[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
THE BP OIL SPILL AND GULF COAST TOURISM: ASSESSING THE IMPACT
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON COMMERCE, TRADE,
AND CONSUMER PROTECTION
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
JULY 27, 2010
__________
Serial No. 111-150
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
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COMMITTEE ON ENERGY AND COMMERCE
HENRY A. WAXMAN, California, Chairman
JOHN D. DINGELL, Michigan JOE BARTON, Texas
Chairman Emeritus Ranking Member
EDWARD J. MARKEY, Massachusetts RALPH M. HALL, Texas
RICK BOUCHER, Virginia FRED UPTON, Michigan
FRANK PALLONE, Jr., New Jersey CLIFF STEARNS, Florida
BART GORDON, Tennessee NATHAN DEAL, Georgia
BOBBY L. RUSH, Illinois ED WHITFIELD, Kentucky
ANNA G. ESHOO, California JOHN SHIMKUS, Illinois
BART STUPAK, Michigan JOHN B. SHADEGG, Arizona
ELIOT L. ENGEL, New York ROY BLUNT, Missouri
GENE GREEN, Texas STEVE BUYER, Indiana
DIANA DeGETTE, Colorado GEORGE RADANOVICH, California
Vice Chairman JOSEPH R. PITTS, Pennsylvania
LOIS CAPPS, California MARY BONO MACK, California
MICHAEL F. DOYLE, Pennsylvania GREG WALDEN, Oregon
JANE HARMAN, California LEE TERRY, Nebraska
TOM ALLEN, Maine MIKE ROGERS, Michigan
JANICE D. SCHAKOWSKY, Illinois SUE WILKINS MYRICK, North Carolina
CHARLES A. GONZALEZ, Texas JOHN SULLIVAN, Oklahoma
JAY INSLEE, Washington TIM MURPHY, Pennsylvania
TAMMY BALDWIN, Wisconsin MICHAEL C. BURGESS, Texas
MIKE ROSS, Arkansas MARSHA BLACKBURN, Tennessee
ANTHONY D. WEINER, New York PHIL GINGREY, Georgia
JIM MATHESON, Utah STEVE SCALISE, Louisiana
G.K. BUTTERFIELD, North Carolina
CHARLIE MELANCON, Louisiana
JOHN BARROW, Georgia
BARON P. HILL, Indiana
DORIS O. MATSUI, California
DONNA M. CHRISTENSEN, Virgin
Islands
KATHY CASTOR, Florida
JOHN P. SARBANES, Maryland
CHRISTOPHER S. MURPHY, Connecticut
ZACHARY T. SPACE, Ohio
JERRY McNERNEY, California
BETTY SUTTON, Ohio
BRUCE L. BRALEY, Iowa
PETER WELCH, Vermont
Subcommittee on Commerce, Trade, and Consumer Protection
BOBBY L. RUSH, Illinois
Chairman
JANICE D. SCHAKOWSKY, Illinois CLIFF STEARNS, Florida
Vice Chair Ranking Member
JOHN SARBANES, Maryland RALPH M. HALL, Texas
BETTY SUTTON, Ohio ED WHITFIELD, Kentucky
FRANK PALLONE, Jr., New Jersey GEORGE RADANOVICH, California
BART GORDON, Tennessee JOSEPH R. PITTS, Pennsylvania
BART STUPAK, Michigan MARY BONO MACK, California
GENE GREEN, Texas LEE TERRY, Nebraska
CHARLES A. GONZALEZ, Texas MIKE ROGERS, Michigan
ANTHONY D. WEINER, New York SUE WILKINS MYRICK, North Carolina
JIM MATHESON, Utah MICHAEL C. BURGESS, Texas
G.K. BUTTERFIELD, North Carolina
JOHN BARROW, Georgia
DORIS O. MATSUI, California
KATHY CASTOR, Florida
ZACHARY T. SPACE, Ohio
BRUCE L. BRALEY, Iowa
DIANA DeGETTE, Colorado
JOHN D. DINGELL, Michigan (ex
officio)
C O N T E N T S
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Page
Hon. Bobby L. Rush, a Representative in Congress from the State
of Illinois, opening statement................................. 1
Prepared statement........................................... 3
Hon. Ed Whitfield, a Representative in Congress from the
Commonwealth of Kentucky, opening statement.................... 7
Prepared statement........................................... 8
Hon. Henry A. Waxman, a Representative in Congress from the State
of California, opening statement............................... 11
Prepared statement........................................... 12
Hon. Joe Barton, a Representative in Congress from the State of
Texas, opening statement....................................... 15
Prepared statement........................................... 17
Hon. Kathy Castor, a Representative in Congress from the State of
Florida, opening statement..................................... 21
Hon. Cliff Stearns, a Representative in Congress from the State
of Florida, opening statement.................................. 21
Hon. Gene Green, a Representative in Congress from the State of
Texas, opening statement....................................... 22
Hon. Robert E. Latta, a Representative in Congress from the State
of Ohio, opening statement..................................... 23
Hon. Betty Sutton, a Representative in Congress from the State of
Ohio, opening statement........................................ 23
Hon. Phil Gingrey, a Representative in Congress from the State of
Georgia, opening statement..................................... 24
Hon. Steve Scalise, a Representative in Congress from the State
of Louisiana, opening statement................................ 24
Hon. Charlie Melancon, a Representative in Congress from the
State of Louisiana, prepared statement......................... 99
Witnesses
Kenneth Feinberg, Administrator, Gulf Coast Claims Facility...... 26
Prepared statement........................................... 28
Answers to submitted questions............................... 102
Roger Dow, President and CEO, U.S. Travel Association............ 30
Prepared statement........................................... 32
Answers to submitted questions............................... 107
Rip Daniels, CEO/Manager, WJZD-FM, Vice President, Mississippi
Gulf Coast Tourism Commission.................................. 39
Prepared statement........................................... 41
Herb Malone, President and CEO, Alabama Gulf Coast Convention and
Visitors Bureau................................................ 47
Prepared statement........................................... 49
Answers to submitted questions............................... 114
Keith Overton, Senior Vice President and Chief Operating Officer,
Tradewinds Resort, and Chairman, Florida Restaurant and Lodging
Association.................................................... 54
Prepared statement........................................... 57
Ralph O. Brennan, President, Ralph Brennan Restaurant Group, LLC. 67
Prepared statement........................................... 70
Answers to submitted questions............................... 118
Submitted Material
Statement of the Northwest Florida Tourist Development Council
Coalition...................................................... 100
THE BP OIL SPILL AND GULF COAST TOURISM: ASSESSING THE IMPACT
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TUESDAY, JULY 27, 2010
House of Representatives,
Subcommittee on Commerce, Trade,
and Consumer Protection,
Committee on Energy and Commerce,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:03 a.m., in
Room 2322 of the Rayburn House Office Building, Hon. Bobby L.
Rush [Chairman of the Subcommittee] presiding.
Members present: Representatives Rush, Schakowsky,
Sarbanes, Sutton, Green, Gonzalez, Butterfield, Barrow, Castor,
DeGette, Waxman (ex officio), Melancon, Whitfield, Stearns,
Terry, Gingrey, Scalise, Latta, Barton (ex officio), and
Burgess.
Staff present: Michelle Ash, Chief Counsel; Tim Robinson,
Counsel; Angelle Kwemo, Counsel; Anna Laitin, Counsel; Will
Wallace, Special Assistant; Elizabeth Letter, Press Assistant;
Jeremy Feigenbaum, Intern; Billie McGrane, Intern; David
Cavicke, Chief of Staff; Amanda Mertens Campbell, General
Counsel; Katie Wheelbarger, Deputy Chief of Staff; Brian
McCullough, Senior Professional Staff; Kevin Kohl, Professional
Staff; Aaron Cutler, Counsel; and Sam Costello, Legislative
Analyst.
OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ILLINOIS
Mr. Rush. The Subcommittee on Commerce, Trade, and Consumer
Protection will come to order. I thank those who have gathered
here for this hearing, and the Chair recognizes himself for 2
minutes for an opening statement.
The Chair wanted to remind the members that anyone other
than the Full Committee Chair or the Full Committee Ranking
Member or the Chairman Emeritus will be encouraged to limit
their opening remarks to 2 minutes because of the time
consideration for some of our witnesses.
April 20 was a tragic day for the people of the Gulf Coast
region of the United States. Eleven workers died following an
explosion on the Deep Water Horizon oil drilling rig located 40
miles offshore in the Gulf of Mexico. Since that tragic day an
estimated 50 to 150 million gallons of oil have leaked into the
Gulf, severely damaging our environment, destroying people's
way of life, and severely damaging the entire region's economy.
Tourism is the Gulf Region's second largest industry. It
generates more than $39 billion in state revenue. Tourism
represents 46 percent of the region's economy. Tourism employs
over one million people. Various setting indicate that this oil
spill has put 300,000 jobs at risk, representing 15 percent of
the total job base in the region.
The saddest part of this story is that some of the
businesses that are impacted today were still recovering from
the aftermath of Hurricane Katrina, which occurred over 5 years
ago. Now then BP has created a $20 billion claim pool to
compensate victims who have been impacted by the oil spill.
The purpose of this hearing is to make sure that the travel
and tourism industry will not be left behind, that they will be
included. One might ask why. Well, I am glad you asked.
Because of the intricacy of that particular industry, the
complexity of the methodology that needs to be employed to
determine the level of damages and grant compensation and
because of the tourisms vast economic impact on the entire Gulf
Coast Region.
Furthermore, we have learned from the massive media
coverage of the oil spill and by various studies by the tourism
industry itself that it is losing business not only because of
the beaches may not be safe but also because travelers perceive
that it is not safe to travel to the Gulf Coast Region of the
U.S.
You have also heard the concerns of the industry about the
claims process, its timeframe for compensation and eligibility.
Finally, we have to consider what needs to be done to bring
back the industry to the stature it had before the oil spill.
These are difficult issues we have to examine here today. The
complexity of the matter may require more than one hearing.
I want to thank all the witnesses for appearing before this
subcommittee. We have concerns about the tourism industry and
how it will be compensated and how it will be revitalized, and
I hope our discussion today be a very fruitful and productive
one.
[The prepared statement of Mr. Rush follows:]
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Mr. Rush. With that I yield back the balance of my time.
Now I recognize the Ranking Member for 2 minutes.
OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF KENTUCKY
Mr. Whitfield. Mr. Chairman, thank you and I want to
welcome all the witnesses today. We appreciate Mr. Feinberg
being with us, as well as representatives of the tourism
industry.
We know that since the explosion of the Deepwater Horizon
oil rig on April 20 the Gulf Coast economy has faced many
difficult challenges. We also know that this is the summer peak
months for tourism and that many people have been adversely
impacted by this incident.
It is my understanding that BP prior to the Gulf Coast
claims funding set-up gave Florida $25 million to promote
tourism, Mississippi, Louisiana, and Alabama, $15 million each
to counter the publicity and the impact, the perception that it
would not be open for tourism.
BP has been paying claims to businesses affected by the
spill. They had paid out, it is my understanding over $200
million thus far in claims. It is not surprising that some
businesses are having difficulty at getting their claims
processed quickly because really BP is not an insurance
company.
The administration of the claims process is being handled
by Mr. Feinberg. He certainly has experience in this arena,
having disbursed funds as a result of the 9/11 incident. It is
my understanding that he is going to be taking control of 36 BP
offices and 1,500 employees established to pay claims to
qualified businesses.
Mr. Feinberg is charged with administering the entire $20
billion Gulf Coast claims account and paying legitimate claims
to affected parties. It is an admirable and certainly a
difficult position because we know that paying claims in this
kind of a situation is certainly an inexact science. Will it be
restricted to the beach resorts only, or will downstream
suppliers to the tourism industry qualify for compensation?
There are a lot of unanswered questions. We do want to see that
people are reimbursed who have legitimate claims. We know that
there will be some people filing claims that are not
legitimate, but that is one of the challenges that Mr. Feinberg
faces.
And then one other question that I think is going to have
to be answered as we go along is the drilling moratorium
imposed by the Administration is certainly going to have an
impact on the economy up and above the impact on the tourism as
a result of the spill. And there is going to have to be some
questions asked about who should pay for the cost of those--of
that moratorium. Should it be the government, should it be BP?
So there are a lot of unanswered questions, and I know that
this committee is totally committed to making sure that
everyone receives compensation that deserves it. We look
forward to your expertise, your thoughts on this important
subject and certainly look forward to all of your testimony.
Thank you.
[The prepared statement of Mr. Whitfield follows:]
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Mr. Rush. The Chair recognizes the Chairman of the Full
Committee, Mr. Waxman, for 5 minutes.
OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Waxman. Thank you very much, Mr. Chairman.
The BP spill on the Gulf of Mexico is the worst
environmental disaster this country has ever seen, and while we
have every hope that the cap will hold and the flow of oil into
the Gulf has truly stopped, we know that the devastation is
enormous, and its affects will continue for years.
In the 3 months since the Deepwater Horizon explosion and
blowout, the Committee on Energy and Commerce has held eight
hearings examining the causes of the explosion, efforts to
mitigate the damage, and the impacts on the environment and the
local community.
I would like to thank Chairman Rush for holding our ninth
hearing which will focus on the impacts of the spill on tourism
and the tourism economy in the Gulf area. The economies of
Louisiana, Mississippi, Alabama, and Florida are heavily
dependent on the travelers who come to the Gulf Coast beaches
each summer for swimming, fishing, and other activities across
each of these four States. Some beaches are closed, and
significant fishing grounds are still off limits. Hotels,
restaurants, charter boats, and resorts are facing
cancellations. Tourists are shying away from the areas of the
Gulf even where no oil has come ashore. Diners and grocery
shoppers across America are asking about whether the seafood is
from the Gulf and whether it is safe to eat.
Today we will hear from tourism officials and businesses
from each of the four States dealing with this catastrophe. We
will also hear from Kenneth Feinberg, the independent
administrator in charge of handling all claims for damage and
loss of the oil spill. He is responsible for determining the
proper level of compensation for each business, worker, and
family impacted by the spill.
This hearing will give the committee a better understanding
of the impacts of the spill on an essential part of the Gulf
Coast economy and help us understand what we can do further to
help the region recover. I thank all the witnesses for being
here today, and I look forward to their testimony.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Waxman follows:]
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Mr. Rush. The Chair now recognizes the gentleman from
Florida, Mr. Stearns, for 2 minutes. For 1 minute. I am sorry.
Oh, I am sorry. I didn't see the Ranking Member down there.
Mr. Barton. I am willing to let Mr. Stearns go.
Mr. Rush. He is to my left. You are not normally on my
left.
The Chair now recognizes the Ranking Member of the Full
Committee, Mr. Barton, my friend from Texas, for 5 minutes.
OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TEXAS
Mr. Barton. I thank the distinguished gentleman from the
windy city of Chicago, home of the Cubs and the White Sox. I
appreciate that.
I want to thank Chairman Rush and Chairman Waxman for
convening this hearing today, and appreciate Ranking Member
Whitfield, whose leadership on this issue. I want to thank each
of you witnesses for appearing before us today. I know it is a
busy time for all of you.
