[Senate Hearing 111-1241]
[From the U.S. Government Publishing Office]
S. Hrg. 111-1241
LEGISLATIVE HEARING TO CONSIDER S. 3305
=======================================================================
HEARING
before the
COMMITTEE ON
ENVIRONMENT AND PUBLIC WORKS
UNITED STATES SENATE
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
JUNE 9, 2010
__________
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COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
BARBARA BOXER, California, Chairman
MAX BAUCUS, Montana JAMES M. INHOFE, Oklahoma
THOMAS R. CARPER, Delaware GEORGE V. VOINOVICH, Ohio
FRANK R. LAUTENBERG, New Jersey DAVID VITTER, Louisiana
BENJAMIN L. CARDIN, Maryland JOHN BARRASSO, Wyoming
BERNARD SANDERS, Vermont MIKE CRAPO, Idaho
AMY KLOBUCHAR, Minnesota CHRISTOPHER S. BOND, Missouri
SHELDON WHITEHOUSE, Rhode Island LAMAR ALEXANDER, Tennessee
TOM UDALL, New Mexico
JEFF MERKLEY, Oregon
KIRSTEN GILLIBRAND, New York
ARLEN SPECTER, Pennsylvania
Bettina Poirier, Staff Director
Ruth Van Mark, Minority Staff Director
C O N T E N T S
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Page
JUNE 9, 2010
OPENING STATEMENTS
Boxer, Hon. Barbara, U.S. Senator from the State of California... 1
Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma... 2
Lautenberg, Hon. Frank R., U.S. Senator from the State of New
Jersey......................................................... 13
Vitter, Hon. David, U.S. Senator from the State of Louisiana..... 13
Additional statement......................................... 29
Cardin, Hon. Benjamin L., U.S. Senator from the State of Maryland 15
Bond, Hon. Christopher S., U.S. Senator from the State of
Missouri....................................................... 18
Baucus, Hon. Max, U.S. Senator from the State of Montana......... 19
Alexander, Hon. Lamar, U.S. Senator from the State of Tennessee.. 20
Merkley, Hon. Jeff, U.S. Senator from the State of Oregon........ 21
Whitehouse, Hon. Sheldon, U.S. Senator from the State of Rhode
Island......................................................... 22
Carper, Hon. Thomas R., U.S. Senator from the State of Delaware.. 23
Klobuchar, Hon. Amy, U.S. Senator from the State of Minnesota.... 24
Menendez, Hon. Robert, U.S. Senator from the State of New Jersey. 26
Nelson, Hon. Bill, U.S. Senator from the State of Florida........ 28
WITNESSES
Minich, D. T., Executive Director, Visit St. Petersburg-
Clearwater..................................................... 34
Prepared statement........................................... 36
Response to an additional question from Senator Boxer........ 43
Responses to additional questions from Senator Carper........ 44
Frenette, Mike, Captain, Venice Charter Fishing.................. 45
Prepared statement........................................... 48
Response to an additional question from Senator Boxer........ 52
Responses to additional questions from Senator Carper........ 53
Kopchak, R. J., Cordova District Fishermen United and Prince
William Sound Science Center................................... 55
Prepared statement........................................... 57
Response to an additional question from:
Senator Boxer............................................ 62
Senator Carper........................................... 63
Murchison, Kenneth M., Professor, Paul M. Hebert Law Center,
Louisiana State University..................................... 64
Prepared statement........................................... 66
Response to an additional question from Senator Boxer........ 79
Responses to additional questions from:
Senator Carper........................................... 80
Senator Whitehouse....................................... 82
Hartman, Barry M., Partner, K&L Gates............................ 84
Prepared statement........................................... 86
Responses to additional questions from:
Senator Carper........................................... 94
Senator Whitehouse....................................... 95
Senator Inhofe........................................... 98
Baron, Ron, Executive Vice President, Willis Global Energy,
Willis of Texas, Inc........................................... 100
Prepared statement........................................... 102
Responses to additional questions from Senator Carper........ 109
ADDITIONAL MATERIAL
Bill submitted by Senator David Vitter, the Acceptance of Offer
on Liability and Expedited Claims at Mississippi Canyon 252 Act 147
Deepwater Operations in the Gulf of Mexico by Company Size, data
compiled by the Office of Senator Robert Menendez.............. 187
Westlaw information on Ballard Shipping Company etc. v. Beach
Shellfish et al................................................ 196
LEGISLATIVE HEARING TO CONSIDER S. 3305
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WEDNESDAY, JUNE 9, 2010
U.S. Senate,
Committee on Environment and Public Works,
Washington, DC.
