without risk. Over a month ago, we had a tragic
coal mining accident that took place.
And so our job, I think, in government is to try to deal
with the risk assessment and the risk management to assure that
we can minimize the risk while allowing this country to deal
with a long-term energy policy that is long overdue, that you
have talked about and many of us have discussed. I hope in
reflection of all of that that this accident, this terrible
accident, does not end up providing a reason for a death knell
to continuing what I think is important utilization of oil and
gas, both on and offshore and public lands.
I want to know how you are trying to deal with the
situation, though, in reassessing risk assessment with risk
management, realizing that you are trying to triage the
situation right now. But as we go forward, the real question in
my mind is how do we convey a sense of confidence that has now
been damaged with the American public that your Department can
adequately manage the risk safely so that we can go forward?
Secretary Salazar. Thank you very much, Congressman Costa.
I think that it is important to note one of your premises, and
that is that nothing in life and nothing that we do is risk-
free, and there is always going to be risk. And so the question
becomes how do you create a program that does in fact minimize
those risks. We will deliver an interim safety report to the
President tomorrow that will address----
Mr. Costa. What is tomorrow?
Secretary Salazar.--that will address some of the measures
that can be taken to increase safety. In addition, the
President's commission to investigate the Deepwater Horizon has
been charged with that responsibility as well. And we in
Interior, and working with the Presidential commission as well,
have the National Academy of Sciences Board of Engineering, the
arm of NAE that basically will be involved in helping develop
those safety measures so that at the end of the day we have a
program for the United States of America that does in fact
minimize those risks.
I think, if I may, Congressman Costa, and maybe for other
members of the Committee, I think looking at other disasters
that have happened in this country in the past and learning
from those lessons is important. In the case of the Challenger,
the investigation led to a two and a half year stop of the
space shuttle program.
Mr. Costa. And there were lessons to learn.
Secretary Salazar. And there were lots of lessons that were
learned from that. In the case of Three Mile Island, it led to
lots of different consequences, including consequences which we
are still living with today, some of which some of you agree
with, some of which you do not. But the reality of it is that
we need to be, from my point of view, moving forward in a
manner that gets us the answers to the root causes of what
happened here, and also gets us to developing with Congress the
kind of safety regime so that this event does not ever happen
again.
And I will note, just for purposes of the record--and, Mr.
Chairman, if you would indulge me, just because I think I am in
Congressman Costa's time. When you look at other oil and gas
spills, if you look at many of them, including one in the Gulf
of Mexico back in 1979, the Ixtoc Well spill, it is somewhere
at 3.5 million barrels, OK? The Gulf War and the oil spills
there were somewhere on the order of 10 million barrels. You
can go through a whole list of probably 10 which have been very
horrific, and which are probably much larger even then what we
will ultimately see here in the Gulf of Mexico.
And so how we move forward here with the kind of
thoughtfulness that you describe relative to creating safety is
something which is----
Mr. Costa. Right. Mr. Secretary, before my time expires--
and I hope we will get that recommendation when it comes to the
President tomorrow that the Committee will receive it as well.
On other area quickly, the Subcommittee that I chair that a
number of members are on in June will be reexamining the
proposal that you have talked about today on reorganizing
Mineral and Management Services.
Everyone should understand that we want to work in
coordination with the Department. We do not intend to rubber
stamp the proposal. I do not think simply rearranging the boxes
of Minerals and Management Services is going to suffice in
terms of taking sort of the corrective action that needs to
happen. And so we will look forward to the presentation next
month when the Subcommittee begins holding hearings on Minerals
and Management Service.
Clearly, we have attempted to begin reform last year. We
actually have held hearings on this for three years now, and a
lot more work needs to be done. But we would like your
commitment to understand that this is a collaborative process,
and not one that simply--while I think the Department is on the
right track, because change is critical and must happen, we
need to make sure that in essence the fox is not guarding the
henhouse, as we noted with this collusion and the sort of cozy
relationships that have existed previously with Minerals and
Management Services and industry.
So we want to ensure that you are going to be there in a
cooperative, collaborative fashion.
Secretary Salazar. You absolutely have my commitment,
Congressman Costa, and the fact is, our team that is working on
the reorganization is already meeting with staff members, and
we would be happy to meet with you all relative to the
development of the program with respect to the reorganization.
I have no interest, frankly, in shuffling boxes around and
shifting labels. We are looking at a fundamental
reorganization, and we will do that together.
Mr. Costa. Thank you.
The Chairman. The gentleman's time has expired. The
gentlelady from Wyoming, Ms. Lummis.
Ms. Lummis. Thank you, Mr. Chairman. Thank you, Mr.
Secretary, for being here. And I want to follow along Mr.
Costa's line of questioning. I am hopeful that as we continue
these discussions that we can provide you all the tools you
need in order to make this agency function well. And that may
include things like the opportunity to retain your best
employees and to fire employees that need to be eliminated from
employment at MMS.
So to the extent that you may need some exemptions from
normal personnel rules in order to accomplish that, I believe
you should request those. In other words, when I was State
Treasurer, I found out when I had a troublesome employee that I
could spend my whole second term in office fighting this person
if I fired them and they sued me, or I could just learn to live
with the bad employee.
So I just learned to live with the bad employee. And I
think that happens too often under government personnel rules
that are designed to protect employees, but when an effort
needs to be made to purge an agency of bad employees and start
over and put in a new design, that sometimes you need new tools
in an exceptional situation. I think this is an exceptional
situation. So I hope you will ask for some of those tools, and
they include ways to improve the agency by improving the staff
through certain salary benefits.
One of the situations in a regulatory agency like this is
when you get a great employee, the industry that is being
regulated recognizes it, and they hire them away. So your best
employees leave and go to the regulated industry. So if you
have a way to reward, maybe even on a quarterly basis,
employees that are exemplary, that might provide a retention
tool for your good employees, and yet also provide you with
flexibility to purge the agency of employees that no longer fit
the design of what you are trying to achieve.
My question, however, is this. There are oil and gas
companies based in Spain, Norway, India, Malaysia, Venezuela,
Vietnam, Brazil, and nearby the Gulf, China, all of which own
leases in the Gulf. How can we assure ourselves of the safety
of their operations when one of the three biggest oil companies
in the world, BP, engages in a process in the Gulf that, based
on my preliminary review, appears to have been 100 percent
avoidable by BP?
I think bad decisions were made on this rig by BP
employees, and the consequences to the Gulf, the environment,
and to 11 families who lost family members has just been
shocking. So I do lay the blame on BP. To take the consequence
then of raising the cap on liability so the only companies that
can participate are those that self-insure--and BP is one that
self-insures--means that there are only going to be three
companies left producing offshore, and one of them is going to
be BP, and BP is the company that caused this problem.
So I am not convinced that some of the solutions being
offered and debated today are the right solutions. I am hopeful
that as we continue this dialogue, that you will provide us
with information on how we can help you make the successor to
MMS the very best regulatory and collection and enforcement
agency it can be, with special emphasis on the safety of people
and safety of the environment.
Now, I have not left you much time to comment, but I would
appreciate your thoughts.
Secretary Salazar. Thank you very much, Congresswoman
Lummis. Let me just say first on tools, we will be looking
forward to having you help us provide additional tools. And the
President's request already before Congress asked for
additional inspection capability within the Department so that
we can do the inspection.
On your second question, whether it is BP or any other
company, they operate on our lands, on the American taxpayer's
resources, and they will abide by the law of this land, and we
enforce that law.
The Chairman. The gentlelady's time has expired. The
gentleman from Massachusetts, Mr. Markey.
Mr. Markey. Thank you, Mr. Chairman, very much. MMS used to
stand for Minerals Management Service. It now stands for
Misconduct, Mismanagement, and Spills. And there are some who
would like to suggest that this is somehow or another the fault
of the Obama Administration. But having spent the last eight
years supporting the Bush-Cheney Administration deregulation of
the oil and gas industry and its lax administration over the
industry, some are now shocked that the gambling with our
environment that was going on in the oil and gas industry's
offshore casino.
They fail to see any connection between their own ``drill,
baby, drill'' boosterism for offshore drilling and the current
``spill, baby, spill'' catastrophe we now face. And some have
even questioned the patriotism of pledging to keep your feet on
BP's neck until they fix their own mess.
But I want to congratulate you, Mr. Secretary, for your
very good work in trying to keep everyone focused on solving
this problem. The fact is that BP has not been entirely candid
and open with the American people about this disaster. Mr.
Secretary, initially BP estimated that 1,000 barrels of oil per
day were leaking into the Gulf. On April 28, 2010, a new leak
was discovered, and Coast Guard officials pushed BP to increase
the estimate of the leak to at least 5,000 barrels a day.
However, BP's Chief Operating Officer, Doug Suttles, was
initially quoted that day, April 28th, saying that he believed
that the flow rate of 1,000 barrels per day was accurate, and
that due to its location, we do not believe that this new leak
changes the amount currently believed to be released.
Yesterday, BP provided me with an internal document dated April
27, 2010, and cited as BP Confidential that shows a low
estimate, a best guess, and a high estimate of the amount of
oil that was leaking.
According to this BP document, the company's low estimate
of the leak on April 27th was 1,063 barrels per day. Its best
guess was 5,758 barrels per day. Its high estimate was 14,266
barrels per day. BP has also turned over another document dated
April 26th, which includes a 5,000-barrel per day figure as
well.
So when BP was citing the 1,000-barrel per day figure to
the American people on April 28th, their own internal documents
from the day before show that their best guess was a leak of
5,768 barrels per day, and their high estimate was more than
14,000 barrels that were spilling into the Gulf every day.
Mr. Secretary, do you believe that BP was being straight
with the American people when they were citing their low-end
1,000 barrels per day estimate and failing to give the full
range of the estimates that they had already developed for this
spill?
Secretary Salazar. Congressman Markey, let me say that our
push on BP has been for them to be transparent, and so what you
are seeing today in terms of the top-kill operation is in part
in response to our directive. The relationship between the
United States and BP under our laws, as I have said, we direct
them relative to important things like transparency and making
sure the information is being made available.
The quantity is a very important issue for a whole host of
reasons, Congressman Markey, and you are right to be focused on
those numbers. Because we want to have the United States have
independent verification, we have scientists from USGS like Dr.
McNutt and NASA and others who will have these independent
numbers, and we will share those with you.
Mr. Markey. Mr. Secretary, for that first week, was there
any reason why BP would have a financial interest in
underestimating how much oil was leaking?
Secretary Salazar. The answer is yes because liability does
apply with respect to the amount of the oil spill. I will tell
you this, that the huge focus on the part of everybody that has
been involved is to stop the pollution. And I have been at the
Houston command center now for four different days, including
this last Sunday, where I know the energy that is being spent
in terms of trying to bring the problem under control.
Mr. Markey. Yes. Under the Ocean Oil Pollution Act of 1990,
any owner-operator of an offshore facility that discharges oil
into the contiguous zone is subject to civil penalties of up to
$1,000 per barrel discharge, or up to $3,000 per barrel
discharge in the case of gross negligence. So for BP, the
difference between an estimate of 5,000 barrels, for example,
and 14,000 barrels, much less 1,000 barrels per day, could
really be the difference between a 5 to 15 million barrels
[sic.] per day in fines, and 14 to 42 million barrels [sic.] of
oil per day--million dollars per day as a penalty.
Mr. Secretary, does the flow rate of the leak have an
impact on whether the top-kill procedure that BP will try today
will be successful? Does knowing the accurate flow rate impact
on their ability to be successful?
Secretary Salazar. Congressman Markey, I think with respect
to this Apollo 13 type of project which is underway as we speak
5,000 feet below the sea level, that the best of data and
diagnostics have been developed, and that is why Dr. McNutt has
essentially been camped out there for three weeks. Dr. Chu has
been there with a team. The labs have been there. And so the
exact question on the amount of flow--I can refer to the
scientists on it, but I do not think it would have impacted
what is happening today with respect to the top-kill operation.
Mr. Markey. Well, BP continues to say that the amount of
oil leaking does not affect the response, that it does not
matter. But I think that the American people need to know the
true extent of the problem that we are facing. The scientists
need to know whether there are undersea plumes of oil lurking
out there in the Gulf, and BP should want to know as well so
that as they are trying to outrun the well with their top-kill
procedure exactly how fast the oil is leaking because that
determines what it is they have to do in order to stop the
leak.
Secretary Salazar. Congressman Markey--and if I may, Mr.
Chairman, because I think this is a very important point, and
we have been working on it very, very hard for some time. I
would ask the Deputy Secretary to give you an overview of what
it is that we are doing to come up with flow measurements
independent of BP.
The Chairman. Before yielding to the Deputy Secretary, we
understand that BP is ready to proceed with their top-kill
procedure, and that you want to be able to leave here by 12:15
so you can monitor that situation. Is that correct?
Secretary Salazar. That is correct. I would like to--there
are some critical decisions that I just want to make sure I am
watching.
The Chairman. We understand, and I am sure all of the
Committee members understand that. But you will leave the
Deputy Secretary here to respond to questions. Is that
accurate?
Secretary Salazar. Yes, sir. Yes, Mr. Chairman.
Mr. Hayes. I will be very brief.
The Chairman. After this response, though, we will go to
Mr. Cassidy on the minority side, as he is from Louisiana. I
allow him the final questioning of the Secretary.
Mr. Hayes. Just very briefly, Congressman Markey raises
very important points about the need for independent scientific
understanding of the flow rate. Commandant Thad Allen formed a
flow rate task force last week that is made up of distinguished
government and independent scientists. That flow rate task
force will issue a report as soon as this afternoon that will
identify from their point of view what the flow rate has been
using three independent different types of analysis.
So I think it will be very useful, and thank you for
bringing attention to the importance of this issue.
Mr. Markey. And I thank you for your work on that. I think
the American public will really be glad that we finally know
how big the spill is. And, Mr. Secretary, again thank you for
your good work on this project.
Secretary Salazar. Thank you, Congressman Markey.
The Chairman. The Chair recognizes Mr. Cassidy, as is
normal procedure, and perhaps Mr. Inslee on our side for very
last questions. All members will be able to submit questions
for the record, and I am sure the Secretary will respond to
those questions that are submitted in writing. Is that
accurate?
Secretary Salazar. Yes, Mr. Chairman.
Mr. Hastings. Will the Chairman yield?
The Chairman. I yield to the Ranking Member.
Mr. Hastings. I think that is very important because this
issue is important, and a lot of members are not going to have
an opportunity to ask questions. But I do want to note the last
time, Mr. Secretary, you were here was eight months ago in
September, and we submitted questions then that we have not
gotten responses for. So I hope that--I know that--I am sure
you do not know that, but we have not gotten responses, and we
would like to get response to those questions in addition to
the ones that we will be asked here today. So if you would do
that, I would appreciate it.
The Chairman. The gentleman from Louisiana, Mr. Cassidy.
Mr. Cassidy. Thank you. Thank you, Mr. Secretary. Mr.
Secretary, part of the frustration in Louisiana--we understand
that the $13 billion that MMS has taken in from offshore
royalty, probably 60 to 90 percent of that off the coast of
Louisiana. Now, having said that, there appears--Mr. Holt said
earlier there was a failure of imagination. As I understand, by
the second day, there was more dispersant used than had ever
been used at one location in the history of oil spills.
There has never been ROV independent survey of the biology
of the seabed in deepwater drilling. In fact, the only test in
terms of control of deepwater and ultra-deep drilling, the
effects of oil on dispersants, have been done in Norway. That
was not ultra-deep; that was deep. Now, it does seem as if an
appropriate response would have been proactive. It would have
said, OK, if we are going to have a spill, if we are going to
use a dispersant, what is the effect of that dispersant.
Because there is as much concern about the effect of the
dispersants, what I understand is basically kerosene, upon our
fishing industry, as it is upon the oil.
There is also concern again that the Stokes law, which I do
not know anything about except to quote it, is impeding the
flow of oil to the surface, therefore it is going to stay
subsurface, as one of my colleagues mentioned, and that this
indeed will have a different impact on the plume, et cetera.
Now, this has not been studied proactively. I see somebody
later will tell us that you are putting together a task force.
But we in Louisiana, who have been contributing 50 to 80
percent of these royalties, needless to say, we feel a little
bit like it is after the horse has left the barn, after the oil
has left the well. Any comments upon that?
Secretary Salazar. Congressman, what I would say is that
Administrator Lisa Jackson has been on top of these issues of
dispersants from day one. They have pushed BP to use less
dispersants. They have looked at whether or not there are
less----
Mr. Cassidy. If I may interrupt, though, that is actually
not the question. The question was did somebody ever come out
and say, listen, if there is a major oil spill in the ultra-
deep, what dispersant will we use, what do we know about the
volumes used, what will that do to the plume, what will that do
to the fishing industry. And that seems to be an after-the-fact
that Ms. Jackson is asking BP not to do it. I guess I am asking
why wasn't it considered before the fact. Was there again a
failure of imagination, as Mr. Holt suggested?
Secretary Salazar. What I would say, Congressman, is that
there was a very massive oil spill response plan that had been
submitted that assumed worse case scenarios. And it is that oil
spill response plan that is being implemented. As it is being
implemented, there are issues that have been raised with
respect to, for example, the dispersants and their long-term
impacts. The EPA has been very involved in it, as well as other
scientists, as well as scientists from Louisiana State
University. And that is one of the reasons why we have
scientists taking a look at it.
Mr. Cassidy. I am told that there has never been one. I
talk to my scientists. They wrote this book. They say they have
not really been involved from the coastal environment, and they
are very frustrated by that because their publication lists for
oil in the marshes apparently exceeds any other university, as
you might expect; and also that there has never really been any
research done on the activity of oil in the ultra-deep.
Now, it really seems that if we are going to have a
response plan, there should have been research done on what
does oil do when it is released in the ultra-deep. That
actually seems again a failure of imagination.
Secretary Salazar. Congressman, I would just say this, and
I am going to have the Deputy Secretary respond as well. But
there are many people here who frankly have been involved in
the development of the Outer Continental Shelf programs,
including the passage of the 2005 and 2007 Energy Policy Acts,
which contemplated the development within the deepwater. There
were many hearings that were held with respect to all of those
changes that were made in the law, and there were many issues
that were dealt with in all of those hearings, as well as
within the agencies relative to the opportunity, as well as
limitations concerning deepwater.
The nation made a judgment that deepwater production was
something that should be encouraged, and indeed incentivized by
this Congress and by other administrations. So the fact of the
matter----
Mr. Cassidy. I guess my questions, though--there is a
California spill of national significance trial run that was
done in 2004. And in my mess, I no longer have it in front of
me. But it basically says that all of the expertise in dealing
with a large-scale spill had been lost, and that middle
management was not capable of taking care of such a spill. Now,
this is the California spill of national significance, which is
not even deepwater. And so it seems as if the preparation--
maybe there was a good response to that. But again, I am asking
again, was there something done for deepwater in particular----
Secretary Salazar. Let me have David, the Deputy Secretary
respond specifically to that question. But I can tell you that
you would not have the largest response in the history of the
world with respect to an oil spill taking place if there had
not been preparedness in place. Deputy?
Mr. Hayes. Just to respond that Commandant Thad Allen, who
is the national incident commander, was also in charge of the
exercise that you are referring to. He believes that was very
successful. He administers, along with the Coast Guard, along
with EPA, the Oil Pollution Act of 1990. They have the primary
responsibility in terms of developing response capabilities.
On the dispersant issue, they, in particular EPA, has pre-
approved the dispersants so they are available onsite. The
deepwater implications are ironically, now that there is a
deepwater ability to inject the dispersants, they are using
far, far less dispersant than if they were relying totally on
surface. And in fact, Administrator Jackson reached an
agreement with BP and ordered BP to reduce the amount of----
Mr. Cassidy. Let me interrupt, though. I was told that by
the second day, more dispersant had been used ever than in the
history of any other oil spill, and so maybe in small volumes,
it was OK. But for a catastrophic spill, it is unknown as to
those effects.
Mr. Hayes. Well, sir, this is an extraordinary event, and
as the Secretary referred to, Administrator Jackson, working
with your local universities, have established a ``follow a
protocol.'' And as you know, for the last several days, they
have been pressing very hard to ensure that the dispersants
that are being used are in fact of--will break down quickly,
will not have long-term effects.
There is no question. I put this in the same category as
what the Secretary has been talking about. We are going to
learn some lessons here. The Congress in its wisdom put
together a response plan that required pre-approval of
dispersants, precisely for this reason. We are going to find
out if that was adequate, or if new protections need to be put
in place.
Mr. Cassidy. I yield back. Thank you.
The Chairman. The gentleman's time has expired. Mr. Inslee.
Mr. Inslee. Thank you. Mr. Secretary, no wind spill has
ever hurt anyone. That is why I am appreciative of your
permitting these start of winds for offshore wind farms. And no
sun spills ever hurt anyone. That is why I am appreciative of
the President being at a solar cell manufacturing plant in
California today. I just hope you will use this spill again as
an inspiration to try to jog our colleagues in the Senate to
get off the dime after a year and pass a Clean Energy Bill so
that we can move to the next cleaner sources of fuel. I know
the President believes that. I believe you do. I just hope you
will continue your inspirational efforts.
I want to ask you about the northern seas, the Chukchi Sea
and the Beaufort Sea specifically. We know there has been a
statement that we are going to put a moratorium on permits for
drilling, but I am told that there are some wells that are not
started yet by Shell in the Chukchi or Beaufort Sea under--I
think it is lease 193. And I read a statement by Vice President
Pete Slaiby of Shell of May 14th saying, we have mobilized
every piece of equipment that is not local. We are heading up
there to do this.
Can you commit to us that you are going to withhold permits
on those until we get this thorough review to make sure that
MMS acts more like the FAA and less like a group that is not
doing their job? Can you commit to us that you withhold permits
on those final permits so we can get this done of fixing this
problem before they start drilling there?
Secretary Salazar. Congressman, let me just first say that
the safety report which I have been working on for most of the
evening and night and some today will be delivered to the
President. Then there will be a series of decisions that will
be made with respect to whatever adjustments need to be made.
And so stay tuned on your question relative to the specifics on
the expiration wells approved in the Arctic. and I will remind
you, as I have said to the Committee before, that the plan had
been by the prior administration to essentially open
everything, Pacific and Atlantic and everything in the Arctic.
We pulled back in the Arctic, specifically in Bristol Bay,
in the Chukchi and in the Beaufort, canceling tens of millions,
I think, of acres that were going to be leased, precisely
because there are some scientific spill response and other
issues that need to be addressed. I will take this opportunity
as well, Mr. Chairman, in response to the question to also say
that I think it underscores the leadership of many members of
this Committee to move us forward into a new energy frontier to
do the kinds of things that are happening with respect to wind
energy and solar energy, where we by the end of this year, just
in Interior on public lands, will have permitted over 5,000
megawatts of wind and solar and geothermal energy.
And seeing Congressman Bishop over there, I will also say
that I was in Utah, a little place, Milford, Utah, a few weeks
ago, and the people in that high school, the kids essentially
had developed the idea of creating a new energy revolution
within that part of Utah. So they now have underway a wind
energy farm that will produce 1,000 megawatts of power, already
producing over 200 megawatts of power, I believe; a geothermal
plant, which is producing close to 50 megawatts of power right
in that same facility; and the construction of a transmission
line for renewable energy, which will take the renewable energy
to the places where----
Mr. Inslee. I am really excited about that. We need to
string that line over to the U.S. Senate so that they can get a
little energy. We have been waiting for a year on them. I want
to ask one last question quickly about the control of the drill
site. Americans are very frustrated about this, as you know.
And you made some comments about perhaps the Federal
government, moving BP aside--the incident commander, Thad
Allen, suggested, well, BP is really the folks that have the
expertise on this.
What I think Americans want are the folks with the
expertise to be doing the work. That might be the industry
right now because the Navy is not equipped to really do this
work, or they do not have drill rigs. But they do want somebody
who is going to be making decisions that are based on the good
policy and the protection of the environment rather than
economics, which is the Federal government.
So I think the people sort of want a mix of the Federal
government here, who make a decision to protect them, with
those who have the expertise that might be the industry. I
guess the question is, is there a circumstance that we should
be thinking about that the Federal government would assume
control over this drill sight and be making the executive
decisions, with executive decision-making authority, and
contract with the industry to perform that work, guaranteeing
thus Americans the feeling of confidence that they have a
government that is making decisions for them and not a private
enterprise that is maybe shortening them, but still using the
expertise that we need. Is that something that at some point we
might be looking at and, if so, under what circumstances?
Secretary Salazar. Congressman, that is a good question
that is--let my just say, Admiral Allen, whom I have worked
with every single day from the beginning of this, and I are in
full agreement here. We are holding BP accountable. And in that
accountability effort that we have underway, we have them by
the neck, and we will keep them by the neck to do everything
that has to be done here, which is right.
We have put into place at the Houston command center for BP
the best of scientists in the entire world. The global
scientific community is focused on what to do with this well in
Houston, and it includes colleagues that I have mentioned,
Secretary Chu, Marcia McNutt, the heads of the labs, and
others. And so I really think what I can guarantee you,
Congressman, is that everything is being done that is humanly
and technologically possible to stop the pollution, and then to
make sure that the pollution is cleaned up, and that those who
are affected by this horrific incident are in fact made whole.
Mr. Inslee. Thank you.
The Chairman. Thank you, Mr. Secretary.
Secretary Salazar. Thank you very much, Mr. Chairman.
The Chairman. Mr. Broun of Georgia is next.
Mr. Broun. Thank you, Mr. Chairman. I thank the Secretary
for coming, as he departs, and I thank the Deputy Secretary for
staying. So, Secretary Hayes, I just want to say, this massive
and ongoing environmental disaster has destroyed untold natural
resources, resulted in the tragic loss of life, and will have a
devastating impact on the economy of the Gulf Coast region for
years, probably decades, to come.
The first and most important thing we need to do is get
this spill under control before it does far more damage. Tough
questions must be asked in the days, months, and years ahead to
determine what happened, to hold those responsible accountable
for their actions or inactions, and to prevent a disaster like
this from ever happening again in the future.
I am concerned that the Federal government has not taken
the lead in the response to this tragedy. Too much reliance has
been placed on BP to find and fix this problem. Sadly, we are
now 36 days into this disaster, and the Federal government is
still looking to BP to take the lead in solving this problem.
We just heard the Secretary give that testimony. He has
pointed his finger at BP. He does not point the finger at
himself or the Department. Mr. Deputy Secretary, this past
Sunday, Secretary said that this past Sunday in regards to BP,
quote, ``We are 33 days into this effort, and deadline after
deadline has been missed.'' He went on to say, ``If we find
they are not doing what they are supposed to be doing, we will
push them out of the way appropriately,'' unquote.
On Monday, Admiral Thad Allen, who was appointed by the
President to oversee spill relief efforts in the Gulf, was
asked whether the government was pushing the cleanup initiative
strongly enough. Admiral Allen replied, quote, ``We are
actually defining it as we go. This is an unprecedented,
anomalous event,'' unquote. And in response to Secretary
Salazar's statement on BP, he said, quote, ``To push BP out of
the way would raise the question, to replace them with what,''
unquote. Farther going on, ``They just need to do their job,''
unquote.
Between the Secretary's statements today and those he has
made recently and actions taken to date by the Administration,
it is clear that the Federal government has not taken the lead
from day one. The protection of American interests is the
responsibility of the Federal government, not BP.
I heard the Secretary over and over say that it is BP's
responsibility, and would not take responsibility. He said over
and over that you guys have been doing everything that you all
can do. And I find that totally incorrect.
Deputy Secretary, do you believe that the Federal
government's response and the Department's response has been
adequate?
Mr. Hayes. I absolutely do, Congressman. We are
implementing the law that this Congress passed, the Oil
Pollution Act of 1990, which establishes responsibility on
companies like BP, who create this kind of damage, to fully
fund and implement the cleanup. It also establishes a structure
under the national contingency plan that establish a national
incident commander, here Thad Allen, that has the
responsibility and oversight of the responsible party. That is
absolutely occurring.
Let me suggest a separation between two issues because I
think you are confusing some very different situations. First
of all, in terms of the response itself, Thad Allen and the
Coast Guard has stood up an organization of now over 20,000
people in the Gulf of Mexico responding to the spill. You have
heard the testimony today of the thousand ships, the thousands
of employees, the millions of miles of boom, the dispersants.
This is the most coordinated, hard-hitting response effort
ever.
The other piece of it is what is going on in terms of
stopping the flow. And we have experts from the Navy. We have
Nobel Prize winning Dr. Stephen Chu. We have the heads of three
national labs. We have the head of the United States Geological
Survey--all embedded in Houston. Every decision that BP is
making, they are asking us for permission, and we are directing
them what to do.
Today's top-kill is the culmination of intense effort with
them. We are 5,000 feet down. The U.S. Navy has confirmed that
actually the best technology is the technology that industry
brings to bear. They are doing it under our direction. And
their complete livelihood is at stake. There is no question, I
do not think, about the commitment of the Federal government
and the effort of response. And for someone who has been
working on this matter since hours after it occurred, to
suggestion that the Federal government is not putting
everything at this effort is disappointing, to say the least,
and incorrect by any empirical measure.
Mr. Broun. Well, Secretary Hayes, I respectfully disagree
with you. Reports come out of Louisiana, where Federal vessels
were sitting there idle, and the state had to take its
emergency management authority to try to get those responding
to the spill. And I do not mistake that there are two pressing
issues. One is stopping the continual flow of oil into the
Gulf, and the second one is cleaning up what is there.
But it is my belief and understanding that the Federal
government has the responsibility under the law to take the
lead role, and you guys have not done that. Shouldn't you have
taken the lead role from the very beginning?
The Chairman. The gentleman's time has expired. Who is next
on our side? The gentlelady from the Virgin Islands, Dr.
Christensen, is recognized.
Ms. Christensen. Thank you, Mr. Chairman, and thank you for
holding this hearing. Deputy Secretary, there have been calls
for a national disaster declaration, and I recognize that the
Secretary has testified, and I realize that all hands are
already on deck. But the impact of this disaster, as my
colleague said, will be far-reaching and last a very long time.
In your opinion, is there that could be gained, or would
the response be any better, any stronger, if this Deepwater
Horizon spill were officially declared a national disaster?
Mr. Hayes. Congresswoman, I am not an expert in the
legalities of the different types of declarations and their
impacts. My understanding is that because we are under the
jurisdiction of the Oil Pollution Act, and we have access to
the billion dollar fund, and also the responsibility of BP,
that the normal kind of disaster declaration that triggers
under the Stafford Act, actually requirements for states often
to provide matching funds, is not appropriate, and actually
would be counter-productive in this situation.
However, there are many complexities. There is a different
type of disaster that can be called under the Magnuson-Moss Act
dealing with the fisheries. So I do know this, that the
Administration and the Department of Justice has the lead on
this with the Department of Homeland Security--is making sure
that every resource available through whatever mechanism,
declarations or not, is appropriate are being followed up to
the maximum extent.
Ms. Christensen. OK. Thank you. And I just want to clarify,
Congressman Inslee sort of asked this question, but the
testimony of the Secretary is that no applications for drilling
permits will go forward. There is a moratorium in place. But it
has been reported that drilling projects are still being
approved. Can you give me some reassurance that that moratorium
is in place and none are being approved?
Mr. Hayes. Sure. I am happy to clarify that point. Let me
first say that the policy was to put a moratorium on approving
new applications to drill offshore until the Secretary presents
the report to the President on interim safety measures. That
will occur tomorrow.
So the moratorium is focused on the fact that since April
20, no new applications to permit to drill in offshore have
been approved or are going forward. There were two actually
that were approved after April 20, but suspended on May 6. So
there have been no processed and allowed to go forward new
applications to permit to drill.
Confusion has arisen because while ongoing--in connection
with ongoing drilling processes, there have been some revisions
and some side drills basically for safety purposes. They have
been allowed to continue because those are changes in ongoing
things. Those have been reported as new permits. They are not
new permits in that sense.
Also, it has been reported that there have continued to be
approvals of exploration plans. That is true. That is because
we are forced to respond to those within 30 days. But the
approval of an exploration plan does not lead to a drilling
permit. That is a separate action. So we have worked hard to
put this pause button on. It is on until tomorrow, when the
President will receive the report, and then the decisions will
be made about what to do going forward.
Ms. Christensen. Thank you. One of the most important parts
of managing a crisis is the dissemination of information to the
public. And when I listen to some of the officials from
Louisiana, watch the news, it seems as though the message on
what, why, and where is really being led by the media and by
people who are panicking because they are concerned for their
and their constituents' livelihood. And then there are
sometimes conflicting statements from different government
officials.
What is being done to improve and have the Federal
government coordinate and really take control of the message
that is coming out on this disaster because it just creates
more confusion and really hampers the ability for the
Administration to move forward.
Mr. Hayes. It is a very good question. It is a tremendous
challenge coordinating the messaging and the information flow.
I was last Thursday in the home command center and also Mobile,
Alabama command center. All of the command centers have what is
called a joint information center, where under the Coast
Guard's jurisdiction, all of the Interior Department, Commerce
Department, BP folks, all are working together, and the
communications all come out of the joint command.
That process is up and running. I think it is going well,
and that is the primary mechanism we are doing. But it is a
tremendous coordination challenge. But Thad Allen is up to it,
I think.
Ms. Christensen. Thank you, Mr. Chairman. My time is up.
The Chairman. The gentleman from Louisiana, Mr. Fleming.
Mr. Fleming. Thank you, Mr. Chairman, and thank you, Mr.
Deputy Secretary, for coming today and speaking with this on
this important topic. I represent the Fourth District of
Louisiana, as Dr. Cassidy and I are both members from
Louisiana.
Over two weeks ago, our Governor, Governor Jindal--and you
heard this discussed earlier--requested a certificate,
requested permission to dredge our shoreline in order to build
berms for protection and to vary our island level to hopefully
protect our coastline and our natural resources, our wildlife,
and so forth.
About six days ago, the entire delegation, Democrats and
Republicans alike, sent a letter to the Corps of Engineers and
to Admiral Allen requesting an answer. So we are well over two
weeks. The people of Louisiana are waiting for an answer. Mr.
Deputy Secretary, are we going to get an answer today?
Mr. Hayes. As the Secretary testified, Commandant Thad
Allen is in daily contact with Governor Jindal on this issue. I
know that he is continuing to work it. The primary issue is
whether building the barrier island will do more harm than good
in terms of fighting off the potential of an oil spill impact.
And those discussions are continuing. I am sure they are going
to mature into a final decision very, very soon.
The main concern of the national incident commander has
been not to make the situation worse.
Mr. Fleming. Mr. Deputy Secretary, do you think we will
hear within a week?
Mr. Hayes. Absolutely.
Mr. Fleming. OK. So could I expect perhaps an answer in
three to five days? Would that be a good window?
Mr. Hayes. It is really probably best to put that to
Commandant Thad Allen, but I can assure you that an answer is
forthcoming. But more importantly, discussions are ongoing.
There are daily discussions between Commandant Thad Allen and
the Governor.
Mr. Fleming. Well, the Secretary referred to conversations.
You refer to discussions. Isn't this, sir, really paralysis
through analysis? We have 84 miles of shoreline that are now
affected. By the time we figure out whether this will work or
not in some way be a problem for the environment, it will be
too late to do anything.
Mr. Hayes. The proposal as it was originally envisioned was
to build 90 miles of barrier island. The concern is that it
would wash away literally in a matter of months with the first
storm event, and then perhaps more importantly that in
connection with the dredging and filling operation, that oil
would be drawn into the marshes that it is trying to protect.
Those are very serious, very serious questions that go to
the appropriateness of this mechanism as a spill response
mechanisms. Thad Allen has the national incident command team
working on it very hard, working in communication with the
delegation and with the Governor. We have a shared interest in
getting the right answer, and I am confident the Commandant and
the Governor will close on this soon.
Mr. Fleming. OK. Thank you, sir. Just to kind of switch the
topic and kind of go back to something that we have been
talking about all along, we have been hearing comments from the
Secretary, the other side of the aisle, how the problems within
MMS have been very problematic and have carried on to this
situation that we have today.
But the fact is that this has happened on President Obama's
watch. Now, I am not here to point fingers. I am not here to
blame. I think President Bush and his Administration no doubt
clearly has blame in this, that BP does as well. But I think
the American people are growing very I think unhappy with the
constant statements made--and the Secretary made them today;
other members of this Committee did as well--that it was the
problems, it was the candy store--I think was the comment made
by the Secretary--that is was a close relationship between
corporate America and the Bush Administration. Isn't it, sir,
really destructive and really kind of covering one's backside
to continually point fingers at another administration rather
than accepting the fact that this has in fact occurred during
the Obama Administration? And wouldn't it be more construction
to look at what is happening at this moment and going forward
rather than constantly pointing fingers?
Mr. Hayes. Perhaps so, Congressman. The reality is that we
just received an Inspector General report within the last 48
hours that focused on inappropriate behavior that occurred
under the previous administration. Those issues are front and
center. And the Secretary was presented with that situation
when he walked in with the Lakewood, Colorado issue.
So it is a reality that it is something we have had to deal
with, and we are trying to deal with the cultural issues that
have been raised throughout this hearing. I will say this, what
we are most interested in--and I know you share this--is
finding out what really happened here with this particular
circumstance. We do not know whether the culture of MMS really
had a connection with this or not. We are going to find out.
The combination of in particular the President's
commission, the National Academy of Engineering Work, the joint
USGS-MMS investigation overseen by the Secretary, all of these
things coming together are going to give us the answers. And I
think we are all going to look forward to getting those
answers. That is where we need to be.
The Chairman. The gentleman's time has expired. The
gentleman from New Mexico, Mr. Heinrich.
Mr. Heinrich. Thank you, Chairman. Undersecretary, this
exploratory well was permitted under a categorical exclusion,
as was alluded to earlier. It was based on a prior EIS,
environmental impact statement, and an EA, an environmental
assessment, both done under NEP.
That EIS evaluated the potential environmental impacts of
drilling in the western and central Gulf of Mexico, and the EA
evaluated the impact of the lease sale that led directly to
this well. The EIS estimates that we can expect two to three
blowouts in the central Gulf and one to two blowouts in the
western Gulf as a result of the 2007 to 2012 lease sales. The
EIS also stated that since lost of well control events and
blowouts are rare events and of short duration, potential
impacts to marine water quality are not expected to be
significant.
Given that we now know that a blowout in the deepwater may
be of very long duration and obviously has significant impacts
on marine water quality, do you believe that MMS should
reconsider the underlying EIS and EA and other similar existing
NEPA decisions that do not take the consequences of a deepwater
blowout very seriously?
Mr. Hayes. I would answer in two ways, Congressman. First
of all, of course, as the Secretary testified, the Council on
Environmental Quality is working with us to do a thorough
review of the NEPA policy as it applies to Outer Continental
Shelf Leasing Act. So we are going to take a stem to stern look
at NEPA reviews, and there are some limitations under current
law that we have talked about already.
The other observation I will make is that under the Oil
Pollution Act of 1990, there is actually a requirement for a
spill response plan to be put together on a worse case
analysis. This is not under NEPA; this is under OPA. And BP was
required to put together a spill response plan that truly did,
I think, assume worst case, 260,000 barrels per day for 30
days, and bigger than our current spill. It is because of that
that we are able to respond as we have been in terms of the
boats, the dispersant, all those issues.
But there is no question, I think, in all of our minds that
the question of worst-case analysis needs to be updated with an
idea of the lessons of this accident. We have to learn what
those lessons are first, and the investigations will help us
there.
So we look forward to it. I cannot speak to now as to
whether the specific EISs are still adequate or not, but they
will be part of our review.
Mr. Heinrich. When we talk about the Alaska leases that
have been referenced on a number of occasions--and some of
those having been granted. I know many of them were canceled
before they were actually leased. Do those leaseholders have a
contingency plan in place if something like this happens in the
Arctic?
Mr. Hayes. They do have spill response plans in place.
Those are all appropriately subject to additional reviews, I
think.
Mr. Heinrich. Is MMS--do they have the authority to require
these kinds of contingency plans for all leases moving forward,
and is that being exercised?
Mr. Hayes. They do, and they have. The very robust spill
response plan that BP is required for in the Gulf, the 260,000
barrels per day response capability plan, was approved by MMS.
So they do have that authority, that responsibility.
Mr. Hayes. I know the response is unprecedented, but I
would not exactly characterize what BP has been able to do over
the past 37 days as a successful response----
Mr. Hayes. Right, right.
Mr. Heinrich.--to this situation, and I think we need to be
careful about how we characterize that. Theoretically, if we
use the correct response, either the dome or a top-kill
procedure would have been successful weeks ago.
Mr. Hayes. Right. No. I think you raise a very important
point, Congressman. The traditional spill response plan looks
at those traditional assets that are brought to bear when there
is a spill. What we have here is a situation where the
containment at the first instance has been the problem. We need
to look hard as to whether we have appropriate mechanisms in
place for that at all. And we will do so.
Mr. Heinrich. Thank you, Undersecretary. Mr. Chair, I yield
back.
The Chairman. The gentleman from Utah, Mr. Bishop.
Mr. Bishop. Thank you, Mr. Chairman. I appreciate
Undersecretary Hayes staying here. I am sure you have the
Secretary's ear, so you will bring back our comments to him as
well. I hope that you will be--sorry that Mr. Inslee is no
longer here, that you are up to taking his challenges of wind
and sun spills so that as soon as you have cleaned up the
coast, you will then solve the problem of hurricanes and skin
cancer at the same time. I am sure you will go forward with
that. And just for the record, the Milford Flat will not
produce 1,000 megawatts of power at the best, under perfect
conditions. It can do 200 megawatts of electricity. I just do
not want anyone to accuse the Interior Department of giving
false information.
So let me go to this. As you know, I have been somewhat
critical of the Interior Department in the past. In this
particular issue, though, I have no intention of trying to do a
simple and quick rush to judgment. I think this Committee wants
to know, number one, what has the government done; two, what
could they have done; and specific answers to what Mr. Cassidy
was trying to get as to the relationship of MMS to this
particular situation?
We need those specific answers. And I recognize, Mr.
Chairman, this is the first of a series of meetings that we
will have to come up with those specific answers. Once those
answers are there, then we can make some kind of adjustment to
that. So I appreciate your willingness to be there, but I also
appreciate your recognizing this is the first step, very
skimming of the service, and we will come up with more
specifics as time goes on.
I also recognize that MMS has a checkered past. During the
Clinton Administration, MMS made some very bad decisions that
cost this government a great deal of money in favor of the
private sector. During the Bush Administration, there were
problems that the investigation of which was initiated and
completed during the Bush Administration that pointed to other
problems.
There are still problems with MMS. And as long as the
rhetoric does not get in the way, I really hope that we can
work together in a bipartisan way to solve that particular
problem, which is not unique to your administration, but is
still there with this Administration, and has been there in the
past, and we can move forward on those areas.
I am grateful to find out that Ms. Kendall is going to
initiate a report on this particular situation. I am under the
hope and assumption that as soon as that report is available,
Congress will get a copy of that report in a timely manner?
That was the question, sir.
Mr. Hayes. I am sure that is the case, and the Inspector
General can answer for her own sake in the next panel, but I am
sure that is the case.
Mr. Bishop. I look forward to that. As you told
Representative Holt over there, there is the intention of being
a very open and transparent----
Mr. Hayes. Right.
Mr. Bishop.--administration. Mr. Hastings asked for certain
documents to be brought today. I am under the assumption they
were not brought today?
Mr. Hayes. I did not come with additional documents.
Mr. Bishop. And when we have asked for documents that deal
with the southern border, they have yet to come as well. To
your knowledge, because we asked this of Mr. Jarvis yesterday
in a hearing--to your knowledge, when there was those
brainstorm meetings that dealt with the monuments, were those
initiated by requests from the White House, or did the meetings
come to your knowledge from the Interior Department?
Mr. Hayes. They came from the Interior Department.
Mr. Bishop. I appreciate that, with once again the request
that those documents that we have repeatedly asked and have yet
to appear are given to us so that we can participate in the
process and do the role that Congress was required to deal
with. And I hope that also applies to this particular situation
because as we have heard today, there are a lot of questions
that have been asked. Very few answers are there. It may indeed
be that the Department does not yet have the answers to share
with us. But when those answers are there, we hope we can get
them in a timely manner, and then we can make some adjudication
about how we go forward in the future and what was or was not
the occasion down in the Gulf.
I thank you for your time and being here.
Mr. Hayes. Thank you.
Mr. Bishop. I yield back, sir.
The Chairman. You did not use the word ``unintended
consequence'' at all.
Mr. Bishop. I yield back, and expect the unintended
consequences, sir.
The Chairman. The gentleman from Oklahoma is recognized.
Mr. Boren. Thank you, Mr. Chairman. I appreciate you having
the hearing today, also Deputy Secretary Hayes for being here,
and also for the Secretary for being here earlier. A couple of
points. I am kind of like Mr. Bishop. I have been critical of
the Department on a number of issues, mainly about access. I am
one of those rare pro-oil and gas Democrats who does support
drilling, but at the same time I think we need to be thoughtful
about it. I think this is a time for us to pause, for us to be
very careful.
I do want to say to you and to the Secretary, I have
watched your response, and I know that you all kind of have the
weight of the world on your shoulders right now, and you do not
need someone else to be piling on. So I am not going to do that
today, and I just want to thank you for your service to this
country.
A couple of the questions I do have--and this was something
that Congressman Holt brought up. He talked a little bit about
independent oil and gas companies and being involved in whether
or not they should be drilling in the offshore because of the
liability issue. And you mentioned OPA '90 a couple of times.
You know, we have this fund. You know, there is a $75 million
cap, but then you have this fund, over a billion dollars, that
is sitting there that is used for these cleanups.
Would it be better instead of just having an unlimited
cap--would it be better--because then, as was mentioned by
other members, you would only have a few companies that would
be able to drill, including like the Chinese and folks that are
not necessarily friendly to the United States. Would it be
better to solve Rush Holt's problem to increase the--and all of
our problem--to increase the fee on the oil and gas industry,
to raise that fund level to 4 or 5 or $10 billion, whatever the
magic number is--and I do not know what that is--so that when
there is a big disaster, that we can clean up the pollution. We
can solve the problem that both Rush Holt and I both have while
still allowing independents who produce a vast majority of a
lot of the oil and gas that is out there.
We have a lot of partnerships. For instance, we have a
company in Oklahoma. They have since sold their offshore. Devon
Energy partnered with Chevron and found a really big discovery.
We want that kind of technology sharing. We want those kind of
people, Oklahomans and others, creating those jobs to be out
there.
So my first question is can't we accomplish the end goal of
cleaning up the mess and having the money there without
necessarily keeping all of the folks out? That is my first
question. And my second question is about the moratorium. I
have had a lot of the shallow water drillers in my office, the
folks that drill anywhere from 35 to 400 feet. I think they are
vastly different than what you have in the offshore. They
complete wells in a short amount of time. There could be
literally thousands of people laid off if the moratorium goes
past--I guess the 28th is the day. We are very concerned about
that. And also even the moratorium in the offshore.
But I obviously understand you have to go in. You have to
do the inspections. I also want to applaud you all for looking
at breaking up MMS. I think it is a positive step forward.
Again, I am not here to talk about the Clinton Administration,
the Bush Administration--sorry, Mr. Bishop--or whatever, the
Obama Administration. There is a lot of blame to go around and
all that.
I just want to find the best solution, and I think I would
love to hear your thought about OPA '90 and Mr. Holt's and my
issue that we can work out, and then also about the drilling. I
would love for you to say, you know, the 28th we are going to
say we can start drilling again.
Mr. Hayes. Congressman, on the first point, the
Administration is absolutely open to working with the Congress
on this suite of issues. I think we have a shared interest in
making sure that the companies that operate in the offshore
have the wherewithal to respond to any problem that arises. We
have that shared view.
I could only speak to that issue of the cap, but there may
well be other ways to skin the cat, so to speak, and----
Mr. Boren. Well, let me, because the light is getting
yellow. Let me just say real quickly, I am just worried in this
political environment someone is going to attach this to a
must-pass bill.
Mr. Hayes. Sure.
Mr. Boren. And all of a sudden, we are just going to have
the Chinese drilling on our offshore.
Mr. Hayes. I understand. In terms of the shallow water
issue, the moratorium, this pause button, if you will, is
associated with a report that will soon be delivered to the
President, and then decisions will be made. That is about all I
can say about that.
Mr. Boren. OK. Thank you for your service.
The Chairman. The gentleman from Texas, Mr. Gohmert.
Mr. Gohmert. Thank you, Mr. Chairman, Deputy Secretary. We
heard Secretary Salazar talk about his wanting to help us to
get the answers, but we also have heard the Ranking Member talk
about requests that were made eight months ago for which we
have not got answers. That really needs to be responded to. I
do not care who is in the majority, there ought to be respect
enough for this body and this body's oversight that we get
answers within eight months. And not only that, there ought to
be enough respect for Congress within Congress that when
Congress cannot get answers, we demand them, and do not reward
an agency until they comply.
So I am hoping--maybe it is a little bit Pollyanna, but I
am hoping for the future we are going to have a little respect
from the Department of the Interior and get answers to
questions.
Also, looking at AP article, the AP obviously did not get
any respect from DOI, but they had requested information so
that they could put together stories. They indicate they got
information from DOI that Deepwater Horizon was inspected 40
times during its first 40 months after September 2001, when it
went into the Gulf, but that more recently, the numbers keep
being amended by MMS as to how many times it was seen. It went
from 26 to 48 times reported for the 64 months since January of
2005. And a Freedom of Information request by the AP indicates
MMS only released copies of three inspection reports. And I
know people would love to know--and I know you said you are
looking forward to getting the reports and finding out what
happened. Why couldn't we just see the records?
If we could just see the records, we can read those. As a
judge, I frequently had to review evidence myself. You get
people to come in and know what they are talking about,
hopefully, and to give you their assessment. But why can't we
just say, here is the report, here is the blowup of any testing
that was done, here is the record that it was not done. Here is
what happened. And then we would know, and we would not have to
wait from somebody within MMS or DOI to tell us what happened.
Can we get those reports, just here is what happened,
without an investigation and waiting for that?
Mr. Hayes. Congressman, with all due respect, we are being
inundated with requests for information at the same time that
we are devoting an incredible effort at addressing----
Mr. Gohmert. Well, then I can understand when you wait
eight months to respond to questions we ask, it really must
build up pretty significantly over time. But if we could just
get the copies of what has happened. It doesn't do you any good
to come in and say we have all of these requests building up
when you keep letting them build up over months. Well, my
time--one of the problems with having only five minutes--let me
get to this.
We heard Secretary Salazar mention, quote, ``A prior
administration when industry was running the show,'' and he
says the relationship between MMS and big oil is arms length
now. And we know--we have had hearings in this room. We have
had the IG come in, and we got down to two people that may have
known about that prior administration when industry was running
things in 1998 and 1999, and they left out the language on the
price control for the leases that just made millions for big
oil and cost our Federal treasury millions and millions of
dollars.
And when I asked the Inspector General, why didn't you talk
to these people, he said they both left government service;
there is nothing I can do. And I could not believe he would not
even try to call them and see if they would voluntarily
respond, but he did not. And it turns out one of those went
from the Clinton Administration to become First Vice President
of Health, Safety, and Environment for British Petroleum North
America. Then she was promoted to Director of Global Health,
Safety, and Environment and Emergency Response for British
Petroleum. And then she became General Manager for Social
Investment Programs Strategic Partnerships at British
Petroleum. And then last summer, Secretary Salazar said, she
understands the value of partnerships, so he has now put her
with the Minerals Management Service in the Department of the
Interior.
And so I hope that you will look closely into that cozy
relationship the President has talked about wanting to end. And
I am very concerned that if Minerals and Management is
overseeing British Petroleum, just how cozy this has gotten.
And I realize my time has expired, but I am just asking, please
look into this. The Inspector General refused, and we have to
rely on you to help because Congress is not adequately looking
into it. Thank you. I yield back.
Mr. Hayes. Just for the record, Sylvia Baca has been
completely recused from this matter because of her prior
employment with BP.
Mr. Gohmert. Oh, when you say completely recused from this
matter, does that leading up to the blowup event or failing to
work properly----
Mr. Hayes. She has not been involved in offshore energy
issues.
The Chairman. The gentleman's time is expired. The
gentleman from Wisconsin, Mr. Kind.
Mr. Kind. Thank you, Mr. Chairman. Deputy Secretary, thank
you for being here along with the Secretary to give us an
update on what is taking place. And I do appreciate what the
Administration and what the Department of the Interior has been
trying to do in light of this accident. And if my recollection
is correct, since coming to office, the Department of the
Interior has eliminated the scandal-plagued royalty-in-kind
program. That has already taken place. It established new
ethics standards, if I recall, within the Department, balanced
MMS mission to include renewable energy production as part of
its portfolio. You have slowed down the new leasing that was
taking place for a more thorough review and analysis before any
of the leasing decisions are ultimately made; moved in the
direction of more science-based determination as far as leave
approval within the agency. And obviously the Secretary
announced the division of MMS now into separate entities so
that there is more focused attention on what needs to be done.
All necessary steps.
But I know the people in western Wisconsin are wondering
why this happened and what steps can be taken to avoid it from
occurring in the future. How much will the Department be taking
into consideration what other countries have been required,
especially in the area of deepwater drilling, as far as
improvements that we need to be making to ensure that any
future project, or even current project that is taking place
right now meets the optimal measurements of safety and again
science-based determination to avoid something like this from
occurring in the future?
If I recall, I think Canada already requires a secondary
pipe or a secondary valve to be drilled at the same time the
primary one is in any of their deepwater drilling. Am I correct
in that?
Mr. Hayes. I do not know the details of that specific
point, but to your more general point, we are very interested
in having world class standards, and that means benchmarking
against other countries and taking the best that they have to
offer. In fact, in the report that we are preparing for the
President, we have started that function. There already is a
lot of international discussion along these lines. But we take
your point. We want to have the best standards in the world.
Mr. Kind. Is that going to be part of the commission's
purview as well----
Mr. Hayes. Absolutely.
Mr. Kind.--when they are moving forward is to look at best
practices in the industry and what is----
Mr. Hayes. It will be part of--absolutely, absolutely, yes.
Mr. Kind. Right. And also, I think taking a look at the
opportunity for secondary safety valves to be established in
case we get a blowout of this order, that there is a second and
third alternative in order to shut something like this off
quickly.
Mr. Hayes. Yes, Congressman.
Mr. Kind. Yes. Now, obviously, the Inspector General is
going to be testifying briefly before us, too, and we have
known for some time that we have a cultural problem within MMS.
And in her report, I think she indicated very clearly that a
lot of this is human nature just playing out.
First of all, I think we have a terrible problem with the
revolving door, of those in the industry going into the
overseeing agencies to conduct oversight from the place they
just came from, and also vice versa, those within going to the
private industry, knowing how to play the game. I do not know
what we can do really to get at that other than some brighter
line rules in order to prevent what appears to be a very cozy
relationship and a lot of transition from public and private
sector work that has been going on for a very long time.
Have you guys been thinking about this in coming up with
some recommendations for us to consider as far as the revolving
door problem that I think I and others----
Mr. Hayes. We absolutely have. And in fact, as the
Inspector General, Acting Inspector General, may testify, as
soon as we receive the draft report, we are looking internally
at some new rules that we might consider, and we are in a
dialogue with the Inspector General about some new requirements
that we would have on the revolving door theory. So we are
absolutely attuned to that.
Mr. Kind. Now, maybe ethically, but is it prohibited by law
or by criminal penalties from accepting gifts or kickbacks or
things of that nature from the industry that you are supposed
to be overseeing?
Mr. Hayes. Oh, there are some very bright lines in terms of
what can be accepted as gifts. And I think there the lines are
much clearer, and the ability to take disciplinary action is
much more clear. I think the issue that Mary Kendall has raised
appropriately is the cultural question of the friendships and
the close relationships, et cetera. That is a harder nut to
crack, and we look forward to working with the Inspector
General.
I will say that we have really enjoyed a very good
professional relationship with the Acting Inspector General,
and we in fact--she is working with us on a special safety
oversight committee function moving forward for precisely this
reason. It is very instructive to get reports of the Inspector
General's office. It is even, I think, more helpful to get the
input and experience of the Inspector General as we look going
forward at new things we can do to avoid the problem so that we
do not have those reports.
Mr. Kind. Well, I appreciate that response. It is going to
be crucial for that type of collaboration and cooperation as we
move forward because when you get comments that we are all oil
industry, it is very troubling, and that is not the way this is
supposed to work.
Mr. Hayes. Yes.
Mr. Kind. So we will look forward to working with you on
that as we move forward. Thank you, Mr. Chairman.
The Chairman. The gentleman's time has expired. The
gentleman from New Mexico, Mr. Lujan, is recognized, whom we
formerly recognized as a new member prior to your arrival this
morning.
Mr. Lujan. Thank you very much, Mr. Chairman. I look
forward to working with you, with all of the Committee members
and the staff as well to really make a difference here, Mr.
Chairman.
Deputy Secretary, following the '89 Exxon Valdez spill, we
heard reference to the 1990 Oil Pollution Act that was brought
forth and what that did to shift responsibility to these
companies, putting the Federal government on a back step, if
you will, as far as having that direct involvement. Learning
from that, how can we assure in the future that the Federal
government will have the capability to take greater control of
cleanup efforts, whether it is creating or establishing an
entity where we can utilize personnel, equipment, technical
expertise from the private sector to drive this home and make
sure that we are doing the things we should be doing off the
bat?
Mr. Hayes. Congressman, I think that will be part of our
debrief, if you will, after this incident has been controlled.
I think a lot of the confusion is more in terms of the relative
roles. The Oil Pollution Act, you are correct, did make it
clear that the companies have responsibility. BP in this case,
along with some other parties, are responsible parties, have to
open their checkbooks, have to make it happen.
But the reality is that the Federal government also is the
primary player here in telling them what they have to pay for,
and that is what we are doing through Thad Allen and the
national incident command. But like everything else associated
with this incident, we will look forward to looking back and
seeing whether it would be useful to clarify the law or clarify
the responsibilities.
Mr. Lujan. And, Deputy Secretary, I know that there has
been a lot that has been said about this; Mr. Dudley from BP,
Mr. Suttles from BP as well, talking about some of these
attempts, failed attempts, to stop the leak, that it has never
been done before, that there is no certainty at these kinds of
depths. Why was it that BP did not move forward with trying to
kill the well to begin with? Why is it that these flows--it
looks like all these attempts was to keep the flows alive as
opposed to go in and just shut if off.
Mr. Hayes. This was a catastrophic failure, and if there
had been a technical way to stop--to kill the well earlier, you
can be assured they would have done it, and would have required
them to do it. What happened was essentially the entire
infrastructure associated with killing the well was lost with
the explosion. So what has been happening over the last couple
of weeks in particular has been a reconstruction effort to
enable what is scheduled for today, the top-kill, which
requires under pressure very large volumes of drilling fluids
to be injected in the well. And at 5,000 feet, without delivery
mechanisms, those mechanisms had to be constructed, and it has
been a 24/7 operation to get to this point today.
Mr. Lujan. And I think there is a lot of concern there
because in some recent articles coming out of the Washington
Post, this one from yesterday, it cites that there are rig
workers and lawmakers that have faulted BP for failing to pay
enough attention to a spike in pressure in the drill pipe and
for neglecting to ask for a second cement plug in the well,
both of which could have been addressed with more time.
Instead, rig workers have said BP pressed ahead with
substituting seawater for drilling mud in preparation for
closing the well and moving the exploration rig off the site.
It then goes on to say that time worries were not the
exclusive province of BP. In a 2006 trade journal, trans-ocean
General Electric engineers wrote about how to save time on a
blowup preventor test by leaving test valves in place. At a
conference in '09, a Halliburton official spoke about how to
get cement to set faster. On a conference call last August, we
continued to hear about what that means to saving costs.
Leaving these test valves in there or turning them where
there could have been other ways to shut this off are things
that I hope that we will look to do, and I certainly hope that
now with what is being done with the restructuring of MMS that
we are able to address the concern that was issued to notice to
lessees that MMS had issued dating back to at least 2002. That
requirement was lifted from most wells in the central and
western Gulf of Mexico to have some of these contingency plans
as well.
And so going forward, I hope that we are able to conduct a
thorough audit of those that do not have these contingency
plans in place. I hope that we can learn that agencies can work
close with one another, as you have done, to bring experts
necessary here to address these issues, but make sure that we
are using modeling and simulation to be able to find out if
these contingency plans are truly going to work because we have
seen that that absolutely is not the case.
They are still saying today that they know it is not
working. So with that, Mr. Chairman, I appreciate it very much.
I yield back my time.
The Chairman. The gentleman yields back. The gentleman from
Oregon, Mr. DeFazio.
Mr. DeFazio. Thank you, Mr. Chairman. I am puzzled. Is
there or is there not a moratorium? There are press accounts
saying that permits have been issued, statements that the
Secretary put forward said you are required to issue these
permits upon 30 days after--you know, within 30 days in
approval or disapproval. Are you under a moratorium or not on
permitting?
Mr. Hayes. We are not approving any--we have not approved
any new applications for drilling in the deepwater since April
20th. And we put a full stop after May 6th all new applications
to permit to drill, period, shallow water and deepwater.
The confusion, Congressman, has been that there are
revisions to permits, so-called, sidetracks, bypasses. Those
appear on the MMS website as though they are new permits. They
are not new permits in the sense of new operations starting.
They are ongoing operations, drilling is already occurring.
They have hit a safety problem; they need to do a bypass; they
need to do a side drill, move around the problem. We are
allowing those to go forward here during this period. Those are
not new applications for drilling.
Also, the important thing also, Congressman, is that this
was in place until the President gets the report, which looks
like will be tomorrow, and then decisions will be made about
the future.
Mr. DeFazio. OK. Now, in the case of the test wells in the
Arctic, do they have to have a plan for a catastrophic failure
before they drill a test well?
Mr. Hayes. We have not received yet the APD request from
Shell for those proposed exploratory wells for this summer.
They also have to submit an APD, an application for a permit to
drill.
Mr. DeFazio. Right.
Mr. Hayes. So they have an exploration plan, but the next
step is for them to send us so-called APDs, which are the final
step for review. And at that point, we review the entire
situation and decide whether to allow the exploration activity
to go forward or not.
Mr. DeFazio. But exploration activities do require a
catastrophic response plan.
Mr. Hayes. Yes, yes, they do. Yes, they do, absolutely.
Mr. DeFazio. OK. And you can envision the concern about----
Mr. Hayes. Sure.
Mr. DeFazio.--spill, even a fraction of this magnitude, in
the difficult conditions in the Arctic.
Mr. Hayes. Yes, yes.
Mr. DeFazio. So I would assume that there is going to be
extraordinary scrutiny applied to what they allege they have in
place to deal with this, a catastrophic event.
Mr. Hayes. That is an appropriate assumption, Congressman.
Mr. DeFazio. OK. Now, in a hearing last week, it came out
that there is a lot about the blowout preventor having been
modified and whether or not it had a hydraulic leak and was
functioning improperly, the condition of the batteries, and
that. But there was one thing even more disturbing than that
beyond potential for malfunction or actual malfunction. It is
that it turns out that these blowout preventors cannot sever
the pipe where it is joined. So 10 percent of the pipe being
used on these deepwater wells, these blowout preventors are not
designed to deal with.
How can we be allowing this to go forward with blowout
preventors that cannot do the job, even if they work?
Mr. Hayes. Right. Well, that is a very serious issue. There
are really two issues there, as you may know. One is whether
the pipe rating matches the ability of the shears to cut
through it, and then the second issue is that where the pipes
are put together, you have thicker material, and the likely
failure of those shears.
We are going to need to look into this. My understanding
is, I have been told that in this case the shear rams had the
capability of cutting through this quality of pipe. But that
obviously is going to be a factual question for this matter,
and will be part of the more general review. MMS has done
studies through the years on this question and tightened up
these regulations, but we are going to look to see whether they
have to be tightened up more.
Mr. DeFazio. Right. Press accounts say there was a study
done by MMS, a subsequent study done, which was '07 that BP
engineered saying basically that most or many blowout
preventors were not capable of cutting pipe of this thickness.
So, that is a very serious concern.
Mr. Hayes. Right.
Mr. DeFazio. We do not want to have blowout preventors as a
feel-good device because I do not feel too good about this one
right now.
Mr. Hayes. No, absolutely.
Mr. DeFazio. So, that is something that I really think you
need to be looking at. With that, Mr. Chairman, thank you.
Mr. Miller. Will the gentleman yield?
Mr. DeFazio. Yes, I will certainly yield.
Mr. Miller. I thank the gentleman for yielding. You put
your finger on a very important point here. What we have
demonstrated over the last 37 days is that if the oil is out of
the pipe, we have no means to control it when it comes to the
surface. We just have no ability to do this. We can try and
manage it and all that.
So we are back now to reliance on these blowout devices.
And until such time--I mean, you can have of all these plans
you want, but the only thing that stands between us and a
catastrophic event is that blowout device because we now know,
I do not care what they file about how many ships they are
going to have in place and all the rest of it, you cannot deal
with it once it is in the water.
So I just hope that--this is kind of the fail-safe point
for the moment unless technology changes or procedures. I think
Mr. DeFazio just raised a critical point here. And the idea of
going forward relying on shears that may not--we do not even
know on other existing wells whether they are sufficient and
placed in the right place.
Mr. Kind. Will the gentleman yield for one last question?
Mr. Miller. Yes, I yield.
Mr. Kind. What about the possibility of a secondary pipe
also going in at the same time as the primary pipe pumping it
out? Would that be another alternative to avoiding something
like this?
Mr. Hayes. I am not yet a petroleum engineer, Congressman.
I seem to be heading that way. But I really cannot speak to
that.
Mr. Kind. We all seem to be, and that is what is scary.
Mr. Hayes. Yes.
Mr. Kind. Right. Thank you, Chairman.
The Chairman. The gentleman's time has expired. The
gentleman from Maryland, Mr. Kratovil.
Mr. Kratovil. Thank you, Mr. Chairman. Mr. Deputy
Secretary, first of all, thank you for being here and for your
service in what clearly must be a very, very difficult and
stressful situation. You know, oftentimes when we have these
kinds of events, the first reaction obviously is to go after
someone and figure out who is to blame. It seems to me the
first issue, as you have correctly pointed out, is figuring out
how do we stop the leak.
In that regard, assuming today what we are trying to do
today does not work, then what?
Mr. Hayes. There is a backup plan that the Secretary
alluded to briefly that Secretary Chu and the directors of the
national labs have been working on with BP that would contain
all of the flow, and that would swing into action.
I am sure that if the top-kill fails, there will be a lot
more discussion of that backup plan. But again, I am probably
not the best person to speak to the Ps and Qs of it.
Mr. Kratovil. Let me go back to a number of--obviously,
there has been a lot on the issue of the blowout. It is my
understanding that back in 2001, MMS issued a safety alert
recommending that all of these OCS operators include a
secondary activation system. And still there is no regulation
requiring that, correct?
Mr. Hayes. There is a requirement for redundancy in the MMS
regulations for BOPs. Is that what you are referring to?
Mr. Kratovil. Yes.
Mr. Hayes. Yes. Now there is a lot of confusion about this,
and I know that Ms. Birnbaum is on your witness list. I would
recommend that you go through that with her.
Mr. Kratovil. OK. And in terms of the exploration plans
being required to have a blowout scenario that explains how
they would respond, why have those been in a sense waived?
Mr. Hayes. The primary reason for the categorical exclusion
application for exploration plans is that the only 30 days is
allowed under the Outer Continental Shelf Lands Act. So there
is no way to do certainly a complete environmental analysis.
And it is something the Administration has requested that
Congress address. So that is the primary reason.
And as I mentioned before in response to Congressman
Heinrich's question, we are doing a thorough top to bottom
review of the National Environmental Policy Act's application
under the Outer Continental Shelf Lands Act.
Mr. Kratovil. Mr. Boren raised the difference between these
deepwater wells and non-deepwater wells. Is there any
distinction--I gather there is not any distinction in the tax
associated with the liability fund as it relates--making a
distinction between deepwater and non-deepwater. Do you think
there should be?
Mr. Hayes. I have not thought about that question.
Mr. Kratovil. OK. Switching to more of a local area, one of
the areas they are talking about drilling is off the coast of
Virginia. And, obviously, certain areas have been determined to
be too environmentally sensitive. Can you give me an idea of
why an area that is very, very close to the Chesapeake would
not qualify similarly to some of the other areas that have been
determined to be too environmentally sensitive?
Mr. Hayes. It might. The decision was to go forward with an
environmental impact analysis, to see whether a lease sale
should go forward. So that environmental impact analysis has
not been done.
Mr. Kratovil. OK. There are other issues related to that
specific location, as you may know, related to the Navy,
related to NASA.
Mr. Hayes. Right.
Mr. Kratovil. What kind of coordination is done when that
decision is made to open up an area like that with other
agencies and entities that may be affected by it?
Mr. Hayes. We work very closely with the Department of
Defense. In fact, the Department of Defense has recently gone
public with an evaluation of expressing concern about most of
that proposed lease sale area as being needed for training
purposes.
Mr. Kratovil. I know. But why not do that before making the
decision to explore opening that up?
Mr. Hayes. Again, the decision is contingent upon bringing
in all sorts of evidence. The next step would be a scoping
process, particularly to get this kind of information. The
Virginia lease sale was put on the existing five-year plan by
the previous administration. It is something that we had that
was already presented to us.
Mr. Kratovil. Thank you. I yield back.
The Chairman. The gentleman from New Jersey, Mr. Pallone.
Mr. Pallone. Thank you, Mr. Chairman. And, Mr. Secretary,
in all fairness, I should probably preface my questions by
saying that I personally was very disappointed in the
Administration's decision to expand leasing to the Atlantic,
and beyond what had been the area prior to when we had a
moratorium in Congress. And I have been here 20 years. Most of
the time, we had presidents who through executive order or
through the appropriations process that they supported a
moratorium on any expanded leasing.
And I was very disappointed to see that this Administration
broke that and started expanding the leasing to include parts
of the Atlantic and other areas that were deepwater. And I
suspected that we would have another spill, a catastrophic
spill, like this because you are going into deepwater, where
the technology is not there to prevent a spill or to cap a
spill after it occurs.
My hope is that the Administration has learned its lesson
after this and will go back to the moratorium we had before--
either the President issues an Executive Order like the one
that was in effect under Bush and Clinton and others, or we
adopt through the Interior Appropriations process another
moratorium, as we have had in the past.
I guess my questions relate to that. I have not seen any
indication that the President is willing to change his
position. In other words, he is saying he is setting up this
commission. There is going to be an investigation. But on
several occasions since the spill, he has made it quite clear,
I think, that his intention is when this over and when the so-
called technology is available, that we will now expand, and he
is not reconsidering.
Can I just ask you three questions relative to that,
though? Is there any reason to believe that the President is
willing to sign an executive order that would prohibit any
further lease sales, EISs, or explorations in areas that are
now open to leasing, similar to what was in effect under the
first Bush, Clinton, and most of the time under the second
President Bush? Any reason to believe that he would sign that
executive order?
Mr. Hayes. I certainly cannot speak to that, Congressman.
The President is focused entirely, as are we, on dealing with
the current unfolding crisis.
Mr. Pallone. Is there any reason to believe that he would
support a legislative moratorium in the Interior appropriations
bill similar to what we had for 20 years?
Mr. Hayes. I cannot speak to that at this point. We are
focused on the unfolding disaster that----
Mr. Pallone. Is Mineral Management in any way considering
revising the five-year plan which continues to open the
Atlantic Coast and other potentially environmental and economic
devastation areas? Is there any suggestion that they would
reconsider the decision to expand pursuant to your five-year
plan?
Mr. Hayes. That decision was a draft. There is no new five-
year plan yet in effect. It will not go into effect until 2012.
The decision that was made was to begin an evaluation of
potential additions to the Outer Continental Shelf.
Mr. Pallone. Is there any suggestion that that might be
reconsidered in light of this spill?
Mr. Hayes. We are putting all of our attention on the spill
right now, Congressman.
Mr. Pallone. So I take it since you are not responding, I
should assume that there really are not any changes that are
being suggested.
Mr. Hayes. I do not think that is fair to make any
assumption based on my response.
Mr. Pallone. OK. Well, I would just ask again that all of
those things be reconsidered. I listened to the Secretary's
remarks, and he was sort of trying to separate himself from the
previous policies of Mineral Management, but it seems to me
that in many ways you are continuing them. In other words, as
long as we say that are going to continue opening up these
areas to more leasing, to more exploration, to more EISs that
essentially continues the policy of the previous
administration. And that is very disappointing to me.
Mr. Hayes. I will just make a comment here that I think as
the Secretary pointed out, the approach that we have taken is a
very cautious approach. We are asked--we are required by a
court action to re-review decisions that the prior
administration had made in the Arctic with regard to oil and
gas leasing. As a result of that opportunity, we canceled five
lease sales scheduled for the Chukchi and the Beaufort Sea. We
canceled lease sales associated with Bristol Bay. And in fact,
the President withdrew Bristol Bay by Presidential proclamation
under the Outer Continental Shelf Lands Act.
Our approach has been and will continue to be a prudent
approach.
Mr. Pallone. I would just ask that you revisit the
approach. We do not really want to see any drilling in the
Atlantic, and we think this oil spill shows that it cannot be
done without a catastrophic spill. Thank you.
Mr. Hayes. Thank you.
The Chairman. The gentleman's time has expired. The
gentlelady from California, Ms. Napolitano.
Mrs. Napolitano. Thank you, Mr. Chair. Mr. Hayes, Secretary
Hayes, how are you, sir? I have several questions, and I will
rattle them off because I may not have time to get them all
answered at the same time. But this is the second hearing that
I have attended--one was in Transportation--with regard to the
spill. And there are still some of the questions that remain.
How many deep wells does BP have, and how many do other oil
companies have in the same depth as this particular one? And
does any other company have the same record of I would say the
wanton disregard for the governing regulations and the
workers's safety? Because this is not only hurting our country;
it is also giving the industry a bad name.
One of the recommendations that has come to my attention is
that maybe we might have Congress pass a bill to force BP to
divest all of its U.S. interests, which would send a strong
message to all of the other companies that are considering
trying to get away with that kind of action.
Second, do we have adequate baseline information or maps of
the shorelines, the barrier islands, and the wetlands to be
able to quantify the impact the oil spill is having on these
valuable resources? If not, maybe--or I know you are utilizing
resources from the bureau and USGS to gather information so
they can accurately assess the damages that BP can be held
accountable for.
And referring to the Exxon Valdez, that was 41 years ago, I
believe. And they are still having impacts. I know BP
professes, at least in the last hearing, that they will be
responsible for paying any and all claims. Well, that may be
well and good, but can they replace lives? How about those
people that were killed?
And the third issue is mental health services that some of
the families and some of the people that are being affected by
this spill in that area will have need of because there were
some suicides, if I remember correctly, out of some of the
other accidents that happened. And then are you considering any
addition to your guidelines for employees and entering such a
statement as to there will be Federal prosecution for those
that have been playing patsy with the industries.
And my understanding, of course, is that we also have that
same kind of issue with water. Now you can reply.
Mr. Hayes. Thank you, Congresswoman. And it is a pleasure
to work with you on water issues. This is a different kind of
water issue than we have been working on. Just to take your
questions in order, I will defer to Liz Birnbaum in terms of
the BP wells, in terms of the numbers. I will say that there
are in the Gulf of Mexico 1,988 deepwater wells currently, and
35,000 shallow water wells. So there has been a significant
amount of drilling activity here over the last several years.
In terms of your second question, do we have good maps, are
we doing a careful job of evaluating the potential impacts on
coastal resources, that has actually been a very important
initiative we have had in the recent weeks. We have had
National Parks Service, Fish and Wildlife Service, BLM, and
other--NOAA, EPA folks, but particularly our resource agency
folks doing coastal assessments and baseline analysis before
the oil hits so that we will be able to quantify the damage.
And the fact that the spill stayed offshore for the first
couple of weeks provided us with that opportunity to do that.
Mrs. Napolitano. OK. Mr. Hayes, before you go on, you did
not fully answer the first question because I was asking the
number of BP wells, deep sea wells.
Mr. Hayes. Yes. And I will have to defer to the Director of
MMS. I do not know the answer to that, unfortunately.
Mrs. Napolitano. Thank you.
Mr. Hayes. In terms of mental health assistance, I assume
that that is available, and it should be available. And we will
be happy to pass along that concern to Thad Allen, who runs the
national incident command.
And finally, have we provided guidelines to employees, made
it clear that employees who have ethical issues will be
prosecuted, the answer is yes. In fact, just yesterday morning,
in connection with the release of the Inspector General's
report, the Secretary made clear that if there were violations
of ethical concerns, folks would be fired, prosecuted, whatever
was appropriate. And in fact, he immediately put the
individuals identified in the Inspector General's report on
administrative leave precisely for that purpose. That follows
up on the same approach that he took upon coming into office in
January 2009, in connection with the Lakewood, Colorado
concerns that had been raised by the Inspector General.
Mrs. Napolitano. Right. But I just want to be sure that not
only in this particular agency but all of the other agencies in
the Department of the Interior.
Mr. Hayes. Yes.
Mrs. Napolitano. Simply because this could happen again,
and it is probable. Bureaucracy maintains.
Mr. Hayes. Right.