Since the Deepwater Horizon exploded and sank 3 months ago,
this committee in my opinion has conducted a fair and rigorous
investigation of the accident and developed what I consider to
be a measured Congressional response. Our Oversight and
Investigations Subcommittee, Energy and Environment
Subcommittee, Health Subcommittee, and now the Commerce, Trade,
and Consumer Protection Subcommittee are each doing their best
to review and discuss all of the issues surrounding the oil
spill.
As a result of these investigations and the bipartisan
engendered by them, the Full Committee recently voted 48 to
zero to report out a Blowout Prevention Bill that, again, in my
opinion is a balanced response to the tragedy.
I want to welcome all of you witnesses today to consider
our investigation, continue the investigation. I especially
want to welcome Mr. Ken Feinberg. Mr. Feinberg has competently
administered the 9/11 Victims Compensation Fund. That was a
very tough job, and I expect him to competently and
transparently administer the current BP Spill Escrow Account.
The people of the Gulf Coast who have lost their jobs or
had their livelihoods diminished by the oil spill should be
compensated, should be compensated fairly, and should be
compensated quickly. We are going to hear from some of the
people who have been affected when we get to the other
witnesses on this panel today.
Tourism, fishing, and energy development are vital to the
Gulf Coast where they employ hundreds of thousands of people.
The tourism industry, which is the focus of today's hearing, by
itself generates over $30 billion a year.
The oil spill reveals much about the Gulf Coast community.
Many of us on this committee have come to know the strength of
that community following the vast swath of destruction that was
left by Hurricane Katrina nearly 5 years ago. Gulf Coast people
are nothing if not resilient, but with this latest manmade
disaster some of those folks must be wondering what on earth is
going to hit them next.
The Gulf Coast economy is tied to earth and ocean
resources. The industries along the Gulf are so intertwined
that the losses in one sector ripple throughout the entire
regional economy. That is why if you are going to understand
the magnitude of the tragedy, we must listen closely to those
who are being directly affected by the Administration's
decisions, especially the one currently to ban energy
exploration.
I have said this before, but the Administration should
reconsider its second moratorium decision. I think that is the
wrong decision that they made. Enforcing a blanket policy in
exploration is not unlike sending a new oil spill or a big
storm to further threaten the jobs of the Gulf Coast. The
Administration has shown some tendency towards panic in this
regards lately. This should not be a time for panic but instead
a moment, a time for careful, thoughtful consideration.
I hope the Administration will choose not to forget about
the fishermen, shrimpers, rig workers who share the same
uncertainty as those who work on the beaches and the hotels and
along the retail establishments of the main streets of the Gulf
Coast.
This is an important hearing. Again, I want to thank the
witnesses. I look forward to your testimony, and again, Mr.
Chairman, and Chairman and Ranking Member Whitfield, thank you
for arranging this hearing.
With that I yield back, Mr. Chairman.
[The prepared statement of Mr. Barton follows:]
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Mr. Rush. The Chair recognizes the gentlelady from Florida,
Ms. Castor, for 1 minute.
OPENING STATEMENT OF HON. KATHY CASTOR, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF FLORIDA
Ms. Castor. Thank you, Chairman Rush and Chairman Waxman
and Mr. Whitfield, for organizing this important hearing.
You know, since April and the BP Deepwater Horizon blowout
Floridians have been living their worst nightmare. The
environmental damage, the economic damage is taking a terrible
toll on our small business owners, our hotels, our fishermen.
You know, we were just coming out of the recession, so BP's
disaster is wreaking havoc again on our hard-working folks in
Florida.
And what is particularly frustrating in the Tampa Bay area
where I represent, we have got the most beautiful beaches in
the world, from Pinellas County, Manatee, Sarasota, all the way
down to Sanibel Island. There is no oil there. The oil is
hundreds and hundreds of miles away, and yet the word has gone
out all across the globe, especially to Europe and South
America, where we rely on all those tourists, that the Florida
beaches are damaged, that the Gulf Coast is toxic.
We have got to turn that perception around. The efforts of
BP to date have been inadequate to say the least. What is
particularly maddening is we watch these incessant ads, full-
page ads by BP, that are polishing their corporate image at a
time where they should be devoting a good portion of those
monies to helping small business owners, our hotels get back on
their feet and explain to folks around the globe that our
beaches are pristine, and we want you to come to Florida rather
than how many millions and millions and millions of dollars
have they spent on polishing their own corporate image.
So that is the frustration I wanted to share today. So I am
really looking forward to hearing from our expert witnesses. A
special thank you to Keith Overton from the Tradewinds from St.
Pete Beach who is the head of Florida's Restaurant and Lodging
Association. We have a lot to learn from all of you, and I am
glad you are here.
Thank you.
Mr. Rush. The Chair now recognizes the gentleman from
Florida, Mr. Stearns for 1 minute.
OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF FLORIDA
Mr. Stearns. Thank you, Mr. Chairman, and let me also
compliment you and Mr. Whitfield for your leadership on this
hearing and welcome Kenneth Feinberg, the Gulf Coast Claims
Administrator here. He is going to have a tough job.
I saw in the paper recently he said, ``I have a concern
that BP is stalling claims. Yes, BP is stalling. I doubt they
are stalling for money. It is not that. I just don't think they
know the answer to the questions by the claimants.'' That is
going to be true whether you decide a claim because of
geographic distance or whether you decide a claim because of
ownership. Are you going to ask for tax returns? I mean, how
are you possibly going to figure out what particular claim is
valid or not. So we all pray and hope that he will have the
wisdom of Solomon to do this.
I noticed in a report as of July 24 in Florida 41,818
claims were made, and money that was handed out was
$45,320,000. So obviously some claims have been paid, and a lot
of people across many, many counties and including counties
that are not even affected by the Gulf Coast, have been paid.
Florida has the most densely-populated coastline of the United
States, and so this spill threatens our beaches, and as a
former restaurant, hotel owner I deeply sympathize and
empathize with these businesses and hope obviously that they
are not hurt badly and that we can come back.
But in the end I think the hard questions for the
Administrator, Mr. Feinberg, is how to solve the questions of
who gets the money and gets served with the extra support.
So, Mr. Chairman, I think this is a very important hearing
to hear from Mr. Feinberg and as well as the members of the
tourist industry, what they think should be done. So thank you.
Mr. Rush. Mr. Green from Texas.
OPENING STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TEXAS
Mr. Green. Thank you, Mr. Chairman, and like my colleagues
I want to welcome our panel, particularly Mr. Feinberg, but on
a personal note I would like to welcome Mr. Brennan here. You
have reopened the Houston Restaurant after a terrible fire, and
we appreciate it in Houston. And, Mr. Chairman, I want to thank
you for raising the issues of the effects of the oil spill on
tourism in the Gulf of Mexico.
Having watched Jimmy Buffett's concert a few weeks ago from
Gulf Shores, it is almost like we need that every week to get
the word out along a number of different places on the Gulf
Coast because that was a good turnout, people saw the clean
beaches, and were enjoying the music. So we need to do more of
that.
Along the Alabama to Texas Gulf Coast oil and gas
exploration, fishing, and tourism are the largest industries
for employment in an economic progress. The oil spill is a
profound impact on all three and during one of our worst
economic times in the last 70 years.
I represent a district in Houston where thousands has lost
or furloughed their jobs as a result of the drilling
moratorium. Other areas have been hit even harder, and some
Gulf Coast towns oil and gas, fishing and tourism are all they
have, and now they don't have any of those three. I am afraid
this spill is going to have a lasting negative impact on
communities beyond the environmental implications for years to
come with so much money being removed from the system. The
economy is already hard hit. We will struggle to bounce back.
It will be important for us to help those communities. One
way this can be accomplished is by fixing misconceptions that
lead the potential tourists to believe that the entire Gulf
Coast has been marred and cannot be visited again. I see it all
the time on the news. There are white beaches, and the water is
clean, so hopefully people who are watching this will know they
can spend their vacation along the Gulf Coast.
I am pleased that our expert panel has given time today to
be here, and I look forward to the hearing. Again, Mr.
Chairman, thank you for calling this hearing.
I yield back my time.
Mr. Rush. Mr. Latta is recognized for 1 minute.
OPENING STATEMENT OF HON. ROBERT E. LATTA, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OHIO
Mr. Latta. Well, thank you, Mr. Chairman, Ranking Member
Whitfield. I believe this is a very important hearing today as
we examine the devastating impacts that the Deepwater Horizon
oil disaster has had on the Gulf Coast tourism.
I recently toured the area around Grand Isle, Louisiana,
and saw firsthand the devastation of the region and its
economic impact on the people who work and live there. This
area of the country is one that relies heavily on its fishing
and tourism industries, and I am looking forward to hearing
from today's witnesses and their perspective on the disaster.
I especially look forward to Mr. Feinberg's testimony and
questions he may answer as to the Administration's platform for
the handling and distribution of the $20 billion escrow account
to compensate victims of the oil spill.
As disaster cleanup continues, we need to make sure funds
are handled properly and in a timely manner, and it gets to the
appropriate individuals that need that assistance.
And with that, Mr. Chairman, I yield back.
Mr. Rush. Ms. Sutton is recognized for 1 minute.
OPENING STATEMENT OF HON. BETTY SUTTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OHIO
Ms. Sutton. I thank the distinguished Chairman for holding
this hearing.
Over the last few months we have heard from BP and other
companies involved in the Deepwater Horizon disaster and
Administration officials about how this tragedy occurred and
how we can prevent it from happening again, and at one of those
early hearings I asked Lamar McKay, the President and Chairman
of BP America, if BP would consider the loss of profits for
fishing and tourism as a legitimate claim, and Mr. McKay
replied, yes, and that was a good development after BP's
reckless actions. Their culture of carelessness caused the
devastation of our waters and coasts and wildlife and injured
countless businessmen and the tourism industry.
And the losses to these businesses, of course, have had
ripple affects throughout our economy, and we have heard some
of that detailed here today where people from places beyond the
Coast are feeling the effects of loss of tourism. I am
interested in hearing the testimony today from the witnesses
about how the Gulf Coast Claims Facility has been processing
the claims coming in and if this process can be improved.
Thank you, and I yield back.
Mr. Rush. Dr. Gingrey is recognized for 1 minute.
OPENING STATEMENT OF HON. PHIL GINGREY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF GEORGIA
Mr. Gingrey. Chairman Rush, thank you for calling today's
hearing on the impact that the Deepwater Horizon explosion has
had on tourism in the Gulf Region. As a member of the
Subcommittee on Oversight and Investigation, I have had the
opportunity to hear testimony on a range of matters relating to
Deepwater Horizon. I look forward to hearing from today's panel
of witnesses.
Due to the importance that tourism has for the economy in
the Gulf, it is critically important that we use today's
hearing to assess the devastating impact that the oil spill
will have on approximately 46 percent of the region's economy
at a time when unemployment across the country is 9.5 percent,
further impact the tourism industry in the region, will only
exacerbate those economic woes.
Mr. Chairman, this downturn will not only affect the areas
directly hit by the oil spill, but it will also affect areas
where the coastline and water are still pristine. Therefore, we
must strike a balance within the funds being handled by the
Gulf Coast Claims Facility under Mr. Feinberg's administration.
In particular, based on his earlier testimony at the Small
Business Committee, I look forward to hearing from Mr. Feinberg
in particular on the challenges facing the Gulf Coast tourism
in the aftermath of Deepwater Horizon, and I thank all of you
gentlemen who are actively involved in tourism industry. You
know of what you speak. We look forward to hearing from you
today.
And, Mr. Chairman, I yield back. Thank you.
Mr. Rush. Mr. Barrow of Georgia is recognized for 1 minute.
Mr. Barrow. I waive opening.
Mr. Rush. Thank you. The Chair now recognizes Mr. Scalise
of Louisiana for 1 minute.
OPENING STATEMENT OF HON. STEVE SCALISE, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF LOUISIANA
Mr. Scalise. Thank you, Mr. Chairman and Ranking Member
Whitfield, for having this important hearing on the oil spill's
affect on tourism in the Gulf Coast. I want to start by
welcoming a dear friend and a respected business leader from
New Orleans, Ralph Brennan. Not only respected in Louisiana but
as former head of the National Restaurant Association, an
authority on restaurants, tourism, and business, and I
appreciate him coming and look forward to hearing his comments.
And as my colleagues have pointed out, the tourism
industry, including restaurants like Mr. Brennan's, is
suffering from the effects of the oil spill. An industry that
employs over one million people along the Gulf Coast and brings
in approximately $39 billion in annual tax receipts is now
facing double-digit declines due to this disaster. A national
survey done in May by the Louisiana Office of Tourism found
that 26 percent of those who had plans to visit Louisiana had
postponed or canceled their trip, while a June survey focused
on nearby visitors along the Gulf Coast States found similar
results.
That is why it is so critical that the recovery fund being
run by Mr. Feinberg is administered in a way that helps all of
those that are being affected and will be affected by this
disaster.
And finally, Mr. Chairman, it is critical that the Federal
Government does not add to the problems that we are facing
along the Gulf Coast, and it is critical that the President end
this irresponsible moratorium on offshore drilling. As people
in Louisiana continue to fight the oil each day, President
Obama and his Administration are taking what is already a human
and environmental tragedy and turning it into an economic
tragedy by continuing to pursue this reckless moratorium.
Mr. Chairman, the economy in my State and others along the
Gulf Coast are already suffering. The Federal Government's role
is to help and not hurt our recovery. I look forward to hearing
from our panelists.
Thank you, and I yield back.
Mr. Rush. Mr. Gonzalez from Texas is recognized for 1
minute.
Mr. Gonzalez. Waive opening.
Mr. Rush. The Chair thanks the gentleman. Is there any
other member? The Chair don't see any--does not see any other
members seeking recognition.
Now, the Chair has a unanimous consent request before the
committee. Mr. Melancon and Mr. Burgess can sit on the panel
and ask questions. I don't see either of them here. If, in
fact, they do appear, then hearing no objection if and when
they do appear, they will be allowed to sit on the panel and
ask questions of the witnesses.
The Chair also asks for unanimous consent to insert into
the record a statement from the Northwest Florida Tourist
Development Council. Hearing no objections, so ordered.
[The information appears at the conclusion of the hearing.]
Mr. Rush. Now it is my pleasure and my privilege to
recognize and introduce the witnesses that will appear before
us today, and beginning on my left, a name that is not
unfamiliar with those who are here in this Congress, Mr. Ken
Feinberg. He is the Administrator for the Gulf Coast Claims
Facility. He is on my far left.
Seated next to him is Mr. Roger Dow, who is the President
and CEO of the U.S. Travel Association. Seated next to Mr. Dow
is Mr. Rip Daniels. He is the CEO and Manager of WJZD-FM. He is
also the Vice-President of the Mississippi Gulf Coast Tourism
Commission.
Next to Mr. Daniels is Mr. Herb Malone. He is the President
and CEO of the Alabama Gulf Coast Convention and Business
Bureau. Seated next to Mr. Malone is Mr. Keith Overton, and Mr.
