[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



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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.
                                 ______
                                 
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    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]

                                  
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