Mrs. Napolitano. And unless we take steps to ensure that
they are aware that if they are dilly dallying, that they all
will be held responsible to the full extent of the law.
Mr. Hayes. Yes. We have really worked hard to promote a new
sensitivity to ethics in the Department. It is one of the
Secretary's highest priorities, and we will remain vigilant
throughout the Department, Congresswoman, not just at MMS.
Mrs. Napolitano. Well, thank you very much, and you have
been a great pleasure to work with, sir. Thank you, Mr. Chair.
The Chairman. Thank you, Mr. Deputy Secretary. We
understand you have a meeting at the White House in 20 minutes,
so we will allow you to leave at this point.
Mr. Hayes. Thank you very much. I appreciate the chance to
be with you, and I am impressed with your ability to avoid
lunch and bathroom breaks, and your commitment to public
service in all of that regard.
The Chairman. I am the only one that has been able to last.
Mr. Deputy Secretary, I join with many of my colleagues that
have already expressed deep appreciation to you for the
tremendous number of hours that you have spent on this tragedy,
tremendous sacrifice to yourself, to your family, and we really
appreciate it. Thank you for your service.
Our next witness is Mary L. Kendall, the Acting Inspector
General, U.S. Department of the Interior, who has been with us
all morning. And we do appreciate your patience, and you may
proceed as you desire.
STATEMENT OF MARY L. KENDALL, ACTING INSPECTOR GENERAL, U.S.
DEPARTMENT OF THE INTERIOR
Ms. Kendall. Thank you, Mr. Chairman. Mr. Chairman and
members of the Committee, I thank you for the opportunity to
testify today about a recent Office of Inspector General report
that addresses a number of issues concerning the Minerals
Management Service at the Department of the Interior.
As you well know, we have previously identified
programmatic weaknesses and some egregious misconduct within
MMS, the later of which received considerable coverage in the
press and scrutiny by this Committee, as well as others. In the
report released this week, we found more of the same, although
the misconduct is dated, arguably less egregious, and
considerably less salacious than that in our report issued in
2008 about misconduct in the royalty-in-kind program.
As a result, we issued our most recent investigative report
according to our routine protocol, providing a copy to the
Department and requesting a formal response in 90 days, at
which point we would provide copies of the report to cognizant
committees and post it to our website.
Given the events of April 20th of this year, however, this
report had become anything but routine. We expedited its
release. While I neither condone nor excuse the behavior
chronicled in this, our most recent report on MMS, for the most
part the improper conduct of the employees at the Lake Charles
District Office preceded the termination of the regional
supervisor in 2007 for his gift acceptance. And, as our report
indicates, this behavior appears to have drastically declined.
As such, I am more concerned about the environment in which
these inspectors operate and the ease with which they move
between industry and government. I am also concerned about the
conduct of industry representatives, something we also
identified in our 2008 report. That they should think it
permissible to fraternize and provide Federal government
employees with gifts after all of the media coverage of this
practice is hard to fathom, but may be informed by the
environment as well.
While not included in our report, we discovered that the
individuals involved in the fraternization and gift exchange,
both government and industry, have often known one another
since childhood. Their relationships were formed well before
they joined either industry or government. MMS relies on the
ability to hire employees with industry experience. And in my
very brief but intense experience in this arena the past month
or so, the MMS employees that I have met who have come from
industry are highly professional, extremely knowledgeable, and
passionate about the job they do.
As you know, all of the OIG reports related to MMS have
made headlines, some more sensational than others. This report
has done the same. Headlines, however, are not our goal.
Rather, our goal has always been and is today to effect
positive change. To this end, I must credit the Department for
the seriousness with which it has taken the findings contained
in this report, and for taking swift action in response to the
misconduct and the challenges inherent to the industry-
government dilemma.
As you also know, Secretary Salazar has announced that MMS
will be split into two distinct bureaus under the Assistant
Secretary for Land and Minerals Management, and a third
independent office for the collection of royalties under the
Assistant Secretary for Policy, Management, and Budget. As this
reorganization progresses, I am hopeful that the Department
will incorporate our recommendations for programmatic
improvements. These must, however, be bolstered with an
emphasis on ethics to include controls and strong oversight.
We are pleased with Secretary Salazar's continued emphasis
on ethics, and MMS's preliminary response to our most recent
report, indicating that it will, among other things, enhance
ethics training, specifically for its inspectors, and establish
controls, like a two-year waiting period to further ensure
ethical compliance.
The final element is strong oversight. In the fall of 2008,
Inspector General Earl Devaney testified before this Committee,
describing what was then a fledgling office within the Office
of Inspector General, now called our Royalty Initiatives Group.
Since that time, we have also established an investigative unit
dedicated to energy issues, and have expanded our oversight
coverage beyond MMS to the energy and minerals program at the
Bureau of Land Management.
Until recently, these two offices had been dedicated to the
royalties-related oversight and improvements. Since the events
of April 20th, it has become increasingly clear that we must
expand their scope to providing oversight of the operational,
environmental, safety inspection, and enforcement aspects of
energy production on Federal lands and in the Outer Continental
Shelf.
We have begun a multi-pronged effort to address these
issues as quickly and thoroughly as possible, including an
inquiry into whether or not the ethics issues in MMS have in
fact ceased. We are also conducting an investigation into the
actions of MMS officials concerning the approval and inspection
of the operations on Deepwater Horizon.
Beyond these efforts, which are clearly spurred by the
immediate urgency of the matter at hand, we will focus on
building our oversight capacity beyond royalties into the areas
of safety and oversight of drilling operations, both off and on
shore.
This concludes my prepared testimony today. I would be
happy to answer any questions.
[The prepared statement of Ms. Kendall follows:]
Statement of Mary L. Kendall, Acting Inspector General,
U.S. Department of the Interior
Mr. Chairman and members of the Committee, I want to thank you for
the opportunity to testify today about a recent Office of Inspector
General (OIG) report that address a number of issues concerning the
Minerals Management Service (MMS) at the Department of the Interior
(Department or DOI).
I will keep my remarks brief today, as I believe that the body of
our work over the last several years speaks for itself. We have
identified programmatic weaknesses and egregious misconduct, the latter
of which received considerable coverage in the press and scrutiny by
this committee, as well as others.
In the report released this week, we found more of the same,
although the misconduct is arguably less egregious, and considerably
less salacious, than that in our report issued in 2008 about misconduct
in the Royalty in Kind program. For this reason, we issued our
investigative report under our routine protocol, providing a copy to
the Department and requesting a formal response in 90 days, at which
point, we intended to provide copies of the report to cognizant
committees, and post it to our website. Given the events of April 20 of
this year, however, this report had become anything but routine.
While I neither condone nor excuse the behavior chronicled in this,
our most recent report on MMS--gift-acceptance, fraternizing with
industry, pornography and other inappropriate materials on government
computers, and lax handling of inspection forms--I am more concerned
about the environment in which these inspectors operate, and the ease
with which they move between industry and government.
I am also concerned about the conduct of industry representatives,
something that stems from our 2008 report; that they should think it
permissible to fraternize and provide Federal Government employees with
gifts after all the media coverage of this practice is somewhat hard to
fathom, but may be informed by the environment, as well. While not
included in our report, we discovered that the individuals involved in
the fraternizing and gift exchange--both government and industry--have
often known one another since childhood. Their relationships were
formed well before they joined industry or government. MMS relies on
the ability to hire employees with industry experience, and in my very
brief, but intense, experience in this arena the past three-plus weeks,
the MMS employees I have met are highly professional, extremely
knowledgeable, and passionate about the job they do.
As you know, all the OIG reports related to MMS have made
headlines, some more sensational than others. That, however, was never
our goal. Rather, our goal has always been, and is today, to effect
positive change. To this end, I must credit Secretary Salazar,
Assistant Secretary Wilma Lewis and MMS Director Liz Birnbaum for the
seriousness with which they took the findings contained in this report
and for taking swift action in response to the misconduct and the
challenges inherent to the industry/government dilemma.
As you also know, Secretary Salazar has announced that MMS will be
split into two distinct bureaus under the Assistant Secretary for Land
and Minerals Management and a third independent office for the
collection of royalties under the Assistant Secretary for Policy,
Management and Budget. As this reorganization progresses, I am hopeful
that the Department will reconsider some of our recommendations for
programmatic improvements. These must, however, be bolstered with
controls and strong oversight to ensure that these new entities do not
simply absorb the same weaknesses that have been identified in MMS.
In the fall of 2008, Inspector General Earl Devaney testified
before this committee, describing what was a fledgling office within
the OIG, now called our Royalty Initiatives Group, (aptly known as
RIG). Since that time, we have established an investigative unit
dedicated to energy issues, and have expanded our oversight coverage
beyond MMS to the energy and minerals programs at the Bureau of Land
Management. Until recently, these two offices have been dedicated to
royalties-related oversight and improvements. Since the events of April
20th, it has become increasingly clear that we must expand their scope
to providing oversight of the operational, environmental, safety,
inspection and enforcement aspects of energy production on federal
lands and in the OCS. We have begun a multi-pronged effort to address
these issue areas as quickly and thoroughly as possible. We are also
conducting an investigation into the actions of MMS officials
concerning the approval and inspection of the operations on Deepwater
Horizon.
Mr. Chairman, this concludes my prepared testimony today. I would
be happy to answer any questions that you or other members have.
______
UNITED STATES DEPARTMENT OF THE INTERIOR
OFFICE OF INSPECTOR GENERAL
Washington, DC 20240
May 24, 2010
Memorandum
To: Secretary Salazar
From: Mary L. Kendall, Acting Inspector General
Subject: Investigative Report--Island Operating Company, et. al.
With this memorandum, I am forwarding our investigative report
entitled ``Island Operating Company, et. al'' which addresses a number
of allegations that Minerals Management Service (MMS) employees at the
Lake Charles District Office had accepted gifts from oil and gas
production companies.
At the outset, I want to note that all of the conduct chronicled in
this report occurred prior to 2007, and pre-dating your tenure as
Secretary and your January 2009 Ethics Guide. While this conduct is
dated, it is more evidence that there was, indeed, a much-needed change
to the ethical culture of MMS.
Initially, the Office of Inspector General issued this
investigative report according to our routine protocol, providing a
copy to MMS and requesting a formal response in 90 days; upon receipt
of that response, we would then provide copies of the report to
cognizant committees, and post it to our website. Unfortunately, given
the events of April 20 of this year, this report had become anything
but routine, and I feel compelled to release it now. We have, however,
already received a preliminary response from MMS to this report.
Of greatest concern to me is the environment in which these
inspectors operate--particularly the ease with which they move between
industry and government. While not included in our report, we
discovered that the individuals involved in the fraternizing and gift
exchange--both government and industry--have often known one another
since childhood. Their relationships were formed well before they took
their jobs with industry or government. MMS relies on the ability to
hire employees with industry experience. I am pleased that MMS has
advised us that it will enhance ethics training specifically for its
inspectors to address this unique industry/government dilemma, and will
establish controls, like a two year waiting period, to minimize the
potential for conflicts of interest.
We appreciate MMS' prompt and thoughtful response to our report
even as it responds to the Deepwater Horizon disaster in the Gulf of
Mexico, and your announcement to reorganize MMS into three distinct
bureaus.
If you have any questions or wish to discuss this report further,
please do not hesitate to contact me.
Attachments
______
UNITED STATES DEPARTMENT OF THE INTERIOR
OFFICE OF INSPECTOR GENERAL
Washington, D.C. 20240
APR 12 2010
Memorandum
To: S. Elizabeth Birnbaum, Director, Minerals Management Service
From: John E. Dupuy, Assistant Inspector General for Investigations
Subject: Report of Investigation--Island Operating Company et al.,
Case No. PI-GA-09-0102-1
The Office of Inspector General recently concluded an investigation
based on allegations that Minerals Management Service (MMS) inspectors
in the Lake Charles District had accepted gifts from oil and gas
production company representatives. These gifts reportedly included
hunting and fishing trips from the Island Operating Company (IOC), an
oil and gas production company working on oil platforms regulated by
the Department.
During our investigation, a number of MMS employees at the Lake
Charles District office admitted to attending sporting events prior to
2007 in which oil and gas production companies sponsored teams, as well
as receiving lunches and accepting gifts. Through numerous interviews,
we found a culture where the acceptance of gifts from oil and gas
companies were widespread throughout that office, but appeared to have
declined after the investigation and termination of Don Howard in
January 2007 for his acceptance of a gift from one of these companies.
Two employees at the Lake Charles office also admitted to using
illegal drugs during their employment at MMS. We found that many of the
inspectors had e-mails that contained inappropriate humor and
pornography on their government computers. Finally, we determined that
between June and July 2008, one MMS inspector conducted four
inspections of IOC platforms while in the process of negotiating and
later accepting employment with that company.
We are providing this report to you for whatever administrative
action you deem appropriate. Please send a written response to this
office within 90 days advising us of the results of your review and
actions taken. Also enclosed is an Investigative Accountability Form
that should be completed and returned with your response. Should you
need additional information concerning this matter, please contact me
at (202) 208-5351.
Attachment
______
Investigative Report
Island Operating Company et al
Report Date: March 31,2010
Date Posted to Web: May 25,2010
This report contains information that has been redacted pursuant to 5
U.S.C. Sec. Sec. 552(b)(6) and (b)(7)(C) of the Freedom of Information
Act. Supporting documentation for this report may be obtained by
sending a written request to the OIG Freedom of Information Office.
RESULTS IN BRIEF
We initiated this investigation after receiving an anonymous
letter, dated October 28, 2008, addressed to the U.S. Attorney's office
in New Orleans, LA, alleging that a number of unnamed Minerals
Management Service (MMS) employees had accepted gifts from oil and gas
production company representatives. The complainant specifically
suggested that MMS employees be investigated for accepting gifts,
including hunting and fishing trips, from the Island Operating Company
(IOC), an oil and gas production company working on oil platforms
regulated by the Department of the Interior (DOI).
During the course of our investigation, a number of MMS employees
at the Lake Charles, LA district office admitted to attending sporting
events prior to 2007 in which oil and gas production companies
sponsored teams, as well as receiving lunches and accepting gifts.
Through numerous interviews, we found that a culture of accepting gifts
from oil and gas companies was prevalent throughout the MMS Lake
Charles office; however, when MMS supervisor Don Howard, of the New
Orleans office, was investigated and later terminated in January 2007
for his gift acceptance, this behavior appears to have drastically
declined.
During our investigation, two MMS employees at the Lake Charles
office admitted to using illegal drugs during their employment at MMS.
We also found that many of the inspectors had e-mails that contained
inappropriate humor and pornography. Finally, we determined that
between June and July 2008, an MMS inspector conducted four inspections
on IOC platforms while in the process of negotiating and later
accepting employment with the company. We presented our findings to the
U.S. Attorney's Office for the Western District of Louisiana, which
declined prosecution. We are providing a copy of this report to the MMS
Director for any administrative action deemed appropriate.
BACKGROUND
MMS has leased areas in the Gulf of Mexico to about 130 qualified
oil and gas companies such as Shell, Exxon, Chevron, British Petroleum,
Apache Corporation, and Newfield Exploration Company. Approximately
4,000 offshore platform facilities are located in the Gulf of Mexico
throughout four MMS districts in Louisiana--Lake Charles, Lafayette,
New Orleans, and Houma--and one in Lake Jackson, Texas. The IOC is one
of many companies contracting with oil and gas platform owners in the
Gulf of Mexico to ensure that they operate in compliance with all
applicable federal regulations. The Outer Continental Shelf Act
requires that MMS inspect these platforms for safety and operational
compliance and, if necessary, issue violations known as incidents of
non-compliance to the owners of the facilities to correct deficiencies.
Between 2004 and 2009, platform owners contracting with the IOC were
fined $572,500 because of violations.
MMS also issues ``safe awards'' to both oil and gas companies and
production companies with the lowest number of violations and civil
penalties in each district. The safe awards are highly sought by
production companies because they help demonstrate they are operating
safely. The companies who receive these awards use them to promote and
market their businesses. The IOC received the safe award for the Lake
Charles district in 2004 and the Lafayette, LA district in 2006.
This investigation follows an investigation by our office into the
activities of Don Howard, the former regional supervisor at the MMS
office in New Orleans, who was terminated in January 2007 for accepting
gifts from an offshore drilling contractor (Case No. PI-PI-06-0153-1).
On November 5, 2008, Howard pled guilty to making false statements for
failing to report those gifts on an OGE Form 450 (Office of Government
Ethics Confidential Financial Disclosure Report). Prior to our
investigation of Howard, receiving gifts such as hunting trips, fishing
trips, and meals from oil companies appears to have been a generally
accepted practice by MMS inspectors and supervisors in the Gulf of
Mexico region. After 2007, the MMS Southern Administrative Service
Center Human Resource Office in New Orleans began sending e-mails
reminding employees that they were not allowed to accept gifts from
prohibited sources.
DETAILS OF INVESTIGATION
We initiated this investigation after receiving an anonymous
letter, dated October 28, 2008, addressed to the U.S. Attorney's office
in New Orleans, LA, alleging that a number of MMS district office
personnel had accepted gifts, including admission to sporting events
and hunting and fishing trips, from oil and gas production companies.
The complainant specifically suggested that MMS employee interactions
with the Island Operating Company should be investigated.
During our investigation, we reviewed hundreds of e-mails and
financial disclosure reports from MMS employees. We also interviewed 15
MMS inspectors and supervisors. We developed confidential sources
during our investigation, who provided additional information
pertaining to MMS employees at the Lake Charles District Office,
including acceptance of a trip to the 2005 Peach Bowl game that was
paid for by an oil and gas company; illicit drug use; misuse of
government computers; and inspection report falsification. During our
review of MMS employee e-mails, we also obtained information that an
MMS employee was negotiating for employment with the IOC while he was
still performing inspections on platforms operated by the company.
Gifts and Gratuities
According to a confidential source, a number of Lake Charles office
employees participated in shooting contests sponsored by offshore
production companies. The source said these shooting activities
happened in the past but were no longer occurring. The source also said
that in approximately late 2005, an offshore operating company provided
a former MMS inspector at the Lake Charles office who now works for the
IOC with air transportation on a company plane to a college football
game. The source thought the company also provided game tickets to this
inspector but did not know for sure.
E-mails for MMS inspectors from the Lake Charles office revealed
that in 2005, 2006, and 2007, various offshore companies invited MMS
personnel to events such as skeet-shooting contests, hunting and
fishing trips, golf tournaments, crawfish boils, and Christmas parties.
Some e-mails confirmed that MMS inspectors attended these events.
In an e-mail dated January 3, 2006, to other MMS employees, the
former MMS inspector at the Lake Charles office stated, ``The 40 to 3
ass whipping LSU put on Miami was a lot more impressive in person. My
daughter and I had a blast''. The next day, the inspector sent another
e-mail attaching pictures, including the plane on which he, and an oil
and gas production company official, and others flew to Atlanta for the
2005 Peach Bowl game.
Confidential financial disclosure reports from 2005 through 2009
for Gulf of Mexico region employees document that only one individual
reported receiving gifts and reimbursement for travel. We confirmed
that all Gulf of Mexico region employees received annual ethics
training.
Federal regulations and agency ethics rules prohibit employees from
directly or indirectly soliciting or accepting gifts, including meals,
over $20 at one time and $50 per year from a prohibited source. Federal
employees are also prohibited from accepting gifts given in association
with their official position. They are required to declare gifts and
travel reimbursements aggregating over $335 during the reporting
period, from any one source, as well as the identity of the source, in
an annual financial disclosure report. For travel-related gifts in
association with their official position, employees must document the
travel itinerary, including dates, and the nature of the expenses.
We showed MMS Lake Charles District Manager Larry Williamson nine
photos named, ``LSU football pictures,'' that we discovered on a former
MMS inspector's computer. Williamson identified two MMS inspectors in
the pictures, which showed tailgating festivities at the Peach Bowl
game.
According to Williamson, many of the MMS inspectors had worked for
the oil and gas industry and continued to be friends with industry
representatives. ``Obviously, we're all oil industry,'' he said.
``We're all from the same part of the country. Almost all of our
inspectors have worked for oil companies out on these same platforms.
They grew up in the same towns. Some of these people, they've been
friends with all their life. They've been with these people since they
were kids. They've hunted together. They fish together. They skeet
shoot together....They do this all the time.''
Williamson said MMS began providing additional ethics training to
employees regarding acceptance of gifts shortly after the Don Howard
investigation. He said MMS made it clear that even having lunch with an
industry representative would not be allowed. Williamson explained that
MMS employees now leave meetings when meals are provided.
Williamson admitted to receiving a Casio watch that he valued at
$20 from ``PennEnergy'' as a ceremonial remembrance gift approximately
5 or 6 years ago. According to Williamson, the watch stopped working
after about 6 or 8 months.
Marcus Mouton, an MMS supervisory inspector, admitted that he
participated in skeet-shooting fundraisers sponsored by nonprofit
organizations and charities in the past. He said various offshore
companies sponsored a five-person team at the events, which would cost
the production companies about $500, or $100 per person, and he
attended less than 10 over his career. He said he had thought
participating in the events was acceptable because many MMS employees,
including senior managers, attended and participated in them. He
explained that he did not think offshore companies received any favors
in exchange for inviting MMS inspectors to these events. According to
Mouton, he stopped attending these events after the investigation of
Howard and the appointment of a new regional manager.
We showed the photos of the Peach Bowl trip to Mouton, who
identified Carlos Kibodeaux, a former foreman from Production
Management Incorporated, an offshore production company that formerly
operated in the Gulf of Mexico, and his wife; a MMS inspector and his
wife; and another MMS inspector and his daughter.
When we interviewed one of the inspectors, he admitted that he had
traveled to Atlanta, GA, for the 2005 Peach Bowl football game between
Louisiana State University and the University of Miami. He said he
attended the game with his wife, and another inspector attended with
his daughter, and Kibodeaux and his wife.
Agent's Note: Pictures of the tickets show that they each cost $70.
This inspector claimed that he reimbursed Kibodeaux for the Peach
Bowl tickets, gave the private pilot $100 to $200, and bought his own
meals. He said he was not sure who paid for the hotel or ground
transportation. He said he never thought to report the trip as a gift
on his confidential financial disclosure report.
During a second interview with this inspector he told investigators
that he had paid for his hotel room and gave the pilot a $100 tip but
did not pay for the Peach Bowl tickets. He admitted that he should not
have accepted the trip from Kibodeaux, even though they were friends,
because of how others might perceive this. He explained that he was a
``big LSU fan,'' and he could not refuse the tickets.
Agent's Note: The inspector later sent an e-mail to the Office of
Inspector General admitting to participating in several sheet-shooting
events, including the 2009 ``Evangeline Tournament''. He said, however,
that he paid his own entrance fee. He also admitted to winning two
shotguns in drawings at two of the events between 2002 and 2005.
An MMS clerical employee informed investigators that one inspector
at the MMS Lake Charles Office, had told her ``everyone has gotten some
sort of gift before at some point'' from an oil and gas company
representative. She said that on a number of occasions, two former MMS
inspectors frequently took most of the Lake Charles Office to lunch.
We interviewed one of the former MMS inspectors and he said that
during his tenure at MMS, no offshore company or company official paid
fees for him to hunt or fish. He admitted, however, to participating in
five sport- and skeet-shooting fundraiser tournaments in which an oil
and gas company paid the entrance fees for his team. He explained that
participating in those tournaments ``used to be an accepted practice,''
and ``everybody was doing it.'' The inspector said he also remembered
playing in a golf tournament sponsored by Baker Energy, but there was
no entrance fee. In addition, he said that from 2000 through 2007,
about six or seven times a year, various oil and gas companies paid for
his meals. He stopped participating in many of these events, however,
around the time the Office of Inspector General started investigating
Howard, he said, and a once-accepted practice quickly became
unaccepted.
This former inspector said he did not consider the trip to the 2005
Peach Bowl game to be a gift from an oil and gas company. He viewed it
as three friends going to a football game. According to him, another
MMS inspector called him and asked if he wanted to go to the game. He
explained that Kibodeaux, a friend who worked for Production Management
Incorporated, had an acquaintance or client who had scheduled the trip
but could not make it. The inspector explained that no airfare was
associated with the trip because Kibodeaux's acquaintance was already
scheduled to go to Atlanta for a business meeting. He said he
contributed $200 to $300 for fuel and gave the pilot another $200. In
addition, the former MMS inspector declared that he gave another $100
to $150 for ground transportation and paid for his own meals. He could
not provide any receipts to substantiate these costs.
After we showed the nine pictures to the former MMS inspector that
we recovered from his computer, he identified Kibodeaux and his wife,
another MMS inspector and his wife, his daughter, and himself.
We showed this former MMS inspector an e-mail dated April 6, 2006,
in which he told an employee with Conoco Phillips, that he had accepted
gifts from certain ``good friends'' in the oil and gas industry. The e-
mail chain began with the inspector sending the Conoco Phillips
employee an e-mail with the subject line, ``Civil Penalty Case recaps--
1st quarter 2006.'' He stated, ``These are the fines that we assessed
to different companies for breaking the rules.'' The Conoco Phillips
employee responded, ``[E]ver get bribed for some of that?'' He replied,
``They try all the time.'' The Conoco Phillips employee responded back,
``[E]ver take em?'' the inspector said, ``I accept 'gifts' from certain
people. But we have VERY strict ethic standards as you could imagine.''
The Conoco Phillips employee replied, ``[CJertain people, meaning
women?'' the inspector said, ``No. meaning good friends that I wouldn't
write up anyway.''
When we asked the former MMS inspector to explain this e-mail, he
replied, ``Maybe I was referring to a skeet shoot. I don't know.'' He
said admissions to skeet-shooting events were the only gifts he
received from companies, which cost about $100 per person. He denied
that he ever received a gift in exchange for not carrying out his
official duties. He said he did, however, receive smaller gifts from
production companies, including jackets, baseball caps, and pocket
knives.
He admitted that after resigning from MMS in August 2008, he had
taken MMS employees to lunch on about five occasions. Although the same
employees did not attend every time, he explained that he had taken the
majority of inspectors, and on one occasion two engineers were present
as well. He claimed that he paid for those employees' lunches with his
own personal funds, however, and the lunches did not exceed $10 per
person.
Carlos Kibodeaux, owner of Contract Operator Production Services,
an offshore production service company, told investigators that he had
been the offshore manager of Production Management Incorporated from
2004 through 2006. He acknowledged that an MMS inspector and his
daughter and another MMS inspector and his wife had accompanied him and
his ex-wife to the 2005 Peach Bowl game. He said two of his friends had
six tickets to the game but could not go, so they offered him the
tickets. Since his friends owned the plane, they also told him they
would drop him off in Atlanta and pick him up after a planned trip to
Miami. Kibodeaux said he accepted the tickets and invited the two
inspectors, the two biggest ``LSU'' fans he knew. Contrary to the
inspector's statements, Kibodeaux indicated that collectively, he and
the two inspectors gave the pilot $150 for fuel. Kibodeaux also said
everyone paid for their own rooms, and he paid a total cab fare of $30
for the group.
Michael Saucier, the Regional Supervisor of Field Operations for
MMS in New Orleans, LA, said he did not believe MMS employees could
attend skeet-shooting events and fishing tournaments sponsored by oil
and gas companies; however, he added that prior to the Howard
investigation, many thought their attendance at those types of events
was acceptable.
Another MMS lead inspector, said that with the exception of Howard,
he had no knowledge of anyone else at MMS doing anything wrong. He
claimed that he did not know many of the inspectors on a personal level
and would not know about any instances of ethical lapses.
Another MMS inspector at the Lake Charles office, said he had no
knowledge of anyone receiving entrance to skeet-shooting events,
hunting trips, or gifts of any sort from offshore oil and gas
companies. According to this inspector, after their departure from MMS,
the two inspectors bought lunch for Lake Charles office inspectors, on
a few occasions.
Another inspector at the MMS Lake Charles office, admitted that he
participated in 12 different events paid for by offshore oil and gas
companies, including production companies, such as golf tournaments,
skeet-shooting events, and hunting and fishing tournaments during the
course of his employment with MMS. He said he received a shotgun as a
``door prize'' at one of the events in 2002. He also said that since
his employment at MMS began in 2000, oil and gas company
representatives bought him lunch about three or four times a year. He
indicated, however, that ``everything came to an end'' after the
investigation of Howard. An MMS inspector said MMS management told the
inspectors, ``If you all are going to shoot, pay your own way; don't
accept any more invitations.''
According to this MMS inspector, what the oil and gas companies
received for paying inspectors' entrance fees and buying their lunch
was a ``better working relationship.'' He said the companies were not
``buying the inspectors off' by hunting, fishing, or being friends with
them. He claimed that he had never ignored his duties as an inspector
by not writing a violation or incident of noncompliance because of
friendship or gifts.
Illegal Drug Use
In addition to providing information about the Peach Bowl trip, the
confidential source claimed that an MMS inspector had used drugs,
including crystal methamphetamine. The source claimed to have heard
that this inspector might have used these drugs offshore on the
platforms.
An MMS clerical employee told investigators that she began using
cocaine and methamphetamine with an inspector when she started working
at MMS approximately 2 years ago. According to the clerical employee,
the inspector recently told her that he had not used crystal
methamphetamine in the past 3 or 4 months. While the clerical employee
said she had no knowledge of the inspector's use of drugs while at
work, she said that in the past, he had used crystal methamphetamine
the night prior to coming to work at MMS.
During his interview, the MMS inspector initially denied using
crystal methamphetamine, but he later admitted to it. He claimed that
the last time he used crystal methamphetamine was the weekend of the
2009 Super Bowl, in February. He explained that he had never possessed
or used crystal methamphetamine while at work but admitted that he
might have been under the influence of the drug at work after using it
the day before.
Inappropriate Use of Government E-Mail
The confidential source also informed us that some of the MMS Lake
Charles inspectors had pornography or other improper materials saved on
their MMS computers.
Federal and department regulations prohibit the use of government
office equipment for activities that are illegal, inappropriate, or
offensive to coworkers or the public. This includes the use of e-mail
to either send or receive sexually explicit or discriminatory material,
gambling, or communications that ridicule others on the basis of race,
creed, religion, color, gender, disability, age, national origin, or
sexual orientation.
We reviewed the e-mail accounts of MMS employees at the Lake
Charles and New Orleans offices from 2005 to 2009. We found numerous
instances of pornography and other inappropriate material on the e-mail
accounts of 13 employees, six of whom have resigned. We specifically
discovered 314 instances where the seven remaining employees received
or forwarded pornographic images and links to Internet websites
containing pornographic videos to other federal employees and
individuals outside of the office using their government e-mail
accounts.
Falsification of Inspection Forms
Another confidential source told investigators that some MMS
inspectors had allowed oil and gas production company personnel located
on the platform to fill out inspection forms. The forms would then be
completed or signed by the inspector and turned in for review.
According to the source, operating company personnel completed the
inspection forms using pencils, and MMS inspectors would write on top
of the pencil in ink and turn in the completed form.
We reviewed a total of 556 files to look for any alteration of
pencil and ink markings, notations, or signatures. We found a small
number with pencil and ink variations; however, we could not discern if
any fraudulent alterations were present on these forms. According to a
lead MMS inspector, MMS inspectors often used pencil to complete
inspection forms. He said that anyone from MMS involved in the platform
inspections could author the inspection form, and inspectors routinely
signed each other's names on the forms.
Seeking Employment
During our review of MMS employee e-mails, we found several
referencing employment discussions between a former MMS inspector and
the IOC. According to the Ethics Guide for DOI Employees, federal
employees are required to receive a written waiver from an ethics
counselor before participating in any particular matter at DOI that
affects the financial interest of a prospective employer. The Office of
Government Ethics interprets any form of communication regarding
prospective employment with a nonfederal source to be seeking
employment, other than requesting a job application.
In a June 12, 2008 e-mail, an IOC employee, told a former MMS
inspector the IOC would like to hire him in the compliance department.
In an e-mail dated June 16, 2008, the inspector discussed his
excitement about coming back to work for the business with another IOC
employee. The inspector said, ``I'm excited about coming back to work
with IOC. Do you think [an IOC official] would go with $65,000 a year?
And all the trimmings you told me about.'' The IOC employee replied on
June 17, 2008, ``Yes I think [he] will. When you hire on you will talk
to him''. On June 19, 2008, the IOC employee urged the inspector to
come to the IOC and meet with ``[an IOC official]'' regarding potential
employment.
Agent's Note: The inspector resigned from MMS on August 8, 2008, to
work for the IOC.
After discovering that the MMS inspector had engaged in employment
negotiations with the IOC and later accepted a position, we conducted a
review of inspections in the New Orleans district from 2005 through
2009 to determine if he conducted any of the inspections of the IOC. We
discovered that the inspector, who was employed by MMS from July 2,
2007, through August 8, 2008, and had previously worked for the IOC,
conducted 51 inspections of IOC platforms, 47 of them between October
1, 2007, and May 19, 2008, resulting in 16 incidents of noncompliance.
After his employment negotiations began on June 12, 2008, the inspector
conducted four inspections of IOC platforms, none of which resulted in
an incident of noncompliance.
DISPOSITION
On October 15, 2009, the U.S. Attorney's Office for the Western
District of Louisiana declined this case for prosecution. This case is
being referred to the Director of the Minerals Management Service for
any action deemed appropriate.
______
Investigative Report
Donald C. Howard
Report Date: February 16, 2009
Date Posted to Web: May 25, 2010
This report contains information that has been redacted pursuant to 5
U.S.C. Sec. Sec. 552(b)(6) and (b)(7)(C) of the Freedom of
Information Act. Supporting documentation for this report may
be obtained by sending a written request to the OIG Freedom of
Information Office.
This investigation was initiated in 2006 based on allegations made
by Chris Oynes, Regional Director, Gulf of Mexico Region (GOMR),
Minerals Management Service (MMS), U.S. Department of the Interior
(DOI), New Orleans. Oynes alleged that Donald C. Howard, Regional
Supervisor, GOMR, had attended one or more hunting trips with officials
of offshore oil and gas companies.
The investigation disclosed that between August 2004 and July 2006,
Howard accepted an offshore fishing trip, two hunting trips involving
transportation on a company airplane, meals, and other gifts from Rowan
Drilling Company, Inc. (Rowan), an offshore drilling contractor
affected by MMS regulations and decisions. These gifts were valued at
approximately $6,678. Howard failed to report at least one of these
gifts as required on a Confidential Financial Disclosure Report (Form
OGE-450) he submitted to MMS in October 2005. Subsequent to receiving
these gifts, and at the apparent request of Rowan, Howard improperly
issued a letter directing Rowan to salvage the Rowan Halifax, a Rowan-
operated, offshore drilling rig that sank in the GOMR during Hurricane
Rita in September 2005. At the time, this letter appeared to be
integral to Rowan's efforts to collect $90 million in insurance
proceeds related to the sinking of the Rowan Halifax and other Rowan
drilling rigs.
MMS terminated Howard's employment in January 2007 based on
information provided to them by the OIG. On October 28, 2008, an
information was filed against Howard in U.S. District Court for the
Eastern District of Louisiana, charging him with one count of false
statements (18 U.S.C. Sec. 1001). The charge stemmed from Howard's
failure to report gifts he received from Rowan on the Form OGE-450 he
submitted to MMS in October 2005. Howard pleaded guilty to the
information on November 5, 2008. On February 3, 2009, Howard was
sentenced to one year of probation. He was also ordered to pay a $3,000
fine and a $100 special assessment. In addition, he was ordered to
perform 100 hours of community service at the ``Rebuild Homeless
Center'' in New Orleans.
Based on the above, no additional investigation will be conducted
and this case will be closed.
______
Mr. Miller [presiding]. Thank you very much for your
testimony. And the work, obviously, by this office, and
certainly the testimony early on and the investigations done by
Mr. Devaney I think pointed out all of the problems that we
have discussed here today. And I think they are obviously very
important, and I appreciate your telling the Committee that you
believe that there has been a very serious response by the
Secretary and the Assistant Secretary and the Director of MMS
with regard to these because I know that is how this Committee
and certainly the Chairman that has led the way on these
investigations--we take this very, very seriously. It is
taxpayer monies, it is the environment. It is a lot of very
serious issues.
But I would like to move, if I can, to on your last page. I
am Chair of Education and Labor Committee and deal with OSHA
and deal with worker safety, and the Chairman and myself have
just returned from a hearing on the coal mine safety and the
accident that took place at the Big Branch Mine. And apparently
you are not going to be part of a committee that is going to be
reviewing safety. Is that correct?
Ms. Kendall. Yes. It is the----
Mr. Miller. Are we talking about safety in terms of the
rigs and the environment, or safety with the tragic loss of
life of the 11 workers?
Ms. Kendall. It covers both.
Mr. Miller. It will cover both?
Ms. Kendall. Yes.
Mr. Miller. Because I think this is a very hazardous
industry. As we see, when things go wrong, they can go wrong in
a very big way. And that is not to say that it has--you know, I
think there has been a great reduction, or there appears to be
a substantial reduction, in injuries and the rest of that. We
will find that out. But we have a number of industries where
that does not tell you what can happen when things go wrong.
And there are processes in place in other areas, not in the
Minerals Management Service at the time, but where we changed
the burden of proof when you are engaged in activities or
changes within the chemical industry and other places if you
are moving on.
In this case, they were going to engage in capping this
well. I believe the exploration was done. You are going to get
this rig off and bring in a production facility at some time in
the future. And I do not know, but I would really be interested
in knowing whether then there is a checklist that people go
through about where people are going to be engaged in this
process, how is this going to be handled, and whether the--I
know the Coast Guard, I do not think, does these rigs; they do
ships and vessels. And this, I think, is a hybrid. It is
neither fish nor fowl.
But in my district, if you were going to shut down a
refinery, you would be going through a checklist of what is
going to take place during that time, just as if you were going
to restart that refinery. And I would just hope that you would
look at this in terms of events that take place on these rigs,
where you may want people to stop and think about, now, how is
this transaction going to take place. And it could be as small
as loading and unloading cargo, and can be whether or not you
are going to cap a well and try to change out drilling for
production.
Am I making any sense to you? You are looking at me like--
--
Ms. Kendall. No. Yes, you are.
Mr. Miller. It would not be the first time a witness looked
at me like I was not making any sense.
Ms. Kendall. No.
Mr. Miller. But I think it is a very serious concern. You
know, I have put on our other hats. We lost 11 people on this
rig, and we are starting to get some information about what
took place, and it is not what you would like to be the regular
order, given the transaction that they were going through in
swapping out this well.
Ms. Kendall. Absolutely. Part of the responsibility of this
oversight board is to be informed by what it learns from the
investigation. And I think we have learned a great deal. The
next question becomes what needs to be done in terms of
improvements in the process in MMS's oversight and the like,
what I identified as our next task, which is to send out Office
of Inspector General teams to really dive into these areas and
bring back information probably to be reviewed by a series of
experts since we do not have that technological expertise in
our office, but we do have the capability to go out, collect
information quickly, make a quick analysis, and present it
through the safety oversight board to the Secretary, who then
will probably employ a series of experts, either from the
National Academy of Engineering or from the President's
commission, to review this information.
Mr. Miller. And if I can just finish up, the thinking is
that this would then be incorporated into the discussions of
the reorganization----
Ms. Kendall. Absolutely.
Mr. Miller.--the architecture of MMS, and maybe even the
Coast Guard and/or whatever else. I would certainly hope so,
yes.
Mr. Miller. OK. Thank you. Thank you very much. That is
very helpful.
The Chairman [presiding]. The gentleman from Louisiana, Mr.
Cassidy.
Mr. Cassidy. Thank you, Mr. Chairman. There is a little bit
of a mixed message from your report. You speak about the
concern that folks have known each other so long they
fraternize. On the other hand, you speak of the high level of
professionalism among the people you met. Presumably, some of
the folks you met were those who were fraternizing. So is it
the fraternizing per se or--you see where I am going with that.
Ms. Kendall. I do. The fraternizing certainly is not
acceptable. But one of the--maybe one of the weaknesses is a
weakness in the ethics regulations which allows gift acceptance
if it is based on a personal relationship.
Mr. Cassidy. But I think gifts are allowed to be, if there
is a preexisting relationship. So if two kids went to Sulphur
High School, they both go to Petroleum Engineering at LSU or
Texas A&M or one of the--because there are not that many
petroleum engineering schools. And so there is going to be one
or two degrees of separation between everybody in the field.
Does that make sense?
Ms. Kendall. Yes. Yes, it does.
Mr. Cassidy. So it almost seems if they played on the state
championship team at Sulphur High School in 1971, and now they
are in industry, one is regulatory and one is private, is that
the type of fraternizing you are concerned about?
Ms. Kendall. It is, simply because it is--if you look a the
gift-giving regulations, it would be in violation of the gift-
giving regulations, which are designed not only to effect or
prevent real effect over a government employee's job and how he
or she----
Mr. Cassidy. Now the fraternizing--I see your point, and I
do not mean to interrupt. I just have a limited time. I am
sorry. The fraternizing obviously is important, potentially,
but potentially not, because again I am struck that you say
that the level of professionalism and motivation among the
career employees was great. So it tells me on the one hand they
may know each other, but they still may be willing to throw the
other into the pokey if they are doing a bad job.
Do you have any data on the year-by-year number of
infractions and the intensity of the infractions that have been
meted out, if you will, by the Lake Charles office or other
offices in the Gulf of Mexico?
Ms. Kendall. I do not.
Mr. Cassidy. Because that seems like that is critical. I
mean, if you have a correlation where a--in fact, I am a little
surprised you do not. What you are alleging--I am a little
schizophrenic--is that because of the fraternizing, there are
people who they are going lighter on. But on the other hand,
there is still a level of professionalism. Both of those
statements are in your testimony or report. But on the other
hand, the real issues is, is it impacting enforcement.
Ms. Kendall. Well, we did not find a quid pro quo involved
in this investigation.
Mr. Cassidy. When you say this, you mean the Deepwater
Horizon?
Ms. Kendall. No, no. I am sorry.
Mr. Cassidy. In your IG report.
Ms. Kendall. The Lake Charles investigation. We did not
find quid pro quo either in this or in the MMS investigation
that we conducted out on the royalty-in-kind group. But there
is a clear violation of the ethics regulations and the
acceptance in both instances----
Mr. Cassidy. Put it this way. I think there is a lot of
attention, and there is almost a presumption that if there is a
violation of the ethics code, that in some way it is impacting
the implementation or the enforcement of regulations. But what
I think I am hearing from you is that what we are really
concerned about is a violation of the ethics code, but that
violation does not seem to have had an impact upon enforcement.
Ms. Kendall. Well, I do not know if it had an impact. We
did not find quid pro quo kind of examples. Your suggestion
that we look at the data of the inspection frequency and extent
I think is a good one.
Mr. Cassidy. Now, it also seems to me that you are going to
have a very hard time in the future monitoring--well, let me
back up a little bit. I am struck that the advanced permit to
drill, the APD, is supposed to MMS's ability to sign off on a
drilling plan, in effect doing what Mr. Miller was speaking of,
signing off on the safety of the plan, is it wise, is it not.
Now, was that not done in this case? Or put it this way, is
that not done regularly? Because APDs theoretically prevent
accidents by saying, stop, you cannot do that because that is
not safe. You see where I am going with that.
Ms. Kendall. I am not sure I do. APDs, they must be
approved by MMS. I do not know the technicalities involved in
the APD process, so I really cannot speak to that.
Mr. Cassidy. OK. Now it also seems like--again, there is
going to be one degree of separation between every petroleum
engineer in the United States. It is going to be a relatively
small sorority/fraternity, if you will. And so if you are going
to have a safety board which is going to actually begin to go
out and do oversight, either you are going to put people in a
box and you are not going to let them go to an LSU football
game, which would be a terrible tragedy for all of us, or you
are going to say, well, listen, you know the guy; you went to
grad school together, and now he is earning three times as much
as you in the private sector, and you are in the public sector,
but somehow we are not going to let you transition. It almost
seems inherent in this smallness of this industry is the
problems which you detail.
Ms. Kendall. Well, I think you are right. But the simple
fix would be go to the LSU game and pay your own way.
Mr. Cassidy. Well, that is absolutely true. That is
absolutely true. But I am going back to what you said, how many
of these people have preexisting relationships, and somehow we
are supposed to put a Chinese wall between them once they go
into the regulatory environment.
Ms. Kendall. I do not think that is what I am saying. I am
saying that you remove the appearance of favoritism and
impropriety if you stop the gift-giving. People can be friends
and----
Mr. Cassidy. And so in your follow-up report, will you do
an analysis of the again numbers of infractions and the
severity of infractions meted out over different time periods?
Ms. Kendall. We can certainly do that. The direct of MMS
may be able to give you that information more quickly than I
can.
Mr. Cassidy. Thank you.
The Chairman. Thank you. Let me ask my questions here
first. Thank you very much for the work that you have done.
This report is rather detailed and extensive, and certainly it
took a lot of long hours, and we appreciate it. You may have
heard me earlier, since you have been here all morning, mention
to the Secretary that as much as we would like to see it in a
perfect world, we are never going to have 100 percent honesty,
integrity, purity if you will. That is just impossible to
legislate or make happen.
My question, I guess, is--my thought first is that you need
stiff penalties in order to make it as little as possible what
has occurred here. But what recommendations do you make? I am
not sure, for example, breaking MMS up into three different
departments or agencies or whatever you want to call it is
going to address the problems that you have addressed in your
report.
So what recommendations would you make to the Secretary, or
have you made to the Secretary, or to MMS to address the
problems that you have found?
Ms. Kendall. Well, we have made a number of recommendations
as we have gone along. Most have to do with strengthening
ethics requirements and ensuring----
The Chairman. Or that what the Secretary has already
promulgated upon his taking office?
Ms. Kendall. Yes, and ensuring that that in fact has
happened. And part of the effort that we will be undertaking in
the next couple of months will be to ensure that that in fact
has occurred.
The other is I think that the Secretary can take some very
short-term measures, like instituting a two-year waiting
period. An inspector, say, who comes from Shell, moves to MMS,
should not be allowed to inspect a Shell platform or rig for at
least two years.
The Chairman. There is no waiting period now?
Ms. Kendall. I do not believe so, no. So that kind of
measure is a fairly simple measure that can be taken almost
immediately without legislation, without change in even
regulation, but could be done even by just internal guidance or
secretarial order.
The Chairman. In response to the earlier question, you had
mentioned the exceptions for personal hospitality--people that
have known each other their whole lives, went to high school
together and all that--that there is an exception there, much
like afflicts us or affects us as Members of Congress. We have
that personal hospitality exemption rule. Is that the same type
of rule that----
Ms. Kendall. It is. It is a specific exception to the gift
rule in the Office of Government Ethics regs.
The Chairman. OK. The recommendations that you make
include--well, let me on that last point I just addressed--we,
though, have a ban on if we leave service in the Congress, I
think there is a one-year ban, or maybe two-year ban, before we
can go into the industry or become a lobbyist, so to speak. So
I am surprised to hear that there is no such waiting period for
MMS.
Ms. Kendall. Well, there are similar bans going from
government to industry. But it also depends on how involved you
were in a particular matter. There are all sorts of elements
that go into whether there is a lifetime ban, a two-year ban,
or a one-year ban. But that addresses going from government to
industry, not industry to government.
The Chairman. OK. Your report notes that on October 15th,
2009, the U.S. Attorney's Office of the Western District of
Louisiana declined to prosecute the issues raised by your
investigation. The U.S. Attorney there at the time was Donald
Washington, a Bush Administration appointee. Could you tell us
why he failed to prosecute?
Ms. Kendall. Mr. Chairman, the U.S. Attorney's offices
exercise a great deal of discretion, and oftentimes we will not
get a specific reason in their exercise of that discretion. My
recollection in this one was that they said there was a lack of
prosecutorial merit.
The Chairman. Lack of prosecutorial merit.
Ms. Kendall. And sometimes that means--in some districts in
my experience, it may mean it has not reached a particular
dollar threshold. For fraud cases, it may not reach another
kind of--I mean, for instance, the U.S. Attorney's Office in
Billings, Montana is going to probably have a lower dollar
threshold than the U.S. Attorney's Office in Los Angeles. Those
are the kinds of elements that go into their decision, and we
are bound by them.
The Chairman. Have there been other cases where the U.S.
Attorney has failed to prosecute?
Ms. Kendall. Oh, yes.
The Chairman. OK. The gentlelady from Wyoming, Ms. Lummis.
Ms. Lummis. Thank you, Mr. Chairman. Thank you for
attending today.
Ms. Kendall. Absolutely.
Ms. Lummis. The first question, are you actively
investigating the Department's response to the explosion,
whether it was immediate, whether there were failures in
preparation or response to the explosion?
Ms. Kendall. What we are looking at are MMS's role leading
up to the explosion. There is an MMS team who has expertise.
Unfortunately, my office does not have technical expertise to
look into the root cause of the explosion. But what we are
trying to determine is MMS's role up to the explosion, and
whether there was any contributing action, inaction, or conduct
that had some effect on the resulting disaster.
Ms. Lummis. Regarding back to the discussion about MMS
employees socializing with oil company executives, is that
unique to the MMS, or are there rules against that kind of
socializing within the U.S. Fish and Wildlife Service or the
Park Service or any other agency within the Department of the
Interior to prevent socializing between contractors or
regulated businesses and the regulator.
Ms. Kendall. The rule is not against socializing per se. It
is against acceptance of gifts, which usually come by way of
buying a meal, paying for a round of golf, a ticket to LSU
championship. It is the acceptance of gifts, not the
socialization that is being regulated.
Ms. Lummis. And do the new ethics rules that have been
enacted for MMS apply across agencies within the Department of
the Interior, or are they specific to the MMS?
Ms. Kendall. The preliminary response that we have received
from MMS has suggested that they will implement ethics training
specific to their inspectors to address the kinds of issues
that we raised in this report relative to the gift-giving
between industry and government, but people who also happen to
be close friends. That is sort of an anomaly for MMS.
Ms. Lummis. OK. So for the time being, these new ethics
rules just apply to MMS.
Ms. Kendall. The ones that they are proposing, yes. I
believe so. I would want you to confirm that with Ms. Birnbaum.
Ms. Lummis. OK. Are there other agencies within the
Department of the Interior that have ethics rules?
Ms. Kendall. Oh, we are all bound by ethics rules, all
bound by the same ones that are issued out of the Office of
Government Ethics.
Ms. Lummis. And were they inadequate to serve MMS's
situation? Is that why a unique set of ethics rules has been
enacted that applies only to MMS?
Ms. Kendall. No. I think the problem is with this exception
for close personal friendships, it did not--I do not know that
OGE envisioned when they put these regs together in--I want to
say the late '80s--that they envisioned this kind of problem.
So I think it is somewhat unique to MMS. There may be other
government entities who have the same kind of relationships
with industry that it may apply to as well, but I am not aware
of any.
Ms. Lummis. Well, I suspect that there are regulatory
relationships with businesses, for example, at EPA, where a
regulator may be inspecting a refinery for whom they formerly
worked, and vice versa. How do those agencies handle it? In
other words, have you looked to other regulatory relationships
within government where there is a flow of employees between
the regulated community and the regulator community to find out
if there is a good model?
Ms. Kendall. No, we have not. But that would be I think a
very good suggestion.
Ms. Lummis. You stated in your testimony that you are
conducting a review of the status on non-producing DOI leases
at the request of Congress. Can you provide us with a copy of
the letter outlining the parameters of the request?
Ms. Kendall. That actually is a relatively old request. It
was a request made by then Chairman Dicks of our Appropriations
Committee, and that report was issued--I want to say about a
year ago.
Ms. Lummis. The request was----
Ms. Kendall. The report, the actual report was.
Ms. Lummis. The report, OK. And do we have a copy of that
report, Mr. Chairman?
Ms. Kendall. It is available on our website, but I can
certainly provide it to the Committee if you wish.
Ms. Lummis. Even if you just provide where we can go to
review----
Ms. Kendall. I would be glad to do that.
Ms. Lummis. That would be great. Did you in that report
look at an analysis of the loss of revenue to states and the
Federal treasury that results from the regulatory processes
that might be not only improved for efficiency, but also
expedited?
Ms. Lummis. That was not within the scope of what we looked
at, no.
Ms. Lummis. OK. Mr. Chairman, thank you.
The Chairman. The gentleman from Arizona, Mr. Grijalva.
Mr. Grijalva. Thank you, Mr. Chairman, and thank you, Ms.
Kendall. And I was glad to hear--and correct me if I heard
wrong--that part of the enhanced role of your office will be
looking at BLM as well.
Ms. Kendall. Yes.
Mr. Grijalva. Well, that is good. I appreciate that. We
heard from the Secretary and from Mr. Hayes that part of the
problem--at least I interpreted that that is what they said.
Part of the problem is this rush to judgment, that we must get
these requests, these applications, permitted and out, i.e., I
have 30 days to do environmental assessments. The Secretary has
extended it to 90 days. I do not believe that is enough. Did
you in your look at MMS see that as a pressure point for maybe
not conducting the oversight?
Ms. Kendall. That is something we will be looking at, both
in terms of the role of MMS and then our contribution to what
the Secretary has requested in terms of looking forward where
we can find better practices, gaps in regulations, or
procedures and that sort of thing. I think we would certainly
include that in what we are going to do looking forward.
Mr. Grijalva. Yes. And I would be curious to see if there
was ever a denial of a permit for drilling based on an
environmental assessment, EIS that are done regionally. I
believe they should be done specific to the site. And I am just
curious to see if there was ever one denied, and of the
categorical waivers of which 26 have occurred after, after the
spill. The point being made is that we rush to make these
things happen because of the legislation, and maybe that is one
area in which Congress does have a role.
Ms. Kendall. Well, it certainly is envisioned in what we
will be looking at.
Mr. Grijalva. The restructuring. Given the relationship
issue, given the fact that much of the oversight responsibility
is within MMS, but also the royalty collection is with them as
well, given that the restructuring that the Secretary talked
about, is that enough to full restructure and reform this
agency that has been persistently a problem?
Ms. Kendall. I do not know that there is any single right
answer to resolving the concerns about MMS. I think going
forward, however, if there is not only a focus on the
restructuring, but sort of the reforming the character and
culture----
Mr. Grijalva. How do you transform the culture? That is
part of the question. I think you can restructure it, but there
is a transformation that needs to happen. I think the Chairman
spoke to that as well. And it worries me that we are just going
to do window dressing restructuring, and the fundamental root
cause is going to remain the same.
Ms. Kendall. I do not have a sample answer. I simply do
not.
Mr. Grijalva. And the last is the oversight staffers at MMS
are being oversighted by who? Who has oversight responsibility
over the oversight folk that are at MMS?
Ms. Kendall. There are two levels of oversight, I think.
Certainly one of them is my office, the Office of Inspector
General. MMS also has an audit function contained inside of
MMS. My understanding is they audit primarily the royalty
aspects of MMS, but they may have an audit function over the
operational--the inspection function as well.
Mr. Grijalva. Thank you. I do not think the issue is do I
know somebody, and do I go with somebody to a football game. I
think the issue is the kinds of regulatory ethical parameters
that we need to establish for that agency. So I want to thank
you very much for your work.
Ms. Kendall. Thank you.
Mr. Grijalva. I yield back, Mr. Chairman.
The Chairman. The gentleman from California, Mr. Costa.
Mr. Costa. Thank you very much. I assume it is the Auditor
General--or the Inspector within the Department of the
Interior, you perform audits on all of the various agencies
within the Department?
Ms. Kendall. Yes.
Mr. Costa. Have you attempted, in light of what has been
ongoing now for several years, as you cited in your own
testimony, any comparative analysis as to how--I mean, sadly,
MMS does not have a very good reputation, for a combination of
reasons that we have all discussed. But is this the worst in
your observations of the others within the--I mean, is it
average? How many personnel are we talking about here, 1,700?
Did I hear the number correct?
Ms. Kendall. That is what I understand, yes, 1,700
personnel in MMS. Congressman Costa, the Department is made up
of almost 72,000 employees. My office has approximately 200
auditors and investigators to oversee.
Mr. Costa. That is a big job. I understand that. But I am
just trying to get some sort of comparative analysis. I mean,
when we talk about a culture of corruption, that it is endemic,
and we are trying to figure that out, there are a lot of other
agencies that perform similar roles. So I am just trying to get
a sense of is this the exception.
Ms. Kendall. I would say that MMS has unfortunately
received most of the publicity. But certainly the other bureaus
have challenges in them, some more than others. But certainly,
these were issues that--and I want to cite Inspector General
Devaney. This is a department that has everything that people
want. They want the minerals, they want the land, they want the
oil, they want the water. And so the kinds of issues that I
think we find in this department may be somewhat different than
we might find--my former agency was EPA, and I do not remember
the kinds of findings from the Inspector General at that agency
like we have here.
So I do not know that I can say better or worse. I would
just say different.
Mr. Costa. OK. You explained in your testimony how you are
being brought into this discussion as it relates to the
application of the reorganization. You view this within the
Department as a work in progress? Are they continuing to
receive your input?
Ms. Kendall. Yes. And let me clarify. We are not trying to
influence how the Department chooses to reorganize.
Mr. Costa. Are you making recommendations?
Ms. Kendall. What we are trying to do is inform in areas
where our work would suggest that as they go forward with the
reorganization that they look at issue areas to make sure that
practices are in place or policies are in place to ensure that
they do not repeat some of the mistakes that we have identified
in the past.
Mr. Costa. Well, let us take that as an example in trying
to determine oversight capability. If we divide, as is being
proposed, the collection of royalties--well, that program is
going to be eliminated, but the collection of fees and so forth
from the inspection part of the process--I think Undersecretary
Hayes quoted 1,800-plus deepwater wells and 38,000 shallow
wells. I mean, you just begin to think of those numbers out in
the Gulf, and I have been out there with the Chairman. It is a
very large responsibility.
Certainly with those amount of wells, it would be a
challenge to have a person, an inspector, on each individual
well. So what kind of proposing ratios or recommendations are
you making? Are you getting into that level of detail?
Ms. Kendall. We may be in this next effort that we are
undertaking. But the focus there is more on safety and
environmental issues. And I think what you are suggesting with
the number of wells and the royalties aspect of managing
royalties from those wells, they are different from the health
and safety and environmental issues.
Mr. Costa. No. I understand, but one of the areas that was
cited in your report was inspection sheets on these rigs that
simply were handed to their friend, who knew someone who said,
hey, why don't you guys fill this out. We assume that you are
running a good operation.
Ms. Kendall. In fact, that was the allegation that we
received. That did not bear out. In fact, we found that what
was happening is the inspectors were actually filling the forms
out themselves in pencil, coming back and filling them out in
pen. We did not find any instances in which they handed them to
industry and said, you fill it out, and then they basically
signed it.
Mr. Costa. So that never happened.
Ms. Kendall. We did not find any instances of that.
Mr. Costa. OK. My time has expired. Thank you very much,
Mr. Chairman. And we will look forward to your continued input
as the Subcommittee holds hearings in the next month.
Ms. Kendall. Thank you.
The Chairman. The gentleman from New Mexico, Mr. Heinrich.
Mr. Heinrich. Thank you, Chairman. Ms. Kendall, you
mentioned one recommendation, I believe a two-year period or
something between I guess people moving from regulated to
regulator, and vice versa. But as you discussed a little bit
earlier, part of the issue here is that when you grow up with
the kind of close relationships that really start long before
even your professional career does, it is much harder to know
where to draw that line.
Do you have any other recommendations? Are there training
recommendations or other ideas for how to make it abundantly
clear, to create some direction there, so that the fundamental
cultural issues become very well defined, and people know
exactly where to draw the line.
Ms. Kendall. Well, let me give credit where it is due. It
was MMS's response to our report that outlined this two-year
waiting period. But what you are suggesting, I think, would be
in a training--an education kind of concept. And one of the
other things that MMS responded to us was to develop a specific
ethics training course for their inspectors to address this
very kind of issue. And I think we cannot govern human behavior
by regulation or rule, but if you can be very specific in terms
of the expectations and be clear about those, I think we will
be in a much better position.
Mr. Heinrich. Thank you, Mr. Chair.
The Chairman. The Chair recognizes the gentlelady from
Wyoming.
Ms. Lummis. Thank you, Mr. Chairman. I thought that I heard
Secretary Salazar say in his testimony this morning
specifically that it was MMS employees who allowed industry
representatives to fill out the forms in pencil and then the
MMS employees went in later and filled them out in pen, giving
the appearance that it was MMS employees who were in collusion
or deferring their responsibilities to inspect to industry,
thereby creating a fox in the henhouse scenario. And if I heard
correctly, I was tremendously alarmed by that.
I am now hearing from you that that allegation did not
prove to be true. Mr. Chairman, I think we should go back and
look at Secretary Salazar's testimony, and if it turns out that
he was mistaken, we should ask him to correct his statement
prior to it being permanently memorialized because that maligns
the agency unfairly if he inadvertently or mistakenly believed
that allegation to have been true. Thanks, Mr. Chairman.
Ms. Kendall. I know I heard that in this hearing room. I do
not remember who it was attributed to. I also know that there
have been press reports making the allegation the actuality,
when in fact I think a careful reading of our report would
suggest that that was the allegation. We did not find it to be
substantiated.
Ms. Lummis. Well, Mr. Chairman, and I do not recall who
said it either this morning. But I think it is important
regardless of who said it that we make some sort of correction
to make clear that that was not the case. I think that
incorrectly maligns the MMS inspectors, and that has been
disproven by the current testimony. Thank you, Mr. Chairman.
The Chairman. The Chair would note that in the report, of
which I am reading this specific language, there were found out
of 556 files that were reviewed for any alteration of pencil of
ink markings, notations, or signatures, ``We found a small
number with pencil and ink variations.'' The report goes on,
``However, we cannot discern if any fraudulent alterations were
present on these forms. According to the lead MMS inspector,
MMS inspectors often used pencil to complete inspection forms.
He said that anyone from MMS involved in the platform
inspections could author the inspection form, and inspectors
routinely signed each other's names on the forms.''
Is that accurate?
Ms. Kendall. Yes, sir.
The Chairman. OK. The gentleman from Wisconsin, Mr. Kind.
Mr. Kind. Thank you, Mr. Chairman. Ms. Kendall, thank you
very much for being here and your testimony, and thank you and
your entire staff at the Inspector General's Office for the
service you are doing on behalf of the American people. I think
it is clear from starting with Mr. Devaney's earlier report a
couple of years back to the most recent one that there was
desperate need of sunshine being let into the MMS offices and
the conduct that was occurring there. And it is not just
Houston, we have a problem, or Denver, we have a problem, but
now Lake Charles office, we have a problem, and on and on.
Now the Secretary was here and testified today what steps
the Department has taken in response to this and other
activities over the past year or so with the new
Administration, and also announced the restructuring of MMS,
dividing that up, new ethical standards. In your opinion, the
steps that are being taken now by the Secretary and the
Department of the Interior, is this moving in a very helpful
direction in order to avoid the type of circumstances that you
have highlighted in the report and Mr. Devaney did in his
previous report?
Ms. Kendall. I think they have a very challenging job in
front of them. I think that the way that the Secretary has
proposed dividing MMS makes sense. I am not sure that just by
virtue of that division you are going to solve the really sort
of human nature problems. But it is certainly a step in the
right direction.
Mr. Kind. You know, that is what kind of jumped out at me
in glancing at your report that you had submitted, that you
were particularly concerned with the ease in which the Federal
inspectors move between industry and government, and I assume
from government to industry, too, this idea that there is a
revolving door taking place. And it is not just the Department
of the Interior. I think it is throughout the Federal
government that we have a problem. And I know folks back home
in western Wisconsin think that there has been a too cozy
relationship between those in charge of oversight and the
industry in which they are supposed to be overseeing.
And I think it is true for previous administrations. There
have been a lot of political appointees made from people from
these various industries that they are going in now to conduct
oversight functions over. And I do not know if in your opinion,
based on the investigations and the information you have been
able to uncover, whether we need more bright line rules in
order to get at this revolving door culture that I think has
been existing for too long without doing it in a way that
jeopardizes the type of expertise and the type of
professionalism that you want in these offices at the same
time.
Ms. Kendall. I think you hit it right on the head. That is
exactly the balance that is difficult to strike. You make the
restrictions too onerous, and government will not have the
benefit of any of the kind of expertise it needs. Industry will
buy it away almost all the time.
I think there is a balance to be had. I do not know if we
have that specifically in the regulations, but I think some of
the steps that MMS is proposing to take certainly goes a long
way in striking that balance.
Mr. Kind. Let me ask you a couple of factual questions, and
you can correct me. But it was my understanding that in MMS
there were bonuses given out to the employees for expediting
lease approvals. Is that something that you are familiar with?
Ms. Kendall. It is not.
Mr. Kind. OK. So I may be asking the wrong person about
that. There was also a memorandum back in 2005 with MMS that
there was an assumption that the private industry would best
know the environmental impacts of any project or any operation
that they were undertaking, and that I think influenced kind of
MMS's review of the environmental impact on projects. Were you
familiar with that 2005 memorandum and whether it is still in
existence today?
Ms. Kendall. Unfortunately, I am not.
Mr. Kind. OK. Well, we will have to do some independent
follow-up with the agency itself then to find it. But you had
explained that this is an inherent problem, I think, even with
elected officials with the past relationships that you might
have had with people in the past, friendships. And I think you
point that out very well in the report and how difficult it is
to straddle that line between personal friendships and the job
that you are entrusted to do.
But finally, with the type of abuses that were uncovered by
Mr. Devaney and also you, were there any consequences to the
MMS employees, but also to the private industry representatives
who got caught with the meals and the football tickets and
things of that nature?
Ms. Kendall. There were to the MMS employees. In the 2008
report, that was one of our concerns. Are there any
consequences to the industry folks who are involved in this?
And my answer, I think, is no.
Mr. Kind. Well, do you think we ought to be considering
Committee-enhanced penalties for private industry
representatives engaged in this type of conduct?
Ms. Kendall. Well, I think any penalties perhaps. I do not
know that there are any that exist at all.
Mr. Kind. OK. Thank you very much.
Ms. Kendall. Thank you.
Mr. Kind. Thank you, Mr. Chairman.
The Chairman. The gentlelady from the Virgin Islands, Dr.
Christensen.
Ms. Christensen. I do not have any questions, Mr. Chairman.
The main question was asked by my colleague right here.
The Chairman. OK. Ms. Kendall, let me ask you one last
question. In your report, in your investigation, you say two
MMS employees at the Lake Charles office admitted to using
illegal drugs during their employment at MMS. If there are two
admissions, obviously there could be many others as well. My
question is, any way of telling if any inspector on this rig--I
recognize Deepwater has only been around since the first of the
year, but nevertheless, this rig has been around for some time
that could date back to the years of your investigation. Any
way of telling if this rig, in which 11 people lost their lives
and others injured, had been inspected by an MMS employee on
drugs?
Ms. Kendall. I do not know the answer to that, Mr.
Chairman. I do know that the Deepwater Horizon was not
inspected by the people involved in this report. We did make
that determination. I do not know if MMS has a random drug test
program for their inspectors. Perhaps Ms. Birnbaum would be
able to answer that for you.
The Chairman. OK. Thank you. Thank you very much.
Ms. Kendall. Thank you.
The Chairman. We appreciate your patience. Our third panel
today is composed of the following individuals: Rear Admiral
James Watson, Deputy, Unified Area Command on the Deepwater
Horizon Fire and MC 252 Oil Spill, with the U.S. Coast Guard;
Dr. Jane Lubchenco, the Undersecretary of Commerce for Oceans
and Atmosphere and NOAA Administrator, National Oceanic and
Atmospheric Administration, U.S. Department of Justice; and Ms.
S. Elizabeth Birnbaum, the Director of the Minerals Management
Service, U.S. Department of the Interior.
OK. We will proceed with the panel. Rear Admiral James
Watson, welcome. Thank you for your service.
STATEMENT OF REAR ADMIRAL JAMES WATSON, DEPUTY, UNIFIED AREA
COMMAND ON THE DEEPWATER HORIZON FIRE AND MC 252 OIL SPILL,
U.S. COAST GUARD
Admiral Watson. Good afternoon, Chairman Rahall and
distinguished members of the Committee. Thank you for the
opportunity to testify on the ongoing response to the explosion
and subsequent oil spill from the mobile offshore drilling unit
Deepwater Horizon.
Since the night of the explosion, Federal, state, and local
authorities, and the responsible parties, BP and Transocean,
have been working around the clock to secure the leak and
mitigate environmental damages. My role as the Deputy Federal
On-Scene Coordinator to support Rear Admiral Mary Landry, who
is our Eighth District Commander out of New Orleans, and the
FOSC at the area command level in Roberts, Louisiana, is
managing and has oversight of all response operations.
The Deepwater Horizon explosion on the night of April 20th
set off an unfortunate chain of events. The event began as a
search and rescue case. Within the first few hours of the
explosion, 115 of the 126 crew members were safely recovered.
After three days of continuous searching, the Coast Guard
suspended the search for the 11 missing crew members. My
deepest sympathies go to the families and the friends of those
crew members who lost their lives in the line of duty.
A massive oil spill response following the sinking of the
Deepwater Horizon, unprecedented in its scope, complexity, and
indeterminate nature, the spill has required an extraordinary
unified response across all levels of government, industry, and
the communities of five coastal states in the Gulf of Mexico.
An incident command system was quickly established to
coordinate this massive operation, employing lessons learned
from the Exxon Valdez, the Cosco Busan, and spill of national
significant exercises. Through the implementation of the Oil
Pollution Act of 1990, the response community galvanized their
efforts under the common framework provided by the national
contingency plan.
This framework developed over the last two decades enables
us to respond to these catastrophes in a way that leverages the
strengths of private industry under the leadership of the
Federal on-scene coordinator. In accordance with the Oil
Pollution Act of 1990, we integrated the best Federal, state,
and local resources, alongside the best and brightest minds of
industry, academia, and the public, in a unity of effort to
protect our natural resources, livelihoods, and the security of
the nation.
The Federal government has taken an all-hands-on-deck
approach from the moment the explosion occurred, including the
designation of a spill of national significance, and designated
Admiral Thad Allen as the national incident commander. From the
start, our objectives have remained constant: stop the leak,
fight the spill offshore, protect environmentally sensitive
areas, and mitigate the effects on the environment, the
economy, and the local communities.
Despite several aggressive measures, including the top hat
and the riser insertion tube tool, engineers have been unable
to stop the flow of oil. Today, we eagerly await the outcome of
BP's deployment of the top-kill to the wells blowout preventor.
As of this morning, this complex operation is still scheduled
to be conducted. They are executing the last-minute diagnostics
to ensure the systems are in place, given the inherent risks
associated with this first of a kind operation. Once top-kill
commences, the process is expected to take three to four days
to complete.
In parallel, BP is continuing to drill relief wells from
two additional rigs. I personally meet with BP officials and
know they are working around the clock to secure this source.
While we work to permanently secure the leak, we are also
attacking the spill as far as offshore as possible. As the oil
moves from one large, monolithic slick to multiple pools of
oil, we continue to deploy traditional methods, including
surface dispersants, in situ burning, and surface cleanup
equipment.
However, the magnitude and dynamic nature of the spill has
required us to look at non-traditional mitigation response
strategies. The use of subsurface dispersants and satellite
imagery to help direct the movement of the skimmers in the
burning are just a few examples of innovative technologies as
new approaches to responding offshore.
In addition to our offshore efforts, we continue to deploy
near-shore measures to protect predesignated environmentally
sensitive areas as outlined in our area contingency plans. This
includes different types of booms and other non-conventional
barrier methods, including the National Guard's deployment of
PESCo barriers in Mississippi, and there are sandbags in
Louisiana.
As oil reaches the shoreline, we have seen in Louisiana
over the last several days--and we continue to monitor the
responsible party's actions. We are requiring BP to obtain and
deploy whatever resources are necessary, including new
technologies, to ensure we are doing everything we can to
protect the shoreline and the environmentally sensitive areas
in the Gulf region.
Mitigating the effects of this spill extend beyond
environmental impacts, and include damages to surrounding
communities, who depend on the Gulf of Mexico for their
livelihood. The fishermen and small business owners are anxious
to do whatever they can. Recognizing the desire of so many to
help and support the local economies, the unified command has
established a volunteer and vessel-of-opportunity program to
maximize the opportunities available to the local communities
to support response and cleanup operations.
Although the incident remains under investigation by a
joint Minerals Management Service and Coast Guard Marine Board
of Investigation, it may take months before we fully understand
what caused the explosion. However, the spill has highlighted
the need for building resiliency into our nation's critical
infrastructure so we are better prepared to respond to system
failures and prevent spills of national significance.
Our response to this historic spill is far from over. I
want to ensure you that the entire response community is fully
committed, and will continue to aggressively pursue all
available options to mitigate the environmental and economic
impacts from this spill.
Thank you for the opportunity to testify today. I look
forward to your questions.
[The prepared statement of Admiral Watson follows:]
Statement of RDML James Watson, Deputy, Unified Area Command
U.S. Coast Guard
Good morning Chairman Bingaman and distinguished members of the
committee. I am grateful for the opportunity to testify before this
committee on the subject of the BP Deepwater Horizon oil spill
currently ongoing in the Gulf of Mexico.
On the evening of April 20, 2010, the Transocean-owned, BP-
chartered, Marshall Islands-flagged Mobile Offshore Drilling Unit
(MODU) DEEPWATER HORIZON, located approximately 72 miles Southeast of
Venice, Louisiana, reported an explosion and fire onboard. This began
as a Search and Rescue (SAR) mission--within the first few hours, 115
of the 126 crewmembers were safely recovered; SAR activities continued
through April 23rd, though the other 11 crewmembers remain missing.
Concurrent with the SAR effort, the response to extinguishing the
fire and mitigating the impacts of the approximate 700,000 gallons of
diesel fuel onboard began almost immediately. In accordance with the
operator's Minerals Management Service (MMS)-approved Response Plan,
oil spill response resources, including Oil Spill Response Vessels
(OSRVs), were dispatched to the scene. After two days of fighting the
fire, the MODU sank into approximately 5,000 feet of water on April
22nd. On April 23rd, remotely operated vehicles (ROVs) located the MODU
on the seafloor, and, on April 24th, BP found the first two leaks in
the riser pipe and alerted the federal government. ROVs continue to
monitor the flow of oil.
As the event unfolded, a robust Incident Command System (ICS)
response organization was stood up in accordance with the National
Response Framework (NRF) and the National Oil and Hazardous Substances
Pollution Contingency Plan (NCP). ICS is utilized to provide a common
method for developing and implementing tactical plans to efficiently
and effectively manage the response to oil spills. The ICS organization
for this response includes Incident Command Posts and Unified Commands
at the local level, and a Unified Area Command at the regional level.
It is comprised of representatives from the Coast Guard (Federal On-
Scene Coordinator (FOSC)), other federal, state, and local agencies, as
well as BP as a Responsible Party.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The federal government has addressed the Gulf Oil Spill with an
all-hands-on deck approach from the moment the explosion occurred.
During the night of April 20th--the date of the explosion--a command
center was set up on the Gulf Coast to address the potential
environmental impact of the event and to coordinate with all state and
local governments. After the MODU sank on the 22nd, the National
Response Team (NRT), led by the Secretary of Homeland Security and
comprised of 16 Federal agencies including the Coast Guard, other DHS
offices, the Environmental Protection Agency (EPA), National Oceanic
and Atmospheric Administration (NOAA), Department of Interior (DOI), as
well as Regional Response Teams (RRT), were activated.
On April 29, Secretary Napolitano declared the event a Spill of
National Significance (SONS), which enhanced operational and policy
coordination at the national level and concurrently allowed Admiral
Allen's appointment as the National Incident Commander (NIC) for the
Administration's continued, coordinated response. The NIC's role is to
coordinate strategic communications, national policy, and resource
support, and to facilitate collaboration with key parts of the federal,
state and local government.
The NIC staff is comprised of subject matter experts from across
the federal government, allowing for immediate interagency
collaboration, approval and coordination. While the FOSC maintains
authorities for response operations as directed in the National
Contingency Plan, the NIC's primary focus is providing national-level
support to the operational response. This means providing the Unified
Command with everything that they need - from resources to policy
decisions - to sustain their efforts to secure the source and mitigate
the impact. This will be a sustained effort that will continue until
the discharges are permanently stopped and the effects of the spill are
mitigated to the greatest extent possible. Beyond securing the source
of the spill, the Unified Command is committed to minimizing the
economic and social impacts to the affected communities and the nation.
UNIFIED RECOVERY EFFORTS
The Unified Command continues to attack the spill offshore. As of
May 13, 2010, over 5 million gallons of oily water have been
successfully recovered using mechanical surface cleaning methods.
Further, approximately over 704,000 of surface dispersants have been
applied to break up the slick, and controlled burns have been used as
weather conditions have allowed. In addition to the ongoing offshore
oil recovery operations, significant containment and exclusion booms
have been deployed and staged strategically throughout the Gulf region.
These booms are used to protect sensitive areas including:
environmental and cultural resources, and critical infrastructure, as
identified in the applicable Area Contingency Plans (ACPs). To date,
more than a million feet of boom have been positioned to protect
environmentally sensitive areas. Fourteen staging areas have been
established across the Gulf Coast states and three regional command
centers. The Secretary of Defense approved the requests of the
Governors of Alabama (up to 3,000), Florida (up to 2,500), Louisiana
(up to 6,000), and Mississippi (up to 6,000) to use their National
Guard forces in Title 32, U.S. Code, status to help in the response to
the oil spill.