Overton is the Senior Vice-President and Chief Operating
Officer of Tradewinds--of the Tradewinds Resort. He is also the
Chairman of the Florida Restaurant and Lodging Association. And
then we have Mr. Brennan, Mr. Ralph O. Brennan, who is the
President of the Ralph Brennan Restaurant Group, LLC.
Again, I want to thank the witnesses for appearing in
response to our request and our invitation. It is the practice
of this subcommittee to swear in witnesses, so I will ask if
you will stand and raise your right hand.
[Witnesses sworn.]
Mr. Rush. Please let the record reflect that the witnesses
have all in their entirety answered in the affirmative. And now
we will recognize Mr. Feinberg for 5 minutes for opening
statement.
TESTIMONY OF KENNETH FEINBERG, ADMINISTRATOR, GULF COAST CLAIMS
FACILITY; ROGER DOW, PRESIDENT AND CEO, U.S. TRAVEL
ASSOCIATION; RIP DANIELS, CEO/MANAGER, WJZD-FM, VICE PRESIDENT,
MISSISSIPPI GULF COAST TOURISM COMMISSION; HERB MALONE,
PRESIDENT AND CEO, ALABAMA GULF COAST CONVENTION AND VISITORS
BUREAU; KEITH OVERTON, SENIOR VICE PRESIDENT AND CHIEF
OPERATING OFFICER, TRADEWINDS RESORT, AND CHAIRMAN, FLORIDA
RESTAURANT AND LODGING ASSOCIATION; AND RALPH O. BRENNAN,
PRESIDENT, RALPH BRENNAN RESTAURANT GROUP, LLC
TESTIMONY OF KENNETH FEINBERG
Mr. Feinberg. Thank you, Mr. Chairman. I thank the
subcommittee for the opportunity to testify. It is the fourth
time I have testified in the last 2 weeks in the Congress,
three times on the House side and once on the Senate side, and
I am here again to answer any questions that the members may
have.
I am the independent administrator of this new Gulf Coast
Claims Facility set up by agreement between the Administration
and BP. I do not work for the Administration. I do not work for
BP. I have been delegated the authority to design, implement,
and administer this purely private facility funded by BP in a
$20 billion escrow account.
I have been assured by both the Administration and BP that
this facility that I am administering will, in fact, be totally
independent. I answer to the people in the Gulf, not to the
Administration nor to BP. BP has--is setting aside $20 billion
in an escrow fund to pay all eligible claims that are submitted
to the facility. Hopefully the $20 billion will be enough. If
not, BP has agreed that it will honor any additional financial
obligations that it may have over and above the $20 billion.
I am now in the process, as you know, of establishing this
facility. It is not yet up and running. It will be up and
running next month, in a few weeks, and we will assume all
responsibility from BP for processing private claims of
individuals and businesses. I do not have any jurisdiction over
government claims, state, local, or federal. None. I also have
no jurisdiction over the moratorium claims for the rig workers,
the $100 million set aside by BP for moratorium rig workers
that is not part of the $20 billion and is being administered,
as I understand it, separately.
I want to give BP some credit. It has already paid over
$230 million worth of claims, not out of the $20 billion but as
part of its petty cash. It has paid out $230 billion in
individual and some business claims. When I said--somebody--
Congressman Stearns, I think, reminded me about stalling. BP
has not been paying certain problematic claims for the reasons
really expressed by Congressman Stearns.
I mean, what constitutes an eligible claim is a major
question here, and it is going to be a major question today
when it comes to tourism. It is easy to compensate a motel or a
restaurant on the beach where there is oil. You don't need the
wisdom of Solomon for that claim. You really don't. You don't
need the wisdom of Solomon for a claim involving a motel on the
beach where the beach is pristine but you can't fish. That is
an easy claim.
Proximity is going to be the problem here. Proximity. How
far from the beach does a steakhouse that has lost 30 percent
of its business because of a downswing in tourism is precisely
the question posed by Congressman Stearns. What constitutes and
eligible tourist claim?
Now, I have got some great help on that from Mr. Malone
from Alabama, who I have met with on a couple of occasions, who
is thinking this problem through from the perspective of
tourism in Alabama. Governor Crist in Florida has reminded me
about the Pan Handle and the influence of this disaster on a--
on the Florida coast, but what I am going to have to decide,
you see, as part of this Gulf Coast Claims Facility is what
constitutes a direct claim, a direct claim, that is immediately
payable, and how far attenuated may a claim be from the spill.
The overall impact of the spill undoubtedly impacts tourism
throughout a particular state. I am sure of that.
The question is what constitutes an eligible claim, and
what is required to be proven in advancing that calculation in
order to get money from this facility. I am as interested as
the members are in hearing from the--my fellow witnesses today.
Maybe I will come up with some additional ideas that Mr. Malone
has already advanced for my consideration in terms of trying to
come up with a fair, equitable, just way to determine
eligibility and to determine what the appropriate compensation
should be.
I look forward to the testimony of my other fellow
witnesses. I look forward to working with this committee. There
are some members here who I have already been working with over
the past few weeks, and I look forward to continuing to work
with Congresswoman Castor and others, Congressman from
Louisiana also. I have been meeting with them. I return to
Florida tomorrow. I will be in Mississippi and Alabama on
Friday and will be returning to Florida again--and Louisiana in
the next 2 weeks.
So you can't do this from Washington. You have to spend a
lot of time down there, hearing what people have to say, the
uncertainty, the concern, and I really look forward to working
with this committee in the months and weeks ahead.
Thank you.
[The prepared statement of Mr. Feinberg follows:]
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Mr. Rush. Mr. Dow, you are recognized for 5 minutes.
TESTIMONY OF ROGER DOW
Mr. Dow. Thank you, Mr. Chairman, and thank you, Ranking
Member Whitfield, and the members of the committee that are
present. It is an honor to be here today, and I have already
submitted and will submit my testimony for the record, but I
would like to be brief.
To give you an idea, the U.S. Travel Association I
represent is basically--represents the whole $704 billion
travel industry or one of nine Americans employed. Our 2,000
members represent all the airlines, hotels, lodging companies,
attractions, et cetera, and our mission is real simple, and
that is to promote travel and increase travel to and within the
United States that creates American jobs.
During the current environmental crisis that mission
couldn't be more important. In my testimony I am going to
highlight several things. One, the significance of the impact
of travel and tourism which you have already heard from
distinguished members of the panel, and you will hear from the
panel and also from the committee state but also the potential
long term of the oil spill, the damages and what BP and the
Federal Government can do.
It is mentioned that four States are impacted to the tune
of $94 billion of their travel economy and a million employees
in their travel economy, but you also have Texas, which
perception has not been hit as hard but perception can cause
people not to go to parts of Texas, and that is even a bigger
place.
When you look at tourism, it has a much larger portion in
the Gulf Region than many--any other region in the country.
Fifteen percent of private employees are in this industry in
the Gulf Region versus other areas. When you really look at how
many people, the question is who is harmed, as Mr. Feinberg
said well, and how long I think are very important questions.
We commissioned Oxford Economics, one of the most respected
economics firms in the globe, to take a look because we have
got to deal with facts as Mr. Feinberg so rightly says, not
hearsay, and we commissioned them to look at 25 national
disasters around the world; hurricanes, tsunamis, earthquakes,
oil spills, pandemics, and take a look at what would happen and
the facts of data of how long it took them to recover.
Well, as you have already heard stated, Katrina 5 years
later, New Orleans hadn't recovered from pre-Katrina numbers.
Oxford Economics estimates that the damage is going to be
probably $22.7 billion. That is just to the travel and tourism
industry, over 3 years.
What I want to talk about today is that cost can be reduced
significantly by up to a third or $7.6 billion. We have
submitted the Oxford Economic study, and we have also submitted
a roadmap to recovery with concrete ideas how to mitigate the
damages so we can lessen them for the taxpayers and lessen them
for BP. Using travel to stimulate the economy and speed the
recovery.
And it is three parts. One is to inform the perception, and
we all know how important perception is. Second, create an
incentive for people to travel back to this area. Third, to
make businesses and people whole, and this must be funded by BP
to help reduce the long-term implications.
A key lever that is available to BP and the Federal
Government is the opportunity to create marketing to bring
people back. We are asking that it be considered a $500 million
fund, which would be a 15 to one return or $7.5 billion to
bring people back. Mr. Feinberg has the challenge of assessing
real damages, but the challenge is, if left untouched these
damages will mount and will grow. We have an opportunity to
shrink them, and we need to address that. And so with no
guidance for recovery, we don't know how to submit the claim.
So that is going to be important.
We believe that the Gulf Coast Claims Facility is the right
and only area to take $500 million and properly allocate it to
the people that can make a difference. There have been many
requests by states, and they have received as you have already
said $70 million. The unfortunate problem is of that $70
million very little actually got to marketing.
We would like to remove the politics. We would like to
remove special interests. We would like to get a transparent
process where we can mitigate and pull this down. The damage
has already occurred. Everyone is talking about capping the
damages and capping the well. Well, we also need to cap the
damages long term, and we can do that.
The 400,000 people that work in this industry know how to
do things in this industry. They probably don't know how to
file a claim. So we need to get them back more quickly. A $500
million marketing effort will do that. We have seen that over
and over. We saw that with SARS in Canada. We have watched for
98 days on television the problems. We can turn this around, we
can mitigate it. Nothing is more important than getting a fund
to do this, put it in place, and I believe that will help the
communities, the families, and the taxpayers, and in the long
term reduce the liability for BP.
Thank you very much.
[The prepared statement of Mr. Dow follows:]
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Mr. Rush. The Chair recognizes now Mr. Daniels for 5
minutes.
TESTIMONY OF RIP DANIELS
Mr. Daniels. Thank you, Chairman Rush, Ranking Member
Whitfield, and other subcommittee members. I am representing
myself today.
Mr. Rush. Would you turn the mike on and pull it closer to
you? Thank you.
Mr. Daniels. I apologize for that. I am representing myself
as a private citizen and not the Harrison County Tourism
Commission primarily because I wanted to represent small
business as well as it applies to tourism.
I have been in tourism since 1978, starting as a tavern
owner, radio broadcaster, real estate broker, tourism
commissioner, and the primary investor in the Coast's newest
African-American hotel, the Almanett. I have seen firsthand the
adverse effects of a range of disasters from Hurricane
Camille's destruction on the seafood industry's processing in
1969, to the economic recession of the '80s which resulted in
the closing of the Hilton and Sheraton hotels, the complete
destruction of the Coast tourism destination by Hurricane
Katrina.
However, I have also been a part of the recovery and
renewal of the Coast after each calamity, and the resilience of
the Gulf Coastians in the face of insurmountable destruction is
a testament to their faith in God and in each other.
On the eve of the 5-year anniversary of Hurricane Katrina,
the Coast was poised to have a banner year for tourism. On
April 20, the Deepwater Horizon sunk and so did our hopes to
finally reestablish the Mississippi Gulf Coast as a tourist
destination as opposed to a hurricane-ravished resort.
The impact of the BP oil disaster on tourism has been and
will be a disaster. The devastation is difficult to measure
because both the actual damage and the perception of the damage
cannot be readily measured. Was the Gulf Coast spared because
there was a limited amount of oil to reach the shoreline, or
was the shoreline spared because most of the oil is still at
the bottom of the Gulf or dispersed in plumes? Is the
perception of clean beaches better than the perception of clean
seafood? And in the words of my grandson, ``Is it safe to go in
the water? And if not, is it safe to eat the fish?''
One can glean that the Mississippi Gulf Coast billion
dollar tourism industry is undoubtedly tied to seafood.
According to recent Harrison County surveys the number one
reason for visiting the Mississippi Gulf Coast was the food,
the seafood. Ladies and Gentleman, the Coastal view is still
gorgeous. The beaches are clean, the sound and the bayous are
open for fishing, but the seafood; is it safe? How does the
Coast remove the perception that it is not?
Surprisingly, according to the hotel/motel association and
the casino association, hotel stays over the last 90 days have
been up, and casino revenues have been up, but of course, that
is compared to last year when the tourism economy was at an
all-time low. Yet, maybe the fact that the Harrison County
Tourism Commission under my guidance investing $650 billion in
advertising did help at least with drive-in markets.
Hotel/motel association stats have shown that many of the
room nights are as a result of extended stay, BP employees,
government agencies, media, petroleum-clean-up-related
businesses, and the like. Although there is a perception at
times that the Gulf Coast revenue is up, is it the result of
tourism, or is it a result of oil recovery? And if so, does
that not suggest that the recovery is not over until tourism is
back to the ratio that existed prior to the explosion?
The most serious adverse effect over the last--over the
lack of tourism, not recovery workers, is that many of the Mom
and Pop shops, the restaurants, off boats, seafood merchants,
water sports vendors, and golf courses and the like have
suffered. They are not getting tourist dollars which were far
greater.
And then even more importantly, we have notice that
inquiries about future visits to the Coast as it applies to
tourism is off 40 to 50 percent. What happens when all the
recovery money is gone, and all the workers have gone?
Ironically, just as the Deepwater Horizon was an
exploratory mission, Mississippi Gulf Coast now finds itself
challenged with the exploration of what to do in the coming
years to fight the perception. There are too many unknowns
right now. Considering the fact that we just had Bonnie, one
has to wonder just what will happen when there is another
Katrina or another hurricane and just how many tar balls will
be washed up.
Ladies and gentlemen, on the Mississippi Gulf Coast as it
applies to tourism, we are not enthusiastic about trading a $1
billion seafood industry for a $1 million well. So we would
hope and in my testimony you will see some recommendations and
hopefully some cures for this ill.
Thank you.
[The prepared statement of Mr. Daniels follows:]
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Mr. Rush. The Chair recognizes Mr. Malone for 5 minutes.
TESTIMONY OF HERB MALONE
Mr. Malone. Good morning, Mr. Chairman, and thank you and
thank the members of the subcommittee for inviting us here
today. It is a tremendous honor to represent our area. It is an
honor to represent the some 2,000----
Mr. Rush. Move the mic to you. Thank you.
Mr. Malone. OK. It is an honor to represent some 2,000
business owners and some 40,000 employees that they employ
whose livelihoods all are at risk as we sit here today.
Our area began receiving oil on our beach in mid May. We
have continued to receive it, have some sheen offshore, coming
ashore today as we speak. This is our high season. With the oil
impacts we have had it is--I cannot describe it verbally as
well it should be. Many of us have had problems with the media
and the way that the media has overstated things, which
sometimes they tend to do, but I will tell you honestly when
the media in the second week of June reported that the beaches
of Alabama were slathered with oil, we were slathered with oil,
and it was not a false report. They failed to report how much
is being cleaned up. Our beaches do look good today, and there
is a clean-up process. It took awhile to get it working, but it
is working.
What has this done to our tourism economy is destroyed it.
We are devastated. We should be at 90, 85 to 90 percent
occupancy today in mid-July and late July. We are running less
than 30 percent, and when occupancy goes down, the rates go
down even greater. So our revenue to our lodging, to our
restaurants, to everyone in town, I don't know of a single
business, and I conveyed this to Mr. Feinberg in a recent
meeting, I don't know of a single business in our town that has
not been directly affected by this oil. It has created a sense
of despair that I have never seen.