The full Committee met, pursuant to notice, at 10:30 a.m.
in room 406, Dirksen Senate Office Building, Hon. Barbara Boxer
(Chairman of the full Committee) presiding.
Present: Senators Boxer, Inhofe, Baucus, Bond, Voinovich,
Carper, Lautenberg, Alexander, Vitter, Cardin, Klobuchar,
Whitehouse, Udall, and Merkley.
OPENING STATEMENT OF HON. BARBARA BOXER,
U.S. SENATOR FROM THE STATE OF CALIFORNIA
Senator Boxer. The Committee will come to order.
Today, we will hear from fishermen, tourism officials, and
legal experts about the drastic and heartbreaking economic
damages caused by a significant oil spill and the need to pass
legislation to ensure that the people whose jobs and
livelihoods are impacted are made whole again.
Several of us sitting here represent coastal States, and as
we watch this we have the strongest of feelings about what it
would mean if it happened in our State. And we have the
strongest of feelings as to what it would mean to our
fishermen, to our people who run tourism businesses and
recreation businesses, and to our wildlife. So our hearts are
in this hearing.
I want to thank all the dedicated people who are now in the
Gulf responding to the current disaster. This includes 17,500
National Guard troops, more than 20,000 people sent by
President Obama, and countless State and local officials who
are working day and night to protect and clean up the coast.
As Chairman of this Committee, I want to unequivocally
state that I want to make available as many people as it takes
to clean up this mess with BP paying the bill as is required by
current law. But as we know from previous oil spills, the road
to recovery can be long and arduous. The Exxon Valdez spill
showed how protracted and painful this experience can be.
Listen to this history.
On March 24, 1989, shortly after midnight, the oil tanker
Exxon Valdez struck a reef in Prince William Sound, Alaska,
spilling more than 11 million gallons of crude oil, which
eventually contaminated 1,300 miles of shoreline. The spill
decimated fisheries and ended the lives of thousands that
depended on the precious natural resources in Prince William
Sound.
Exxon reached a settlement agreement for $900 million to
restore injured natural resources over a period of 10 years.
But more court cases followed, and Exxon continued to
successfully fight the court's ruling of an additional $5
billion to Alaska fishermen, natives, and businesses. In 2006
an Appeals Court cut this to $2.5 billion. And in 2008, nearly
20 years, 20 years after the spill, the case wound its way to
the Supreme Court, who cut the amount Exxon owed even further
to $507 million. After two decades of waiting, each plaintiff
received $15,000.
Exxon successfully fought to minimize the economic damages
it paid after the spill, leaving many without adequate
compensation. And while the court cases played out, the impact
of the oil spill continued. The Prince William Sound herring
fishery has been closed for the majority of the 21 years since
the spill, 21 years. Further, surveys conducted since 2001
indicate that as much as 21,000 gallons of oil remain on the
coasts of Prince William Sound.
Congress responded to Exxon Valdez by enacting the Oil
Pollution Act of 1990, which included reforms, but it had
serious shortcomings. Recent events make that clear. The Oil
Pollution Act says that the party responsible for a spill at an
offshore facility only has to pay $75 million for economic and
natural resources damages. This is a recipe for another
horrible, unfair, and long road.
In the wake of the disaster in the Gulf, we must act.
Already businesses are complaining that BP is not acting on
claims. Coming from California, where our coastal tourism,
recreation, and fishing ocean economies generate $23 billion in
economic activity and support 388,000 jobs, I believe it is
critical that we protect those whose jobs and livelihoods could
be devastated by a spill that was no fault of their own.
Shielding companies from responsibility for damages sends
the wrong signal. If anything it increases the risk to the
public. If you or I, colleagues, or anyone in the audience,
members of the press, any of us, got into an accident that we
caused, we are responsible for all the damages. No caps in that
case, and there should be no caps in this case.