VOLUNTEERISM AND COMMUNICATION WITH LOCAL COMMUNITIES
A critical aspect of response operations is active engagement and
communication with the local communities. Several initiatives are
underway to ensure regular communications with the local communities.
1. Active participation and engagement in town hall meetings
across the region with industry and government involvement.
2. Daily phone calls with affected trade associations.
3. Coordination of public involvement through a volunteer
registration hotline (1-866-448-5816), alternative technology, products
and services e-mail ([email protected]), and response and safety
training scheduled and conducted in numerous locations.
4. More than 7,100 inquiries received online via the response
website (www.deepwaterhorizonresponse.com) with more than 6,121
inquiries completed, with 4-hour average time of response.
5. Over 568,000 page hits on response website.
6. Over 110 documents created/posted to response website for
public consumption.
7. News, photo/video releases, advisories to more than 5,000
media/governmental/private contacts.
8. Full utilization of social media including Facebook, YouTube,
Twitter and Flickr.
9. Establishment of Local Government hotlines in Houma, LA (985-
493-7835), Mobile, AL (251-445-8968), Robert, LA (985-902-5253).
MODU REGULATORY COMPLIANCE REQUIREMENTS
43 U.S.C. Sec. 1331, et seq. mandates that MODUs documented under
the laws of a foreign nation, such as the DEEPWATER HORIZON, be
examined by the Coast Guard. These MODUs are required to obtain a U.S.
Coast Guard Certificate of Compliance (COC) prior to operating on the
U.S. Outer Continental Shelf (OCS).
In order for the Coast Guard to issue a COC, one of three
conditions must be met:
1. The MODU must be constructed to meet the design and equipment
standards of 46 CFR part 108.
2. The MODU must be constructed to meet the design and equipment
standards of the documenting nation (flag state) if the standards
provide a level of safety generally equivalent to or greater than that
provided under 46 CFR part 108.
3. The MODU must be constructed to meet the design and equipment
standards for MODUs contained in the International Maritime
Organization Code for the Construction and Equipment of MODUs.
The DEEPWATER HORIZON had a valid COC at the time of the incident,
which was renewed July 29, 2009 with no deficiencies noted. The COC was
issued based on compliance with number three, stated above. COCs are
valid for a period of two years.
In addition to Coast Guard safety and design standards, MMS and the
Occupational Safety and Health Administration (OSHA) also have safety
requirements for MODUs. MMS governs safety and health regulations in
regard to drilling and production operations in accordance 30 CFR part
250, and OSHA maintains responsibility for certain hazardous working
conditions not covered by either the Coast Guard or MMS, as per 29
U.S.C. Sec. 653 (a) and (b)(1).
COAST GUARD/MMS JOINT INVESTIGATION RESPONSIBILITIES
On April 27th, Secretary Napolitano and Secretary of the Interior
Ken Salazar signed the order that outlined the joint Coast Guard-MMS
investigation into the Deepwater Horizon incident.
Information gathering began immediately after the explosion--
investigators from both agencies launched a preliminary investigation
that included evidence collection, interviews, witness statements from
surviving crew members, and completion of chemical tests of the crew.
The aim of this investigation is to gain an understanding of the causal
factors involved in the explosion, fire, sinking and tragic loss of 11
crewmembers.
The joint investigation will include public hearings, which have
already begun in Kenner, LA. The formal joint investigation team
consists of equal representation of Coast Guard and MMS members. The
Coast Guard has also provided subject matter experts and support staff
to assist in the investigation.
LESSONS LEARNED FROM PAST RESPONSES
The Coast Guard has been combating oil and hazardous materials
spills for many years; in particular, the 1989 major oil spill from the
EXXON VALDEZ yielded comprehensive spill preparedness and response
responsibilities.
In the 20 years since the EXXON VALDEZ, the Coast Guard has
diligently addressed the Nation's mandates and needs for better spill
response and coordination. For example, a SONS Exercise is held every
three years. In 2002, the SONS Exercise was held in New Orleans to deal
with the implications of a wellhead loss in the Gulf of Mexico. In that
exercise, the SONS team created a vertically integrated organization to
link local response requirements to a RRT. The requirements of the RRT
are then passed to the NRT in Washington, D.C, thereby integrating the
spill management and decision processes across the federal government.
The response protocols used in the current response are a direct result
of past lessons learned from real world events and exercises including
SONS.
Although the EXXON VALDEZ spill shaped many of the preparedness and
response requirements and legislation followed to this day, other
significant events since 1989 have generated additional lessons learned
that have shaped our response strategies. For example, the M/V COSCO
BUSAN discharged over 53,000 gallons of fuel oil into San Francisco Bay
after colliding with the San Francisco-Oakland Bay Bridge in heavy fog.
Through the recovery of over 40 percent of the spilled product, the
Unified Command recognized improvements were needed in some areas. As a
result, new guidance and policy was developed to better utilize
volunteers in future responses. Additionally, standard operating
procedures for emergency notifications were improved to ensure better
vertical communications between the federal responders and local
governments. Furthermore, steps were taken to pre-identify incident
command posts (ICPs) and improve booming strategies for environmentally
sensitive areas.
Most recently, the Coast Guard led a SONS exercise in March, 2010.
Nearly 600 people from over 37 agencies participated in the exercise.
This exercise scenario was based on a catastrophic oil spill resulting
from a collision between a loaded oil tanker and a car carrier off the
coast of Portland, Maine. The exercise involved response preparedness
activities in Portland, ME; Boston, MA; Portsmouth, NH; Portsmouth, VA;
and Washington, DC. The response to the SONS scenario involved the
implementation of oil spill response plans, and response organizational
elements including two Unified Commands, a Unified Area Command, and
the NIC in accordance with the National Contingency Plan and national
Response Framework. The exercise focused on three national-level
strategic objectives:
1. Implement response organizations in applicable oil spill
response plans
2. Test the organization's ability to address multi-regional
coordination issues using planned response organizations
3. Communicate with the public and stakeholders outside the
response organization using applicable organizational components
The SONS 2010 exercise was considered a success, highlighting the
maturity of the inter-agency and private oil spill response
capabilities and the importance of national-level interactions to
ensure optimal information flow and situational awareness. The timely
planning and execution of this national-level exercise have paid huge
dividends in the response to this potentially catastrophic oil spill in
the Gulf of Mexico.
ROLE OF THE OIL SPILL LIABILITY TRUST FUND
The Oil Spill Liability Trust Fund (OSLTF), established in the
Treasury, is available to pay the expenses of federal response to oil
pollution under the Federal Water Pollution Control Act (FWPCA)(33
U.S.C. Sec. 1321(c)) and to compensate claims for oil removal costs and
certain damages caused by oil pollution as authorized by the Oil
Pollution Act of 1990 (OPA) (33 U.S.C. Sec. 2701 et seq.). These OSLTF
uses will be recovered from responsible parties liable under OPA when
there is a discharge of oil to navigable waters, adjoining shorelines
or the Exclusive Economic Zone (EEZ).
The OSLTF is established under Revenue Code section 9509 (26 USC
Sec. 9509), which also describes the authorized revenue streams and
certain broad limits on its use. The principal revenue stream is an 8
cent per barrel tax on oil produced or entered into the United States
(see the tax provision at 26 U.S.C. Sec. 4611). The barrel tax
increases to 9 cents for one year beginning on January 1, 2017. The tax
expires at the end of 2017. Other revenue streams include oil
pollution-related penalties under 33 U.S.C. Sec. 1319 and Sec. 1321,
interest earned through Treasury investments, and recoveries from
liable responsible parties under OPA. The current OSLTF balance is
approximately $1.6 billion. There is no cap on the fund balance but
there are limits on its use per oil pollution incident. The maximum
amount that may be paid from the OSLTF for any one incident is $1
billion. Of that amount, no more than $500 million may be paid for
natural resource damages. 26 U.S.C. Sec. 9509(c)(2).
OPA further provides that the OSLTF is available to the President
for certain purposes (33 U.S.C. Sec. 2712(a)). These include:
Payment of federal removal costs consistent with the NCP. This
use is subject to further appropriation, except the President
may make available up to $50 million annually to carry out 33
U.S.C. Sec. 1321(c) (federal response authority) and to
initiate the assessment of natural resource damages. This so-
called ``emergency fund'' amount is available until expended.
If funding in the emergency fund is deemed insufficient to fund
federal response efforts, an additional $100 million may be
advanced, one time, from the OSLTF subject to notification of
Congress no later than 30 days after the advance. See 33 U.S.C.
Sec. 2752(b). Additional amounts from the OSLTF for Federal
removal are subject to further appropriation.
Payment of claims for uncompensated removal costs and damages.
Payments are not subject to further appropriation from the
OSLTF. 33 U.S.C. Sec. 2752(b).
Payment of federal administrative, operating and personnel
costs to implement and enforce the broad range of oil pollution
prevention, response and compensation provisions addressed by
the OPA. This use is subject to further appropriation to
various responsible federal agencies.
National Pollution Funds Center (NPFC) Funding and Cost Recovery
The NPFC is a Coast Guard unit that manages use of the emergency
fund for federal removal and trustee costs to initiate natural resource
damage assessment. The NPFC also pays qualifying claims against the
OSLTF that are not compensated by the responsible party. Damages
include real and personal property damages, natural resource damages,
loss of subsistence use of natural resources, lost profits and earnings
of businesses and individuals, lost government revenues, and net costs
of increased or additional public services that may be recovered by a
State or political subdivision of a state.
In a typical scenario, the FOSC, Coast Guard or EPA accesses the
emergency fund to carry out 33 U.S.C. Sec. 1321(c), i.e., to remove an
oil discharge or prevent or mitigate a substantial threat of discharge
of oil to navigable waters, the adjoining shoreline or the EEZ. Costs
are documented and provided to NPFC for reconciliation and eventual
cost recovery against liable responsible parties. Federal trustees may
request funds to initiate an assessment of natural resource damages and
the NPFC will provide those funds from the emergency fund as well.
OPA provides that all claims for removal costs or damages shall be
presented first to the responsible party. Any person or government may
be a claimant. If the responsible party denies liability for the claim,
or the claim is not settled within 90 days after it is presented, a
claimant may elect to commence an action in court against the
responsible party or to present the claim to the NPFC for payment from
the OSLTF. OPA provides an express exception to this order of
presentment in respect to State removal cost claims. Such claims are
not required to be presented first to the responsible party and may be
presented direct to the NPFC for payment from the OSLTF. These and
other general claims provisions are delineated in 33 U.S.C. Sec. 2713
and the implementing regulations for claims against the OSLTF in 33 CFR
Part 136. NPFC maintains information to assist claimants on its website
at www.uscg.mil/npfc.
NPFC pursues cost recovery for all OSLTF expenses for removal costs
and damages against liable responsible parties pursuant to federal
claims collection law including the Debt Collection Act, implementing
regulations at 31 CFR parts 901-904 and DHS regulations in 6 CFR part
11.
Aggressive collection efforts are consistent with the ``polluter
pays'' public policy underlying the OPA. Nevertheless, the OSLTF is
intended to pay even when a responsible party does not pay.
OSLTF and the Deepwater Horizon
On May 12th, the Administration proposed a legislative package that
will: enable the Deepwater Horizon Oil Spill response to continue
expeditiously; speed assistance to people affected by this spill; and
strengthen and update the oil spill liability system to better address
catastrophic events. The bill would permit the Coast Guard to obtain
one or more advances--up to $100 million each--from the Principal Fund
within the Oil Spill Liability Trust Fund to underwrite federal
response activities taken in connection with the discharge of oil that
began in 2010 in connection with the explosion on, and sinking of, the
mobile offshore drilling unit Deepwater Horizon. To deal more generally
with the harms created by oil spills as well as to toughen and update
these laws, the bill would, for any single incident, raise the
statutory expenditure limitation for the Oil Spill Liability Trust Fund
from $1 billion to $1.5 billion and the cap on natural resource damage
assessments and claims from $500 million to $750 million.
In order to help those impacted by the oil spill get claims and
benefits quickly, the legislative package proposes Workforce Investment
Act provisions which would assist states in providing one-stop services
for those affected by the oil spill, including filing claims with BP,
filing unemployment insurance/Oil Spill Unemployment assistance claims,
accessing job placement, training and workforce services, accessing
SNAP, child care, or other social service benefits, and applying for
SBA Disaster Loans.
The emergency fund has been accessed by the FOSC for $68 million as
of May 23, 2010. BP, a responsible party, is conducting and paying for
most response activities. The Coast Guard requested and received an
advance of $100 million from the OSLTF Principal Fund to the emergency
fund as authorized by 33 U.S.C. Sec. 2752(b), because the balance
remaining in the emergency fund was not adequate to fund anticipated
federal removal costs. BP and Transocean have been notified of their
responsibility to advertise to the public the process by which claims
may be presented. As of May 24th, 23,960 claims have been opened with
BP, and nearly $28 million has been disbursed; though Transocean has
also already been designated as a responsible party, all claims are
being processed centrally through BP.
CONCLUSION
Through the National Incident Command, we are ensuring all
capabilities and resources--government, private, and commercial--are
being leveraged to protect the environment and facilitate a rapid,
robust cleanup effort. Every effort is being made to secure the source
of the oil, remove the oil offshore, protect the coastline, include and
inform the local communities in support of response operations, and
mitigate any impacts of the discharge.
Thank you for the opportunity to testify today. I look forward to
your questions.
______
The Chairman. Dr. Lubchenco, welcome once again to our
Committee.
STATEMENT OF DR. JANE LUBCHENCO, UNDER SECRETARY OF COMMERCE
FOR OCEANS AND ATMOSPHERE AND NOAA ADMINISTRATOR, NATIONAL
OCEANIC AND ATMOSPHERIC ADMINISTRATION, U.S. DEPARTMENT OF
COMMERCE
Dr. Lubchenco. Thank you, Chairman Rahall and members of
the Committee. Thank you so much for the opportunity to testify
this morning about the Department of Commerce's National
Oceanic and Atmospheric Administration's role in the BP
Deepwater Horizon spill.
I wish to begin by letting the families of the 11 people
who lost their lives in the explosion and sinking of the
Deepwater Horizon know that we think about them every day. The
12,800 employees of NOAA, both those who are actively working
in the Gulf as well as those around the country, extend our
deepest condolences to them.
Because you already have my written testimony, what I would
like to do today is just summarize briefly NOAA's overall
responsibilities in this effort, and then give you a brief
update of where we are with some more recent happenings. NOAA's
mission is to understand and predict changes in the earth's
environment to conserve and manage coastal and marine resources
to meet our nation's economic, social, and environmental needs.
NOAA is also a natural resource trustee and is one of the
Federal agencies responsible for protecting and restoring the
public's coastal natural resources when they are affected by
oil spills.
As such, the entire agency is deeply concerned about the
immediate and long-term environmental, economic, and social
impacts to the Gulf Coast and the Nation as a whole in response
to this oil spill. NOAA is the nation's scientific resource for
the unified command, and it is responsible for coordinated
scientific weather and biological response services.
Our experts have been assisting with the response from the
very outset. Offices throughout the agency have been mobilized,
and hundreds of NOAA personnel are dedicating themselves to
assist. Over the past few weeks, NOAA has provided 24/7
scientific support to the U.S. Coast Guard in its role as
Federal on-scene coordinator, both on the scene and through our
Seattle operation center. This NOAA-wide support includes twice
daily trajectories of the spilled oil, information management,
overflight observations and mapping, weather and river flow
forecasts, shoreline and resource risk assessment, and
oceanographic modeling support.
Now for a few updates on seven activities for which NOAA
has responsibility. Number one, NOAA oceanographers continue to
release updated oil trajectory maps showing the predicted
trajectory of oil slick. These maps help inform shoreline
operations, placement of boom, and oil recovery efforts at the
surface. NOAA's current forecasts show relatively light and
variable winds should persist throughout much of the week.
Yesterday's overflights continued to observe significant
amounts of oil associated with convergent zones around the
Mississippi Delta and Breton Sound. However, with light winds
and weakening westward currents, oil is not expected to move
significantly further westward during NOAA's current forecast
period of 72 hours.
Number two, on the loop current, we continue to track the
small amount of oil that was entrained in the loop current late
last week. Most of that surface oil is now caught in a
counterclockwise eddy on the northern side of the loop current.
And because the top of the loop current has now pinched off,
any oil that was in the loop current will most likely be
retained in the Gulf and not routed to the Florida strait or
the Gulf current.
Three, flow rate. NOAA scientists are part of the national
incident command's flow rate technical group, which is designed
to support the response and inform the public by providing
scientifically validated information about the amount of oil
flowing from the leaking well while ensuring vital efforts to
cap the leak are not impeded. The official rough estimate of at
least 5,000 barrels per day was based upon the best available
information at the time. Only a few days ago did we receive
from BP videos of sufficient quality to make credible estimates
of flow. The technical team has been hard at work. Their work
is undergoing rapid peer review, and we expect to have results
available very soon.
Four, fishery disaster declaration. On Monday, Commerce
Secretary Gary Locke determined that there had been a fishery
disaster in the Gulf of Mexico due to the economic impact on
commercial and recreational fisheries from the ongoing
Deepwater Horizon oil spill. The affected area includes the
states of Louisiana, Mississippi, and Alabama. Secretary Locke
made the determination under section 312[a] of the Magnuson-
Stevens Act, and this declaration was made in response to
requests from Louisiana and Mississippi based on loss of access
to many commercial fisheries, and existing and anticipated
environmental damage from this unprecedented event.
Five, fishery closures and seafood safety. Yesterday,
NOAA's National Marine Fisheries Service modified the
boundaries of the fishery closed area based on the latest oil
spill trajectories. The modified area increased the closed area
to 5,096 square miles. This represents 22.4 percent of the Gulf
of Mexico exclusive economic zone. NOAA is actively sampling
seafood inside and outside the closed areas, and working with
FDA to ensure that seafood is not contaminated, and to guide
decisions about where closed areas can be reopened.
Six, NRDA. NOAA is coordinating the Natural Resource Damage
Assessment effort with the Department of the Interior as a
Federal co-trustee, as well as the co-trustees in five states
and representatives for at least one responsible party, BP. The
focus currently is to assemble existing data on resources and
their habitats, and to collect baseline or pre-spill impact
data. Data on old resources and habitats are also being
collected.
And finally, scientific and environmental impact. NOAA is
aggressively working with other agencies and non-Federal
scientists to understand where the oil is on the surface and
below the surface, and to evaluate the environmental impacts of
both the spill and any associated mitigation efforts.
To close, I would like to simply assure you that we will
not relent in our efforts to protect the livelihoods of Gulf
Coast residents and mitigate the environmental impacts of the
spill. Thank you, and I am happy to answer any questions.
[The prepared statement of Dr. Lubchenco follows:]
Statement of Jane Lubchenco, Ph.D., Under Secretary of Commerce for
Oceans and Atmosphere, and NOAA Administrator, National Oceanic and
Atmospheric Administration, U.S. Department of Commerce
Thank you, Chairman Rahall and Members of the Committee, for the
opportunity to testify on the Department of Commerce National Oceanic
and Atmospheric Administration's (NOAA's) role in the response to the
Deepwater Horizon oil spill. My name is Dr. Jane Lubchenco and I am the
Under Secretary of Commerce for Oceans and Atmosphere and the
Administrator of NOAA. I appreciate the opportunity to discuss the
critical roles NOAA serves during oil spills and the importance of
maximizing our contributions to protect and restore the resources,
communities, and economies affected by this tragic event. Before I move
to discuss NOAA's efforts, I would first like to express my condolences
to the families of the 11 people who lost their lives in the explosion
and sinking of the Deepwater Horizon.
NOAA's mission is to understand and predict changes in Earth's
environment and conserve and manage coastal and marine resources to
meet our Nation's economic, social, and environmental needs. NOAA is
also a natural resource trustee and is one of the federal agencies
responsible for protecting and restoring the public's coastal natural
resources when they are impacted by oil spills, hazardous substance
releases, and impacts from vessel groundings on corals and seagrass
beds. As such, the entire agency is deeply concerned about the
immediate and long-term environmental, economic, and social impacts to
the Gulf Coast and the Nation as a whole from the Deepwater Horizon oil
spill. NOAA is fully mobilized and working tirelessly 24/7 to lessen
impacts on the Gulf Coast and will continue to do so until the spill is
controlled, the oil is cleaned up, the natural resource damages are
assessed, and the restoration is complete.
My testimony today will discuss NOAA's role in the Deepwater
Horizon response, natural resource damage assessment, and restoration;
NOAA's assets, data, and tools on-scene; the importance of
preparedness; and necessary future actions.
NOAA'S ROLES DURING OIL SPILLS
NOAA has three critical roles mandated by the Oil Pollution Act of
1990 and the National Contingency Plan:
1. Serves as a conduit for scientific information to the Federal
On-Scene Coordinator to provide trajectory predictions for spilled oil,
overflight observations of oil on water, identification of
environmental areas that are highly valued or sensitive, and shoreline
surveys of oil to determine clean-up priorities.
2. Conduct a joint natural resource damage assessment with other
trustees with the goal of restoring any ocean and coastal resources
harmed by the spill. This includes fulfilling the role of Natural
Resource Trustee for impacted marine resources.
3. Represent Department of Commerce interests in spill response
decision making activities through the Regional Response Team.
The U.S. Coast Guard (USCG) has the primary responsibility for
managing coastal oil spill response and clean-up activities in the
coastal zone. During an oil spill, NOAA's Scientific Support
Coordinator delivers expert scientific support to the USCG in its role
as Federal On-Scene Coordinator. NOAA's Scientific Support Coordinators
are located around the country in USCG Districts, ready to respond
around the clock to any emergencies involving the release of oil or
hazardous materials into the oceans or atmosphere.
Using experience, expertise, and state-of-the-art technology, NOAA
forecasts the movement and behavior of spilled oil, evaluates the risk
to resources, conducts overflight observations and shoreline surveys,
and recommends protection priorities and appropriate clean-up actions.
NOAA also provides spot weather forecasts, emergency coastal survey and
charting capabilities, aerial and satellite imagery, and real-time
coastal ocean observation data to assist response efforts. Federal,
state, and local entities look to NOAA for assistance, experience,
local perspective, and scientific knowledge.
NOAA serves the Nation by providing expertise and a suite of
products and services critical for making science-based response
decisions that prevent further harm, restore natural resources, and
promote effective planning for future spills. Federal, state, and local
agencies across the country called upon NOAA's Office of Response and
Restoration (OR&R) for scientific support 200 times in 2009.
NOAA'S RESPONSE EFFORTS FOR DEEPWATER HORIZON OIL SPILL
NOAA's experts have been assisting with the response from the
beginning, providing coordinated scientific weather and biological
response services when and where they are needed most.
At 2:24 a.m. (central time) on April 21, 2010, NOAA's OR&R was
notified by the USCG of an explosion and fire on the Mobile Operating
Drilling Unit (MODU) Deepwater Horizon, approximately 50 miles
southeast of the Mississippi Delta. The explosion occurred at
approximately 10:00pm on April 20, 2010. Two hours, 17 minutes after
notification by the USCG, NOAA provided our first spill forecast
predictions to the Unified Command in Robert, Louisiana. NOAA's
National Weather Service Weather Forecast Office in Slidell, LA
received the first request for weather support information from the
USCG at 9:10am on April, 21, 2010 via telephone. The first graphical
weather forecast was sent at 10:59am to the USCG District Eight Command
Center in New Orleans. Support has not stopped since that first request
for information by the USCG. Over the past few weeks, NOAA has provided
24/7 scientific support, both on-scene and through our Seattle
Operation Center. This NOAA-wide support includes twice daily
trajectories of the spilled oil, information management, overflight
observations and mapping, weather and river flow forecasts, shoreline
and resource risk assessment, and oceanographic modeling support. NOAA
has also been supporting the Unified Command in planning for open water
and shoreline remediation and analyses of various techniques for
handling the spill, including open water burning and surface and
deepwater application of dispersants. Hundreds of miles of coastal
shoreline were surveyed to support clean-up activities.
Offices throughout the agency have been mobilized and hundreds of
NOAA personnel are dedicating themselves to assist. In addition to
these activities, I would like to highlight several of NOAA's assets
that are assisting with the overall oil spill response and assessment
efforts.
NOAA's National Weather Service is providing critical 24/
7 weather support dedicated to the spill, as well as on-site weather
support at multiple command centers. Special aviation marine wind and
wave forecasts are being prepared to support response activities. A
marine meteorologist was deployed to the Joint Operations Center in
Houma, LA on April, 27, 2010. Beginning on April 28, 2010, hourly
localized `spot' forecasts were requested by USCG and NOAA OR&R in
support of oil burns and eventually chemical dispersion techniques.
Longer range forecasts are a critical component to plan containment and
response actions. NOAA's National Data Buoy Center data is also being
incorporated into oil trajectory forecasts.
NOAA's National Ocean Service is providing: custom
navigation products and updated charts to help keep mariners out of oil
areas; updates from NOAA's extensive network of water-level,
meteorological, and near-shore current meters throughout the Gulf; in-
situ observations data; economic assessment expertise; aerial photo
surveys to assess pre-and post landfall assessments; and pre- and post-
oil contamination assessments of oysters at Mussel Watch sites.
NOAA's Office of Oceanic and Atmospheric Research (OAR)
dispatched the R/V Pelican ship along with National Institute for
Undersea Science and Technology cooperative scientists to collect
samples as soon as possible. OAR is advising on airborne and oceanic
dispersion modeling. NOAA and university scientists are also flying
NOAA's P3 hurricane hunter aircraft to drop expendable probes to map
the ocean current, salinity, and thermal structure from 1000 m depth to
the surface that will refine and calibrate loop current modeling. These
deployments will be critical for helping to track where the oil might
be headed and whether other areas of the United States will be impacted
by the Deepwater Horizon oil spill. In addition, NOAA-funded Sea Grant
programs in Louisiana and other Gulf Coast states will be awarding
grants for rapid response projects to monitor the effects of the oil
spill on Louisiana's coastal marshes and fishery species.
NOAA's National Marine Fisheries Service (NMFS) is
addressing issues related to marine mammals, sea turtles, seafood
safety, and fishery resources. On May 2, 2010, NMFS closed commercial
and recreational fishing in oil-affected portions of federal waters in
the Gulf for ten days. NOAA scientists are on the ground in the spill
area taking water and seafood samples to ensure the safety of seafood
and fishing activities. On May 7, NMFS made effective an amendment to
the emergency closure rule which adjusted the shape of the closed area
to be more consistent with the actual spill location. On May 11, 2010,
NMFS filed an emergency rule to establish a protocol to more quickly
and effectively revise the closing and opening of areas affected by the
oil spill. Due to the shifting currents and winds, rapid changes in the
location and extent of the spill are occurring, which requires NMFS to
update the dimensions of the closed area, as necessary, to ensure
fisher and consumer safety without needlessly restricting productive
fisheries in areas that are not affected by the spill. In addition,
NOAA's Marine Animal Health and Stranding Response Program is assisting
the Wildlife Operations Branch of the Unified Command to provide
expertise and support for the response efforts to the Deepwater Horizon
oil spill. Established protocols and procedures for treating marine
wildlife impacted by oil have been developed by NOAA and its partners
and are being adapted to address the particular needs of this event.
NOAA's National Environmental Satellite, Data, and
Information Service is providing satellite imagery from NOAA's
Geostationary Operational Environmental Satellites and Polar
Operational Environmental Satellites, and is leveraging data from the
National Aeronautics and Space Administration and international
satellites to develop experimental and customized products to assist
weather forecasters and oil spill response efforts. NOAA's National
Data Centers are also providing data from its archives that are being
used to help provide mapping services for the impacted areas, and
temperature, salinity, current, and surface elevation (tides) with
forecasts up to 72 hours out from the Navy Global Ocean Coastal Model.
NOAA's Office of Marine and Aviation Operations has 3
aircraft providing support for overflights that are being conducted on
a near daily basis.
The NOAA General Counsel's Office is working closely with
state and federal co-trustee agencies to undertake a natural resource
damage assessment and other steps to prepare claims for response costs
and damages for natural resource injuries associated with the oil
spill. The Office is also addressing a wide range of legal questions
that arise in conjunction with the spill.
The NOAA Communications office has provided two to three
communications specialists to assist in the Joint Incident Center with
press and all communications efforts. Within NOAA, the staff has been
facilitating scientist interviews with media and working with the
Office of Response and Restoration to update daily a dedicated NOAA
Deepwater Horizon response web site with the latest information and
easy-to-use fact sheets on topics ranging from oil and coral reefs to
an explanation of the booms being used.
NOAA'S ROLE IN DAMAGE ASSESSMENT AND RESTORATION
Oil spills affect our natural resources in a variety of ways. They
can directly impact our natural resources, such as the oiling of marine
mammals. They can diminish the ecological services provided by coastal
and marine ecosystems, such as the loss of critical nursery habitat for
shrimp, fish, and other wildlife that may result from oiled marshes.
Oil spills may also diminish how we use these resources, by affecting
fishing, boating, beach going, and wildlife viewing opportunities.
Stewardship of the Nation's natural resources is shared among
several federal agencies, states, and tribal trustees. NOAA, acting on
behalf of the Secretary of Commerce, is the lead federal trustee for
many of the nation's coastal and marine resources, and is authorized
pursuant to the Oil Pollution Act of 1990 (OPA) to recover damages on
behalf of the public for injuries to trust resources resulting from an
oil spill. OPA encourages compensation in the form of restoration and
this is accomplished through the Natural Resource Damage Assessment
(NRDA) process by assessing injury and service loss, then developing a
restoration plan that appropriately compensates the public for the
injured resources. NOAA scientists and economists provide the technical
information for natural resource damage assessments and work with other
trustees and responsible parties to restore resources injured by oil
spills. To accomplish this effort, NOAA experts collect data, conduct
studies, and perform analyses needed to determine whether and to what
degree coastal and marine resources have sustained injury from oil
spills. They determine how best to restore injured resources and
develop the most appropriate restoration projects to compensate the
public for associated lost services. Over the past 20 years, NOAA and
other natural resource trustees have recovered over $500 million worth
of restoration projects from responsible parties for the restoration of
the public's wetlands, coral reefs, oyster reefs, and other important
habitats.
The successful recovery of injured natural resources depends upon
integrated spill response and restoration approaches. The initial goals
of a response include containment and recovery of floating oil because
recovery rates for floating oil can be quite high under certain
conditions. As the oil reaches the shoreline, clean-up efforts become
more intrusive and oil recovery rates decline. At this point, it
becomes important to recognize that certain spill response activities
can cause additional harm to natural resources and actually slow
recovery rates. Such decision points need to be understood so that cost
effective and successful restoration can take place. NOAA brings to
bear over 20 years of experience and expertise to these issues.
Continued research on clean-up and restoration techniques and the
recovery of environmental and human services after oil spills may
improve such decision-making.
NOAA'S DAMAGE ASSESSMENT AND RESTORATION EFFORTS FOR THE DEEPWATER
HORIZON OIL SPILL
At the onset of this oil spill, NOAA quickly mobilized staff from
its Damage Assessment Remediation and Restoration Program to begin
coordinating with federal and state co-trustees and the responsible
parties, to begin collecting a variety of data that are critical to
help inform the NRDA. NOAA is coordinating the NRDA effort with the
Department of the Interior as a federal co-trustee, as well as co-
trustees in five states and representatives for at least one
responsible party (BP).
Although the concept of assessing injuries may sound relatively
straightforward, understanding complex ecosystems, the services these
ecosystems provide, and the injuries caused by oil and hazardous
substances takes time--often years. The time of year the resource was
injured, the type of oil or hazardous substance, the amount and
duration of the release, and the nature and extent of clean-up are
among the factors that affect how quickly resources are assessed and
restoration and recovery occurs. The rigorous scientific studies that
are necessary to prove injury to resources and services may also take
years to implement and complete. The NRDA process described above
ensures an objective and cost-effective assessment of injuries --and
that harm to the public's resources is fully addressed.
While it is still too early in the process to know what the full
scope of the damage assessment will be, NOAA is concerned about the
potential impacts to fish, shellfish, marine mammals, sea turtles,
birds, and other sensitive resources, as well as their habitats,
including wetlands, beaches, bottom sediments, and the water column.
This may include national estuarine research reserves and national
marine sanctuaries. The natural resources co-trustees may also evaluate
any lost value related to the use of these resources, for example, as a
result of fishery and beach closures.
VALUE OF READINESS
This event is a grave reminder that spills of national significance
can occur despite the many safeguards and improvements that have been
put in place since the passage of the OPA. Although the best remedy is
to prevent oil spills, oil spills remain a concern given the offshore
and onshore oil infrastructure, pipes and vessels that move huge
volumes of oil through our waterways.
To mitigate environmental effects of future spills, responders must
be equipped with sufficient capacity and capabilities to address the
challenge. Response training and exercises are essential to maintaining
capabilities. Continuous training, improvement of our capabilities,
maintenance of our capacity, and investments in high priority,
response-related research and development efforts will ensure that the
nation's response to these events remains effective. Training and
coordination with other federal, state and local agencies that might
have response and restoration responsibilities is critical to success
in mitigating effects of future spills.
Just two months ago, NOAA participated in an oil spill exercise
that focused on a hypothetical spill of national significance. This
type of exercise is held every three years to sharpen the Nation's
ability to respond to major oil spills at all levels of government. Led
by the USCG, this exercise included more than one thousand people from
twenty state and federal agencies as well as industry. This year's
exercise centered on a simulated tanker collision off the coast of
Portland, ME resulting in a major oil spill causing environmental and
economic impacts from Maine to Massachusetts. Lessons learned from this
and similar drills have improved our readiness to respond to oil
spills. One tool that was successfully incorporated into this recent
exercise is called the Environmental Response and Management
Application (ERMA). This tool was developed by NOAA to streamline the
integration and sharing of data and information, and certain components
of this tool are now being used in the Deepwater Horizon response
effort. ERMA is a web-based Geographic Information System tool designed
to assist both emergency responders and environmental resource managers
who deal with events that may adversely impact the environment. In the
recent drill, ERMA allowed for the integration of current science,
information technology, and real-time observational data into response
decision-making. It allowed the latest information that was collected
from a variety of efforts related to spills of national significance to
be integrated, displayed on a map and shared for use across the
Incident Command structure. Although not fully functional in the Gulf
of Mexico, ERMA is providing benefits for the Deepwater Horizon
response, many of which were first tested during the recent oil spill
exercise. This recent drill also incorporated the damage assessment
efforts of the trustees, which resulted in improved communications and
leveraging of resources and information.
ACTIVITIES TO IMPROVE FUTURE RESPONSE EFFORTS
Activities that would benefit the Nation by improving our ability
to quickly respond to and mitigate damages from future spills include:
Response capacity--NOAA's Office of Response and
Restoration is fully engaged in responding to the Deepwater Horizon
spill. Although unlikely, if another large spill was to occur
simultaneously in another location across the United States, NOAA would
have difficulty responding to its complete ability. Additional
expertise in analytical chemistry, environmental chemistry, biology,
oceanography, natural resource damage assessment, administrative
functions, and information management would help plan and prepare
activities between spills including training, development of area plans
and response protocols, drafting and reviewing response job aids, and
coordinating with regional responders.
Response effectiveness--The use of simulated drills and
the continued development of tools and strategies can only increase the
effectiveness of oil spill response. Specific activities that would
increase response effectiveness include:
Environmental Sensitivity Index Maps--Environmental
Sensitivity Index (ESI) maps provide information that helps
reduce the environmental, economic, and social impacts from oil
and chemical spills. Spill responders are utilizing NOAA's ESI
maps to identify priority areas to protect from spreading oil,
develop cleanup strategies to minimize impacts to the
environment and coastal communities, and reduce overall cleanup
costs.
Data Management Tools for Decision Making--The key to
effective emergency response is efficiently integrating current
science, information technology, and real-time observational
data into response decision-making. NOAA has developed the
ERMA, which integrates real-time observations (e.g., NOAA
National Buoy Data Center data, weather data, shoreline data,
vessel traffic information, etc.) with archived data sources
(e.g., NOAA's National Oceanographic Data Center's historical
data) to aid in evaluating resources at risk, visualizing oil
trajectories, and for planning rapid tactical response
operations, injury assessment and habitat restoration. Having
access to retrospective data is critical to bring value to
real-time observational data being collected. For the Deepwater
Horizon oil spill, certain components of the Gulf of Mexico
ERMA are functional and being used on an ad hoc basis. The only
fully functional ERMA are in the U.S. Caribbean and New
England.
Use of Relevant Technologies--Better use of remote-
sensing technologies, unmanned aerial vehicles, and an improved
ability to access and use real-time observation systems would
optimize clean-up operations. For example, when oil spreads
across the water it does not do so in a uniform manner. Oil
slicks can be quite patchy and vary in thickness. The
effectiveness of response options--the booms, skimmers, and
dispersants--depends on whether they are applied in the areas
of the heaviest oil. NOAA's trajectory modeling and visual
observations obtained through overflights are helping direct
the application of spill technologies, but remote sensing
technology could be used to more effectively detect oil,
determine areas of heaviest amounts of oil, and then this
information could be used to direct oil skimming operations and
increase the recovery of spilled oil. Traditional methods of
visual observation can be difficult at night or in low
visibility conditions, as is the case with Deepwater Horizon.
In such situations, enhanced remote sensing technology would
allow NOAA to improve the trajectory models it produces for the
Unified Command.
Real-time Observation Systems--Real-time data on
currents, tides, and winds are important in driving the models
that inform us on the likely trajectory of the spilled oil. As
the Integrated Ocean Observing System generates more data from
technological advances like high frequency radar, the
prediction of oil location can be improved by pulling these
observations into trajectory models in real-time.
Research and development--Research and development is
critical to ensure the latest science informs response efforts.
Priority areas for future research and development include:
Fate and Behavior of Oil Released at Deep Depths--A
better understanding is needed of how oil behaves and disperses
within the water column when released at deep depths, such as
happened with the Deepwater Horizon oil spill. This is also
true regarding the use of dispersants in deep water. This
information is critical to develop oil spill trajectory models
and improve our understanding of the potential short- and long-
term effects of dispersants on the environment.
Long-Term Affects of Oil-- Spilled oil can remain on the
shoreline and in wetlands and other environments for years.
More than twenty years later, there is still oil in Prince
William Sound from the Exxon Valdez spill. Research is needed
to improve our understanding of the long-term effects of oil on
sensitive and economically important species. This
understanding will improve decision making during a response
and allow us to determine the best approach to clean up.
Arctic--Continued acceleration of sea-ice decline in the
Arctic Ocean as a consequence of global warming may lead to
increased Arctic maritime transportation and energy exploration
that in turn may increase the potential of oil spills in the
Arctic. Recent studies, such as the Arctic Monitoring and
Assessment Programme's Oil and Gas Assessment, indicate that we
currently lack the information to determine how oil will behave
in icy environments or when it sinks below the surface. We also
lack a basic understanding of the current environmental
conditions, which is important for conducting injury
assessments and developing restoration strategies.
Mapping Oil Extent--Current use of NOAA-generated
experimental products suggest that data from space-based
synthetic aperture radar could assist us in detecting and
refining the areal extent of oil and provide information in the
decisions about where resources could be deployed.
Oil Detection in Water Column and Seafloor--In addition
to depth data, modern multibeam echo sounders record acoustic
returns from the water column and acoustic backscatter
amplitude returns from the seafloor. In limited research
applications, these systems have been able to detect oil in the
water column and on the seafloor. Sensors on autonomous
vehicles that detect the presence of oil and gas in the water
column are another detection technology. If these technologies
could be used to provide highly accurate information on where
oil is, and where it isn't, such information would be of
significant benefit to a spill response such as Deepwater
Horizon, where timely and precise placement of limited
resources are critical to mitigate spill impacts. This
developmental effort could provide very useful data for later
response and restoration efforts.
Human Dimensions--Research on how to incorporate
impacted communities into the preparedness and response
processes could help to address the human dimensions of spills,
including social issues, community effects, risk communication
methods, and valuation of natural resources.
CONCLUSION
NOAA will continue to provide scientific support to the Unified
Command. NRDA efforts in coordination with our federal and state co-
trustees have begun. I would like to assure you that we will not relent
in our efforts to protect the livelihoods of Gulf Coast residents and
mitigate the environmental impacts of this spill. Thank you for
allowing me to testify on NOAA's response efforts. I am happy to answer
any questions you may have.
______
The Chairman. Ms. Birnbaum.
STATEMENT OF S. ELIZABETH BIRNBAUM, DIRECTOR, MINERALS
MANAGEMENT SERVICE, U.S. DEPARTMENT OF THE INTERIOR
Ms. Birnbaum. Thank you, Chairman Rahall and members of the
Committee, for the opportunity to discuss the Minerals
Management Service's ongoing response to the explosion of the
Deepwater Horizon drilling rig. Before I begin my testimony, I
want to express how saddened I and all MMS staff are over the
tragedy that began with the loss of life on April 20 onboard
the Deepwater Horizon, and continues as we speak with the oil
spill in the Gulf.
Many MMS staff have worked their entire careers to prevent
this kind of thing from happening, and we will not rest until
we determine the causes so that we can do everything possible
to reduce the risk of its happening again.
Secretary Salazar spoke earlier about the Department's role
in the unified command structure, so I would like to focus on
MMS's role in the response effort. MMS has chiefly been
involved in overseeing efforts to stop the flow of oil
permanently, in establishing new safety measures for oil and
gas drilling, and in investigating the root causes of the
accident. MMS response to this incident began immediately. MMS
staff were onsite at the BP and Transocean incident command
post in Houston on the morning of April 21st.
The same day, MMS established an emergency operations
center at our Gulf of Mexico regional office in New Orleans. By
Friday, April 23rd, we had posted additional personnel at the
incident command center in Houston, the MMS emergency
operations center, the unified command in Robert, Louisiana,
and the Coast Guard area command in New Orleans.
On April 23rd, MMS staff began overseeing BP's effort to
develop an acceptable exploration plan for the two relief wells
that can permanently seek the leaking well. MMS reviewed and
approved all elements in the drilling application, and required
additional testing measures to increase the safety of the
relief wells, which will go as deep as the original well and
reach the same oil and gas reservoir. Drilling of the first
relief well began on May 2nd. MMS also continues to oversee
BP's efforts to close off the flow of oil at the wellhead. BP
is currently attempting a top-kill procedure. As we speak, they
are beginning to push drilling mud into the well at a rate that
will cataract the pressure of the oil and gas, and then if the
procedure is successful, seal the wellhead with cement. All of
these measures have been taken with the immediate oversight of
MMS, and at our urging, BP is consulting the broadest possible
array of drilling engineers.
In addition to intervention at the wellhead, MMS also
continues to oversee efforts to contain the oil flowing from
the broken rise lying along the sea floor. The riser insertion
tube tool has brought more than 20,000 barrels of oil directly
to the surface and into a production vessel rather than
polluting the ocean.
Another priority for MMS is to determine the root cause of
these events. MMS has begun a joint investigation with the
Coast Guard under the formal Marine Board procedures. In
addition, Secretary Salazar has established an OCS safety
oversight board at the Department to conduct a full review of
offshore drilling safety and technology issues. Also, later
this week, the Secretary will deliver a report to the President
on interim measures that can be taken to improve the safety of
OCS operations. These efforts will all support the special
Presidential commission announced last week.
In addition, at the direction of the Secretary, MMS has
taken several steps to increase offshore safety immediately. We
issued a safety alert reminding all operators of the urgency of
conducting all operations within the requirements of MMS
regulations and with the highest standards of safety in mind.
Our offshore inspectors made an immediate sweep of all
deepwater drilling rigs, and have now moved on to a thorough
inspection of all deepwater production platforms.
We have placed a temporary moratorium on the issuance of
any permits for drilling new wells pending the completion of
the Secretary's interim safety report to the President. This
tragedy has made the importance and urgency of the Secretary's
broader reform agenda for MMS ever more clear. The secretarial
order signed last week will reorganize MMS into three separate
entities: the Bureau of Ocean Energy Management, the Bureau of
Safety and Environmental Enforcement, and the Office of Natural
Resources Revenue. Over the next month, the Department will
develop a schedule for implementing the reorganization in
consultation with this and other jurisdictional committees.
Mr. Chairman, from the night of April 20th, MMS's highest
priority has been to shut off the source of oil. I assure you
that MMS staff across the Nation are fully engaged in response
efforts to this tragic incident as we strive to respond to the
immediate effects of the blowout and ensure greater safety for
drilling operations in the future.
That concludes my prepared statement. I would be happy to
answer any questions.
[The prepared statement of Ms. Birnbaum follows:]
Statement of S. Elizabeth Birnbaum, Director, Minerals Management
Service, U.S. Department of the Interior
Thank you, Chairman Rahall, Ranking Member Hastings, and Members of
the Committee, for the opportunity to discuss current activities at the
Department of the Interior related to oil and gas exploration on the
Outer Continental Shelf, and in particular, the Minerals Management
Service's (MMS) participation in the ongoing response to the explosion
of the Deepwater Horizon drilling rig.
Before I begin my testimony, I want to express how saddened I and
all MMS staff are over the tragedy that began with the loss of life on
April 20, on board the Deepwater Horizon, and continues as we speak
with the oil spill in the Gulf. Many MMS staff have worked their entire
careers in an effort to prevent this kind of thing from happening, and
we will not rest until we determine the root causes so that we do
everything possible to reduce the risk of its happening again.
The Deepwater Horizon oil spill has been declared a ``spill of
national significance'' by the Department of Homeland Security and is
of grave concern to the Minerals Management Service and the Department
of the Interior. The Obama Administration and the Department are
dedicating every available resource to ensure that BP and other
responsible parties meet their responsibilities to stop the flow of oil
and clean up the pollution, and to comprehensively and thoroughly
investigate these events.
At the President's direction, his entire team is dedicated to
making sure the oil spill is stopped, the cleanup is completed, and the
people, the communities, and the affected environment are made whole.
We are fighting the battle on many fronts. MMS has chiefly been
involved in overseeing efforts to stop the flow of oil permanently, in
investigating the root causes of the explosion and subsequent oil
spill, and in establishing new safety measures for oil and gas
drilling.
Secretary Salazar spoke before this Committee earlier about the
Department's role in the Unified Command structure, so I would like to
focus my testimony today on MMS's roles and activities in the response
effort. At present, approximately 170 MMS employees are stationed at
various locations and command stations throughout the Gulf region
responding to this crisis. From the night of April 20, MMS's highest
priority has been to shut off the source of oil. Permanent closure of
the well will take several weeks yet as BP finishes drilling a relief
well to stop the flow of oil from the damaged well at its source. In
addition to authorizing the drilling of two relief wells, we also have
a team stationed at BP headquarters in Houston, overseeing efforts to
engineer a solution that can stop the flow of oil at the wellhead. That
effort has been joined by industry experts, scientists from the
Department of Energy's National Labs, and Dr. Marcia McNutt, the
director of the U.S. Geological Survey, all focusing their expertise on
strategies to kill the well.
MMS's response to this Deepwater Horizon event began immediately
upon notification of the explosion.
Staff were dispatched to the BP and Transocean Incident Command
Posts in Houston and they were on site the morning of April 21. The
same day, MMS established an Emergency Operations Center at our Gulf of
Mexico Regional Office in New Orleans. By Friday, April 23, we had
posted additional personnel at the Incident Command Centers for BP and
Transocean in Houston, and at the MMS Emergency Operations Center, the
Joint Information Center (JIC), the Unified Command and the U.S. Coast
Guard Area (USGC) Command in New Orleans.
On April 23, MMS staff began working closely with BP to develop an
acceptable exploration plan for the two relief wells that can
permanently seal the leaking well. (Only one relief well is necessary;
the second is being drilled as a precautionary back-up.) By April 26,
Applications for Permit to Drill (APDs) for both relief wells were
submitted by BP and underwent review by MMS engineers and management.
Before approving the APDs, MMS had to review and approve all elements
required in the APD. Some of these elements include the safety
equipment such as the blow out preventers and diverters; well design;
casing, cementing and drilling fluids programs; and many others.
Additional testing measures were proposed by BP and required by MMS to
increase the safety of the relief wells, which will go as deep as the
original well and reach the same oil and gas reservoir.
Concurrently, the drilling rigs Development Driller III and
Development Driller II were being moved to the site of the Deepwater
Horizon oil spill. Drilling commenced on the first relief well on May
2. MMS is actively overseeing all drilling and support operations for
the relief wells, 24 hours a day--7 days a week, with MMS personnel
located on the Development Driller III (drilling relief well #1),
Development Driller II (drilling relief well #2), and the Q4000 (a
deepwater intervention vessel assisting in the relief well activities).
Even before the relief well plans were submitted, MMS was also
overseeing BP's efforts to close off the flow of oil at the wellhead.
MMS oversight of this BP effort continues to this day. Initial attempts
to close the blow-out preventer (BOP) using the approved secondary
mechanism of a ``hot stab'' from a remote operating vehicle (ROV) did
not succeed. Since then, efforts to re-engineer the BOP stack while it
sits on the wellhead have had varying degrees of success. BP is
currently attempting a ``top kill'' procedure to close off the flow at
the wellhead. As we speak, final preparations are being made to push
drilling mud into the well at a rate that will counteract the pressure
of the oil and gas, and then, if the procedure is successful, seal the
wellhead with cement. Again, all of these measures have been taken with
the continuous oversight of MMS, and with BP, at our urging, consulting
the broadest possible array of drilling engineers.
In addition to these intervention efforts at the wellhead, MMS also
has overseen the effort to engineer containment of the flow of oil from
the broken riser lying along the sea floor. BP has seen some success
with the riser insertion tube tool, or RITT, which has brought some oil
and gas directly to the surface and into a production vessel, reducing
the amount of oil that is polluting the ocean. MMS personnel are on the
vessel Enterprise monitoring the flow of liquid as it is brought onto
the ship for containment and storage.
Currently, MMS's response is varied in both technical and
geographic scope. MMS engineers in Houston continue to review and
provide input for various source control procedures and updates and
recommendations to the MMS managers and engineers in the Unified
Command in Robert, LA, prior to MMS approval of proposed activities. At
the Unified Command, MMS regional managers actively participate in
meetings, review and approve procedures, and provide support for
ongoing Unified Command activities. MMS's regional engineers continue
to provide information for the other command centers, MMS Headquarters
and other Federal bodies, at the same time that they review procedures,
and compile and send operation updates.
As I noted, another priority for MMS is to determine the root
causes of these events. Under an agreement signed by Secretary Salazar
and Secretary Napolitano, we have begun a joint investigation between
the Coast Guard and MMS under the Coast Guard's formal Marine Board
procedures to discover the root causes of the explosion and the
resulting oil spill. That investigation will take several months. One
major factor affecting this timeline is that investigators will need
access to the BOP stack that must remain on the seabed until the well
is permanently sealed. In addition, Secretary Salazar has established
an Outer Continental Shelf Safety Oversight Board to conduct a full
review of offshore drilling safety and technology issues. Also, later
this week, the Secretary will deliver a report to the President on
interim measures that can be taken to improve the safety of Outer
Continental Shelf operations. And, at the request of the Secretary, the
National Academy of Engineering, a highly regarded organization
affiliated with the National Academy of Sciences, will conduct an
independent, science-based analysis of the root causes of the Deepwater
Horizon oil spill so that corrective steps can be taken to address any
engineering or mechanical shortcomings that may be uncovered. These
efforts will all support the larger investigation the President has
announced, which will be conducted by a special Presidential
commission.
In addition to shutting down this well and investigating the root
causes of the events, the MMS has taken several steps to increase
offshore safety at the direction of the Secretary. We issued a safety
alert to all operators reminding them of the urgency of conducting all
operations within the requirements of MMS regulations and with the
highest standards of safety in mind. Our offshore inspectors made an
immediate sweep of inspections of all deepwater (water depth of 1000
feet or greater) rigs, and have now moved on to a thorough inspection
tour of all deepwater production platforms. In accordance with the
Secretary's direction, we also have placed a temporary moratorium on
issuance of any permits for drilling new wells, pending the completion
of the Secretary's report to the President regarding interim measures
to increase drilling safety.
Broader reforms at MMS are also in the works. This tragedy and the
massive spill for which BP and others bear responsibility have made the
importance and urgency of the Secretary's reform agenda ever more
clear. The Minerals Management Service has three distinct and
conflicting missions--enforcement, energy development, and revenue
collection--that must be divided. The Secretarial Order that Secretary
Salazar signed last week will establish three separate entities as
follows:
The Bureau of Ocean Energy Management will be a new
bureau under the supervision of the Assistant Secretary for Land and
Minerals Management that will be responsible for the sustainable
development of the Outer Continental Shelf's conventional and renewable
energy and mineral resources, including resource evaluation, planning,
and other activities related to leasing.
The Bureau of Safety and Environmental Enforcement will
be a new bureau under the supervision of the Assistant Secretary for
Land and Minerals Management that will be responsible for ensuring
comprehensive oversight, safety, and environmental protection in all
offshore energy activities.
The Office of Natural Resources Revenue will be a new
office under the supervision of the Assistant Secretary for Policy,
Management, and Budget that will be responsible for the royalty and
revenue management function including the collection and distribution
of revenue, auditing and compliance, and asset management.
Over the next month, the Department will develop a schedule for
implementing the reorganization in consultation with this and other
jurisdictional Congressional committees. This reorganization will
strengthen oversight of offshore energy operations, improve the
structure for revenue and royalty collections on behalf of the American
people, and help our nation build the clean energy future we need.
I assure you that MMS staff across the nation are fully engaged in
response efforts to this tragedy, supporting our team members in the
Gulf of Mexico Region, the Department and the Unified Command by
providing information and personnel to support any necessary decisions
and activities as we strive to respond to the immediate effects of this
tragedy and ensure greater safety for drilling operations in the
future.
Mr. Chairman, that concludes my prepared statement. I would be
happy to respond to questions you or Members of the Committee have.
______
The Chairman. Thank you. The Chair does wish to thank all
of you for your service, and we know that this tragedy has put
particular pressures upon each of your agencies and yourselves
as well, and we do appreciate the sacrifices you have been
making.
Let me ask my first question of Admiral Watson. As was made
clear at last week's Transportation Committee hearing, the
Coast Guard does not directly review the oil spill response
plans that are filed with MMS. I think that needs to be
changed. We should not just assume that these plans are
consistent with Coast Guard procedures.
I also believe we are going to need more response planning
for each new well, not just relying on a regional plan. My
question would be, would the Coast Guard have the resources
necessary to review all of these plans if Congress mandated it?
In other words, what I would like to see here is a better
communication between MMS and the Coast Guard. I believe you
should be talking with each other about reviewing these plans,
and not just relying upon assurances from the oil companies
that if a bust were to occur, that all is going to be OK, we
can handle it. That seems to be what is happened in this
particular case, and it would appear that if there had been
better communication beforehand between you and MMS, perhaps we
would have had a better response plan.
Admiral Watson. Yes, sir. I think I agree with you that we
would need more resources for that kind of a program. We do
review plans for all tank vessels and all non-tank vessels and
put a Coast Guard stamp of approval on those plans. And when
they are reviewed, the review is integrated with our knowledge
of our own response capabilities, as well as those of the
response industry that is out there that the companies who
submit these plans are referring to in their plans.
And then in addition to that, we have local area
committees, as well as regional response teams and their
regional plans, to know specifically what the requirements
might be were a certain quantity of oil to be spilled in a
certain location.
So I think there could be some improvement for the mobile
offshore drilling rigs if we were to collaborate a little bit
better with MMS on the review and approval of those plants. It
is hard for me to estimate the amount of extra manpower we
would need to do that at this time.
The Chairman. Ms. Birnbaum, do you wish to comment on that?
Ms. Birnbaum. Yes. MMS is given the primary responsibility
for reviewing offshore drilling oil spill response plans under
the executive order dividing up the responsibilities under the
OPA. We have made those plans available to the Coast Guard to
review, as well as doing our own review. But I think that we
are all learning from this incident that we would probably do
well to coordinate more closely on the review of those plans.
The Chairman. While many people may criticize the response
to the Deepwater Horizon disaster, it occurred in the Gulf,
which has a long history of oil and gas development, and as
such has an infrastructure in place to respond to incidents. I
do not believe such an infrastructure is in place in the
Atlantic Coast, however, where oil and gas leasing is being
contemplated, particularly off the coast of Virginia.
Does the area contingency plan around Virginia envision
responding to an event like what we are grappling with in the
Gulf of Mexico?
Admiral Watson. Sir, I have not reviewed the area
contingency plan for Virginia specifically, but I have a lot of
experience in different parts of the country, including
Savannah, Georgia--I was there--Miami, Florida, San Diego,
California. And in general, there is not an assumption that
there is going to be an open well that is emitting oil
continuously for over a month in any of those plans. And so
even in the Gulf of Mexico, that was not, I do not think, an
assumption that was built into the area contingency plans.
The Chairman. Let me ask NOAA and MMS. It has been alleged
that MMS repeatedly approved lease sales, exploration permits,
and plans, and development plans in the Gulf of Mexico without
conducting the necessary consultations required to protect
endangered species and marine mammals. Is this true?
Ms. Birnbaum. Under the Endangered Species Act, we have
consulted with the Fish and Wildlife Service. We have one
biological opinion for sperm whales that governs our activities
in the Gulf of Mexico. And we conducted an informal
consultation indicating that there were no other species for
which they believed their biological opinion was to be
necessary.
With respect to NOAA, NOAA has the lead on whether MMPA
consultations are necessary, and I will let Director Lubchenco
speak to that.
Dr. Lubchenco. Mr. Chairman, we have provided general
comments to MMS on five-year plans, on their NEPA analyses, and
associated biological opinions in the Gulf of Mexico. And I
think it is fair to say that in our comments, we have expressed
concern about possible consequences of oil spilled on species
at risk, but we have not independently evaluated or calculated
the risk of oil spills. And we have taken MMS's calculations
about the estimated likelihood of a spill. And I think it is
appropriate to review the processes that are used in doing
that.
The Chairman. So do you feel your recommendations, NOAA's
recommendations, are taken into account by MMS? Or are they
just put on a shelf?
Dr. Lubchenco. Mr. Chairman, we submit comments as part of
a formal process when they are invited. There is no formal
mechanism on a routine basis for MMS replying back to us.
The Chairman. When invited. You are not required to submit
such?
Dr. Lubchenco. We are required. So MMS prepares a five-year
plan, for example. We provide comments on that five-year plan.
And in many cases, those comments may be incorporated into a
decision or not. We do not have any authority in this manner.
We simply are in a position of providing comments. And MMS can
use those comments as they choose. In some cases, it is pretty
clear that comments have influenced a decision and changed
things. In many cases, they have not.
The Chairman. Nice diplomatic answer. Thank you. The
gentleman from Louisiana.
Mr. Cassidy. First, I will make a comment, probably
addressed to all three. But it is fairly clear to me that there
was no gaming out of a deepwater spill. And so fairly clear
about that.
Second, I am very frustrated, Dr. Lubchenco. I am sorry. I
am from Louisiana, and we have been putting all this money into
the Minerals Management Services. Here I see your testimony, in
which you say, well, future research and development, the fate
and behavior of oil released at deep depths. Then I look at my
2003 National Research Council book, Oil and the Fate of Oil in
the Sea, and it says, ``MMS, Coast Guard, and NOAA should come
together to study the fate of oil released into the sea.''
Now, this is 2003. The only thing we are going to add here
is the adjective ``deep.'' But I gather despite these
recommendations--and granted, this is before your beat. I will
be fair, although I gather that nothing has happened in the
last year and a half, as far as I can tell. And I am sorry if I
am letting my frustration bubble out. I would like your
comments on that. Why are we still talking about seven years
later something that in 2003 was recommended, and now we do not
know how that deepwater plume is going? We do not know what its
long-term effect is going to be. We do not know what those
dispersants are going to do. I am sorry. Any comments, Dr.
Lubchenco?
Dr. Lubchenco. Yes, Congressman. I share your frustration
that we have not as much information about the transport and
impact of oil in the Gulf as we should.
Mr. Cassidy. And so it really seems as if our spills of
national significance have ignored the fact that as we go to
the OCS, it changes the dynamic. And so that is why when I hear
that there is a whole crowd of people out in the Gulf of Mexico
with a great response, I am thinking, you would not need that
crowd if we had had better planning. No offense. But it takes
more people to clean up a mess than it does if the mess does
not occur. And so if we had actually planned in the deepwater
spill, I have a sense that we would not need this huge number
of people, and we would have a better effect. That is just an
editorial comment.
I looked on your NOAA ship tracker. Now as best as I can
tell, the Gordon Gunter arrived I guess in the last three days.
The Pisces went to port roughly around Biloxi and has not been
out. And then the Thomas Jefferson is out there now, but was
not out there before. It seems like the NOAA research ships
have been fairly late to the game. Why weren't they deployed
right after--if we are looking at the plume, why weren't they
deployed right after the spill?
Dr. Lubchenco. Congressman, each of those ships was
involved in a particular activity, and we have repurposed those
ships, turned them around, refitted the equipment that they
need to do these particular jobs as rapidly as was possible.
The Thomas Jefferson, for example----
Mr. Cassidy. So I understand that, and I accept that. So
why not contract with a private entity?
Dr. Lubchenco. We have in fact done that. We have reached
out to our academic partners and utilized the vessels that they
have, and we have also been contracting with fishing vessels to
help acquire additional information.
Mr. Cassidy. Now, I am told that for deepwater, those are
typically limited, that things like gliders or ROVs would be of
help. Woods Hole has an ROV. Has that been deployed? Or are we
depending entirely upon industries ROVs for the deepwater
analysis?
Dr. Lubchenco. We have had good communications with the
research institutions that have ROV capabilities, have
remobilized some of them to the Gulf. They have been----
Mr. Cassidy. So there are research ROVs in the Gulf right
now?
Dr. Lubchenco. Yes, sir, there are. There is one from the
Monterey Bay Aquarium Research Institute that is in the Gulf.
It has been in the Gulf waiting. It was our hope that it could
be taking data in the vicinity of the plume and help us get
better information on the flow rates, but that has not been the
highest priority, and there was concern that I believe is
legitimate concern about possibly interfering with the efforts
to stop the flow of oil. And so that and other ROVs are being
considered to do other tasks in the area, not simply getting
better information about the flow rate.
Mr. Cassidy. OK. Ms. Birnbaum, the advanced drilling
permit. BP has released information, and as I have discussed
this with folks, one of the things it shows is, as we know,
there seems to be a pressure leak. It may have been a seal; it
may have been the shoe. Their concern is now that the mud--when
they laid the cement at the end, just before the explosion,
they evacuated all of the mud, and it was only seawater
providing downward pressure upon the bubbling gas. That is as
it was explained to me by people who know far more than me.
I guess my question is, did MMS have to sign off on that,
or is that something that is within the flexibility of the
decision to allow a drilling project?
Ms. Birnbaum. First, I cannot speculate on what happened
with this particular well while the investigation is going on.
I have heard a lot of reports about things that might have
happened, and we have seen BP's account of it. But again, that
is from one of the interested parties. We have a joint
investigation going on. And the particular----
Mr. Cassidy. Now, the only reason I say that is because the
E&C Committee has released the BP document in which they show
the diagrams.
Ms. Birnbaum. I agree. BP has given their version of the
story. However, I will speak to the general question, which is
that the replacement of drilling mud with seawater is a normal
part of the course of completing a well. In order to keep the
drilling mud from polluting the ocean, we require that it be
brought back up into the drilling rig. It is not supposed to be
done until the well is sealed and under control. If that was a
contributing factor, then obviously that was not done in
accordance with our regulations.
Mr. Cassidy. So the ADP--I do not know. I am not
challenging you; I am just asking for clarify. So the ADP would
have said, keep the mud in there until you have sealed it. And
if it turns out the hypothetical is true, that they removed the
mud before they finished sealing the cement, that would have
been in contradiction to your normal operating procedures.
Ms. Birnbaum. To our regulations, correct.
Mr. Cassidy. OK. Let us see. Paper, paper everywhere, and I
cannot find my questions now. I will yield back, and I will
come back. Thank you.
The Chairman. The gentleman from Oregon, Mr. DeFazio.
Mr. DeFazio. Thank you, Mr. Chairman. Admiral, I am bit
confused, and this seems to fall in the jurisdiction of Coast
Guard and EPA about the dispersant issue. It was an order, it
seems to me, was sent to BP, saying, we want you to use--to
limit or eliminate the use of Corexit because it is highly
ineffective and highly toxic. If you look at the schedule of
the 18 approved substances, it is one of the least effective
and one of the most toxic. And substitute something else. BP
essentially ignored that order and has continued to use
Corexit. The EPA has said they are disappointed in the
response. I mean, at what point can we just order them to do
something in this case?
Admiral Watson. Sir, we can order them at any point. That
is the role of the Federal on-scene coordinator when it becomes
necessary. The challenge I think that we were having as a
unified command there is the primary mission--and we hope it
will be satisfied today through the process--is to shut this
well in. And the sub-sea dispersant, the sub-sea use of that
Corexit was not only dispersing the oil, but it was also
knocking down the volatile organic compounds that come up from
that well right into the area where all of these vessels are
working on the surface to cap that well.
And so we were convinced that we needed to continue with
those dispersant applications sub-sea.
Mr. DeFazio. But I guess the question is they do have
100,000 gallons of an alternative on-hand, something called Sea
Brat No. 4, which can potentially degrade, one very small
fragment of it, to a potential endocrine disruptor. But there
are a whole lot of other things going on with Corexit that we
know are very toxic to the marine environment, living things
generally. And the question is, if we had concerns about the
toxicity--and also, Sea Brat is considered to be much more
effective as a dispersant--why wouldn't we order them to use
that, and then place orders for other things from the list
which are even less toxic than Sea Brat and even more
effective, because their excuse is, well, we did not order
them, and it would take them 10 to 14 days to get it to us.
Now if they fail today, we are now a week down the road
where they haven't placed an order for something less toxic and
more effective that we might need over the next two months if
they are not done today. So why wouldn't we have had them
substitute at least the less toxic one in the interim since we
expressed concern with that 100,000 gallons, which seems would
have taken them through this operation today? And why don't we
have in place an order saying, OK, we are concerned about the
gas reaching the surface and that. Use what you have, but we
want you to place an order for one of these others, or this
one, however you want to do it, that is much less toxic and
much effective. And as soon as you have an adequate supply,
substitute it.
It seems to me we are just not looking for--we are going to
let them coast another few days. This stuff is horrendous so
far as I can tell looking at the EPA chart. It is the second
most toxic of the 18.
Admiral Watson. Yes, sir. I cannot answer your question
about relative toxicity. I can answer----
Mr. DeFazio. Well, I am just going from the EPA chart. And
I am puzzled that the EPA administrator, who unfortunately is
not here, says, well, we want to do our own tests. Well, you
have already done tests. You already have the results. You have
already got a handy-dandy grid. But we are going to do more
tests and let them keep using Corexit, which is at the really
bottom of the barrel here, so to speak? And Exxon-Mobile and BP
happen to be involved with the company that makes Corexit,
strangely enough.
Admiral Watson. Right. The reason I think that they use
Corexit--it has been used by far more than any other dispersant
over the history of using dispersants.
Mr. DeFazio. Sure. And it has been banned in Britain, and
it is 20 years out of--you know, it is more than a 20-, 25-year
old chemical. There are new compounds out there. I understand.
But the question is, so you do not--let me perhaps turn to Dr.
Lubchenco then. Are you concerned about the toxicity of this
stuff and what it is going to do to the food chain and/or also
about this subsurface dispersing of the oil and what that means
in the water column?
Dr. Lubchenco. Congressman, I am concerned. And I think the
real concern is the total volume of dispersants that have been
used. I think we do not have any idea what the full
consequences of that is. I think that we need to--it is
probably time to take a good hard look at the dispersants that
are on that list and what the protocols are for using them. I
do not think that it was ever envisioned that they would be
used subsurface or in this particular volume. And those raise
some totally new questions.
I think it is important to take into account that
dispersants in general are less toxic than the oil. And so this
is a situation where there is no really good outcome here. We
are starting with a really bad situation, and the question is,
can you make it better. And we only have partial information to
make that decision.
Mr. DeFazio. But if after today they are not successful in
their top shot, it would seem to me that we would want to move
with some more dispatch to determining what is the best
alternative in terms of dispersants for the next two months
until they can intercept this well. And I would hope that the
Coast Guard would agree with that. And I certainly will be in
touch with the EPA because we can just keep kicking this can
down the road. They have an interest in Corexit; they can get
an infinite supply of it from their company in which they have
an interest. But we know it is pretty bad stuff. It may be
effective. It may have been used a lot. But it has been banned
in Britain. There are other alternatives that have been rated
both for their dispersal capabilities in certain conditions
with certain oils, and there are many things on the list which
seem to be much preferable to what is being used.
So, Admiral, do you have something?
Admiral Watson. Yes, sir. I just wanted to say that that
requirement has been placed onto BP. They are under an order
that has been coordinated between the Coast Guard and EPA to
evaluate all the dispersants on the list. There are various
problems of delivery of----
Mr. DeFazio. I have their----
Admiral Watson. Yes, sir. That is it. And they are going
through that list, and we are going to continue to press them
for another dispersant.
Mr. DeFazio. Well, I have been contacted by one of the
manufacturers. It is something that is rated as much less toxic
and much more effective, and that BP said, well, we would
consider using yours if you will give Exxon all the proprietary
information about your chemical. Exxon happens to be a
competitor in this.
So somehow we do not have the proprietary information about
Corexit, and we cannot provide it to the public, and we do not
know what to look for in the fish and the shellfish and
everything else in terms of toxic chemicals that are going to
be in the food chain. But someone who wants to compete with
them with something that is rated much less toxic has to
provide them with all the proprietary information.
I do not think this is a straight-up game, and I do not
think the response--you know, this was a non-response really,
you know. And I would be insulted if I had ordered them to
honestly evaluate alternatives, and I got this letter. And I
would hope that the Coast Guard and the EPA feel insulted, more
so than the rather bizarre and benign response I have seen in
the press so far. And I understand if the total focus was on
today's top shot, and you want to keep putting junk in there to
try and keep the stuff from welling up to the surface,
endangering the people who are working there. But I think if
that does not work after today, you really have to get serious
about this in terms of what the alternatives are not let them
play games with you on it.
Admiral Watson. Yes, sir. I agree. And those same
sentiments were expressed in the meeting with BP following the
receipt of that letter.
Mr. DeFazio. OK. Thank you. Thank you, Mr. Chairman.
The Chairman. The gentlelady from Wyoming, Ms. Lummis.
Ms. Lummis. Thank you, Mr. Chairman. Questions for Rear
Admiral Watson. There is Congressional Research Service report
that was conducted after the 2004 spill of national
significance exercise that indicated that oil spill response
personnel did not appear to have even a basic knowledge of the
equipment required to support salvage or spill cleanup
operations.
There was a shortage of personnel with experience to fill
key positions. Many middle-level spill management staff had
never worked a large spill, and some had never been involved in
an exercise. As a result, some issues and complex processes
unique to spill response were not effectively addressed, which
is exactly what you want to learn during an exercise. That is
the whole point of an exercise.
So my question is, what steps have been taken since the
2004 exercise to address the concerns discussed in the CRS
report and then the after-action report?
Admiral Watson. I think that the report was making
reference to the fact that we have fewer people in the Coast
Guard and in the response community that have actually been
involved with large oil spills.
Ms. Lummis. Yes.
Admiral Watson. The number of large oil spills has
dramatically decreased since OPA '90, and therefore, you do not
have those people that have experienced the real thing. Now,
that is changing very quickly right now as we cycle people
through and are getting the experience with the Deepwater
Horizon spill.
But at that time, I think that was an accurate statement.
Our exercise program has been consistent. It is mandated by law
and by regulation. And I am not aware that there has been any
specific change to the regulations. In order for us to have an
oil spill exercise that is meaningful, it has to involve all of
the involved parties, which is state, local, Federal, and a
responsible party. We rotate the responsible party role through
the oil companies, the waterfront facilities that store oil,
and any other entity that has large quantities of oil and has a
spill contingency plan.
So what we have tried to do since that report is to ensure
that those exercises are distributed equally around the country
so that if CRS goes to a place, they will at least find that
there is a certain level of readiness and competency.
Ms. Lummis. Yes. I appreciate your response because the
good news is there have been fewer oil spills. The bad news is
there is very little expertise out there as a consequence of
that that knows how to react and act accordingly. So it has
created, I think, a situation where we have this massive oil
spill of perhaps a lack of preparedness simply because of the
lack of experience.
What changes when a spill of national significance
declaration is made?
Admiral Watson. We identify--well, it is really the
commandant's responsibility to identify who the national
incident commander shall be. In this case, he selected to keep
it at his level. He could have delegated it, but it basically
is a plan that moves some of the authorities of the Federal on-
scene coordinator up to another level so that big policy
decisions and certain decisions that probably would be beyond a
district commander in our case, who is the predesignated
Federal on-scene coordinator, who can manage things within a
district, but not at the national level.
So a spill of national significance is really for the
purpose of having a decision-making authority that can handle
national implications, and decision-making that goes on during
an oil spill.
Ms. Lummis. OK. Ultimately, who is in charge of this oil
spill and this cleanup, ultimately? Is it the President? Is it
a Cabinet Secretary? Who is the top person who is calling the
shots on this oil spill?
Admiral Watson. Well, certainly everyone involved listens
to the President, and he is in charge. The role of being in
command of the oil spill operation is the national incident
commander. And then at the ground level, in Louisiana,
Mississippi, Alabama, that is Admiral Landry right now, and she
is fully empowered with the authority to make most of those
tactical decisions, and she does on a daily basis.
We have certainly given a lot of orders to the responsible
party. We have also made decisions that involve the state and
the locals and other Federal agencies.
Ms. Lummis. Does the admiral contact the President on a
regular basis? Do they speak regularly? Do they speak daily?
Admiral Watson. Admiral Allen is in regular contact with
the President, yes.
Ms. Lummis. And then does she have coordinating authority
over the Secretary of Homeland Security, the Security of the
Interior? How do they interface with the admiral?
Admiral Watson. The Secretary of Homeland Security is on
daily phone calls. She gets a daily report, I think twice a
day. She has been into the area. She gets her information on a
regular basis from Admiral Allen, and is usually involved every
time there is communication to the President. At the area
command level, where I am involved with Admiral Landry, we are
constantly feeding information up to the national incident
commander. He has a staff here in Washington, and they
distribute that to all of the involved departments and agencies
of the Federal government.
Ms. Lummis. Including the Secretary of the Interior?
Admiral Watson. Yes, ma'am.
Ms. Lummis. OK. So the Secretary of the Interior, if you
were to put together an organizational chart on the response
team, what would it look like?
Admiral Watson. Well, the individual secretaries and agency
heads are still independent of the response organization. They
are getting a constant feed of information. There is a national
response team that is a preorganized body to help facilitate
that, and they are being used every day in a teleconference to
ensure that that information is flowing. But we have seen all
of the involved administrators and secretaries participating on
teleconferences almost daily, and also visits to the site.
As far as the actual response organization, it starts with
Admiral Allen as the national incident commander who has a
staff, as I said, to manage these national decisions. But he
refrains from directing the oil spill at the regional and local
levels. At the regional level, that is where the area command
operates, Admiral Landry, and her area of responsibility in her
normal assignment is the Eighth Coast Guard District. Most of
this impact is in the Eighth Coast Guard District, and she is
very familiar with the impacted area and the resources
available there.
And then the next level down is the incident command level,
which generally aligns with our sector organizations. These are
the captains who work for the admiral, and we have incident
commanders in Houma and in Mobile, and then we have another
incident command in Florida that is at a much lower scale right
now because there really has not been any direct impact on
Florida.
Ms. Lummis. And you have been gracious, Mr. Chairman. May I
ask one more question? And that is how the Governors interface
with this discussion.
Admiral Watson. At the incident command level and at the
area command level, there is a unified command. So there is
going to be a Federal on-scene coordinator, a state on-scene
coordinator, and a representative of the responsible party with
decision-making authority. Those three people at each of those
two levels are in continuous contact. They are co-located
physically, and they move together, and they make decisions
together. And if you are wondering how they make a decision if
they disagree, the Coast Guard Federal on-scene coordinator has
the 51 percent vote.
Ms. Lummis. OK. Mr. Chairman, thank you for indulging my
creative timekeeping.
The Chairman. The gentleman from Arizona, Mr. Grijalva.
Mr. Grijalva. Thank you very much. And now I will be quick,
knowing the Chairman will not extend the graciousness to me,
but that is OK. Director Birnbaum, every environmental
compliance document that is currently in place for every
offshore energy project in U.S. waters is based on at least in
part the effectiveness of blowout preventors. Now we have some
information. Blowout preventors are capable of huge failures,
proven in this case. The agency that is responsible and tasked
with inspecting these pieces has been in independent reviews
seen as far too cozy with industry, and it raises serious
doubts about the due diligence regarding the inspection of
these pieces.
So my question is, so is it not clear that every single
environmental compliance document currently in place for an
offshore project needs to be re-done from scratch if we have
based it on a premise and there are some questions about the
effectiveness of the agency itself?
Ms. Birnbaum. Congressman Grijalva, we have been reviewing
every aspect of our safety regulations as a result of what we
have learned from this incident and the potential causes of it.