Like Mr. Daniels, I have grown up on the Gulf Coast. I have
been through hurricanes. We have been through hurricanes. I
have been in this position for 22 years. I look at the eyes of
my friends and colleagues around the community, and I see
despair I have never seen before.
We mentioned and remembered 11 victims of the explosion of
the rig. We have got a 12th victim. We have got a charter boat
captain, Captain Alan Cruise, who in the sense of despair,
beyond hope, took his own life. We hope that is the last one.
We have measures in place to try to prevent that from happening
again. We hope we are successful with those.
We are the smallest beach, laterally we are the smallest
beach on the Gulf Coast. We have the least amount of coastline
of any of the five States, but we generate $2.3 billion
annually from our tourism product. We the decline that we see
in this high season, we fully expect our loss to be at or near
$1 billion just this year, not counting what happens in the
summer, I mean, in the future years. And that is the direct
spending by the consumer, not counting the ripple affect as it
would ripple through our economy.
So it is devastating to us. It is about survival. The BP
claims process has been mentioned in the numbers that they seem
to tout quite often of what they have paid. The bigger number
is what they have not paid. Last night I received an e-mail
from one of our local CPA firms that I know has been very
actively engaged in the claims process. They have filed over--
gave me a detailed list of over 70 claims they have filed on
behalf of businesses. These 70 claims total over $27 million.
This is just for May and June. July claims are just now
starting to be filed. Of that $27 million less than $5 million
has been paid yet to owners. Of that $5 million, $3.5 million
went to two claims.
So as you see there is a tremendous void in what has been
filed and what has been requested and what has been documented,
and this CPA firm is highly reputable. They have been actively
engaged from the very beginning, and they like the rest of us,
are being frustrated why money is not coming into the hands of
our business community. Without that they can't support the
jobs, they can't make payroll next week, they can't pay the
notes that are due.
Our industry is much like farmers. We prepare in the
spring, we market, we spruce up the place, we paint the boat,
we remodel during the winter, we are ready for the coming
season. Just like the farmer who has lost his crop, we have
lost our yield. So is it--not only is it a terrible time in
regards to the recession and the previous hurricanes, it is a
terrible time of year for us.
So our request to you today is this committee, subcommittee
and members of Congress is to do, please, whatever you can to
get money in the hands of Mr. Feinberg and his program and get
it up and going as fast as possible. We have had two meetings
with Mr. Feinberg. We have found him to be very fair and open-
minded. Our first meeting he scared us with his eligibility
requirements, but in our second meeting he listened to our side
of the case, and he said we closed the gap tremendously with
him. We still have some work to do, Mr. Feinberg, but we are
feeling better about it, and we look forward to working with
him.
But our problem is I have businesses who have bank notes
due last week. Every day that goes by is critical. Every week
that goes by there will be another foreclosure. So when Mr.
Feinberg says he is taking over mid next month, I wish for us
he would take over tomorrow, and if there is any way that
members of this committee or any other members of Congress can
help facilitate getting this into the control of Mr. Feinberg
and out of the control of BP, it would be a tremendous benefit
to us.
With that I would like to close over than to say, again,
thank you for your interest in this issue. Thank you to the
gentleman who recognized our Jimmy Buffett concert. Thank you
to the lady from Florida who discussed the beautiful beaches.
We share the same beautiful beaches with Florida. At least we
did before the oil. We look forward to the day those beaches
are beautiful once again.
[The prepared statement of Mr. Malone follows:]
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Mr. Rush. Thank you. Mr. Overton, you are recognized for 5
minutes.
TESTIMONY OF KEITH OVERTON
Mr. Overton. Thank you, Mr. Chairman, and distinguished
subcommittee members. For the record we, too, are a little
frightened of Mr. Feinberg so far, but I think we are going to
get through it OK as we have more discussion.
Florida is the vacation capital of the country, and it has
been for generations. When visitors think of Florida, they
envision warm sunshine, blue waters, sugary white sand beaches,
fresh seafood, and the natural environment like no other. All
of these wonderful characteristics have been damaged as a
result of the perceptions that Florida's beaches are covered in
oil.
Tourism is big business. It is our number one industry. We
hosted over 80 million visitors in 2009. We captured nearly 17
vacations from Floridians--17 million vacations from
Floridians. Collectively our visitors spent over $60 billion on
travel last year, generating nearly $4 billion in sales tax
collections.
What that means is more than one-fifth of Florida's sales
tax dollars are paid by visitors, and it also means jobs.
Nearly 1 million Floridians are directly employed in travel and
tourism.
To give you an example of the economic impact the BP oil
spill is having on hotels, let me give you some statistics from
my hotel, the Tradewinds. For purposes of geographic reference,
we are the largest resort on the West Coast of Florida, just
west of Tampa Bay, located in Pinellas County. Call volume is
down by as much as 25 percent. We have 800 of the county's
approximate 35,000 hotel rooms. So when you take an average of
the last 3 years, which is what BP is asking us for, of our
revenues shortfalls and you compare that to the revenue that we
have achieved since the oil spill, we are down approximately
$1.7 million.
Now, if you extrapolate that out and you assume the balance
of Pinellas County's 35,000 rooms have had a similar impact,
that is a $70 million economic loss just in hotel room revenue,
and that doesn't include restaurants or secondary businesses
related to tourism.
And then if you think about the Pan Handle, which has
76,000 hotel rooms in its entirety and the effects clearly have
been more devastating to them than they have in Pinellas
County, it is easy to see that the losses to Florida's tourism
are in the billions. It is a substantial number, and it is
something that we want to make on the record today that we need
help with that.
What is most concerning to me is that all of these losses
have occurred to our resorts without a drop of oil being on any
beach in Pinellas County. It is amazing to me how the
perceptions of the media have gotten us to this point.
Nonetheless, we are there.
I also want to share with you that the Y-Partnership
conducted a survey on June 18, and it was asked at the time of
the participants which States do you believe will most directly
be impacted by oil. Ninety-five percent of them put Florida at
the top of the list. Florida is clearly the least affected
State, at least physically, from the oil that is impacted the
shorelines.
So clearly, again, I want to restate this is a perception
problem, and I certainly think we can all agree that
perceptions have worsened since June 18.
Prior to appearing on Neil Cavuto show a couple of weeks
ago, I was viewing a monitor, and it had the President who was
appearing at Pensacola Beach, and at the time there were a few
tar balls there, but it hadn't been materially affected. And
the tickertape along the bottom, I couldn't hear what was being
said, but it read, ``Oil finally reaches Florida's beaches.''
Plural. And when they transitioned to the next shot, the
television station, and I can't recall which one it was,
superimposed the oil running down the screen behind the
President over the beautiful Gulf waters that were behind him.
And I said to myself, you know, $25 million, $50 million, $100
million, there is no amount of money that is going to combat
that kind of imagery, and it is a challenge that we are faced
with, and it is going to be there for many, many years to come
I believe. Much like what happened in the hurricanes of 2004.
We are still suffering from that and cannot gain occupancies in
August and September that we used to achieve.
I have five requests of the committee in closing if you
would acknowledge them, and I would ask you to at least address
them in your comments and your questions. One is the media must
be held accountable to accurate and fair reporting of the facts
regarding this oil spill. They have a legal and an ethical
responsibility to do so, yet many of them continue to put
ratings ahead of accuracy.
I urge you to charge some agency, maybe it is this
governing body, I am not sure, within the Federal Government to
review news reports weekly and hold them accountable for the
sensationalism and the accuracies that are there. We need
somebody to support us in that regard, or it will just continue
on even with the next crisis beyond this one.
Number two. We are optimistic that the oil leak has been
capped, however, there is still going to be years of cleanup
and recovery efforts remaining. We all fear that the claims are
going to cease being paid prior to the end of the actual
losses. I think that is an accepted concept today.
Additionally, Mr. Feinberg's recent comments with regards
to what is a compensable or legitimate claim based on whether
or not oil is on its beaches and the proximity to that oil is
also very concerning to all of our members and all of the
tourist-based businesses within Florida, and we implore Mr.
Feinberg and any branch of the government that can influence
the claim process to look very carefully at this and not allow
it to be a black and white issue. We want to make sure each
business owner has an opportunity to be heard for their
legitimacy of their claims and not just ruled out because of
geographics.
Third, I would like to make you aware that the CVBs in all
of the Gulf Coast counties rely on bed tax dollars, and those
bed tax dollars are related to hotel room revenues. When they
fall, revenues fall, then the bed tax dollars fall. We need
that marketing money. We need to be made whole. I know that is
not Mr. Feinberg's responsibility, but those CVBs need to made
whole on the dollars that have been lost for their marketing
purposes.
The fishing and seafood industry and our wildlife are
critical to tourism and Florida's economy. I am not going to go
into the details, but I have included in your packet some
recommendations from very legitimate ocean conservancy, other
agencies that will help you in some of your studies as it
relates to our wildlife.
And lastly, we have to continue to spend money on marketing
efforts both domestically and internationally. We have not yet
gotten more money past the $25 million originally that BP has
given to us. Fifty million dollars was requested by our
governor, and it has been turned down. We really need that
money. It is very important. This is going to go on for a long
period of time as I said earlier, and those dollars are vital
to our recovery.
I thank you very much for allowing me to speak today and
giving you our testimony.
[The prepared statement of Mr. Overton follows:]
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Mr. Rush. Mr. Brennan, you are recognized for 5 minutes.
TESTIMONY OF RALPH O. BRENNAN
Mr. Brennan. Thank you very much, Mr. Chairman, and thank
you for this opportunity to testify on behalf of the National
Restaurant Association and the restaurant industry. As you said
in my introduction, I am from the Ralph Brennan Restaurant
Group, and I have been involved in the restaurant industry in
New Orleans for almost 30 years, and my family has been in the
restaurant business for more than 60 years, and as a group we
operate 12 restaurants, nine of those in New Orleans. And Gulf
seafood is an important ingredient in all of our menus.
I want to thank you for holding this hearing and for your
continuous focus on the oil spill's impact on the economy of
the Gulf Region and the Nation, and I appreciate the
opportunity to tell the restaurant industry's part of the
story.
Ours is an industry that employs an estimated 2.3 million
employees in the Gulf Coast Region. Restaurants in the Gulf
Coast area generate about $77 billion in annual sales.
Since April 20 when oil began flowing into the Gulf of
Mexico, our coastline, our sea life, our culture and our
tourism economy are again in great jeopardy. After Hurricane
Katrina roared ashore on August the 29th, 2005, Gulf Coast
residents and businesses essentially knew what to do to return
to normal or as we call it today the new normal. The water came
into New Orleans, the water went out, and we began to rebuild
and move on. But this is not the case today.
The key message that I want to share with you is one of
long-term uncertainty impacting both the ecosystem of the Gulf
and the economy of the Gulf Coast area and potentially
devastating tourism in the Gulf States.
Across the affected areas restaurants report a range of
experiences. Those located in seaside or in beach communities
are decimated as tourism shrivels. Tourists are not coming
because there is either oil on the beach or in the water, or
people have the perception that there is oil there, and visitor
perception is key to decisions about where to vacation. The
overall numbers of tourists are down, restaurant guests and
sales are decreasing, product costs are increasing, and jobs
are in jeopardy as already thin margins precariously slip away.
In New Orleans one of the driving forces of our economy is
culinary tourism and Gulf seafood is at the heart of our
culinary tourism. Like we saw after Hurricane Katrina,
convention groups and leisure travelers are now calling to
express concern about upcoming business and whether to book
future business. Many are asking if oil is on the doorsteps in
New Orleans, and New Orleans is miles inland. Today almost 5
years after Hurricane Katrina convention bookings have not
returned to pre-Katrina levels because of the damage to the New
Orleans brand, and the oil spill risks surrendering the ground
that we have gained over the last few years along with future
increases.
While the focus of my testimony is not primarily on the BP
claims process, I have heard from some of our restaurant
association executives along the Gulf that there is a
willingness to set up a claims center and that would be solely
focused on the restaurant and hotel industries, and I want to
voice my strong support for that idea.
Regarding my three New Orleans restaurants specifically,
sales are down, counts are down, costs are up, and margins are
down, and this is not a sustainable business model and as the
oil looms offshore with an impact that could last for many
years to come.
With regard to perceptions and misconceptions, I would like
to begin applauding our state and federal officials for the
stringent safety testing of Gulf seafood that has allowed
truthful reporting around the potential toxicity of the
seafood. We are fortunate that 100 percent of the reports to
date have shown that Gulf seafood is to be safe to consume from
areas that are approved. Ongoing testing is crucial for a safe
and informed public.
Despite the testing concerns about safety and supply, one
of the recent national polls indicated that 54 percent of the
respondents said they would only eat seafood that they know
does not come from the Gulf. Our staff has received many calls
and comments, all centered around safety and supply. And to
combat concerns we have aggressively trained our staff to
knowledgeably share precise locations of where our seafood
comes from.
To demonstrate support for the fishermen and the safety of
the product, my restaurants have added seafood offerings. As I
told the ``New York Times,'' the way to help is to eat Gulf
seafood. If high-profile individuals, including celebrities,
celebrity chefs, and even members of Congress could be seen
eating a Gulf shrimp po boy it would go a long way to
alleviating consumer fear. The Obama family's visit to Florida
beaches next month is a welcome opportunity, again, for
positive reinforcement, and I know the National Restaurant
Association is looking to plan some of its meetings in the Gulf
Coast Region, and I would hope that trade associations and even
government agencies would do the same.
Despite a curb in the demand for Gulf seafood, prices
across the board have increased. On average in my restaurants
we are paying 18 to 30 percent more for the seafood that we
serve.
Finally, I would like to comment on the long-term impact of
a misinformed public. In the years after Hurricane Katrina
potential visitors from around the country thought that the
city of New Orleans was still under water, that the drinking
water was unsafe, and there were no hospitals or other city
services. These misperceptions were largely created and
reinforced by the media because of the regular replaying of
images from days after the storm.
Many in New Orleans feel it was only after the New Orleans
Saints and the city of New Orleans hosted two playoff games
back in January, and the Saints went on to win the Super Bowl
that those misperceptions were finally ceased.
Misperceptions are happening again now. Just about every
day a story is reported live from New Orleans on the spill. The
perception shaped by the media, even if unintentional, is that
oil is on the doorsteps of New Orleans. That is
sensationalistic and untrue, yet if reporting from these
locales continues, the public will continue to draw its own
conclusions and perceive New Orleans and many of the cities and
resorts across the Gulf as damaged destinations.
Marketing dollars will be needed to counter these
misperceptions. The long-term consequences and impact on
tourism of the damaged brand are severe.
Thank you, Mr. Chairman and member of the subcommittee, for
this opportunity to be here today.
[The prepared statement of Mr. Brennan follows:]
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Mr. Rush. The Chair thanks all the witnesses for their
testimony, and the Chair recognizes himself now for 5 minutes
of--for the purposes of questioning the witnesses.
Mr. Feinberg, I am going to begin with you. At this moment
BP is still processing claims I understand filed by businesses
and workers in the Gulf Coast Region. According to your
testimony BP has already paid $200 million in emergency
payments. Despite these numbers we have been told that there
are many complaints about the claim spots that BP is utilizing.