The law should be clear that the polluter pays for the
damages they cause, period.
I look forward to the testimony from our witnesses today,
and I call on my distinguished Ranking Member, Senator Inhofe.
OPENING STATEMENT OF HON. JAMES M. INHOFE,
U.S. SENATOR FROM THE STATE OF OKLAHOMA
Senator Inhofe. Thank you, Madam Chairman.
I am glad we scheduled this hearing today because it will
be an example to see how complex this whole thing is. On May 27
President Obama held a press conference to explain his role in
addressing the BP spill. He said, ``This Administration is
relying on every resource and every idea, every expert, every
bit of technology to work to stop it. We will take ideas from
anywhere and we are going to stop it.''
When I heard this, I thought, that is great, Mr. President.
You are focused on the right thing that you should be focused
on. Of course, we in Congress need to do the same, as I have
said during the previous hearings. Congress should focus on
three priorities. We need to mitigate and contain the
environmental impacts, provide assistance to the Gulf's
affected commercial and recreational industry, and investigate
the causes so that we can prevent an accident of this kind from
happening again.
That is essentially what the President initially said
before emotion starting rising in this thing. Staying focused
will help us to make the prudent decisions. I think we all
agree on that. This is why I was discouraged when President
Obama in the same press conference veered off course, and he
said the spill occasioned passage of the global warming
legislation. He referred prudently to the Waxman-Markey bill,
the cap and trade bill that the House had passed last year.
Now this raises the obvious question. How would cap and
trade, a massive energy tax on consumers, stop the spill? How
would it clean up the spill? How would it help those affected
by the spill? And how would it help us determine what happened
so that we can prevent this from happening again? The answer is
it wouldn't, but it makes great theater. And so we have had a
lot of that.
So I respectfully call on President Obama and my colleagues
here in the Senate to concentrate on fixing the problem. Let's
avoid getting sidetracked by cap and trade and other issues
that will needlessly complicate the efforts in addressing the
real problem.
We do have a lot of people right now who are trying to use
this very tragic situation to advance their own agendas. Since
the Chairman mentioned the Exxon Valdez, I recall that, Madam
Chairman, when that happened, I was in the House on the
appropriate committee, and so I actually went up there. When I
got there, this horrible thing that took place, some of the far
left environmental extremists were celebrating. They were
actually celebrating that it happened. And I said, why would
you do this? Well, because we are going to parlay this into
stopping any kind of exploration or drilling on the North
Slope. And they attempted to do that.
And I said, wait a minute. The Exxon Valdez was not an
exploration. It was not a drilling accident. It was a
transportation accident. If you stop the drilling, stop our
ability to produce and export our own resources, we are going
to have to be reliant upon foreign countries, and so
transportation would play a much larger role. Nonetheless, we
are seeing a lot of that happen now.
And I would say this. I think we should avoid overreaching.
This thing was really tragic. People died. People's economic
livelihoods are at stake, as the Chairman said, and the
environment is being harmed. But I am concerned that the
President's moratorium on deepwater drilling could harm the
economy in the Gulf, as I am sure Senator Vitter will talk
about. The Louisiana Department of Economic Development
estimates that the President's active drilling suspension alone
will result in the loss of 3,000 to 6,000 Louisiana jobs in the
next few weeks and over 10,000 in the next few months.
So today's hearing on S. 3305 is a welcome step, Madam
Chairman.
Senator Boxer. Thank you.
Senator Inhofe. I am not through yet.
Senator Boxer. Oh, so sorry.
Senator Inhofe. Two weeks ago, I had to object twice to a
unanimous consent agreement to debate 3305 on the floor. We
hadn't had a hearing on it, and that is one of the reasons that
I objected. This bill involves complex issues that must be
understood before we act. If we get it wrong, we can set back
this Nation's energy future for decades.
Now, why do I say that? Well, it is what the experts are
telling us. In a recent letter from the Alliant Insurance, they
said insurers offshore in gas operations sums it up well: ``If
the liability cap is increased to levels we understand are now
under consideration, in our view only the major oil companies
and the NOCs,'' that is the national oil companies, and we are
talking about China and Venezuela and some of the rest of them,
``would be in a position to do this.''