As the Secretary said, we are going to be providing an interim
safety measures report to the President. He will be providing
that to the President tomorrow, I believe. That is not the end
of our review of our regulatory structure. We will be going
forward to determine whether there are additional regulatory
requirements we should include, additional inspects we should
include, and so on, throughout every aspect of our safety
regulation in the offshore.
That will include review of environmental documents. I
cannot speak to that at this point, though.
Mr. Grijalva. OK. Just a follow-up, Director. Last October,
MMS sent a letter to an environmental group, the Food and Water
Watch, explaining that MMS regulations do not require a company
to have a complete and accurate set of as-built drawings for
their sea floor components. They only need to have as-built
documents. They do not have to be complete or accurate. Does
this particular regulation make any sense, and shouldn't we
care about the accuracy of those?
Ms. Birnbaum. I actually think that is a little bit of a
mischaracterization of what the letter said. I believe that
what we said was that they are required to have those
documents. We do not in the normal course review every document
with respect to every platform for its accuracy. You and
several other members have now sent us a letter asking that we
make that review for the Atlantis platform owned by BP. We have
been conducting that review. I am actually glad you asked about
this because we had promised you a report on that by the end of
May. Unfortunately, the team that was doing the audit of the
Atlantis documents in Houston at BP headquarters had to pause
for awhile after this incident because the facility was being
used for the response to Deepwater Horizon.
We have now made arrangements to continue our audit of all
of the as-built drawings for the Atlantic platform, and we are
continuing that, but we will not be able to get you the
response as quickly as we hoped. It is going to be delayed a
couple of weeks.
In addition, however, I will assure you on an interim basis
we have at this point found nothing that indicates that there
is a problem with the as-built drawings, and we have conducted
many safety surveys of the Atlantic platform in addition to
regular inspections of that Atlantis platform since it has been
in service. And so we have found anything that would suggest
that it needs to be shut in, as Food and Water Watch has
suggested.
Mr. Grijalva. For the NOAA Director, with the existing
technology that is out there, is there any way to deal with a
similar blowout that could occur, or should one occur in the
Arctic region? With technology at hand, could we deal with a
blowout there?
Dr. Lubchenco. That is not really NOAA's area of
responsibility or expertise. We do not deal with those
blowouts. Our responsibilities come into play if there is a
spill. Then we help guide attempts to contain and mitigate the
oil. So I would defer to one of my colleagues for a response to
that.
Mr. Grijalva. Admiral?
Admiral Watson. That is something that we clearly are
concerned about. If this sort of situation were to occur in the
Arctic, have the plans and the equipment and the training been
pre-established so we do not have to invent it after it occurs.
And I do not think it has.
Mr. Grijalva. Thank you. And, Director Birnbaum, the last
point. In the Clean Water Act--and Congressman Markey spoke to
another part of it--there is a civil fine beyond the $75
million cap on compensation and economic damages. The act
allows the government to seek civil penalties in court for
every barrel into U.S. waters. That would end up--I think the
fine is $4,300 per barrel. Where is that decision--or anybody.
Where is that decision to pursue a civil recourse to get
additional economic damages above the cap? Where does that
decision rest? Who makes it?
Ms. Birnbaum. I believe the Department of Justice is
reviewing all avenues for civil and criminal penalties in this
incident, but they will not make a determination on that until
there has been further investigation of the causes. But that
would be a question best directed to the Department of Justice.
Mr. Grijalva. Thank you, Mr. Chairman.
The Chairman. The gentleman from Texas, Mr. Gohmert.
Mr. Gohmert. Thank you, Mr. Chairman. Let me ask a question
first regarding the Coast Guard. Within the first seven days
after the explosion, Admiral, how many Coast Guard vessels were
directed to that area in the Gulf?
Admiral Watson. I think there were three, sir. There was
the initial search and rescue in which there was at least two,
and mostly we were searching----
Mr. Gohmert. Were those helicopters or----
Admiral Watson.--with helicopters. Yes, sir. We could reach
that location from shore, from Mobile and from Air Station New
Orleans.
Mr. Gohmert. OK. How many ships were directed to that area?
Admiral Watson. There were I believe two patrol boats. And
then shortly after that, within those seven days, there was a
270-foot medium endurance cutter.
Mr. Gohmert. OK. Now, 37 days later, how many Coast Guard
vessels have been directed to that area?
Admiral Watson. Sir, we have a class of 225-foot buoy
tender, which was built in the early '90s following OPA '90,
which is equipped with skimmers.
Mr. Gohmert. OK. But just how many vessels. My time is so
short.
Admiral Watson. And there has been a total of four
different vessels of that class operating at different times,
no less than two at any given time.
Mr. Gohmert. Well, having been in the Army, I know you
cannot question an order by the commander-in-chief, but let me
ask it. Was it your recommendation that the Administration, as
it is now put forward, cut the Coast Guard by $75 million,
which would mean nearly 1,000 personnel less, five cutters
less, and several less aircraft? Was that part of your
proposal?
Admiral Watson. Sir, that is in the 2000----
Mr. Gohmert. Oh, I know it is. I am asking if that was your
proposal.
Admiral Watson. I am not the budget officer of the Coast
Guard right now. I am the Director of Operations.
Mr. Gohmert. But you think that is a good idea?
Admiral Watson. I have no comment on the budget, sir.
Mr. Gohmert. Let me go over to the MMS. Was the blowout
preventor on this well tested within two weeks of it actually
blowing out and malfunctioning?
Ms. Birnbaum. We believe that it was.
Mr. Gohmert. You believe that it was? Do you have the
authority to check with people at the MMS to find out whether
or not they tested this blowout preventor?
Ms. Birnbaum. The blowout preventors are tested by the
operator, not by MMS. MMS reviews blowout preventor tests,
sometimes observes them, but they are conducted by the operator
and maintained in the operator's documents. We have----
Mr. Gohmert. So if BP says we have tested it, take our word
for it, it is great, then that is what you do.
Ms. Birnbaum. We have obtained documentation from the
operator, but we observe some tests. We do not observe them
all.
Mr. Gohmert. But you take their word for it that they test
it----
Ms. Birnbaum. They are required to maintain documentation
of numerous testing requirements on drilling rigs. Since we are
not there every day, we do not observe every test. If they were
to lie to us, they would be subject to criminal penalties.
Mr. Gohmert. Right. That wasn't my question. Yes, there are
a lot of criminal penalties that may go around here by the time
we are finished with this operation. That is not the issue. The
issue is what did whom do and when did they do it, or not do
it. And so I am wanting to know is it true that BP was given a
waiver of the mitigation plan for this kind of blowout by MMS?
Ms. Birnbaum. No, that is not correct.
Mr. Gohmert. OK. So they had to----
Ms. Birnbaum. EPA has an oil spill response plan for the
Gulf region which covers this kind of incident. And when this
exploration plan was approved, it was approved with the
knowledge that the blowout scenario within that oil spill
response plan was sufficient to cover this particular----
Mr. Gohmert. OK. So you were satisfied with the blowout
response plan that was provided by BP. I get it.
Ms. Birnbaum. We approved it. I will say that we are now
reviewing what the standards are for blowout response plans and
whether they ought to be revised along with all of our other
regulatory----
Mr. Gohmert. Oh, really? You think it might have been
inadequate?
Ms. Birnbaum. We are reviewing all of our regulatory
standards as a result of this incident.
Mr. Gohmert. Well, now the New York Times, in their article
about MMS said, quote, that it was an agency, quote, ``widely
recognized as one of the most dysfunctional in government.''
And some of us that have been in the Army or done different
things for the government, we know--like for the last two
nights, I have not gotten more than two hours sleep either, not
because I had a lot to do to prepare, but as I understand it,
the MMS is the only unionized group within the Department of
the Interior.
I am wondering, does the union have restrictions on how
much travel these inspectors can do, how many hours a day they
might can work?
Ms. Birnbaum. I have no idea whether MMS has the only union
within the Department of the Interior. I sincerely doubt that
that is correct, and I actually do not know what the union
rules might be. But MMS has rules for how much inspectors work
and how much they travel.
Mr. Gohmert. So you do not know if there is a limit on how
much you are allowed to make them work or inspect within a
given time?
Ms. Birnbaum. They are subject to civil service
regulations, sir.
Mr. Gohmert. Right. And as I understand it, the proposal is
to divide your agency, and basically we will get twice the
government for twice the price. Is that what you understand?
Ms. Birnbaum. I believe that Secretary Salazar has
identified what is an inherent conflict in the Outer
Continental Shelf Lands Act, which requires MMS both to promote
the orderly development of offshore oil and gas resources and
guarantee environmental and human safety. What he has suggested
is that the existing structure be divided so that actually
there will be three entities. The royalty management system,
which is already separate within MMS, would move into the
Assistant Secretary for Policy Management and Budget. The
offshore safety requirements would move into a new Bureau of
Safety and Environmental Enforcement, which would comprise some
of the current employees of MMS, and a separate bureau also
under the Assistant Secretary for Land and Minerals Management
with the Bureau of Ocean Energy Management, which would
comprise another group of the employees within MMS.
That is an effort to separate those that deal with that
inherent tension and separate those roles.
Mr. Gohmert. You mentioned that before already, and I
appreciate your answers. And I say apparently our solution when
something does not work is divide it into three and make it
bigger. So thank you.
The Chairman. The gentlelady from Guam, Ms. Bordallo.
Ms. Bordallo. Thank you, Mr. Chairman. I have a question
for Ms. Birnbaum. This morning, Mr. Miller raised the important
point that more than 40 years after the Santa Barbara oil
spill, we are today still using basically the same methods and
technologies to respond to oil spills. Now, I find this rather
surprising and certainly unfortunate.
The Minerals Management Service has had in place for over
25 years a technology assessment and research program
established in part to improve our knowledge and technology to
detect, contain, and clean up oil spills. So I would like to
know the following. If it appears clear that no new innovations
in response technologies have been developed for more than 40
years, what has this research program been doing for more than
25 years?
Ms. Birnbaum. Congresswoman Bordallo, I would be happy to
give you a list of all of the studies that have been conducted
by our oil spill research program over the last 25 years. They
have been extensive. They have looked at oil spill travel. They
have looked at fate effects. They have also looked at
technologies. We also operate in the Leonardo, New Jersey an
oil spill test facility that serves to train responders as well
as testing new equipment, and more recently has been moved also
into testing renewable energy devices, which also it turns out
can be tested very well in that tank.
Ms. Bordallo. Well, I understand that. But in all of those
years, you have never found something that would have attracted
your attention to improving on the technology?
Ms. Birnbaum. Again, I can supply you with the full list of
all the studies we have conducted. There have been some
upgrades in equipment. However, I have to say, I agree with
Congressman Miller. We have not found something that will
ensure that we can remove oil from water.
Ms. Bordallo. Well, thank you. Admiral Watson, do you think
that cleanup technology and capabilities that equals the risk
should be a requirement of exploration and drilling plans?
Admiral Watson. Yes, ma'am.
Ms. Bordallo. All right. And I have another question for
you and Dr. Lubchenco. A 2003 report by the National Research
Council predicted that the oil in a deepwater blowout could
break into fine droplets, forming subsurface plumes of oil.
Now, given that this was a known outcome of a deepwater spill,
was the need to respond to these plumes accounted for in the
area contingency plan?
Admiral Watson. I am not aware that the area contingency
plan includes a response to that plume, ma'am.
Ms. Bordallo. Do you have anything to add to that, Doctor?
Dr. Lubchenco. I do not believe that it is in there.
Ms. Bordallo. I see. Then I have another question for you,
Dr. Lubchenco. The Coast Guard and EPA get annual
appropriations from the oil spill liability trust fund to
prepare for potential oil spills, but NOAA does not. Should
NOAA have access to this fund to improve their response and
recovery capabilities in advance of a spill?
Dr. Lubchenco. You are correct that we do not have direct
appropriations from that fund on an annual basis. If we did, we
could utilize those funds for a number of purposes that would
be immediately obviously relevant to this particular case,
including additional research to understand fate and transport,
to enhance our capacity to respond in circumstances like this,
and a number of other areas that I would be happy to detail
should you be interested in that.
Ms. Bordallo. Have you asked for these funds? Have you
requested funds?
Dr. Lubchenco. It is not part--that is not the way it is
structured. It is not something that you ask for. My
understanding is that that was a decision that was made, that
there would be annual appropriations from that to certain
agencies and not to others.
Ms. Bordallo. I have another question, Doctor. Do we have
any idea how repeated natural resource damages are assessed?
For example, if an oiled habitat is restored, and then a
hurricane moves oil back onto that same habitat, will further
damages be assessed and recovered?
Dr. Lubchenco. Part of the natural resources damages
assessment process involves evaluating the state of public
resources prior to an event, and then evaluating what impact
has happened as a result of the event, and then determining the
types of remediation or restoration that would be appropriate,
and then making that happen.
Should there be a situation where there are multiple
stressors on marshes, for example, or other critical habitats,
we would make every attempt to evaluate the state of the system
prior to a particular impact. When this oil spill--when the
explosion happened, the NOAA scientists immediately mobilized
to get as much data as possible with respect to the state of
many of the coastal habitats, the marine species, especially
protected species, marine mammals, turtles, our fisheries, as
well as take water and chemical samples for contaminants so
that we would have the most up-to-date from which to evaluate
possible impacts of the oil.
So that is part of what the NOAA team has been spending a
huge amount of their time and energy doing, is getting good
baseline information. We have that. It is current now because
it is within just the last couple of weeks. Should there be
multiple stressors to those systems, that would be I think
taken into account in the assessment.
Ms. Bordallo. I have one last question for you, Doctor. The
Gulf of Mexico is home to several national estuarine research
reserves and two national marine sanctuaries, which generally
function as sentinel sites to monitor and assess the health and
the productivity of the Gulf of Mexico. What is NOAA doing to
utilize these sites to track and assess the impact of the oil
spill over time, and why did the Administration not
specifically request additional funding to support greater
observation and monitoring activities at these sites in its
request for supplemental appropriations?
Dr. Lubchenco. We have made a special attempt to conduct
the surveys that are needed to get good baseline data for those
NERRs as well as for the sanctuaries, and have some ongoing
monitoring in all of those to evaluate impacts of the oil. They
are critically important sentinel sites. You are absolutely
correct. They will be very, very valuable in helping us
understand the impacts of this tragic event.
The additional resources to do that evaluation and do
surveys would certainly be--would be welcome, and would be
appropriate.
Ms. Bordallo. Thank you. Thank you, Mr. Chairman, for being
so gracious with the time.
The Chairman. Mr. Cassidy, you have already asked on this
first round. I am sorry. Let me recognize those who have not
asked on the first round. Dr. Christensen, Virgin Islands.
Ms. Christensen. Thank you, Mr. Chairman. So there will be
more rounds for questioning? Do you anticipate having a second
round?
The Chairman. It looks that way.
Ms. Christensen. OK. Well, thank you. I would like to
welcome the witnesses. Dr. Lubchenco, I want to follow up on a
question that the Chairman asked. The draft proposed Outer
Continental Shelf oil and gas leasing program for 2010 to 2015
stated that if an oil spill occurred, habitat recovery would
occur within several years, that no substantive reductions in
fin fish or shellfish populations would result, and no
permanent change in the population of marine mammals was
expected.
Your comment letter to MMS criticized the draft plan,
saying, quote, ``The analysis of risks and impacts of
accidental spills and chronic impacts are understated and
generally not supported,'' end of quote. But there is another
quote. And you also said, ``The frequency of spills is
understated in the plan.'' Those concerns seem particularly
prophetic today. Did MMS respond to these comments in writing?
Dr. Lubchenco. No, they did not. But they would not
routinely do so in the normal course of business. We would
normally submit our comments, and they would take them into
account as they deemed most appropriate.
Ms. Christensen. Well, did they change the draft plan to
address the concerns?
Dr. Lubchenco. For the five-year plan, for the 2010-2015,
there were some significant changes in the plan that we infer
were a result of our comments because they were consistent with
them, but not across the board. There were some things that
were changed, and other things that were not.
Ms. Christensen. Ms. Birnbaum, would you care to respond?
Ms. Birnbaum. There actually has not been a subsequent
document after that draft proposed program, which was produced
at the beginning of 2009. We received the comments from NOAA.
What we indicated is the areas that we will continue to
consider in the draft EIS, which will then produce a draft
program. That draft EIS has not yet been produced and the draft
program has not yet been produced. We would anticipate that in
preparing those documents, we would certainly take into account
NOAA's concerns and actually further consultation with NOAA's
staff.
Ms. Christensen. Thank you. I also wanted to ask Dr.
Lubchenco, do you have any additional concerns or plan in place
with hurricane season starting next week, on the trajectory of
the spill?
Dr. Lubchenco. We are entering hurricane season. It does
typically start June 1st. Every season is a time for
preparedness on the part of anyone who is in the path of a
hurricane. This year, there are particular concerns because of
the spill.
Ms. Christensen. Yes. And I am specifically asking about
concerns regarding the spill.
Dr. Lubchenco. We do not know what impact a hurricane would
have on the spill in terms of the nature of the interactions
between the two. Typically, a hurricane in the Gulf would be
much larger in size than the area that is represented by the
spill to date, but that does not mean that there may not be
interactions and consequences. We just do not have enough
information to evaluate that completely.
Ms. Christensen. And we do not know where the hurricane
might be, whether it is going to be north, south of the spill.
Dr. Lubchenco. Exactly.
Ms. Christensen. But I hope we are planning. And do you
anticipate that the closures in this fishery in the Gulf will
have any impact on the annual catch limits that we are mandated
to set in the other regions by the end of the year?
Dr. Lubchenco. Are you asking whether--so we are closing
areas of the Gulf where there is oil present, and in a buffer
area around that, taking into account where we expect the oil
to be going in the next few days. It is not yet clear how----
Ms. Christensen. But, for example, if--I guess they have
red snapper in the Gulf, and we have to deal with our red
snapper. Is that going to impact--the closing there, could it
have an impact on what the Caribbean region catch limits might
be for the same fish?
Dr. Lubchenco. We are watching closely where the oil is and
where it goes, and we are sort of staying on top of this on a
day to day basis, and are looking closely at that. I think it
is too early to know for sure what kind of interactions there
may be and what consequence might happen.
Ms. Christensen. OK. Rear Admiral Watson, these questions
have to do with the conditions that have to be met for
deepwater oil rigs. On the--what is it--MODU certificate of
compliance--and your testimonies speak to the conditions that
were met with Deepwater Horizon. They had a valid COC, but it
was based on the third compliance standard that you listed. I
would like to know, is that the highest or the lowest standard.
And standard two says that they must meet the standard of the
country of origin of the company, and that would be U.K. in
BP's case. And U.K., I understand, has a higher standard than
the United States.
So why was it only reviewed at standard three and not at a
higher standard? And are you anticipating that you will require
standards at the 5,000-foot depth going forward? It just seems
to me that that was a lower standard that they received their
certificate at. And maybe I am incorrect.
Admiral Watson. I think that may be a misinterpretation.
There is one standard for a certificate of compliance that is
based on the international maritime standard for a vessel that
is operating internationally. You know, we have a----
Ms. Christensen. Because one of three conditions must be
met, and so that was number three.
Admiral Watson. Well, I am sorry. I will have to get back
to you with a more correct answer then, ma'am.
Ms. Christensen. Well, go ahead and give your answer.
Admiral Watson. Well, there is a domestic standard for a
U.S.-flagged MODU that would be slightly different. If it was
not issued an international certificate, then it would only
have to meet the domestic standard. And there are some
differences. It depends on the specific area that is being
regulated. For example, the area of electrical or stability or
structural or fire protection. There are all of those different
sub-elements of a mobile offshore drilling unit. And the
standards are pretty closely aligned. and then there would be
deepwater rigs, and then there would be shallow water rigs.
Ms. Bordallo [presiding]. The gentlelady's time has
expired.
Ms. Christensen. I will come back on the next round,
Madame.
Ms. Bordallo. Thank you. I would now like to recognize the
gentlelady from California, Ms. Capps.
Ms. Christensen. Everybody has used more time than I did.
Ms. Capps. Thank you, Madame Chair, for this long hearing,
this long day. And I want to thank our panel, the third panel,
both for your testimony, but also for your service at the site.
You know, as the world has been riveted on the events involving
Deepwater Horizon over the past several weeks, it is clear that
BP has not been developing the technology equal to the
technology that they developed to get to the bottom of the
ocean that deep, and all of the complexities of drilling.
At the same time, the technology infrastructure to deal
with disasters was sorely lacking. In fact, it appears that
there has been a disregard for any responsibility by this oil
company to develop any kind of contingency plan for their
workforce, safety, or for any kind of disaster mitigation.
Transocean has documents stating that the recovery rate of
oil from an imploding boom rarely exceeds 15 percent. Those are
the same figures that they used--and I know this has been
referenced. I represent the Santa Barbara Channel, and I was
there in 1969, and those were the figures that were used then.
And when I saw the boom let out, which was the same technique
that we had for those 40 years ago, my heart sank because I
realized how limited this response was going to be, given the
resources at hand.
So it seems to me that the role of recovery technology is
one that the Federal government must take on, clearly with the
financial burden being borne by the oil industry. But clearly,
the Federal government now has to rely solely on the deepwater
technology which BP in this case has developed, which in itself
proves to be a barrier for stopping the leak.
So my question to you, Director Birnbaum, is about the
Department and any plans that you might have to expand existing
programs or to create a new national center that would
consolidate scientific and engineering expertise in oil cleanup
technologies to prepare for and to respond to such disasters.
Ms. Birnbaum. Thank you. As I discussed earlier, we do have
an oil spill technology program already. It is fairly small. It
conducts research on an annual basis on a variety of issues.
But I think that the idea of devoting a significant government
focus on improved oil spill technology--oil spill cleanup
technology in particular--is definitely worth considering.
Ms. Capps. Thank you. Well, I for one pledge to want to
work with you to support those kind of efforts, and I know
there are many research institutions with a lot of scientific
expertise where we could tap into those resources. It is
absolutely shocking to me that a multibillion dollar industry
has not been able to come up--or not found it in their interest
to come up with more effective strategies. So clearly, this
proposal that you are considering is something that I
wholeheartedly support and would like to work with you in doing
that.
Now, Dr. Lubchenco, as BP works to contain the spill,
response efforts are underway which require access to all
information pertinent to the spill. Earlier this week, BP
released live video feed from the accident site. This will
allow scientists to estimate how much oil and gas are leaking
from the pipe. While this is a critical step toward
transparency, BP must release more information to allow
scientists to track the transport and fate of the oil as well
as the environmental effects of the oil both onshore and in the
ocean. They have been reluctant to do this, it seems. I have
sent a letter to BP asking for them to make available to
Federal agencies, scientists, and the public all data, records,
and physical samples pertaining to the chemical composition of
the reservoir fluids.
One of the scientists, Dr. Valentine, from my institution,
UC Santa Barbara, has indicated an interest by his colleagues
and himself that this would be really valuable information for
scientists to have. Would this data on oil composition from BP
be useful to your response efforts, now or in the future?
Dr. Lubchenco. Congresswoman, I appreciate very much your
focus on the importance of transparency and sharing information
in a timely fashion. And thank you for your leadership on that.
It is true that the video that received from BP early on was of
insufficient quality and length to do credible scientific
assessments, and it is only in the last couple of days that we
have gotten video that was high enough resolution, long enough
length, and fast enough shutter speed to really do credible
calculations.
So too is it important that they share in timely fashion
all information that is available to assist in our efforts. We
did request and received early on samples of the actual oil
from this particular oil, and so we do know the composition of
that and have been using that to fingerprint various, for
examples, tar balls that have washed to shore to evaluate
whether they are from this spill or from another spill. And,
for example, the tar balls that washed ashore in Key West were
determined to not be from this spill. And it is that
fingerprinting that we were able to do.
So we do know the composition of the oil, but we do not
have all of the other information that would in fact be useful
to do a much more comprehensive understanding to which you are
alluding.
Ms. Capps. I look forward to more exchange along this line
as we proceed, and together with MMS and NOAA.
Ms. Bordallo. Yes. Your time has expired, and I thank the
gentlelady from California. Now I would like to recognize Mr.
Costa, the gentleman from California.
Mr. Costa. Thank you very much, Madame Chairwoman. Ms.
Birnbaum, there have been some press reports, and realizing
that there is a lot of focus, not all of them have been
accurate, but on how Minerals Management Service relies on the
American Petroleum Institute to draft its operations and safety
regulations. What I am trying to do is to ascertain what you
believe the facts are in terms of how you develop your
operations and safety regulations. Does the American Petroleum
Institute in fact--do you incorporate their manuals by
reference, or do you actually promulgate your own regulations?
Ms. Birnbaum. Thank you, Chairman Costa. The Minerals
Management Service does formulate its own regulations with
respect to offshore drilling operations and safety. We have
within those regulations incorporated standards from eight
different standard-setting organizations, including the
American Petroleum Institute, but also the American Concrete
Institute, the American Steel Institute, and others.
We do not incorporate those as a substitute for writing our
own regulations. For example, we have five pages of regulations
governing what a blowout preventor is supposed to look like.
Those five pages do have a couple of references to one API
standard in them, but they are largely developed by MMS. At
times, we develop regulations that go beyond the API standards.
For example, we recently put out a regulation on safety seals
which went beyond API standards for high pressure, high
temperature seals.
Mr. Costa. OK. So when we are talking about these
standards--and I do not know if you are able to comment, but
say the safety seals as an examples. Is it your sense that
Minerals and Management Services in the promulgation of these
regulations attempt to set the highest standards in the world
when you have comparative analysis to what you have off the
coast of Norway or other offshore regulatory regimes with
different countries?
Ms. Birnbaum. We attempt to set very high safety standards,
and it is very hard to actually compare them to other
regulatory systems which are set up differently. I will say
that all of our regulations, in addition to the fact that we
review them independently, are put out for public comment, and
we get public comment on what would provide the greatest
safety. However, we regularly reject comments from industry
that suggest that we should go back to just an API standard or
whatever.
Mr. Costa. Well, that is good, and I am glad that you
clarified it. Before my time runs out, I want to get into the
weeds on a couple of other related issues to that.
Ms. Birnbaum. OK.
Mr. Costa. By the way, do you ever meet around the world
with other regulatory agencies and compare notes, at
conferences?
Ms. Birnbaum. We have existing MOUs with several other
countries on offshore safety regulation. We also do meet with
the international body. We always send representatives.
Mr. Costa. I might want to send some follow-up questions on
that.
Ms. Birnbaum. OK.
Mr. Costa. As it relates to this specific well where this
tragedy took place--and hopefully we will be successful today.
But there has been a comment that the British Petroleum design
was inherently unsafe. There was a graphic in the Times
Picayune that says a linear hanger was not placed between
casings eight and nine. Drilling engineers say that it is
highly unusual. There were other quotes in other papers that
quoted deepwater engineers saying the company would not use
BP's design, and that an additional liner would make things
safer by a factor of tenfold.
Do you care to comment on any--I have a lot of graphs here,
but on these various comments by engineers?
Ms. Birnbaum. Again, I cannot comment on anything specific
about this well or this BOP stack pending the outcome of the
investigation. But I will say that we are reviewing our
regulations with respect to well-cementing procedures, casing
procedures, seals, as well as BOP stacks. And as I said, some
of that will come forward in the Secretary's interim safety
recommendations to the President. And beyond that, we will
continue to review.
Mr. Costa. That is tomorrow?
Ms. Birnbaum. Yes.
Mr. Costa. OK. And so we will have those under the heading
of lessons to be learned?
Ms. Birnbaum. Yes, sir.
Mr. Costa. And what about the displacement? Maybe this is
another question you at this time cannot answer. But when was
MMS informed that BP was going to displace several thousand
feet of mud below the blowout preventor with the lighter weight
seawater?
Ms. Birnbaum. Again, that is a question that I cannot
answer pending the investigation. The displacement of mud with
seawater is actually a regular procedure because it prevents
the mud from polluting the ocean. We require it to be drawn
back up into the vessel. It is supposed to take place after the
well is sealed and controlled. And so if it was done before
that, then it would not be consistent with our regulations.
Mr. Costa. Under these conditions, would it be normal to
seek an application permit to modify under these circumstances?
Ms. Birnbaum. I do not believe so, but I would have to
check on that.
Mr. Costa. Could you check on that for us?
Ms. Birnbaum. Yes. I would have to get back.
Mr. Costa. In terms of whether or not the permitting
process was followed in the procedures that took place leading
up to this tragedy.
Ms. Birnbaum. I will check.
Mr. Costa. And that would be helpful to the Committee. My
time has expired, and, Madame Chairwoman, I will submit the
balance of the questions in written form.
Ms. Bordallo. Thank you very much.
Mr. Costa. Thank you.
Ms. Bordallo. I would like now to recognize the gentleman
from Texas, the Acting Ranking Member, Mr. Gohmert.
Mr. Gohmert. I appreciate it so much, the Acting Chair. Let
me go back, Ms. Birnbaum. Apparently I have gotten the correct
information. The only unionized branch of MMS is the offshore
inspectors, apparently, is what I have been----
Ms. Birnbaum. I have to say, I am not even sure that that
is true. It may be. I am not sure.
Mr. Gohmert. OK. In negotiations with what workers--what
offshore inspectors will be doing, as Director of MMS, do you
get involved in any of those negotiations?
Ms. Birnbaum. I do not.
Mr. Gohmert. Who does that?
Ms. Birnbaum. That is done by the people who supervise
them, the regional directors.
Mr. Gohmert. OK. As the MMS is made into three new
branches, will the union agreements be reconsidered, or will
the entire new Bureau of Safety and Environmental Enforcement
be unionized?
Ms. Birnbaum. The Bureau of Safety and Environmental
Enforcement will likely consist of more than just the
inspectors to begin with.
Mr. Gohmert. Right, right. That is why I am wondering if--
--
Ms. Birnbaum. So I would not anticipate that, as not all of
the people who would move there are currently unionized, I
would not expect it to be entirely unionized. The question of
how the creation of the new bureau would affect union contracts
is a matter for lawyers that has certainly not been addressed
since we still have not sorted out the full division. It is
certainly an issue that will have to be addressed in the
reorganization. But again, there is a time line on
reorganization due to the Secretary in mid-June, and that will
only set out the parameters by which we can begin to address
that question.
Mr. Gohmert. Yes. Are you getting any input in suggesting
what should or should not be done to avoid some of the current
problems with the new three entities?
Ms. Birnbaum. I have supplied input to the senior
representatives who are putting this plan together. I will say
that I have not been asked----
Mr. Gohmert. The senior representatives of whom?
Ms. Birnbaum. Of the Secretary. The Assistant Secretary of
Policy Management and Budget----
Mr. Gohmert. So these are DOI's three designated
representatives that are putting together the three new
entities. And as Director who would have seen things that were
done right, things that were done wrong, you just got to make
your suggestions to the three representatives.
Ms. Birnbaum. I actually think it is important that I not
be one of the people who is devising the reorganization of MMS
because I think it needs to be done by fresh eyes. They have
interviewed not just me, but virtually all of MMS's senior
managers. They are going to be interviewing people in the
regional offices. They are trying to collect all of the
information possible. And I actually think----
Mr. Gohmert. And I understand that, and I appreciate all
the Secretary's representatives are doing. But I can tell you
what. If I had somebody I trusted that were running an agency
of mine, I would doggone sure want their input on how to avoid
the current problems. Well, let me ask you this and see if you
know about how this systems works. But when the offshore
inspectors go out and inspect these rigs, you said they do not
actually test; they just observe. But they require testing.
Don't they require testing to be done in their presence?
Ms. Birnbaum. There is some testing that is done in the
presence of MMS inspectors, but we require testing on a regular
basis, on a weekly basis, on a daily basis, on a monthly
basis----
Mr. Gohmert. Do they have the authority to require testing
be done in their presence?
Ms. Birnbaum. Not all of that is done in MMS--yes, they do.
Mr. Gohmert. OK. And is there some kind of system among the
offshore inspectors that provides them the ability to review
what other offshore inspectors have done just to make sure that
someone has not missed something--the term you used--so that
someone with fresh eyes can see what other offshore inspectors
have done to make sure they are doing the right things?
Ms. Birnbaum. The first thing is that in general MMS
inspectors go out in teams of two, not alone, so that we do
have more than one set of eyes looking at things. Beyond that,
we do rotate inspectors. It is not always the same inspector
inspecting the same rig or the same platform. They always have
access to the previous inspector's reports as well.
Mr. Gohmert. So the duplicity of having two offshore
inspectors at the same time go out and inspect a rig helps
provide that check and balance?
Ms. Birnbaum. It is one of the things that does, yes.
Mr. Gohmert. OK. Then did you think it was a good idea at
what is now being revealed from the Coast Guard-MMS joint
investigation that the last two inspectors of this Deepwater
Horizon were a father and son pair? I know they are union
members, but did you think that was a good idea, that father
and son are working and watching each other, checking each
other's back?
Ms. Birnbaum. Again, I cannot speak with anything with
respect to the investigation of the Deepwater Horizon incident
itself.
Mr. Gohmert. Well, let us talk hypothetically.
Hypothetically, would you think it is a good idea to have a
father and son be the ones that are double checking and being
the fresh eyes on the other inspector?
Ms. Birnbaum. I would say it gives rise to questions.
Mr. Gohmert. OK. Thank you very much.
Ms. Bordallo. I thank the gentleman from Texas. And now we
are on our second round. I would like to recognize the
gentlelady from the Virgin Islands, Ms. Christensen.
Ms. Christensen. Thank you, Madame Chair. Just a few, I
think, brief questions. Rear Admiral, I guess this question
would go to you, even though it is about health. There are
reports of very severe health impacts in the workers on the
Exxon Valdez, although what exactly it is, is sealed, so we do
not know for sure. But there have been other reports of long-
term health effects from workers in other spills. Have we
learned from those responses, and what can you tell me to give
me some kind of assurance that we are not going to be seeing
long-term health effects in these workers?
Admiral Watson. Well, we certainly have become aware of the
long-term health effects of dealing with oil, not just during
oil spills, but people that are involved in the industry. And
so safety is our number one concern. Every morning, every
evening, we get a report from our incident commanders and the
people that are actually directly involved with those workers
as to, you know, have there been any safety incidents on scene.
The monitoring is much better. We have a lot of EPA air
monitors and water monitoring. The personal protective
equipment is much more readily available. The challenge
sometimes is to make sure those people wear that equipment.
Ms. Christensen. But someone is overseeing them----
Admiral Watson. Yes, ma'am.
Ms. Christensen.--that knows what equipment they must use.
Admiral Watson. Right. And so all of those things are in
place. Can I guarantee anything?
Ms. Christensen. I understand.
Admiral Watson. No. No, ma'am, I cannot. But I can tell you
that it is a number one priority for our response organization.
And I did figure out----
Ms. Christensen. Why I was asking that question.
Admiral Watson. Yes, ma'am. The numbers are not meant to be
any kind of ranking of priority. Maybe one thing that I should
note is that the Deepwater Horizon is not a U.K. flag vessel;
it is a Marshall Islands flag vessel, even though it is owned
by BP.
Ms. Christensen. I did hear that.
Admiral Watson. It is flagged in the Marshall Islands. And
so number one and number two do not apply. They have no
standard other than the international standard.
Ms. Christensen. I got it. Thank you. But the question to
Ms. Birnbaum is similar because there are other countries that
have higher standards than the United States that have to be
met for deep oil well drilling, like Norway and the U.K. Is
that not true?
Ms. Birnbaum. I am not familiar with that actually. They do
have different systems from ours. One thing that has been
reported several times in the press that we have determined is
simply inaccurate is that they require acoustic triggers as
backup systems for BOP stacks. We actually called the
regulators because we had not understood that their systems
require that.
Ms. Christensen. I am getting it from media.
Ms. Birnbaum. Yes. And they confirmed to us that they do
not require them. They allow them as an option, which we also
allow.
Ms. Christensen. I see. And since you are overseeing the
drilling of the relief wells, have you added any additional
requirements in light of what happened?
Ms. Birnbaum. We have added additional requirements. BP
volunteered some of them, and some of them we imposed on them.
Testing the BOP stacks on the rig at the pressures used by the
ROVs, they are tested on the rig normally before they are
placed on the sea floor. But it is different testing to make
sure that the ROVs can trigger them, testing them using the
ROVs on the sea floor as well. And also, they did test the auto
sheer device--actually the deadman device at the top of the
stack, which is a slightly risky test. We would like to be able
to develop a protocol for testing those devices that doesn't
place the rig at risk because it has some potential impacts.
But they did all of that additional testing, and are continuing
to do additional testing as they drill the relief wells.
Ms. Christensen. Thanks. One last question. You said that
you had been inspecting deepwater rigs in the Gulf at least,
and maybe elsewhere. Have you shut any down since the 20th of
April?
Ms. Birnbaum. We have not had any shutting orders that I
know of since the deepwater rig and platform survey was begun.
I do know over the last year we issued something around 100
shutting orders from various inspections, but we conduct 2,500
inspections a year or so.
Ms. Christensen. Thank you, Madame Chair.
Ms. Bordallo. I thank the gentlelady from the Virgin
Islands. And now I would like to recognize the Acting Ranking
Member, Mr. Cassidy, from Louisiana.
Mr. Cassidy. A series of actors. Dr. Lubchenco, can you say
for the record for those commercial fishermen who are still
producing in the Gulf that the fish that is coming to market
currently is safe for human consumption?
Dr. Lubchenco. Congressman, we have a program in place for
testing seafood from the Gulf that has been approved by the
FDA, and we are in the process of aggressively sampling inside
the areas and outside the areas, with the goal of doing the
appropriate testing so that FDA can make the determination
about seafood safety.
Mr. Cassidy. So if it is on the market, it has passed those
tests, and it is safe to eat?
Dr. Lubchenco. Everything that is on the market already
should have been not affected by the spill.
Mr. Cassidy. OK.
Dr. Lubchenco. One of the reasons that we are doing the
fishery closures is to proactively prevent seafood from getting
into the markets that might be tainted.
Mr. Cassidy. No. I appreciate that. And there are just some
people who do have good product which is not being bought
because of perception. Director Birnbaum, there was an issue
earlier with the Inspector General, and her ethics violations,
she could not draw a correlation between that and the frequency
or severity of citations issued. And she said, frankly, ask
you. Can you give us statistics on over the last several years,
including the period, but also currently, the number of
citations and the average severity of them?
Ms. Birnbaum. We can do that. I don't know, but we will
look at the Lake Charles District and the relative number of
violations found as well as shutting orders and give you some
information.
Mr. Cassidy. Dr. Lubchenco, you mentioned that you speak of
what NOAA has done in terms of it, but then you also say that
your research boats were deployed elsewhere and had to finish
assignments, and were not moved to the affected area until
relatively recently. Was this with internal capacity that you
were doing these studies of baseline, et cetera, or did you
contract out, may I ask?
Dr. Lubchenco. Congressman, we mobilized all of our
existing assets in the Gulf pretty much immediately to be
available to do the different types of sampling needed. I
myself was personally out on one of our vessels that was
getting baseline seafood samples to get good contaminant, good
other levels, to do the safety testing that we were just
speaking of.
We also have contracted with a number of academic
institutions, both in the Gulf and elsewhere, to redeploy
assets there, and are working with other agencies to do exactly
that.
Mr. Cassidy. Now as a state that is in the bulls-eye of
this spill, there is, as you might guess, a certain amount of
suspicion of both the Federal government response as well as
industry response. It turns out my university, LSU, which in
the interests of disclosure I still see patients through their
hospital, they chaired the book that I quoted earlier that made
recommendations that we are again making. When I spoke to their
coastal environmental folks, who apparently have thick resumes
of publications regarding oil in the marshes, they tell me they
haven't been contacted by NOAA. And yet here is an expertise
that has great credibility with the people of the state which
is being maximally affected. Any idea why not, why they haven't
been contacted?
Dr. Lubchenco. I do know that we have been in communication
with many of the scientists at LSU. They are actively doing
much of the testing of oil. We routinely send samples there. We
routinely communicate with many of the scientists. I would be
happy----
Mr. Cassidy. I met with them Saturday, and they do have
contract work they are getting. They also tell me, by the way,
that when they independently go down to the marshes, that their
name is taken, and that they are informed that their results
will be subpoenaed. They imply that was industry, but that
individual research is going to be difficult to do if people
are intimidated by the thought of having their records
subpoenaed. One of the fellows had worked with Exxon Valdez. He
said he is still not able to publish his research from Exxon
Valdez because it is under a court order not to be released.
So I want to add a concern again that the people I am
speaking to, in contradistinction of what you are saying, are
telling me, no, we haven't been called by NOAA except for
contract work we had preexisting. When we go on our own, on our
own check, we are intimidated, so to speak, by the threat of
our stuff being impounded. It doesn't seem a good environment
for independent research. Any thoughts?
Dr. Lubchenco. Congressman, this issue came to our
attention in conversations with some of the academics who had
preexisting contracts with BP, and they articulated pretty much
what you have just described. We have been working with BP and
have told them that we think it is appropriate for all of the
academics that are working on this to be able to freely publish
and share their information, and that is exactly what we are
proceeding with.
Mr. Cassidy. Thank you for that. Now I will also say that
the fact that--again, if LSU is the one that is publishing all
of this--and again, they are chairing the committee that writes
the book that now is the basis for recommendations that are
being reissued today--and they haven't been called--and they
tell me they haven't been called--frankly, my paranoia starts
to stir up--I have learned in Washington it never hurts to be a
little paranoid--that maybe they are not being called
deliberately. Maybe there is a concern that the people who are
in the state being most effective will draw conclusions which
are inconvenient to different parties who are involved.
That may be paranoia, but can you assure me that that is
not the case?
Dr. Lubchenco. Congressman, I would be delighted to find
out the individuals that you think we should be in
communication with. I can tell you that we are working with LSU
folks to convene a scientific summit that they are hosting for
academics and other research institutions from the region and
elsewhere to meet next week, to have a big science summit to
understand what the science needs are, what is actually
happening already because there is a lot of work that is
underway, what isn't happening, what is needed, what the
priorities are, and they have been intimately involved in this.
And so I know that we have good interactions and
communications with some of the experts at LSU. It sounds like
we don't have all of them, and I would be happy to know who
those are so that we can set--we can correct them.
Mr. Cassidy. I promise the Acting Chairwoman that this is
my last question. Ms. Bordallo brought up the fact that the
plumes--well, people have recommended we study the plumes, but
no one is studying the plumes. And I have understood from
others that deepwater and ultra-deep is a different animal, so
to speak, and that we expect different behavior from the oil in
the water. And yet you ask, have you studied the plumes, and
everybody said no. And it begs the question, why not?
Dr. Lubchenco. I didn't respond no to that. And I would
actually respond that we are studying that very aggressively.
Mr. Cassidy. But that is currently or previous? Is that
since this happened, or is that from, no; we understand it is
an issue, so we are going to bring it back up, and we are going
to address this proactively?
Dr. Lubchenco. I am not aware of any studies before this
spill to follow-up on those plumes. But I can tell you that at
present, we have ships out on the water that are actively
trying to characterize----
Mr. Cassidy. So I guess my question--my question was why
wasn't it done since a couple of rookies in this business
understand that it is a concern? And I can read from 2003, it
is a concern. And the Norwegians apparently release gas to see
what would happen, but not at depths quite so deep. So I know
the scientific--and yet, the recommendations that U.S. Coast
Guard, NOAA, and MMS do this in 2003 by the National Research
Council of the National Academies has not been acted upon.
Again, as a state which is being terribly affected by
this--and I presume that information will be helpful--I am just
asking why wasn't it. That may be somebody else's beat, by the
way.
Dr. Lubchenco. No. I think there is a lot of research that
should be done. I think the reality is that there have not been
resources to do all of the research that would be appropriate
to do in this. I know that from NOAA's standpoint, our Office
of Response and Restoration has its hands full responding to
the some 200 oil spills that we respond to a year, have not had
the resources to do the kind of additional research that would
be appropriate to get at the very questions that you are
answering. Those are important questions.
Mr. Cassidy. Director Birnbaum, your thoughts on that?
Ms. Birnbaum. I think that having appropriate research on
the fates and effects of oil at all levels in the water is
appropriate. We have conducted some studies, and we have also
worked with Norway to learn what they have learned from their
studies. Additional research is always useful. There is a
challenge finding something that will behave like oil in water
without actually releasing oil in water.
Mr. Cassidy. OK. Thank you.
Ms. Bordallo. I thank the gentleman. And at this time, I
wish to thank the witnesses for the time and for their patience
today. This hearing has been going on since 10 o'clock this
morning. I know you have many important tasks before you right
now, and we appreciate you being here. And I am sure that we
will have some questions for you, and the record will be held
open for 10 days, if we have questions or you have something
you would like to submit for the record.
Again, I want to thank the members that were here earlier,
and to thank our witnesses for the many hours that they spent
in this hearing room.
If there are no further comments before this Committee, the
hearing of the Committee on Natural Resources is now adjourned.
[Whereupon, at 4:25 p.m., the Committee was adjourned.]
[Additional material submitted for the record follows:]
[The prepared statement of Mr. Grijalva follows:]
Statement of The Honorable Raul M. Grijalva, a Representative in
Congress from the State of Arizona
Thank you, Mr. Chairman.
The catastrophe at the BP Horizon Platform--which claimed 11 lives
and continues to spew thousands of gallons of oil into the Gulf of
Mexico every day--serves as a tragic wake-up call for the regulators
who oversee drilling activities and the lawmakers who dictate our
national energy policy.
What is happening in the Gulf is our worst nightmare. It IS what
environmental advocates--who sought a sound and balanced energy policy
and a moratorium on offshore drilling--warned us would happen if we
didn't address our relentless appetite for oil. Sadly, I don't think
even they could have imagined the scale of devastation that we are
witnessing in the Gulf. Let's be clear: as of right now, there is NO
end in sight.
As we sit here today, the oil continues to gush with no real,
legitimate way to stop it. BP, Transocean and Halliburton continue to
shirk their responsibilities and childishly point fingers instead of
find solutions. In the meantime, herons and brown pelicans lie dying in
coastal marshes, suffocating in oily muck. ``Rivers'' of oil and
dispersants flow through the waters of the Gulf as boats deploy booms
in a feeble attempt to contain the massive spill. And the people and
communities of the Gulf stand by helplessly as the oil continues its
assault on their fisheries, their precious coastlines, their
communities and their livelihoods.
I think the American people must feel that same helplessness.
So, at the very least, Mr. Chairman--at the very least--this should
force us to step back, take a much needed time-out on drilling permits,
and revisit this mad rush to drill deeper, faster, and wider in the
Outer Continental Shelf. We must revisit the flawed policies and
processes that brought us here today--as we bear witness to, and
oversee, one of the worst environmental disasters in our history.
Our national impulse to drill first and ask questions later was
never a sustainable energy policy. And now the bill for that negligent
regulatory culture has come due.
But we still don't seem to really get it. We don't seem to get that
the lack of oversight by MMS over the oil industry, combined with
drill-at-all-costs policies, led us to an oil spill so huge that it is
uncontainable. This spill is so complex that our best engineering minds
cannot figure out a way to stop it. The scope and magnitude of the
destruction is still unfathomable.
This is the obvious, unfortunate and heartbreaking result of the
irresponsible and calculated calls of ``Drill, Baby, Drill.''
But what's even more disturbing to me today is that despite the
billions of dollars it will take to clean up the Deepwater Horizon
spill, and despite the untold economic and environmental damage, we are
continuing to allow unfettered offshore drilling in deep water. We
haven't learned our lesson! Even as we stand completely powerless to
stop the havoc in the Gulf.
Right now, up in Alaska, with its rough seas, unpredictable weather
and hard-to-reach oil deposits, new permits for drilling are being
authorized with minimal oversight. From what I have seen of the MMS,
including the new Inspector General report, it is an agency that serves
only as a cheerleader--and apparently a party planner--for big oil, no
matter what the risks and no matter how flawed the plan.
Over the last decade, the increasingly cozy and lax relationship
MMS had with the oil industry led to record profits for a few big
companies who used increasingly unsafe and irresponsible drilling
practices. That HAS to change. Big oil needs a watchdog, not a wing-
man.
The recent proposal to divide MMS into several new offices is
simply not an adequate response to such an urgent situation. Nothing
will change at this agency if we do not demand that rigorous
enforcement and oversight become the norm at MMS rather than simply
wielding a rubber stamp.
MMS failed to do its job. It failed the public and this country.
And the people and wildlife of the Gulf States are paying a very heavy
price. This is simply not acceptable. I call on Secretary Salazar to
put forth serious solutions for these serious times.
As we consider a timeout on drilling permits, we need to call for a
timeout on categorical exclusions too. Even if MMS were to put the
responsibility for environmental oversight in the proper hands, the
regular use of CEs to exempt drilling plans from environmental review
gives me little reason to believe that a ``new'' MMS will make drilling
safer.
We all know now that BP's plan for this sort of ``worst case
scenario'' was not to have a plan. They simply, arrogantly, asserted
that something like this would never happen to the Deepwater
Horizon...and MMS took them at their word. And then gave them a permit
to drill. Tragically, they all were wrong. That simply cannot be the
``M-O'' of the MMS. The MMS culture doesn't just need reform...it needs
a complete overhaul.
I also call upon Secretary Salazar to ensure that we take all
precautions to ensure that other rigs in the Gulf are operating safely.
In February, eighteen other Members of Congress joined me in asking the
Secretary to investigate whistleblower allegations that the BP Atlantis
was operating without required documentation in a way that could lead
to ``catastrophic operator errors.'' To date, there has been no
investigation. As the news today shows images of more and more oil
washing up on the shores of the Gulf, and wildlife soaked in oil, do we
really need any more evidence to support taking action NOW?! So I ask
you again, Secretary Salazar, to investigate these allegations or shut
BP Atlantis down.
BP should be held responsible for the FULL economic damages to
those affected by this ongoing disaster. Plain and simple. BP claimed
in the beginning they would pay. They need to follow through. We
learned from the Exxon Valdez that these oil companies will do
everything in their power to avoid responsibility for their actions.
This is why I just introduced legislation to completely remove the
unnecessary cap on liability that currently limits economic damages in
these types of disasters to $75 million--a cap that only serves the
interests of the responsible parties. I call on my colleagues to
support this legislation.
I look forward to hearing from our witnesses today as we examine
the causes of this disaster, the status of our offshore oil drilling
policies, and the response of BP and the government to the Deepwater
Horizon catastrophe. Thank you, Mr. Chairman.
* * *
OVERSIGHT HEARING ON THE ``OUTER CONTINENTAL SHELF OIL AND GAS STRATEGY
AND IMPLICATIONS OF THE DEEPWATER HORIZON RIG EXPLOSION''
----------
Thursday, May 27, 2010
U.S. House of Representatives
Committee on Natural Resources
Washington, D.C.
----------
The Committee met, pursuant to call, at 10:04 a.m. in Room
1324, Longworth House Office Building, Hon. Nick J. Rahall, II
[Chairman of the Committee] presiding.
Present: Representatives Rahall, Kildee, Pallone,
Napolitano, Holt, Grijalva, Bordallo, Costa, Heinrich, Lujan,
Miller, Markey, DeFazio, Christensen, DeGette, Kind, Capps,
Inslee, Baca, Herseth Sandlin, Sarbanes, Shea-Porter, Tsongas,
Kratovil, Hastings, Duncan, Flake, Gohmert, Lamborn, Wittman,
Broun, Fleming, Coffman, Lummis, McClintock, and Cassidy.
STATEMENT OF HON. NICK J. RAHALL, II, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF WEST VIRGINIA
The Chairman. The Committee on Natural Resources will come
to order, please. We are now some 20 hours into Operation Top
Kill and anxiously awaiting the results, hopefully later today.
In the meantime, we will continue our oversight hearings on the
Outer Continental Shelf Oil and Gas Strategy and Implications
of the Deepwater Horizon Rig Explosion. Pursuant to Committee
Rule 4[g], opening remarks will be limited to the Chairman and
Ranking Member during today's hearing.
In my view, the Obama Administration has been and is doing
everything humanly and technically possible to contain and stem
the well, which is still the first priority of all of us, of
course.
The President is in charge, not BP, and his Administration,
primarily through Coast Guard Commandant Thad Allen, is
directing the emergency response.
While it is frustrating and heartbreaking to watch the
continued hemorrhaging of oil into the Gulf, I think it is
important to state, counter to what some people have alleged,
that it is in no one's interest, certainly not the Obama
Administration and not BP, to allow this oil to continue
gushing into the Gulf of Mexico.
I take Secretary Salazar at his word when he testified
yesterday that he would be relentless in assuring that the well
is tapped and that the environment will be cleaned up after
this horrible incident.
Since he has taken over at Interior, Secretary Salazar has
imposed new ethics requirements, abolished the scandal ridden
Royalty-In-Kind program, and generally set a new tone that we
believe is affecting the performance and management at the
Department of the Interior, but while commendable, that is not
enough.
We will continue our oversight responsibility. We have been
rigorous from the beginning, and we will continue to be
rigorous in our oversight responsibilities and trying to help
those many others to find the answers of what happened here.
So, with that, I recognize the Ranking Member, Doc
Hastings.
STATEMENT OF HON. DOC HASTINGS, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF WASHINGTON
Mr. Hastings. Thank you, Mr. Chairman. First, I would like
to start by offering my condolences to those who lost family,
friends, and coworkers in this terrible accident. The loss of
eleven hard-working men cannot be forgotten in this tragedy,
and serves as a stark reminder of why you must work to ensure
that something like this never happens again.
Yesterday we heard from Secretary Salazar and other
Administration officials as this Committee seeks to find
answers to the decisions and actions that led to the explosion
and the sinking of the Deepwater Horizon and the ongoing oil
spill.
Today we will hear from the companies directly responsible
for this rig and well. We all hope to learn more about what is
being done to stop the leak and the cleanup of the spill.
Yesterday, as I stated, both BP and the Obama
Administration have a joint and shared responsibility to do
everything they can to stop the flow of oil.
I want to make it abundantly clear that there is not just
bipartisan agreement but a bipartisan command and commitment
that the responsible parties pay the full cost of the cleanup
and all the damages caused by this spill.
I would like to briefly discuss something that will happen
later on, and that is the President's press conference
scheduled for later this afternoon. This morning's news reports
are full of stories quoting a top Administration source on the
announcement that the President will make at his press
conference.
The President is announcing that offshore leases and
drilling scheduled for months and years from now are being
delayed. Administration officials say that the President's eyes
have been opened and that is why he is acting.
There may be some real merit in taking a pause in some of
these areas, but the fact still remains oil has been spilling
now for over a month in the Gulf. There are an untold number of
gallons of oil that are floating in the Gulf.
The Governor of Louisiana, Governor Bobby Jindal, reports
that oil is washing ashore on 100 miles of his beaches in his
state, and Federal law explicitly states that the President is
responsible for overseeing the cleanup of oil spills in Federal
waters.
So, rather than focusing on things not scheduled to happen
for months and years for now, the President, I believe, needs
to get focused on the actual crisis at hand.
The public expects the President and this Administration to
carry out their duty under the law and get focus on stopping
the spill and cleaning it up. The economic toll of this spill
is still climbing, but it is important that the actions of the
Federal Government don't impose further economic harm by
hastily acting without all of the facts.
If decisions are being made that could put people out of
work, then there must be solid information justifying these
actions and it must be publicly disclosed.
Having seen the impact of $4.00 gasoline on our economy
that we experienced two years ago and on their family's
pocketbooks, the American people understand the need for more
American-made energy.
The American people know that American-made energy means
jobs and a stronger national economy and stronger national
security. The leak must be stopped, the oil cleaned up the
minute we can get to the bottom of exactly what happened so
that informed, educated and permanent reforms can be put in
place to ensure that the American drilling industry is the
safest in the world and a spill like this won't happen in the
future.
Thank you, Mr. Chairman. I yield back my time.
[The prepared statement of Mr. Hastings follows:]
Statement of The Honorable Doc Hastings, Ranking Member,
Committee on Natural Resources
I would like to start by first offering my condolences to those who
lost friends, family and coworkers in this terrible accident. The loss
of eleven hard working men cannot be forgotten in this tragedy and
serves as a stark reminder of why we must work to ensure that something
like this never happens again.
Yesterday, we heard from Secretary Salazar and other Administration
officials as this Committee seeks to unwind the decisions and actions
that led up to the explosion and sinking of the Deepwater Horizon and
ongoing oil spill.
Today, we will hear from the companies directly responsible for
this rig and well. We all hope to learn more about what is being done
to stop the leak and cleanup the spill.
As I stated yesterday, both BP and the Obama Administration have a
joint and shared responsibility to do everything they can to stop the
flow of oil.
I want to make it abundantly clear that there is not just
bipartisan agreement, but a bipartisan demand and commitment, that the
responsible parties pay the full cost of the cleanup and all damages
caused by this spill.
The American people should not and will not be on the hook for a
single dime to pay for this disaster.
I'd like to briefly discuss the President's press conference
scheduled for this afternoon.
This morning's news reports are full of stories quoting a top
Administration source on the announcements that the President will make
at the press conference.
The President is announcing that offshore leases and drilling
scheduled for months and years from now are being delayed.
Administration officials say the President's ``eyes have been opened''
and that's why he is acting. There may well real merit in taking a
pause in some areas . . . but oil has been spilling for over a month.
There are an untold number of gallons of oil floating in the Gulf.
The Governor of Louisiana reports that oil is washing ashore on a
hundred miles of beaches in his state.
Federal law explicitly states that the President is responsible for
overseeing the cleanup of oil spills in federal waters.
Rather than focusing on things not scheduled to happen for months
and years from now, . . . the President needs to get focused on the
actual crisis at hand.
The public expects the President and his Administration to carry
out their duty under the law and get focused on stopping this spill and
cleaning it up.
The economic toll of this spill is still climbing, but it's
important that the actions of the federal government don't impose
further economic harm by hastily acting without all the facts.
If decisions are being made that could put people out of work, then
there must be solid information justifying these actions and it must be
publicly disclosed.
Having seen the impact of $4 gasoline on our economy and family's
pocketbooks, the American people understand the need for more American-
made energy.
The American people know that American-made energy means jobs and
stronger national security. The leak must be stopped, . . . the oil
cleaned up, . . . and then we must get to the bottom of exactly what
happened . . . so that informed, educated and permanent reforms can be
put in place to ensure American drilling is the safest in the world . .
. and that a spill like this never happens again.
______
The Chairman. We will now hear from our first panel
representative, John Garamendi, California 10th District, our
colleague and Member of Congress.
Welcome, John.
STATEMENT OF HON. JOHN GARAMENDI, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF CALIFORNIA
Mr. Garamendi. Mr. Chairman and Members of the Committee,
thank you very much for this extraordinary privilege of
addressing you at this moment when we are in the midst of a
crisis on the Gulf Coast.
The purpose of my attendance here and participation in this
is to say Murphy was right with his law: what can go wrong will
go wrong. We have seen plenty of that in the past in the Gulf
over the last 15 to 20 years. We have seen some 38 blowouts.
In California--and this brings me to my point--we saw a
massive blowout in 1969 in the Santa Barbara channel that led
to a moratorium on the West Coast in the state waters for the
last 43 years.
As Lieutenant Governor in the State of California last
year, I led the fight to stop new oil leasing in California
waters. In my previous work as the Deputy Secretary at the
Department of the Interior in the 1990s, we made a major effort
to stop new leases off the West Coast and persuaded with very
little trouble President Clinton to continue the Presidential
moratorium on the West Coast.
We need a law, and as you ponder and listen to the reports
from the oil companies as to what is happening today and what
did happen and caused the blowout, I would like you to keep in
mind that stuff happens. Really bad stuff happens, and we have
seen that on the Gulf Coast.
It will happen again. Despite every effort, accidents do
occur. When those accidents occur, should it be from a drilling
platform on the West Coast and a blowout occurs, we are talking
about a major, major problem, environmental to be sure and
economic.
In California, it is calculated that the coastal
environment of California provides the state with $22 billion
in annual economic activity and employs 369,000 people. In
Oregon, it is $17 billion annually and some 17,000 people are
employed. In Washington State, 150,000 people and over $8
billion.
We value that economic activity as much as we value the
precious coastline, the fishing, and the other opportunities
that it presents to us. No more oil.
We could ``Drill, Baby, Drill,'' but we can also count on
``Spills, Baby, Spills.'' And that has happened. Not just this
one incident as horrible as it is in the Gulf Coast, but it has
happened over and over throughout the world. A huge blowout on
the West Coast of Australia last year that took months to
contain, and here we are once again.
It is time for a permanent law. That is why my bill, H.R.
5213, the West Coast Ocean Protection Act deserves your
attention and deserves your pondering as you listen to the
testimony of the oil industry today.
I would ask you to consider the other legislation that has
been proposed by our colleagues here in the House. A permanent
protection on the East Coast in law not just depending upon the
President but rather depending upon the laws of this nation,
and also an expansion of protections on the West Coast of
Florida. These are important.
In addition to all of the economic activity, it is time for
this Nation to end its addiction to oil. As long as we drill,
as long as we open our coastlines to drilling, we will continue
our addiction just as surely as a junkie on the street will
find the next pusher.
It is time for us to say enough and to spend those vast
amounts of money that are employed in the drilling industry, to
spend that money on the renewable energies of all kinds--solar,
wind, geothermal, nuclear. All of those things must be our
future.
It is our opportunity today to push the junky aside and end
our addiction. The legislation that I am proposing and my
colleagues are proposing set us on that course.
Mr. Chairman, I thank you. I look forward to working with
this Committee. I thank you for the work of the members of the
Committee and what you have managed to do. I join you in
attentive listening to the next witnesses.
[The prepared statement of Mr. Garamendi follows:]
Statement of The Honorable John Garamendi, a Representative in Congress
from the State of California
Chairman Rahall, Ranking Member Hastings, and members of the
committee, thank you for allowing me the honor of testifying before
this esteemed committee. We're here today to talk about the past,
present, and future of offshore oil drilling.
For almost two decades I have helped shape policy on offshore oil
drilling at both the state and federal level. During the Clinton
Administration, I served as Deputy Secretary at the Department of
Interior where I advised President Clinton to extend the presidential
moratorium, a move I'm proud to say he ultimately made. As the
Lieutenant Governor of California, I testified before Secretary Salazar
on the dangers of the Administration allowing offshore oil drilling off
the coast of California. I stood up to Governor Schwarzenegger as head
of the State Lands Commission, the independent state agency in charge
of granting oil leases, and cast the deciding vote against his proposal
to expand new drilling leases at the PXP platform off the coast of
Santa Barbara. Now in Congress, I am proud to work with my colleagues
to ensure that offshore oil drilling is a practice relegated to the
pages of history textbooks.
My home state of California is all too familiar with the dire
consequences of offshore oil drilling. In fact, the 1969 Santa Barbara
spill, from its causes to outcome, foreshadows the events now taking
place in the Gulf of Mexico.
On the afternoon of January 29, 1969, a Union Oil Co. (now Unocal)
platform stationed six miles off the coast of Summerland, CA suffered a
blowout. Workers had drilled a well 3,500 feet below the ocean floor
and were in the process of retrieving the pipe in order to replace a
drill bit when the ``mud'' used to maintain pressure became dangerously
low. As the pressure built up and started to strain the casing on the
upper part of the well, an emergency attempt was made to cap it, but
this action only succeeded in further increasing the pressure inside
the well. Under this extreme pressure a burst of natural gas blew out
all of the drilling mud, created five breaks in an east-west fault on
the ocean floor, releasing oil and gas from deep beneath the earth.
Union Oil had been granted a waiver by the United States Geological
Survey that allowed them to use a shorter casing on the pipe than
federal standards prescribed (a casing is a reinforcing element of the
well that is supposed to prevent blowouts). Even though the well itself
was capped, the fragmentation of the wellhead produced a disaster. Oil
and natural gas broiled to the ocean surface in the vicinity of the oil
platform for eleven days while increasingly desperate attempts were
made to contain and stop the spill. On the eleventh day, chemical mud
was successfully used to seal the cracks in the seafloor, but only
after approximately three million gallons of oil escaped. The wind,
ocean currents, tides and waves dispersed the spilled oil into the
biologically diverse waters of the Santa Barbara channel and coated the
pristine California beaches with oil and sludge from Rincon Point to
Goleta, marring 35 miles of coastline and killing thousands of aquatic
species.
The aftermath of this spill and the resulting public outcry led to
the Santa Barbara County establishing the first Earth Day and is often
cited as a key moment in the modern environmental movement. In 1969, as
in 2010, the technology of the day failed to prevent or address the
spill and for eleven days, oil workers struggled to cap the rupture.
Tragically, we have not learned the lessons of Santa Barbara and
other similar events that have occurred in years since. This time, 11
workers lost their lives and scores of others were injured. The spill
in the Gulf shows that our reach has exceeded our grasp, our ability to
extract has exceeded our ability to anticipate and prevent disaster.
Although we can dig wells miles below the ocean bottom, we still lack
the means to avoid or combat oil spills of the magnitude or at the
depth of the Deepwater Horizon well. As in 1969, this is not the oil
industry or even BP's first accident.
According to the Minerals Management Service (MMS), there were 38
blowouts in the Gulf of Mexico between 1992 and 2006. BP's own safety
record in recent years paints a portrait of a corporation that
seemingly places profit over safety or environmental concerns. After a
Texas City, Texas refinery blew up in 2005, killing 15 workers, the
company vowed to address the safety shortfalls that caused the blast.
Then in 2006 an accident spilled 200,000 gallons of oil over the North
Slope of Alaska. After agreeing to pay $370 million in fines and
settling criminal charges, resulting from the Texas City blast, BP once
again pledged to clean up its act. Now in 2010 we are faced with yet
another environmental crisis, this time resulting from the Deepwater
Horizon spill. The spill is potentially unprecedented in its
destructive scope and BP is unable to cap the well or clean up the
spill. Given recent significant lapses by BP, perhaps its corporate
motto should be ``Bleeding Petroleum'' rather than ``Beyond
Petroleum.''
If a spill the equivalent to the Gulf spill were to happen off the
coast of Santa Barbara it would devastate the ocean environment off
California and the region. If the coastal economies of California,
Oregon and Washington were to suffer a catastrophic oil spill the
results to the three states economies would be devastating. According
to the National Ocean Economics Program the coastal based economy of
California employs 369, 444 individuals and generates $22 billion in
GDP. Oregon's coastal economy employs 16,909 and generates $1.2 billion
in GDP. Washington's coastal economy employs 149,741and generates $8.3
billion in GDP. Combined the three states provide nearly $32 billion in
revenue and employ nearly 600,000 people.
Gulf Coast communities, like the Santa Barbara area in 1969, are
learning the hard lessons that come in the wake of a catastrophic oil
spill. In the Gulf of Mexico nearly $350 million dollars has been spent
to clean up the spill and experts estimate billions more will be spent
before the cleanup is complete. The true final cost to the Gulf Coast
communities of having their way of life shattered by BP's negligence
remains unquantifiable.
One-third of the fish consumed in the U.S. comes from the Gulf
Coast and market prices are already beginning to rise based on fears
that supply will soon be greatly outpaced by demand. Even our best
scientists cannot determine how long it will be before the numerous
fragile ecosystems in the Gulf truly recover from the poisons now
seeping through wetlands and estuaries along the Gulf of Mexico. Add to
that the unknown effects of the highly toxic dispersants sprayed
liberally by BP to ``disperse'' the spill, and we are long away from
waking up from the nightmare that is the Deepwater Horizon spill.
That's why Congress must act now to reinstate the ban on offshore
oil drilling of the West Coast. For more than 20 years, from 1988 to
2008, through both Republican and Democratic control of Congress and
the White House, a moratorium was in place that protected those federal
waters from offshore oil drilling. Before ``Drill Baby Drill'' was all
the rage at the Republican National Convention, President George H.W.
Bush, himself a Texas oil man, established an executive moratorium on
new OCS oil and gas leasing and drilling [where?] until 2002, which
President Clinton extended until 2012. Until 2008, when President
George W. Bush lifted the executive moratorium, there was consensus
among the both parties during their time in the White House that our
precious oceanic and coastal resources had to be protected from the
scourge of offshore oil drilling. Even though President Obama has
wisely reinstated a temporary moratorium on offshore oil drilling,
Congressional action is needed to codify the will of the people's
representatives.
That is why I introduced H.R. 5213, the West Coast Ocean Protection
Act of 2010, which will protect the U.S. mainland, from the Canadian to
Mexican border, from new offshore oil drilling. A few weeks after my
bill was introduced, six Senators, representing California, Oregon and
Washington introduced companion legislation in the Senate. So far 35 of
my colleagues from the House, representing 6 six states and a
territory; Arizona, California, Maryland, New Jersey, Northern Marianas
Islands, Oregon and Washington have agreed to join the bill as
cosponsors.
Our nation ultimately faces a decision. Climate change and global
economic competition require us to green our economy. Clean, renewable
sources of energy are our inevitable future, and the longer we drag our
feet in setting up our country as the base for the research,
manufacturing, installation, and maintenance of new and better green
technologies, we allow our economy to drift further away from our
competitors. We can drill and spill our economy into decline, or we can
invest in the wind, solar, and other renewable energy sources that will
determine the victors of 21st century economic development.
Chairman Rahall and Ranking Member Hastings, thank you again for
allowing me to testify on this important national issue. I look forward
to working with you in the future.
______
The Chairman. Thank you, John, for your testimony. Do any
of my colleagues wish to question John from Louisiana?
Mr. Cassidy. I am sorry. Are we making a law against
tankers or are we making a law against drilling?
Mr. Garamendi. My bill would prohibit permanently new
drilling leases in the Federal waters off the West Coast.
Mr. Cassidy. So there are more spills with tankers than
there are with drilling, but we are going to outlaw the
drilling even though there are more spills in terms of volume
from tankers. What is the rationale?
Mr. Garamendi. My esteemed colleague, it is the oil that is
the problem. As long as we----
Mr. Cassidy. So presuming that we will still need oil for,
you know, the next 30 years----
Mr. Garamendi. Yes.
Mr. Cassidy.--I mean, unless you are going to raise prices
to $10.00 a gallon, we are going to need oil for the next 30
years.
Mr. Garamendi. Well, the prices are likely to be raised by
our friendly people that have the oil in the Gulf states, in
Venezuela and Nigeria, and by the oil companies.
Mr. Cassidy. Of course, they will be more able to do that
if they control the market, so the more dependent we make
ourselves on foreign supplies of oil, according to the
military, the more vulnerable we are.
So I am thinking I am hearing from you we need to shut down
what we do locally so that we can import more from which we
know that there are more spills, it increases our dependence,
and raises cost. Again, I am not seeing the rationale.
Mr. Garamendi. I beg to differ with you----
Mr. Miller. Will the gentleman yield?
Mr. Garamendi.--on your economic theory.
Mr. Cassidy. I will yield. I would love to see your facts
then. I will yield.
Mr. Miller. I think the gentleman's statement was that he
is seeking to replace that oil and additional oil in those
tankers by changing the energy policy in this country.
Mr. Cassidy. If I may reclaim----
Mr. Miller. We all recognize that that takes----
Mr. Cassidy.--If I may reclaim my time, I think it is about
one percent that solar now provides a----
Mr. Miller. I understand all that. We all know that.
Mr. Cassidy. So if we are going to do that, it is not going
to be in the near term. It is going to be at least three decade
off. So for the next three decades, do we increase our
environmental hazard by importing more, make ourselves more
vulnerable to foreign governments, all because this is an
emotional response?
I think what is incumbent upon us is to be very factual
here.
Mr. Miller. The fact is it is a very----
Mr. Garamendi. If I might, sir.
Mr. Miller.--hard economic response for our state.
Mr. Cassidy. Yes, because----
Mr. Garamendi. You might look----
Mr. Cassidy.--you are feeling the cost of one of the
highest in the nation.
Mr. Garamendi.--sir, you might look to your own state----
Mr. Cassidy. Oh.
Mr. Garamendi.--and check out the emotional and the
economic response along your own----
Mr. Cassidy. You do not have to tell me about that. You do
not absolutely have to tell me about that. On the other hand,
my own state understands completely that the more we import,
the more tanker accidents there are in New Jersey, the more
tanker accidents there are around the coast--that is
statistically.
That is not just rhetorical. Statistically, tankers are
more likely to spill than are oil rigs.
I yield my time.
Mr. Coffman. Thank you. Just a question. In your
legislation, is there anything to move forward on nuclear--I
think you mentioned nuclear power as a renewable source, and
certainly there are certain groups that oppose that.
What in your legislation would, in fact, incentivize
nuclear power in the United States?
Mr. Garamendi. My legislation speaks specifically to the
issue of the new drilling leases off the West Coast of the west
American States. It does not speak to nuclear.
I would be delighted to work with you on programs,
policies, funding to move the nuclear issues along including
those advanced nuclear systems normally called stage four that
would over time allow us to consume the present nuclear waste
coming from the Stage Threes. I think we have to move in that
direction.
Although this is a new policy, 30 years ago I was not
there. I now understand that we have to move in that direction.
Mr. Coffman. You speak to renewables such as wind and
solar, and those technologies today require natural gas when
the wind isn't blowing and the sun isn't shining. Does your
legislation speak to that?
Mr. Garamendi. It does not, however, the COMPETES
legislation, which was stalled on the Floor by a recommit, did
speak to it, and certainly I voted for it in the Science and
Technology Committee and will vote for it again because it
provides the research to fill in the gaps.
Certainly, we will see natural gas, which is a better
alternative in the medium term for me than oil, but we need to
do the research on storage capabilities, both mechanical and
battery storage, chemical storage, and nuclear--as we just
discussed.
Certainly we need to see an expansion of the other green
technologies from biofuels of all kinds, advanced biofuels,
solar, wind, geothermal. All of these things have to be in our
future.
We simply cannot continue to depend only on oil, and that
is the fundamental argument that I am making here. We have to
move away from it----
Mr. Cassidy. Reclaiming my time.
Mr. Garamendi.--while protecting our coasts.
Mr. Cassidy. Reclaiming my time--I would----
The Chairman. The gentleman's time from Louisiana has
expired. The Chairman did not mean to open up a hornet's nest
here among ourselves, and we are not going to have a hornet's
nest among ourselves.
But I will since I recognized one member on this side, I
will recognize another member on our side, and then only one
more on each side. I believe I saw the other gentleman from
Louisiana with his hand over here, and I saw the gentlelady
from California, Ms. Capps' hand over here.
But before that, I will recognize the gentleman from New
Mexico, Mr. Heinrich, and then the two I just mentioned will be
recognized. And that will be it.
The gentleman from New Mexico.
Mr. Heinrich. Thank you Mr. Chairman. I want to thank our
colleague from California for being here today. I think we need
to have these discussions.
You know, judging by some of the statements that we heard
in this Committee yesterday, many of our colleagues have
discovered their oversight role in all of this.
But frankly for the last year sitting on this Committee,
most of what I heard could be characterized as boosterism, and
I want to read some of the statements that we have heard over
the last year and a half in this Committee.
From our friend Mr. Cassidy of Louisiana: Indeed, offshore
drilling is much safer than, say, the cars we are driving
around and dropping oil on the street, which then runs off into
the bay.
Our friend Mr. Brown of South Carolina: Despite the heated
rhetoric, the OCS program has an outstanding environmental
record. It is our nation's safest energy extraction program.
And Representative Rohrabacher of California: Decades ago,
there were a few well-published accidents that led to oil
spills. 1969 was a long time ago.
We shouldn't be basing our judgments on what is important
for our people or what is good for the environment based on
what was done with technology that was put to use in 1969. That
was probably technology that was developed long before 1969.
The fact is that we can have underwater well heads that
have almost no chance of spilling even in the middle of a
hurricane and even in the middle of the Gulf.
I hope that as we move forward we can balance our
boosterism with a little more healthy oversight.
Thank you, Mr. Chairman.
Mr. Cassidy. Will the gentlemen yield?
Mr. Heinrich. Actually, I would yield to Ms. Capps of
California.
Mr. Cassidy. She has her own chance to speak.
The Chairman. Will you yield so the gentleman from
California can talk?
Mr. Heinrich. Yes, I would.
Mr. Baca. John, thank you very much for bringing this
legislation to us. I have a simple question that, you know, as
we were talking about the tankers and accidents that are there
that there are more that have been there.
Isn't it a lot easier to clean up the oil from a tanker and
it is not as costly to us, and when we have the drilling it
costs us a lot more? Isn't that so?
Mr. Garamendi. I really don't know the relative costs. I
suspect it would depend upon the nature of the spill, and the
amount spilled, and where it is spilled.
Certainly tankers present a major problem, and that is one
of the reasons----
Mr. Baca. But it doesn't continue to leak. It doesn't
continue with the problem that we have right now because right
now the leak that we have we haven't been able to stop it.
A tanker was able to clean that up because it isn't
leaking. It is a tank that basically has spilled, right?
Mr. Garamendi. Well, certainly in the case of the Gulf not
5,000 feet down. In all cases, oil cases is a very serious
environmental hazard whether it is--and we just heard some
quotes here.
It is a very serious problem. It demands the utmost safety
precautions, and in this hearing you will undoubtedly get into
that issue. We certainly have seen in the past with the Exxon
Valdez what happens when you use a single-hold tanker and a
captain that isn't exactly on the top of his game.
So we need to have those protections at every level. But
the major point here is that the West Coast of America is a
very difficult place to drill for oil certainly north of
Vandenberg Air Force Base.
You have a completely different environment than you do in
the Gulf with the exception of hurricane season. When that
occurs, you have a very rich ecological system both marine as
well as terrestrial and an economy that has been built upon
those extraordinary values.