Mr. Malone describes the process as erratic, somewhat
convoluted, and at times dysfunctional. And also in your
testimony you stated how complicated it is to determine whether
the oil spill is true or the approximate cause for the damages
that businesses are suffering, even when there is no evidence
of oil in sight. Many of these businesses are on life support,
and they wait on a determination of their eligibility to submit
a claim against the $20 billion escrow, a fund that BP has
established.
Mr. Feinberg, I just have to ask you because I am drawn to
the infamous and traditional Gulf Coast fisherman, Forest Gump,
saying life is a box of chocolates. You don't know what you are
going to get.
Now, my question to you is when will the people of the Gulf
Coast, the business people, the workers, when will they get
definite answers? Mr. Dow talked about a roadmap to recovery.
When will they get such a specific from you or someone else
about who is eligible, why they are eligible, when they are
going to get paid, how much they are going to get paid? These
are just some basic questions. The guesswork needs to be in--it
needs to come to us, the guesswork.
And so your process that you are going through I understand
you got to go through this process in terms of getting to a
point of answering some of these very, very valid and important
questions, but when is the process going to be over? When are
you going to be able to give some clarity and eliminate the
guesswork?
Mr. Feinberg. I will answer that very obviously critically
important question with three answers.
First, I believe that the blueprint that I have established
for emergency payments to be paid as quickly as possible should
be finished and available this week. That is first. That is my
goal.
Secondly, I have no authority to fund the $20 billion
escrow account. That is an agreement between the Administration
and BP. My understanding is that they are working overtime to
try and finalize the terms and conditions of that escrow
account which will make the $20 billion available. I can't give
you a time except to say I think it is probably within a matter
of weeks, but I don't know. I am not privy to that escrow
negotiation.
Third, I suspect that I will be able to accept transition
from BP, BP will get out of the claims business completely, the
private claims business, and I should be up and running with
the Gulf Coast Claims Facility the middle of next month. The
middle of next month. A couple of weeks. And then I will assume
all authority to process emergency claims. Emergency claims. In
which the fishermen, the small business, the restaurant will
not waive any rights they may have. They will simply decide if
they are eligible, they will decide whether they want to
participate in the program, and we will receive, if eligible
and if they document their loss, up to 6 months of emergency
payments to help get them over this immediate emergency.
Now, that--Mr. Chairman, if I may just add, I understand
from all of these witnesses and from the members of this
committee time is of the essence. This is a huge undertaking,
and I am working as fast as I can, as diligently as I can, full
time to get the Gulf Coast Claims Facility up and running, to
get it funded so that these emergency claims can be made as
soon as possible.
Mr. Rush. Are you considering the workers also in terms
of--will they--the same guidelines apply to them also?
Mr. Feinberg. The same. I think BP frankly has done a much
better job of this $230 million they have paid out, I think
they have done a much better job of paying out worker claims,
shrimpmen, fishermen, oyster harvesters than they have paying
out small business and large business claims. I think that is
clear from the testimony I have heard today and from the CPA in
Alabama, and I think that is absolutely true. That is one
reason why I have got to get up and running with this facility
as soon as I can.
Mr. Rush. The Chair now recognizes the Ranking Member, Mr.
Whitfield, for 5 minutes.
Mr. Whitfield. Well, thank you again for your testimony,
and Mr. Feinberg, I think all of us are delighted that you will
truly be independent, you are not reporting to anyone. I think
that is probably good for all of us to get a fair and equitable
help on this problem.
I notice that Mr. Daniels, Mr. Overton, and Mr. Brennan in
their testimony placed a great deal of emphasis on damages
caused by perception as opposed to damages caused by actual
damage, and I have heard many people also blame the media for
assisting in this misperception of the American public. And I
don't think any of us are surprised by that because the media
is focused on being sensational and obtaining more viewers and
more readers and frequently without any regard to the real
impact it has on people.
But my question to you would be since you are going to be
up and running within a month hopefully, when you start
processing claims from your perspective it won't make any
difference if the damage is caused by perception or by actual
damage. Is that correct?
Mr. Feinberg. That is correct. Under the law of the Federal
Pollution Control Act, which is a very important aspect of this
whole process, actual physical damage to property is not
required. So the issue for me--you are absolutely right on,
Congressman. The issue for me is not whether perception that
has an impact on tourism is compensable. The question really is
going to be how far removed is a claim to be eligible. It is
one thing if the perception harms a motel on the beach, even if
there is no damage. It is another thing if the perception harms
a motel 70 miles inland.
Mr. Whitfield. Right.
Mr. Feinberg. And I am going to decide, I take no advanced
position on this, but that is where--I think that is what
Congressman Stearns was getting at a little bit.
Mr. Whitfield. Uh-huh.
Mr. Feinberg. Where you draw that line on eligibility.
Mr. Whitfield. And that is going to be one of the obviously
key points that you are going to have to decide on. It kind of
reminds you of the old Pause Graff case in law school.
Mr. Feinberg. You remember. That is right.
Mr. Whitfield. But on the--Mr. Dow, you talked about a $500
million fund to assist. Now, would this money--is it your idea
that this money for emergency marketing would also come from
BP?
Mr. Dow. Yes, I definitely believe it should come from BP,
and the question whether it can come from this fund or
additional amount but as I stated, my hope clearly is that this
can mitigate the damages phenomenally to the tune of 7 to $8
billion. Just as all the money was spent to cap that well, we
ought to cap the damages now. No one would say let the oil run
forever and let us just pay the people afterwards for their
damages. They said, stop it, and we have to do the same thing.
So I believe it should come from BP. Mr. Feinberg is--may
be between a rock and a hard place, can that money come from
the fund. I don't know.
Mr. Whitfield. Do you have authority to pay out money for
marketing?
Mr. Feinberg. I don't think. Again, I am not privy to that
negotiation involving the escrow account, but I don't think
under the terms of that escrow account $500 million for
marketing could come out of that $20 billion. Now, that doesn't
mean there aren't other sources for it, but I don't think, I am
not an expert on this, but I don't think it could come out of
it.
Mr. Whitfield. If I come in for emergency payment from you
and you give me emergency funds, will I be required to sign a
release for legal liability issues?
Mr. Feinberg. No.
Mr. Whitfield. Will I ever be required to sign a legal
release?
Mr. Feinberg. You will be required to sign a release down
the road only if you come back to the Facility and seek a final
payment for all of your then damage and projected future
damage. Only then would you have to sign a release. Not as part
of these emergency funds.
Mr. Whitfield. Thank you.
Mr. Rush. Ms. Castor is recognized.
Ms. Castor. Thank you, Mr. Chairman.
Mr. Dow, since the April BP blowout in the Gulf, have you
seen these TV ads that BP has been running, polishing their
corporate image?
Mr. Dow. If you own a television set, you cannot not see
them. I have seen them, and I have seen them, and it just
points out to me the very clarity that BP truly understands
that changing perception and getting the word out is critical.
I think the same thing has to be done for the citizens, for the
businesses of the Gulf Coast. It is critical, and it can stem
the damages phenomenally.
Ms. Castor. I think you said it well. If you own a TV, you
have seen these incessant ads by BP. Oftentimes not very
informative, just--they remind me of political campaign ads,
frankly, and you can't pick up a newspaper.
Mr. Malone, I am sure you seeing in Alabama what we see in
Florida. Is there a day you pick up the newspaper you don't see
these full-page ads?
Mr. Malone. That is true, and I can tell you that we have
met with some of the BP officials that you see in those ads,
particularly the gentleman that represents he is in charge of
claims for BP. We met as early as May the 11th in my office
with our mayors and other leading people, some of our CPAs, in
a proactive approach to try to establish an expedited claims
process. Lots of promises were made that day on May the 11th,
and I don't mean to be flippant, but in our community BP has
come to stand for broken promise.
Ms. Castor. Uh-huh.
Mr. Malone. And that is what we have seen one after another
after another. In fact, they issued a press release around the
middle of June where they said they had adopted an expedited
claims process for business claims. I read you the figures
awhile ago. It has not come true.
Now, Mr. Feinberg is right. The individual employee can
walk in a claims office and walk out with a check for 2,500 or
$5,000 if he has got his W-9s from last year or whatever--
minimum documentation. But when you ask a business to submit
2,200 pages of documentation before your claim would even be
considered, that is onerous. And that same business submitted
their claim in May, mid-May, they have yet to receive less--
more than 10 percent----
Ms. Castor. Uh-huh.
Mr. Malone [continuing]. Of the claims they have presented
since May to this date. These claims, they are referred to as
large claims. They differ on whether that is over 20,000, over
50,000, depending on who you talk to. They are sent to a
forensic account for examination before they ever get in
consideration. That takes weeks and weeks to do. And as I said
in my recent comments, to me is the analogy of everyone
submitting their income tax returns, and if you do a refund,
you can't get your refund until a full audit is completed. They
are doing a full audit before they are writing a single check
to our businesses, and I am not always talking about the
million dollars businesses. They guy who rents beach umbrellas
on the beach.
Ms. Castor. Uh-huh.
Mr. Malone. Submits $60,000 claims. That is his whole year,
that is----
Ms. Castor. Don't you think it is making folks mad because
they understand how much this media campaign is costing BP? I
mean, do you see the same thing in Mississippi, Mr. Daniels? Do
you see all these ads on the TVs and TV commercials?
Mr. Daniels. Yes, without a doubt we do, and actually as a
broadcaster we sell advertisement to BP. That is the paradox
here.
Ms. Castor. Uh-huh.
Mr. Daniels. From a broadcasting standpoint it is not
necessarily the ads. It is the reassurance.
Ms. Castor. Uh-huh.
Mr. Daniels. And if the Federal Government would do one
thing that is reassure by way of Mr. Feinberg's claims but
especially when it comes down to saying that the seafood is
safe. What the rest of the world needs to hear and especially
the Nation needs to hear is that it is oK to go in the water
and that it is safe and that it is being monitored.
Ms. Castor. Right.
Mr. Daniels. I----
Ms. Castor. The--we--I know someone had made an inquiry of
BP about how much money they have spent on these ads, and they
refused to provide that information, so, Mr. Chairman, I would
like to ask unanimous consent that this committee seek from BP
the amount of money that they have spent on their corporate
image-polishing campaign since the BP blowout.
Mr. Rush. The Chairman will consent to the gentlelady's
request to direct staff to address a letter to BP specifically
with that question in mind.
Ms. Castor. Thank you, Mr. Chairman, very much, and quickly
in my remaining time, Mr. Feinberg, this--we have got to be
able to bring our local government and CVB industry state
claims as part of your $20 billion escrow. How do we do this?
Do we need to lobby the Administration and BP to have that
included in this escrow agreement that is going to be coming
out in the next week or two?
Mr. Feinberg. First of all, the government claims are
included in the $20 billion escrow. They are just not part of
my watch.
Ms. Castor. Uh-huh.
Mr. Feinberg. Out of that 20 billion will come not only the
claims that I pay but all government claims will come out of
that $20 billion, but the way the understanding is reached
between the Administration and BP government claims are the
direct responsibility of BP, even though they are coming out of
the $20 billion.
Ms. Castor. So what is your opinion? Don't you agree that
you and your experts will--are competent, in fact, expert
enough to sort through those very difficult and detailed
claims?
Mr. Feinberg. If it is the will of the parties to the
agreement, the Administration and BP, I am glad to take----
Ms. Castor. So it is up to them?
Mr. Feinberg [continuing]. On that--as if I don't have
enough problems, but I would be glad to take on that
assignment, but, again, not only watch at the current time. Nor
the moratorium claims either.
Ms. Castor. Thank you.
Mr. Rush. The Chair recognizes Mr. Barton for 5 minutes.
Mr. Barton. Thank you, Mr. Chairman. Most of my questions
are going to be towards Mr. Feinberg simply because he has got
a huge undertaking, and we don't get him before our committee
too often, but I want to tell you other gentlemen, I listened
to your testimony in my office. I clearly understand the issues
that you are dealing with and clearly support that you should
be compensated, and I am especially pleased to know that there
is still a Brennan involved with Brennan's. That is comforting
to know since I am a frequent visitor to your restaurants when
I am in New Orleans.
My first question to you, Mr. Feinberg, oh, and let me say,
I do support that there be a compensation fund. I do support
that BP pays most, if not all, of the money that goes into that
fund, and I do support that it be, as I said, fairly, quickly,
and transparently paid out to the people that have the claims.
My first question to you, Mr. Feinberg, is who do you
report to? Do you report to the President, do you report to the
Secretary of the Treasury, the Chairman of the Federal Reserve?
Who exactly is your boss?
Mr. Feinberg. I don't have a boss on this assignment. I
think the fair answer, Congressman, would be that I report to
the people in the Gulf. Both the Administration and BP frankly
don't want to get near me once this program is up and running,
and they want to--they are going to reinforce--I am totally
independent.
Mr. Barton. You did an excellent job in the other fund that
you administered, but that was different. That fund was
approved by the Congress, there were clear reporting standards.
This is in a unique fund.
Mr. Feinberg. It really is.
Mr. Barton. There apparently is no precedent for it.
Doesn't mean, again, that we don't need it, but if my
understanding is correct, now that you have been either asked
to serve or appointed by the President, he does not have the
power to remove you. Is that correct?
Mr. Feinberg. I think that clearly is correct. Clearly he
doesn't have the power.
Mr. Barton. All right. Do you have to personally approve
each claim to be paid?
Mr. Feinberg. As a theoretical matter, the answer is yes.
Now, of course, there is going to thousands of claims, and I am
going to have a process in place, an infrastructure where
problematic claims will come to me. Hopefully we will
consistently apply the formulas and there won't be a necessity
for me to look at each and every claim.
Mr. Barton. When a claim is paid, will your signature be on
the check?
Mr. Feinberg. You know, I don't know the answer to that
question.
Mr. Barton. All right.
Mr. Feinberg. That is a good question.
Mr. Barton. Where will the funds be deposited that you
allocate? Will they deposit in the U.S. Treasury in Washington,
in a branch office of the Federal Reserve, in a private
financial institution or institutions?
Mr. Feinberg. One, I don't know the answer to that question
because I am not privy to the escrow negotiations between the
Administration and BP. Two, I have urged both of the escrow
negotiators to deposit at least some of the money in local,
regional institutions in the Gulf that have expressed a real
desire to benefit financially from this.
Mr. Barton. Who makes the decision where--what depository
institution is to be used?
Mr. Feinberg. Again, that would be between the
Administration and the fellow--and the Administration that I
have been consulting with is Tom Perrelli, the Associate
Attorney General, and at BP----
Mr. Barton. But you have no definitive role in making that
decision?
Mr. Feinberg. None.
Mr. Barton. You are purely--make the decision what the
protocol is for claims, the claims process, and the decision
making protocol for making decisions on the claims and then
being sure that there is adequate follow up and documentation.
Is that a fair statement?
Mr. Feinberg. That is correct, and I want to make sure the
checks don't bounce, but that is absolutely accurate.
Mr. Barton. OK. What reporting requirement, if any, does
the fund that you are going to oversee have to report to the
Congress on dispersion and operation of the fund?