Now, I would go so far as to say--and I am not quoting them
when I say this--that if we remove the caps altogether, even
the big five who would be self-insuring--I think all of them
self-insure--would not be able to cover it. So we would be
completely reliant upon China and Venezuela and the national
oil companies, the only ones who could actually handle an
unlimited cap.
So I think we need to look at this thing and to approach it
logically and not emotionally. And I think we have some good
witnesses today that are going to shed some light on this.
Thank you, Madam Chairman.
[The prepared statement of Senator Inhofe follows:]
Statement of Hon. James M. Inhofe,
U.S. Senator from the State of Oklahoma
Thank you, Madam Chairman, for scheduling today's hearing
to examine the complex issues surrounding the strict liability
limits in the Oil Pollution Act of 1990.
On May 27 President Obama held a press conference to
explain his role in addressing the BP spill. He said his
Administration is ``relying on every resource and every idea,
every expert and every bit of technology, to work to stop it.
We will take ideas from anywhere, but we are going to stop
it.''
When I heard this, I thought, ``That's great, Mr.
President; you're focused on exactly what you should be focused
on.'' Of course, we in Congress need to do the same. As I've
said during previous hearings, Congress should focus on three
priorities. We need to:
Mitigate and contain the environmental impacts;
Provide assistance to the Gulf's affected commercial and
recreational industries; and
Investigate the causes so we can prevent a disaster of
this kind from happening again.
Staying focused will help us make prudent decisions. Which
is why I was discouraged when President Obama, in the same
press conference, veered off course: he said the spill
occasioned passage of global warming legislation. He referred
approvingly to the Waxman-Markey cap-and-trade vote in the
House last year.
This raises obvious questions: How would cap-and-trade, a
massive energy tax on consumers, stop the spill? How would it
clean up the spill? How would it help those affected by the
spill? And how would it help us determine what happened so we
can prevent it from happening again?
Well, it wouldn't. So I respectfully call on President
Obama--and my colleagues here in the Senate--to concentrate on
fixing this problem. Let's avoid getting sidetracked by cap-
and-trade or other issues that will needlessly complicate
efforts to address real problems.
And I would add this: let's avoid overreaching. Now this
incident is serious--people died, people's economic livelihoods
are at stake, and the environment is being harmed. But I am
concerned that the President's moratorium on deepwater drilling
could harm the economy in the Gulf. The Louisiana Department of
Economic Development estimates that the President's active
drilling suspension alone will result in a loss of 3,000 to
6,000 Louisiana jobs in the next few weeks and over 10,000
Louisiana jobs in the next few months. More than 20,000 jobs
are at risk over the next 12 to 18 months.
So, today's hearing on S. 3305 is a welcome step, Madam
Chairman. Two weeks ago I had to object twice to unanimous
consent agreements to debate S. 3305 on the floor. We hadn't
had a hearing on it--that's one of the reasons I objected. This
bill involves complex issues that must be understood before we
act. If we get this wrong, we could set back this Nation's
energy future for decades.
Now why do I say that? Well, it's what the experts are
telling us. A recent letter from Alliant Insurance, which
insures offshore oil and gas operations, sums it up well:
``If the liability cap is increased to the levels we
understand are under consideration . . . in our view only major
oil companies and NOCs (National Oil Companies) will be
financially strong enough to continue current exploration and
development efforts.''
This letter was in reference to S. 3305's $10 billion
liability cap on economic damages. The insurers believe smaller
U.S. independent producers won't be able to drill with that
limit. And bear in mind that ``National Oil Companies'' means
those that are state-owned, such as the Chinese Offshore Oil
Corporation. Do we really want China drilling in place of
America's independent producers?
Alliant is not alone in holding this view. Consider this
statement from INDECS insurance consultancy: ``If we have
understood the proposals correctly, then it would appear to us
that the proposed bill will not act as `Big Oil Bailout
Prevention Liability Act of 2010', rather making it impossible
for anyone other than `Big Oil' to operate.'' I ask that this
letter be submitted for the record. Lockton Companies insurance
brokerage has said much the same thing: ``Without insurance,
many of the active exploration and production companies would
be unable to operate in the Gulf of Mexico. This decision will
affect thousands of people, their families, and their local
economies.'' I ask that this letter be submitted for the
record.