My point here with regard to the legislation is let us
protect it and, in doing so, literally force ourselves to move
away from our dependence on oil. As long as we can get the
drug, we are going to get it. So get the junkie off the street.
Move away from oil. Don't give ourselves more opportunity
to continue doing what we know is risky, harmful in many, many
ways. If I wanted to open up another hornet's nest, I would
mention the climate change issue.
But nonetheless, these are real issues out there, and as
long as we continue to make it possible, to go for the drug, we
will. It is time to move away from that and, in doing so,
protecting extraordinary economy, a fishing economy, a tourist
economy.
That is my point here, and my colleagues that are concerned
about the East Coast have similar views. I don't know if they
are on the Committee. If they are--and perhaps they will add to
the hornet's nest, Mr. Chairman. Thank you.
The Chairman. The Chair recognizes the gentleman from
Louisiana, Mr. Fleming.
Mr. Fleming. Yes, thank you Mr. Chairman, and I thank my
friend for coming before us today to talk about this.
Look, we spent a good part of yesterday hearing from
Secretary Salazar talking about how this was Bush's fault. We
heard all about how it was BP's fault, and certainly there is
fault there--no question about it--but how it wasn't the
President's fault or any of the President's Administration.
Then today it seems to me that we are hearing pretty much
the same from Rahm Emanuel, which is ``Let no disaster go to
waste where we are politicizing this terrible event.''
I am from Louisiana, as my friend Bill Cassidy is, and
there is no state affected in this process more than the two of
us in this Committee. So I am disappointed that we are using
this to advance a political agenda, quite frankly.
I thank my friend, but honestly I would much rather see us
focus on the problem at hand. I don't think that this is a
forum in which we should be advancing cap and trade and all of
these other things.
Also, I am a little disappointed Mr. Heinrich quoted my
friend, Mr. Cassidy, and then wouldn't yield to him to respond.
So with that, I am going to yield to my friend Mr. Cassidy and
let him respond to those points that were made.
Mr. Cassidy. Thank you. Thank you for yielding. It is
actually disappointing that what is called boosterism is facts.
The National Research Council--and I can bring it to you--oil
in the sea, international or national kind of conference, said
that 60 percent of what is in the ocean is seepage. It is
natural seepage.
About 20 percent is runoff. I may be a little bit fuzzy on
my exact details, but about 20 percent is runoff. About five to
ten--less than five percent is related to what is happening
with transportation or with the drilling. It turns out that is
not boosterism. That is facts. Unfortunately, facts are
sometimes seen as boosterism.
As regards natural gas, offshore drilling is giving us most
of our new finds of natural gas. So as we go to our green fuel
which I absolutely accept as a nice way to transition, most of
that green fuel is going to come from offshore or from
fracking.
Now fracking has also found its opponents, and so it may be
that we are just going to pretend that energy happens. Sure,
one percent of our energy comes from solar and wind, but it is
just going to happen and we don't have to worry about anything
or anything, that we are just going to send more overseas and
pretend that tankers don't spill like the Exxon Valdez.
Mr. Heinrich. Would the gentleman yield?
Mr. Cassidy. Not yet.
Mr. Heinrich. OK.
Mr. Cassidy. Mr. Baca, I think that the people in Alaska
would say that the Exxon Valdez with its heavy crude was indeed
quite an accident and it was not something which they would say
is any less than what is happening to the Gulf Coast.
Last, we cannot account for negligence. There may have been
negligence in this thing. But negligence is not inherent.
Negligence is something which can be prevented, and I think
what is responsible here is for--and believe me, no one outside
of Louisiana cares more about this issue than someone from
Louisiana--if there was negligence, we wish to have that
isolated, identified, and prevented in the future.
On the other hand, energy does not just happen. Many of the
prescriptions you see for a better future will come from
offshore drilling.
Mr. Heinrich. Would the gentleman yield?
Mr. Fleming. I just want to reiterate some of the
statements that Dr. Cassidy made again, and that is we know the
majority of oil that is in the ocean is through natural seepage
and not through spills.
This is a very unfortunate event. It would be lovely if we
could turn our energy over to solar and to windmills. Someone
said the other day in the Committee meeting here that they felt
turbines are the up-and-coming technology while oil and gas is
diminishing.
Well, I would suggest that we have had windmills for 400
years, so I don't see it that way at all. If you look at
windmills and the technology behind them, it is not there. It
is not overtaking other forms of energy. It is less than one
percent.
I do agree with moving forward on nuclear energy, but we
don't have an infrastructure to build that. We are going to
have to put that back together after all these years.
So again, I would like to focus on what is going on here
today rather than advancing political agendas, and with that, I
yield back, Chairman; and I am putting my stinger back in my
pocket too, sir.
The Chairman. The gentleman yields back the balance of his
time, and under the Chair's prior dictum, I mean announcement,
the gentlelady from California will be the last one to be
recognized.
Ms. Capps. Thank you, Mr. Chairman, and I want to reference
our first witness and thank our colleague for talking about the
West Coast, and his legislation, and our history.
You referenced the big spill, the blowout of platform A in
1969 during which time I was living in that community of Santa
Barbara which I am honored to represent today.
I just would call attention to the fact that that platform
is drilling today. It has been drilling ever since and along
with 20 other platforms offshore of my district in Central
Coastal and Southern California. So the truth is that offshore
drilling is occurring and will occur probably for the next
three decades.
The comparison with tankers is interesting too because I
have introduced legislation. We have a lot of tankers going up
and down the Santa Barbara channel, and I have introduced
legislation to require double hulls. That would take us a long
way toward safer tankering which we will also be doing for a
good length of time.
The topic of this hearing today is Outer Continental Shelf
oil and gas strategy, and I just want to thank the President
for a statement I believe he is going to make today which will
call a moratorium on new leasing.
We are talking this legislation that was brought up by Mr.
Garamendi is about new leasing. The process of leasing takes
years in many place, and we are talking about leases that will
expect to drill far beyond the three decades.
I applaud the decision to call a pause or a moratorium on
the leasing of the new kind of technology that existed on the
Deepwater Horizon rig which then exploded.
So with that, I can yield to my colleague Diana DeGette and
also to Mr.----
Ms. DeGette. I thank the lady for yielding, and I also want
to thank Congressman Garamendi for coming.
I want to ask you, Congressman Garamendi, if you are aware
of this recent MMS study. The good news is it showed that in
general the way these wells are installed has been safe but the
problem is there have still been failures.
We had some hearings in the Energy and Commerce Committee--
part of the concern many of us have is, while in general these
deep deepwater wells can be safe, if there is a problem and our
friends on the other side admit there can be problems like
obviously happened here, systemic failures, the downside of
that failure is catastrophic as we are seeing right now in
Louisiana.
So I would think you would agree, and I would certainly
hope our friends on the other side of the aisle would agree,
that if we are going to install wells that we have to have
appropriate oversight by MMS and other agencies.
We have to have appropriate safeguards put in place by the
companies doing that because even though failures are rare, the
catastrophe to the ecosystems either in California or on the
East Coast and the Gulf can be devastating to those economies.
I am wondering if you could comment very briefly on that,
Congressman?
Mr. Garamendi. I can comment both with emotion as well as
some history having served as the Deputy Secretary of the
Department of the Interior in the mid-'90s. We were very
concerned about the Minerals Management Service and took
certain steps to try to change the culture of that
organization.
The Chairman pointed out in his opening remarks the efforts
that Mr. Salazar, Secretary Salazar, has made to straighten out
what is an agency that is in desperate need of restructuring.
The restructuring, the division of responsibility is
underway and apparently it will be a piece of legislation or at
least an appropriation issue. That has to happen.
Also, a few heads have to roll. The new director of that
agency has a great reputation. Unfortunately she is only been
there for I think about four months, hasn't really had the time
to straighten things away.
But Minerals Management Service has to be a regulator not a
hand maiden to the industry, and it is incumbent upon us to
make sure that that happens.
The Chairman. The gentlelady from California.
Ms. Capps. Mr. Inslee asked for some time, but I am not
sure how much is left.
The Chairman. Thirty seconds.
Ms. Capps. Thirty seconds.
Mr. Inslee. I just want to point out Mr. Cassidy has
suggested that it is possible to prevent oil spills. The one
point I want to make is we are going to have the President of
American Operations of British Petroleum up here in a few
minutes and he is going to admit something that is very true
which is that every single oil well in the world today creates
an invisible oil spill because it creates carbon dioxide when
we burn the oil.
That goes into the atmosphere. It goes into the oceans and
creates carbonic acid, and the oceans are 30 percent more
acidic than they are today. We have invisible oil spills from
every single oil well ever drilled in human history, and we are
going to have to figure out a way over time in the next few
decades to wean ourselves into new forms of non-carbon sources
of fuel.
Mr. Garamendi, I just appreciate your legislation because
it is not inconsistent with the bill we passed which
unfortunately all our colleagues voted against which will do
advanced nuclear, which will do coal-sequestered coal, which
will do solar and wind. I appreciate your work.
Thank you, Mr. Chairman.
The Chairman. We now move to the purpose of today's
hearings, and our second panel composed of Mr. Lamar McKay,
Chairman and President, BP America, Incorporated, and Mr.
Steven L. Newman, President and CEO, Transocean Limited.
Gentlemen, we welcome your familiar faces to Capital Hill
again, and we do have your prepared testimonies.
Mr. McKay, you may begin in whatever manner you wish.
STATEMENT OF LAMAR McKAY, CHAIRMAN AND PRESIDENT, BP AMERICA,
INC.
Mr. McKay. Thank you, Chairman. Chairman Rahall, Ranking
Member Hastings, Members of the Committee, my name is Lamar
McKay, and I am Chairman and President of BP America.
We have experienced a tragic series of events. This
horrendous accident which killed 11 workers and injured 17
others has profoundly touched all of us.
There has been tremendous shock that such an event, such an
accident, could have happened, and there has been great sorrow
for the lives lost and injuries sustained.
I have seen the response first hand on the Gulf Coast, and
I have talked with the men and women on the front line. There
is a deep and steadfast resolve to do all we humanly can to
stop this leak, contain the spill, and to minimize the damage.
We will meet our obligations under the Oil Pollution Act of
1990 to mitigate the environmental and economic impacts of this
incident. Our response efforts are part of a unified command.
It provides a structure for our work with the Departments of
Homeland Security, the Departments of the Interior, and other
Federal agencies as well as state and local government's.
We are committed to working with President Obama, members
of his cabinet, the Governors, congressional members, state
agencies, and local communities across Mississippi, Alabama,
Louisiana, Florida, and Texas.
I want to underscore that the global resources of BP are
engaged and have not been spared. Before I describe our
response efforts, I want to reiterate our commitment to finding
out what happened.
The question we all want answered is what caused this
tragic accident. A full answer to this and other questions will
have to await the outcome of multiple investigations which are
underway.
These include a joint investigation by the Departments of
Homeland Security and Interior which is the Marine Board. It
includes the President's National Commission, includes
congressional investigations, and an internal investigation
that BP itself is conducting.
This week, representatives from the BP investigation team
briefed the Department of the Interior and other U.S.
government officials on their initial perspectives based on the
data and the witnesses available to them so far as well as
areas of focus for further inquiry.
There is a lot more work to do including more interviews
and analysis as well as full forensic examinations of the
blowout preventer, the well head, and the rig itself, all of
which are currently on the sea bed.
But the investigation team's work so far shows that this is
a complex accident involving the failure of a number of
processes, systems, and equipment. Put simply, there seems to
have been an unprecedented combination of failures.
Now let me turn to our response efforts. In the sub sea,
our sub-sea efforts to stop the flow of oil and secure the well
are advancing on silver fronts.
Our primary focus has been on what is known as a top kill
which we began yesterday afternoon. This is a proven technique
for capping wells though it has never been done in 5,000 feet
of water.
This technique injects heavy drilling fluids into the
blowout preventer and the wellbore in an attempt to kill the
well which would then be capped with cement. We do not know how
long it will take for the operation to prove successful or
otherwise. BP will continue to report on the progress.
If necessary, we are also preparing a junk shot which is a
technique to clog the BOP and stop the flow. It involves
injecting fibrous material into the blowout preventer followed
by drilling mud to kill the well.
Now in parallel with the top kill, we have the development
of a lower marine riser package cap or a containment option.
This is designed to capture most of the oil and gas flowing
from the well and transport it to the surface. We are also
drilling two relief wells to intercept and seal the original
well. This will take an estimated three months.
Now on the open water, a fleet of more than 1,200 response
vessels has been mobilized under unified command. With the
Coast Guard's approval, we continue to attack the spill area
both on the surface and sub sea with biodegradable dispersants
from EPA's approved list.
To protect the shoreline, we are implementing what the
Coast Guard has called the most massive shoreline protection
effort ever mounted. Almost 3 million feet of boom are now
deployed with another 1.3 million feet available and 1.1
million feet on order. Eighteen staging areas across the Gulf
Coast are now in place, and thousands of volunteers have come
forward.
To ensure the rapid implementation of state contingency
plans, we have made available $25 million each in block grants
to Louisiana, Mississippi, Alabama, and Florida.
On Monday, we said we would make available up to $500
million to fund an open research program studying the impact of
the Deepwater Horizon incident and its associated response on
the Gulf of Mexico.
Now, beyond the environmental impacts, there are also
economic impacts. BP will pay all necessary cleanup costs and
is committed to paying all legitimate claims for other loss and
damages caused by the spill.
We are expediting interim payments to individuals and small
business owners whose livelihood has been directly impacted. To
date we have paid out over 13,500 claims mostly in the form of
lost-income payments, and those have totaled over $37 million.
We have an on-line claims filing system. Our call centers
are open 24 hours a day, seven days a week, and we have 24
walk-in claim's offices and over 400 adjustors working on this.
Our intent is to be efficient, fair and responsive.
We are taking guidance from the established regulations and
other information provided by the U.S. Coast Guard, which
handles and resolves these types of claims. We are also making
available $70 million to Florida, Alabama, Louisiana, and
Mississippi to help promote tourism.
Tragic as this accident was, we must not lose sight of why
BP and other energy companies are operating in the offshore,
including the Gulf of Mexico. The Gulf provides one in four
barrels of oils produced in the United States, a resource our
nation requires. BP and the entire energy industry are under no
illusions about the challenge we face. We know that we will be
judged by our response to this crisis. No resource available to
this company will be spared. I can assure you that we and the
entire industry will learn from this terrible event. We will
emerge from it stronger, smarter, and safer.
Thank you for the opportunity to appear before you today,
and I will be happy to answer any of your questions.
[The prepared statement of Mr. McKay follows:]
Statement of Lamar McKay, Chairman & President, BP America
Chairman Rahall, Ranking Member Hastings, members of the committee,
I am Lamar McKay, Chairman and President of BP America.
We have all experienced a tragic series of events.
I want to be clear from the outset that we will not rest until the
well is under control. As a responsible party under the Oil Pollution
Act of 1990, we will carry out our responsibilities to mitigate the
environmental and economic impacts of this incident.
We--and, indeed, the entire energy sector--are determined to
understand what happened, why it happened, take the learnings from this
incident, and make the changes necessary to make our company and our
industry stronger and safer. We understand that the world is watching
and that we will be judged by how we respond to these events.
Five weeks ago, eleven people were lost in an explosion and fire
aboard the Transocean Deepwater Horizon drilling rig, and seventeen
others were injured. My deepest sympathies go out to the families and
friends who have suffered such a terrible loss and to those in Gulf
Coast communities whose lives and livelihoods are being impacted.
This was a horrendous accident. We are all devastated by this. It
has profoundly touched our employees, their families, our partners,
customers, those in the surrounding areas and those in government with
whom we are working. There has been tremendous shock that such an
accident could have happened, and great sorrow for the lives lost and
the injuries sustained. The safety of our employees and our contractors
and the protection of the environment are always our first priorities.
Even as we absorb the human dimensions of this tragedy, I want to
underscore our intense determination to do everything humanly possible
to minimize the environmental and economic impacts of the resulting oil
spill on the Gulf Coast.
From the outset, the global resources of BP have been engaged.
Nothing is being spared. We are fully committed to the response. And
from the beginning, we have never been alone. On the night of the
accident, the Coast Guard helped rescue the 115 survivors from the rig.
The list of casualties could easily have been longer without the
professionalism and dedication of the Coast Guard.
Even before the Transocean Deepwater Horizon sank on the morning of
April 22, a Unified Command structure was established. Currently led by
the National Incident Commander, Admiral Thad Allen, the Unified
Command provides a structure for BP's work with the Coast Guard, the
Minerals Management Service and Transocean, among others.
Immediately following the explosion, in coordination with the Coast
Guard and in accordance with our spill response plan, BP began
mobilizing oil spill response resources including skimmers, storage
barges, tugs, aircraft, dispersant, and open-water and near-shore boom.
Working together with federal and state governments under the
umbrella of the Unified Command, BP's team of operational and technical
experts is coordinating with many agencies, organizations and
companies. These include the Departments of the Interior, Homeland
Security, Energy, and Defense, the National Oceanic and Atmospheric
Administration (NOAA), U.S. Fish & Wildlife Service (USFW), National
Marine Fisheries Service (NMFS), EPA, OSHA, Gulf Coast state
environmental and wildlife agencies, the Marine Spill Response
Corporation (an oil spill response consortium), as well as numerous
state, city, parish and county agencies.
``BP has been relentless and we've been relentless in our oversight
because we all understand the stakes here,'' said Adm. Allen on May 14.
``This has never been done before. This is an anomalous, unprecedented
event.''
The industry as a whole has responded in full support. Among the
resources that have been made available:
Drilling and technical experts who are helping determine
solutions to stopping the spill and mitigating its impact, including
specialists in the areas of subsea wells, environmental science and
emergency response;
Technical advice on blowout preventers, dispersant
application, well construction and containment options;
Additional facilities to serve as staging areas for
equipment and responders, more remotely operated vehicles (ROVs) for
deep underwater work, barges, support vessels and additional aircraft,
as well as training and working space for the Unified Command.
The actions we're taking
As Chairman and President of BP America, I am part of an executive
team that reports directly to our Global CEO, Tony Hayward. I am BP's
lead representative in the U.S. and am responsible for broad oversight
and connectivity across all our U.S.-based businesses.
BP itself has committed tremendous global resources to the effort.
Including BP, industry and government resources--nearly 17,000
personnel are now engaged in the response, in addition to thousands
volunteers.
Indeed, we have received many offers of help and assistance, and we
are grateful for them. The outpouring of support from government,
industry, businesses and private citizens has truly been humbling and
inspiring. It is remarkable to watch people come together in crisis.
Our efforts are focused on two overarching goals:
Stopping the flow of oil; and
Minimizing the environmental and economic impacts from
the oil spill.
Subsea efforts to secure the well
Our first priority is to stop the flow of oil and secure the well.
In order to do that, we are using multiple deepwater drilling units,
numerous support vessels and Remotely Operated Vehicles (ROVs) working
on several concurrent strategies:
``Top kill:'' Our primary focus over the last week has
been on what is known in the industry as a ``top kill.'' It is a
technique for capping wells which has been used worldwide, though never
in 5,000 feet of water. The technique, if utilized, will inject heavy
drilling mud into the blowout preventer (BOP) and well bore in an
attempt to kill the well. The well would then be capped with cement.
It cannot be predicted how long it will take for the operation
to prove successful or otherwise. BP will report on the
progress of the operation as and when appropriate.
If necessary, we are also preparing a ``junk shot'' technique
to clog the BOP and stop the flow. This involves the injection
of fibrous bridging material into the BOP followed by drilling
mud to kill the well.
Lower Marine Riser Package (LMRP) Cap: In parallel with
the top kill is development of a lower marine riser package cap
containment option. This would first involve removing the damaged riser
from the top of the BOP, leaving a cleanly-cut pipe at the top of the
BOP's LMRP.
The LMRP cap, an engineered containment device with a sealing
grommet, would be connected to a riser from the Discoverer
Enterprise drillship and then placed over the LMRP with the
intention of capturing most of the oil and gas flowing from the
well and transporting it to the drillship on the surface.
The LMRP cap is already on site and it is anticipated that this
option will be available for deployment should it be necessary.
Riser Insertion Tube: Nearly two weeks ago, we
successfully inserted a tapered riser tube into the end of the
existing, damaged riser and drill pipe, which is a primary source of
the leak. Gas and oil is now moving up the riser tube to the Enterprise
drillship on the surface, where it is being separated and flared. The
oil will eventually be transferred to another vessel or vessels for
transportation to one of three different locations on land for
treatment.
We are continuing to optimize the flow from the damaged riser
up to the drillship. This remains a new technology, however,
and both its continued operation and its effectiveness in
capturing the oil and gas remain uncertain.
Containment Recovery System: Initial efforts to place a
large containment dome over the main leak point were suspended as a
build-up of hydrates, essentially ice-like crystals, prevented a
successful placement of the dome over the spill area. The dome is
sitting on the ocean bottom 200 meters from the leak while we continue
to evaluate the impact of the hydrates.
A second, smaller containment dome, measuring four feet in
diameter and five feet high, called a ``top hat,'' is being
readied to lower over the main leak point, if needed. The small
dome would be connected by drill pipe and riser lines to a
drill ship on the surface to collect and treat the oil and is
designed to mitigate the formation of large volumes of
hydrates. It is important to note once again, however, that
this technology has never been used at this depth, and
significant technical and operational challenges must be
overcome.
''Hot tap:'' This is another containment option on the
seabed. This would involve tapping into the riser near the well head
and funneling off oil and gas.
Dispersant injection at the sea floor: We are continuing
to work closely with the Environmental Protection Agency (EPA) on the
subsea application of dispersant. Working through the Unified Command,
ROVs are currently injecting approximately 14,000 gallons of dispersant
at the sea floor per day. Dispersant acts by separating the oil into
small droplets that can break down more easily through natural
processes before it reaches the surface.
Drilling relief wells: We are currently drilling two
relief wells to permanently secure the well. These wells are designed
to intercept the original MC252 #1 well. Once this is accomplished, a
specialized heavy fluid will be injected into the well bore to stop the
flow of oil and allow work to be carried out to permanently cap the
existing well. Each of these operations could take approximately three
months.
Attacking the spill
We are attacking the spill on two fronts: in the open water and on
the shoreline, through the activation of our pre-approved spill
response plans.
On the open water
On the open water, more than 1,255 response vessels are deployed,
including 80 skimmers, as well as storage barges, tugs, and other
vessels. The Hoss barge, the world's largest skimming vessel, has been
onsite since April 25. In addition, there are 15, 210-foot Marine Spill
Response Corporation Oil Spill Response Vessels, which each have the
capacity to collect, separate, and store 4000 barrels of oil. To date,
approximately 262,100 barrels of oil and water mix have been recovered
and treated.
Fourteen controlled burns were conducted on Monday.
Working through the Unified Command, we continue to attack the
spill area with Coast Guard-approved biodegradable dispersants, which
are being applied from both planes and boats. To date, over 705,000
gallons of dispersant have been applied on the surface.
Actions to protect the shoreline
Near the shoreline, we are implementing with great urgency oil
spill response contingency plans to protect sensitive areas. According
to the Coast Guard, the result is the most massive shoreline protection
effort ever mounted.
To ensure rapid implementation of state contingency plans, we have
made block grants of $25 million each to Louisiana, Mississippi,
Alabama, and Florida.
To date, we have approximately 1.9 million feet of boom deployed in
an effort to contain the spill and protect the coastal shoreline.
Another 1.28 million feet are staged and ready for deployment and 1.16
million feet is on order. The Department of Defense is helping to
airlift boom to wherever it is needed across the Gulf coast.
The Area Unified Command Center has been established in Robert, LA.
Incident Command Centers have been established at Mobile, AL; St.
Petersburg, FL and Houma, LA.
Eighteen staging areas are also in place to help protect the
shoreline:
Alabama: Dauphin Island; Orange Beach; and Theodore;
Florida: Panama City, Pensacola, Port St. Joe and St.
Marks.
Louisiana: Amelia; Cocodrie; Grand Isle; Port Fourchon;
Shell Beach; Slidell; St. Mary; and Venice.
Mississippi: Biloxi; Pascagoula; and Pass Christian.
Highly mobile, shallow draft skimmers are also staged along the
coast ready to attack the oil where it approaches the shoreline.
Wildlife clean-up stations are being mobilized, and pre-impact
baseline assessment and beach clean-up will be carried out where
possible. Rapid response teams are ready to deploy to any affected
areas to assess the type and quantity of oiling, so the most effective
cleaning strategies can be applied.
A toll-free number has been established to report oiled or injured
wildlife, and the public is being urged not to attempt to help injured
or oiled animals, but to report any sightings via the toll-free number.
Contingency plans for waste management to prevent secondary
contamination are also being implemented.
Additional resources, both people and equipment, continue to arrive
for staging throughout the Gulf states in preparation for deployment
should they be needed.
Communication, community outreach, & engaging volunteers
We are also making every effort to keep the public and government
officials informed of what is happening and are regularly briefing
Federal, state, and local officials.
We are making a live webcam feed of the leak available.
On the ground, in the states and local communities, we are working
with numerous organizations such as fishing associations, local
businesses, parks, wildlife and environmental organizations,
educational institutions, medical and emergency establishments, local
media, and the general public.
On Monday, BP announced it would make available up to $500 million
to fund an open research program to study the impact of the Deepwater
Horizon incident, and its associated response, on the marine and
shoreline environment of the Gulf of Mexico.
In addition to the block grants mentioned earlier, we are also
making available $70 million in tourism grants to Alabama, Florida,
Louisiana and Mississippi.
BP is leading volunteer efforts in preparation for shoreline clean-
up. We have helped and will continue to help recruit and deploy
volunteers, many of whom are being compensated for their efforts, to
affected areas. Volunteers are being trained in such areas as beach
clean-up, wildlife monitoring, handling of hazardous materials and
vessel operation for laying boom.
There are seven BP community-outreach sites engaging, training, and
preparing volunteers:
Alabama: Mobile;
Florida: Pensacola;
Louisiana: Pointe-a-la-Hache and Venice;
Mississippi: Biloxi, Pascagoula and Waveland.
A phone line has been established for potential volunteers to
register their interest in assisting the response effort.
Coping with economic impacts
We recognize that beyond the environmental impacts there are also
economic impacts on many of the people who rely on the Gulf for their
livelihood. BP will pay all necessary clean up costs and is committed
to paying legitimate claims for other loss and damages caused by the
spill.
We believe it is inevitable that we will spend more than the $75
million liability cap established by the Oil Pollution Act of 1990.
We are providing expedited interim payments to those whose income
has been interrupted. The interim payment is intended to replace
roughly one month's lost income, based on the documentation provided by
the claimant. The check for the advance payment will be available at
the nearest BP Claims Center, the location of which will be
communicated to the claimant. Alternative arrangements can be made if
this method of check delivery is not feasible.
Claimants will continue receiving income replacement for as long as
they are unable to earn a living as a result of injury to natural
resources caused by the spill.
Over 25,000 claims have been filed and approximately 12,000 have
been paid, totaling nearly $30 million. These are mostly in the form of
lost income interim payments. We intend to continue replacing this lost
income for those impacted as long as the situation prevents them from
returning to work. We have yet to deny a claim.
BP has enlisted a company called ESIS to help administer claims. .
The company is well known as a leader in its field and is trained to
respond quickly and professionally to significant events.
Twenty four walk-in claims offices are open in Alabama, Florida,
Louisiana and Mississippi:
Alabama: Bayou La Batre; Foley; Orange Beach.
Florida: Apalachicola; Crawfordville; Fort Walton Beach; Gulf
Breeze; Panama City Beach; Pensacola; Port St. Joe; Santa Rosa Beach;
Louisiana: Belle Chasse; Cut Off; Grand Isle; Hammond; Houma; New
Orleans; Pointe-a-La-Hache; St. Bernard; Slidell; Venice;
Mississippi: Bay St. Louis; Biloxi; Pascagoula.
Our call center is operating 24 hours a day, seven days a week. We
also have in place an on-line claims filing system. Nearly 700 people
are assigned to handle claims, with approximately 400 experienced
claims adjusters working in the impacted communities. Spanish and
Vietnamese translators are available in some offices.
We are striving to be efficient and fair and we look for guidance
to the established laws, regulations and other information provided by
the U.S. Coast Guard, which frequently handles and resolves these types
of claims.
We will continue adding people, offices and resources as necessary.
Understanding what happened
BP is one of the lease holders and the operator of this exploration
well. As operator, BP hired Transocean to conduct the well drilling
operations. Transocean owned and was responsible for safe operation of
the Deepwater Horizon drilling rig and its equipment, including the
blowout preventer.
The question we all want answered is, ``What caused this tragic
accident?''
A full answer to this and other questions will have to await the
outcome of multiple investigations which are underway, including a
joint investigation by the Departments of Homeland Security and
Interior (Marine Board), The National Commission on the BP Deepwater
Horizon Oil Spill and Offshore Drilling, and an internal investigation
that BP is conducting.
BP's investigation into the cause of this accident is being led by
a senior BP executive from outside the affected business. The team has
more than 70 people, including engineers, technical specialists, and
external consultants. The investigation is ongoing and has not yet
reached conclusions about incident cause. This week, the team briefed
the Department of the Interior and other U.S. government officials on
the initial perspectives based on the data and witnesses available to
them so far, as well as areas of focus for further inquiry.
There is a lot more work to do, including more interviews and
analysis, and full forensic examinations of the BOP, the wellhead, and
the rig itself, all of which are currently on the sea bed. But the
investigation team's work so far suggests that this is a complex
accident involving the failure of a number of processes, systems, and
equipment. There were multiple control mechanisms--procedures and
equipment--in place that should have prevented this accident or reduced
the impact of the spill. Put simply, there seems to have been an
unprecedented combination of failures.
Only seven of the 126 onboard the Deepwater Horizon at the time of
the incident were BP employees, so we have only some of the story, but
the BP investigation team is working to piece together what happened
from meticulous review of the records of rig operations that they have
as well as information from those witnesses to whom they have access.
We are looking at our own actions and those of our contractors, as is
the Marine Board, and as will the National Commission.
Conclusion
BP is under no illusions about the seriousness of the situation we
face. In the last five weeks, the eyes of the world have been upon us.
President Obama and members of his Cabinet have visited the Gulf region
and made clear their expectations of BP and our industry. So have
governors, members of Congress, and the general public.
We intend to do everything within our power to bring this well
under control, to mitigate the environmental impact of the spill and to
address economic claims in a responsible manner.
Any organization can show the world its best side when things are
going well. It is in adversity that we truly see what it is made of.
We know that we will be judged by our response to this crisis. No
resource available to this company will be spared. I can assure you
that we and the entire industry will learn from this terrible event,
and emerge from it stronger, smarter and safer.
\1\ The data described throughout this testimony is accurate to the
best of my knowledge as of 8pm, Tuesday, May 25, 2010, when this
testimony was prepared. The information that we have continues to
develop as our response to the incident continues.
______
The Chairman. Thank you, Mr. McKay.
Mr. Newman?
STATEMENT OF STEVEN L. NEWMAN,
PRESIDENT AND CEO, TRANSOCEAN LTD.
Mr. Newman. Chairman Rahall, Ranking Member Hastings, and
other members of the Committee, I thank you for the opportunity
to speak with you today.
My name is Steven Newman. I am the Chief Executive Officer
of Transocean, Limited. Transocean is a leading offshore
drilling contractor with more than 18,000 employees worldwide.
I am a petroleum engineer by training, and I have spent
years working with and on drilling rigs. I have worked at
Transocean for 16 years, and I am incredibly proud of the
contributions our company has made to the energy industry
during this time.
Today however I sit before you with a heavy heart. The last
five weeks have been a time of great sadness and reflection for
our company and for me personally.
Nothing is more important to me and to Transocean than the
safety of our crewmembers, and our hearts ache for the 11
crewmembers including 9 Transocean employees who died in the
Deepwater Horizon explosion.
These were exceptional men, and they performed exemplary
service for our company, and we are committed to doing
everything we can to help their families cope with this
tragedy.
Over the last few weeks, we have also seen great acts of
courage and kindness in our colleagues and in our communities.
That courage and kindness was embodied by the 115 crewmembers
who made it off the Deepwater Horizon that night and were as
concerned about the safety of their colleagues as they were
about themselves.
It was embodied by the brave men and women of the U.S.
Coast Guard, who provided on-scene response and search and
rescue efforts, and it was embodied by the medical
professionals and the friends and families who met the
crewmembers when they arrived ashore.
It is embodied by our friends and colleagues at Transocean
and across the industry who have rallied to help the families
of the men who were lost. This has been a very emotional period
for all of us at Transocean, but it has also been a period of
intense activity and effort.
Immediately after the explosion, Transocean began working
with BP and the unified command in the effort to stop the flow
of hydrocarbons from the well. Our finest engineers and
operational people have been working with BP to identify and
pursue alternatives for stopping the flow as soon as possible.
Two of our drilling rigs, the Development Driller II and
the Development Driller III are involved in drilling relief
wells at the site, and our drill ship, the Discover Enterprise,
is on scene conducting crude oil recovery operations. We will
continue to support BP and the unified command in all of these
efforts.
At the same time, we have been working hard to get to the
bottom of the question to which the members of this Committee
and the American public want and deserve an answer. What
happened on the night of April 20th, and how do we assure the
American public that it will not happen again?
Transocean has assembled an independent investigative team
to determine the cause of the tragic events, a team that
includes dedicated Transocean and industry experts. They will
be interviewing people who have potentially helpful information
and studying the operations and equipment involved.
Because the drilling process is a collaborative process
involving a number of companies, contractors, and
subcontractors, the process of understanding what led to the
April 20th events and how to prevent such an accident in the
future must also be collaborative.
Our team is working side by side with others including BP
and governmental agencies and these investigative efforts will
continue until we have satisfactory answers. While it is still
too early to know exactly what happened on April 20th, we do
have some clues about the cause of the disaster.
The most significant clue is that the events occurred after
the well construction process was essentially complete.
Drilling had been finished on April 17th, and the well had been
sealed with casing and cement.
For that reason, the one thing we do know is that on the
evening of April 20th there was a catastrophic failure of the
cement, the casing, or both. Without a failure of those
elements, the explosion could not have occurred.
It is also clear that the drill crew had very little time
to react. The initial indications of trouble and the subsequent
explosions were almost simultaneous.
What caused that sudden violent failure and why weren't the
blowout preventers able to squeeze, crush, or sheer the pipe?
Those are critical questions that must be answered in the
coming weeks and months.
Until we know exactly what happened on April 20th, we
cannot determine how best to prevent such tragedies in the
future. But regardless of what the investigations uncover, ours
is an industry that must put safety first.
We must do so for the sake of our employees, for the sake
of their families, and for the sake of people all over the
world who use, rely, and depend on the oceans and waterways for
their livelihood and sustenance.
I thank you for the opportunity to speak with you today,
and I will be happy to answer your questions.
[The prepared statement of Mr. Newman follows:]
Statement of Steven Newman, Chief Executive Officer,
Transocean, Ltd.
Chairman Rahall, Ranking Member Hastings, and other members of the
Committee, I want to thank you for the opportunity to speak with you
today.
My name is Steven Newman, and I am the Chief Executive Officer of
Transocean, Ltd. Transocean is a leading offshore drilling contractor,
with more than 18,000 employees worldwide. I am a petroleum engineer by
training, I have spent considerable time working on drilling rigs, and
I have worked at Transocean for more than 15 years. I am proud of the
Company's historical contributions to the energy industry during that
time. Today, however, I sit before you with a heavy heart.
The last few weeks have been a time of great sadness and reflection
for our Company--and for me personally. Nothing is more important to me
and to Transocean than the safety of our employees and crew members,
and our hearts ache for the widows, parents and children of the 11 crew
members--including nine Transocean employees--who died in the Deepwater
Horizon explosion. These were exceptional men, and we are committed to
doing everything we can to support their families as they struggle to
cope with this tragedy.
We have also seen great courage and kindness since April 20 that
has reaffirmed our faith in the human spirit. That spirit is embodied
by the 115 crew members who were rescued from the Deepwater Horizon and
were as worried about the fate of their colleagues as they were about
themselves. It is embodied by the brave men and women of the U.S. Coast
Guard who led search-and-rescue efforts for the injured and missing
crewmembers, and the emergency workers waiting for the injured crew
members when they arrived ashore. And it is embodied by the friends and
colleagues who have rallied to help the families of those who were lost
at sea.
While this has been a very emotional period for all of us at
Transocean, it has also been a period of intense activity and effort.
Immediately after the explosion, Transocean began working with BP
(in BP's role as operator/leaseholder of the well) and the ``Unified
Command'' (which includes officials from the U.S. Coast Guard, the
Department of the Interior's Minerals Management Service (MMS), and the
National Oceanic and Atmospheric Administration (NOAA)) in the effort
to stop the flow of hydrocarbons. Our finest operational personnel and
engineers have been working with BP to identify and pursue options for
stopping the flow as soon as possible. Our drilling rig, the
Development Driller III, is involved in drilling the relief well at the
site, and our drillship, the Discoverer Enterprise, is involved in the
unique oil recovery operations in the Gulf. In addition, a third
Transocean drilling rig, the Development Driller II, is moving into
position to drill a second relief well or otherwise assist in
operations to stop the flow. We will continue to support BP and the
Unified Command in all of these efforts.
We have also been working hard to get to the bottom of the question
to which the Members of this Committee--and the American people--want
and deserve an answer: What happened the night of April 20th, and how
do we assure the American public that it will not happen again?
As is often the case after a tragedy of this kind, there has been a
lot of speculation about the root cause of this event. Although it is
premature to reach definitive conclusions about what caused the April
20 explosion, we do have some clues about the cause of the disaster.
The most significant clue is that the events occurred after the well
construction process was essentially finished. Drilling had been
completed on April 17, and the well had been sealed with casing and
cement. For that reason, the one thing we do know is that on the
evening of April 20, there was a sudden, catastrophic failure within
that basically completed well. It is also clear that the drill crew had
very little (if any) time to react. The initial indications of trouble
and the subsequent explosions were almost instantaneous.
What caused that sudden, violent failure? And why weren't the blow-
out preventers able to squeeze, crush or shear the pipe and thereby
shut in the flow? These are some of the critical questions that need to
be answered in the coming weeks and months.
The well construction process is a collaborative effort, involving
various entities and many personnel--the well operator, government
officials, the drilling contractor, the mud contractor, the casing
contractor, the cement contractor and others. For the same reason, the
process of understanding what led to the April 20 explosion must also
be collaborative. We agree that this is not the time for finger-
pointing--instead, all of us must work together to understand what
happened and prevent any such accident in the future.
Ours is an industry that must put safety first. And I can assure
you that Transocean has never--and will never--compromise on safety. In
2009, Transocean recorded its best ever Total Recordable Incident Rate
(TRIR). And MMS, the federal agency charged with enforcing safety on
deepwater oil rigs, awarded one of its top prizes for safety to
Transocean in 2009. The MMS SAFE Award recognizes ``exemplary
performance by Outer Continental Shelf (OCS) oil and gas operators and
contractors.'' In the words of MMS, this award ``highlights to the
public that companies can conduct offshore oil and gas activities
safely and in a pollution-free manner, even though such activities are
complex and carry a significant element of risk.'' In awarding this
prize to Transocean, MMS credited the Company's ``outstanding drilling
operations'' and a ``perfect performance period.''
Despite a strong safety record, Transocean is not complacent about
safety. We believe that any incident is one too many. Last year, our
Company experienced an employee accident record that I found
unacceptable. As a result, I recommended to our Board of Directors that
they withhold bonuses for all executives in order to make clear that
achieving stronger safety performance was a basic expectation--and
fundamental to our success. That recommendation was accepted, and our
Company paid no executive bonuses last year, in order to send a loud
message that we evaluate our success in large part based on the safety
of our operations.
Until we fully understand what happened on April 20, we cannot
determine with certainty how best to prevent such tragedies in the
future. But I am committed--for the sake of the men who lost their
lives on April 20, for the sake of their loved ones, for the sake of
all the hard-working people who work on Transocean rigs around the
world, and for the sake of people in each of the affected states and
worldwide who rely on our oceans and waterways for their livelihood--to
work with others in the industry, with Congress and with all involved
federal agencies to make sure that such an accident never happens
again.
______
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The Chairman. Thank you, gentlemen, for your testimony.
As we have already heard this morning and has been reported
in the media, the President is going to be having a press
conference here in an hour or so with some announcements to
make. This being Washington, DC and the city that it is, we are
already aware of what he is going to report according to the
experts.
It is reported that he is going to extend the moratorium on
deepwater drilling for an additional six months and cancel the
upcoming Western Gulf Lease Sale and the Virginia Lease Sale.
Would you both share your opinions? If this is what he
announces, would you have a take on this announcement?
Mr. McKay, you first.
Mr. McKay. I don't have a take directly on the
announcement. What I would say, I think it is important that we
learn from this incident everything we can learn as quickly as
possible that will influence I think practices, industry
practices, that go ahead as well as the regulatory environment
by which those practices occur.
Mr. Newman. Mr. Chairman, I think a pause is prudent. I
think it is incredibly important to understand what happened
and how to prevent such an incident in the future.
But I firmly believe in the long-term importance of the OCS
to the economy of the United States. If you think about
offshore drilling as an exercise in risk management, the regime
in the United States--Transocean works in 30 countries around
the world, and the regime in the United States, the approach to
risk management in the U.S. Gulf of Mexico is at the upper end
of the spectrum.
So the ability we have in the U.S. to manage risk is far
superior than other places in the world, and I would hate to
see us export that challenge of risk management to other areas
of the world.
The Chairman. You said a pause would be prudent. Are you
referring to shallow-water drilling, deepwater drilling, or
both and for how long is a pause?
Mr. Newman. I am referring specifically to deepwater
drilling because this is the incident that we are specifically
discussing today with respect to the Deepwater Horizon.
As I said in my opening comments, we are working very hard
to understand what happened. I don't know how to give you a
definitive time line around what sort of a prudent pause would
be----
The Chairman. OK. Let me ask you both. Yesterday at the
Coast Guard/MMS investigative hearing in New Orleans, the chief
mechanic on the Horizon testified that there was an argument
between top Transocean and BP employees on the rig less than 12
hours before the explosion, a rather heated argument it has
been reported.
The chief mechanic, Douglas Brown, said that Transocean's
top manager strongly objected--strongly objected--to BP's
plans. One of the Transocean employees who also objected, the
primary driller, Dewey Revette, would perish in the explosion
that night.
Can either of you shed any additional light on exactly what
this argument was about?
Mr. McKay. I cannot. I have not seen anything other than
what was in the press on that particular discussion or
argument.
Mr. Newman. Mr. Chairman, I don't know what the particular
discussion related to, whether it was a task to be carried out
later that day or what it related to.
The Chairman. Well, I hope we can find a little more
information on exactly what this argument was about because I
think it could give us some very valuable clues as to what
really happened here, and that is all of our primary goal was
to find out what happened so it won't happen again.
Mr. McKay, in the time line that your investigators put
together are these very anomalous pressure readings, sometimes
between 6:40 p.m. and 7:55 p.m., about two or three hours
before the explosion.
This slide says there was a discussion about pressure on
the drill pipe and that the rig team was satisfied that the
test was successful despite the fact that the pressures were
off.
Do you know who was involved in that discussion and how
they might have convinced themselves that this was a successful
test? Would the company man have been involved?
Mr. McKay. I don't know for a fact but I presume probably
so. Most of those type of decisions are a collaborative on a
rig. I do think that as we have noted in our investigation that
there were anomalous pressures that were measured.
There were decisions made to move forward through steps of
the procedure, and we believe that there was, you know, a
significant period of time that the well was giving signals
that there were issues occurring.
And we need to piece that together through all of the
investigations, and I think all discussions, all data, all
processes, and all decisions that were made are going to be
extremely important through the investigations.
The Chairman. All right. Thank you, gentlemen.
Mr. Hastings?
Mr. Hastings. Thank you very much, Mr. Chairman, and thank
both of you for being here today.
Both of you stated something that I agree, and that is that
we need to get to the bottom of this so we can make an informed
decision as to what happened and whatever corrections should be
made in the future because I too am one that believes that
there is potential in the OCS and we need to continue doing
that. But we obviously have to do it in a very safe way.
Just a kind of a perspective, it is my understanding that
since 1969 there have been something in the excess of 36,000
wells drilled in the OCS, and I am talking about the Gulf of
Mexico, and the Atlantic, and the Pacific, and in Alaska and
since 1969 this is the first incident that we have had.
I only say that to put things into perspective because we
know there is risk in everything we do. For goodness sakes, I
fly back and forth to my home in Washington State every weekend
and there is risk every time I get on an airplane. So I just
think that once we get to the point where we have all of the
facts, then we can make some informed decisions.
I suspect that there will be some revelations that are
maybe embarrassing to the private sector, and there will
probably be some revelations that will be embarrassing to the
public sector. Well, that is fine. We need to deal with that
and try to make sure it doesn't happen in the future.
But what I would like to ask both of you, the area I
represent has Hanford Nuclear Reservation, which is the most
contaminated nuclear site in the world. There are 53 million
gallons of radioactive material that is in the process of being
glassified and sent hopefully to a national repository.
But I only bring that up because, when you are dealing with
these type of materials, there is a lot of risk. On the ground,
the contractors there have a policy. All of the contractors
have a policy if there is anything unsafe, a single individual
can stop the process.
I have never been out on a rig in the Gulf, but I would
suspect that something like that would happen, and I would ask
you if you could both tell me what your safety rules and
regulations as it pertains to those rigs on the site.
Mr. McKay, I will start with you.
Mr. McKay. Well, our orders are very clear that any
employee anywhere at any level if they have any concern about
safety have the ability and, in fact, the responsibility to
raise their hand and try to get the operation stopped, whether
that is our operations or a contractor's operations.
I would presume everybody on that rig probably had the same
ability to do something and stop operations if they felt it was
unsafe.
Mr. Hastings. Mr. Newman?
Mr. Newman. Congressman, what you are talking about we
refer to as ``stop work authority,'' and it is a fundamental
component of our safety management system.
We have a regular program for recognizing individuals who
have taken that stop work authority. We call it, ``I made a
difference.'' We take a picture of the individual doing this,
calling a time out for safety.
We send that across our entire organization because we want
our people to know that they have that opportunity and, in
fact, obligation to stop any unsafe act or condition from
causing an incident.
Mr. Hastings. So those conditions existed on the rig and,
of course, we won't know what happened until we get all of the
facts and figures. But the point is that your policy in both of
your cases is a policy by which somebody can stop whatever
operations are going on if they think it is unsafe; is that a
fair way to say that?
Mr. Newman. Yes.
Mr. McKay. Yes.
Mr. Hastings. Yes. OK. I would like to follow up briefly.
In your remarks, Mr. McKay, you said that you block-granted
funds on the cleanup to the various states. There has been some
talk now in the news and I alluded to that in my opening
statement where Governor Bobby Jindal of Louisiana is somewhat
frustrated where he has at least a plan.
Now my only question, I guess, is those funds that you
block granted to the state could be used as far as stopping the
oil coming onshore? Is that the intent of that?
Mr. McKay. Yes. The intent of those block grants were to
allow the local what are called area contingency plans at the
local level, for instance in a parish level, to be actioned as
quickly as possible such that there is no waiting time on
funds. So that is what those funds are for, yes.
Mr. Hastings. OK. Well, I wanted to make that point because
we seem to have a little bit of tension between a Governor on
the ground with trying to make sure his state is protected by
this spill and a degree of difficulty at least in getting these
funds put in place so he can do what he is supposed to do as a
Governor of the state.
So with that, Mr. Chairman, I see my time has expired, and
I will yield back.
The Chairman. The gentleman from California, Mr. Miller.
Mr. Miller. Thank you, Mr. Chairman.
Gentlemen, I appreciate your testimony and your remarks but
add today what we are doing is we are managing a failure. Every
time we have a catastrophic event like this involving British
Petroleum or other parts of the oil and gas industry, we are
told that this is an unpredictable cascade of unforeseeable
errors, that this is unprecedented and nobody could have
foreseen this.
This is sort of like the bankers on Wall Street. Nobody
could have foreseen the risk that they engineered themselves,
and so nobody's responsible. I don't believe that this is some
kind of black swan or perfect storm event. There wasn't
something that nobody could foresee, and I don't think you can
promise it will never happen again.
Yesterday we spent a lot of time talking about changing the
culture of MMS, the Minerals Management Service, and how that
culture was wrong.
I wear two hats. I am a member of this Committee and I am
Chair of the Education and Labor Committee. I spend a lot of
time with British Petroleum about safety, about killed workers,
about injured workers, about processes that they go through.
This is a record that the American people ought to understand
who is doing business on our Outer Continental Shelf.
Back in 2005, BP had a tragic Texas City oil refinery
killing 15 workers, injuring 180. During the restart of
gasoline production unit, the tower was overfilled, caused
flammable liquid geyser to erupt from the stack.
Critical alarms and control instruments failed to alert
operators. BP had no flare to burn off the hydrocarbons. Eight
previous releases from the same stack. BP relied on low
personal injury rates as a safety indicator.
Following Texas City, BP commissioned a special report by
former Secretary James Baker in which he found that BP
tolerated serious deviations from safety operating practices
and concluded material deficiencies and process safety
performance exist at BP's five U.S. refineries.
In 2006, British Petroleum spilled 200,000 gallons of crude
oil over Alaska's north slope. In August 2006, BP found oil
leaking from flow lines that were severely corroded with losses
of 70 to 81 percent in three-eighth inch thick pipe. British
Petroleum had not done internal pipe clean out or inspections
for 14 years to save money.
In November 2007, British Petroleum plead guilty to a
single criminal misdemeanor in violations of the Clean Water
Act and paid $20 million in fines. This follows $22 million in
fines paid in 2000.
In 2009, OSHA fined British Petroleum an additional $87
million for the 700 violations that the Texas City Oil Refinery
that killed 15 workers, injured 180 after they failed after
four years to fix the deficiencies that they promised in the
settlement.
Now we are still wondering what happened on the Deepwater
Horizon. I think what we see here is we see a pattern that
apparently, BP, it is impossible for you to keep oil in the
pipelines whether it is on the north slope of Alaska, the Outer
Continental Shelf, or in your own refineries.
We have a failure of processes here that have been noted
numerous times. It is not just me who is noting this but a
report on the oil leakage. You commissioned Booz Allen, and
they found out that you had deeply ingrained cost-management
ethics that led to the failures to inspect.
The Chemical Safety Board did a study on Texas City. Cost-
cutting and budget pressures from the BP Group Executive
managed to impair process safety performance at Texas City and
15 people died.
You then asked former Secretary James Baker to make a
determination. BP does not effectively measure or monitor
safety performance. Budget cuts of 25 percent were imposed upon
Texas City.
Your own internal people came to your executives, went into
the board room in London, and said that these changes should be
made. Most of them were not, and then you proceeded to cut the
budgets by 25 percent, and the refinery went up in smoke and
those people died.
The fact of the matter is that there are red flags on the
safety record on the cost-cutting activities of BP throughout
the years, and I think it is time for the American people, for
the Congress of the United States to ask just who is doing
business on the Outer Continental Shelf.
This is not a right; it is a privilege. And when these
companies are struggling to replace inventory, the Outer
Continental Shelf is a prize and we ought to guard it jealously
and we ought to be clear about what kind of companies and what
kind of record they bring to that bidding process. They should
not be able to exclude companies just by bidding more than
others.
I think what we see here, this is a culture. I have
discussed this culture with former Chairman of the Board of BP.
I have discussed it with their last executives. I have
discussed it with the refinery executives, and the culture
continues to persist.
I appreciate you got awards from MMS, but maybe this was
the clash of two really bad cultures. Thank you.
The Chairman. Well, the gentleman from California's time
has expired, but the Chair will give the panel a chance to
respond if you wish.
Mr. McKay. I would briefly respond that we have
acknowledged that in Texas City, Alaska, that there were some
fundamental mistakes made. We have worked very hard.
We got a new CEO in 2007 whose effectively single agenda
item for quite a bit of his time was safety, safe, compliant,
and reliable operations. We have instituted changes from the
top at the Board with the Safety and Environmental Ethics Audit
Committee.
We have added a group Operational Risk Committee at the
top. We have set up an entirely new division, effectively,
which is safety and operational integrity. We are instituting
operation management systems around the world at every
operating business to conform in the standard.
This incident, we don't know what happened yet. I do expect
it will be a combination of factors that include human error,
processes, and equipment. All I can tell you is we are
dedicated to make this company the safest in the industry, and
we have not gotten there yet.
We have made a lot of progress, and we continue to work on
that. So the direction has been clear, and I acknowledge what
you have said from the past and we have taken responsibility
for that.
Mr. Miller. Well, I would still--we will talk more, but I
would like to get the facts around the gathering center number
one fire in Alaska where we still apparently cannot get a
candid report on what took place there.
The Chairman. The gentleman's time has expired.
Gentlemen from Louisiana, Mr. Fleming, is recognized for
five minutes.
Mr. Fleming. Thank you, Mr. Chairman, and thank you
gentlemen for coming today.
I come from the health care industry. I am a physician.
Industry such as health care, airlines, the work that you do
are risky industries, and one of the things that we have
discovered is that in order to be safe you have to have
redundancy in multiple systems, safeguards, fail-safe systems.
The good news about that is that if something goes wrong,
you have back-up systems. The bad news about that is that often
times people can cut corners and get away with it until finally
all of the factors align and that once in 30 years or once in
even a century a situation occurs where everything goes wrong,
and then you have a disaster.
I know that you are not fully knowledgeable or have been
briefed about what went wrong, but let me mention some of the
things that have come out about this thus far.
It seems that the problem began with an accidental
destruction of the rubber annular--I guess it is called an
annular. There was evidence that this had occurred, but it was
ignored.
Then there was discovered a failure of the redundant
electronic system. Apparently that is fully redundant, and
throughout this process one had not been working well at all,
so that really meant you had one reliable system at best.
Because of time pressures, instead of using the normal
heavy fluid for drilling, it was substituted with either light
fluid or salt water. And as the story goes, that is what the
argument was about was the fact that lighter fluid than normal
was being used.
Now again, I can't confirm this but this has been reported,
and I am sure we will find out over time. But it seems to me
that this reflects that there was a culture that had developed,
and I don't which company or maybe it was both.
I know that it has come out of the news that one company
seemed to be concerned about the procedures of the other one,
and I won't say which one was which but it seems to me that the
culture had developed sort of a time-pressure and a relaxation
of some of the safety and back stops.
So I open this up to a response from both of you gentleman.
Mr. Newman. Congressman, you have raised two questions that
I can respond to, one with respect to the annular. Just so the
Committee understands what we are talking about, this is a
piece of rubber that is about three feet in diameter. It is
about 18 inches tall, and it weighs about 2,000 pounds.
In the 60 Minutes report that aired which included an
interview of one of Transocean's employees on the rig, he made
reference to having seen a small handful of chunks of annular
material come across the shakers. So this is small handfuls of
material of a 2,000 pound piece of rubber.
If you consult the manufacturer's own specification sheet,
that specification sheet will tell you that this element is
subject to wear and tear.
So, you know, having small chunks of rubber come off this
is not unusual and not an indication that the annular element
was destroyed. In fact, the annular element was repeatedly
tested subsequent to those events and passed every one of those
tests.
Mr. Fleming. On that point though, if the annular is not
working properly, you could get misreadings on pressure; is
that correct?
Mr. Newman. You could get misreadings on pressure, but
those would be readily identifiable as misreadings on pressure
and they would characterized as failures of the test.
Mr. Fleming. Is it possible that someone could misinterpret
that reading?
Mr. Newman. The reading is relatively straightforward. You
either get a straight line, and that is an indication of a
successful test, or you get a sloping line, and that is an
indication of a failed test.
Mr. Fleming. Well, it was reported that the pressures were
acting very unusually and that, again, apparently there was
some discussion or inability to really interpret what those
pressure situations were and why they were occurring.
Mr. Newman. If you are referring to confusion on the day of
the 20th, I am not sure that the annular element was even
involved in those pressure readings that were taken on the
20th. So it is entirely possible that they may be completely
unrelated issues.
The other issue, the other question you raised, was with
respect to the control system, the duel redundant control
systems that are responsible for operating the BOP.
Repeatedly throughout the well, those systems are tested.
The industry refers to those duel redundant systems as blue and
yellow, and tests alternate between those blue and yellow sides
according to regulations, and every time they were tested they
passed those tests.
Mr. Fleming. Mr. McKay?
Mr. McKay. I do think--I mean, you asked some questions
that I think the investigations are going to need to come to
grips with which is what type of decisions were made on what
type of information at the time.
And there were anomalous pressures that were taken at
various times, and you know, the detail of the different
conversations and what was said, and who was objecting to what,
I don't know. But the investigations will need to get to the
bottom of that I think.
Mr. Fleming. OK. I think I am out of time.
The Chairman. The gentleman from New Mexico, Mr. Lujan.
Mr. Lujan. Mr. Chairman, thank you very much. First and
foremost, I think that from all of us our heart and our prayers
are with the families of those that lost their lives on the
20th. This is serious.
Especially as our nation's been horrified by the plumes of
oil that devastated marine life, local seafood industries,
vulnerable wetlands, and the waters of the Gulf of Mexico, we
watched the company most responsible for the spill, British
Petroleum, understate the spill's extent and impact while
trying to escape blame for the Earth's greatest environmental
catastrophe since Chernobyl.
Although the sheer volume of oil has stunned most
Americans, I am finding it extremely hard to believe that BP
executives are shocked. Over the past decade BP has grown to
become the largest company in America, systematically
undercutting its competitors on safety issues.
In 2005, BP's Texas refinery exploded killing 15 workers,
injury 150 more, and we have heard this time and time again.
Shortly after, the plant had cut maintenance by spending less
than or cutting their expenditures on safety by 41 percent. The
next year, a poorly maintained pipeline rupture spilled 200,000
gallons of crude over the North Slope of Alaska. BP has claimed
time and again that it is learned from its mistakes, however,
it continues to cut back on employee and environmental safety
cost to increase its profits.
Over the past three years, 97 percent of all the flagrant
violations in the refining industry found by the Occupational
Safety and Health Administration were located at just two BP
refineries, one of which was the very refinery in Texas City
that exploded in '05. BP's citations were classified by OSHA as
egregiously willful meaning that they reflect violations of a
rule designed to prevent catastrophic events at refineries.
According to Risk Metrics, a consulting firm that scores
companies' commitment to health, environment, and safety, BP is
among the worst performing major oil companies in these areas.
Last month we witnessed another explosion connected to BP
at Deepwater Horizon that killed 11 more people and spread a
devastating slick across the Gulf.
Perhaps we shouldn't be surprised to hear that the
Associated Press has reported that a Transocean employee on the
rig prior to the disaster stated that he had overheard, and I
quote, ``overheard upper management talking saying that BP was
taking shortcuts by displacing the well with salt water instead
of mud without sealing the well with cement plugs. That is why
it blew.'' Unquote. Once again, BP abandoned its workers for
the sake of a little more profit.
Mr. McKay, the record breaking fines that have been levied
against BP over recent years all finding that 97 percent of
egregious willful violations over the last three years, one of
which was the Texas City refinery that exploded in 05,
undermines your company's claims of shock and devastation and a
willingness to correct these problems. BP's record appears to
indicate that the company has determined that an occasional
fatal accident is no more than a cost of doing business. How
can any company possibly correct problems with its corporate
culture that are so deeply interwoven into your business model
that even a loss of life has not forced a change? At what point
will jeopardizing the health and safety of your workers and the
environment no longer make sense to your bottom line?
Mr. McKay. There have been massive changes made to the
company. I went through a few earlier. Just to mention in terms
of safety and operational integrity spending that is--that has
been rising. It has been, you know, we spent over a billion
dollars in Alaska. We have spent over a billion dollars in
Texas City rebuilding.
More importantly than that is the agenda that has been
created by our new CEO after those events. That is clear top to
bottom. That is our agenda. That is our priority.
I cannot say the causes of this incident, but what I can
tell you is we have 23,000 employees in this country working to
be the safest company in this industry.
We have made massive changes, as I said. Progress is being
made. It will never be finished, but I believe this company is
making--has made major, major steps at its core since those
incidents.
Mr. Lujan. Mr. McKay, let me read a couple quotes that came
back from 2007 by the former CEO. BP gets it. I get it too. I
recognize the need for improvement.
After the 11-member panel that BP asked to study its U.S.
refineries at the urging of the U.S. Chemical Safety Board made
ten recommendations, what they found as far as looking even at
Texas was the panel said BP did not learn from a long-string of
past accidents, had a false sense of confidence about safety,
do not always ensure that adequate resources were effectively
allocated to support or sustain a high level of safety in the
industrial process, and rotated refinery chiefs too quickly.
Again, a lot of what we are hearing now is well it has been
repeated after 2005, and I know we all want to get to the
bottom of this. We all want to make sure this does not happen
again.
But we have to make sure that we are making the investments
and that people are held accountable to making sure that they
are putting the lives of people first and the safety of others
before them.
Thank you, Mr. Chairman. I yield back my time.
The Chairman. The gentleman's time has expired.
The gentleman from Colorado, Mr. Coffman.
Mr. Coffman. Thank you, Mr. Chairman.
Mr. Newman, it has been reported that Transocean has filed
a limitation of liability petition. Can you explain this claim
to the Committee and explain if this applies to claims under
the Oil Pollution Act, OPA?
Mr. Newman. Thank you for the opportunity to clarify this,
Congressman. We were instructed by our insurance underwriters
very early after the incident to file the limitation of
liability. So the first reason we filed it was at the
instruction of our insurance underwriter, so we did that to
preserve our insurance scheme.
The second reason is that we are being sued in multiple
states, in state court, Federal court across many
jurisdictions, and so the limitation and liability filing
serves to consolidate all of those into a single venue to
ensure that the pace of discovery and the process of
administering those claims doesn't disadvantage one claimant
against another.
So we did it at the request of our insurance underwriters
and to consolidate all the actions into a single venue. It is
unrelated to claims filed under the Oil Pollution Act. It is
only intended to address non-environmental claims.
Mr. Coffman. Thank you.
Mr. McKay, we have been provided a briefing by BP on events
leading up to the incident on board the Deepwater Horizon. By
your company's own admission, there appears to be a series of
problems throughout the day with well control.
Can you explain for us what appears to have happened that
day and why when there were problems with the well more caution
wasn't applied to the situation?
Mr. McKay. I can give the Committee a quick overview of
what at least I have been reviewed with the investigation team
which is similar to the review the Committee staffers have had.
There were anomalous pressures measured. There were
evidently hydrocarbons that enter the wellbore. The recognition
of those hydrocarbons is at question. Were they recognized;
were they not? It would appear not for a period of time at
least.
Operations were continued. The well gave signs at various
places in time--and I don't have the time line in front of me--
that there was pressure increasing. It would be bled off, and
then there would be flow.
It would be bled off, and there were various--it is very
complicated because there are lots of operations going on--but
there were various indications that hydrocarbons could have
entered the wellbore, and the well was becoming capable of
flowing. I think that is one of the interim concerns that we
have uncovered.
Then the operational activities, whether that was
monitoring, discussing decisions, and physical operations have
to be pieced together. I don't understand those yet and nor
does the investigation team.
But I do believe it became a progressive event is what it
would appear, and that there were signals that mounted, and
there was an accumulative effect.
And whatever operations were needed to control the well in
a well-control situation don't look to have happened. Then
after things got out of control, a piece of equipment that is
designed to operate in that system didn't work.
We don't know the reasons for any of that yet, but the
investigations, I think, I have confidence that the
investigations will figure that out.
I think with that confidence then we can minimize and make
changes. It will minimize and make changes that will minimize
the chance of this happening again and provide confidence for
the industry again.
Mr. Coffman. Well, thank you both for your testimony. I
certainly concur with you on an earlier statement that both of
you made in terms of supporting the pause in terms of more
leases until we get to the bottom as to what happened and what
it will take to correct it.
But I also recognize the importance of offshore drilling
and that that pause that the President is going to be talking
about today not be extended beyond that time for which we
understand how to correct this issue and how to move forward.
Mr. Chairman, I yield back.
The Chairman. The gentleman from Washington, Mr. Inslee.
Mr. Inslee. Thank you. I have to say while we have been
engaged in this investigation, it has been very disturbing
because it doesn't look like BP or the operators went through
one stop sign. It looks like they went through five or six at
least.
I mean, anyone can make a mistake, but it is amazing to me
the numbers here. We have a dead battery in the blowout
preventer. We have a hydraulic leak in the blowout preventer
because someone didn't ratchet it down.
We have a casing decision that according to various people
a decision to use a particular casing for economic reasons at
least created a riskier situation.
We have a failure to respond to the signals from the well
that you were getting abnormal pressures. We had an early
decision about not using mud that may have been involved in the
argument we heard about.
And now our investigators have just tumbled to another one
I want to ask you about that might be number six in this series
of failures and that is about the centralizers. Your staff has
told investigators for the Committee staff that a decision was
made by BP to reduce, in effect, the number of centralizers.
Centralizers are sort of a spring-like device that go
around to keep the pipe, the casing, centered in the wellbore.
It is very important to keep it centered so you have structural
integrity so you don't get a leak.
Originally BP staff wanted to use 20 centralizers which
would have assured that you had centralizers above the
hydrocarbon zone, 500 feet above the hydrocarbon zone.
But someone apparently delivered the wrong ones to the rig
according to your staff, and so it was decided to reduce the
number of centralizers to only six and because of that decision
to only use six there were apparently no centralizers in the
500-feet zone above the hydrocarbon zone. Even though there was
cement there, there were no centralizers.
So because there were no centralizers there, you may have
been off center which could have weakened or essentially
compromised the integrity of the system.
So could you tell us about why BP made that decision to
reduce the number of centralizers; why you decided to run this
risk of not having centralizers in the zone. These were
conscious decisions. These were before the blowout. Why you
decided to reduce that and run that additional risk?
Mr. McKay. I don't know why. That is part of the
investigation that needs to continue. I do acknowledge what you
are saying. I was in the review I had prior to this with the
investigation team, evidently six centralizers were run rather
than 20 or so.
I don't know the reason for that being six versus 20.
Obviously the investigation team is looking into that not just
our team as well.
Mr. Inslee. Is it somewhat disturbing at least that
apparently your staff thought originally there should be 20;
you should have them above the hydrocarbon zone? Somebody made
a decision to reduce it to six. Does that disturb you?
Mr. McKay. I think it needs to be looked at. I don't know
the reason that those were dropped. I don't know--I have no
idea what the reason they were dropped, so I don't know if
there is a good reason or a bad reason. I don't know.
Mr. Inslee. When do you think BP will have that answer?
Mr. McKay. I think the investigation team will continue to
look at it and soon. I don't know the exact time.
Mr. Inslee. We hope that will be the case. Now, I just have
to tell you that it is disturbing to me every single time there
is said to be a junction between doing something safer and
maybe a little more expensive and something to do riskier and
maybe a little less expensive, in this particular case, BP went
with the cheaper and riskier solution.
To me this seems like more of a cultural problem than just
one running of a stop sign. I just have to relay that as one
Member of Congress's reaction.
I want to ask about a larger part of the BP plan for our
energy future of this country. Your logo I really like. It is
beautiful. It is green. It suggests benign photosynthesis.
It was adopted when your previous leadership of British
Petroleum wanted to call BP Beyond Petroleum, and the reason is
your previous leadership recognized that every single oil well
in the world is an invisible oil spill because the carbon that
we use goes in the atmosphere, gets burned up, the carbon
dioxide goes in the ocean, creates carbonic acid in the ocean.
Your previous leadership then understood that that is
unsustainable because within the next century we probably won't
have healthy coral reefs anywhere in the world.
We will have acidic conditions that could damage 40 percent
of the food chain, the very basic food chain of the oceans. He
understood we had to get beyond petroleum, and yet it seems
that that corporate goal has now been abandoned by BP and you
have reduced your investment in some of the things that can get
us beyond petroleum.
In fact, has that happened and how do you explain that
disappointing event?
Mr. McKay. I would disagree. We have not abandoned that. We
have been very, very clear that we believe in all of the above
including the range from expiration in production to biofuel,
solar, and wind.
We are still investing on the schedule that Lord Brown
talked about years ago. In fact, we are ahead of that schedule,
and we are investing primarily in the U.S. on wind, and
biofuels, and solar.
So we are still firmly, firmly in belief that it needs to
be everything, and we are still investing in that way.
Mr. Inslee. What percentage of your expenses or investments
of your total budget go to renewable energy sources as a rough
percentage? Just very rough?
Mr. McKay. I would say five to ten percent, but I am not
sure.
Mr. Inslee. We appreciate your comments. We hope there is
more fiscal muscle behind those desires. Thank you.
The Chairman. The gentleman's time has expired.
Just as a housekeeping announcement here because it may
affect future questioning from our members to the panel, the
Committee has learned--and it appears to be in the public arena
now--that the departure of Elizabeth Birnbaum as Director of
MMS is imminent.
The Chair would say that her departure does not address the
root problem. She has only been the public face of MMS for
about 10 months, and the most serious allegations that we have
learned recently occurred prior to her tenure.
On the surface, this might be a good start, but I feel this
particular individual must not be the end game in our efforts
to get at the root causes of the problems at MMS. So the Chair
just makes that comment by way of a public announcement.
The gentleman from California, Mr. McClintock, is
recognized.
Mr. McClintock. In the Santa Barbara oil spill in 1969,
that in many ways was technically a more difficult situation.
As I understand it, the casing didn't extend deep enough down.
There was a fracture in the substrata. Fissures opened up.
You had multiple leaks, and yet that was contained in a
relatively short period of time compared with this disaster.
What is taking so long? Is it strictly the difficulties of
dealing with 5,000 feet of water?
Mr. McKay. There are several reasons. I put them in two big
categories. One is 5,000 feet of water where we just can't get
human access and it is we are working with submarines and
robots.
The second big category is that we have a blowout preventer
with what is called a lower marine riser package still stuck on
top and a kinked riser 4,300 feet long.
So the ability to--and we have not been able to actuate
that blowout preventer through the remote operated vehicles as
it should be, nor have we been able to get on top of that
blowout preventer to be able to get another blowout preventer,
for example, on top of it.
So this is an extremely difficult--extremely difficult--
situation, and we have had to do diagnostic work, non-intrusive
diagnostic work through gamma rays, sonar, and radiography to
try to understand the internal workings of that blowout
preventer such that we don't effectively take a step backwards
versus a step forward as we do operations because we have been
concerned that if the top of that riser package was
compromised, then we may have a much bigger problem.
So we have had to work without being able to touch
anything, see anything other than robots, and build everything
on the sea floor with robots.
Mr. McClintock. I realize you have to drill where the oil
is, but directional drilling gives a considerable amount of
latitude on where to place these rigs. Why are you drilling in
5,000 feet of water?
Mr. McKay. Directional drilling can go directionally
about--eight miles is about the farthest it can go. This is 41
miles offshore from the delta, so it is quite a ways offshore.
So directional drilling just can't get you there to much of the
deep, well, all of the deep water providence in the Gulf of
Mexico.
Mr. McClintock. So the placement then of the well is
determined geologically; it is not regulatory?
Mr. McKay. Yes. Yes. Exactly.
Mr. McClintock. OK. Thank you.
The Chairman. The Gentleman from Michigan, Mr. Kildee.
Mr. Kildee. Thank you, Mr. Chairman.
You would think that through enlightened self-interest any
money that you might save by lack of due diligence you would
lose many times over by disasters such as this.
You certainly have offended the American people all over
the country. I am from Michigan way up north, but we are
offended by that. You certainly should have offended your
stockholders for lack I think of due diligence.
Have you recapitulated your construction of this rig and
platform to see what changes may have taken place in the
construction of this one compared to those that were built
before that might have contributed to what happened, or do you
plan to recapitulate in detail construction of this particular
platform?
Mr. McKay. I do believe it is really important to
understand the equipment that was operating, whether that is
the rig itself or the blowout preventer, any modifications that
were made along the life of that, for example, blowout
preventer and anything that may or may not have worked properly
with that blowout preventer, I think that will do several
things.
One, it will inform as to what blowout preventers should do
in the future. Number two, I think it will enhance the testing
procedures around blowout preventers now, and number three, I
think at least it at least begs the question should blowout
preventers be re-certified now.
I also think what we are finding is that the sub-sea
intervention capability for the industry will need to be looked
at in terms of how can you handle these things, how can you, in
effect, have a plan that understands a sub-sea capability
available across the industry and be able to be put into
service.
So I think there is a reassemblage of the events and the
equipment that will be necessary to understand how to go
forward.
Mr. Kildee. I think it would be very important--there is an
old saying for lack of a nail, a shoe was lost. For lack of a
shoe, the horse was lost. For loss of a horse, the battle was
lost. For loss of the battle, the war was lost.
I think you have to go back and look at every step to see
what you may have done differently that may have made this less
reliable than previous platforms.
You were really going very, very deep, and you think you
would take even special precautions, but maybe a decision was
made that upon reflection if you really recapitulate here you
would find out was not the proper decision maybe not out of
malice but out of not knowing what that may have done to the
system that you have put together.
I think that is very important because we cannot tolerate
this happening again. I am 81 years old, and in my lifetime I
have seen a lot of natural disasters. But I can't recall
anything that has captured the American people's attention as
much as this.
You have only a fiscal obligation but you have a moral
obligation to do better when you begin to operate in that
fashion going out into the Gulf of Mexico, a beautiful area,
and polluting an area down there.
So I think you have that moral and fiscal obligation, and I
certainly hope that you take both those seriously.
Thank you, Mr. Chairman.
The Chairman. The gentleman's time has expired.
The gentleman from Louisiana, Mr. Cassidy.
Mr. Cassidy. Thank you.
Mr. McKay, let us change the picture a little bit. Frankly,
there are a lot of folks who hear you say that you are going to
pay for everything but they think you are going to find a legal
dodge at the end that will keep you from being on the hook. I
am not going to ask you comment on that. This is just the
preparation for my next question.
Eleven people died. I met with some of them. They say that
they are covered under the Jones Act and the Death on the High
Seas Act, and that they are basically, the survivors, are paid
lost wages presuming that they--and this presumes that the
person will stay in the same job for the rest of his life.
It will be subtracted from that that which he would have
spent upon himself, say to buy a hamburger, but do that for 50
years, then also it will be subtracted the income tax he would
have paid, and that is what net out paid. There is nothing for
loss of consortium. There is nothing for pain and suffering, et
cetera.
A woman in my district, a widow, who delivered her second
baby after her husband died. Now, and apparently the liability
for this not only is limited but it is transferred to one of
your subcontractors.
Now it is almost a test case because I think, I want to
believe, that you really want to make people whole. And when
folks say no, they will find a legal dodge, I am thinking,
well, let us see.
But this actually seems something where--and I was
encouraged by your testimony where you are very conscious of
those 11 people. The question is, will their recompense, if you
will, ``their'' being those two children, be limited to that
which is available under the Death on the High Seas Act and the
Jones Act which I gather is less generous than that which
covered the refinery workers in the Texas refinery disaster,
that they somehow are covered under a different Act and there
was actually additional recompense made for those families.
So first, let me just start out with the human element and
see what your thoughts are and see if we can get a commitment
that you will meet with those families and consider making some
other consideration aside from that which is strictly limited
by the law.
Mr. McKay. I believe the families of the tragedy are being
dealt with directly with the contractor or their employers. For
instance, I don't know if this is Transocean or----
Mr. Cassidy. No. This is a subcontractor who has been
involved----
Mr. McKay. OK.
Mr. Cassidy. And they are going to follow the letter of it,
if you will, and apparently once they take care of it that is
done. They will, I am sure, limit themselves to what they are
required to pay. But frankly, if you will, that is not the
moral issue.
Mr. McKay. We will certainly talk to the families.
Mr. Cassidy. Nan I get your commitment that you will do
more than talk, that you will actually make a strong
consideration of making recompense of it?
Mr. McKay. We will make a strong consideration, yes.
Mr. Cassidy. I appreciate that.
Second, going through the drilling information that BP put
together--very helpful. Thank you very much for providing that
to the Committees.
If I start on page 24, I went over this, and Mr. Newman,
you mentioned that there was really no sign that something
could happen until the thing blew, but I went over this and
from at 17:05, 5:00 p.m. in the afternoon to 5:25 in the
afternoon, it looks like they were offloading mud. The mud
loggers were not informed that offloading had ceased.
Now, I am told that that limits the ability of the mud
logger to give a safety signal--my gosh, we are getting either
some sort of more out or less out that--it is very
significant--that the mud loggers were not informed that
offloading had ceased.
I guess I am asking--and by the way, I have also been told
by people in academia that you run a safe ship, and they say
that is the irony of this. So is there a normal operating
procedure that the mud loggers would not be informed, or was
this a variation from normal operating procedure?
Mr. Newman. My sense of normal operating procedure would be
relatively robust level of communication between all of the
subcontractors that are involved in the operation such that
everybody is informed about what is going on.
Mr. Cassidy. So OK, because in the Wall Street Journal they
are focusing on the fact that there is a disagreement between
the two heads, but there may have been a breakdown farther
down, if you will. I am just postulating. I don't know.
Also, you mentioned that it wasn't until then, but I am
looking at 17:52, and there was an influx from the well as
suspected at this point because 15 barrels were taken at this
bleed.