Mr. Feinberg. It will be expressed reporting requirements
that all interested parties, starting with the Congress, will
have information, whether it is monthly or biannually, frequent
reporting as to how the claims are being processed, what the
statistics show, our claim rate, et cetera.
Mr. Barton. What transparency will there be for the public,
i.e., will there be a public Web site that shows claims paid
and who received the money and perhaps even pending claims and
the decision process by which a decision is made on a claim?
Mr. Feinberg. Yes. Now, we have got to be careful as we
were with the 9/11 fund that we don't disclose under the
umbrella of transparency individual names or private
information, proprietary business information, but I am
completely in agreement with you, Congressman, in your question
that we have got to have a transparent database from which
people can review how we are doing and what our strengths and
weaknesses have been.
Mr. Barton. I have one more, Chairman, one more question,
Mr. Chairman. I know that my time has expired.
You in answer to the gentlelady from Florida's question,
you indicated that other decision makers will have decision
making authority over this $20 billion fund and that your
authority is going to be restricted to certain dispersements.
Do you make decisions on compensation for oil and gas workers
who have lost their jobs?
Mr. Feinberg. Yes. Not the moratorium rig workers, though.
Mr. Barton. I understand that. For fishermen----
Mr. Feinberg. Yes.
Mr. Barton [continuing]. And, you know, seafood----
Mr. Feinberg. All individuals, all private businesses, no
government claims.
Mr. Barton. OK. So you are--the government claims the
decision maker is----
Mr. Feinberg. BP.
Mr. Barton. Well, they would--I wouldn't think we would
allocate to them--what government official would oversee their
decision?
Mr. Feinberg. No. I mean I think the government official
will send a claim for reimbursement, for cleanup, or for lost
tax revenue or whatever to BP for processing. That is currently
the plan.
Mr. Barton. Mr. Chairman, do we--will we have the ability
to ask written questions for responses from the panel?
Mr. Rush. The Chair will address that issue once----
Mr. Barton. I know my time is expired, and I appreciate the
Chair, and I thank you for your answers, Mr. Feinberg.
Mr. Rush. The Chair now recognizes Ms. Schakowsky for 5
minutes.
Ms. Schakowsky. Thank you, Mr. Chairman, and I want to
thank all the witnesses.
You know, I was listening to and looking through all the
testimony here, and I think that it would be good, for example,
for Mr. Daniels' questions, he asked a number of questions, to
be included among those that we present as our own questions. I
think they are very important and that he deserves those
answers, and so that we should include that in the questions.
Mr. Rush. They will be included in the written questions
that we would submit to the witnesses.
Ms. Schakowsky. Thank you. I also wanted to ask about the
suggestion, I think it was Mr. Dow's suggestion, that the
government incentize a--do an incentive for people to do
tourism in the region. Was that you or Mr. Malone?
Mr. Dow. It was me.
Ms. Schakowsky. OK.
Mr. Dow. It was part of three points of $500 million to get
the perception, get the right information out, and incentize
travel.
Ms. Schakowsky. What--exactly what does that mean? What is
incentize?
Mr. Dow. There are several things that could be done. They
have been done in the past. Commerce Department runs trade
missions. There could be incentives where they don't charge for
those missions to get more people here. There is opportunities
to give meal tax deductions or some tax--things done. There are
many things that have been done in the past throughout areas
that will give people an advantage by going to an area and an
incentive to do so, and we have got a list of them in that
roadmap for recovery, ma'am.
Ms. Schakowsky. Thank you. I think, Mr. Feinberg, you may
have answered this, but Mr. Malone said that he has personally
spoken with a large number of business owners who have yet to
see a single payment, particularly the larger ones. Are you
suggesting that they re-file when you are up and running or no?
Mr. Feinberg. They won't have to re-file at all. We will
assume responsibility for those claims and accelerate them as
quickly as possible. As Mr. Malone has pointed out to me and
Governor Riley in Alabama has pointed out, we don't want to
reinvent the wheel by requiring people to re-file.
Ms. Schakowsky. OK, and Mr. Feinberg, Mr. Overton was
talking about the damage that has been done even though there
is no oil at all. Is that still true? At his resort. This is
clearly on the water, and so is his business eligible then for
compensation from the fund?
Mr. Feinberg. His business is eligible insofar as he has a
claim where there has been no visible damage to the beach. He
would have--that is not the issue in that case. What I don't
know from that statement is how close is his business to the
beach, how dependent is it on the beach or fishing or
sightseeing or charter boats or what have you. So it is the
facts surrounding the overall claim that are going to be
critical in deciding eligibility in something like that.
Ms. Schakowsky. Yes. This perception question is really
hard to get your arms around, but maybe the biggest source of
damage long term, am I right, Mr. Brennan? Did you want to
comment on that?
Mr. Brennan. Well, no. I think the best example is to look
at Hurricane Katrina and the impact on New Orleans, the
perception of the city as a damaged brand, and I think you as a
member of Congress understand perception. We have to overcome
that. It is just like BP is running these ads trying to change
the perception of their company. We need to do a similar thing
to change the perception of the hospitality and tourism
industries along the Gulf Coast.
Ms. Schakowsky. Whose responsibility do you think, Mr.
Feinberg, or is it everybody's to proactively address this
issue?
Mr. Feinberg. Well, I think it is BP's responsibility. I
think BP has done some things, nothing to do with me. They
clearly haven't done enough. They have spent some money, I
believe. From what I have read in the newspapers they have
spent some money promoting tourism in the Gulf but others know
better than I about that.
Mr. Dow. I will address that. BP initially spent $70
million, $25 million for the State of Florida, $15 million for
the three other States. Requests have been denied by the
Governor of Florida and by about ten Gulf Coast communities--
not denied. They have not received any other information. The
Governor of Florida was denied, the other communities have not
heard anything back, and the challenge is it is $70 million,
and as I stated earlier, very little of that has actually got
to marketing. I think one of the most important things this
committee--that BP could do is isolate the funds and say, let
us get experts working on this, and let us be sure they do that
job, and I believe the gentleman to my right could do a
terrific job overseeing that because he has proven himself.
Thank you.
Ms. Schakowsky. Yes. I thank all of you for your efforts.
Mr. Feinberg, you--and good luck on all your work.
If I could, Mr. Chairman, just a point of personal
privilege, I have spent vacations many summers on the Pan
Handle of Florida, and these sugar white sand beaches were
just, of course, the lure. And the notion that the beaches
would be spoiled but also that the reputation of this area
would be hurt is just so painful. I can only imagine how it is
to all of you.
So I thank you for being here.
Mr. Rush. Mr. Stearns is recognized for 5 minutes.
Mr. Stearns. Thank you, Mr. Chairman. Mr. Feinberg, the
question would be who is going to pay the salaries of the
employees that you hire to implement this program and
disbursement the of $20 billion?
Mr. Feinberg. BP.
Mr. Stearns. BP. And how many employees do you think that
you will expect? Can you extrapolate from your 9/11 experience?
Mr. Feinberg. Well, with 9/11, which was a relatively,
thank goodness, a relatively modest, clean cohort----
Mr. Stearns. Right.
Mr. Feinberg [continuing]. We had 475 employees. BP in
paying out $230 million so far has hired about 1,500 at 35
claims offices throughout the Gulf Region, and I think seven in
Florida. I am now putting together a budget for the Gulf Coast
Claims Facility. I think we probably wouldn't need that many
people, but I will know more about that in the next week or
two.
Mr. Stearns. I understand. So it is roughly going to be
1,500 or less, and----
Mr. Feinberg. Correct.
Mr. Stearns [continuing]. These employees will be paid by
BP.
Mr. Feinberg. Right.
Mr. Stearns. I mean, by the BP funds.
Mr. Feinberg. That is correct.
Mr. Stearns. And the salary structure, is this going to be
something like the private sector or the government--the
private sector or the government sector?
Mr. Feinberg. Again, the Deputy Administrator of the fund,
Camille Biros, who is putting--setting up the budget, she would
have a better handle on that, but I can certainly get you that
information.
Mr. Stearns. In 9/11 did you use--what standard did you use
for salaries?
Mr. Feinberg. In salaries we used--Price Waterhouse had a
contract with the Department of Justice----
Mr. Stearns. OK.
Mr. Feinberg [continuing]. That used largely private
salaries.
Mr. Stearns. OK. I have here I think it is a four-page
claim form that BP used for commercial fishermen. I notice on
their form it does not have a notary public on it, and it
just--the people can fill it out. Do you intend to use the same
form, or are you going to come up with your new form?
Mr. Feinberg. New form.
Mr. Stearns. New form. OK, and I notice that with BP that
43 percent of the claims are still waiting payment. So that
means are you going to take over and inherit all those 43
percent, and does that mean that these people who supposedly
haven't got claims, lack of information, are you going to
follow up on that?
Mr. Feinberg. Yes. We will not require people to re-file.
Now, that 43 percent figure, I am not sure that figure is
accurate.
Mr. Stearns. OK.
Mr. Feinberg. Because BP apparently has counted as a claim
somebody who makes an inquiry and gets a claim number and never
fills out the form. So I am not sure. I got to get my hand on--
I got to get a handle on that data.
Mr. Stearns. OK. Let me just give you a statement and ask
if you agree with this. Do you think everybody should get
reimbursed no matter where they are located if they can prove
loss of income because of this spill?
Mr. Feinberg. No. No.
Mr. Stearns. Because, you know, a family could say I am in
Tennessee, they are going to go to Pensacola, they say, we are
not going to go to Pensacola, we are going to go to Tampa, and
then the gas station on the interstate could say, well, golly,
I just didn't get that family to Tennessee and make that claim.
So, I mean, how are you going to work this so that it is a fair
thing?
Mr. Feinberg. I have to listen to these experts that are at
this table like Mr. Malone, and Mr. Malone in a very careful
presentation laid out for me sort of the proximity, the zone
where there is the greatest direct impact and said, Mr.
Feinberg, in that zone in Alabama that is the zone that is the
most directly impacted. Tourism. These are the restaurants, the
motels, the other sites, and with input from experts I will try
and answer that very question as to what is the proximity where
it is most likely that a claim should be deemed eligible.
Mr. Stearns. Mr. Feinberg, under 9/11 did you have anybody,
accounting firm come in and look at what you did? Was there
anybody not necessarily that you reported to but somebody sort
of like we have here, Inspector General, GAO, can go into a
government agency and sort of tell members of Congress what is
happening. Did you have that on the 9/11 commission?
Mr. Feinberg. Constantly. The Office of Management and
Budget.
Mr. Stearns. OK. Now, you are not going to have that here.
Don't you think you should--you would even want to have an
Inspector General or a claims--or somebody that could oversee
this and report back to Congress on what you are doing instead
of you reporting back on what you are doing yourself? Don't you
think, I mean, I would think I would like to have somebody
checking up on me just to make sure that I get the cross the
dots----
Mr. Feinberg. I love that idea. I think we are going to do
that. Now, we will have a separate question related. What
about--I have heard this from various Congressional committees.
What about fraud? Right. What about the problem of fraud? Not
so much auditing. It is just fraudulent claims.
Mr. Stearns. Right.
Mr. Feinberg. The Department of Justice, Criminal Fraud
Division, is working with us directly.
Mr. Stearns. You will refer them to the Department----
Mr. Feinberg. Absolutely will have an internal retained
anti-fraud expert working within the facility to audit and
check for fraud, but I absolutely have no problem with
transparency in the form of Congressional oversight or some
sort of regular reporting by an independent person checking on
what we are doing.
Mr. Stearns. Mr. Chairman, I think what Mr. Feinberg is
mentioning is something that this committee or some committee
in Congress should help him with this legislation that allows
him to report to or they provide sort of an Inspector General
type of accounting here. This is a huge amount of money, $20
billion, and I think the American taxpayers obviously would
like some kind of report, and obviously we have great
confidence in Mr. Feinberg, but I think at the same time he
wouldn't mind having somebody to counterbalance and show that
everything is going--because this is going to be 1,500
employees that are working in a way that is--he can't control
completely. So it is just a thought.
Thank you, Mr. Feinberg.
Mr. Rush. Mr. Stearns, your point is well taken, and it
will be taken under consideration by this committee.
Now, we recognize Mr. Green of Texas, recognized for 5
minutes.
Mr. Green. Thank you, Mr. Chairman. I know you read a
statement earlier, and I would like to ask this question of Mr.
Feinberg. We know BP has paid about over $200 million in
emergency payments, and the committee has heard complaints
about BP's claims process, and Mr. Malone describes the process
as erratic, somewhat convoluted, and at times dysfunctional. I
think that could probably apply to Congress in some cases.
But, Mr. Feinberg, I was hoping if you could comment on how
BP's processed these claims so far, specifically what problems
have you identified.
Mr. Feinberg. I think BP deserves some credit here. Most of
these mass disasters that I have been involved in over the
years, when I get involved, I start sort of from scratch. There
is nothing in place, and we have to build from the beginning.
While I am rushing to set up this facility in just a few weeks,
in August, BP continues to pay claims.
Now, the problem is that as my fellow witnesses have
pointed out accurately, BP is quick to pay the individual wage
loss claims. They are quick to pay claims where there is
physical destruction; oil on the beach or flowing somewhere
injuring property, destroying property. Where they are
reluctant or where they have less assuredness is business
interruption claims, lost profits, lost business, calculating
lost business, corroborating lost business, and that is why I
think the gentlemen that are here today testifying are
frustrated by BP, yes, they paid $230 million, but shouldn't
they be doing more on the business side?
And I appreciate that, and when I set up this facility ASAP
we will focus on those business claims.
Mr. Green. OK, and so your testimony earlier that the
claims will be actually--what BP is doing--you are monitoring
those, and they are coming to you now instead of BP directly.
Mr. Feinberg. They will be in a matter of weeks, and I will
accelerate the payment of those claims.
Mr. Green. OK, and how do you plan to staff a Gulf Coast
Claims Facility?
Mr. Feinberg. We will keep the people that are there now.
We will train them in the new facility. We will keep those that
we like. We will hire additional local, local vendors and local
people in the four-state, five-state area, as needed, and we
will set up this new infrastructure in a matter of weeks.
We are doing it now actually.
Mr. Green. Mr. Malone, do you have any response to that? I
know compared to Louisiana and Mississippi and Alabama and
obviously the upper, the Gulf Coast of Florida, upper coast,
have you seen the payments getting better and more response?
Mr. Malone. As Mr. Feinberg said, the small payments to the
individuals have been fairly routine matters. The payments to
businesses that are in excess of $50,000, $100,000, and up,
excess of $1 million have been extremely difficult to obtain.
Mr. Green. Has it been because of documentation?
Mr. Malone. It is very sporadic. There have been some
spells where they have written some companies some large checks
rather quickly. Other companies have been waiting nearly 3
months for their first check.
Mr. Green. OK. Well, coming from where I am and obviously
we were concerned about Galveston a couple of weeks ago, but
not that we don't have tar balls on a regular basis but that
wasn't the issue and I know in southeast Texas but my concern,
too, is if each of you could comment not only on the BP's
response but also the impact of the moratorium, the hard 6-
month moratorium we are seeing on whether it be Alabama,
Mississippi, or Louisiana.