Madam Chairman, our response to this tragedy should be
measured, and it should be based on facts. How we respond could
have far reaching consequences for the Gulf and the Nation.
There's simply too much at stake to get this wrong.
[The referenced letters follow:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Boxer. Thank you so much.
I am sorry. I thought you were through.
Senator Inhofe. No, that is all right.
Senator Boxer. Senator Lautenberg.
OPENING STATEMENT OF HON. FRANK R. LAUTENBERG,
U.S. SENATOR FROM THE STATE OF NEW JERSEY
Senator Lautenberg. Thank you, Madam Chairman.
What a difference in perspective, because I was up in
Alaska the third day that the Valdez was foundering, and I saw
people crying. I didn't see people celebrating. I saw people
brokenhearted about what was happening to the wildlife and to
the fish supply and to the life that people had experienced
before.
And we shouldn't start any hearings here without extending
our condolences to the families who lost loved ones. They paid
a price for mismanagement that is irreparable.
We saw, as the Chairman so eloquently explained, what
happened with Exxon with their $5 billion punitive damage fine.
And they whittled it away, spent the money for the lawyers, and
20 years later they got the $5 billion fine down to a $500
million fine. Incredible, when in years since then they have
earned billions and billions of dollars in a quarter.
And let's look at this thing realistically. Fishermen,
crabbers, boaters, they don't want a check or a handout. They
want to continue a way of life that in many cases has gone on
for generations so they can work to take care of their
families. And that is why I want to make one thing clear. I
will not stand for offshore drilling anywhere that can affect
my State of New Jersey or my nearby States because the
spillover is obvious.
We have to pass energy legislation that prevents spills
from happening by making the polluters pay. Pretty simple.
Impose tighter regulations on existing drilling, placing a
moratorium on offshore drilling in new areas, and investing in
clean energy. But I am never going to stand silently on the
beaches of my State that contribute $50 billion to our State's
economy and watch the funeral march of oil bearing down on my
home State of New Jersey.
And that is why I will not support any bill that puts New
Jersey at risk by allowing drilling in the Atlantic, and in
order to do that we have to make sure that companies large or
small, if they make big mistakes, big management mistakes, as
BP has, that they pay the price, regardless of the size of
their company.
And I look forward to hearing our witnesses and hear what
they say about the results of this.
Thank you.
Senator Boxer. Thank you, Senator.
Senator Vitter.
OPENING STATEMENT OF HON. DAVID VITTER,
U.S. SENATOR FROM THE STATE OF LOUISIANA
Senator Vitter. Thank you, Madam Chair.
This oil spill liability issue is extremely important, so
thank you for the hearing on that. But as you know, this
hearing has been styled specifically on one precise bill, S.
3305, by Senator Menendez and others, and I have no problem
talking about that bill.
But when I understood this, I immediately wrote you and
requested that as a member of the Committee from the single
most affected State by the ongoing disaster-- and it is an
ongoing crisis and an ongoing disaster--I wrote and said I have
a bill directly on point that lifts all liability caps on BP
for this event, but also sets up an expedited claim process.
And Senator Murkowski was instrumental in that portion of the
bill. And I requested that this hearing and discussion be
broadened to include that bill, S. 3461.
After making multiple attempts to reach out to you
following up on that letter, we finally talked last night, and
you agreed it would be appropriate and appropriate for me to
make the UC request so that I can join Senators Menendez and
Nelson in the first panel and also present S. 3461, which would
lift the entire liability cap on BP for this disaster and also
set up an expedited claim process.
This, by the way, has been completely cleared on the
Republican side, so we could literally move on this as it
pertains to this ongoing disaster and ongoing crisis
immediately if we can get it cleared through the Senate. So I
would make that unanimous consent request so that we can have
that fuller discussion.
Senator Whitehouse. I am sorry. I didn't understand the
unanimous consent request.
Senator Boxer. Do you want to repeat it?