And so, again, it seems like three hours beforehand there
was clear evidence that there was an attempt by the well to
begin to flow. Any comments on that because, well, you
mentioned how anybody has the ability to say stop, and yet
apparently there was indications for three hours before the
blowup that it is clear that the well has something flowing in
it at 18:40, for example. Any thoughts on that?
Mr. Newman. I have not seen that data specifically,
Congressman, so I can't comment on whether or not 15 barrels
was the amount of fluid that they were expecting to flow back.
I don't know whether that was abnormal or not. I don't know
what particular operation they were undertaking that resulted
in that flow back.
Mr. Cassidy. That is a fair statement.
Mr. McKay, any comments on that?
Mr. McKay. I think that 15 barrels, I think 5 would be
calculated as the expected volume if I remember right. So there
was some anomalies starting to show up.
Mr. Cassidy. So you would agree that even three hours
beforehand there was evidence for----
Mr. McKay. I do think there is a significant period of time
where there were signals, and there is a cumulative effect of
those signals that were not recognized.
Mr. Cassidy. Then on page 33, last question because I am
expired and thank you for your generosity, Mr. Chairman, page
33 it says the Sheen Test passed and approval was granted to
discharge overboard.
One I assume it is seawater you are discharging overboard.
I don't know that. It doesn't say, but who gave that approval?
Who gives approval for discharge to occur overboard? I can show
you the Power Point that that is--are you familiar with this?
Mr. McKay. I am familiar, but I don't know who gives the
approval.
Mr. Cassidy. Is that a Federal agency, or is that somebody
in Houston in the command?
Mr. McKay. Well, it is under--that would be under MMS and
EPA regulation I believe, but I don't know who gives the
approval on the rig to actually say discharge. I don't know.
Mr. Cassidy. OK, so I guess my question is--and I don't
know, I am just asking all these things--is that a rig-centric
approval, or do you have to get on the phone to someone in
Robert and say, listen, can we do a discharge overboard?
Mr. McKay. I don't know, but I believe it is on the rig, I
believe.
Mr. Cassidy. OK.
Thank you. I yield back. Thank you.
The Chairman. The gentleman's time has expired.
The gentleman from Arizona, Mr. Grijalva?
Mr. Grijalva. Thank you, Mr. Chairman.
I first want to comment, I think there was a reaction to my
colleague talking about boosterism, and I don't think it was
well received. But the fact of the matter is we are talking
about--this is not about a political agenda by the Obama
Administration.
This situation that we are at right here with our witnesses
before us has been getting to this point for a while. It has
been the attitude for the last four or five years and even
that, you know, we drill first and we are going to ask
questions later, and that we have to pull full trust in the
companies and in the industry that they will do the right
thing, and that we are going to overlook the corruption and the
collusion going on within an agency that is responsible for the
oversight, the enforcement, and the investigation of this
industry.
So it has been building up. As late as March 19th, almost
every member on the other side of the aisle on this Committee--
most, if not all--and the Republican leadership sent a letter
to Secretary Salazar saying please do not delay opening up new
areas to drilling and job creation because it would be a no-
cost stimulus for our economy.
Again, drill first and we will find out the consequences
later. Well, we are dealing with the consequence. Somebody said
we have to get to the bottom of this. I think we have gotten to
the bottom of this.
The responsibility for what is going on in the Gulf, the
responsibility for the aftermath of what is going on, rests
fully with the industry, and the responsibility--and I am glad
that some motion is going on with MMS--rests to some extent, to
an extent, with this government for having a lax oversight and
for encouraging a culture that is responsive to the industry
and not too responsive to the public that they serve.
I have one question only to both gentlemen. I have
introduced legislation that says there are no caps on liability
to a company on an oil spill or anything else. Mr. Menendez has
introduced the same legislation. No liability caps.
Your reaction to that legislation?
Mr. McKay. I don't have any specific comments on that
particular legislation. What I would say, we have been clear in
this incident we are taking our responsibilities as a
responsible party very seriously.
We have said we are not going to use any caps of any sort.
We have said we are going to reimburse the government for the
expenses. We are going to pay all legitimate claims, and we are
not going to ask for reimbursement from the government for any
claims.
So we have been clear that in our situation that we are in
that we are stepping up and saying we are going to deal with
this and we are going to make it right for the people of the
Gulf Coast.
Mr. Grijalva. I appreciate that. I think the legislation
talks to now and in the future and not a particular incident.
I think what is going to come from these hearings that will
be an interesting experience for each of us here is a
reintroduction of the role of this government in the oversight,
enforcement, and investigation of oil production and energy
production in this country.
We have let that go by the side. We are paying for it now,
and we are paying dearly for the people of Louisiana, and I
share my colleagues from Louisiana's pain that they are going
through.
I just want to remind that, our then colleague, Mr. Jindal
at our 2005 hearing about the benefits of offshore drilling,
and now Governor, said the oil and gas exploration on the Outer
Continental Shelf is vital to Louisiana and as well as the
nation.
We have seen first hand the benefits of opening OCS up to
safe and efficient exploration and production. Here in
Louisiana, we are able to promote and encourage energy
production while at the same time also protecting and
preserving our environment.
I remind people of that quote because now we are talking
about a pause, a moratorium, and a whole different look at how
we engage with this industry in the future. I think that is to
some a extent very, very pathetic silver lining out of this
whole thing, but nevertheless, it is a step to go forward. I
yield back, Mr. Chairman.
The Chairman. The gentleman yields back. The gentlelady
from Wyoming, Ms. Lummis.
Ms. Lummis. Thank you, Mr. Chairman.
Well, I want to identify myself as a proponent of the
responsible recovery of our oil and gas resources, and I am not
shying away from that. But I also want to associate myself with
the remarks of Mr. Lujan, and Mr. Miller, and others who have
expressed concern about the corporate priorities of BP.
I am of the opinion that there is a corporate culture at BP
that prioritizes the wrong things, and I would strongly
encourage BP to be introspective about the importance of safety
for its workers and of the environment, and they are paramount
above all other considerations of your company, and should be.
I commend to you our concern that that be addressed.
Now, that said, I would like to ask a question. Does BP
have a backup plan if the top kill doesn't work?
Mr. McKay. Yes. We have ready to go a--remember I said we
have this lower marine riser package on top? We have been
concerned that if we take the kinked riser off that the
situation could get worse.
The data we have gotten over the last few days indicates
that I believe we will be able to take that riser top off. And
then we have a containment system built with a rubber grommet
seal that we will get on top of that and hopefully capture
almost all the oil, if not all of it, while we get other
methodologies to try to kill it in place as well as drill these
relief wells. So yes, we do.
Ms. Lummis. What do the relief wells hope to accomplish?
Mr. McKay. The relief wells will intersect this well down
near the reservoir itself at 18,000 feet and will directly pump
mud effectively at the source of the reservoir and kill it, and
kill it for good.
Ms. Lummis. OK, now if the top kill is successful, what are
your immediate plans to proceed with the cleanup?
Mr. McKay. We will keep the capacity out there to be able
to deal with it if something goes wrong, let us say, the kill
is not sustained, but we think it would be. But we are going to
keep capacity out there under unified command to be able to
deal with it should it not be.
Also, we will continue with the cleanup. We will continue
with dealing with the claims and the economic impacts. There is
a natural resources damages assessment that is being done with
NOAA as the lead trustee for the Federal Government. That will
be done and assess the damages to natural resources, as well as
what it would take to restore those, as well as pay for the
associated claims around the whole Gulf Coast.
Ms. Lummis. Thank you, Mr. McKay.
I have time remaining, and I would like to yield the
remainder of my time to Mr. Cassidy.
Mr. Cassidy. Thank you.
Yesterday Liz Birnbaum, who was the Director of MMS, said
that they would not have approved an ADP, advanced drill plan I
think, or permit, which would have allowed clearance of the
seawater--excuse me--replacement of the mud with the seawater
prior to putting the upper plug. You know the nomenclature; I
don't. So if you will bear with me. So and yet that apparently
is what happened. Now, she had not specifically reviewed the
ADP, but she said that that would not have been allowed. So it
sounds as if the way this proceeded was at variance with the
ADP.
So I guess, one, is that common that things are done at
variance with ADP, number one? And, number two, is the ADP not
law? Number three, would both parties have to agree to
something that was at variance with a plan that had been
permitted by the MMS?
Mr. McKay. I believe that the sequence that was performed
for replacing the mud with the seawater is--first of all, I
don't believe that is an unusual procedure. Second, I believe
that was consistent with the temporary abandonment sundry
notice or the application that was approved by the MMS. That is
what I believe. That can be checked, and we can get back with
you on it.
Mr. Cassidy. Can you do that----
Mr. McKay. Yes.
Mr. Cassidy.--because that actually is different than what
she said.
Mr. McKay. I believe that is true, but I will check that.
Mr. Cassidy. In speaking to petroleum engineers, who tell
me they don't do offshore, they do say that the more
conservative way to do this would be to leave the heavy
drilling mud there and then to seal it, and then to pull the
mud out as opposed to doing it with seawater in place.
They seem to feel that that was the best--Mr. Newman, your
comments on that?
Mr. Newman. First, with respect to the ADP, because we are
not a part of the ADP process, when the operator hands us a
procedure to carry out, a task, we don't have the approved ADP
against which to compare it, so we wouldn't be in a position to
be able to assess whether what we are being asked to do
complies or doesn't comply with the operator's ADP.
With respect to the procedure for setting the cement plugs,
that is part of the abandonment plan and would be specified and
overseen by the operator.
Mr. Cassidy. OK. I think I am out of time again. Thank you.
The Chairman. The gentleman's time has expired.
We are voting on the House Floor, and before breaking for a
vote, the Chair first wants to make an announcement. Then we
would ask you two gentlemen to be back with us in 45 minutes.
Get something to eat. There is just a cafeteria downstairs, but
you can have something to eat there if you would like.
But this was just announced this morning. The U.S.
Geological Survey Director, Dr. Marcia McNutt, announced this
morning that two teams using different scientific methods have
now determined that the well that exploded on April 20th has
poured between 17 and 39 million gallons of oil into the Gulf
of Mexico thus making this incident the Nation's worst oil
spill in history and far greater than the 11 million gallons
spilled by the Exxon Valdez incident.
The Chair will announce their recess for 45 minutes while
we answer votes on the House Floor.
[Recess.]
The Chairman. The Committee will resume its business.
The gentleman from New Mexico, Mr. Heinrich, is recognized.
Mr. Heinrich. Thank you, Mr. Chair.
Mr. McKay, over the last 20 years or so I think it is fair
to say the oil and gas industry has made some incredible
technological strides. You know, when you think about the fact
that you can start a well a mile beneath the surface of the
ocean and literally drill miles into the Earth's crust, I don't
think anyone can say that is not an incredible feat of human
ingenuity.
I know that employed by the industry and employed by BP are
some of the best scientists, geologists, engineers you are
going to find in any industry.
Unfortunately, I think what we are learning right now is
that kind of ingenuity was devoted mostly to building
technologies to allow drilling in tougher and tougher
environments, deeper wells, more challenging coastal
infrastructure, and not devoted to the kind of technologies to
deal with these kinds of accidents in those tough environments.
As Mr. Miller noted yesterday, we are using some of the same
tools to address this spill that were used in that 1969 Santa
Barbara spill.
As I hear from my constituents over and over again, one of
the things that folks want to know is why wasn't there a ready-
to-go plan B, plan C, plan D, the next day? Why did it look
like you were winging it days and even weeks into this
accident?
Mr. McKay. The response efforts have concentrated in two
large pieces, sub-sea and surface, and the Surface Spill
Response Plan which is authorized by the government and sits
underneath the National Contingency Plan, that has formed the
foundation of the surface response which I think has worked
overall pretty well, and it is under unified command.
On the sub-sea response, as I said a little bit earlier,
this is a very unique and unprecedented situation, and we have
this situation where we have a blowout preventer that should
have worked, didn't work.
The ability to manually intervene with ROV's has not proved
successful. We have on top of that a marine riser package which
did not release the rig, therefore we can't get on top of that
blowout preventer.
What we have done is respond, and it is the largest sub-sea
response ever mounted anywhere. We have four deepwater rigs
operating and drilling relief wells, intervening and containing
the oil, and 16 submarines that sometimes were----
Mr. Heinrich. Well, and I appreciate the quantity of the
resources there are, but given the fact that a deepwater
blowout like this is certainly a possibly and now a reality,
how come you had never tested these technologies, the Top Hat
Response, and some of these other approaches in that deep
water?
I believe from your own testimony you note that these
proposed strategies to get the well under control had never
been tested at this depth before. Shouldn't we be doing some of
these things ahead of time so that we know how things are going
to respond in these conditions?
Mr. McKay. A couple of things. You are right. This has not
been done in 5,000 feet of water before. The Top Hat, the
containment domes have been used in shallower water. We are
dealing with a rather unique fluid here that has hydrate issues
and that is what we ran into.
I would--what I would say is we are definitely going to
learn a lot from this, and I will say that I believe the
industry's going to have to look at incremental sub-sea
capability to intervene in situations like this. I do believe
that.
So we have been pursuing multiple parallel paths on every
piece of action that we can think of or other experts,
including the government, can think of. We will learn from this
and, therefore, I think through regulation and through the
industry efforts we will be able to put in place some more
capacity, some more planning, and some more understanding of
worse-case scenarios that will allow us to have confidence in
developing the resource going forward. I do believe that.
Mr. Heinrich. Can you give me some understanding of the
thought process that went into attempting this what you called
a Top Hat containment dome procedure first as opposed to moving
first to use the kill valves to pump mud into this well?
Mr. McKay. Yes, I can. The Top Hat was a technology that
has been successful in shallow water. It has been used, and it
was available and ready to go, so we knew we may have hydrate
problems. We thought that was worth----
Mr. Heinrich. When you say it was ready to go, you didn't
have one staged. You had to build it, right?
Mr. McKay. We did have--no, we did actually have the----
Mr. Heinrich. You had one?
Mr. McKay.--we had to amend it----
Mr. Heinrich. OK.
Mr. McKay.--and change it a bit for this----
Mr. Heinrich. Got ya.
Mr. McKay.--but we had it. Second, on the top kill, we have
been concerned from day one that we didn't know where
effectively the choke on this well was occurring. Was it in the
kinked riser? Was it in the blowout preventer? Was it down
hole?
Therefore, we have not been able to do a top kill until we
were able to diagnose with inside the blowup preventer what was
happening to the degree we could.
Not only did we try to get the blowout preventer closed, we
were trying to diagnose and rebuild parts of the blowout
preventer. That is why the top kill took as long as it did to
get set up.
Mr. Heinrich. Mr. Chairman, how much time do I have left or
am I out of time?
The Chairman. Zero.
Mr. Heinrich. Zero. Thank you very much.
Mr. McKay. Thank you.
The Chairman. The gentleman from Colorado, Mr. Lamborn, is
recognized.
Mr. Lamborn. Thank you, Mr. Chairman.
One of the things that the American people don't like about
Congress is that we rush to judgment, and we do this in so many
ways. Apart from this whole area, we are doing it with
financial reform.
Congress has set up a commission to find out what went
wrong in the financial crisis a couple years ago, and we have a
report that is due from this commission at the end of the year,
but we are doing major financial reform now before even seeing
what the results of this commission is that we set up.
With Don't Ask, Don't Tell on the military side, we have a
commission once again that is going to come out in December, I
think it is, but we are acting now as if we already know what
the results are. We are prejudging that.
And in this area we are doing the same thing. You have
heard today how there are bills being proposed to shut off
drilling in the Pacific Coast completely. We have legislation
in both the House and the Senate to create unlimited liability,
and we are doing all this--for oil spills--we are doing all
this not even knowing what the facts are.
We can't even wait a few days, or a week or two, or
whatever it is going to take to find out what the facts are
before we make our decisions. And it is that rush to judgment I
think is one of the reasons why Congress has such low approval
ratings among the American people.
Let us talk about liability in particular, and I didn't
know this until just very recently, but apparently under the
Oil Pollution Act, OPA, there are at least I guess two types of
liability for costs involved with oil spills.
Can you both or either one of you elaborate on that because
I guess effectively one type of this liability for cleaning up
the spill itself is already unlimited in effect. The costs have
to be paid period, so that is already unlimited.
The other type of liability is for economic damages or
something like that. Can you both elaborate on this? And that
is what is set at $75 million?
Mr. McKay. I think that is correct. The OPA 1990 set forth
liability structure effectively, and it calls for cleanup cost
to be borne by responsible parties.
It has embedded in it a $75 million cap for economic impact
claims or damages. We have been very clear from day one that we
are not going to exercise that cap or recognize that cap. We
believe we will spend more than that.
Also, there is the ability for reimbursement through the
trust fund in some ways, and we are not going to exercise that.
We have been very clear about that.
Mr. Lamborn. So there are two types of liability for the
cost of mitigating the damage from the spill; is that correct:
the cleanup cost itself, number one, which has no limits and,
number two, the economic damages which is capped at 75,
although in your case you are saying whatever it takes, and
that is 75 million?
Mr. McKay. Yes. The OPA 1990 is a broad--it effectively
obligates broad responsibilities to responsible parties roughly
in those categories, cleanup costs and economic impact on the
environment as well as the people and businesses that are
affected. And yes, we have waived or said it is irrelevant, the
$75 million cap.
Mr. Lamborn. OK. Thank you.
I want to shift gears here and ask about the blowout
preventer. Once we can stop the leak and that is the number one
priority of everyone concerned, then number two, clean up the
oil--once that is capped, will we be able to bring the blowout
preventer or preventers to the surface and do a thorough and
complete forensic examination to find out mechanically what the
issues were there?
Mr. Newman. Yes, Congressman. Once the well is permanently
capped, we will recover the BOP and we will be able to perform
thorough diagnostics and a complete evaluation of the BOP to
determine what prevented it from effectively shutting off the
flow of hydrocarbons.
Mr. Lamborn. OK. All right. I want to thank you.
If I have any more time, I would yield to another member,
but is there any effective time remaining, Mr. Chairman?
The Chairman. Ten seconds.
Mr. Lamborn. Then I will just yield back.
The Chairman. OK. The gentleman from Oregon, Mr. DeFazio.
Mr. DeFazio. Thank you, Mr. Chairman.
Mr. McKay, are you familiar with Robert Kaluza, an employee
of your company?
Mr. McKay. I do not know Mr. Kaluza.
Mr. DeFazio. OK. Donald Vidrine?
Mr. McKay. No. I don't know him.
Mr. DeFazio. OK. So these are the two individuals from BP
who were in charge of determining whether or not the well was
stable and making the call on the withdrawal of the drilling
mud, and you haven't contacted them in the interim? You haven't
been curious as to, you know, what went on? You haven't met
with them or talked with them?
Mr. McKay. I have not. The investigation team, I believe,
has talked to them, yes.
Mr. DeFazio. OK. Now, you said earlier that you were only
by press accounts familiar with the--you had not discussed nor
sought discussion with them.
One gentleman has taken the fifth because of the potential
for self incrimination, and the other has an undisclosed
illness. Has your company informed you of the nature of his
undisclosed illness and whether or not it is potentially fatal,
or whether he will be at some point in the future able to
testify under oath as to what happened and/or have the
opportunity to take the fifth like his college?
Mr. McKay. I do not know the state of the medical
condition. That is evidently been directly with the Marine
board in terms of that discussion, so no I am not aware of
that.
Mr. DeFazio. Right, but one would--this doesn't seem to be
a good direction.
So then to Transocean, do you know the gentleman Jimmy
Harrell?
Mr. Newman. I do know Jimmy Harrell.
Mr. DeFazio. OK, and is he a reliable long-time employee
or?
Mr. Newman. I don't know Mr. Harrell's history with the
organization, no.
Mr. DeFazio. OK. You probably don't know the chief mechanic
who testified yesterday, Doug Brown?
Mr. Newman. I don't know Doug Brown.
Mr. DeFazio. OK. So what Mr. Brown quoted or said that
there was some heated discussion, and he said that, well--he is
quoting Mr. Harrell--well, I guess that is what we have those
pinchers for.
So he apparently was not happy with the decision for
whether the well was stable or the withdrawal of the mud. Have
you had any conversation with Mr. Harrell regarding that?
Mr. Newman. I have not.
Mr. DeFazio. OK, so you are not curious about that? I mean,
a company who has huge potential liability, and you guys are
going to be pointing fingers at each other and you just haven't
asked, and no one has asked, and no one has told you?
Mr. Newman. Well, Mr. Brown's testimony before the Marine
board was yesterday.
Mr. DeFazio. Yes.
Mr. Newman. And so that was brought to my attention last
night.
Mr. DeFazio. OK.
Mr. Newman. It is an issue that our investigation team will
be pursuing to the end.
Mr. DeFazio. OK
All right. Then on to dispersants. Mr. McKay, I asked you
some questions last week and hopefully you have become a bit
more familiar with the dispersants your company's using.
During the last week after the hearings both in
Transportation and Energy and Commerce, EPA asked BP to reduce
use of dispersants and to use less toxic dispersants.
I have read the response letter, and I could only describe
it as non-responsive and insulting. You know, you are saying in
that letter--are you familiar with the letter your company sent
regarding dispersants?
Mr. McKay. Yes.
Mr. DeFazio. OK. That you purchased 100,000 gallons of Sea
Brat No. 4, but you are concerned because of the potential of a
trace or near trace amount of degradation of something that
could create a non-phenol.
Yet Corexit is three to five times more toxic on sea life
according to EPA tests, four times more toxic than oil. It is
petroleum based, not water based. Never been used at these
depths before.
You talk about it biodegrading. We don't know what it is
going to do in the water column or at those debts where there
is little sunlight and cold temperatures.
It was used after the Exxon Valdez disaster and linked to
human health problems, respiratory, nervous system, liver,
kidney, and blood disorders. One of the two Corexit products
being used contains a compound that at high doses is associated
with headaches, vomiting, and reproductive problems. Today, we
have press accounts from people hired to do cleanup work who
are reporting those same symptoms as we had with Exxon Valdez.
So is your company going to honestly respond to the EPA?
The EPA has felt that your response was not adequate, but they
are contemplating whether or not to order you to change
dispersants.
Why are you sticking with Corexit when it is less effective
and more toxic?
Mr. McKay. We have been working very closely with the EPA,
and as I understand it, the Corexit has been so far the most
effective, most available, and least toxic of the dispersants.
We have been----
Mr. DeFazio. No, sir, excuse me. Sea Brat No. 4 is actually
nine times less toxic or Corexit is nine times more toxic in
the Menidia test and in the Mysidopsis which are of some sea
life forms.
It is five times more toxic than Sea Brat No. 4, and in
terms of effectiveness, it is about 10 percent less effective
on South Louisiana crude oil. So it is somewhere between nine
and five times more toxic and ten percent less effective.
Mr. McKay. And there are ingredients in that particular
product that we have concerns about. We have notified the EPA
of those concerns. I think we are both trying to understand
whether those are significant or not.
We will not do anything--anything--the EPA tells us not to
do, and we will--and it----
Mr. DeFazio. Well, I thought they pretty much told you to
reduce----
Mr. McKay. We have reduced.
Mr. DeFazio. OK, and then I thought they told you to look
at alternatives, and then you sent the letter back saying your
petroleum based more toxic stuff is preferred.
Mr. McKay. We are continuing--we didn't commit and we are
continuing to look at every dispersant we can find to see if
there is a more effective, available, and less toxic
dispersant. We have committed to that, and we will do that.
Mr. DeFazio. Are you familiar with--one quick last question
on this, Mr. Chairman.
The producer of Sea Brat No. 4 just spontaneously called my
office and said that, you know, he had been happy to sell it to
you but in terms of selling more he was being asked to reveal
proprietary information, and strangely enough he was being
asked to reveal it to Exxon. Now why would that be?
Mr. McKay. I don't know. I am not familiar with that.
Mr. DeFazio. Well, that is what your company apparently
said.
Thank you, Mr. Chairman.
The Chairman. The gentleman's time has expired.
The gentleman from New Jersey, Mr. Holt?
Mr. Holt. Thank you, Mr. Chairman, and thanks for holding
this series of hearings.
I thank the witnesses. Of course we lament the loss of
human life, and we lament the damage to people's lives, and
livelihood, and physical and mental health. And the highest
need right now is to stop the oil flow, but we do need to look
ahead. BP has said it will pay all the costs for the damages,
cleanup, economic damages, and so forth. Transocean I guess has
filed a limitation of liability, although I understand that
doesn't relate to liability under OPA.
But the question is how are we going to cover the costs of
this and future accidents which surely will occur? I mean, this
has often been called unprecedented, but it should never be
called unexpected. This was too predictable.
Oh, about five dozen of my colleagues and I have introduced
the Big Oil Bailout Prevention Act which would raise the
liability cap. Would you, each of you, your organizations, your
companies support the lifting of the limit on liability from
the laughably small number of $75 million?
If not, would you please explain why you think the limit
should not be raised?
Mr. McKay. I can't comment on specific legislation. What I
can tell you in this situation----
Mr. Holt. Without--specifically, just should the liability
limit be raised from the, as I said, laughably small $75
million?
Mr. McKay. In this particular situation, we are ignoring
and taking that cap away, so in our opinion in this situation,
it is not there.
Mr. Newman. I think it is a public policy question that
Congress ought to evaluate, and I would hope that in that
evaluation Congress would take into account the commercial
considerations and the impacts on some of the smaller operators
that produce a significant amount of America's oil.
Mr. Holt. So do you want to tell me what those are then? I
mean, that is what we need to take into account, yes.
Mr. Newman. I don't know what the commercial considerations
are, but----
Mr. Holt. OK. I mean, isn't one of those considerations
that a small operation could do a billion dollars worth of
damage?
OK, well. Moving on then. This is acknowledged to be
dangerous employment. One of you mentioned earlier that you are
proud of the ability to manage risk.
In other words, this is risky business or, in other words,
things can go wrong. Yet, even though it is an industry that is
based on the idea that things can go wrong, it is astonishing
and scandalous to see the lack of preparation, the lack of
imagination, the lack of planning for what to do when things go
wrong.
Didn't know whether Top Hat or Sombrero would still work,
or whether we should do a junk shot, or what kinds of
dispersants we should use. It was as if you had never bothered
to develop the check-lists and methods of action that one
might--that you should take, and an outsider might take that
level of certitude as arrogance.
I think it is obvious that we need to challenge this lack
of preparation and ask you to explain it. I mean, was it that
you were gambling on not being caught, or was it that you
decided that the risk of things going wrong was really small
enough to live with, or that MMS never asked you to do these
things, or that the cost of things going wrong could be covered
out of your--what?
Mr. McKay. The first response was within just a few hours
of the accident. The sub-sea response has been the largest ever
in the history of the world.
We have four operating rigs, deepwater capable rigs, 16
submarines. The creativity has been extraordinary. The
professionalism of the employees of BP, the government, the
industry has been extraordinary.
Mr. Holt. In the last six weeks, you mean?
Mr. McKay. Yes, and----
Mr. Hastings. But how do you explain the lack of
preparation? You have been experimenting for these last six
weeks because you didn't have in place the checklist, the
preparations, the tests, the procedures.
Mr. McKay. We had a piece of equipment that has failed, and
it has been unable to be accessed or intervened with by the
methods that it is intended to. That has presented a unique
configuration at 5,000 feet that we have had to design,
fabricate, and build around.
I don't think--and I am not trying to dodge this. I don't
think the configuration could have been predicted, and
therefore fine-fitting mechanical equipment couldn't have been
predicted.
What I will say, though, that we are learning that the
capability, the sub-sea intervention capability, on a
relatively generic basis must be looked at. It probably has to
be improved.
It probably has to have an industry sort of structure to it
rather than individual companies. I think that is one of the
big things we are going to learn out of this.
The Chairman. The gentleman's time has expired.
The gentlelady from Guam, Ms. Bordallo.
Ms. Bordallo. Thank you very much, Mr. Chairman.
Mr. McKay, I have a few technical questions for you. Our
Committee just received the documents that were filed with MMS
describing how BP intended to finish the job on this well.
On April 16th, BP filed a permit to temporarily abandon the
well. The permit indicated that work would start on April 18th,
and it would take approximately eight days to complete.
Yet everything that has been reported was that the Horizon
was only a day or two away from leaving the site when it
exploded on April 20th. The eight-day job was almost done after
only two days.
Was BP operating a lot faster than what they implied to
MMS? Was it trying to rush it?
Mr. McKay. I don't believe so. I believe the procedure was
being followed, and in one of those steps of the procedure, you
know, this well-control event occurred which stopped the
procedure.
That procedure, I think, and obviously the investigations,
I will have to look at this step by step, but I believe the
procedure was being followed in the way that it was authorized.
Ms. Bordallo. All right, well, I guess I have a follow-up
then. I would also like to show you this is the procedure,
eight steps. I have it right here, the document that BP filed
with MMS.
It is only one page, eight fairly short steps, and it looks
like rather a routine procedure that you probably go through
regularly.
Do you think this effectively conveyed to MMS the
complexity of this procedure which ended during step three with
an explosion that killed 11 people?
Just looking at it, it seems highly inadequate to describe
a very complex procedure, and I do have my permit here, the
application that came through--or no, the MMS permit. I also
have that document stating that it should be eight days to
complete this procedure.
Mr. McKay. I believe the procedure met all the MMS
requirements. I can't put it in a relative sense versus other
procedures, but I believe that procedure met the MMS
requirements.
Ms. Bordallo. So you were able to complete something that
probably should have taken a little longer in a fairly short
time?
Mr. McKay. No. I am saying that procedure as authorized fit
MMS regulations. I don't--as to the timing, we never got
through the whole procedure. As you stated, the explosion
occurred on step--I don't have it in front of me----
Ms. Bordallo. Yes.
Mr. McKay.--but step three or so in that procedure.
Ms. Bordallo. Was MMS aware of the problems that were
occurring with this well? You submitted a permit that indicated
that you had a stuck drill bit, but other than that according
to the documents this Committee has, as far as MMS knew,
everything was going quite well.
Did MMS receive any of the logs that were run in this well,
or were they told that there were mud losses even a major loss
event according to one of your documents?
Mr. McKay. Yes. I don't know what MMS knew or was told. I
don't know.
Ms. Bordallo. So we have a regulator that is supposed to
review and approve your designs and your procedures but all
they have are eight bullet points and few if any indications
that this was a troublesome well. It seems like we have a hole
in our regulatory oversight if that is the case.
One more thing, Mr. McKay. There appear to be
inconsistencies in BP's permit submissions. I have that
document also in front of me here. On April 15th, BP reported
to MMS that the bottom of the next to last piece of pipe was at
17,500 feet.
On April 16th, BP submitted the actual well diagram to MMS
and it showed that the pipe ending at 17,157 feet. There is a
300-foot difference in these numbers. Can you explain this
discrepancy?
Mr. McKay. No, I can't. I don't know those numbers to that
detail. I don't know. I can't explain the discrepancy without
studying it or having someone look at it. We can get back to
you on that.
Ms. Bordallo. Very good. I do have the documents with me
here. Thank you, Mr.--yes?
Mr. Miller. I just want to enter into the record, Mr.
Chairman, if I might there has been discussion here about
liability and Ben Ray Lujan raised it on insurance companies.
I just want to enter into the record the story from Reuters
that all of the actions that Transocean went through to avoid
liability for Louisiana sugar cane farmer for the poisoning of
his wells and his fields where the Delaware judge some 10 days
ago cited them and sent them back to Louisiana.
But they created false corporations. They created false
bankruptcies, false liabilities all to avoid what they owed Mr.
William Tebow in Central Louisiana.
So just again, I think history will help us as we go
forward in this hearing in understanding the corporate entities
that we are dealing with at a time when they are telling us
they are going to take care of all of this liability and make
sure these people get paid. I am just somewhat of a skeptic
here. Thank you.
Thank you gentlewoman for yielding.
Ms. Bordallo. I yield back, Mr. Chairman.
The Chairman. Without objection, a request for an article
will be made part of the record.
The gentleman from California, Mr. Costa, is recognized.
Mr. Costa. Thank you very much, Mr. Chairman.
Gentlemen I have some more technical questions as to what
took place that day, and then I have some broader questions
that I would like to ask you.
Mr. McKay, I understand that two days ago the Committee
received a briefing from British Petroleum on the status of
your own investigation and that British Petroleum reported
there were three clear indications--one as early as 51 minutes
before the explosion--that this well was flowing.
If that had been caught at that time, would there have been
enough time to prevent an explosion in your opinion, or were
you beyond the point of no return?
Mr. McKay. This is an opinion, and the investigation will
have to understand it in more detail than I understand it, but
my opinion is that that period of time there was a well-control
event, and it could have been caught. Yes, I do believe that.
Mr. Costa. Well, I mean, I am trying to figure out and
obviously under due diligence we will get to the bottom of it
eventually, I guess, but why it wasn't.
I mean, I have been on these rigs before, the Chairman and
I, about a year and a half ago. It is akin to almost being like
on a space shuttle where the control room is, and the dials
that are going on in terms of what is flowing in, what is
flowing out.
It seems to me that they would have been able to clearly
see at that time what the indications of the well-flow were; do
you not think so?
Mr. McKay. Well, I may get some help by Mr. Newman. It is
his rig, but I think there were signs that were happening that
the well was----
Mr. Costa. Is that true, Mr. Newman?
Mr. Newman. Congressman, I have reviewed the letter that
Chairman Waxman wrote following the briefing, and a simple
strip chart of some data that covers the time period between
8:00 p.m. and 10:00 p.m., and in trying to tie the three
anomalies that Chairman Waxman references in his note to this
strip chart, I have a bit of a difficult time because Chairman
Waxman talks about something that happened 51 minutes before
the explosion----
Mr. Costa. Yes.
Mr. Newman.--but the Chairman doesn't identify the time----
Mr. Costa. Well, let us go with a hypothetical then. I
understand this still has to be looked at. If it was true,
would your crew at that point under your operating procedures
have standing orders to shut the well down?
Mr. Newman. They would, yes.
Mr. Costa. They would?
Mr. McKay, is it pro forma that you have a British
Petroleum officer on the rig at the time?
Mr. McKay. We normally have normally two to three people on
the rig.
Mr. Costa. It is an overseer. I think it is an----
Mr. McKay. We call it a well-site leader.
Mr. Costa.--well site?
Mr. McKay. Well-site leader.
Mr. Costa. Was that person on the well at the time?
Mr. McKay. Yes. There were two of them. They do back-to-
back. Yes.
Mr. Costa. Does he have access in his office to all the
information that the driller would have in those control towers
that some of us have actually been on when we have been on-
sight?
Mr. McKay. I don't know in his office. I don't know.
Mr. Costa. You don't know. Then we will find that out I
said. Could he have ordered the well to be shut down, your
overseer, your well or----
Mr. McKay. I think anyone on the rig were they concerned
about a safety event could have asked Transocean to shut the
rig down, including Transocean's Halliburton----
Mr. Costa. And we don't know if he did or did not?
Mr. McKay. I don't know.
Mr. Costa. OK. I think that is important that we are going
to have to find out, Mr. Chairman, as we further pursue this
effort.
Let me get now out of the weeds and more into macro sense.
The Secretary yesterday talked about reorganizing MMS, Minerals
Management Service, and dividing the roles between the
collection of royalties and the enforcement procedures.
I know you are trying to focus on shutting down this well,
but have you had a chance to get a sense if that would be an
improvement?
Mr. McKay. I have not, honestly. I do think anything that
can be taken from this incident as well as the regulatory
structure around this and can be improved is important. I will
say that.
Mr. Costa. Mr. Newman, I would think that your focus from
MMS's perspective is more in terms of following the regulations
and the enforcement procedures. You don't get into the
collection of royalties too much, right?
Mr. Newman. That is correct.
Mr. Costa. So would it enhance the ability to increase
safety if we had a better cop on the beat that enforced the
rules and regulations?
Mr. Newman. Because the relationship we have with MMS only
relates to oversight and inspection, I am not sure I am the
best person to comment on splitting the revenue collection
responsibilities from the oversight and----
Mr. Costa. Well, no I don't expect you to comment on that,
but I am talking about having a person, an MMS person on a
regular basis. I don't know if it needs to be daily or not but
to overseeing this in terms of making sure that all the specs
are being followed?
Mr. Newman. MMS visit our rigs regularly.
Mr. Costa. How regularly?
Mr. Newman. They are on there about once a month. They are
out there. They come unannounced.
Mr. Costa. It seems like we can still do better. Before my
time is up. Let me ask the two of you the biggest question
here, and that is clearly--I mean, we may have different views.
I am one who supports offshore oil and gas exploration.
There are those on this Committee who don't, but this is a
terrible setback. It is a terrible tragedy.
It seems to me, how are you as people who obviously support
this effort going to try to attempt to restore faith that you
are capable of doing this on a safe basis because certainly the
public at this point in time has little faith in this ability
to continue forward.
Mr. McKay. I think in three major ways. One, stop it. Get
the thing stopped. Number two is clean it up and deal with the
economic impacts all along the Gulf Coast, and number three is
we must know exactly what happened, the facts, the facts of
what happened such that then we can make changes to move
forward and regain that confidence.
Mr. Newman. Congressman, I can only offer you the same
commitment that I gave to the nine Transocean families when I
met with them. We will do everything we can to understand what
happened, and then we will do everything we can to make sure it
never happens again.
Mr. Costa. Well, we are going to have to do better,
gentlemen.
Thank you very much, Mr. Chairman, for the time, and we
will continue to follow up with the work of the sub-committee
next month as we continue to pursue this effort.
The Chairman. The gentlelady from New Hampshire, Ms. Shea-
Porter, is recognized.
Ms. Shea-Porter. Thank you.
Mr. McKay, you said that your company will be judged by how
you behave now after the accident, and I would say that you are
going to be judged by what you did before the accident, what
your company did.
I sit on the Education and Labor Committee, and I too sat
through hearings about the Texas Oil Refinery disaster. It
looked at the families with their dead loved ones pictures in
front and the tissue boxes there because of the pain because BP
consistently ignored warnings and, indeed, fired people who
warned.
So you have been a bad corporate neighbor, frankly. So you
keep saying I don't know, I don't know, we will have to have
the facts. Well, I have the Wall Street Journal, and they did a
pretty good job, I think, of listing the facts.
I just would like to ask you if you agree with them about
what happened, what the facts are? It says BP, for instance,
cut short a procedure involving drilling fluid that is designed
to detect gas in the well and remove it before it becomes a
problem according to documents belonging to BP and to the
drilling rig's owner and operator, Transocean. Do you agree
with that?
Mr. McKay. To cut short a procedure? I don't----
Ms. Shea-Porter. Cut short procedure involving drilling
fluid. Well, I will be happy to show this article.
Mr. McKay. No, I don't know if that is true or not. I don't
know.
Ms. Shea-Porter. OK. BP also skipped a quality test of the
cement around the pipe, which we talked about, another buffer
against gas despite what BP now says were signs of problems
with the cement job and despite a warning from cement
contractor Halliburton. Isn't that ironic? Do you agree with
that?
Mr. McKay. I don't know what test you are talking about in
that particular article.
Ms. Shea-Porter. OK. It is the cement----
Ms. DeGette. If the gentlelady will yield, it is the cement
bond test.
Ms. Shea-Porter. Yes.
Mr. McKay. A cement bond log was not run on this well. That
is right.
Ms. Shea-Porter. OK. Let me continue. In an April 18th
report to BP, Halliburton warned that if BP didn't use more
centering devices, the well would likely have--and I want to
quote from Halliburton--a severe, in big letters, gas-flow
problem. Still BP decided to install fewer of the devices than
Halliburton recommended, six instead of 21 which we talked
about.
They go on to say, despite the well design and the
importance of the cement, daily drilling reports show that BP
didn't run a critical but time-consuming procedure that might
have allowed the company to detect and remove gas build up in
the well. Does that sound familiar to you?
Mr. McKay. I don't know the procedure that that article's
referring to. The centralizers, there were six centralizers run
rather than--I think six, rather than 21. I don't know the
logic around why that was done.
Ms. Shea-Porter. OK, and finally----
Mr. McKay. The investigation will be looking at that.
Ms. Shea-Porter.--finally BP also didn't run tests to check
on the last of the cement after it was pumped into the well
despite the importance of cement to this well design and
despite Halliburton's warning that the cement might not seal
properly.
Workers from Schlumberger Limited were aboard and available
to do such tests, but on the morning of April 20th, about 12
hours before the blowout, they were told their work was done.
They caught a helicopter back to shore at 11:00 a.m.
I just can't understand this. I just--and I have to tell
you that I believe Americans don't understand how this could
be. Did you worry, first of all, that we didn't have the
technology to clean up? I mean, when we look now and we looked
for Plan A, Plan B, Plan C, it appears that not only didn't you
not have a plan that we knew would work but every step along
the way they ignored.
This is from the Wall Street Journal, but you can read it
elsewhere. But I want to move on to what CNN is reporting which
is disturbing. Again, I will just read it.
That U.S. and BP are accepting few offers of international
help, countries say. And they speculate that out of all of the
countries that have offered to help, that we have only accepted
three.
They are saying one reason BP may not be accepting the
offers of assistance is because of cost, some say. Shipping
boom from halfway around the world, for example, is expensive.
Other factors, according to a senior U.S. official include
liability for any equipment that might be provided and support
for any crews that might accompany that equipment. Is this
true?
Mr. McKay. Well, I know we have gotten 15,000 different
ideas and requests that have come in to help. We are using
every good idea we can find. That is coming through unified
command.
We are using Norwegian scientists for monitoring. We are
using Canadian planes for overflights and analysis through
unified command. We have flown boom from Europe. We have flown
assets from around the world to get in place all through
unified command.
Ms. Shea-Porter. But has your company turned down offers
from other countries? This article says that you have.
Mr. McKay. Turned down--we have----
Ms. Shea-Porter. Offers of help. Offers of assistance. I am
asking specifically is CNN what they just wrote that some
people said it is because of cost, is that true?
Mr. McKay. I don't have any information that say we have
turned down offers because of cost nor do I know if we have
turned down offers from countries. I don't know that.
Ms. Shea-Porter. OK, I would appreciate if you would get
back----
Mr. McKay. We have accepted some from countries.
Ms. Shea-Porter.--if you could get back to me on that.
Thank you.
I yield back.
The Chairman. The gentlelady's time has expired.
The gentlelady from the Virgin Islands, Dr. Christensen.
Ms. Christensen. Thank you, Mr. Chairman.
I think maybe all the tough questions have been asked, but
you know, we are all as has been said before deeply saddened by
the loss of the employees and the injuries to others, and we
extend our sympathy to the company and the families.
But in addition to doing all--and this is to you, Mr.
McKay--all that you can to ensure that this would never happen
again, there are people who are currently working on the
cleanup.
I asked this question yesterday, but I want to ask it again
because in previous spills, the workers have had severe medical
problems following up and long after they have worked on the
cleanup.
What can you tell me about to sort of reassure us that
everything is being done to protect, to train them well, to
protect them while they are responding so that we don't find
ourselves years later with chronic and disabling ailments in
these workers?
Mr. McKay. We are training workers. We are getting
assistance from OSHA in training and several thousand people
have been trained. There are instances----
Ms. Christensen. Protective gear provided and----
Mr. McKay. Oh, yes. Absolutely. There are instances where,
you know, working offshore and working around some of this
where it is coming up, there are volatile hydrocarbons coming
off the sea, so there are people that are--we have had
instances where people have gotten sick and have been brought
in.
What we are trying to do is make sure that we don't put
anybody in that situation. If someone gets in that situation,
we get them out, and we are training everybody.
No one can go touch an oil, or a tar ball, or anything in a
marsh unless they are trained to operate boom, and set out
boom, pick up boom, skim oil, those kind of things. Everybody's
trained.
It is not perfect; I will be the first to admit, and we are
working with OSHA to get it better and better.
Ms. Christensen. You have answered several questions about
your commitment to paying for damages and repairs and so forth.
That commitment extends to individuals who may be sickened by
responding to this spill?
Mr. McKay. Yes, it does. OPA 1990 provides for personal
injury if it occurs to be taken care of, and yes we will.
Ms. Christensen. OK. Thank you.
Let me ask the gentleman from Transocean a question. BP has
talked a lot about their commitment to pay whatever is required
of them. I am not clear--I have never heard Transocean say
anything to that effect, and maybe I just haven't heard it.
But assuming that as the investigation goes forward and we
uncover what went wrong, if to the extent that Transocean would
be responsible, are you making that same commitment?
Mr. Newman. We will satisfy all of our legal obligations.
Ms. Christensen. I guess Mr. McKay again. I see a number of
representatives from other petroleum companies in the audience
here. To what extent--you talked about people from Norway and
planes from Canada.
To what extent have the other oil companies in the United
States come to your assistance and provided their expertise,
and do they just show up and say here I am to help, or did
someone call them in?
Mr. McKay. No, this is an industry effort now, and it is
been that way for several weeks. We have as an example in the
Houston crisis center where we are trying to do the source--
where we are doing the source control or stopping the leak,
there are 90 companies, nine-zero.
Our competitors are working with us, Exxon, Shell, Chevron,
Conoco, Phillips, Petrobras, E&I from around the world, and we
have about 150 people working from the U.S. National
Laboratories with us as well, as well as the Navy. We have the
best scientists in the world working on this.
Ms. Christensen. Was the White House or the unified command
involved in--what was their involvement in bringing those
companies together?
Mr. McKay. We have access to the companies and the
resources of the U.S. Government as well as other countries
through a combination of efforts. Companies have offered it.
The unified command has helped funnel people toward us, and
as an example, the Department of the Interior, Secretary Chu
has been very good in getting national laboratory people there.
The Navy has offered help.
So it has come from everywhere, and the unified command has
been a way that a funnel to help us get resources there.
Ms. Christensen. Thank you.
I don't have any other questions, Mr. Chairman. I yield
back the balance of my time.
The Chairman. The gentlemen from Wisconsin, Mr. Kind.
Mr. Kind. Thank you, Mr. Chairman.
Listen, I want to thank the two witnesses who we have here
today and your testimony, but I don't think I can adequately
represent to you today the level of anger, frustration, deep
concern that the people in Western Wisconsin have over this
incident. It is one of the reasons why we require a double hull
for any transport of oil in the upper Mississippi region to try
to avert this.
But Mr. McKay, I think you are right. I think both of you
guys are being judged today on a number of factors, one of
which is how quickly you can plug this gusher. That is all
hands on deck.
Second is how effective and quickly you can mitigate the
disaster that is being done and working with the state and
local communities to clean up the damage that is occurring and
that will continue to occur.
Finally, this is where I part company with what you think
needs to be--you have to be completely honest and transparent
and open with the American people right now.
I have to be honest, sitting here for the better part of
today, I am less than impressed with your testimony today. This
head-in-the-sand type of testimony, not knowing, not talking to
people, not giving us information about what happened and why
just isn't cutting it. It is not cutting it back home.
You know, it is frustrating that we have to be picking up
most of the information today over printed press or the media
as far as the facts. I mean, just this week the Coast Guard and
Minerals Management Service had a hearing down there in Kenner,
Louisiana.
Doug Brown, chief mechanic for the Deepwater Horizon
testified that he witnessed a skirmish on the rig between
British Petroleum well site leader and crewmembers employed by
Transocean, the rig's owner, the morning of the blast.
Mr. Brown said the disagreement followed BP's decision to
replace heavy drilling fluid with lighter salt water before the
well was sealed with the final cement plug. Well, this is how
it is going to be, a BP official is quoted as saying according
to Mr. Brown.
Now, Mr. McKay, is it your testimony that you haven't
talked to Doug Brown at all about this or anyone else that was
there participating in this argument that occurred on the rig
the morning of the blast?
Mr. McKay. First of all, our investigation team is trying
to talk to everyone they can. They have talked to our
employees. As I understand it, they have not talked to any
Transocean employee.
Mr. Kind. You are the head of the company in North America.
Have you had any conversations with anyone who was present who
had first-hand knowledge of what that argument was about on
that rig before the blast occurred?
Mr. McKay. No, I have not. We are doing an internal
independent investigation, and I have been 100 percent focused
to the extent I can on the crisis which----
Mr. Kind. I just find it curious with your lack of
curiosity about what happened on that rig, and what was said,
and what transpired.
Mr. Newman, is Mr. Brown your employee?
Mr. Newman. Yes, Mr. Brown works----
Mr. Kind. Have you had any conversation with Mr. Brown
about what happened on the rig that morning?
Mr. Newman. I have not.
Mr. Kind. Well, I tell you gentlemen, I think your
companies are hanging by a thread if you are hoping to continue
to do business on any offshore drilling in the United States
territory with the response and what has happened here. It is
extremely frustrating.
Then you have Andrew Gowers, BP spokesperson declined to
answer any questions about workers' accusations or about why
the costs may have factored into the company's decision to use
the casing system it chose for the Deepwater Horizon.
This is the response that we are getting, you know, from BP
about what happened. I think, as the facts leak out, the
narrative becomes clearer and clearer.
I think BP went cheap on the casings that was used. I think
they were under considerable time and financial pressure to
move this along, and because of it they bypassed basic safety
procedures and testing procedures that could have averted this.
The main reason this happened is because you were being
charged $533,000 a day to rent the Deepwater Horizon rig, and
you were already 43 days behind going to a different place and
beginning a new drill operation at a cost of $21 million and
counting.
So the pressure was mounting. This is the narrative that is
coming out right now. And I know there are investigations that
still need to be conducted.
But it would be more helpful if representatives of the
companies were more forthright and candid about what happened
so we know how best to respond to any future--and it could be
another one waiting tomorrow or next week that we don't know
about. We could be taking steps right now in order to aver it.
Mr. McKay, let me ask you another question. Again it
appeared in the media as to why BP let workers from
Schlumberger, a drilling services contractor, leave the morning
of the accident without conducting a special test on the
quality of the cement work that is done.
Now engineers describe these, and it is called the cement
bond logs, as an important tool for insuring cement integrity.
Why did that happen?
Mr. McKay. I don't know why the decision happened to not
run the cement bond log, but that decision was made. If I could
say, the data that you are quoting and working from is exactly
what we shared, including with this Committee, two days ago.
We have not finished our investigation, and we have pledged
to be transparent. We have brought to this Committee, as well
as others, everything we know as of this date, everything we
know.
Mr. Kind. Well, as a former special prosecutor, I find your
testimony less than credible. It may work for the attorneys
representing your companies right now, but it is not flying
with the American people.
Finally, just one question as we do look forward. You say
you have two relief wells being drilled right now. If there had
been a relief well already in place before this disaster
occurred, would that have mitigated or prevented this gusher
from occurring?
If at the time you drilled the original well you also
simultaneously drilled a relief well in case an accident like
this occurred, would that have prevented what is taking place
today?
Mr. McKay. That would require drilling duplicate wells for
every well.
Mr. Kind. Exactly.
Mr. McKay. And I----
Mr. Kind. If you did that, would this avoid the disaster
that we are witnessing in the gulf today?
Mr. McKay.--presumably you would poise the relief well
above the reservoir. I don't know. I mean----
Mr. Kind. Does Canada require that of all deepwater
drilling in their territory, a----
Mr. McKay. Mandatory relief wells?
Mr. Kind.--a mandatory relief well.
Mr. McKay. Simultaneous?
Mr. Kind. Simultaneous.
Mr. McKay. I don't know. I don't know. I have not heard
that. I don't know.
Mr. Kind. Well, that may be something we have to follow up
with as far as what additional safeguards need to be put in
place.
Mr. Chairman, I see my time has expired. I thank you for
your indulgence.
The Chairman. The gentlelady from Colorado, Ms. DeGette.
Ms. DeGette. Thank you very much, Mr. Chairman. Let me
follow up very briefly on some questions that Ms. Shea-Porter
and Mr. Kind were asking about this cement.
Schlumberger as you heard from Mr. Kind was sent away about
11 hours before the test, and Mr. McKay, do you know why they
were asked not to perform the test? Or not asked to perform the
test.
Mr. McKay. Yes. I don't know. Normally--I will give you
generic. I don't know specific to this----
Ms. DeGette. Well, you don't know in this situation though?
Do you know who sent Schlumberger away? Do you know who was in
charge of making that decision to tell them not to do the test?
Mr. McKay. I don't know specifically. I would imagine the
well site leader was probably----
Ms. DeGette. The well site leader? Is there an
investigation currently going on into this particular issue?
Mr. McKay. There are multiple investigations going on about
the whole sequence of events including----
Ms. DeGette. OK, and as part of that----
Mr. McKay.--cement.
Ms. DeGette.--investigation on why this test was not--the
cement bond log test was not performed?
Mr. McKay. I think, yes. I think all the chronology of the
steps and decisions that were made. Yes.
Ms. DeGette. OK. Do you know what the status of that
investigation on the cement bond log is?
Mr. McKay. That discreet step, no. I mean, it is part of
the investigation.
Ms. DeGette. OK. And are you concerned that Schlumberger
was asked not to perform that test in this situation? Does that
concern you?
Mr. McKay. I am drawing on my past experience, not on this
well. Normally, you run cement bond logs. There are inferences
of cement bond. You normally do a positive test to make sure
the cement bond--you look at the way the job----
Ms. DeGette. Holding. Right. Yes.
Mr. McKay.--the job was pumped and potentially a positive
test. Then decisions are made whether to run the bond log or
not. In this particular situation, I don't know why that
decision was made at all.
Ms. DeGette. Does it concern you that it wasn't made?
Mr. McKay. I think it is in--it is----
Ms. DeGette. It is not a hard question. Does it concern you
that they didn't do it in this case?
Mr. McKay. The whole operation concerns me. The whole
operation.
Ms. DeGette. Including the failure to do the cement bond
test?
Mr. McKay. The cement operation, what happened pumping it--
yes.
Ms. DeGette. Thank you. I want to ask you another question
which is--Mr. Probert, who was in our Committee before,
testified when he was at the Senate about the cement bond log
test that the only test that can really determine the actual
effectiveness of the bond between the cement sheets, the
formation, and the casing itself is the cement bond log test.
Usually, and I think this is what you were just talking
about, a cement bond log test is performed if earlier tests
indicate potential problems with the cement.
So my question is do we know at this point whether the
pressure tests of the cement job that were performed before the
blowout indicated potential problems that would require this
test to be done?
Mr. McKay. What I know is that the cement job was pumped
effectively and the volumes matched, and it looked like an
effective cement job.
Ms. DeGette. So there were no indications in advance as far
as you know?
Mr. McKay. Through the pumping of the job.
Ms. DeGette. OK.
Mr. McKay. Then there was a positive test that was done
that looked like it held. Then are these anomalous tests that
were done on the negative test. When this--I don't personally
know when the cement bond log was released. You know, released
off the platform----
Ms. DeGette. Yes.
Mr. McKay.--versus the sequence of events.
Ms. DeGette. OK. Let me go to another issue and that is the
blowout preventer. According to the Washington Post this last
Sunday, BP agreed in 2004 to have Transocean replace a variable
bore ram with a test ram on the blowout preventer.
Now, a test ram cannot actually stop the flow of oil and is
therefore useless in an emergency situation. The letter from
Transocean stated that by BP's signature it acknowledged that
replacement would ``reduce the built-in redundancy of the
blowout preventer thereby potentially increasing BP's risk
profile.''
Mr. McKay, why was a test ram installed in the blowout
preventer if it would reduce the redundancy and increase the
risk of a blowout; do you know?
Mr. McKay. I am not familiar with the decisions made at
that time to get a test ram installed.
Ms. DeGette. So you don't know. Now, it is since come out
that BP wasted valuable time. We talked about this in the
energy and commerce hearing after the accident trying to
activate the test ram thinking it was a variable bore ram, and
they lost nearly 24 hours trying to activate that test ram.
You had testified before that that was because the port
that was to be activated by a remotely operated vehicle was
connected to the lower most ram cavity, the one occupied by the
useless test ram.
So my question is, how much time would it have taken after
installation of the test ram to change the connections in the
emergency port so it would work?
Mr. McKay. Perhaps that is for Mr. Newman.
Ms. DeGette. Mr. Newman, do you know the answer to that
question?
Mr. Newman. Because these connections from the ROV
intervention port to the actual operating cylinder on the BOP
are hoses. They are hose connections. It would be a simple
matter of changing the routing of that hose.
Ms. DeGette. It would not have taken any time at all,
correct?
Mr. Newman. A simple matter of changing the routing of the
hose.
Ms. DeGette. Thank you very much, Mr. Chairman.
The Chairman. The gentlelady's time has expired. The
gentlelady from California, Ms. Capps.
Ms. Capps. Thank you, Mr. Chairman.
Mr. McKay, yesterday your colleague, John Watson, who is
the CEO of Chevron, was addressing his shareholder meeting in
Houston, and he made the statement in that context that he
believed that the Federal Government should raise the safety
standards for offshore drilling in order to avoid another
tragedy like your massive oil spill.
Do you agree with Mr. Watson that the Federal Government
should raise safety standards for offshore operators and that
these standards should be required, in other words, be mandated
standards?
Mr. McKay. I do believe lessons from this incident will
change regulations and there will be standards that are raised.
I do believe----
Ms. Capps. You believe they should be?
Mr. McKay. I believe they should be, yes.
Ms. Capps. Thank you. So now BP is supportive of proposed
MMS rules to require additional safety and environmental
management systems because in September BP opposed the proposed
rule.
At that time, you said in a letter to MMS that the proposed
rule was too expensive, and too prescriptive, and too
extensive. It is my understanding that you had worked out a
deal with MMS in the past that voluntary standards be created
by the industry and that these be based on best practices.
So what is it that changed your mind? It is the spill?
Mr. McKay. That particular letter addresses some request
for input from the MMS where we did say we didn't favor more
prescriptive regulation. We favored regulation that would hold
all companies to very high standards.
And, later in the letter, we recommended where we thought
that could be improved. So we were--it was about the
prescriptiveness of it versus more regulation.
Ms. Capps. So which part of it you don't agree with?
Mr. McKay. The methodology that they were pursuing. We
suggested a different way in that letter.
Ms. Capps. OK, but you wanted to have control over how the
standards would be. This requirement, this request--and the
public's asking for this--is that the government set these
standards now and that they be more strict, more prescriptive,
more extensive than in the past.
Mr. McKay. Let me just say we are absolutely aligned to
anything that will make this safer and this incident not able
to happen again we are supportive of.
Ms. Capps. OK. I want to turn to a topic that has been
raised, but I am also very concerned about the people who are
working now to clean up this spill. They are in close contact
with the chemicals that are known to be hazardous to human
health.
Yesterday the LA Times reported that fishermen hired by BP
while--and they described the training class that they were in.
They were only told not to pick up oil-related waste, and they
weren't provided with protective equipment.
This fisherman who gave the report wore leather boots and
regular clothes on his boat, and when asked what BP told them,
this fisherman responded they--the BP officials--told us that
if we ran into oil it wasn't supposed to bother us.
Now, Mr. McKay, the unified command has recalled the
vessels operating in Breton Sound after crewmembers reported
health problems. Do you agree with the unified command's
decision?
Mr. McKay. We are working with unified command as part of
unified command as a participant, so absolutely. The unified
command system is the structure we operate under.
Ms. Capps. Do you agree with their decision to call these
workers back?
Mr. McKay. I don't know the details, but yes. I mean, we
are absolutely in agreement with what unified command's doing.
Ms. Capps. I still remain so struck by BP's lack of
preparedness for this spill, and now lack of preparedness for
the cleanup. May I ask you, Mr. McKay, what were BP's annual
profits in 2009?
Mr. McKay. I am sorry I don't know the exact number. I
think $16 billion. I am not sure. I can get that to you.
Ms. Capps. That is OK, and this is profits?
Mr. McKay. Yes. World-wide.
Ms. Capps. And your salary for 2009?
Mr. McKay. My salary for 2009, 650,000.
Ms. Capps. Plus a bonus?
Mr. McKay. Yes.
Ms. Capps. What was your bonus, sir?
Mr. McKay. About $1.1 million.
Ms. Capps. OK. So this industry with $16 billion in profits
and pretty high salaries for its management cannot properly
outfit workers and volunteers who are cleaning up the mess.
Mr. Chairman, I yield back.
Mr. Pallone. Thank you, Ms. Capps.
The gentleman from Texas, Mr. Gohmert?
Mr. Gohmert. Mr. McKay, we were told by Director Birnbaum
yesterday that there was a mitigation plan for such an accident
as this that had been approved by MMS. Could you tell us what
the first three steps were of that mitigation plan if there was
one?
Mr. McKay. The first--I don't know the first three steps.
These----
Mr. Gohmert. So if there was a plan, you obviously didn't
use that plan in mitigating----
Mr. McKay. We have used----
Mr. Gohmert.--this issue?
Mr. McKay.--We have used the Oil Spill Response Plan. It
has been the foundation for the entire surface response. It
was----
Mr. Gohmert. Then what would have been the purpose of even
having a mitigation plan for such an emergency if that is not
what was immediately gone to after there was a blowout?
Mr. McKay. It was immediately actioned, literally
immediately actioned about three hours after the----
Mr. Gohmert. The mitigation plan?
Mr. McKay.--yes.
Mr. Gohmert. OK.
Mr. McKay. Yes.
Mr. Gohmert. Then tell me what were the first three steps
of the mitigation plan.
Mr. McKay. I don't have it in front of me to tell you the
first three steps. What I know----
Mr. Gohmert. Well, what was the first step?
Mr. McKay. A first step was the Marine Spill Response
Corporation was called to start staging and deploying
resources, and that happened within just a few hours.
The Coast Guard was notified and helped in search and
rescue. Resource Crisis Center was stood up immediately, which
is part of that plan, in Houston. Three days later--I think
three days later, in Robert, Louisiana, unified command was set
up.
All of that followed the spill response plan. It also
catalogued and had available organization phone numbers,
deployed resources across the whole Gulf Coast that were
activated, and that all happened exactly by the plan.
Mr. Gohmert. OK.
Mr. McKay. And I think Thad Allen----
Mr. Gohmert. Well, how can you say it happened by the plan
if you don't know what the plan was?
Mr. McKay. Because Commandant Allen has talked about it and
said that the plan was enacted as authorized and as----
Mr. Gohmert. OK, was this BP's plan or was this the Coast
Guard plan?
Mr. McKay. BP's plan.
Mr. Gohmert. OK, so the Coast Guard got a copy, but you are
not familiar with it?
Mr. McKay. I am relatively familiar with it. I don't know
each step in terms of which one's one, which one's two, and
which one's three.
Mr. Gohmert. OK, well where can we get a copy of that
mitigation----
Mr. McKay. We can----
Mr. Gohmert.--plan that was approved?
Mr. McKay.--we can provide that to the Committee.
Mr. Gohmert. All right, and I would ask the Chair if we
could have, without objection, their mitigation plan provided
to the Committee.
Mr. Pallone. Without objection, so ordered.
Mr. Gohmert. We have also heard that in order to assure
that proper blowout preventers were properly inspected and
tested that offshore inspectors from MMS would come and observe
testing, Ms. Birnbaum was not able to let us know whether or
not there was an offshore inspector from MMS that was present
for a test within 14 days of the blowout.
Do you know whether there was an offshore inspector from
MMS in 14 days prior to the blowout who observed a test of the
blowout preventers?
Mr. Newman. The last MMS visit to the Deepwater Horizon
occurred on April 1st.
Mr. Gohmert. OK, so that would have been outside the 14
days, obviously. Now, does Transocean or BP have any say in who
will come out and be the offshore inspectors from MMS, or is
MMS entirely responsible for assigning those inspectors?
Mr. Newman. That is an MMS decision. They just show up on
the rigs.
Mr. Gohmert. You don't have any say in who comes?
Mr. Newman. No, sir.
Mr. Gohmert. OK. So are you aware of the last team of two
inspectors that came to inspect the offshore activity?
Mr. Newman. I do not know the name----
Mr. Gohmert. At the Deepwater Horizon?
Mr. Newman. I do not know the names of the----
Mr. Gohmert. Are you aware they were father and son?
Mr. Newman. I do not know the names. I don't know anything
about the individuals.
Mr. Gohmert. Were you aware that they were father and son?
Mr. Newman. I don't know anything about the individuals.
Mr. Gohmert. OK. So I am still asking, did you know they
were father and son?
Mr. Newman. If you tell me they are, I will know it, but I
don't know it right--no.
Mr. Gohmert. OK. The answer is no then, thank you. And
obviously you didn't request them.
Did BP request those individuals to be the ones to come out
and test?
Mr. McKay. No, not that I know of.
Mr. Gohmert. Observe? OK. Now, we have heard that the
Administration has had and continues to have a boot on the
throat of British Petroleum, and I know that is hyperbole and I
know that it has been said many times.
But could you--and my time has run out--if you would just
tell us what that means. How has this Administration kept the
boot on the throat as they attended charity events, and
basketball, and all that? How did they keep the boot on your
throat? What have they done?
Mr. McKay. Well, we have--let me just say nobody's more
frustrated than we are and want to get this thing killed and
cleaned up.
Mr. Gohmert. No, I understand that. It is costing you a lot
of money, and you have said you are going to take care of all
of the damages, correct?
Mr. McKay. Correct.
Mr. Gohmert. OK, so how has the Administration kept a boot
on your throat? I hear----
Mr. McKay. There have been many reviews of what is going on
with Secretary Salazar, Secretary Chu, many visits to Robert,
Louisiana as well as Houston in reviewing exactly what is
happening.
Mr. Gohmert. Most of those came more than 10 days after the
blowout though, correct?
Mr. McKay. I don't remember when the first meeting was.
Mr. Gohmert. Most of the visits----
Mr. McKay. Most of the visits, yes.
Mr. Gohmert.--OK, and so there have been these visits and
whatnot. But have there been any threats, any intimidation at
all from the Administration?
Mr. McKay. No. We are under extreme pressure to get this
done by our own needs as well as the Administration's----
Mr. Gohmert. By virtue of the damages you are looking at
for one thing----
Mr. McKay. Right.
Mr. Pallone. The gentleman is about a minute and a half
over.
Mr. Gohmert. Thank you, Chairman.
All right. Thank you.
Mr. Pallone. The gentleman from Maryland, Mr. Sarbanes is
recognized.
Mr. Sarbanes. I will come over here so I can see you
better. Thank you, Mr. Chairman.
I just had really one set of questions. It shouldn't take
all of five minutes even. All of the statements we have been
hearing in describing this situation and what happened, and the
tragedy of it talk about how unpredictable this was, how
unprecedented it was, describe how hard it is to clean this up,
or fix it, or address it when you are 5,000 feet under the
ocean because it is not like having it right there on land or
easily accessed, correct?
Mr. McKay. Yes. It adds to the difficulty, yes.
Mr. Sarbanes. And so that to me that begs the question of
if it is so hard to clean up something or address something
that goes wrong at those levels, if it is as unprecedented an
environment in which to operate as has been described, it
raises a question of why we are there in the first place where
the kind of analysis you have to do up front about whether to
go to a place where if something goes wrong your ability to fix
it is severely compromised or limited.
So what I am curious about is if there was a law that said
oil companies, for example, have to demonstrate their
capability to respond to a leak at the site to clean that
situation quickly and in an effective way in order to be able
to go do the drilling, and that let us say your capability to
respond would be certified by MMS or some other Federal agency,
would you support that kind of thing? I mean, it seems like a
reasonable standard to put in place.
Mr. McKay. I do support coming out of this incident and
what we learn from it that sub-sea intervention capability as
one example is an important thing that needs to be looked at.
I think there is both the company's ability to do that, and
I think, quite frankly, there will be an industry-wide need for
certain capability that needs to be demonstrated in the future
so, and general agreement.
Mr. Sarbanes. Do you have a comment?
Mr. Newman. I would support what Mr. McKay has said. I
think coming out of this there needs to be a re-evaluation of
the preparation for oil spill mitigation.
Mr. Sarbanes. Would you agree that some kind of
certification regarding by some independent authority as to the
company's demonstrating that it has the wherewithal to address
a leak situation before a permit is issued would be a
reasonable position to take?
Mr. McKay. I think it is something to consider, and I think
my personal opinion is that it will need to be sort of a
company look as well as what access to industry capability,
formal or informal, could be gained to give confidence around
intervention capability.
Mr. Sarbanes. OK. Thanks.
Mr. Pallone. Thank you.
The gentleman from Tennessee, Mr. Duncan.
Mr. Duncan. Well, Thank you, Mr. Chairman, and as I said to
each of you about a week ago at the Transportation Committee, I
am like everyone else. I want to make sure that we do
everything possible to get this mess cleaned up and find out
the cause.
But I do have this concern that I hope that we don't go to
such extremes in overreacting to this that we basically cause a
shutdown of much of the offshore oil production in this country
because if we do that would potentially drive up the price of
gasoline.
And who it would hurt in the end, it would hurt millions of
poor and lower income and working people in this country. I
don't want to see that happen.
But Mr. McKay, you told me the other day, and I was trying
to remember, that there have been 92--was it 92,000 oil wells
have been drilled in the Gulf over the last 50 years or so, or
what--do you remember the figures?
Mr. McKay. It is 42,000 for the wells drilled offshore in
the U.S.
Mr. Duncan. 42,000?
Mr. McKay. Yes.
Mr. Duncan. And 7,800 platforms or some kind of----
Mr. McKay. Over 7,000 production platforms or injection
platforms in offshore U.S. in the last 50 years. About 2,300
deepwater wells drilled in the last 24 years.
Mr. Duncan. I guess the night before last, Campbell Brown
said on her program that she used the words that so far this
had been bureaucracy at it is worst.
Then I saw Governor Jindal on CNN last night saying that he
hadn't been able to get the emergency permits that he has
wanted. What is not going on that should be going on?
Can either one of you tell me that, what he was talking
about? He has indicated that the state is being held back
because of bureaucratic delays and so forth.
Mr. McKay. I think--I think, I am not sure. I think that is
in reference to Barrier Islands to be built where they require
permits, environmental assessments, and effectively whether
they would be effective for this spill response, and I think
that is what he is talking about.
Mr. Duncan. Now, last week at the Transportation and
Infrastructure Committee hearing you may remember that I
commended BP because I said that the company seemed to have
done more in advance than any other company I would ever heard
of in response to various accidents or tragedies.
But last week, you said that you had paid 19,000 claims,
and today you said you had paid 13,500 and I am curious as to
what the discrepancy is there.
Mr. McKay. I did say that, and I corrected it later in the
hearing. There were 19,000 claims that have been made, and I
said paid. There had been at that time about, I can't remember,
about 6,000 paid. And I did correct that at the hearing.
Mr. Duncan. Oh, OK.
Mr. McKay. Today there have been about--and I will get the
number wrong, but something on the order of 25,000 to 26,000
claims made and about 13,000 plus paid. As far as I know, those
are accurate as of yesterday.
Mr. Duncan. Now I know that you have been concentrating
most of your efforts on trying to cap this well, and I just was
told by an aide that they think there may be some success in
this latest work.
I don't know what the--I have been in other meetings, so I
don't know what the report was. But what is doing about the
cleanup on where the oil has already come up to the surface?
People are really concerned about this.
Mr. McKay. Obviously we are trying to fight it offshore and
keep it offshore, but there are areas in Louisiana in the
marshes that have been affected.
The cleanup in some of those areas is to basically to get
water hoses and wash it back out and then boom it or skim it
up. Some of the marshes that are very sensitive, it is
unfortunately better sometimes to just leave it and let nature
take its course.
But there are various cleanup techniques that have been
authorized for different priority in types of marshes, and
those are being enacted. A lot of it is trying to hose it back
out of the marsh.
Obviously keeping it from the marsh is priority one, and
that is what we are trying to do. Once it is there, it is
pretty sensitive, and we have to be careful with the cleanup
operations.
Mr. Duncan. I know that people have been talking about all
kinds of weird or unusual methods of reacting to this, and you
know I have heard about golf balls, and mud, and all kinds of
things being put down.
But I had a constituent who told me that there was a
demonstration on one of the networks about dumping hay into the
water and then recollecting the hay. And they said they did
this demonstration showing that the hay absorbed the oil and
cleaned up the water very quickly. Have you heard of anything
like that?
Mr. McKay. I have heard of it. There are a lot of natural
materials that will soak up oil. A lot of them soak up more
water than they do oil, and it is actually a fairly big problem
to pick it up.
A lot of the technology that is being used today, the
sorbent boom, is much, much better at picking up oil than hay
or other natural substances. That is what is being used to try
to soak it up.
So I think this is through unified command. I think we are
using the best technology available in trying to soak up the
oil and keep it off the shore.
Mr. Pallone. The gentleman's time has expired.
Mr. Duncan. All right. Thank you very much.
Mr. Pallone. Thank you.
The gentlewoman from California, Ms. Napolitano.
Mrs. Napolitano. Thank you, Mr. Speaker, and I would like
to enter into the record two articles that have been given to
the Chair in regard to the emotional and health impact to
residents of other oil spills, especially the Exxon Valdez.
It refers to the estimated 250,000 birds, 2,800 sea otters,
harbor seals, bald eagles, killer whales that died along with
billions of salmon and herring eggs. It says British Petroleum
takes the heat for allegedly downplaying the initial threat to
spill in the Gulf of Mexico.
I am really perturbed in going into this issue of health
and mental health services. Apparently it alleges that--because
I don't have the actual report--that community exhibited any
kind of social stress you can imagine.
Alcoholism went up. Suicides went up. Family violence went
up. Divorces went up and, of course, bankruptcies and various
kinds of financial failures went up in the attendance stress of
families.
Then, of course, they felt burned by the U.S. Supreme Court
who slashed the jury award. So I keep hearing legitimate
claims, and while they may end up in Court trying to figure out
whether they are legitimate or not.
I hope this does not happen in this particular case as long
as they are connected. To that effect, I would ask if you have
set up any kind of system to be able to help not only the
families of those deceased workers but also those families that
have been impacted, whether there are the fishing boats, all of
those along the coast, the business, the tourist business, all
of those that are going to be suffering because people don't
want to go and smell this gasoline smell.
Mr. McKay. Yes, we have. We have 28 claims offices across
the Gulf Coast. Those have been set up to deal exactly with the
things you are talking about and under OPA 1990, the Coast
Guard has a lot of experience through Valdez and post Valdez
that they have exercised.
Just very quickly, I know you want to go, we have sort of
three systems working. One, our claims office and claims
centers that are working with 400 adjusters----
Mrs. Napolitano. Yes, you are talking about the claims. I
am talking about services to those men and women and their
families in regard to their stress so that they--and this is
aside from the filing of claims.
This is services to them to be able to recuperate and not
have the divorces or the suicides or any of the PTSD that is
mentioned in some of these articles.
Mr. McKay. We do have community outreach centers, but what
I need to do is get back to you on our plans for sustainability
going forward to address those type of needs.
Mrs. Napolitano. Well, I would hope so because I would hate
to see this seemingly drive a grade over take BP the moral
responsibility to those that it has harmed through their
negligence.
I would also want to ask, the emergency response plan that
you would be working kind of dovetails, and some of the
questions have been asked before. Was there a Plan A, a Plan B,
a Plan C for those wells that are anywhere between 3,500 and
5,000 feet because apparently there is very little you can do
at that depth.
What plans were there? What could be carried out had they
been tried out? Had they been tested to be able to determine
whether or not you would be able to handle a spill whether it
was natural or whether it was by mistake, whatever?
Mr. McKay. The structure in the past and up to present has
been the spill response plans have been effectively
concentrated on surface response. Through this incident we are
learning, obviously, that there are conditions in sub sea and
5,000 feet of water that are very difficult, maybe more
difficult than people would have thought.
There are response plans that are predicated and partly
dependent on that blowout preventer, and if not being able to
actuate when the event happens at least being able to intervene
with an ROV and be able to shut it, or at least being able to
access it. That has not occurred----
Mrs. Napolitano. How many--I am sorry, but my time is
running out. How many wells do you have that are over 3,500
feet?
Mr. McKay. I don't know----
Mrs. Napolitano. Roughly. Give me a rough estimate.
Mr. McKay. Well, I know there are 2,300 drilled in the Gulf
of Mexico over 1,000 feet, so it would be a pure guess over
3,500 feet.
Mrs. Napolitano. Over 3,500. Are any of those using the
same kind of material or the same kind of structure that you
use for this 5,000?
Mr. McKay. When they are drilled, they use similar blowout
preventers and rigs as has been used here.
Mrs. Napolitano. Now, apparently the blowout safeguards
that you had--how many were there, about five I heard in one of
the prior hearings?
Mr. McKay. There are various barriers to blowouts from mud,
to cement casing, to well control, to blowout preventers.
Mrs. Napolitano. OK, and in those instances of those other
wells, are you utilizing the same methodology as you used on
this one?
Mr. McKay. Similar methodologies are being used. We have
recommended and are implementing incremental and enhanced
testing of blowout preventers which we are doing. I believe
that redundancy in blowout preventers and other systems will
need to be looked at.
We are looking at sub-sea intervention capability and what
should be planned or available.
Mrs. Napolitano. I would like to know if you would submit a
report to the subcommittee to find out how many wells are
actually possibly in danger that might cause a similar blowout
that would cause greater damage.
Mr. Chair.
Mr. Pallone. Yes. That has to be the gentlewoman's last
question though because you are a minute over, but if the----
Mrs. Napolitano. I have waited.
Mr. Pallone. No, I understand.
If Mr. McKay would like to submit that in writing, we would
appreciate it.
Mr. McKay. We will.
Mrs. Napolitano. And the last question, is there any
anticipated participative training for your personal on this
3,000 to 5,000 feet level to be able to understand what can or
cannot be done and to develop the plans that hopefully will cap
some of these outbreaks or blowouts.