And what are you seeing on that, and those folks except for
the workers, they probably are allowed compensation. If you are
laid off of a rig, could you comment on that?
Mr. Malone. Are you talking to me or Mr. Feinberg?
Mr. Green. Yes.
Mr. Malone. I am in tourism, sir. I am not familiar with
what is going on in the oil and gas industry. I know that our
workers who are laid off get compensated. They go to the State
Unemployment Office, and what that doesn't pay, then they get
money from BP. I am just not familiar with the oil and gas
industry and what is going on with their workers.
Mr. Feinberg. If a rig worker was laid off as a direct
result of the moratorium, BP agreed to set aside $100 million,
not part of the $20 billion, a separate fund of $100 million
just for moratorium rig worker claims.
Mr. Green. Has that been pretty widely advertised,
particularly in Louisiana? My colleague, Mr. Melancon, you
know, that we are doing it, because I have folks in my own
district who work offshore. I have not heard, but the fear is
that they are not going to be able to continue to work.
Mr. Feinberg. I think it has been fairly well publicized,
and BP is now deciding where to deposit that $100 million,
which will be earmarked only for unemployed moratorium rig
workers.
Mr. Green. I know I am out of time. Do you know how much of
that $100 million has been expended?
Mr. Feinberg. I don't think any of it yet. I don't think it
has been deposited yet to pay out those claims.
Mr. Green. OK. Thank you, Mr. Chairman, for your patience.
Mr. Rush. Dr. Gingrey is recognized for 5 minutes.
Mr. Gingrey. Mr. Chairman, thank you very much. We have
spent most of the morning listening to our witnesses and asking
questions and of course, most of the questions and the
testimony is around the issue of how we are going to get paid.
And, of course, everybody looks at Mr. Feinberg, of course. He
has got a tremendous job and responsibility in seeing that that
is done in a fair and equitable way. And it is important, and
you brought out the fact that time is of the essence. I think
Mr. Feinberg may have said that.
The others of you have said, well, gosh, you know, I think
Mr. Overton talked about Florida and even though there are no
tar balls washing up on the beaches, the effect on the economy
because of perception. And we talk about individuals, rig
workers, and fishermen, and people that, you know, have these
direct claims that are going to get processed real quickly, but
the small business men and women across the country, the
husband and wife that own the Motel 6, you know, maybe 100
miles, 70 miles I think was mentioned, from the coast that are
suffering because they depend on when all those motels along
the coast are full in peak seasons, thank goodness they call up
their friends 70 miles away and say, hey, have you got a
vacancy.
I mean, how many of us know when we traveled to Florida
years ago with our parents that you would just drive miles and
miles and miles trying to find--or you saw these blinking neon
signs that said, ``no vacancy,'' and you would have to go 70
miles inland.
So, you know, there is a huge problem, and Mr. Feinberg, it
probably extends a lot further than we realize today as far as
economic losses. I want to real quickly, you know, Rahm
Emanuel, the Chief of Staff of the President, was credited with
making a statement, ``Well, let no crisis go to waste.''
Now, from the political perspective on our side of the
aisle we would say that was--that is deplorable, but from a
policy statement, if that is what he was talking about, then,
in fact, I would agree that we should not let a crisis go to
waste, and we should make an attempt to make lemonade out of
these lemons, this huge lemon of the oil spill in the Gulf of
Mexico.
And, you know what I think should be done, and I would love
your opinion on it, the President's state of the union address
said, you know, we are going to take $30 billion of the TARP
money, the unspent TARP money. We gave--forced, in fact, the
nine or ten largest financial institutions in the country to
take that money even against their will, but it has been paid
back, not completely, but to a large extent, and the President
said, let us take $30 billion of that money and let us give it
to--let us recapitalize the small banks and help them make
loans because small businessmen and women can't borrow the
money that they need to stay afloat.
Wouldn't this be a great opportunity for the Federal
Government to listen to the President and to actually follow
through on this and get money available to small community
banks, not just in Florida, all along the Gulf Coast, indeed,
Georgia has 120 miles of coastline, and Florida and Georgia are
two of the States that are seeing banks close every week on
Friday, you know, or Saturday morning. You look to see, you
know, which community bank is going under, and all these jobs
are lost as a result of it. All these small Mom and Pops that
invested 5, 10, 15, $25,000 to start that bank would be part of
the start up, raise $15 million or whatever.
That money is totally wiped out. This would be a great
opportunity to turn lemons into lemonade and to get that money
in the hands of these small banks so that these businesses that
are waiting on Mr. Feinberg to adjudicate their claims would
have money to stay in business.
I would like--Mr. Feinberg, we will start with you, but I
know this is not you all's area of expertise, but you all are
bright men, and you know what I am talking about, and we need
to get this conversation going.
Mr. Feinberg. Am I safe if I say worthy of consideration?
Mr. Gingrey. How about damn worthy of consideration?
Mr. Dow.
Mr. Dow. Yes. Mr. Gingrey, I think it is an admirable
thought. When you talk about small businesses, you look at the
Gulf Coast, it is probably almost all small businesses. New
Orleans has big hotels and big--but if you look at this Gulf
Coast, this is made up of people who have relationships with
these small banks. People know they have got their records and
all that versus the larger banks, and I think it is all small
business.
And the other thing, I also think this is a phenomenal
opportunity. There will be another hurricane, there will be
another tsunami, there will be another earthquake, and this is
an opportunity for us to set in place how we deal with these
disasters so we don't have to reinvent the wheel, and that is
why I think this marketing fund we talked about is so critical
and that we can use this over and over again.
But this is a great opportunity for the government to learn
and to really set a process for the future.
Mr. Gingrey. Well, and I see my time is running out, Mr.
Chairman. I don't want to extend too long here, but clearly,
the President called for this to be done, it hasn't been done.
This Financial Regulatory Reform Bill, the reason so many of us
were opposed to it, it did nothing for Fannie and Freddie, but
as far as this provision for some of that TARP money to the
smaller community banks, it never happened.
But it is not too late, and we need to really look into
this closer, Mr. Chairman. I hope we have an opportunity to
discuss it further.
Mr. Chairman, I know some of the witnesses want to respond
to this. It is up to you whether or not--I will shut up, and
you can let them talk if they--you give them time.
Mr. Rush. Witnesses have a response? Yes.
Mr. Daniels. I must say I think it is a great idea, but I
would be remiss if I did not impress upon you that this is
still a liquid situation. Every day there are those of us on
the Mississippi Gulf Coast who are praying that the cap stays.
There is still oil in the water, and granted, the discussion of
payment is excellent. Your idea is excellent, but BP doesn't
have enough money when we talk about perception over the years
if the oil continues to come.
So I think the idea of utilizing the community banks is
great, but what the people on the Gulf Coast needs is
reassurance. What they need, and only the Federal Government
can give this, by the way, is the reassurance that it is safe.
The reason--no matter how much advertisement BP does or we do
in the tourism industry, if you don't think it is safe to go to
the beach, then you are not going to take your kids.
So you esteemed gentlemen are the ones who are in charge of
the DMR, OSHA, the DEQ. You guys need to have at BP's expense
an army of scientists, biologists, and marine biologists there
assuring the rest of the world that it is oK, and first, assure
them that there is no more oil in the water.
So I think you have two components. I think Mr. Feinberg
and BP with $20 billion will not be enough if we are still
discussing this very fluid situation next year.
Mr. Rush. Mr. Daniels, we are going to move on because we
have other members who want to question the witnesses.
Mr. Gonzalez is recognized for 5 minutes.
Mr. Gonzalez. Thank you very much, Mr. Chairman. My
question will go to Mr. Feinberg, and I have had the benefit of
hearing your testimony in the Judiciary Committee, but I wasn't
able to ask a question. I want to ask it at this time.
At the time of your testimony last week before Judiciary,
that same morning Joe Scarborough, who is from Pensacola, was
broadcasting his show from Pensacola and the beach, and he had
a State Senator, and the State Senator made a couple of
comments, and so I will build my questions on the comments.
The first one was, look at our beaches. They are beautiful,
pristine, everything is fine. We are not getting people here.
So it is the perception, and you have referred to this in the
past, and I apologize. I wasn't here for all the testimony, and
that is Charlie Gonzalez is thinking of going to Pensacola, but
I am afraid there is oil, so I don't go, no one is at the
hotel, the motels. That hotel, motel owner is a victim of some
perception. It may be false. How are you going to handle that
claim?
What was disturbing to me was that the State Senator's
comment was, right now we have been dealing with BP on claims.
Can you imagine now we are going to have to deal with the
Federal Government? And you have already made it very clear
that you don't--that is not your boss, neither is BP.
But would you say to that State Senator? Why is it that
this Gulf Coast Claims Facility is superior to what was in
place prior to the agreement?
And the second question is the one that I would like for
you to answer if you don't mind and then go to the perception
of the beaches being spoiled and such.
Mr. Feinberg. I would like to think that with the
experience that I would bring and the confidence that the
President and BP had in selecting me to do this based on my
prior work in processing mass disaster claims, BP is an oil
company, not a claims facility, I would like to think that we
will be able much more efficiently, much more effectively to
process claims in a way that will engender the support of the
people that I am trying to help.
All the talk in the world won't replace payments, and a
sense that people have and businesses have that there are
actually checks being paid to eligible Claimants. So the proof
will be in the result in the next month, and I am hoping with
my fingers crossed that the President's confidence in me and
the Administration's confidence in me and BP's confidence in me
will result in the people in the Gulf having confidence in me
so that the program is working and that it is credible.
Mr. Gonzalez. And to the second question, and I don't
know--not to pre-judge any claims, but what do you do if the
perception was that there was oil on the beach when there
wasn't, but the business has suffered?
Mr. Feinberg. You cannot need oil on the beach to have a
compensable claim. I want to emphasize this. Florida law may
require, I don't know. Attorney General McCollum has a
different view and probably the correct view, but you don't
need oil on the beach, you don't have to be unable to fish.
Perception is compensable.
Now, the problem that Congressman Stearns and others pose,
well, what is the proximity requirement? What is the dependence
on that beach or on fishing or on shodder boats or sightseeing?
I will have to draw some lines on eligibility. The lines will
be based on proximity to the beach or to that natural
resources, fishing or what have you, the industry, fishing,
crabbing, oyster harvesting is easy. Motels, restaurants
depending on the motel and type of restaurant, legitimate,
eligible, and how dependent is that claimant on natural
resources. And I will have to in the next, actually in the next
few weeks I am going to have to develop eligibility criteria
that will answer that question.
Now, the Claimant still has to prove the claim. Eligibility
is one issue. Corroborating the claim by showing that the spill
caused my loss, that is another issue, but that is what I will
have to deal with.
Mr. Gonzalez. Thank you very much, and I want to thank the
other witnesses, though I may not have a particular question.
Thank you for your testimony, and I yield back, Mr. Chairman.
Mr. Rush. The Chair recognizes Mr. Scalise of Louisiana.
Mr. Scalise. Thank you, Mr. Chairman.
It has been talked about by a number of you about the
problems of perception, both with tourism, with food, the fact
that even where some areas have absolutely no oil, you still
got a double digit, if not over 50 percent drops in people that
are coming, and I want to start with you, Mr. Brennan.
When we talk about how to combat that, especially once the
oil, you know, and we are all praying that this well is capped
real soon, but there is still going to be oil that has got to
be cleaned up, and there is still going to be perception
problems. I know our State has worked on some different types
of certification proposals to encourage FDA to set up a formal
process so that people can go out there and actually have, all
across the country have a clear confidence level that if they
are buying seafood, we know if you can buy it, it is safe
because our vendors aren't selling seafood that is unsafe, but
there is a perception and a concern out there, and so a
certification process would give a higher level of confidence.
First, can you talk about both that combined with
marketing? What is it going to take in your opinion to get
people to feel comfortable walking into a seafood restaurant,
not just in New Orleans but anywhere in the country, to know if
it is from the Gulf that it is safe?
Mr. Brennan. Congressman, clearly there are two issues
here. You know, one is the damaged brand of the entire Gulf
Coast as a tourist destination, and the other which you just
mentioned is the food safety concern, and there are a number of
regulatory agencies at the state and federal level that are now
evaluating the safety of the seafood on a daily basis.
And we need one consistent program that can become sort of
the goal standard that--so that people will feel comfortable. I
had an opportunity to have dinner with a lady the other night
from Santa Monica, California. She said she would never eat
Gulf seafood because despite what they are saying about it, she
still believes that it is tainted in some way. And there are
probably many people around the country that feel that way, and
there are restaurants around the country that are posting signs
saying, we don't serve Gulf seafood.
So we have a serious issue here, and we need one standard
so that the country will feel confident that the seafood that
comes out of the Gulf is of----
Mr. Scalise. Mr. Overton, we will just go down the line.
Mr. Overton. The seafood industry in general, particularly
when you talk about the fisheries of the Gulf of Mexico, have
been under-funded for a long time, the research associated with
it, and so, you know, back to the earlier comments of how do we
bring something good out of this crisis, I think it is an
opportunity for us to take some funds and do some measurable
data on the water columns, the baselines, and know how many
fish we have, how many have been--what, you know, this class of
fish, is it totally destroyed, or is it partially destroyed? It
will give us an opportunity to really look at what our data
should tell us today.
We don't have the funding currently to do that, and if I
may, just one other point. When it comes to the perceptions,
and Mr. Feinberg may have a comment on this, the complexity
that we are faced with now is that we actually lose money in
September and in August. We don't make a profit. We make our
money in the other parts of the year, so what are we going to
do if we don't have a claim paid by then, and by the way, for
the record, I am not aware of any business owner in Florida
that has been paid a large claim as of yet.
So what are we going to do? Are we going to become servants
to the bank and our debt service covenant ratios, which are
very important. Those covenants just can't be broken, or do we
go lay employees off because we need to make that number? And
that is what we are faced with.
Mr. Scalise. Thank you, and I apologize, I have only got a
minute and a half left, and I have got a number of other
questions.
Mr. Malone, if you can get me a copy of the presentation
that you made to Mr. Feinberg, it sounds like you all really
put some things together that made an impression on him. If you
would be willing to share that----
Mr. Malone. Yes, sir.
Mr. Scalise [continuing]. With us as well, I would love to
see that, too.
Mr. Malone. Be happy to. Can I speak briefly to another
question about perception?
Mr. Scalise. Real quick.
Mr. Malone. Real quick.
Mr. Scalise. I have got some questions for Mr. Feinberg,
and I have only got a minute now.
Mr. Malone. OK. The science community is doing our region a
terrible injustice. We tend to believe the EPA, the regulatory
bodies, but every week somebody, some scientist from some
university, it varies, is continually questioning the quality
of the water, quality of the air. As long as those questions
are out there, these misperceptions are going to be----
Mr. Scalise. All right, and I have got to get to my
questions for Mr. Feinberg. As you have heard some of these
comments from the panelists today, other conversations you had,
can you help give them some confidence that when we talk about
some geographical limitations, if you got a restaurant in New
Orleans, and it is 60 miles away from the point of impact, how
are you going to factor that in?