Senator Vitter. It is simply that I be allowed to join our
colleagues in the first panel so that I can also present S.
3461, which is my bill to completely remove the liability cap
on BP for this event and to set up an expedited claim process
for this event. This bill has been cleared on the Republican
side and could actually be passed immediately.
Senator Whitehouse. The UC is just to present that?
Senator Vitter. Correct.
Senator Whitehouse. OK.
Senator Boxer. Senator, I am going to slightly amend your
request because as you know, we just got your bill this
morning. Our staff just got a copy of it. It is 40 pages, and I
haven't seen it. It hasn't been noticed. So what I am going to
suggest is that I ask unanimous consent that any and all
members of this Committee have the opportunity today to discuss
any and all legislation relevant to the Menendez bill.
Senator Vitter. I have no problem with that if I can join
my colleagues at the table to be able to present 3461. Assuming
that is incorporated in your request, I certainly agree.
Senator Boxer. Let me reiterate. It is definitely
incorporated. People can sit here or sit there.
Do you have a problem with where people sit? We don't. So I
will just reiterate to be clear.
This hearing is about the Menendez bill, but any and all
members have the right to discuss their legislation or any
relevant legislation to the Menendez bill.
Senator Lautenberg. Within the time constraints, Madam
Chairman?
Senator Boxer. Within the time constraints, that is
correct.
All right. Now, we are going to move forward.
I believe Senator Cardin is next. Yes.
OPENING STATEMENT OF HON. BENJAMIN L. CARDIN,
U.S. SENATOR FROM THE STATE OF MARYLAND
Senator Cardin. Thank you, Madam Chair. Let me thank you
for this hearing.
I know you pointed out yesterday was World Ocean Day. I
know my friend from Rhode Island is fully aware of that, but we
really do celebrate the importance of our oceans for seafood,
for recreation, for sea lanes for transportation. And all of
that has been brought into real question as a result of the
Deepwater Horizon spill.
I agree with our Chair that our first obligations must be
to stop the spill and to do the mitigation, and that has got to
be our first priority. You also need to hold BP responsible, as
they said they would be, but to make sure that they are full
held accountable for all the damages that are caused to small
businesses that have been disadvantaged or put out of business,
to landowners who have been damaged, and to taxpayers who
otherwise would have to foot the bill.
I agree with Senator Lautenberg that we need to put a
moratorium on drilling until we are sure we have in place a
regulatory structure that will protect the public as far as any
future problems are concerned. And we need to take off the
table those areas of the Nation where it is just too sensitive
to drill, including the area that Senator Lautenberg and I
represent.
But this hearing is basically about the regulatory
structure to make sure this doesn't happen again. And I
appreciate the Chairman mentioning the Supreme Court decision
which I find to be very disappointing and shocking, telling
Exxon that their punitive damages are limited to a little over
$500 million, rather than the $2.5 billion.
As we are trying to talk about, trying to put incentives in
law to prevent this type of behavior, $500 million seems like a
lot of money to most of us, but to an oil company such as BP
Oil, which produced $6 billion in profits the last quarter.
That is $6 billion in profits, not revenues, that these types
of damages could be easily handled as just expenses on their
books and no real discouragement against irresponsible
behavior.
That is why I particularly want to thank our colleagues,
Senator Menendez and Senator Nelson, for bringing forward
legislation. I am proud to be a cosponsor of that bill that
would make our laws make sense as far holding the oil companies
fully responsible for the damages that they cause through their
irresponsible behavior. And this legislation should be enacted
quickly, and I applaud my colleagues for doing it.
One last point, Madam Chairman. Many of these people say
that these are so-called black swan events that were
unpredictable. I heard the CEO of BP Oil said they couldn't
have predicted what was going to happen in this type of
circumstance.
Well, that is not what they said when they presented their
plans to the Government for their permit. They said they
understood exactly what the risks were, and they were minimal,
and if a spill occurred they had the proven technology in order
to prevent any catastrophic or any significant damage to our
environment. The truth of this matter is that such an event was
entirely conceivable. BP officials simply did not want to spend
the money necessary to reduce the likelihood of it happening or
to have on hand the resources in order to contain it, and they
weren't forced to do it.