Mr. McKay. There absolutely is a lot of training, and there
will be more training going forward, yes.
Mrs. Napolitano. Would you please submit something of any
of those responses to the subcommittee so we know that
hopefully we will not be looking at this in the future?
Mr. McKay. OK.
Mr. Pallone. If you could follow up in a written response.
The gentlewoman had two articles that she referenced?
Mrs. Napolitano. Yes. I gave them to you. I gave you
copies. I passed them down. If not, I will get you an
additional copy, sir.
Mr. Pallone. All right. without objection, the gentlewoman
would like those submitted to the record without objection. So
ordered.
[NOTE: The articles submitted for the record by Mrs.
Napolitano has been retained in the Committee's official files.
See list of retained documents at the end of this hearing]
Mr. Pallone. I think I am next, right. OK. I will recognize
myself then for five minutes.
Gentlemen, I have to say that long before President Obama
announced that he was going to expand offshore oil drilling for
oil, I guess, and natural gas, you know, a few weeks before the
BP disaster occurred he made that announcement.
As I said before, I was very disappointed in that because I
don't believe we should expand offshore drilling beyond the
leases that have already been approved every, frankly, because
I think that the technology doesn't exist to prevent a spill in
the During the period water or, once the spill occurs, to stop
it.
I know a lot of testimony has been taken about what could
have been done to prevent it, what is being done to stop it.
Frankly, I think nothing you could have done would have
prevented it and nothing that you will do was able to stop it
quickly. Hopefully you will have the ability to stop it soon.
But it all points back to the fact that over the years I
have just heard over and over from all the oil companies, not
just BP, others, oh, we have plenty of ways to prevent spills.
We have plenty of ways to stop a spill once it occurs.
I think this oil spill in Louisiana shows very dramatically
that none of those things are true. You may have believed that
they were true, and maybe the Minerals Management Service
believed they were true. I never believed they were true.
Spills occur all the time, and spills will continue to occur.
So I guess my question is why should I believe that we are
not going to have another deepwater spill again and that you
will be able to do anything about it in the future?
I mean, I assume that you could tell me if you don't, do
you continue to advocate that we should expand deepwater
drilling? In other words, would you agree with the President
that we should expand the lease sales and go into new areas
like the Atlantic with this type of deepwater drilling? Would
you agree with that? Do you agree with the President?
Mr. McKay. I do believe that this industry can operate
safely. I believe that what we learn from this will change the
way deepwater is done in some ways in terms of regulation, in
terms of safety systems.
Mr. Pallone. So you would agree with the President that we
should continue to expand deepwater drilling in the Atlantic
and other areas where it is not done now?
Mr. McKay. I believe after we learn what is done here and
has happened and those findings are incorporated, I believe
that resources can be developed safely and in an
environmentally sensitive way.
Mr. Pallone. Well, why should I believe you now? You and
other big oil companies were saying all along, telling the
President, telling the Minerals Management Service that this
was safe and we could do it.
It wasn't safe. You weren't able to control it. You are
still not able to control it. I hope you are in the next few
days. Why should we believe you? Why should be believe that the
technology is out there or that it will be developed?
Doesn't this spill show very dramatically that statements
made by you and others were simply not true? I mean, you may
have thought they were true, but why should we believe that
they are?
I am not giving you bad intent. I guess what I am trying to
tell you is I am not saying you were lying. I am saying you
believed certain things that have proved to be false. Why
should we believe that you can make a difference in the future
and that we should expand things?
Mr. McKay. Let me tell you what I believe. We have a
context of 42,000 wells drilled offshore that has had a good
safety record. We have an incident that I think is unique and
unprecedented that we must learn exactly what happened.
I believe that we can put in changes in our operating
practices, industry operating practices, and regulations that
will allow resources to be developed safely. I do.
Mr. Pallone. But why didn't it work this time? Why--what
went--in other words, why should--you know, all these
assurances that were made didn't prove to be true. So why
should we act on that and instead just let us have a
moratorium.
The President announced a halt today to drilling operations
at all 33 deepwater rigs incident he Gulf of Mexico for six
months or until a Presidential commission completes its work.
I commend him for that, but it seems to me based on what
happened we should just have the moratorium in perpetuity. I
mean, we had that for many years.
In fact, until the last couple of months of the Bush
Administration, there was an executive order in place for 20
years. There was an Interior Appropriations rider in place for
as long as I have been in Congress, over 22 years, that said no
expansion.
That was lifted because you made assurances--not you
personally maybe but the big oil made assurances that we didn't
have to worry. This spill would occur and we would be able to
control it, but this proves otherwise.
I just don't understand. There is no reason to think that
we should expand, and you are just telling me I should trust
you. I know you are an honest person. I am not suggesting
otherwise, but you don't give us any reason to believe that we
should have those assurances. Unless you want to give me some.
That is the end of my question.
Give me an assurance why things are going to be different.
I don't hear it.
Mr. McKay. As I have said, I think we have a track record
for 50 years that has been good, and I think we will learn from
this in an unprecedented event to make it safer going forward.
That is what I believe.
Mr. Pallone. Well, I think it is just--you know, I can't--I
have to have something more than just your belief, but I do
appreciate your effort to respond.
Thank you, Mr. Chairman.
The gentleman's recognized.
Mr. Cassidy. Mr. Newman, you had mentioned earlier that you
would accept, even recommend, a hiatus, if you will, in
drilling until we sort out what is going on, but I don't think
a lot of colleagues understand there is a difference between
deepwater or ultra-deep, and just offshore.
It is my understanding that the access to the blowout
preventer, if it is just offshore as opposed to ultra-deep, is
much more accessible, and that the difficulty here is that it
is basically ultra deep.
So when you say there should be perhaps a hiatus, do you
mean for all offshore, or do you mean for ultra deep, or just
deep, or do you see where I am going with that?
Mr. Newman. Yes. I think there are differences in the level
of complexity with respect to offshore drilling, and operations
in shallow water environments where the BOP is basically at the
rig, it is on the surface, it is easily accessible probably
presents a lower level of challenge and complexity with respect
to operations going forward from this point.
So I see no reason to call a halt to shallow water
operations on jack-ups where the BOP is readily accessible.
Mr. Cassidy. Yes, and I am not sure whether the President's
moratorium applies to all offshore. He is very concerned about
the tourist industry in Florida. I sure hope he is concerned
about the roustabouts who are working in Louisiana in a jack-
up. I just learned that word from you if I am using it
correctly.
So we have to recognize there are a lot of working folks
who are employed in this industry, and it has been an industry
which has provided folks who otherwise have fewer options with
a good living with good benefits. So I hope that is not lost by
the President as he addresses this issue.
Going back to the stuff that you all submitted, Mr. McKay,
on page 27 it talks about the pressure holds negative test and
said the drill pipe pressure it measured at Halliburton stayed
steady at 1,400 PSI, et cetera, no flow observed in the kill
line.
The rig team was satisfied that the test was successful.
The rig team, would that include all people on board,
Halliburton, BP, and Transocean? I am just trying to understand
this PowerPoint presentation.
Mr. McKay. Yes. I am not sure who was involved in the
discussions then except and so the task that would generally be
a collaborative discussion of and involve various people
including BP, Halliburton, and Transocean.
Mr. Cassidy. OK, so it would have been more than one person
though, huh? So it would have been an agreement among
everybody?
Mr. McKay. Well, the investigation will have to see how it
actually worked, but generally those types of decisions are
discussed and the consensus is arrived at.
Mr. Cassidy. OK, next--and you may not be able to answer
this either one of you--I had a National Research Council thing
which suggested that MMS, NOAA, and others--this is back in
2003--form a committee to understand all these things--the use
of dispersants, the use of the fate of oil in a deepwater
situation, et cetera.
I am struck that our government agencies back in 2003
apparently didn't act upon it. I say that because at least part
of these recommendations or part of their recommendations for
what we should do now, I am thinking, ``Well, why didn't we do
it in 2003?''
As far as you know, was industry ever called by MMS, the
Coast Guard, et cetera, to do a plan on how to address
potential complications of deep and ultra deep drilling?
Mr. McKay. Not to my knowledge, no.
Mr. Cassidy. OK, so this would not have been solely an
industry responsibility. It would have also been a governmental
responsibility as well. Fair statement? No, you can't answer
that, but I am going to postulate that, yes, that would be the
case.
The President is apparently going to recommend that 33
wells currently being explored activity be put on halt. What
thoughts do the two of you have about those 33 wells currently
being explored activity being ceased? Any thoughts, either one
of you?
Mr. McKay. Well, I believe as I said a bit earlier that I
think we need to learn from this incident. I think that will be
relatively quick because there are some incremental changes
that I think could be made now.
Then after that is incorporated, then I think it will be up
to the government to decide whether to move forward or not.
Mr. Cassidy. The last thing, and I don't know the answer to
this and, again, I am asking just to learn. There are a lot of
questions as to whether or not the drill pipe was centered at
the bottom of the string, I gather.
And Transocean submitted documents to the Energy and
Commerce Committee that showed the effects of a drill pipe
being off-center versus centered and the ability of the cement
to seal around that drill pipe at the shoe I guess, if I am
getting my words correct.
How do you confirm that the drill pipe is centered at the
bottom of the well? That graph you all submitted to E&C, how do
you confirm that it is centered as opposed to off-centered
therefore we can trust that the cement is most likely
operational?
Mr. Newman. I think you are talking about casing rather
than drill pipe.
Mr. Cassidy. OK.
Mr. Newman. And the only way, really, to manage the
centralization of the casing in the outer string of casing is
to put centralizers on it. That is the primary function those
centralizers serve.
Mr. Cassidy. Is there any way to know that centralizers are
working correctly? Did we know that six were better--as
adequate as 21 because I think it said here that that was not
best best practices--this is in the Wall Street Journal--that
while some were not consistent with industry's best practices,
they were within acceptable industry standards.
So it is acceptable, so presumably there is some evidence
that six is adequate; is that a fair statement?
Mr. McKay. I think this will be part of the investigation,
but I understand the six were there to cover the reservoir
section and centralize, and as I said earlier, I don't know the
decision making between 6 and 21 and the reasons for that. That
will be part of the investigation.
Mr. Cassidy. So it will be an empirical discussion as to
whether or not the six is adequate because you will see whether
or not there is leaking or the acoustic test, or whatever.
There is no way to visualize that?
Mr. McKay. No. There is no way to check that in a visual
way.
Mr. Cassidy. I yield back. Thank you.
The Chairman. The gentleman's time expired.
The gentleman from Massachusetts, Mr. Markey.
Mr. Markey. Thank you, Mr. Chairman, very much.
Mr. McKay, today the U.S. Geological Survey Flow-rate
Technical Team issued its findings that its best initial
estimate is that the well is leaking 12,000 to 19,000 barrels
per day. That is two to nearly four times what BP had been
claiming for weeks.
Earlier this week your company provided me with an internal
document dated April 27th, 2010, and cited as BP confidential
that shows a low estimate, a best-guess, and a high estimate of
the amount of oil that was leaking.
According to this BP document, the company's low estimate
of the leak on April 27th was 1,063 barrels per day. It is best
guess was 5,758 barrels per day. It is high estimate was 14,266
barrels per day.
Were you personally aware on April 27th that the number BP
was citing in the press of 1,000 barrels per day was your
company's low-end estimate and that the leak could be as high
as 14,000 barrels per day?
Mr. McKay. I am not personally aware of that at the time.
The 1,000 barrel a day was a unified command estimate at the
time.
Mr. Markey. So that was not an estimate that was based upon
BP's information that they gave to the unified command?
Mr. McKay. It may have been based on information from a
variety of sources, and I am sure BP had input into it, yes.
Mr. Markey. Well, you were in command of all of the
information for that first week. You were the only source of
information in that first week. It was your rig. It was your
submarines. It was you who had that capacity to make a
determination. So you are saying you did not know that it was
1,000 to 14,000?
Mr. McKay. I personally did not know.
Mr. Markey. You did not know?
Mr. McKay. No.
Mr. Markey. It seems hard to believe, honestly, Mr. McKay.
You are the head of BP America. You are BP's top official here
in the United States. You say that you are unaware that such
documents exist but your company had these estimates.
Shouldn't they have sounded the alarm if other people in
your company knew that the range was 1,000 to 14,000 barrels?
Should other people in your company not have sounded the alarm
that it could be a vastly greater catastrophe which was
unfolding?
Mr. McKay. I don't know at that point in time what was
shared with who, but I believe that all of our data and
estimates were being shared within unified command with NOAA,
and as I understand it, NOAA contributed information from
overflight and from dispersion estimates in the water----
Mr. Markey. Well, these are your own internal documents,
Mr. McKay. They say that you knew that it could be upwards of
14,000 barrels per day in the first week even as BP was saying
it was 1,000 barrels per day.
So I think BP had a responsibility to the American people
to let everyone know that it could be 14,000 barrels per day
right from the very beginning because that would have changed a
lot of the response that, in fact, occurred.
Mr. McKay. Could I just comment on that? Admiral Allen has
been clear that whether it was one, five, 10, or 15 it would
not have changed the response.
Mr. Markey. I disagree with that. I think that the amount
of dispersants which is put into the water is very much tied to
the amount of oil which is in the water.
I think the number of booms which you need for the
coastline are tied to how much oil is in the water. How far
this plume can go is based upon how much oil there is in the
water.
So I don't agree with that assessment that BP has made on
this issue, OK? It is not, in fact, accurate. Many things are
contingent upon knowing how big this catastrophe is.
Does BP have a financial interest, Mr. McKay, in
underestimating the size of the leak?
Mr. McKay. Could you repeat the question?
Mr. Markey. Does BP have a financial interest in
underestimating the size of the leak?
Mr. McKay. In underestimating the size? I don't know. I
don't know.
Mr. Markey. Well, the upper estimate of the--you don't know
if you have a stake in underestimating?
Mr. McKay. We certainly have--we are going to clean up
everything that happens so that the size of the leak is--the
absolute value of the leak will not impact the response we
have, the claims that we pay.
We have said from the outset that we are responsible for
the oil spill response cleanup costs, reimbursement to the
government, claims that result from it in terms of----
Mr. Markey. But isn't it true, Mr. McKay, that the higher
the rate of oil that went into the ocean is the higher the
liability for BP? In other words, under the existing law if it
is only 5,000 barrels per day, then the liability under the
existing law for BP is $185 million.
If it is 19,000 barrels per day, which is the estimate that
came out today, the liability for your company is $2.1 billion
for this spill. There is a big difference there in liability.
What I am afraid of, Mr. McKay, is that BP was more
concerned about its liability than it was about the livability
of the Gulf by low-balling the number of barrels of oil per day
that was being sent out into the Gulf. That is my belief.
Mr. McKay. Our position is to do everything we possibly can
to stop this, provide as much data as we can as fast as we can,
clean it up and deal with all the economic claims.
Presumably, the amount of oil will result in whatever
impacts the shore has and the cleanup costs as well as the
government's response and our response. So----
Mr. Markey. Well, if you had not maintained this fallacy
that it was only 1,000 to 5,000 barrels per day all the way
until the last couple of days, it would have been a
substantially different reaction.
Mr. McKay. Could I just comment? Those were unified
command--1,000----
Mr. Markey. Based upon BP figures.
Mr. McKay. And NOAA figures. I have a NOAA document that I
can give to the Committee--about 5,000 barrels a day calculated
two different ways by NOAA--and it was a unified command
decision.
Mr. Markey. But again, reliant upon your own data and your
experts----
Mr. Cassidy. Will the gentleman yield?
Mr. Markey. I will be glad to yield.
Mr. Cassidy. I have participated in the 3:00 p.m. joint
command call between MMS, Coast Guard, NOAA, and others. BP is
not on. I have continually asked for a rate of flow, and I have
continually been told by MMS, NOAA, Coast Guard it is very
difficult and that they are doing their best.
That has also been a point of frustration from mine, but in
fairness to BP, I have heard it straight from the agencies'
mouths that they have been unable to do it.
So I yield back. Thank you.
Mr. Markey. Yes. Well, again, dependence upon BP figures I
think is central to any evaluation that any agency is making.
Let me ask you this, Mr. Newman, BP to its credit has
agreed--I wrote a letter last week to each of you asking you to
make contributions to an independent science consortium that
could be put together, and BP has made a commitment of $500
million to that independent science consortium.
Are you willing as a corporation, Mr. Newman, to make a
contribution to a consortium of independent scientists who can
make analysis of what is going on down there and what should be
done in the long term in order to protect and preserve the Gulf
from the worst consequences of this catastrophe?
Mr. Newman. I am unfamiliar with the letter, Congressman,
but I will certainly take it into consideration. I am not
familiar with what the science foundation is intending to
accomplish, but I will review it.
Mr. Markey. Well, it is intended to have the best science
available for the people who live in the Gulf going forward,
not just BP and not just Transocean but to have the best
scientists we have in our country be funded in a way that all
the best decisions can be made going forward to protect the
people down there.
And I hope that Transocean makes a substantial contribution
as well.
Thank you, Mr. Chairman. At the end of the day, it is BP's
spill but it is America's ocean. It is the people in the Gulf's
ocean. We have to make sure that they get protected.
Thank you, Mr. Chairman.
The Chairman. The gentlelady from California, Ms.
Napolitano.
Mrs. Napolitano. Thank you, Mr. Chair, and I will be as
brief as I can.
I am going to keep harping on some of the information. The
hearing before the Department of the Interior, I had asked
whether they had adequate environmental baseline information to
be able to assess the damages that are occurring to the
wetlands, the marshes, the islands, and the near-shore areas
and the answer, of course, at that point was not very
encouraging.
I associate my remarks with my colleague, Mr. Markey,
because of the amount of oil that is going into some of these
areas. I ask the question because I know that without some of
these hard numbers, these quantitative numbers, your company
can argue every assessment that is made.
There is a history, again, with Exxon Valdez showing a
clear path of what is likely to happen. You will question every
expenditure that is claimed and try to get the courts to limit
the exposure and the costs whether it is the five or 11,000
that Mr. Markey was referring to.
My question is are you willing to commit that BP will
assume the long-term commitment certainly to exceed 20 years to
continue to support the scientists, local fishermen, business,
mental health needs, social needs, and the full recovery cost
for the environment that have resulted from this black death,
and I would like a yes or no answer.
Mr. McKay. Could I at least--the----
Mrs. Napolitano. Yes or no, sir?
Mr. McKay. I can't put an end on it. I can't put a date on
it. What I would say is under OPA we are going to fund the
Natural Resource Damage Assessment which will set the baseline
as well as the restoration plans----
Mrs. Napolitano. So in other words, there is a baseline,
and there will be a cap on some of these things?
Mr. McKay. No. No, no, no. No, there is a baseline to
establish where we start it from. This is by the government not
by us. This is by NOAA that establishes what the resources were
there before any damage, establishes the damage, then
establishes restoration and recompense from that point forward
or as long as it is needed.
Mrs. Napolitano. As I pointed out, the article that I
submitted for the record indicates that in the Exxon Valdez
that there is still litigation pending because of whatever--or
actually the Court damages were reduced for whatever reason of
some of these individuals that had suffered these injuries.
Mr. McKay. Under OPA 1990 which happened after the Valdez,
this was put in place such that the government agency would do
the assessment. The restoration requirements, meaning costs and
schedule for however many years it takes, would be set. Then we
have said as a responsible party we are going to step up to
those obligations.
Mrs. Napolitano. Well, I am hoping to be around. The other
question I have is--or actually a statement and a question.
President Obama has already admonished both of your
companies for finger pointing, and it certainly seems there is
still a lot of the ``blame the other guy'' going on. BP's
investigators seem to not surprisingly be fine that it was
Transocean's fault, or Halliburton's fault, or the fluid
company's fault, et cetera. More disturbed to find out the
companies are withholding information from each other.
Mr. McKay, your investigators said that they were not
getting access to Transocean employees.
Mr. Newman, you have said your company is not getting
access to BP data.
Can you both commit to stop playing the blame games and get
working to find out what went wrong?
Mr. McKay. Let me just say we want to understand what
happened. We want to cooperate with----
Mrs. Napolitano. That doesn't answer the question, sir.
Mr. McKay.--and we are sharing documents and working out, I
hope, an ability to talk to Transocean employees. We are
sharing our documents----
Mrs. Napolitano. But not getting to talk to each other's
employees?
Mr. McKay.--that is being worked out, I believe.
Mrs. Napolitano. And to what extent will there be a
solution or is this just not going to be----
Mr. McKay. I hope so. I hope so.
Mrs. Napolitano. Well, Mr. Chair, I hope they can find a
solution because I think this is part of where we are going to
find some of the solutions. Thank you, Mr. Chair.
The Chairman. Thank you. I think we are done with this
panel.
Thank you, Mr. McKay and Mr. Newman for your patience and
responses today. We appreciate it and all you are doing to try
to resolve this disaster.
Our third panel is composed of Mr. Randall Luthi,
President, National Ocean Industries Association; Mr. Jack
Gerard, President and CEO, American Petroleum Institute; Dr.
Michael Hirshfield, Ph.D., Senior Vice President for North
America and Chief Scientist, Oceana; and Dr. Michelle Michot
Foss, Ph.D., Head of the Center for Energy Economics and Chief
Energy Economist, the University of Texas.
Lady and gentlemen, we have your prepared testimonies and,
of course, they all will be made part of the record as if
actually read. And you are encouraged to summarize.
Mr. Luthi, we will start with you. Welcome back to the
Committee again.
STATEMENT OF RANDALL LUTHI, PRESIDENT,
NATIONAL OCEAN INDUSTRIES ASSOCIATION
Mr. Luthi. Thank you, Mr. Chairman, and Ranking Member
Hastings, and members of the Committee thank you again for
inviting me to speak about the Outer Continental Shelf and the
oil and gas strategy implications as a result of the tragedy in
the Gulf of Mexico.
My name is Randall Luthi, and I am the President of the
National Ocean Industries Association, or NOIA, which
represents over 250 companies working to explore for and
produce both traditional and renewable energy sources from the
Outer Continental Shelf.
I became President of NOIA in March of 2010, yes, just a
couple of months ago. Our members are engaged in activities
ranging from exploration to production, engineering to marine
and air transport, offshore construction to equipment
manufacture and supply, shipyards to communications,
geophysical survey into diving operations, and the development
of America's first commercial offshore wind farm.
The accident in the Gulf of Mexico and the recent tragedy
in West Virginia remind us all that the development of energy
comes with risk, a risk that must always be foremost in our
minds and must be minimized or eliminated whenever possible.
Indeed, America's innate pioneering spirit endures in the
face of the most treacherous conditions rather that be the
outer reaches of space, beneath tons of earth, or miles below
the ocean.
We, the members of NOIA, and the rest of the Nation mourn
with the families who have lost loved ones and pray that they
might find comfort. We remember their sacrifice by
strengthening our resolve to demonstrate responsibility,
accountability, leadership, and cooperation in the wake of this
tragedy.
This vital industry must regain the public's trust. Our
members stand ready to provide information, expertise, and a
self-critique of offshore operations, equipment, procedures,
and practices.
We are committed to working with the Administration, the
Congress, and particularly this Committee to answer the many
questions that rightfully are being asked.
We are asking ourselves the same questions that your
Committee has asked, and will continue to ask, because one
tragic and deadly accident is one too many.
We are committed to finding out what went wrong, the cause,
rather it be mechanical failure, human failure, some yet
unidentified factor, or a combination of all and fix it.
To that end, you are witnessing a great cooperation among
industry to find the cause and respond to the effects of this
spill. Various task forces are working night and day to develop
recommendations for increased safety and reliability.
Nearly all our member companies and their employees live in
the Gulf of Mexico region. This accident is extremely personal
to them. This is where they raise their children, their
grandchildren, and make their homes.
Their neighbors are shrimpers, fishermen, boaters, tourism,
and the hospitality workers. It is important to our members to
look after their neighbors by conducting their business in a
responsible manner that puts safety above all else.
As we listened to the various press reports and testimony,
there seems to be a common thread emerging. It appears that the
technology to harness oil and gas resources has advanced by
leaps and bounds.
But it appears--and I underline appears--that the oil spill
response technologies may not have kept pace. That is why we
are forming a response team of experts to make recommendations
for robust and timely spill response and cleanup capabilities.
We will seek participation from our sister trade
associations, response organizations such as the Rain Spill
Response Corporation, as well as ecologists and scientists with
expertise in oil, gas, and the environment.
The panel will examine the existing and cutting edge
techniques and sub sea capture, surface containment and
disbursal, the need to reconstitute an industry funded response
research and development fund, and the need to harmonize
differing response regulations between the Minerals Management
Service and the U.S. Coast Guard.
This team of experts will provide recommendations for the
future. If there is a better mousetrap or a better way to use
that mousetrap, I trust this team will find it.
In closing, for the foreseeable future we will continue to
need energy resources produced everyday on the Outer
Continental Shelf. All forms of energy both traditional and
renewable are available off our shores. It is our
responsibility to provide that energy safely and in a timely
manner.
Now is the time to discuss the need for energy for our
families and our economy. Now is the time to frankly discuss
the need for a diverse energy portfolio including renewables,
fossil fuels, biofuels, wind, wave, and title energy. We need
them all, and we can produce them all at home. Now is the time
for a review of our industry both internally and externally.
NOIA member companies remain committed to ensuring that we
produce domestic energy and protect the safety of workers in
the environment. We look forward to working with the Committee
to achieve these goals.
Thank you, Mr. Chairman and members of the Committee.
[The prepared statement of Mr. Luthi follows:]
Statement of Randall Luthi, President,
National Ocean Industries Association
Chairman Rahall, Ranking Member Hastings, and members of the
Committee, thank you for inviting me to speak before you today about
Outer Continental Shelf (OCS) oil and gas strategy and implications of
the recent tragedy in the Gulf of Mexico. My name is Randall Luthi, and
I am the President of the National Ocean Industries Association (NOIA),
which represents over 250 companies working to explore for and produce
both traditional and renewable energy resources from the OCS.
Our members are engaged in activities ranging from exploration to
production, engineering to marine and air transport, offshore
construction to equipment manufacture and supply, shipyards to
communications, geophysical surveying to diving operations, and the
development of America's first commercial offshore wind farm.
This accident in the Gulf of Mexico and the recent tragedy in West
Virginia remind us all that the development of energy comes with risk:
a risk that must always be foremost in our mind, and minimized or
eliminated. Indeed, America's innate pioneering spirit endures in the
face of the most treacherous conditions: the outer reaches of space,
beneath tons of earth, or miles below the ocean.
We, the members of NOIA, and the rest of the Nation mourn with the
families who have lost loved ones and pray that they might find
comfort. We remember their sacrifice by strengthening our resolve to
demonstrate responsibility, accountability, leadership and cooperation
in the wake of this tragedy. This vital industry must regain the
public's trust.
Our members stand ready to provide information, expertise, and self
critique of offshore operations, equipment, procedures and practices.
We are committed to work with the Administration, the Congress, and
this Committee to answer the many questions that are rightfully being
asked; and to use this knowledge to reshape industry practices and
procedures to minimize the chances of this ever happening again. We are
asking ourselves the same questions, because one tragic and deadly
accident is one too many for our collective family of offshore
employees and their loved ones to endure. We are committed to finding
out what went wrong, whatever the cause, whether it be mechanical
failure, human error, some as yet-identified factor or a combination of
all, and fix it.
To that end, you are witnessing great cooperation from industry to
find the cause and respond to the effects of the spill. Various task
forces are working day and night to develop recommendations for
increased safety and reliability. As more is learned concerning the
cause of the accident, our members will assist in discussing short and
long term actions required to improve subsea blowout preventer (BOP)
stack testing, reliability and intervention. These solutions will
require input from operators, exploration and service contractors, and
equipment manufacturers. We must examine the design and execution of
various industry practices for cementing, casing, BOP configuration,
and well control.
Amidst these worthy questions, however, we must not lose sight of
the fact that industry competitors have joined forces in an
unprecedented response effort to find a solution to the problems in the
Gulf. As outlined by the attachment, this includes NOIA's major and
independent producers, as well as member service and supply companies
who have stepped forward to offer vessels, helicopters, remotely
operated vehicles, boom, dispersant, monitoring equipment and perhaps
their most treasured assets, their best and brightest technical
experts.
Nearly all of these companies and their employees live in the Gulf
region. This accident is very personal to them. This is where they
raise their children and grandchildren. They live and work there. Their
neighbors are shrimpers, fisherman, boaters and tourism and hospitality
workers. It is important to our member companies to look after their
neighbors by conducting their businesses in a responsible manner that
places safety above all else.
As we have listened to press reports and the testimony of others, a
common thread appearing is that while technology to locate and harness
oil and gas resources from the offshore has advanced by leaps and
bounds over the past decades, we still have work to do to ensure that
oil spill response technologies advance along with our ability to find
and develop offshore resources ever farther from shore.
That is why NOIA is forming a Response Team of experts to make
recommendations for robust and timely spill response and cleanup
capabilities. We will seek participation from our fellow trade
associations, response organizations such as the Marine Spill Response
Corporation, as well as ecologists and scientists with expertise in
oil, gas and the environment. This panel will examine the existing and
cutting edge techniques in subsea capture, surface containment, and
dispersal; the need to reconstitute an industry-funded spill response
research and development fund; and the need to harmonize currently
differing spill response regulations between the Minerals Management
Service and the U.S. Coast Guard. This team of experts will use its
collective knowledge and experience to provide recommendations for the
future. If there is a better mouse trap, or a better way to use the
mouse trap, this team will find it.
I will also address the reorganization of the Minerals Management
Service. NOIA believes the current Administration is in the best
position to determine what administrative changes are best for the
agency at this time. We are encouraged that this restructuring appears
to include the necessary funding and resources to ensure that oil and
gas will be produced here in a safe and environmentally responsible
manner. That is certainly the goal of our member companies and we look
forward to working with the Administration and the Bureau of Ocean
Energy Management, the Bureau of Safety and Environmental Enforcement,
and the Office of Natural Resources Revenue.
In closing, let me state a simple fact: that for the foreseeable
future we will continue to need the resources produced every day on the
nation's Outer Continental Shelf. All forms of energy production--both
traditional and renewable--are available off our shores. It is our
responsibility to provide that energy in a safe and timely manner.
We know that we will continue to need that energy to fuel our cars,
heat our homes, run our businesses, and grow our food. We know
petroleum products are all around us: the ink in our pens, the lenses
and frames in our glasses, the clothes on our back, the carpet beneath
our feet and the chairs we are sitting on are all products of oil and
natural gas. It is engrained in our daily lives in ways we never think
about. And that will be the case for decades to come.
Now is the time to discuss the need for energy for our families and
our economy. Now is the time to frankly discuss the need for a diverse
energy portfolio, including fossil fuels and cutting edge renewables
such as biofuels, wind, wave and tidal energy. We need them all. We can
produce them all at home.
And now is also a time for review of our industry, both externally
and internally. NOIA member companies remain committed to ensuring that
we produce domestic energy and protect the safety of our workers and
the environment. We look forward to working with this Committee to
achieve those goals. Thank you; I look forward to your questions.
______
NOIA Member Companies Engaged in Deepwater Horizon Response
NOIA member companies are lending their resources in an
unprecedented cooperative effort to stop the flow of oil and prevent
further damage to the environment.
These resources include land-based and offshore facilities,
aircraft, marine vessels, remotely operated vehicles (ROVs), a
containment dome, subsea tooling, subsea video, dispersant, personnel,
and technical expertise on suction systems, blowout preventers,
dispersant injection, well construction, containment options, subsea
wells, environmental science, emergency response, spill assistance,
well intervention, and drilling and well competence.
Aker Solutions
Aker Solutions is on contract with BP and has been providing
deepwater multipurpose vessels, first with the initial rescue
operations and since then with subsea intervention support. Aker
employees have volunteered to assist with clean-up activities in
Mobile, Alabama.
American Pollution Control (Ampol)
Ampol owns and operates a boom factory in New Orleans,
which is currently dedicated 24 hours per day to production of 18''
near shore boom and Ocean Boom
Ampol has 6 vessels offshore providing skimming
operations
Ampol has 5 vessels offshore providing insitu burning
operations
Ampol has 1 vessel offshore to support the offshore
operations
Ampol has crews providing protection booming in
Pensacola, Florida; Mobile, Alabama; Pascagoula and Biloxi,
Mississippi; and Venice and Cocodrie, Louisiana
Ampol has converted an offshore pipe lay barge to lay
Ocean boom to protect White sand beaches in Alabama
Ampol is working on protection booming of Marsh Island,
Louisiana
Ampol has crews loading the aircraft every day for
dispersant spray operations out of Stennis, Louisiana
Ampol has spill managers assisting BP in Mobile, Alabama
and Houma, Louisiana command centers
Ampol has boom experts inspecting the booms air freighted
in from around the world
Ampol has an insitu burn expert assisting the burn
operations
Ampol total personnel working on this BP project is 250
and growing
Ampol is currently hiring and training up to 300 more
personnel
Anadarko
Anadarko has 4 employees assisting BP technical teams.
Bee Mar LLC
Bee Mar's new build DP-2 platform supply vessel, the M/V Bee Sting,
promptly answered the distress signal of the Deepwater Horizon on April
20th and joined several other vessels in performing a survivor search
and rescue effort and attempting to contain the fire on the rig using
its offship firefighting equipment. Bee Mar has also offered the use of
its DP-2, ABS-classed Platform Supply Vessels and conventional Offshore
Supply Vessels to assist in containing the oil spill. Additionally, Bee
Mar is coordinating with environmental response companies and other
vessel providers to develop new approaches to containing and cleaning
up the spilled hydrocarbons.
Bristow Group
Bristow group, an offshore services company, has been providing
aviation services to BP with 8 helicopters flying observation and
spotting flights both morning and afternoon. Bristow is inspecting
booms in location for oil containment. Bristow provided these services
to BP for `out of pocket' expenses only. This means that the aircraft
and crews were utilized free and only fuel burn, direct operating costs
and base set up in Mobile, Alabama were reimbursed. Bristow performed
on a similar basis to FEMA during the 2005 hurricane evacuations and
clean up/recovery efforts.
Broadpoint
Broadpoint has been providing both satellite and cellular service
for communications to many of the vessels involved in the response.
They are providing a video feed to BP back to their headquarters
location in Robert, Louisiana.
CalDive
CalDive has one 100 foot utility boat offshore, with 7 men aboard
assisting in the offshore spill response; they are working directly for
BP. CalDive has submitted to BP and the USCG and the National Response
Corporation a schedule of its entire 28 ship/barge fleet and 2000
person workforce in the Gulf of Mexico available to assist in the
cleanup efforts.
CapRock Communications
With nearly 30 years of experience and service to customers in over
120 countries, CapRock Communications is a premier global satellite
communications provider for the energy, maritime, government,
engineering and construction and mining industries as well as for
disaster recovery services. CapRock delivers highly reliable managed
communication services including broadband Internet, voice over IP,
secure networking and real-time video to the world's harshest and most
remote locations.
CapRock Communications has provided VSAT (very small aperture
terminal) communication packages, video services, short-notice orders
and fast-response technical support for vessels supporting the relief
wells and clean-up efforts in the Gulf of Mexico. In direct response to
the current oil spill in the Gulf of Mexico, CapRock has provided
increased bandwidth, remote video streaming, quick response time and
several on-deck technicians to a support vessel involved in the clean-
up efforts. Recently, the vessel had critical communications needs for
its operations. Both the operator on board and the rig owner required
remote video streaming links and other technologies to fully function
in their support role for these efforts. Within hours of the request,
CapRock issued technicians out to this vessel, installed video encoders
for these streaming links and had systems fully operational within a
few days. At least one of CapRock's technicians remained on the vessel
for a longer period of time for ongoing support and to ensure the
systems continued to operate at full capacity.
Chevron
Chevron is providing both direct and indirect support to BP and
government to help stop the leak and assist with the spill response.
Chevron has assigned technical experts to BP in the areas
of subsea wells, subsea blowout preventer (BOP) intervention, subsea
construction, environmental science, and emergency response
Chevron has provided wildlife experts who work for
Chevron Energy Technology Company, who are assisting with long term
wildlife management plans and hurricane evacuation plans.
Chevron has provided subsea equipment to BP
Chevron personnel have joined the Coast Guard's local
incident command response team in Louisiana, Mississippi and Alabama.
BP has contracted the Chevron Pascagoula Refinery's
marine wildlife rescue portable trailer as an additional resource
BP has access to Chevron's Venice Shore base for spill
response activities and equipment storage
Chevron supports the work of Tier 3 spill response and
cleanup cooperatives, such as Marine Spill Response Center, Clean Gulf,
and Oil Spill Response Ltd., who provide personnel and equipment, such
as dispersants, fire boom and radios
ConocoPhillips (COP)
ConocoPhillips (COP) continues to work with BP and PHI
(Petroleum Helicopters Inc.) to allow usage of COP's contracted
helicopter for various issues related to the oil spill. BP is currently
utilizing this resource up to 3 times per week. ConocoPhillips has
extended the invitation for use of its shore bases in Fourchon and
Dulac, Louisiana for staging and departure locations. ConocoPhillips
remains in contact with BP's Logistics Group, U.S. Coast Guard and the
Terrebonne Sheriff's Office for any needs related to shore base and
helicopter requirements.
ConocoPhillips is providing IMAT (Incident Management
Assistance Team) resources on a rotational basis to BP. ConocoPhillips
continues to support BP with incident management assistance at all
levels. ConocoPhillips' Crisis Management Emergency Operations Center
is in communication with BP's Crisis Center to identify any additional
assistance required.
ConocoPhillips is providing technical experts to
participate on the Joint Industry Task Force set up to review both
offshore operating procedures and equipment used in Deepwater Drilling
operations. The task force recommended changes in both areas to improve
offshore safety and these recommendations were submitted to the
Department of the Interior on Monday, May 17th. These groups will
continue working with a long term focus on applying the findings from
the incident investigation, revising existing API standards and
submitting improvement suggestions to the Minerals Management Service.
ConocoPhillips is a member of the Marine Preservation
Association that directly contracts MSRC which provides oil spill
response in the Gulf of Mexico. ConocoPhillips and others participate
and fund the cost of making the clean up equipment and dispersants
available. ConocoPhillips is also a member of the Norwegian Clean Seas
Association that has provided resources for the clean-up effort.
ConocoPhillips has reviewed BP's current plans, offered
ideas, and environmental and wells related technical assistance to BP's
VP of Drilling and Completion Engineering.
ConocoPhillips has established a system for employees to
make charitable contributions to non-profit agencies involved in the
cleanup. Contributions will be matched by ConocoPhillips.
ConocoPhillips is directing employees who are interested
in volunteering to the central volunteer information site.
At the request of the Department of the Interior,
ConocoPhillips submitted a letter to the MMS on April 30th with
recommendations covering immediate actions to be taken, short terms
steps to reduce risks in current deepwater drilling and risk reduction
steps for future drilling operations.
It should be noted that ConocoPhillips does not have any GOM
drilling operations at this time, therefore has limited availability to
boats or other equipment to offer BP to assist in the incident.
Davis-Lynch Inc.
Davis-Lynch is working with BP to supply the necessary equipment
for the relief well being drilled.
Delmar Systems
Delmar, as a leading provider of mooring-related services, is
consulting with BP regarding anchor/mooring solutions to be used in
whatever solutions are finalized in a solution to contain the well flow
leak and diverting oil and gas to the surface for further containment.
Discussions are ongoing and Delmar is offering its full support of
engineering, technical, planning and operational capability in addition
to various specialty mooring equipment and hardware on a priority
basis.
Diamond Offshore Drilling
Diamond Offshore Drilling is providing a 7000' hydraulic pod hose
and pod reel, a BOP mandrel and a DWHC BOP connector.
ExxonMobil
ExxonMobil has teams of technical experts in its Upstream Research
Company and drilling organization working to provide BP with
engineering and technical expertise in a range of areas related to the
response. The company also continues to support the work of spill
response and cleanup cooperatives in the Gulf of Mexico. ExxonMobil has
offered the use of a drilling rig as a staging base, two supply
vessels, an underwater vehicle and support vessel and has provided
experts to respond to BP's request for technical advice on blowout
preventers, dispersant injection, well construction and containment
options. The company also continues to support the work of Tier 3 spill
response and cleanup cooperatives, such as MSRC, Clean Gulf, and Oil
Spill Response Ltd., to provide personnel and equipment, such as
dispersants, fire boom and radios. ExxonMobil is also identifying,
procuring and manufacturing additional supplies of dispersant for
potential use.
FMC Technologies Inc.
FMC's direct assistance to BP to support their Deepwater Horizon
Response efforts fall into two areas:
Personnel:
FMC has supplied offshore personnel on the Discoverer
Enterprise and Q4000 drill ships.
The personnel on the Discoverer Enterprise are supporting BP's
efforts to siphon oil from the leaking riser pipe to the
surface. On the Q4000, FMC personnel are working with BP to
support their efforts on the ``Top Kill'' initiative.
Equipment:
BP requested FMC to design and manufacture a special adapter to
connect to flexible hoses and a subsea manifold for the ``Top
Kill'' initiative. To complete this work, FMC assembled a team
including engineers, manufacturing personnel, offshore
personnel, and project management. All work, from concept,
through final design, manufacturing, and shipment was completed
in a matter of days.
Global Industries
Global Industries has been in touch with BP and has offered its
entire fleet, including ROV's and the following DP vessels to provide
deepwater support and possibly quarters vessels to the response
initiative:
DB Hercules
DB Titan 2
Global Orion
Normand Commander
Olympic Challenger
Hereema
Heerema offered to mobilize the heavy lift vessel ``Balder'' from
Trinidad to help in any way possible and has provided BP detailed
drawings and Material Take Offs of installation aids for buoyancy
modules.
Kiewit Offshore Services
Kiewit Offshore Services regularly makes its services available in
the event of a disaster or emergency, and has done so in this case,
offering to assist BP and Transocean in any way they require.
Marathon
Marathon provided 2 support vessels that assisted in around-the-
clock fire fighting and search and rescue following the explosion.
Marathon offered to deliver ROV hot stab equipment; however BP found a
closer option. Marathon offered services of deepwater drilling experts
Marine Spill Response Corporation (MSRC)
MSRC was formed in 1990 and became fully operational in 1993. Since
that time MSRC has responded to over 700 incidents from vessels,
barges, pipelines, refineries, terminals and off-shore operations.
Additionally, MSRC mobilized significant resources to respond to 36
separate incidents for 22 different customers during Katrina/Rita in
2005. The response requested from BP in the first two days of the
incident exceeded the total called on for any prior response, including
Katrina/Rita.
On-water/off-shore Response:
The assets mobilized in the first 12 hours are far in excess of any
regulatory planning requirements necessary to meet the worst case
discharge of the largest tankers that transit in U.S waters. From just
after mid-night (Central Daylight Time) on April 21, through mid-
morning of April 21, BP activated the single largest mobilization of
response resources for any incident in the twenty-year history of MSRC.
This included:
6 specially built Oil Spill Response Vessels (OSRVs) from
Miami, Florida and locals throughout the entire Gulf Coast to Corpus
Christi, Texas. These OSRVs include high capacity skimmers, boom and
boom boats as well as 4,000 barrels of temporary storage. Importantly,
they also have two oil/water separators that allow for skimming
operations to continue much longer.
At present there are 10 of the 210' Responder Class OSRVs
on scene, from as far away as Maine and New Jersey.
Significant additional resources have been mobilized
since the initial activation and the totals under MSRC direction
include the following:
1.4 million feet of boom
463 contractor boats
10 210' Oil Spill Response Vessels (OSRVs)
4 Barges
22 Shallow Water Barge Systems
6 Fast Response Vessels (FRVs)
244 MSRC personnel
6800 Contractor personnel
Dispersant Response:
Concurrent with BP's initial activation of the OSRVs, BP activated
MSRC's aerial dispersant capability, which includes a C130 and King Air
90. These were ready for spraying by mid-morning of April 21. At
present aerial dispersants are not required under USCG regulations, but
BP has been providing funding, along with other companies utilizing
MSRC, as a contingency planning tool.
Shore-line Response:
Pending potential shore-line impact, BP requested MSRC mobilize the
largest single resource base in MSRC's twenty-year history, and
currently this stands at over 6,800 personnel under MSRC management.
Boom deployed or pre-staged as of May 20 stood at approximately 1.4
million feet at key sites along the Gulf.
Newfield Exploration
Newfield sent a support vessel, the Odyssea Diamond, to assist
during the rig fire on April 20. The vessel was subsequently utilized
to tow 2 damaged lifeboats to Fourchon, Louisiana and was sent back to
Newfield on April 22. Newfield released the Helix Q4000 semi-
submersible intervention vessel to BP on April 30, requiring an early
suspension of subsea well intervention operations at MC 506. The Q4000
remains on contract with BP at this time.
Newfield has donated through the Newfield Foundation to the
following:
$1500 to the Gulf of Mexico Foundation
$2500 to the Nature Conservancy of Texas
$5000 Texas Adopt a Beach Program
Oceaneering
Oceaneering is supporting BP with people--round the clock--to work
on all manner of subsea ideas. One vessel is on location with 2 ROVs
and there are 2 additional ROVs on a third party vessel that BP has
hired to be on location. In addition, Oceaneering has ROVs on both of
the two other drilling rigs that BP/Transocean is bringing to the
location. Oceaneering equipment is providing the video feed from the
ocean floor.
Oil States International
Oil States has offered emergency response accommodations and
engineering assistance to BP.
Plains Exploration & Production Company
Plains Exploration & Production Company made any and all of its
equipment and expertise available to BP and Transocean as it responds
to the Deepwater Horizon incident.
Seacor Holdings, Inc.
Seacor Holdings, Inc. is in the business of planning for,
responding to, and handling communications during emergencies. Seacor
Holdings, Inc. is the parent company of Seacor Environmental Services,
an emergency response, planning, consulting service and media advisor.
Seacor has a large contingent of professionals working in different BP
command centers, overseeing different operational requirements and
other jobs.
Seacor has provided boom, skimming vessels, boom
deployment vessels, and is helping BP secure the various services and
assets required to support the mobilization.
Seacor's offshore marine support group has provided
several large vessels, one as a command and communications center,
equipped with systems to track marine assets and coordinate, and
several that support deep water work, as well as several fast response
vessels (25-30 knots) and smaller work boats.
Seacor has two master mariners working for BP to help
manage the ad hoc fleet of local boats retained to work on near shore
operations.
Seacor's aviation group, ERA, is flying USCG personnel
and has offered to contribute flight tracking technology.
Shell Oil
Shell has provided the following:
Initially, 6 vessels for fire fighting and search &
rescue (released within 24 hrs.)
A dynamically positioned vessel with a Remotely Operated
Vehicle (ROV)
An EC135 helicopter
An ROV intervention hot-stab panel
A spare Control POD
Dispersant
A Containment Dome
An Autonomous Underwater Vehicle
Sections of Co-Flexip pipe
Technical experts in the areas of subsea wells,
environmental science, and emergency response, providing Shell
practices for consideration to advance safe operations in Deepwater
(Safety Cases, well design, etc).
Robert Training and Conference Center (RTCC) in Robert,
Louisiana to provide full support of Unified Area Command including
accommodations and press conferencing space including accommodations
and press conferencing space.
Many Shell employees and contractors have asked how they can best
assist in this response effort. Currently, we are encouraging all Shell
employees and contractors interested in volunteering to do so via the
``Volunteer'' link on the Deepwater Horizon Response Unified Command
website. As the beach and wildlife impact could potentially increase,
Shell is actively looking for opportunities to employ groups of trained
volunteers to provide assistance as appropriate.
Statoil
StatOil has offered both spill assistance and drilling and well
competence.
Stone Energy
Stone Energy sent its M/V ``Wisconsin'' to the site the first
night. It was released from service the next morning. Stone has also
offered the use of its MC109 Amberjack platform as needed and stands
ready to assist at any time. Stone Energy is looking into the potential
to organize a group of industry volunteers through Louisiana Volunteers
to Assist Disasters chaired by Margaret Trahan of Lafayette and with
the advice of Dr Keith Ouchley of the LA Nature Conservancy. Stone
Energy has made contributions to the trust (what trust)?
Taylor Energy
On Tues May 4th, Taylor Energy attended a Review of Preliminary
Plans for Well Intersection and Dynamic Kill Operations on MC 252 #3 at
BP's office to provide assistance as a peer Operator. Taylor Energy has
recently drilled five successful intervention wells nearby at MC20
within the last sixteen months, with a sixth intervention well
currently in progress.
Teledyne RD Instruments
Teledyne RD Instruments is providing Acoustic Doppler Current
Profilers (ADCPs) to measure the speed and direction of the currents
for the entire water column around the accident area.
Teledyne is also working with Horizon Marine to do vessel surveys
to measure the size of the plume and help model where and when the oil
slick will go.
Tidewater
Tidewater has 4 vessels assisting the cleanup.
The Damon B. Bankston, was instrumental in the rescue of
the 115 survivors from the rig, and is currently working in spill
response efforts.
Pat Tillman--has been on long term contract with BP and
has carried various tools, equipment, and dispersant to the Macondo
site.
LeBouef Tide--on short term contract supporting BP
operations and the spill response.
War Admiral--on short term contract monitoring loop
currents.
______
The Chairman. Thank you.
Mr. Gerard?
STATEMENT OF JACK N. GERARD, PRESIDENT AND CEO, AMERICAN
PETROLEUM INSTITUTE
Mr. Gerard. Thank you, Mr. Chairman, Ranking Member
Hastings, and members of the Committee.
I am Jack Gerard, the President and CEO of the American
Petroleum Institute. API has over 400 member companies which
represent all sectors of America's oil and natural gas
industry.
Our industry supports 9.1 million jobs including 170,000 in
the Gulf of Mexico related to offshore development business
that provides most of the energy we need to power our economy
and our life along the way.
The tragic and heartbreaking accident in the Gulf was
unprecedented, and our thoughts and prayers continue to go out
to those families who lost loved ones, to the workers who were
injured, and to all of our neighbors in the Gulf who were
affected.
Response to the accident has also been unprecedented. Our
work will not end until we stop the flow of oil, clean up the
environment, understand the causes, and correct them. We owe
that to our employees, to their families, and we owe it to the
country.
Safety is a core value for the U.S. offshore oil and gas
industry. Companies and employees understand the significant
risks of working in the challenging offshore environment and
place a strong focus on safety training procedures and
equipment.
Offshore workers are the first line of defense against oil
spills and other accidents on rigs and platforms. These
hardworking, conscientious professionals are schooled in how to
protect themselves and the environment.
They actively observe each other's behavior and remind
their coworkers about safe operating practices. They work under
a comprehensive suite of regulatory standards and frequent
inspections that further reinforce their safety ethic.
The industry's commitment to safety is real and strong, but
the April tragedy in the Gulf clearly demonstrates there is
more work to be done. All of us realize that we must do better.
The process of improvement has already begun with the
formation of industry task forces which provided input to the
U.S. Department of the Interior on improving offshore equipment
and offshore operating procedures.
Their work will complement Interior's Outer Continental
Shelf's safety oversight board and lead to enhancements to
existing API standards and possibly to new API standards. API
has helped create numerous standards on safety which we provide
free of charge to all. The API standards program is accredited
by the American National Standards Institute, the same
independent organization that accredits programs at some of our
Federal laboratories.
We fully support President Obama's plans for an independent
Presidential commission to investigate the spill. At the same
time, we urge our policy makers to be careful in their approach
so that any policies enacted don't have unintended consequences
for our nation and our recovering economy.
Proposals to halt or restrict offshore energy projects
could result in hundreds of thousands of lost jobs including
many in the Gulf states, billions of dollars of lost government
revenue, and a sharp decrease in our country's energy security.
President Obama and Interior Secretary Salazar struck the
right balance when they recently reaffirmed the importance of
domestic oil and natural gas production to the nation's
strategy for energy and economic security.
We can safely and reliably produce the oil and natural gas
we will need at home. For more than 60 years our industry has
developed the ample natural resources that lie off our coast
and with rare exceptions has done so in a safe environmentally
responsible way.
We will address the safety issues related to this accident
and continue to provide the energy our nation needs keeping
jobs and revenue at home while enhancing our energy security.
It is important to take the time to understand the causes
of the accident as we work to improve the safety and
reliability of offshore oil and natural gas development. This
knowledge will help the industry raise the bar on our
performance and better inform policy choices related to
offshore development.
We will continue to support the Department of the Interior,
other agencies, and the President's independent commission in
their efforts to learn what caused this accident.
Thank you, Mr. Chairman. I look forward to your questions.
[The prepared statement of Mr. Gerard follows:]
Statement of Jack Gerard, President and CEO,
American Petroleum Institute
Good morning Chairman Rahall, Ranking Member Hastings, and members
of the committee.
I am Jack Gerard, President and CEO of the American Petroleum
Institute. API has about 400 member companies, which represent all
sectors of America's oil and natural gas industry. Our industry
supports 9.2 million American jobs--including 170,000 in the Gulf of
Mexico related to the offshore development business--and provides most
of the energy we need to power our economy and our way of life.
The tragic and heartbreaking accident in the Gulf was
unprecedented, and our thoughts and prayers go out to the families who
lost loved ones, to the workers who were injured, and to all of our
neighbors in the Gulf who were affected.
The response to the accident has also been unprecedented. Industry
and government were on the scene immediately and massively. Many
thousands of people have been working long and hard to control and halt
the release of oil and protect the shoreline.
Our work will not end until we stop the flow of oil, clean up the
environment, understand the causes, and correct them. We owe that to
our employees and their families, and we owe it to our country.
Safety is a core value for the U.S. offshore oil and natural gas
industry. Companies and employees understand the significant risks of
working in the challenging offshore environment and place a strong
focus on safety training, procedures, and equipment.
Offshore workers are the first line of defense against oil spills
and other accidents on rigs and platforms. These hard-working,
conscientious professionals are schooled in how to protect themselves
and the environment. They actively observe each other's behavior and
remind their co-workers about safe operating practices. They work under
a comprehensive suite of regulatory standards and frequent inspections
that further reinforce their safety ethic.
The industry's commitment to safety is real and strong, but the
April tragedy in the Gulf clearly demonstrates there is more work to be
done. All of us realize we must do better.
The process of improvement has already begun with the formation of
industry task forces, which provided input to the U.S. Department of
the Interior on improving offshore equipment and offshore operating
procedures. Their work will complement Interior's Outer Continental
Shelf Safety Oversight Board and lead to enhancements to existing API
standards and possibly to new API standards. API has helped create
numerous standards on safety, which we provide free of charge to all.
The API standards program is accredited by the American National
Standards Institute, the same independent organization that accredits
programs at some of our federal laboratories.
A commitment to safety improvement is vital because more domestic
production of oil and natural gas both onshore and offshore is critical
to jobs for Americans, a stronger economy, and enhanced energy
security.
The tragic accident in the Gulf doesn't change the reality that
demand for energy is growing and that we'll need more oil and natural
gas to help meet that demand in the coming decades. Offshore production
from the Gulf of Mexico plays an important role meeting demand today,
accounting for 30 percent of the nation's total domestic oil production
and 11 percent of domestic natural gas production. Approximately 70
percent of the oil and 36 percent of the natural gas produced in the
Gulf come from deepwater exploration.
We fully support President Obama's plans for an independent
presidential commission to investigate the spill. At the same time, we
urge our policymakers to be careful in their approach so that any
policies enacted don't have unintended consequences for our nation and
our recovering economy. Proposals to halt or restrict offshore energy
projects could result in hundreds of thousands of lost jobs, including
many in the Gulf States, billions of dollars of lost government
revenue, and a sharp decrease in our country's energy security.
President Obama and Interior Secretary Salazar struck the right
balance when they recently reaffirmed the importance of domestic oil
and natural gas production to the nation's strategy for energy and
economic security.
Permanently shutting down an entire program or system, whether it's
our interstate highway system, our space program or our airways is
never an option when there's an accident or tragedy. Doing so when it
comes to offshore oil and gas activity shouldn't be an option either.
We can safely and reliably produce the oil and natural gas we'll
need at home. For more than 60 years, our industry has developed the
ample natural resources that lie off our coasts and, with rare
exceptions, has done so in a safe, environmentally responsible way. We
will address the safety issues related to this accident and continue to
provide the energy our nation needs, keeping jobs and revenue at home
while enhancing our energy security.
It is important to take the time to understand the causes of the
accident as we work to improve the safety and reliability of offshore
oil and natural gas development. This knowledge will help the industry
raise the bar on our performance and better inform policy choices
related to offshore development. We will continue to support the
Department of the Interior, other agencies and the President's
independent commission in their efforts to learn what caused this
accident.
This concludes my statement, Mr. Chairman. I welcome questions from
you and your colleagues. Thank you.
______
The Chairman. Thank you.
Dr. Hirshfield?
STATEMENT OF MICHAEL HIRSHFIELD, PH.D., SENIOR VICE PRESIDENT
FOR NORTH AMERICA AND CHIEF SCIENTIST, OCEANA
Dr. Hirshfield. Mr. Chairman and Mr. Hastings, members of
the Committee, thank you for the opportunity to appear before
you today. I would especially like to thank Chairman Rahall and
all of you for your work to address the daunting issues of
energy policy, climate change, and the many threats faced by
our oceans.
My name is Michael Hirshfield. I am the Senior Vice
President for North America and Chief Scientist for Oceana, a
global conservation organization headquartered here in
Washington, D.C.
Oceana's mission is to protect and restore our world's
oceans for the sake of the fish, wildlife, and people that
depend on them. Today I will discuss the need to protect our
oceans from the all too visible threat posed by offshore oil
drilling in the United States.
Last year, Oceana's board member Ted Danson testified
before the full Committee on this subject and our Pacific
Science Director, Dr. Jeffrey Short, testified at a joint
subcommittee hearing.
At both hearings, Oceana stated our opposition to expanded
offshore oil drilling because the risks were too great and the
benefits too small. In light of the Gulf disaster, we call
today on Congress and the Administration to suspend all pending
approvals and ban all new drilling in the Outer Continental
Shelf indefinitely. In place of expanded offshore oil drilling,
the United States should begin the transition to a clean energy
economy.
Mr. Chairman, I wish you didn't have to hold this hearing.
For years the oil industry has told us all that offshore oil
drilling was safe. They repeatedly downplayed the risk and
oversold the benefits.
They tried to convince us that catastrophes like the
deepwater drilling disaster could never happen. I could easily
fill my time with embarrassing industry quotes. I will spare
you that.
Yet we should not have been surprised by this catastrophe.
Just last year a new shallow water drilling rig off the coast
of Australia had a blowout similar to the one in the Gulf.
The Australian rig spewed roughly 17,000 gallons of crude
oil daily into the Timor Sea for about 75 days. As is now
painfully obvious, so-called fail safe mechanisms do fail, and
we lack effective means to stop ongoing oil releases or clean
them up.
I want to make a special point about the risks of drilling
in the Arctic. Imagine this disaster occurring in the ice, in
the dark, in extraordinarily rough seas, and without the
enormous response capability we have seen in the Gulf.
We appreciate the reprieve that President Obama will be
giving the Arctic for this summer, but the fundamental problems
will still remain. The Arctic should be taken off the table for
good as should the rest of our coastlines.
We now hear calls for action to ensure that this will never
happen again. We all wish that could be the case. Let us be
honest, we know another offshore oil drilling disaster will
happen. We don't know when, but it will happen, and it will be
caused by another unexpected combination of technological
failure and human error.
The industry is asking us to play a game of environmental
roulette, and they are taking aim at a long list of targets.
Will we see oil foul the beaches of the Atlantic seaboard next?
The Pacific? The Arctic?
Four years ago, President Bush acknowledged that America is
addicted to oil. Just last week, Senator Murkowski said we all
agree that we need to minimize our use of oil but we will
continue to need it for a long time.
Unfortunately, the conversation seems to be all about how
long we will continue to need it not about when we get serious
about minimizing it. But when do we start?
America's answer so far seems to be we will start tomorrow.
We are acting like the addicted smoker buying just one more
pack of cigarettes promising to quit but never doing it. So
tomorrow never actually comes.
The oil industry's answer is much clearer. They will stop
drilling for oil when all the oil is gone. If it is left up to
the industry, our addiction will never end. So the question
remains will we learn the correct lesson from the deep-water
drilling disaster and finally end our oil addiction?
Oceana urges Congress to take these three steps to set
America on course toward a new energy economy. One, immediately
and indefinitely suspend all approvals, activities, and
processes other than current production related to offshore
drilling.
Two, ban all new offshore drilling and provide permanent
protection for the areas previously subject to moratoria.
Three, pass legislation that provides for a more efficient
clean carbon free energy future that emphasizes the development
of renewable sources of energy.
In closing, I would like to read one more quote again from
President Bush: ``By applying the talent and technology of
America, this country can dramatically improve our environment,
move beyond the petroleum-based economy, and make our
dependence on Middle Eastern oil a thing of the past.'' I
couldn't agree more.
Thank you.
[The prepared statement of Dr. Hirshfield follows:]
Statement of Michael F. Hirshfield, Ph.D.,
Senior Vice President for North America and Chief Scientist, Oceana
Introduction
Thank you for the opportunity to provide testimony before the House
Natural Resources Committee. I want to start by thanking Chairman
Rahall and his fellow committee members for their efforts in addressing
the daunting issues of energy policy, climate change, and the many
threats faced by our oceans and marine life from habitat loss to ocean
acidification. I am the Senior Vice President for North America and
Chief Scientist for Oceana, a global ocean conservation organization
headquartered here in Washington, D.C. that works to restore and
protect the world's oceans. In addition to our headquarters in
Washington DC, Oceana also has staff located in Alaska, California,
Georgia, Massachusetts, New York, Oregon, and Tennessee, as well as
international offices in Belize City, Belize; Brussels, Belgium;
Madrid, Spain; and Santiago, Chile. We have 300,000 members and
supporters from all 50 states and from countries around the globe. Our
mission is to protect our oceans and the fish and wildlife that depend
on them.
Today, I will present testimony regarding the need to protect our
oceans from the increasingly visible threats posed by offshore oil and
gas exploration and development in the United States. The ongoing
Deepwater Horizon drilling disaster is a clear testament that offshore
drilling is a dirty and dangerous business, one that threatens jobs,
both in the fishery and tourism industry, and also one that threatens
public health and the health of marine ecosystems.
Oceana testified in front of the House Natural Resources committee
twice last year on this very issue. Our board member, Ted Danson,
testified before the full Committee, and our Pacific Science Director,
Dr. Jeffrey Short, testified at a joint hearing of the Subcommittee on
Energy and Mineral Resources and Subcommittee on Insular Affairs,
Oceans and Wildlife. In both instances, Oceana stated clearly and for
the record that we oppose the expansion of offshore oil and gas
drilling. (Testimonies of Ted Danson and Dr. Jeffrey Short attached
hereafter as Appendix A and Appendix B).
Today, we echo that call and take it a step further: we must
suspend all pending approvals and ban all new drilling in the Outer
Continental Shelf indefinitely. In place of expanded offshore oil and
gas activities, the United States should begin the transition to a
clean energy economy. By pursuing carbon-free alternatives, such as
offshore wind and solar energy, combined with conservation and fuel
efficiency improvements such as those contemplated by President Obama's
announcement last week, the U.S. can step away from the frenzied
pursuit of offshore drilling, which has demonstrably put our vital
ocean ecosystems at risk. The United States should promote clean energy
industries that will allow us to finally break our fossil fuel
addiction, stimulate our economy and become an exporter of energy
technology. And by doing so, we can stop placing the profit interests
of the oil industry above those of the fishing industry, the tourism
industry, human health and well being, and marine ecosystems.
Lessons from the Deepwater Horizon Drilling Disaster
The Deepwater Drilling Disaster in the Gulf of Mexico is a tragedy
for the families of the workers killed, the ocean ecosystem, and
coastal economies. It clearly illustrates to us that the business of
offshore drilling is dirty and dangerous.
As Congresswoman Donna Edwards, from my home state of Maryland,
said so eloquently, ``You can't stop the spilling, until you stop the
drilling.'' Now more than ever, it is time for the U.S. to recognize
that the risks of offshore drilling far outweigh the benefits it may
provide. Despite the oil industry's statements, disasters like this
will happen again unless we act to prevent them.
Our oceans give essential protein to nearly half the world's
population. United States recreational and commercial fisheries
combined supply over 2 million jobs. Coastal tourism provides 28.3
million jobs and annually generates $54 billion in goods and services.
More drilling means more oil spills, more lost jobs, more contaminated
beaches, and more ecosystem destruction. Our marine ecosystems and the
communities that depend on them are threatened by the short and long
term toxic effects of oil.
Oil spills happen. These spills range from small, steady leaks to
large catastrophic blowouts and they occur at every stage in oil
production from the exploration platform to the oil tanker to the
pipeline and storage tanks. The impacts to fish and wildlife and
coastal communities are numerous and well documented. To date, the
Deepwater Drilling Disaster has pumped millions of gallons of toxic oil
in to the Gulf of Mexico.
The spill resulting from the Deepwater Drilling Disaster threatens
Gulf coastlines from the Louisiana Bayou to the Florida Keys. The
resulting oil slick now covers almost 16,000 sq miles of ocean.
Fisheries have been closed in state waters of Louisiana, and over
48,000 square miles of federal waters have been closed to commercial
fishing. The damage has only begun, and we may not know the true cost
of this catastrophe for many years or possibly decades.
For the past month, millions of gallons of oil have gushed into the
Gulf of Mexico, overwhelming all available response capability. More
than 800,000 gallons of toxic dispersants have been applied at the
surface and below it. Federal officials are still struggling to obtain
accurate information about the spill's impacts. What is certain is that
there will be impacts. More than one month in, responding agencies
still have more questions than answers.
Staff of the National Marine Fisheries Service, the National Ocean
Service, and the U.S. Fish and Wildlife Service have all publically
expressed concerns about the movement of oil and oil dispersal
contaminants to upland habitats and their effect on estuarine and
freshwater habitats.
The timing of the spill coincides with the loggerhead sea turtles'
migration from foraging grounds to nesting grounds. The historic
average of sea turtle strandings for the month of May is 47. The
current turtle stranding rate is significantly higher than past rates.
The cause of mortality is still unknown for many of the turtles, but
the corpses have been taken for necropsy. Since April 20th, there have
been 162 sea turtle strandings in the Gulf of Mexico in which 156 sea
turtles have died. Most of the stranded sea turtles were juvenile
Kemp's Ridley.
This spill will impact the drifting pelagic community and near
shore species such as snapper, grouper, Spanish and King mackerel, and
shrimp. Since April 20th, there have been 12 bottlenose dolphin
strandings, all 12 of which died.
Both onshore and open ocean species of birds are vulnerable to the
impacts of oil. Depending on where the oil reaches shore, beach
nesters, such as terns and plovers and marsh dwellers are vulnerable.
Even if oil doesn't end up in nesting habitat, other indirect impacts
could result, such as effects on food supply.
Much of the wildlife impact will remain unseen. Oil can have long
term effects on feeding, reproduction and overall health of the animal.
Also, put simply, many of the carcasses simply will not wash ashore.
Nevertheless, we are now beginning to see the first images of seabirds,
sea turtles, and other species affected by oil. Unfortunately, these
images, and the harm to ocean life that they portray, will be
continuing for the foreseeable future.
The economic impacts on the Gulf Region's commercial and
recreational fisheries could be staggering. Gulf fisheries are some of
the most productive in the world. In 2008, according to the National
Marine Fisheries Service, the commercial fish and shellfish harvest
from the five U.S. Gulf states was estimated to be 1.3 billion pounds
valued at $661 million. The Gulf also contains four of the top seven
fishing ports in the nation by weight and eight of the top twenty
fishing ports in the nation by dollar value. Commercially-important
species and species groups in the Gulf of Mexico include: blue crab,
stone crab, crawfish, groupers, menhaden, mullets, oyster, shrimp, red
snapper, and tunas.
Gulf landings of shrimp led the nation in 2008, with 188.8 million
pounds valued at $367 million dockside, accounting for about 73% of
U.S. total. Louisiana led all Gulf states with 89.3 million pounds.
State waters in Louisiana are now closed to fishing and 48,005 sq mi of
federal waters, which is just under 20% of the Gulf of Mexico exclusive
economic zone, are closed to fishing. The Gulf also led in production
of oysters in 2008 with 20.6 million pounds of meats valued at $60.2
million and representing 59% of the national total.
The Benefits of Offshore Drilling are not Worth the Risks
While the oil industry clearly stands to benefit from offshore
drilling, we all bear the risk. In this case, BP has transferred a
tremendous amount of risk to residents of the Gulf coast in exchange
for no clear benefits. Although offshore oil and gas production can
have tremendous impacts on marine life, it will not contribute
significantly to lower prices at the pump or energy independence.
Offshore Drilling Provides No Relief from High Gasoline Prices and Will
Not Create Energy Independence.
Additional offshore oil drilling will not lower gas. In 2009, the
United States Department of Energy (DOE) estimated that by 2030,
gasoline prices would be only three pennies less than if previously
protected ocean areas remained closed.
The U.S. Department of Energy predicts has found that at peak
production in 2030 drilling in the Atlantic, Pacific and Eastern Gulf
of Mexico would produce 540,000 barrels a day, which would account for
2.5 percent of daily energy demand in the United States. Thus,
regardless of the oil produced offshore, the United States will still
import the vast majority of its oil from other countries. The increased
production will not diminish this dependence or prices at the pump
significantly. The United States Department of Energy (DOE) estimates
that even if we opened all offshore areas to drilling, the U.S. would
still import about 58% of its oil supply. Currently, about 62% of the
crude oil supplied to the United States comes from foreign sources,
with the top two suppliers being Canada and Mexico. The United States
simply does not have enough domestic oil to reduce its dependence on
imports, much less to fulfill its demand.
The only way to become truly energy independent is to end our
addiction to oil. The best way to eliminate foreign oil dependence is
to eliminate dependence on all oil by developing alternative sources,
rapidly switching to plug-in and electric vehicles and phasing out oil
consumption in other portions of our economy like home heating and
electricity generation.
Additionally, the development of offshore wind energy off of the
East Coast and Great Lakes could create thousands of jobs. Europe
already has 19,000 people employed in the offshore wind industry and
the European Wind Energy Association expects nearly 300,000 to be
employed by the offshore wind industry by 2030. We should be demanding,
and our energy policy should be promoting, similar job growth here in
the United States. It has been estimated that a $1 million investment
in energy efficiency and renewables creates three times the number of
jobs created if that same $1 million was invested in the oil industry.
The plain facts speak for themselves--expanded drilling will not
lower gas prices or make us energy independent. The Deepwater Drilling
Disaster illustrates that the harm posed by oil and gas activities in
the Outer Continental Shelf dramatically outweighs any perceived
benefits that can be gained by expanding drilling.
Oil and Gas Activities have Tremendous Impacts on Marine Life
Accidents inevitably accompany all stages of offshore production,
and these accidents can be catastrophic. We are now seeing in the Gulf
of Mexico that there is no available technology or capability to
respond to a spill, particularly a gusher of the magnitude we are
witnessing in the Gulf.
We should not be surprised by the Deepwater Drilling Disaster. Well
blowouts are certainly not uncommon, and even the latest advances in
drilling technology have not prevented them.
On 21 August, 2009, the Montara oil rig suffered a blowout and
began spilling oil. The well was located in 250 ft of water, between
East Timor and Australia. It took four attempts over ten weeks to block
the leak and it was eventually stopped when mud was pumped into a
relief well. The Australian Department of Resources, Energy and Tourism
estimated up to 2,000 barrels per day (or up to 85,000 gallons) were
spilled over that time, five times the estimate given by the
responsible party, the PTT Exploration & Production Public Company
Limited. In the end, the Wilderness Society estimated the oil slick to
have affected 19,000 square miles of ocean.
The Deepwater Drilling Disaster is not an isolated incident and
offshore oil drilling remains extremely dangerous. Since 2006, the
United States Minerals Management Service (MMS) has reported at least
21 offshore rig blowouts, 513 fires or explosions offshore and 30
fatalities from offshore oil and gas activities in the Gulf of Mexico.
Additionally, in 2007 the MMS reported that from 1992 to 2006 there
were 5, 671 wells drilled, and 39 blowouts. It is important to note
that these blowouts occurred at a variety of depths and in a variety of
environments. A blowout is not a rare occurrence, and it can happen
anywhere, not just in the deep waters of the Gulf of Mexico.
Once a spill occurs, little can be done to clean it up. According
to the National Academy of Sciences, ``No current cleanup methods
remove more than a small fraction of oil spilled in marine waters,
especially in the presence of broken ice.'' We have been drilling in
the Gulf of Mexico for more than 60 years. Although we are using the
latest advances in drilling technology, pushing the limits of the
physical environment, the Deepwater Drilling Disaster shows that we
still lack the technology and planning to effectively respond to large
oil spills. As Robert Bea, a professor at U.C. Berkeley and former
Shell employee stated, ``we are still chasing it around with Scott
towels.''
Industry would have us believe that the process of offshore oil and
gas extraction is completely benign. Consider this statement made by
the American Petroleum Institute in a 2009 letter to the Committee on
Natural Resources:
``Over the past 40 years, improved practices and equipment have
enabled the industry to significantly strengthen its offshore
environmental performance and meet or exceed federal regulatory
requirements.''
Or these by David Rainey, Vice President, Gulf of Mexico
Exploration BP America Inc., in his testimony to the Senate Energy and
Natural Resources Committee on November 19, 2009.
``Advances in drilling technologies and production systems have
been significant. They include extended reach drilling,
drilling in deeper waters, and to greater depths. These
advances enable more production while reducing environmental
impacts and allowing for efficient use of existing facilities
and infrastructure.''
``Many of the technology examples discussed . . . have enabled
a robust track record of environmental stewardship and can
reduce or even eliminate the visual ``footprint'' of offshore
energy operations.''
But offshore drilling isn't safe just because the industry says it
is. We can all see with our own eyes that there are limits to the oil
industry's accident prevention capability--whether they are
technological or managerial limits, the industry simply cannot
guarantee safe operation.
As Oceana's Jeff Short, one of the world's experts on the chemistry
of oil and its impacts, stated in his testimony at that same Senate
Committee hearing in November, 2009:
Oil development proposals in the marine environment are often
presented and discussed as engineering challenges, without
sufficient regard for the complexity of the environment in
which they would occur, or the often dubious assumptions
implicit in assessments of environmental risks and cleanup and
mitigation technologies. Oil spill contingency plans are
treated as exercises in damage control, taking for granted that
not all damage can be controlled, and based on the faulty
assumption all potential outcomes are adequately understood,
predictable, and manageable. The truth of the matter is that
our understanding of how oil behaves in the environment, the
ways it affects organisms, and how well response and mitigation
measures actually work in the field is still largely unknown.
The Deepwater Drilling Disaster shows us that current technology
and regulation cannot prevent what we now know is inevitable--a major
spill of oil into the marine environment, and one which is to date
beyond our ability to control.
The Arctic is Particularly Vulnerable--and Response Capability is
Nonexistent
The risks from these activities are particularly acute in the
Arctic, where the oceans play a critical role in the culture of Native
peoples, there is little available response, rescue, or clean-up
capability, and little information about the environment or impacts
from oil development is available (see Appendix B)
Because there is a significant lack of information, both from
western science and documented local and traditional knowledge of
Arctic peoples, it is impossible to ensure that exploration drilling
will not harm the health of Arctic marine ecosystems or opportunities
for the subsistence way of life. Managers do not have the baseline
information needed to conduct quantitative risk assessments of
activities or, if a spill were to occur, assess impacts to hold
companies accountable for damages. This lack of information is evident
in the cursory and general environmental reviews that have been
conducted and the errant generalizations that the Minerals Management
Service (MMS) has made.
Further, response, rescue, and clean-up capabilities are virtually
nonexistent for the challenging conditions in Arctic waters, which can
include sea ice, stormy seas, extreme cold temperatures and long
periods of darkness. There is no demonstrated capability to clean up
spilled oil in icy waters. The nearest Coast Guard response and rescue
vessels would be nearly 1,000 miles away, and the Coast Guard has
stated publicly that it could not respond to a spill. Particularly
given the fact that we must dedicate all available resources to
limiting damage in the Gulf of Mexico, it would be irresponsible to
allow parallel risky activities in Arctic waters.
It would be impossible to quickly mobilize additional emergency
spill response vessels into the Arctic Ocean due to the area's
remoteness and difficult operating conditions. As Commandant Thad W.
Allen, National Incident Commander for the coordinated response to the
Deepwater Horizon blowout, testified before a Senate committee last
August, the Coast Guard has ``limited response resources and
capabilities'' in the event of a major spill in the Arctic Ocean. In
comparison, BP reported that it had mobilized response vessels,
including 32 spill response vessels with a skimming capacity of more
than 170,000 barrels per day and an offshore storage capacity of
122,000 barrels within forty-eight hours of the Deepwater Horizon
blowout. On the morning of May 16, Unified Command reported that ``650
response vessels were responding on site, including skimmers, tugs,
barges and recovery vessels . . . in addition to dozens of aircraft,
remotely operated vehicles and multiple mobile offshore drilling
units.'' It would be impossible to deploy the same resources that
quickly in the Arctic. Yet, despite this massive mobilization of
resources, the oil gushing from the Deepwater Horizon blowout remains
unchecked to date.