Mr. Feinberg. I am going to factor that in. Proximity makes
it sort of a per se case. If you are right on the beach or you
are right by the Gulf, by the waters, it sort of--that is what
I mean when I say proximity. It is sort of easy.
That doesn't mean if somebody has another facility farther
away they are automatically ineligible. We will take a look at
the facts.
Mr. Scalise. OK. Real quick, too. On the escrow
negotiations, are you kind of held back on what you can do to
start setting up your operation and cutting checks for that to
be completed, or can you start before they complete these
escrow negotiations?
Mr. Feinberg. No. I am not held up. We are on parallel
tracks. The sooner the escrow is set up the better, but
meanwhile I am going forward setting up the infrastructure.
Mr. Scalise. Can you cut any checks before the escrow
negotiations occur?
Mr. Feinberg. No, but I am confident that by the second
week of August, which is, you know, already too late, I am
hoping that the escrow should be up and running so that there
will be no inability to cut checks.
Mr. Scalise. OK, and then you said with the $100 million,
that is the only place to go for people who work on rigs. There
is really no place to go that I have heard of for people that
service rigs. Can they go to your fund? Would you pay them out
of your fund? And if not, is just unemployment their only
option at this point?
Mr. Feinberg. I don't know about unemployment. I can tell
you that unemployed rig workers who are unemployed because of
the government's moratorium don't have a claim against the----
Mr. Scalise. Once that--that $100 million is going to run
out within 2 months if they start paying on it by any estimate
that we have been given, and so once that is extinguished, do
they have any recourse other than just going on unemployment?
They are still unemployed, and there is still a moratorium
after 2 months.
Mr. Feinberg. I am just suggesting I doubt very much that
they would have a claim within this fund.
Mr. Scalise. OK, and then if you could give me offline here
the protocols for review board. As you are setting up the
process if somebody----
Mr. Rush. Mr. Scalise.
Mr. Scalise [continuing]. Disagrees with your ruling and
they want to go to some kind of additional process----
Mr. Rush. Mr. Scalise, this is your last question.
Mr. Scalise. Thanks, and I yield back. Thank you, Mr.
Chairman.
Mr. Rush. All right. The Chair now recognizes Mr. Sarbanes
of Maryland.
Mr. Sarbanes. Thank you, Mr. Chairman. Thanks to the panel.
Mr. Feinberg, I was going to ask you some questions. You
say that you are not privy to the negotiations that are going
on with respect to the escrow fund. Are you OK with that? Does
that--do you think that is better from your standpoint? Worse?
Or what is your perspective?
Mr. Feinberg. I am neutral. As long as the money is
available when the Gulf Coast Claims Facility starts processing
claims and cutting checks, that is fine with me.
Mr. Sarbanes. Do your decisions, are they immune from
challenge under whatever understandings have been----
Mr. Feinberg. No.
Mr. Sarbanes. No.
Mr. Feinberg. No.
Mr. Sarbanes. So if you and Mr. Malone are talking about
the appropriate zone, and the government things you have drawn
the zone too small, and BP thinks you have drawn the zone too
big, or someone who is on the outside of the zone doesn't agree
with your judgment call, are you anticipating that there is
going to be some challenge presented to that? Or are you--or
under the structure of this arrangement is that not
challengeable?
Mr. Feinberg. Neither the government nor BP can challenge
my independence, but if an individual claimant, business or an
individual, doesn't like my eligibility determination or
doesn't like the amount of money that I have awarded, that
individual has two choices. The individual can either, not
either, both. First, the individual can seek an appeal to three
ex-Judges or an Appellant body that will review my decision,
and only then can the Claimant, who if he or she is still
dissatisfied, Congressman, can opt out of this system
altogether and go file a lawsuit.
Mr. Sarbanes. Got you. Was it a condition of your accepting
this assignment that BP and the government agree that your
judgment calls would not be challenged by them?
Mr. Feinberg. Yes.
Mr. Sarbanes. OK. Mr. Malone talked about how there are
people who--let us assume there is a good claim coming down the
pipeline, and when it eventually gets to you, you are going to
do the right thing, but it is not there yet, and the business
that is seeking those--that compensation is in a position as
Mr. Malone described where they may not be able to hang on as
against the obligations they face from others, from third
parties.
Is there anything that can be done in your mind? Is there--
could you even though you are not set up and ready to go, is
there some kind of comfort letter or something that you can
provide to that business that says, you know, by all
indications you will be in a position to submit your claim to
us once we are up and running, and you can use this letter and
present it to third parties who may be liening on you so they
understand that, you know, there is some recourse available to
them? Is that something that is possible?
Mr. Feinberg. Yes. First, I am going to be up and running
in a matter of weeks. Now, that is too many weeks, but I
understand that. That is small solace to somebody who is on--
about to close their business. I will be up in a matter of
weeks.
Secondly, if I know of that claim, I mean, BP is paying
claims. If there is a claim like that that I can't wait 2 weeks
or 3 weeks, be it a letter or your promise or your willingness
to deal with me, if I know that claim, I will go to BP for that
claimant. I have done this already----
Mr. Sarbanes. OK.
Mr. Feinberg [continuing]. To try and ease that transition.
Mr. Sarbanes. So there is some recourse. I mean, if
businesses can be identified that are kind of caught in the
switches here, there is a way you can get that in front of BP--
--
Mr. Feinberg. Yes.
Mr. Sarbanes [continuing]. And say before it is too late,
do something here while we are in this transition period.
OK. All right. Thank you. I yield back my time.
Mr. Rush. The Chair recognizes Dr. Burgess for 5 minutes.
Dr. Burgess. I thank the Chairman for the consideration. I
am not part of this subcommittee, but I am part of the full
committee.
Mr. Feinberg, if I understood correctly in your answer to a
question Mr. Barton asked that the framework that is being set
up surrounding your administering this fund is actually being
done in the White House by an Assistant Attorney General, is
that correct?
Mr. Feinberg. The framework setting up my Claims Facility
is being done by me. The framework for setting up the $20
billion escrow fund, my understanding is, because I am not
privy to those negotiations, is between the Associate Attorney
General's Office and people at BP in Houston.
Dr. Burgess. Now, at some point, though, those two
universes have to merge. Is that correct? Otherwise you have a
structure with no fund----
Mr. Feinberg. You have got it.
Dr. Burgess [continuing]. And they have got a fund with no
structure.
Mr. Feinberg. That is right.
Dr. Burgess. When that merging occurs, will we on the
Energy and Commerce Committee be made aware of what that
structure looks like and how the fund then subsequently is to
be administered?
Mr. Feinberg. I would think so. You will certainly be
entirely up to date on what I am doing with the Claims Facility
and how that is working, what the protocol is, how we are
drawing on the money. You will have--there will be full
transparency as to what I am doing.
Dr. Burgess. Well, let me just ask you this. When you
worked 9/11, it was before my time, but when you worked
administering that fund, who--for whom were you working?
Mr. Feinberg. I was working for the Department of Justice
and Attorney General John Ashcroft.
Dr. Burgess. So you received a paycheck from the Department
of Justice?
Mr. Feinberg. I did--I worked on that assignment entirely
pro bono.
Dr. Burgess. OK. Had you been paid, though, likely would
have come from the Department of Justice?
Mr. Feinberg. Department of Justice.
Dr. Burgess. On this--are you working pro bono on this
account?
Mr. Feinberg. No, I am not. The entire cost of this fund,
the Facility, Gulf Coast Claims Facility, must, of course, be
paid by BP. You can't ask the claimants to fund any part of it.
You can't ask the government to fund any part of it.
Dr. Burgess. Well, then that begs the question who is
signing our paycheck?
Mr. Feinberg. I am sure that BP is signing not only my
paycheck but is signing the paycheck of everybody working in
this independent Gulf Coast Claims Facility.
Dr. Burgess. Do you see any difficulty in maintaining the
independence with them holding the title of paymaster?
Mr. Feinberg. I don't see any difficulty in maintaining my
independence. I certainly do see the implication of your
question, which is there could be a perception that since BP is
paying, shouldn't we have more transparency or full disclosure,
and I agree with that.
Dr. Burgess. And I think that is where we would like to be
of service to you and provide some help to you. When the 9/11
compensation fund was set up, my understanding, and, again, I
was not here, but that was set up under a Congressional
authorization or Congressional charter. Is that correct?
Mr. Feinberg. It was a federal statute.
Dr. Burgess. Right, but it was as a direct result of action
taken in the United States Congress.
Mr. Feinberg. That is right.
Dr. Burgess. But this is a little different.
Mr. Feinberg. Very different.
Dr. Burgess. There has been no action taken in the United
States Congress, so if we invite you, for example, to our
Committee on Oversight and Investigations, if Chairman Rush
invites you back to this committee, may we expect your
attendance?
Mr. Feinberg. You certainly may with honor.
Dr. Burgess. Well, I want to say as the Ranking Member on
Oversight and Investigations and who knows what will happen to
the world after November but as the current Ranking Member, we
will welcome you back or welcome you to that committee some
time this fall when you actually get funded to have a visit
about how those funds are actually being dispersed, and of
course, we also will be terribly interested in how the merging
of the structure that you are producing and the funding that is
yet to happen.
You know, we had a field hearing the 1st of June down at
Chalmette, Louisiana, Chalmette virtually destroyed in Katrina,
built back, and now they are being destroyed by the oil spill
and then subsequently the moratorium. There was a hotel
operator there who talked about how he was keeping his cash
flow going by borrowing, and having run a business before I
know it is hard to keep your cash flow going if you are
borrowing. And I asked him who was co-signing his loans with
him, and he said his wife. I said, well, that is not exactly
what I had in mind. I was kind of hoping BP was co-signing
those notes with you, and he said, no such luck.
Are we going to get to a point where that individual or an
individual in similar circumstance can continue to maintain
their business without facing future financial ruin?
Mr. Feinberg. That will be my goal.
Dr. Burgess. Thank you, Mr. Chairman, for your courtesy. I
will yield back.
Mr. Rush. The Chair recognizes Mr. Melancon for 5 minutes.
Mr. Melancon. Thank you, Mr. Chairman. I appreciate you
allowing me to waive on. If I would, I would like to submit a
statement for the record since I am not a member of the
subcommittee.
Mr. Rush. OK.
Mr. Melancon. Thank you, sir. I would like to welcome my
friend, Ralph Brennan with the Restaurant Association. We
worked many years ago on a promotion for Louisiana not only out
of Louisiana but also internationally, and I guess my question
to you is do you remember how many years it took us to build
that reputation once we got that fund up and running?
Mr. Brennan. Congressman, I don't remember the number of
years, but it is a long time.
Mr. Melancon. And so we are right now kind of reverting
back to where we were, and we are going to have to have some
ability as well as Alabama, Mississippi, Florida, and Texas to
get that message back out once this Gulf has been cleaned up.
So it is a long time coming.
Mr. Brennan. Yes, sir.
Mr. Melancon. I guess, Mr. Feinberg, is there any
indication from BP of how long they are going to be in this
thing, or are they thinking that this $20 billion is the all to
end all, and is it going to done then?
Mr. Feinberg. BP has made it very clear publicly and
privately that if the $20 billion isn't enough, and I certainly
hope it is, but if it isn't enough, they have promised to honor
any additional financial obligations that might be their--its
responsibility.
Mr. Melancon. Mr. Feinberg, if I could, can you tell me
what the hell this Alabama lawsuit is about?
Mr. Feinberg. I am sorry?
Mr. Melancon. This Alabama lawsuit. What is that about? I
mean, BP is the responsible party. They are obligated not only
for the money but paying for the administration of it, so
somebody is filing--Alabama I think is filing suit.
Mr. Feinberg. I am not----
Mr. Melancon. That was something I had heard on the news
the other day. I was wondering what that was all about. Maybe I
didn't get my full information.
Ralph, let me ask you as a person from Louisiana and for
the Mississippi folks, I spent quite a number of days along the
coast including the Mississippi Gulf Coast after Katrina. We
are all in this thing together. I fully support every state
that has been affected, whether it is from the storms or
whether it is from BP.
I wasn't here for the opening statement, and I apologize to
all of you that--for that, but Ralph, is there anything since
the discussions have started that has come to your mind that
you wish you may has said or you might want to still say while
I still have 2 minutes and 30 seconds?
Mr. Brennan. Congressman, all I would say is--and I said
this in my opening remarks, this is a long-term problem. Unlike
Katrina it was a fixed event, it was over, we knew what we had
to do. We don't know the long-term effects of this on
especially Louisiana, the tourism industry and the seafood
industry.
And so we have to take an approach today, and we have to
start today knowing it is going to be a long-term battle. I
think you mentioned that earlier. We can't just end this at any
date certain. It may go on for many, many years, and we have
had conversations with the tourism industry officials and the
seafood officials from Alaska, and after the Valdez incident
they told us it has taken 5 to 10 years for them to overcome
the effects of just that spill.
Mr. Melancon. As I mentioned to my colleagues and others
that will listen and the media, what our problem is, I guess,
Mr. Feinberg, is what we don't see out there in the marshes in
the Gulf that are the concerns for us for the future, and that
is why, you know, knowing that you fully well see the long
term, it is not like a 9/11, we are settled, and we are done,
and we walk away. That is where I may not be around either
because the Lord doesn't wish it for me or whatever, but I just
hope that maybe that the people will be made whole in some way,
shape, or form.
I want to thank the Chairman for having this hearing as we
continue to move forward to understand the problems that are
faced by the people of the Gulf Coast of this country and hope
that whatever we do the resolve will be such that it will be a
model for the future.
So, Mr. Feinberg, I pledge you and your folks full
cooperation of my office as long as I am in office to help you
with this problem, and again, Mr. Chairman and Ranking Member,
thank you all for allowing me to waive onto the committee.
Yield back the balance of my time.
Mr. Rush. That said, the Chair wants to inform all the
members, all the witnesses that you have been very patient, you
have participated and informed the subcommittee far beyond our
expectations, but we--and we certainly are appreciative of your
sacrifice and your time that you submitted to this process. Mr.
Dow, you had----
Mr. Dow. Mr. Chairman, may I make one statement? One of the
more moving and impressive things that I have seen is in
September of 2008, you returned to the House on the floor to
personally support the Travel Promotion Act which is now law. I
do appreciate you understand what promotion can do.
Mr. Rush. Yes.
Mr. Dow. Your heroism being there but most important I am
going to ask this committee and Congress if we can move forward
and push for a $500 million fund. It is not in Mr. Feinberg's
purview, but if we do this, we can limit significantly what is
going to be spent in damages and recovery, and you understand
as well as anyone. Thank you, sir.
Mr. Rush. The Chair does understand and however, the
committee will take that under consideration and give its
intense insight or intense interest in that, and we will use it
in the process to determine what our next step should be.
But I want you to know that I do understand how important
it is.
And the Chair as was indicated earlier, really appreciates
all the witnesses for their time. I know that Mr. Feinberg does
have a 12:30 deadline that he has to meet. So with that in mind
the committee now stands adjourned.
[Whereupon, at 12:30 p.m., the Subcommittee was adjourned.]
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