As a result, we have the ensuing damages. It is our
responsibility to make sure that we have the right structure in
place, and the Menendez bill needs to be part of that
structure. I want to see less black swans and more snowy
egrets. And I think that is our responsibility to make sure
that happens.
[The prepared statement of Senator Cardin follows:]
Statement of Hon. Benjamin L. Cardin,
U.S. Senator from the State of Maryland
Madam Chair, yesterday was World Oceans Day. It's an
opportunity to celebrate the world's oceans and the products
and amenities they provide, including seafood, recreational
opportunities, and sea lanes for international trade. It's also
a time to appreciate oceans for their intrinsic value. I regret
to say that I think all of these values are coming into sharper
relief as we struggle to comprehend what's happening--and what
will happen--in the Gulf of Mexico and beyond as a result of
the British Petroleum (BP) Deepwater Horizon spill.
I think the spill in the Gulf does two things: first, it
brutally underscores the need for our Nation to develop and
implement an energy policy that weans us off oil as quickly as
possible. We need to do that for our national and economic
security, and we need to do it to protect human health and the
environment. Second, because we cannot end our oil addiction
overnight, we need to revamp our regulatory and legal
frameworks so they prevent this sort of accident from happening
again.
We already know that the existing regulatory framework--
replete with inherent conflicts of interest at the Minerals
Management Service (MMS)--is inadequate, and we are beginning
to address those problems. The catastrophe unfolding in the
Gulf of Mexico as a result of the BP Deepwater Horizon accident
suggests that the legal framework needs to be revamped, too,
and indicates what's at stake. This accident claimed 11 lives
and is well on its way to becoming the worst accidental oil
spill in history, if it hasn't already surpassed the 140
million gallons released in the 1979 IXTOC 1 spill. The natural
resource and economic damages are significant now, and the well
may not be capped for another 2 months. Oil is killing marine
wildlife, destroying some of America's most important
commercial fisheries, and fouling fragile barrier islands,
crucial wetlands, and previously pristine beaches along the
Gulf Coast. It threatens to be swept by the so-called Loop
Current around Florida and up the south and even mid-Atlantic
coast.
Yesterday the Senate Judiciary Committee held a hearing on
whether liability caps and recent Supreme Court decisions
undermine the legal framework meant to act as a deterrent to
inappropriate cost cutting and risk taking behavior on the part
of oil and gas companies and other entities involved in
offshore drilling. It appears that recent decisions by the
Supreme Court--especially the 2008 Exxon Shipping decision--
have lessened the efficacy of threatened litigation as a
deterrent to bad corporate behavior. As the organization People
For the American Way (PFAW) notes, the Roberts Court gave
Exxon-Mobil a $2 billion gift by reducing a punitive damages
award from $2.5 billion to $507.5 million for the 1989 Exxon
Valdez oil spill. The majority's willingness in that decision
to invent a rule capping punitive damages against Exxon-Mobil
does not bode well for those hoping to hold BP and the other
potentially responsible parties such as Halliburton,
Transocean, and Cameron accountable for this most recent
disaster.
Today's hearing here in the Environment & Public Works
Committee focuses exclusively on liability caps. The $75
million liability cap on damages established two decades ago
and unchanged since then is a trifle compared to big oil
companies' enormous profits and the burgeoning costs associated
with containing and responding to a catastrophic deepwater oil
spill. We need to lift the liability cap on damages to $10
billion at least--something S. 3305 will do. While BP officials
have claimed that the company won't be bound by the existing
cap, the fact remains that under current law BP is only
responsible for up to $75 million in damages, including
injuries to natural resources, unless the accident is caused by
gross negligence, willful misconduct, or violation of an
applicable Federal regulation under certain circumstances. It's
worth noting that BP's first quarter profits--not revenue, but
profits--were almost $6 billion. The existing $75 million
liability cap is equivalent to less than 1 day of BP profits. I
congratulate Senator Menendez for introducing S. 3305. I am
proud to co-sponsor the measure.