The events surrounding the Deepwater Drilling Disaster provide
significant new information that requires the Minerals Management
Service (MMS) to reanalyze Shell's drilling plans. The new information
goes to the heart of the decision to approve Shell's plans, and
accordingly the approval of any drilling should be suspended pending
reconsideration of the environmental analysis in light of the Deepwater
Horizon spill.
Shell has made efforts to distinguish its proposals from the Gulf
tragedy. It is clear, however, that the same technologies and standards
that failed so tragically in the Gulf have been or will be applied in
the Arctic. (See Appendix C, Final Response to Shell, May 19, 2010)
Given the obvious deficiencies and commitment to wholesale reevaluation
of our oil and gas program, there is no reason to allow Shell to take
these risks with our Arctic resources. The Deepwater Horizon was an
exploration well, just like those proposed by Shell for this summer.
Moreover, MMS's approvals were made using the same standards and
processes that allowed the Deepwater Horizon tragedy and under the same
cloud of collusion that has been revealed by the GAO, New York Times,
and other media outlets. (See Appendix D, Offshore Oil and Gas
Development: Additional Guidance Would Help Strengthen the Minerals
Management Service's Assessment of Environmental Impacts in the North
Aleutian Basin, Government Accounting Office, March 2010, attached
hereafter; see also Appendix E, William Yardley, Arctic Drilling
Proposal Advanced Amid Concern, New York Times, May 19, 2010, attached
hereafter; see also Appendix F, Juliet Eilperin, U.S. agency overseeing
oil drilling ignored warnings of risks, Washington Post, May 24, 2010.)
It is Time to Kick the Habit and Move to a Clean Energy Economy
It is clearly time for a bold Congressional effort to transition
America into its much needed clean energy future. In doing so, Congress
should focus in part on clean sources of ocean energy such as wind,
solar, and geothermal power. The Deepwater Drilling Disaster shows us
that now, more than ever, our oceans and the communities that rely on
them on a daily basis need a clean energy future. Future generations of
Americans deserve oil free beaches and oceans that are an abundant
source of food, wildlife and clean energy.
The Deepwater Drilling Disaster presents us with a glimpse of what
our oil addiction is doing to our country. It is costing us jobs,
valuable destroying natural resources and distracting us from
developing innovative new technologies that can empower us both by
lighting our homes and stimulating our economies.
The United States Department of Energy has projected that we can
generate 20% of electricity demand from renewables by 2030. Offshore
wind could provide 20% of this amount. Supplying even 5 percent of the
country's electricity with wind power by 2020 would add $60 billion in
capital investment in rural America, provide $1.2 billion in new income
for farmers and rural landowners, and create 80,000 new jobs. This
effort has started, as the United States added enough wind power in
2007 alone to provide electricity to more than a million homes.
Let's stop pretending that offshore drilling lowers the price of
gasoline. A more effective way to bring down the price of gasoline--
without the risks of catastrophic environmental and economic damage--is
to raise fuel economy standards for new cars and trucks sold in the
United States, as called for last week by President Obama. Making cars
that get 35.5 miles per gallon of gas, as federal regulations will
require, will save a dollar per gallon by 2030. Compare this with the 3
cents a gallons savings the EIA says drilling all our offshore oil
reserves will bring over that same period. We should be working as
rapidly as possible to electrify our transportation and home-heating
systems, using electricity provided by carbon-free sources like wind
and solar.
Congress could make tremendous progress in creating a new energy
economy right now by passing legislation that would stimulate this
process. For example, setting a Renewable Electricity Standard (RES)
would cut harmful carbon emissions while creating jobs and saving
consumers' money, reducing costs for utilities and consumers. A strong
RES, such as mandating that 25% of electricity should be generated from
renewable sources by 2025, can stimulate domestic investment in new
renewable energy throughout the nation, creating jobs and income in
rural areas, as well as in the high tech and manufacturing sectors. An
RES would reduce the need to drill for onshore and offshore natural gas
or to build new supporting infrastructure for these activities such as
drilling rigs, pipelines, terminals and refineries.
It is critical that Congress continue to promote legislation that
provides direct and substantial investment in clean energy component
manufacturing to ensure that an adequate supply chain for goods
essential to the renewable energy industry is created in the U.S. This
legislation must direct federal funding for clean energy manufacturers
to retool their facilities and retrain their workers to develop,
produce, and commercialize clean energy technologies.
Recommendations
And so, today, on behalf of Oceana, I ask you to take three
important steps that will steer our country in the right direction
toward energy independence based on renewable, carbon-free energy
sources and lasting protections for our coastal and marine
environments.
The tragic events unfolding in the Gulf of Mexico have focused the
nation's attention on the consequences of our addiction to oil. We need
to understand what led to the BP blowout and spill and to prevent it
from happening again. We need to understand not only the engineering
problems of blowout preventers and potentially criminal behavior on the
part of one or more corporations, but also the systemic regulatory
failures of MMS to provide needed environmental impact analysis,
appropriate industry oversight, and meaningful enforcement.
President Obama has appropriately pledged to task a special
commission to undertake a thorough investigation and analysis of the
failures that resulted to the Deepwater Horizon disaster. Damage from
the ongoing oil spill in the Gulf of Mexico may last for generations,
and a quick 30-day review is clearly not sufficient to credibly address
the many technical and regulatory concerns that have been brought to
light by this spill.
I. Immediately and indefinitely suspend all approvals, activities, and
processes--other than current production--related to offshore
drilling.
It is imperative to allow sufficient time for the President's
commission and other investigative bodies to complete their
investigations of the failures that led to the ongoing BP blowout and
to apply the lessons learned from this disaster to prevent such a
tragedy from ever happening again. For that reason, we must immediately
suspend all approvals, activities, and processes--other than current
production--related to offshore drilling. That suspension should remain
in place while the independent review called for by the administration
takes place and all changes recommended by it are implemented. All
approvals already granted must be re-evaluated based on the new
information gathered by the commission and using any new processes
recommended.
The most immediate and dramatic need is to suspend approval for
drilling in the Arctic Ocean. The Minerals Management Service approved
Shell's plans to drill exploration wells in the Chukchi and Beaufort
Seas this summer. For the same reasons, proposals to open areas off the
east coast of the United States must be put on hold indefinitely. We
should not be considering opening new areas to leasing when it is clear
that we cannot control companies that own leases on currently open
areas.
To reiterate, Congress and President Obama must immediately and
indefinitely suspend all approvals, activities, and processes--other
than current production--related to offshore drilling. That process
should begin with suspension of the approvals for Shell's exploratory
drilling plans in the Chukchi and Beaufort Seas.
II. Ban new offshore drilling in the Outer Continental Shelf (OCS) and
permanently protect all areas currently closed to leasing.
Since 1982, Congress and the President banned oil and gas leasing
on much of our coasts. Those moratoria were allowed to lapse amidst the
rancor of political campaigning in the last three years. Those
protections should be restored and made permanent. This year's
catastrophic disaster in the Gulf of Mexico illustrates that a ban on
new drilling is essential to ensuring that a similar fate does not
befall our other coasts, which, like the Gulf of Mexico, support
important national assets in the form of valuable coastal economies and
marine environments. As disturbing as this catastrophe has been for all
of us, we need to make sure it never happens again. Congress should
exercise its authority to permanently ban drilling offshore.
III. Finally, Congress must continue to pursue legislation that
provides for a more efficient, clean, carbon-free, energy
future that emphasizes the development of renewable energy.
By providing incentives for investments in clean energy such as
offshore wind we could achieve the goals outlined above and possibly
more. We could generate more energy, at a lower cost, from Atlantic
offshore wind farms than from drilling all the oil in the Atlantic OCS
areas. East Coast offshore wind electricity generating potential could
supplant 70% of the East Coast's fossil-fuel generated electricity
supply. Providing this quantity of clean energy could cut 335 million
metric tons of carbon dioxide emissions annually--while limiting the
risk of exposure to highly volatile energy expenses and creating three
times as many jobs as offshore oil and gas development.
Summary
We must dramatically change course and move forward toward a future
in which we rely upon affordable, carbon-free, renewable energy and end
our dependence on oil. A ``teachable moment'' is upon us. What will we
learn from the Deepwater Drilling Disaster? Ultimately, it is
imperative for the United States to shift toward a future in which we
rely upon affordable, carbon-free, renewable energy; one in which our
oceans and the environment are healthy, and one that ensures our
freedom from oil dependency. Part of this effort must include an
emphasis on development of carbon-free technologies, including wind and
solar power, in conjunction with improved energy efficiency.
Oceana urges the United States Congress to act swiftly to set up a
rational policy to protect our oceans and the economies that depend on
them from the impacts of offshore oil and gas drilling. Specifically,
in light of Deepwater Drilling Disaster, Congress should take the
following essential steps to set America on course toward a new energy
economy:
Immediately and indefinitely suspend all approvals,
activities, and processes--other than current production--related to
offshore drilling.
Ban all new offshore drilling and provide permanent
protection for the areas previously subject to congressional and
presidential moratoria.
Pass legislation that provides for a more efficient,
clean, carbon-free, energy future that emphasizes the development of
renewable sources of energy.
In the wake of the Deepwater Drilling Disaster, it is clear that
none of the response options are good ones. What we have seen so far--
burning the slick, use of toxic dispersants, booms and skimmers, a
cofferdam, and a siphon--are all either lose-lose propositions or long
shots that don't come close to stopping the spill, much less cleaning
it up. Even stopping it at this point would be little solace to those
depend on the oceans. We must avoid repeating this ``no good option''
predicament in the future, and we urge Congress to take the necessary
steps outlined above to do so.
[NOTE: Attachments have been retained in the Committee's official
files.]
______
The Chairman. Thank you.
Dr. Foss?
STATEMENT OF MICHELLE MICHOT FOSS, PH.D., HEAD OF THE CENTER
FOR ENERGY ECONOMICS AND CHIEF ENERGY ECONOMIST, UNIVERSITY OF
TEXAS
Dr. Foss. Mr. Chairman and members of the Committee on
natural resources, I am Michelle Michot Foss, Chief Energy
Economist and Head of the center for Energy Economics based in
the Bureau of Economic Geology Jackson School of Geosciences at
the University of Texas.
Perhaps more importantly today I am a South Louisiana
native, so you can imagine how I feel about a lot of the things
that have happened over the past few weeks.
In April 2004, I presented testimony on the importance of
research and development, ultra deep water exploration and
production activities. I am going to try to make my remarks as
dispassionately as I can.
As an economist, I think that there are immeasurable
benefits of hydrocarbons in our economy, the use of oil and gas
in our economy not only in the United States but worldwide.
If we were to take everything out of this room that was
made in part from or through the use of hydrocarbons, there
would be nothing left. It has been that way for a long time.
There is a tremendous amount of energy contained in these
molecules that is why they are so important. That is why human
beings have used them so widely. That is why the energy
challenge we face is so difficult. It is why the economic
tradeoffs are so tough. It is why the decisions are so
important.
I have four key points to present to the Committee as you
make your deliberations. We have large resource endowments, but
our reserves have to be replenished. This is what drilling is
all about.
Exploration and production activities are designed to take
what we believe exists and resources and convert them into
proved reserves that we can produce and use everyday.
The industry has done that steadily. Just looking at oil we
have produced since 1900 and used 197 billion barrels of oil in
the United States economy alone while increasing our reserve
base through industry activities, and that is using U.S.
Government data from the Energy Information Administration.
The second key point is that domestic reserve replenishment
is linked to economic benefits. At this point in time in this
situation, people have not had a chance to take a look closely
at the economic impacts associated with some of the ideas that
are being proposed to band drilling.
The closest thing is a report that was completed and
submitted in February of this year under the umbrella of the
National Association for Regulatory Utility Commissioners using
the National Energy Modeling system, which is maintained by the
U.S. Energy Information Administration.
That report gives us an idea of the amount of resources and
reserves remaining in our continent alone, which is
substantial. It also gives us some ideas of the economic
effects of maintaining moratoria, and we can translate that
information into the likely effects of what would be considered
through some of the things that are being discussed.
Through 2030, the research found nearly 13 million jobs
less than what we would have in a base case, a roughly 17
percent increase in average natural gas prices, a roughly three
percent increase in gasoline prices, a roughly five percent
increase in electricity prices, reductions in real disposable
income, increases in energy costs for a variety of different
kinds of energy consumers.
Of course, this is why, as was pointed out earlier by one
of the members of the Committee, this is why these decisions
are so important. The oil and gas industry as has been stated
already is a very important part of the economy of the Gulf
Coast.
The economic implications of reducing drilling or banning
drilling would have a large and substantial effect on all of
the communities and the states' economies that would be
difficult to remediate.
The third point is the impact of energy costs including the
costs of alternatives on households. A great deal of work has
been done on this front over the years.
Since 2000 roughly, 2001, for households that are roughly
$50,000 in income, energy costs rose to about 20 percent of the
share of household disposable income, so you can get an idea of
people who would be most heavily affected by this.
My final point, point four, future sustainability of the
oil and gas industry must be assured. Everything that I have
said in no way alleviates anyone from any of the responsibility
of doing the right thing, whether it is the private sector or
the public sector.
People have to operate responsibly. They have to develop
best practices not only in this country but worldwide because
we are not the only country that is pursuing oil and gas
resources offshore or in deeper waters.
I believe that there are ways of developing technologies to
ensure that the industry can continue to progress. I have
provided some ideas of that in testimony.
I think they required careful thought, sincere stewardship,
careful research, careful development, and deployment of the
right kinds of practices.
Regulating any industry is a tough job. Overseeing
government activities is also a tough job, and these are all
things that everyone really has to really work hard to get done
the right way.
But in the end, I think we will able to find solutions to
these problems and continue to benefit from the power of the
resources that are ours to use as human beings.
Thank you very much.
[The prepared statement of Dr. Foss follows:]
Statement of Michelle Michot Foss, Ph.D., Chief Energy Economist and
Head, Center for Energy Economics, Bureau of Economic Geology, Jackson
School of Geosciences, University of Texas
Mr. Chairman and members of the Committee on Natural Resources, I
am Michelle Michot Foss, Chief Energy Economist and Head of the Center
for Energy Economics, based in the Bureau of Economic Geology, Jackson
School of Geosciences at The University of Texas. I am pleased and
honored to be selected as a witness for the Committee. However, I had
not expected that, in my career, I would be called upon to present
evidence of the economic value and importance of domestic oil and
natural gas production to the United States and the Gulf Coast in such
a manner. These are extraordinary circumstances and an extraordinary
time.
As a Louisiana native with deep roots in Acadiana, and as a
resident of Houston, Texas, let me first say on behalf of myself and my
research team, our UT community, our industry and government supporters
and colleagues and my family and friends in Lafayette and south
Louisiana: our hearts go to the families of those lost in the Deepwater
Horizon tragedy. This should be foremost in everyone's minds. As well,
our hearts and minds should be focused on all of those whose lives and
livelihoods are affected by this event and it is from that perspective
that I present my testimony.
On April 29, 2004 I presented testimony before the House
Subcommittee on Energy and Air Quality on Ultradeep Water Research and
Development: What Are the Benefits? I know that there are astounding
and almost immeasurable benefits associated with the discovery and
utilization of oil and natural gas resources in our deep water
provinces in the U.S. and around the world. There are astounding and
almost immeasurable benefits associated with oil and gas production
from all of our onshore basins. These benefits are hugely difficult to
replace--thus the intensity of debate in our country and worldwide
about how we will best meet our energy needs into the future. The size,
scope, diversity, inventiveness, determination and diligence of our oil
and gas enterprises, from smallest to largest, and the men and women
who work in them are attributes that other countries strive to emulate.
We know this from direct experience. Finally, to meet and move beyond
this current challenge will require thoughtful, careful, sincere
stewardship from all facets of industry, government and civic
leadership. That is where the American people need to concentrate our
efforts.
The charter for these oversight hearings is broad. Domestic oil and
gas production plays a vital role in our economy, ranging from domestic
energy and economic security to myriad, rich scientific benefits.
Future sustainability of the industry must be assured. I present four
key points for the Committee's consideration.
1. We have large resource endowments, but our reserves must be
replenished.
Of critical importance is replenishment, the ability to convert
resources to proven reserves and replace the oil and gas that we
consume each year. Using publicly available data from the U.S. Energy
Information Administration (USEIA), the productivity of America's vast
oil and gas industry base is easily demonstrated. Since the beginning
of last century, Americans consumed 197 billion barrels of domestically
produced crude oil even as the industry continued to find and add
reserves, resulting in a 2008 reserve base that was orders of magnitude
larger than known proved reserves in 1900. In similar fashion, our
known, proven stocks of natural gas have increased as domestic
production and consumption surged following World War II. With recent
successes in our continental shale gas basins, drilling in the Gulf of
Mexico deep shelf and deep water plays we expect proved natural gas
reserves to remain robust. Overall, on a barrel of oil equivalent
basis, the U.S. remains the largest producer and reserve holder in the
world. Looking further ahead to energy frontiers, the same methane
hydrate crystals that impeded containment of oil from the Macondo well
drilled by Deepwater Horizon could offer a potential, clean fossil fuel
source well beyond any time horizon we can imagine.
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2. Domestic reserve replenishment is linked to economic benefits.
Replenishment of U.S. reserves of crude oil and natural gas
generates economic benefits as domestic exploration and production
proceeds. Availability, conversion and delivery of these energy
resources provide competitively priced energy supplies fostering
economic development and income growth.
Prior to the Deepwater Horizon incident, the National Association
of Regulatory Utility Commissioners (NARUC), acting as an umbrella
organization for many collaborating organizations and companies
released a major review, Analysis of the Social, Economic and
Environmental Effects of Maintaining Oil and Gas Exploration and
Production Moratoria on and Beneath Federal Lands. The analysis for the
NARUC committee was undertaken by SAIC and the Gas Technology Institute
using the USEIA's National Energy Modeling System (NEMS). I and many
others served as external advisors for the moratoria study effort. The
final report is available via www.naruc.org.
This study effort focused on questions regarding federal lands that
are subject to various restrictions or for which policies are not
formulated to provide access for drilling. However, importantly for
these hearings, the data in this new study can provide insights on
energy availability, cost and economic consequences of policy and/or
regulatory actions that would limit or ban domestic oil and gas
development. Key findings were as follows.
A review of all available data and information for both
moratoria and non-moratoria areas suggests that the natural gas
resource base is estimated to increase by 132 trillion cubic feet (Tcf)
onshore and 154 Tcf offshore (excluding parts of Alaska as detailed in
the final report); the offshore crude oil resource base is estimated to
increase by 37 billion barrels of oil (Bbo, excluding parts of
Alaska19); the onshore crude oil resource base is estimated to increase
by 6 Bbo for the Arctic National Wildlife Refuge (ANWR), with no
estimated increase in the Lower-48 resource base. With these additions,
GTI estimates the current resource base to increase from 1,748 Tcf to
2,034 Tcf for gas and from 186 Bbo to 229 Bbo for oil. The increases
are driven by two primary factors: the increased shale gas activity and
development successes, and an increase in resource estimates for the
currently restricted offshore areas to better reflect the impact of new
technology and successes in the currently available and developed
offshore areas.
The study committee and advisors tested a number of
scenarios (to 2030) associated with keeping moratoria in place, and
which provide some guidance should domestic oil and gas drilling
decline.
Domestic crude oil production projected to decrease by
9.9 billion barrels, or nearly 15 percent per year, on average.
OPEC imports projected to increase by 4.1 billion
barrels, or roughly 19 percent per year on average, resulting
in increased cumulative payments to OPEC of $607 billion ($295
billion on a net present value or ``NPV'' basis).
Domestic natural gas production projected to decrease by
46 Tcf or 9 percent per year on average.
Net natural gas imports (both as liquefied natural gas
or LNG and as pipeline deliveries) projected to increase by
nearly 15.7 Tcf or almost 75 percent.
Employment in energy intensive industries projected to
decrease by nearly 13 million jobs, an average annual decrease
of 0.36 percent.
Energy prices projected to be higher: annual average
natural gas prices increase by 17 percent; annual average
electricity prices increase by 5 percent; annual average motor
gasoline prices increase by 3 percent. More renewables would be
used adding to the higher cost of delivered energy.
Real disposable income projected to decrease
cumulatively by $2.34 trillion ($1.16 trillion NPV or $4,500
per capita), an annual average decrease of 0.65 percent.
Energy costs to consumers projected to increase
cumulatively by $2.35 trillion ($1.15 trillion NPV or $3,700
per capita), an annual average increased cost of 5 percent.
Import costs for crude oil, petroleum products, and
natural gas are projected to increase cumulatively by $1.6
trillion ($769 billion NPV), an annual average increased cost
of over 38 percent.
Gross domestic product (GDP) projected to decrease
cumulatively by $2.36 trillion ($1.18 trillion NPV), an annual
average decrease from the base case of 0.52 percent.
Using 2007 data, PriceWaterhouseCoopers estimated that the more
than nine million employees, $558 billion in labor income and $1
trillion in total value added by the domestic oil and gas industry
constituted more than 5 percent of U.S. total employment, more than 6
percent of U.S. total labor income and more than 7 percent of U.S.
total value added, respectively. However, this study did not account
for the GDP effects utilizing oil and gas in our energy systems as
inputs to other goods and services, nor did PWC attempt to measure the
GDP impact of goods manufactured from oil and gas feedstocks or
economic effects of exporting these goods. Finally, PWC did not attempt
to estimate economic benefits of U.S. oil and gas industry investments
abroad, or the total contribution in taxes, royalties and other fees
paid by the oil and gas industry to all government jurisdictions as
well as public (including federal) and private mineral owners. All of
these benefits would push the total economic value of the U.S. industry
into the trillions of dollars and a substantial chunk of U.S. GDP.
Of great concern is the impact on livelihoods associated with my
home state's commercial and recreational fisheries and seafood
businesses. A widely quoted estimate of the value of Louisiana's
seafood industry is $3 billion. This is vital to the coastal
communities and families that depend on these activities. But even more
vital and much, much larger are the employment, income and tax revenue
benefits associated with Louisiana's and the Gulf Coast region's oil
and gas businesses. To understand the full scale of negative
consequences and social displacement that could result from a sharp
drop in drilling activity one has only to investigate the outcomes from
the collapse in oil prices during the mid-1980s. In that instance, the
total effect of lost jobs and income in the states that host oil and
gas industry activity along with home and commercial mortgage
foreclosures and subsequent collapse of the savings and loan industry
shaved roughly one percent from U.S. GDP growth.
We know and understand very well the distribution of oil and gas
resources and proved reserves around the world, the extent of sovereign
government control over access and development, and the structure and
role of national oil companies. While we support free and open
international trade in oil, natural gas and other critical raw
materials, U.S. domestic production is our best hedge against global
oil and gas geopolitical risk. Indeed, outside of the US, many other
nations view our access policies and existing limitations on drilling
and replenishment as hoarding our own supplies while draining those of
others. Meaningful efforts to sustain our domestic industry over the
long term and meaningful policy signals that we intend to continue
replenish our reserves in a consistent manner would send one of the
most impressive foreign policy signals we could engineer, as well as
serving as a moderating force on global commodity prices.
Finally, oil and gas exploration and production activity serves up
amazing, and humbling, lessons about the earth, its history and
biology, physical and chemical properties and the forces that drive our
planet. Offshore oil and gas exploration in particular both consumes
and produces advances in science and technology that extend from global
positioning to advanced composites and other lightweight materials.
These are the immeasurable but absolutely necessary benefits that
emanate from the industry and its workforce.
3. The impact of energy costs, including costs of alternatives, is very
real.
Any reduction in U.S. oil and gas production and consequent upward
pressure on energy prices will impact households. Middle and lower
income households are particularly vulnerable because energy costs are
a larger share of their disposable income. It is these households that
are most susceptible to energy price shocks. Indeed, in our view, given
all available data, we feel that the national recession incorporated
classic energy price shock components--extraordinarily high oil prices,
combined with several years of generally rising energy costs as the
U.S. economy expanded rapidly, stretched these households to the
breaking point. Borrowers from this population, no longer able to meet
their obligations, in all likelihood triggered the first wave of
mortgage foreclosures.
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While we are optimistic about some alternative energy
technologies being pursued, the reality is that costs of alternatives--
including the cost of public subsidies which far too often is
discounted or ignored--are high. Timing and ``scalability'' of low
energy density options are uncertain. The law of unintended
consequences plays out in large and visible new land use impacts;
introduction of new and profound environmental risks (for instance
``dead zones'', like that in the Gulf of Mexico, are expanding due in
large part to more intense cultivation and use of fertilizers for
biofuels production); and security implications associated with
critical non-fuel minerals requirements. This last consideration
represents a distinct trade off and risk associated with rapid
acceleration of alternative energy and advanced grid technologies that
we have not nearly begun to explore.
4. Future sustainability of the oil and gas industry must be assured.
The domestic U.S. oil and gas industry has repeatedly shown an
ability to absorb and deploy advanced technologies in order to progress
to the next frontier of discoveries.
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To sustain the oil and gas technology pathway, a number of
variables must be considered.
Finding and lifting costs and the economics of
exploration and production are susceptible to, and underlie, cycles in
commodity prices. Low prices send signals to producers that demand is
low and supply surpluses exist. Drilling is reduced. Low prices
stimulate demand, reducing excess supplies and pushing prices up.
Drilling resumes. Investment decisions for oil and gas projects involve
time--the larger the project, the longer the lead times. Companies must
be able to manage through price cycles and adverse business conditions
in order to replace reserves and be positioned to meet future demand.
In a world of fast growing emerging markets and complex international
geopolitics these challenges can be extreme. The oil and gas industry
is a major contributor of tax revenue across all levels of government.
Imposing new obligations for taxes and royalties that are rigid and not
market responsive will hinder replenishment with all concomitant
economic impacts.
Environment and safety protections must be at the
forefront and solutions must be flexible, adaptable, innovative and
appropriate to the problem at hand. This is not a matter of regulatory
oversight as we know it. As the industry progresses into new frontiers
new mechanisms for assuring environment and safety protocols are
needed, supported by data and analysis and bolstered by technologies
that encompass real time information and rapid deployment, not least to
manage the public cost and burden of regulatory oversight. Remote
logistics arrangements are needed for crisis management in frontier
locations. Smooth management processes are essential. Most crucial is
that we have the patience, in a trying time, to understand the sources
and causes of failure and evaluate best practice future actions for
prevention before engaging in wholesale restructuring and redirection
of our regulatory apparatus.
Finally, public education is essential. Very little is
understood about the oil and gas industries in general. From a mass
polity point of view, offshore operations, especially those in deeper
waters and more remote locations, truly are akin to moon shots.
Hydrocarbons in marine environments need to be better understood, both
in terms of natural occurrence--the source of 70 to 80 percent of
concentrations--and mitigation when accidents happen. In sum, public
education on U.S. energy sources, technologies, needs and choices could
be better served.
The industry overall will be better off as lessons are learned from
the Deepwater Horizon accident and new practices and technologies are
developed and deployed. This will be a powerful tribute to both the
lives lost and the lives saved as the industry progresses. Thank you
for your time and attention.
______
The Chairman. Thank you all for your testimony. Let me ask
my first question to both API and NOIA.
Mr. Gerard and Mr. Luthi, what are your positions on the
announcement by the President today that he is willing to put a
six month--or that he will put a six-month hold on new deep-
water drilling, canceling the Virginia Lease Sale and the
Western Gulf of Mexico Lease Sale, putting the Arctic
exploratory drilling off for a year, and directing new safety
standards and regulations?
Mr. Gerard. Thank you, Mr. Chairman. We understand the
legitimate concerns that the public has and particularly at
this time the frustration that we all share with the ongoing
tragic incident in the Gulf of Mexico.
However, I think we also need to recognize that the issue
and the announcement made today by the President is much bigger
than just the oil companies and the oil industry.
It impacts every man, woman, and child in our society. As
Dr. Foss just mentioned a moment ago, we have come to rely on
oil and natural gas for 60 percent of our energy needs in the
country today.
We certainly hope that the President's announcement of a
moratorium does not turn into a moratorium on economic growth
and job creation.
The Chairman. Mr. Luthi?
Mr. Luthi. Thank you, Mr. Chairman. We too are looking at
it very closely. I noticed you mentioned this morning, you
know, only in Washington will you know what is in an
announcement before you get the announcement. As you know, I
have been sitting here rather than reading the announcement and
paying attention to the Committee.
But here are the things we are concerned about. Certainly
everyone wants to look closely at this accident and find out
what happened, and I think that still should be the major goal
of everyone in this Committee, everybody in the industry. Let
us find out what happened, see what you can do to fix it.
As the Committee goes forward, I think you have to look at
an overall approach of how best to talk about offshore
resources, and you don't talk about it necessarily in the
immediate wake of a terrible accident, which this is, but you
keep in mind the economic factors.
You keep in mind the approximately 200,000 jobs that are
related to the oil and gas industry in the Gulf of Mexico. And
you also look at the process itself.
For example, delaying lease sales might be a little
premature. Lease sales are generally done well in advance of
actual, you know, exploration. But again, I think it needs to
be taken in the entire context as you move forward. We stand
ready to help the Committee identify issues to look at should
we be asked to do so.
The Chairman. OK. Dr. Hirshfield, Secretary Salazar has
testified in earlier hearings that a categorical exclusion was
used in approving the BP drilling permit for the Deepwater
Horizon because the Gulf is ``an area where we know a lot about
the environment.'' Do you agree with that statement?
Dr. Hirshfield. I do not. One of the things that we have
learned over the years is we may think we know a lot about the
environment. We may think we know about fish. We may think we
know about turtles. But what we don't know is what happens
under the ocean. We really don't have a clear picture.
These categoric exclusions result in very, very cursory
assessments of the resources at risk. Long catalogues, long,
you know, long stapled-together lists including in the case of,
as I have read, BP's plan, you know, how to address the issues
associated with walruses, a cut-and-paste that didn't----
The Chairman. They have been used quite a bit then?
Dr. Hirshfield. Yes. They did not do a good job of cutting
and pasting their plan. So categoric exclusions should be
eliminated completely from this industry.
The Chairman. Completely?
Dr. Hirshfield. Completely.
The Chairman. All right, Mr. Luthi, as the former head of
MMS, you have a unique insight into the problems plaguing that
agency. Do you believe there is any way we can fix MMS?
Mr. Luthi. Thank you, and that is--it was my honor, Mr.
Chairman, to head up MMS for a period of time. There comes a
time, however, you know when you come into any kind of an
agency I think you look at you want to make it the best it can
be. I don't think there is any director that doesn't come in
with that goal in mind and do everything you can to make it
better.
But there comes a time when the perception is so great that
it cannot be made better that you have to look at other
options, and certainly one of those options the Committee is
looking at today with dividing the agency up.
We certainly again--what we would like is if it makes, you
know, energy development and restore the public faith that we
can indeed do energy development safely, we are certainly
supportive of changes in the----
The Chairman. Do you think we can still restore that image
or is it too late--too far gone?
Mr. Luthi. Well, I believe, you know, that is part of the
option. As I understand, dividing it into three agencies
probably doesn't leave a whole lot left.
The Chairman. OK, but does it get to the root of the
problem?
Mr. Luthi. I certainly hope so. I think things you want to
look at or make sure that there is a strong chain of command
and a strong chain of communication from top to bottom.
I would suggest that everyone read those inspector general
reports both in 2008 and the one that was released last week.
Make that required reading for any regulator as well as
industry. It shows where potential problems lie.
The Chairman. Employees as well?
Mr. Luthi. Absolutely employees as well.
The Chairman. And Congressmen, yes. I am out of time.
Mr. Hastings?
Mr. Hastings. I just want to follow up on the Chairman's
line of questioning as it relates to MMS is an administratively
created agency. Do you think you ought to be statutorily
creative?
Mr. Luthi. Congressman Hastings, that is certainly an
option that is not in my purview any more. I can give you some
general thoughts. Having it not being going through the Organic
Act and a legislative creative problem actually allowed
Secretary Salazar to make sweeping changes in a hurry. That
could be a pro or a con depending on how you look at it.
Having it in an Organic Act and depending on what you do
with the approval process or rather a Senate confirmation can
change the structure, can make it either more wieldy or less
wieldy.
So once again, that is something that Congress would need
to talk about.
Mr. Hastings. Well, on something as large as from an
environmental standpoint and the incident in the Gulf of
Mexico, that is why I ask that question. Do you have the
flexibility or are you building in a rigidity that you can't
resolve.
Then, of course, if you have the rigidity then that could
be a potential problem. If you have the flexibility, that
flexibility becomes a whim of whatever the Administration's
political thoughts are and sometimes that may not work either.
So I just ask the question to somebody with your background to
get an idea.
One of the interesting things, this hearing as you know was
scheduled before the incident happened in the Gulf of Mexico,
and it was to be the response of the President's announcement
on OCS, and I think we all thought when that was scheduled that
it would be something that we could build upon.
The last two days it seems to have evolved--and you have a
great deal of patience sitting out listening to all this--into
some theater. I won't try to characterize that theater because
I think we really need to get this thing stopped and cleaned
up, and then go from there.
But having said that, there is a common thread that has
been asked by a number of members that I think is important
anyway and, Mr. Luthi, you reference this in your testimony
where your organization is going to develop a response team for
cleanup techniques.
I think you said something to the effect that if there is
one thing that is really lacking in technological improvements
it is the cleanup techniques.
I agree with you. I think that that is an area where you
need to put top priority and get as many organizations involved
with that because, you know, this will be stopped at some time.
The demand, however, for oil and gas will go on.
I am a believer that we ought to be developing the OCS and
we ought to be developing other areas because that is a major
part of our energy. But if we could find a good way in order to
get the technology advanced on cleaning up, I think we would be
making great, great strides.
Do you have a time frame as to when you can get some
preliminary information back?
Mr. Luthi. I do not, Congressman. We will be putting
together the response team as we are calling it within the next
few weeks and, of course, we will operate as rapidly as
possible.
One of the things that we will certainly want to know is
how the response continues through the next few days, weeks,
and months. But it certainly will be done.
We want it done correctly. We don't want to rush it. We
want them to be able to give a quality product.
Mr. Hastings. Well, I totally agree, and with the advances
in technology in a number of ways--in fact, the technology in
drilling--I mean, I thought the figure was since 1969 something
over 36,000 wells drilled. I found out in testimony it is over
40,000 since the last incident.
Now, you know, that is pretty good because if--and I am
not, you know, we live in a society where there is some risk.
If we take everything out of our society where there is a risk
of an accident, we won't even be flying airplanes because we
had a crash of an airplane here just yesterday in India.
Now, if we were to apply exactly the same what some are
advocating that, OK you know, this happened so therefore we
should stop all production, then by the same logic we probably
shouldn't be flying in airplanes.
I dare say, unfortunately, somebody will probably be killed
in a car accident someplace in the country today. Does that
mean that we are not going to drive cars? Of course not. I
mean, the nature of human nature is to, you know, challenge the
risks that we have and try to overcome them. I think that is
exactly the challenge that we have here with the OCS.
And Dr. Foss, I will just simply say, which hasn't been
said in any of the hearings, that the byproducts of the oil and
gas industry--it would probably boggle a lot of people's minds
how broad that is.
In fact, I would just suggest if I am not mistaken I think
the 787 is an example of that, just to kind of connect the
dots.
Thank you very much, Mr. Chairman.
The Chairman. The gentleman from California, Mr. Costa.
Mr. Costa. Thank you very much, Mr. Chairman. I have a lot
of questions and not a lot of time.
I concur with the gentleman from Washington's comments, I
mean, life is not without risk and what we tend to not do very
well, in my view, as Members of Congress is adequately weigh
risk assessment with risk management, which was a question that
I asked the Secretary yesterday.
Mr. Gerard, while the President made the announcement
today, there has been speculation that this was going to happen
over the last 48 hours or so. Have you folks made any
determination as to what the potential economic impacts may be
over the next six months as a result of this moratorium?
Mr. Gerard. We haven't done an analysis internally. I would
say Wood Mackenzie did some earlier projection. I don't know if
you have seen that report or not.
Mr. Costa. No, I haven't.
Mr. Gerard. But I would get that to you. In a recent report
they found that a six-month moratorium on new drilling activity
would result in the reduction of about four percent of the
production out of the Gulf of Mexico.
Mr. Costa. OK. I would like you to give a sense. I mean, we
are going to have to do those numbers and obviously move
forward.
Dr. Hirshfield, you have talked about a more efficient
source of energy that is carbon free. I think all of us in a
lot of attempts would like to see that, but what you fail to
do, it seems to me, is to fill in the blanks and that is that
every President since 1973 when we had our first gas alliances
talked about reducing our dependency on foreign sources of
energy, reduction of carbon energy.
But every Congress and every President since that time has
attempted to enumerate policies to get there, and obviously we
are dependant upon more source of foreign industry, primarily
carbon energy, and what do you think is lacking?
And you didn't talk about the economic dislocations, and
the poor people in this country that are suffering right as a
result of this recession notwithstanding the middle class, how
do you attempt to try to address those issues? How do you get
there from here? I mean, there is not a magic wand, but.
Dr. Hirshfield. I do not want to imply that there is a
magic wand. I am certainly not suggesting that we could
possibly stop using oil today. What I am asking is when do we
stop continuing to dig the hole deeper?
We are in a hole. We agree that we are addicted to oil. We
agree that it is time to move on. BP agrees that we need to
deal with climate change and put a price on carbon.
I think it is high time this country puts a price----
Mr. Costa. Some of the major oil companies have talked
about a carbon tax, and I commend them for that.
Dr. Hirshfield. We certainly hope this----
Mr. Costa. I think this is really out of your area of
expertise, and then therefore it is probably not a fair
question. But until you link the two in terms of the economics
in a way that shows a path to getting there, which is why I am
going to go to the person next to you.
Dr. Hirshfield. Well, Senator Sanders introduced
legislation today that proposed to link fuel efficiency
improvements, which we could do--we could move this nation
toward the fuel efficiency standards that they have in Europe,
that they have in China, and that----
Mr. Costa. But we are attempting to do----
Dr. Hirshfield.--we are moving toward----
Mr. Costa.--that. We passed that in legislation last year.
I supported that effort.
Dr. Hirshfield.--I would like to see a six-month
commissioned blue-ribbon panel from the President that spends
as much time and energy focused on how do we get off of oil as
we do how do we keep this kind of catastrophe from happening
again. Thank you.
Mr. Costa. Yes.
Dr. Michot Foss, I was very intrigued with your testimony
because one of the things I have always felt in looking back
over the last 30 years, notwithstanding all the rhetoric, is
what has been lacking is an interim, mid-term, and long-term
plan and an economic pathway to get there--recognizing that we
are going to continue to be dependent upon a source of carbon
for a time period as we develop a robust renewable portfolio
because, in your testimony, you talk about the economic
dislocations and the tradeoffs.
Frankly, until we get some willingness on a bipartisan
fashion to agree on that path over a 20-year period and get
bipartisan buy-in and continuity to stick with it, I don't see
how we get there from here. Could you comment on that?
Dr. Foss. It is very difficult.
Mr. Costa. What has been lacking?
Dr. Foss. What has been lacking? Well, my views are going
to be a little bit different, I think, than what often gets
discussed.
Mr. Costa. Do you support a carbon tax? Not a cap-and-
trade. I am just talking about the Tom Friedman type of 50
cents, $1.00, whatever.
Dr. Foss. I am going to bail out and say that for----
Mr. Costa. You are agnostic?
Dr. Foss. No. No. Most economists would prefer a
transparent carbon tax. It is easier to be able to understand
how it is going to apply. You can understand what its effect
is. It is easier to measure the impacts on businesses, and
consumers, and society in general.
So generally speaking, I think most economists--any well-
trained economist is going to be much more comfortable with a
transparent tax. Now, having said that, I think that one of the
things that we have struggled with for a long time is how do
you properly direct especially public resources, which are
constrained because business resources will come into research
and development in search of opportunities.
Public resources are a different matter because we have
scarce resources and we need to use them for a lot of other
things, education, health care, and everything else.
How do you direct public resources into energy research the
right way? We have tried a lot of things over the past 35
years. We have to get back to basics and understand that to a
certain extent physics, chemistry, thermodynamics are working
against us.
If you go from higher forms of energy to lower forms of
energy, if you lose energy density in order to try to take
advantage of something that looks good like alternative energy
systems, there are real costs and tradeoffs associated with
that. And that is really the problem. I mean, it is a
technological, technical, physical, chemical problem that we
have to understand.
I actually think that we should spend more of our time
focused on materials because, as Mr. Hastings pointed out, it
is the byproducts of hydrocarbons, what we do with the
molecules, the things that we make with them that are so
difficult to replace because everything we use, everything that
we build and manufacture, everything that we derive economic
benefit from in some way or another takes those molecules and
combines them to give us the things that we use, the tools, the
implements, the machines, the computers, the electronic goods.
So materials research, how do we find new compounds? What
are we going to replace those molecules with? Where is that
going to come from? That is actually a bigger problem than
replacing the energy in many respects.
There are a lot of different things that we can do and
deploy in recognition of the tradeoffs, in recognition of the
costs that can supplement energy including more efficient use
and so on. But the materials problems is a really big one.
Mr. Costa. Mr. Chairman, I know my time has expired and the
witness' time has expired, but I really think that as we
address the challenges with this tragedy and this disaster, the
larger question at the heart of her comment is really focused
in terms of where this country goes in the 21st Century.
And until we are willing to deal with that in a de-
politicized manner that just involves common sense and how we
get there, I am not so sure how we will ever have a
comprehensive energy policy that tries to achieve the goals
that I think in a larger sense many of us share in common.
The Chairman. The gentlelady from Wyoming, Ms. Lummis?
Ms. Lummis. Thank you, Mr. Chairman.
I find myself in the embarrassing scenario of having a
meeting at 3:30 and I am just getting to questions, so please
excuse me if I ask questions that I really want to read your
answers to and then maybe bug out before we have a chance to
hear your answers expressed verbally. But two questions for Mr.
Gerard and Mr. Luthi, and then one specifically for Mr. Luthi.
What steps is industry taking right now to evaluate their
OCS operations and technologies? And, further, is the industry
generally, the oil and gas industry, opposed to stricter
offshore safety standards? And can they make recommendations?
Are they willing to participate in the discussion of additional
safety standards that really do make sense?
Then my question for Mr. Luthi, I know that you were late
in the game in the last administration regarding the MMS, but
you came in at a time when the agency was in turmoil in terms
of the public perception.
It has been acknowledged up here that when confidence is
lost in an agency, it is difficult to restore, which may be
some of the rationale behind breaking it up to where there is
no longer such a thing as the MMS.
But do you find that the personnel rules and having
unionized employees as we learned yesterday as true with the
offshore inspectors is an impediment to making a dramatic
change in a Federal agency when a dramatic change is warranted
because of this lack of public or loss of public confidence?
So thanks. Those are my three questions.
Mr. Gerard. I will be very brief Congresswoman, and then I
will give you a written answer to the rest if you would like.
Ms. Lummis. Thank you.
Mr. Gerard. What have we done within industry? Shortly
after the tragic incident in the Gulf working with the
Secretary of the Interior we established two industry task
forces. We got the best minds together in the industry. We
looked at two fundamental questions, the equipment we are
currently using in the deepwater and our operating procedures.
We have made recommendations to the Secretary, and likely
perhaps we will see some of that in the President's
announcement today. I haven't seen the details of that.
We identified 9 or 10 key areas that we thought we could do
that were not currently in the regulatory process that would
improve and reassure the public, further redundancies, et
cetera, that were operated in a safe fashion.
To your second question very quickly. The industry does not
oppose safety standards. We take safety as a top priority as
you have heard today from some of the others.
In fact, we lead with our standard-setting process and, in
1993, put together a comprehensive safety management program
that has been updated three times--and recently has been under
consideration by the Minerals Management Service to be adopted
as their broader regulatory scheme in the industry practice.
I will get you a lot more detail if you would like to hear
more about that.
Ms. Lummis. Thank you.
Mr. Luthi. I am sorry. I will get closer. Should be on the
forefront of recommending and the final key to that is again
finding exactly what happened. Then that is going to help hone
in on the, you know, what needs to be changed.
Personnel roles. Let me give you a quick example. MMS in
2005-2006 rumor started floating around about improper activity
in the Denver office. MMS asked the inspector general to look
at that and investigate that activity.
That investigation and report was not released until 2008,
so you have a two-year period when basically--and you are also
told, by the way, that you are not supposed to take
administrative action, at least serious administrative action,
until the report is complete and released.
So I have always felt that if you have a consequence close
to the event it is certainly more effective. The same--so in
2008 when we got the report, within 30 days we had disciplinary
action well started and on the board. Again, it was just
somewhat frustrating.
You saw it again this week, events between 2005 and 2007.
The report is completed in 2010. So if there were some way to
make the ability of Federal managers to be able to provide that
disciplinary action--and it needs to go through the channels
to, you know, for proper safety and in terms of employee
rights. But that would be one recommendation I would hope the
Committee might want to look at.
Ms. Lummis. Mr. Chairman, thank you very much.
The Chairman. The gentlelady form the Virgin Islands, Ms.
Christensen.
Ms. Christensen. Thank you, Mr. Chairman, and thank you
witnesses for your patience being here pretty much all day.
My first question would go to Mr. Luthi and Mr. Gerard, and
I applaud your commitment to improving the safety going
forward, the task forces that you have created and so forth.
But I happened to be watching Rachel Maddow last night, and
she was flashing back over 20 years to another oil spill and
the response, and that didn't seem--now, I am sure that this
was edited for effect, but there didn't seem to be much
difference in the response now to the response 20 or more years
ago.
So could you give us a sense--I mean, the technology of the
drilling, the depth of the drilling, all of that has really
changed dramatically over that time.
Could you give us a sense of what National Ocean Industries
Association and API have been doing in that period of time to
improve the response, and the cleanup, and the safety?
Mr. Gerard. Absolutely. Thank you for the question.
Secretary Salazar said something yesterday that wasn't expanded
on, but I think it goes to this point Congresswoman. It is a
very important one.
He commented without the preparations that are the things
industry's been doing over the past 20 years we wouldn't have
the unprecedented response that we have today.
When the Oil Pollution Act was passed in the early 1990's,
it established recovery organizations. Today, there are around
the country over 140 oil spill recovery organizations.
These are funded by the private sector, and they have
developed equipment, they have response capability, they train
with the Coast Guard. Just recently I believe in New England
they had a big training exercise with the Coast Guard
surrounding the question of oil spill.
So within these organizations, within the API as a trade
association, we established the Marine Response Corporation
that was referenced by the earlier panel.
That has since been spun off into the private sector. That
was one of the first responders that Lamar McKay mentioned to
day in being out there on the front line with the capability of
the boats, et cetera.
The only other point I would raise is as you are aware
there is a per-barrel fee or tax on the industry that goes into
the Oil Spill Liability Trust Fund. That currently has about
$1.7 billion in it that has been paid into it by industry.
But over the course of the last 15 years or so, on an
annualized basis, the Coast Guard and others take about $100
million out of that fund that industry pays for to equip
themselves, to train. EPA has some for research and development
on better practices, et cetera.
So when you put it all together, the industry has spent in
the last 14-15 years just through this process about $1.6
billion to be prepared for oil spill incidents like this, and
that doesn't count the individual companies and their research
and development and their other investments to be ready to go.
Ms. Christensen. Briefly so that I could try to get
another--if you wanted to answer? OK. Because it just seems to
me that we should have--and I think you said that, you know,
the technology for the cleanup, and so forth, has really lagged
behind the technology that we have developed for drilling.
But I wanted to also ask Mr. Gerard, you talked about the
loss of jobs. Should we have a moratorium? Should we stop,
cancel, some of the permits that have been let already.
But has API done an analysis comparing the jobs lost to the
jobs that would be created with a new green economy, new
renewable energy going forward, and Dr. Hirshfield, I would
like you to respond to the job-loss issue from the ban also.
Mr. Gerard. I will be very brief, but thank you again for
this question. It is a very important one.
First, the industry today supports 9.2 million jobs in the
United States. 7.5 percent of all our gross domestic product in
the United States is tied to the development of oil and natural
gas.
Now, one statistic that might be surprising that goes to
Congressman Costa's question earlier is between the year 2000
and 2008 the oil and natural gas industry invested in research
and development $58.4 billion to develop zero emitting and low
emitting carbon technologies.
That is more than the Federal Government spent during that
period of time and more than all the other private sector
interest combined. That goes from our perspective to the issue
of green jobs. Those are green technologies. Those are the
energy forms of the future.
Back to Congressman Costa's question, the oil and gas
industry is leading in the development of these alternative
energy sources, and through those investments and others, it is
deemed that we have created about a million jobs in the United
States to develop to research green technologies.
Dr. Hirshfield. Three quick points. First, there is a need
to separate the jobs in the oil industry from production,
ongoing operations, ongoing work, and whatever the jobs that
might be associated with continuing the moratorium. There are
some statistics that Dr. Foss had. This is one of those games
that it is really easy to play.
Second, it is really important to remember the jobs that
are lost, the communities that are destroyed by the oil in the
water, and these catastrophic rare events are the ones that we
have such a hard time dealing with.
And third, you know, if you can imagine 100 years ago Big
Horse talking about the transportation infrastructure and the
jobs associated with stables, raising horses, cleaning up horse
poop, you know, all of blacksmithing, all of those jobs, you
can imagine if they had the kind of clout that the industry has
in our decision-making bodies, we might not have made that
transition to the automobile.
Ms. Christensen. Thank you, I think my time has expired.
The Chairman. The gentlelady's time has expired.
The gentlelady from Colorado, Ms. DeGette.
Ms. DeGette. Thank you, Mr. Chairman.
We have a graphic I would like to show on the screen. I
don't know if the panel can see it, but what this shows is that
in a 2007 MMS study, some of you I am sure are familiar with
it, cementing problems were identified as the most significant
factor contributing to blowouts.
Cementing was associated with 18 of 39 blowouts in the Gulf
between 1992 and 2006 or nearly 50 percent. This was a doubling
from the previous period where cementing was a factor in only
25 percent of the blowouts.
So Dr. Hirshfield I would like to ask you, given that
cementing is the most commonly identified problem leading to
blowouts, would you agree that companies should take extra care
in assessing the integrity of the cement bond?
Dr. Hirshfield. I think it is clear to everyone on this
panel, off this panel, all around the country that extra care
and attention needs to be paid to every aspect. Cementing
clearly is a factor in this, but it is the whole--it is every
step along the way.
Ms. DeGette. Right.
Dr. Hirshfield. Somebody referred to multiple stop signs.
Ms. DeGette. Right. We were----
Dr. Hirshfield. That is what would be----
Ms. DeGette.--talking about that on the last panel where it
is true that there were just multiple systemic failures in this
situation, but the problem is that while that is rare, it is so
devastating when it happens that you have to put failsafes in
place at every stage.
Mr. Gerard, I see you nodding in agreement. I think you are
nodding in agreement.
Dr. Hirshfield. Can I make one more comment on that?
Ms. DeGette. Yes, please.
Dr. Hirshfield. Just yes that is the case, but in almost
every major catastrophic rare disaster that is unprecedented,
it is some unpredicted, unprecedented combination of human and
technological failures. So our opinion is it is going to happen
again.
Ms. DeGette. Well, yes. So do you think that a cement bond
log test should be a standard requirement?
Dr. Hirshfield. Yes, but we think----
Ms. DeGette. OK.
Dr. Hirshfield.--it is time to get out of the offshore.
Ms. DeGette. You know, I agree with you what you are saying
is there were multiple human errors here at every level, and
the problem is that if you put all of those together it might
be rare but it is devastating.
And Mr. Gerard, do you want to quickly explain your view?
Mr. Gerard. I was just going to respond Congresswoman.
Ms. DeGette. Go ahead.
Mr. Gerard. This particular report, as I recall, came from
MMS.
Ms. DeGette. Yes.
Mr. Gerard. And shortly after this was determined, the
longer term analysis showed that the number of blowouts had
decreased significantly during this--to this decade. But what
it did show, to your point, is that cementing was the number
one issue.
Ms. DeGette. Right. Right.
Mr. Gerard. Immediately after this came out, the MMS
approached us at API through our independent standards process,
and you might be aware that we have worked on that with the
department and have come up with a best practice----
Ms. DeGette. So do you think that a cement bond lock test--
--
T1Mr. Gerard.--has now been released.
Ms. DeGette.--should be a standard requirement?
Mr. Gerard. I am happy to share with you what that best
practice is. I am not sure if it is included or not. I am happy
to go back and----
Ms. DeGette. Well, do you think it should be given this
level of failure?
Mr. Gerard. We had a number of technical recommendations to
the department. This is----
Ms. DeGette. But you don't remember if this was one of
them?
Mr. Gerard. I don't remember that but----
Ms. DeGette. If you don't mind supplementing your answer, I
think that would be helpful.
Mr. Gerard. I would be happy to do that, and----
Ms. DeGette. Thank you.
Mr. Gerard.--I will get it to you today.
Ms. DeGette. I have another question, which is, I know the
Administration is trying to improve the management at MMS and,
of course, Mr. Luthi I remember quite well, being from Denver,
the little troubles we had with the MMS in the Denver office a
couple of years ago.
I would also say I am in complete agreement with you as a
mother if nothing else if you don't have immediate consequences
for the actions then it tends to get attenuated and people tend
to forget what example the issues are.
So I want to ask you the question Secretary Salazar has as
you know--it has been well publicized--suggested reorganizing
MMS, and I am wondering if you believe that his proposed plan
will effectively achieve a separation of enforcement and
revenue functions.
Mr. Luthi. Well, thank you, and I start off by saying you
know the Secretary and the Administration is in the best
position to decide, you know, how they want to handle MMS and
the best way to do it.
I have offered some general just suggestions that as you
look at an organization you want to make sure you have the
communication ability----
Ms. DeGette. Right, but what do you think of Secretary
Salazar's plan?
Mr. Luthi. Certainly, if it restores the public trust in an
agency that can----
Ms. DeGette. Do you think it will restore the or help
improve the efficacy of the agency?
Mr. Luthi. Individual behavior is often difficult to
improve. I certainly hope so.
Ms. DeGette. Mr. Chairman, if you don't mind, I ran out of
time before and I just want to put something on the record.
I have a document, which I will submit for the record,
which is BP's application to MMS for a revised new well dated
January 14th, 2010. One of the attachments to their application
is a schematic of the blowout preventer, which I have. And the
bottom most ram cavity is labeled VBR test ram.
The document shows that BP knew at least as of January that
a test ram was installed in the blowout preventer, but the
emergency ROV port remained connected to the test ram three
months later making it useless as I discussed with the previous
panel in the coming emergency.
Mr. Newman said in his testimony that it would be a simple
matter of changing hoses to fix this, but this did not occur.
So I just wanted to put--number one, I wanted to say on the
record I think it is appalling that the hoses were not changed
because they had all that time because clearly they had the
knowledge and the time to do so.
And I would ask unanimous consent to submit BP's
application and the attachments for the record.
The Chairman. Without object----
[NOTE: The application and attachments submitted for the
record have been retained in the Committee's official files.]
Ms. DeGette. Thank you so much, Mr. Chairman.
The Chairman. The gentleman from Louisiana, Mr. Cassidy?
Mr. Cassidy. Hey Dr. Hirshfield, I take it if you don't
want drilling then you want more tankers, huh?
Dr. Hirshfield. If we had had a tanker spill, we would be
here talking about problems with tankers. We would be talking
about how all the tankers were safer.
Right now we are going to have tankers for the foreseeable
future. There is no question about it. I think it is time, as I
said earlier, to stop our addiction to oil and start reducing
tomorrow.
Mr. Cassidy. But statistically, we know that tankers are
more likely to result in oil in the ocean than drilling. Even
given this one, statistically if you look at history, tankers
are far more likely to spill, correct?
Dr. Hirshfield. It is cold comfort to people in the Gulf
that tanker spills in California or somewhere else are more
likely than what they had.
Mr. Cassidy. No, it is not cold comfort. I am just trying
to focus upon the economic consequences of decisions we make.
So if we make a decision not to drill, then we are making a
decision to import more.
Thirty percent of domestic oil comes from the Gulf of
Mexico. Lots of employment thereof. So if we make that decision
that we are going to replace that 30 percent with imported oil,
statistically we know we are going to have more oil in the
ocean than if we had continued to drill.
Dr. Hirshfield. We think that it is actually practical and,
you know, a country that has the----
Mr. Cassidy. Practical to do what?
Dr. Hirshfield.--I was referred to the pioneering spirit--
--
Mr. Cassidy. Practical to do what?
Dr. Hirshfield.--practical to reduce our demand for oil.
That is what----
Mr. Cassidy. OK, so we are----
Dr. Hirshfield.--that is what we need to do. We need to----
Mr. Cassidy.--so how much do we import per--I mean, how
many barrels do we use a day now in the United States?
Dr. Hirshfield. Twenty million.
Mr. Cassidy. We use 20 million barrels a day now, so we are
now going to go to a system where we are going to have zero,
or----
Dr. Hirshfield. No, no.
Mr. Cassidy.--we are going to have 28 minus----
Dr. Hirshfield. Ramping down. We are not talking about
stopping production.
Mr. Cassidy.--so we would have to raise the costs, so your
idea I presume, therefore, if we stop drilling that we will
raise the cost and inherently in raising costs we will decrease
demand?
Dr. Hirshfield. Ultimately I think with BP and the oil
companies as we talked about earlier, we have to put a price on
carbon. We have to--we heard----
Mr. Cassidy. I think that is a yes. I have limited time, so
I don't mean to cut you off.
Ma'am, if we cut our--just take away the Gulf of Mexico, 30
percent of our domestic oil, 20 million a day, 20 million
divided by one-third of 20 million--what would that do to the
price of gasoline for the average working person who is trying
to make a living?
Dr. Foss. It would go up.
Mr. Cassidy. How much?
Dr. Foss. I can't tell you how much.
Mr. Cassidy. So if you just did a back of the envelope--if
you said we cut our supply of feedstock by a third, does that
mean that the price of gasoline will go up at least by a third?
Dr. Foss. It would probably go up at least five percent. I
mean, it would increase. I mean, there is no way that it would
not go up.
Mr. Cassidy. And there will be a ripple effect, I presume,
for everything because, you know, we have bottled water here.
The plastic is made out of petroleum. I presume that there will
be some consequence of the cost of every product that in some
ways impacted by petroleum.
Dr. Foss. Yes, sir.
Mr. Cassidy. Including food since we know that farmers use
a tremendous amount of petrol chemicals in order to create
food.
I am also struck that if we are going to transition to a
lower carbon economy, everybody speaks about using natural gas,
but as it turns out natural gas the abundant supplies, Dr.
Hirshfield, are coming from offshore. So what do we do about
our desire to transition to natural gas as a lower carbon
footprint if we are cutting off our ability to produce natural
gas?
Dr. Hirshfield. Again, what we are talking about is a halt
to expand the drilling off of our coasts. There are other
sources of natural gas, and it is clear that we can reduce the
demand that would offset those new sources.
Mr. Cassidy. So you would be in support of fracking, for
example, which is the basically new supply of natural gas?
Dr. Hirshfield. Fracking obviously has environmental
consequences. I think they should be looked at closely and they
should be addressed carefully.
Mr. Cassidy. Mr. Gerard, I understand there are
differences, I know you do, between non-deepwater, if you will,
shallow water, deep, and ultra deep.
If we have a six-month moratorium or longer on this, will
the supply industries with all the people whom they employ be
able to survive? Can they survive on a current book of business
without--with complete interruption of what is going forward?
Mr. Gerard. There is immediate impact, and there is long-
term impact. The only thing I would add to that Congressman
that is very important to remember of that 30 percent of oil
that is coming out of the Gulf of Mexico, 70 percent of it
comes out of the deepwater. The 20 most prolific leases
producing oil in the Gulf of Mexico are in the deepwater.
Mr. Cassidy. So again, if we rope that off we are telling
ourselves we are going to import more from countries often that
hate us. Since the marginal supply comes from OPEC nations,
therefore, the additional supply won't come from Mexico and
Canada. We are already maximizing what we can get from them.
The additional supply is going to come from the places
where we have to tank it the farthest, which have the worst
environmental records in terms of watching for carbon release,
et cetera.
I have seen a big spill upon the coast of Nigeria. I gather
that happens with regularity. And we will have to burn diesel
to get it here, and statistically we are more likely to have an
oil spill from a tanker than we are from a rig.
Mr. Gerard. Yes.
Mr. Cassidy. That is all facts. That is not making up. It
is not rhetoric. It is not pie in the sky. It is what we know
to be true, correct?
Mr. Gerard. Yep.
Mr. Cassidy. Now, going back to the employment for those
roustabouts, and for those pipe fitters, and for those boat
builders in my state, the President is worried about tourism in
other states.
I am worried about the roustabouts and the working people
who don't their ways around the hall of power but nevertheless
they are dependent upon jobs to feed their families, good jobs.
What is going to happen with a six-month moratorium if we
do everything, near shore, intermediate, depth, et cetera? Will
those supply companies be able to stay in business?
Mr. Gerard. They will be hit immediately. I mean, there are
those out there now and those----
Mr. Cassidy. When you say hit, that means layoffs? That
means fewer people employed?
Mr. Gerard. That is right.
Mr. Cassidy. Fewer working class people employed.
Mr. Gerard. If you stop the activity, if you stop the
production, you are going to have fewer people going to work.
And it has the economic multiplier effect that you have touched
on that impacts the entire economy. It is much bigger than just
those individuals employed by the industry. It ripples
throughout the economy.
Mr. Cassidy. My family moved to Louisiana so my dad could
sell New York Life Insurance to people that were working in
petrol chemical. I am proud of being Louisianan but I am there
because of my dad selling insurance. I am very aware of that
ripple effect.
Last question, Houma-Thibodaux had the lowest unemployment
for a while. Even when everybody else was at 10 percent, it was
at 2 percent. People were moving there to work in the
shipyards.
Again, these weren't Ph.D.'s. These were people who didn't
have college educations, but these are people because of this
employment were able to feed their family, they had great
health insurance, didn't need a government handout to generate
such.
When you say there will be an immediate effect, what you
are telling me is that those folks who have really few other
employment options will almost immediately begin to feel the
impact of being laid off.
Mr. Gerard. That is correct. There is another dynamic here
we shouldn't forget. Many of those individuals that are
employed in the offshore and the Outer Continental Shelf make
almost twice what the average income is in most jurisdictions
and in most states.
Mr. Cassidy. Even though they don't have college
educations, et cetera, et cetera, et cetera?
Mr. Gerard. That is correct.
Mr. Cassidy. OK. I yield back. Thank you.
The Chairman. The gentleman from California, Mr. Costa.
Mr. Costa. Thank you very much, Mr. Chairman. I will try to
be brief. I know it has been a long two days here.
Dr. Hirshfield, the comment that you made with regards to
how you would like to see us go forward, like, I guess poses a
lot of questions in my mind, but what would you think would be
the reaction of countries like Brazil that have done a good mix
with ethanol but part of their balance is with new offshore
discoveries; a lot of the other areas in which China has a
foreign policy, and I am on the Foreign Affairs Committee, that
is totally, totally in my view energy and mineral related
anywhere around the world, that is China's foreign policy;
other major countries like Russia whose entire focus for
economic transition is energy related?
I think while well-intended, your vision--I don't see you
indicating a way in which somehow those things are going to
change.
Dr. Hirshfield. I am not sure exactly what the question is,
but I think it is pretty clear that we in the United States use
an awful lot of oil. We use more oil per capita than just about
anywhere else, and it is time for us to go on a diet.
Mr. Costa. Well, I think energy conservation is one of the
real important tools on our energy toolbox. I don't disagree.
In California, as you know, we probably set more higher
standards, and I have voted for those standards as a member of
the California Legislature to ensure that the energy
conservation tool in our toolbox is well-used.
Two more questions. Doctor Foss, how would you recommend to
us in light of where we are now and your testimony where we go
from here as policymakers? With the rhetoric aside, there is
obviously a wide range of views in this Committee, as there is
in Congress, and trying to strike a balance in terms of an
interim and a long-term comprehensive energy policy has proved
to be elusive.
What would you recommend to us?
Dr. Foss. Patience.
Mr. Costa. Well, for three decades we--we do patience very
well. It is called kick the can down the road.
Dr. Foss. Yes. Patience to be able to do what has already
come up today, which is to investigate the situation,
understand what happened, the reasons, the factual information,
and then be able to use that to take the steps that need to be
taken in order to improve safety, improve oversight, and be
able to do that carefully with full information.
And so I guess that would be my first, and it may seem like
a bit of a hedge, but at this stage of the game we don't have
full--the information yet, and we need to know more.
The second thing that we need to do I think is maybe
recognize some things. I realize that many people would like a
national energy policy, but we are a country with many
different regions, and lots of different resources, and
different kinds of economies, and I think that there is a great
deal of experimentation in different states and different
regions, and we are all going to learn from that.
I think there are some things that are already happening
that need to continue and maybe need to be accelerated, which
is to review Federal R and D programs and see exactly where
dollars are going and try to create a vision for how to direct
those toward the most useful things, the most difficult
problems that can be solved.
And I think some realism, some public education really
needs to be done. Where do we get our energy? How do we use it?
What can we expect to do in the future? What is the timing? Why
are we so constrained? Why has it been three decades with no
silver bullet? Why is this difficult? And get people better
informed about that.
So those may seem not very exciting recommendations, but
sometimes at times like this it is the mundane things that can
actually make a difference.
Mr. Costa. Well, and I think articulating a comprehensive
but yet common sense policy in which all Americans have a
vested interest and try to bring this country together on that
point. I mean, we live in this world of 30 second commercials.
We have been conditioned in color, now in high def, and we
think every problem in America can somehow be solved in a 30
second commercial from your common cold, to refinancing your
home, to your athletes foot or whatever.
Life is not that way. Life is not without risks. I mean, we
have had 130 plus shuttle launches, and we have had two
disasters. I mean, you talk about the risk assessment versus
the risk management. We have had over 40,000 wells drilled in
the Gulf. We do it so poorly--again, measuring risk assessment
and risk management.
My last question to Mr. Gerard and Mr. Luthi. I have said
it before. I will say it one more time. I am an advocate of
using all of the energy tools in our energy toolbox, which
includes using both oil and gas offshore as well as on because
I think you have to transition.
I have articulated what I think has been lacking in that
transition. This is a big, big--this tragedy, this tragedy is a
big black eye for those of us who want to use all the energy
tools in the energy toolbox.
I asked the question earlier today. I asked it yesterday.
Under the lessons to be learned, how does the response from the
private sector, the energy companies who obviously are trying
to transition, trying to move with this, have a tremendous
investment yet though in all of this, how do we come back and
convey confidence to the American public that we can do this
safely and that we have learned the lessons?
Because would that confidence, this effort that the
President was attempting to pursue I think is going to be very
difficult to implement when we are talking about all the energy
tools in the energy toolbox. What is your response? What is
your responsibility?
Mr. Luthi. Thank you, Congressman. As everyone has said, it
is not an easy, fast, quick answer, but I think the tough
reality is that industry has to do it right, and it is going to
take some time to regain that confidence.
In addition to, I think it is important as we talk about
what happened. We have addressed that quite a bit today. What
happened? Concentrate on making sure that whatever regulatory
changes are necessary are made.
And then, I think, industry is willing to put some
investment into that research and development area that appears
to be--and I underline appears because we don't know that yet--
that response maybe hasn't really kept up with the technology
particularly in the deepwater. It is going to take time. It is
going to take some effort, and it is going to take transparency
on our part as well.
In addition to, I think the industry as a whole as we use
the Outer Continental Shelf can actually be part of that energy
basket, wind, wave, and current are all available, and I
certainly encourage our members and encourage more interest in
attempting to develop all of that as you have so eloquently on
more than one occasion indicated.
Mr. Gerard. Mr. Costa, I think in the short term and then
in the long term two quick dynamics. The first in the short
term, this is a tragic incident as we all know.
It is been a serious challenge for us within the industry,
and I hope as Mr. McKay testified earlier today there have been
over 90 companies who have responded with their assets and
their resources. We view this responsibility much larger than
just the companies involved. This is the responsibility of the
industry.
And to Randall's first point, first stop it. Clean it up.
Figure out the root cause, and then deal with that root cause
quickly to make sure it never happens again to regain the trust
and confidence of the public.
But as an industry, we also have a responsibility to go out
and to be more transparent as we communicate what we do and how
we do it. We assume too often that people understand this. That
they assume--we assume they understand.
And when they get that affordable, reliable energy at the
gas pump that they recognize there has been a lot of risk
management. There has been a lot of effort. A lot of investment
go into that.
So we have a responsibility as industry. We are already
talking about this as to what we do to reach out to reassure
the public and then make sure we do this in a safe fashion,
that we drive the performance for the entire industry.
This isn't just one company. We recognize after this tragic
incident we have all got to do it better.
Mr. Costa. Do you think this is the opportunity for the
President to really try to bring the country together to really
go forward in a comprehensive energy policy that reflects the
realities that we are facing today and reach some level of
consensus that would be bipartisan that would have consistency
and continuity over the long term?
Mr. Gerard. I think it could be, but I think the short-term
responses will dictate whether or not that window of
opportunity stays open.
Mr. Costa. Do the rest of you want to comment?
Dr. Hirshfield. I certainly hope so. This may be the
ultimate teachable moment on this issue, and I think it is time
for us all collectively to come together and figure out a way
forward.
Mr. Costa. Thank you, Mr. Chairman for what I think has
been two days of very fruitful hearings, and obviously we have
a lot of work ahead of us. But with your good leadership, I am
ready to be a part with my colleagues to figure out how we work
through this in the short term and the long term.
But thank you very much again for all your hard work and
the staff's work on both sides of the aisle here for the last
two days. And I thank our witnesses.
The Chairman. The Chair wishes to also thank this panel for
being here. We know you have been here throughout the day, and
it has been a long day.
This will now formally conclude our two-day oversight
hearings on the Outer Continental Shelf oil and gas strategy
and implications of the Deepwater Horizon rig explosion. This
has been part one and two.
We will continue the examination of this explosion with
future subcommittee hearings. There will be actually five
subcommittee hearings we will have in the month of June that
are designed to study in detail the many issues related to the
incident from enforcement of safety regulations by MMS to the
impacts of the spill on natural resources in the Gulf.
We know that our Committee has already been rigorously
following the events and offering our assistance to other
committees and requesting numerous documents from both the
Administration and company officials, and we will continue to
do that as the situation merits.
We have not yet had a formal CODEL to the region. I have
felt such would only be interfering with those who are on the
ground and in command and trying to stop the well immediately.
We have had staff on the scene on a nonpartisan basis. Both
Doc Hastings and I have sent staff down there. At a future
time, we may if it does appear that we can find something that
will be helpful or offer our services in any way, we may have a
future CODEL to the region.
So, with that, I want to thank the staff as well for the
preparation of this hearing. We had good attendance, very good
attendance on both sides of the aisle during these two days,
and I thank my colleagues as well.
With that, we will conclude this hearing of the Natural
Resources Committee. Thank you.
[Whereupon, at 4:11 p.m., the Committee was adjourned.]
[Additional material submitted for the record follows:]
[A statement submitted for the record by Mr. Miller
follows:]
Statement of The Honorable George Miller, a Representative in Congress
from the State of California
I have to say, as former chairman of this committee, and current
chairman of the Committee on Education & Labor, I have seen this all
before.
BP's Deepwater Horizon disaster in the Gulf of Mexico was not some
``black swan'' or ``perfect storm'' event. This was not something that
could not have been foreseen. And this was not something that you can
promise will never happen again.
There is a theme that now seems to weave though many of BP's
decisions: trading off risks versus profits, and the costs are being
shouldered by the families of the 11 dead workers, and the livelihoods
of those who depend on the gulf.
An important question to answer now is whether BP should ever be
allowed to drill a new oil well in U.S. waters again.
Just consider the history of BP taking risks to boost profits.
Texas City
On March 23, 2005 BP's Texas City refinery exploded
killing 15 and injuring 180 during the restart of gasoline production
unit. A tower was allowed to be overfilled and caused a flammable
liquid geyser to erupt from a stack. Critical alarms and control
instruments failed to alert operators. BP had no flare to burn off the
hydrocarbons despite 8 previous releases from this same stack. BP
relied upon low personal injury rates as a safety indicator, while the
Chemical Safety Board found that, due to cost cutting, BP allowed its
process equipment to ``run to failure.'' OSHA fined BP $21 million for
300 ``egregious willful'' violations, and then in 2009, OSHA fined BP
another $87.4 million for 700 violations that BP promised to fix after
the 2005 explosion. In March 2010, OSHA issued a $3.0 million fine
against BP's Toledo, Ohio refinery for process safety violations.
BP commissioned former Secretary of State James Baker to
head a panel which found that BP tolerated ``serious deviations from
safety operating practices,'' and concluded that material deficiencies
in process safety ``performance exist at BP's five U.S. refineries.''
North Slope Pipeline
In March 2006, BP spilled over 200,000 gallons of crude
oil over Alaska's North Slope. In August 2006, BP found oil leaking
from flow lines which were severely corroded with losses of 70 to 81
percent in the 3/8-inch thick pipe. BP had not done an internal
pipeline cleanout and inspection for 14 years, despite warnings that is
corrosion prevention program was being hampered by cost cutting. BP had
to replace of 16 miles of pipeline.
In November 2007, BP pled guilty to a single criminal
misdemeanor for violations of the Clean Water Act, and paid $20 million
in fines and restitution for this spill.
This follows a $22 million fine paid in 2000 to settle
criminal and civil violations from illegally discharging hazardous
waste at its North Slope operations.
Risk versus profit
BP senior executives have a history of trading of risks vs profits,
which has led to worker deaths and severe consequences to the
environment and local economies.
Congressional investigations found that BP cut expenditures on
corrosion control to save money, but the price was severely corroded
pipes which spilled 200,000 gallons of oil on the North Slope of
Alaska.
The Chemical Safety Board found that cost cutting and budget
pressures from BP Group Executive managers impaired process safety at
Texas City, which led to 15 deaths, 180 injuries and over $1.5 billion
in property damage. Requests for additional funding to BP in London
were shot down.
Now there are questions about whether BP traded off risks vs
profits in the Gulf to speed up the completion of the well by using too
few centering rigs, a well casing that increased risks of a blowout.
Evidence is still surfacing, but it we know BP was spending $533,000
per day to lease this drilling rig, and there are questions about
whether they had scheduled this rig to be put in a new location to
begin a new project.
We are still learning what precisely happened in the Deepwater
Horizon explosion, but we see from BP's internal investigation and
other accounts that numerous things went wrong.
This all adds up to an ongoing pattern of violations and a pattern
of failure:
A failure to keep the oil and gas in the pipes.
A failure to follow processes put in place to avoid the
worst case scenario.
And a failure to keep workers safe.
In the Gulf, this failure is having devastating consequences--in
terms of loss of life, devastation to the marine environment, and
untold billions of dollars in economic damage.
This history tells me that there is something terribly wrong with
the culture at BP, and that safety is not the priority that it should
be for BP executives.
And while I think it's a good sign that Transocean paid no
executive bonuses last year after a poor safety record, I hope that
your legal gymnastics to limit liability and deny responsibility for
previous spills are not foreshadowing of the dodging and weaving that
we can expect going forward in the case of Deepwater Horizon.
So again, we have this question to answer--does the pattern of
safety violations and failure to protect workers and the environment
and local economies disqualify BP from ever drilling for oil again in
U.S. waters?
______
The documents listed below have been retained in the
Committee's official files.
CNN Article--``U.S. and BP Accepting Few Offers of
International Help, Countries Say''
DeGette, Hon. Diana, a Representative in Congress from
the State of Colorado
Minerals Management Service, U.S. Department of the
Interior ``Application for Revised New Well''
Chart--``Factors Contributing to Blowouts''
Hirshfield, Michael F., Ph.D., Senior Vice President for
North America and Chief Scientist, Oceana
GAO Report: ``Offshore Oil and Gas Development--GAO-10-
276
Letter to Secretary Ken Salazar dated May 19, 2010,
submitted for the record by the Alaska Wilderness League;
Center for Biological Diversity; Defenders of Wildlife;
Earthjustice; National Audubon Society; National Wildlife
Federation; Natural Resources Defense Council; Northern Alaska
Environmental Center; Oceana; Ocean Conservancy; Pacific
Environment; Pew Environment Group; Sierra Club; and The
Wilderness Society
Article by William Yardley--``Arctic Drilling Proposal
Advanced Amid Concern'' dated May 19, 2010
Testimony by Ted Danson dated February 11, 2009
Testimony by Dr. Jeffrey Short dated March 24, 2009
Washington Post Article by Juliet Eilperin--``U.S.
Agency Overseeing Oil Drilling Ignored Warnings of Risks ``
Miller, Hon. George, a Representative in Congress from
the State of California
Reuters Article by Tom Hals--``Transocean Punished for
Legal Tactics in Old Spill''
Napolitano, Hon. Grace F., a Representative in Congress
from the State of California
Article by Professor Robert Bea, UC-Berkley--``Failures
of the Deepwater Horizon Semi-Submersible Drilling Unit''
AP Article by Don Joling and Mark Thiessen--``Gulf Oil
Spill Brings Back Painful Memories in Alaska''
Mind and Body Examiner Article by Dr. KC Kelly dated May
6, 2010--``Will BP Oil Spill Have Same Profound Emotional
Affect [sic] on Residents as Exxon Valdez Catastrophe?''
______
[A chart entitled ``Factors Contributing to Blowouts''
submitted for the record by Ms. DeGette follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]