I have heard that the Credit Suisse Group AG estimate of
stopping and mitigating the spill could be as high as $37
billion. So it's clear that a spill of this magnitude could
overwhelm a responsible party's ability to pay, in which case
funds would have to be withdrawn from the Oil Spill Liability
Trust Fund. As Chairman of the Environment & Public Works
Subcommittee on Water & Wildlife, I particularly appreciate
that S. 3305 eliminates the $500 million per incident cap on
natural resource damage claims that can be paid out by the
Trust Fund. That is the right thing to do. And while we will
hold all responsible parties' feet to the fire when it comes to
paying claims for damages of all kinds, we need to ensure that
the Trust Fund, if it needs to be tapped, will have adequate
revenues for the task at hand, too. That's why I am heartened
the House-passed version of H.R. 4213, the so-called extenders
bill currently on the Senate floor, more than quadruples the
current assessment on domestic and imported oil from 8 cents
per barrel to 34 cents per barrel.
It is a constant challenge to assess risks and benefits
accurately. And it is a constant challenge to strike the right
legal and regulatory balance to protect human health and the
environment in the most cost effective, least burdensome way
possible. This task is further complicated because more and
more we also need to be aware of--and do a better job planning
for--so-called ``black swans''--namely, low probability events
that have absolutely staggering consequences. The September 11,
2001, terrorist attacks, the breached levees following
Hurricane Katrina in 2005, the housing market meltdown in 2007
and 2008, and now the BP Deepwater Horizon accident have all
been called ``black swans.''
What troubles me is that ``black swan'' events seem to be
occurring more frequently, with even greater and greater
consequences. More important, one characteristic of ``black
swans'' is that they are supposedly unexpected. Well, the
events I just mentioned were not entirely unforeseeable. For
instance, an unclassified September 1999 report prepared by the
Library of Congress for the National Intelligence Council
entitled ``The Sociology and Psychology of Terrorism: Who
Becomes a Terrorist and Why?'' warned that Osama bin Laden's
terrorists could hijack airliners and fly them into Government
buildings like the Pentagon. According to the report, ``Suicide
bomber(s) belonging to al-Qaida's Martyrdom Battalion could
crash-land an aircraft . . . into the Pentagon, the
headquarters of the CIA, or the White House.'' With regard to
the levees, it seems that nearly everybody anticipated the
breach. The problem wasn't lack of anticipation; it was lack of
preparation. And the New York Times reported that John Paulson
earned $1 billion in hedge fund fees in 2007, $2 billion in
2008, and $2.3 billion in 2009 by betting against subprime
mortgages.
Perhaps ``black swans'' aren't so unanticipated after all.
And if that's the case, they may be--to a certain degree--
avoidable, if only we have the proper legal and regulatory
frameworks and proper incentives and disincentives in place.
With disingenuousness reminiscent of officials from the
previous Administration talking about 9/11 or breached levees,
BP officials initially claimed that the accident was
unprecedented, unforeseeable, and inconceivable. On April 30,
BP spokesman David Nicholas said, ``The sort of occurrence that
we've seen on the Deepwater Horizon is clearly unprecedented.''
On May 2, BP spokesman Steve Rinehart said, ``I don't think
anybody foresaw the circumstance that we're faced with now''
and added that the company didn't build a containment dome
prior to the accident because ``it seemed inconceivable'' that
the blowout preventer (BOP) would fail. Of course, the
containment dome didn't work, either.
The truth of the matter is that such an event is entirely
conceivable. BP officials simply did not want to spend the
money necessary to reduce the likelihood of it happening and to
have on hand the resources to respond swiftly and effectively.
And they weren't forced to.
Not only did BP cut corners with regard to drilling and
capping the well; it also failed to maintain adequate resources
to contain and respond to a spill. On June 3, BP chief
executive office Tony Hayward finally acknowledged the obvious:
the company simply wasn't prepared to deal with a deepwater
spill. ``What is undoubtedly true is that we did not have the
tools you would want in your tool kit,'' he told The Financial
Times in an interview.
Of course, Mr. Hayward's acknowledgment last week diverges
dramatically from the mendacious claims that BP officials made
on the company's Deepwater Horizon drilling permit application
about having ``proven response technology.'' That's why on May
17 I joined several members of this Committee, including
Chairman Boxer and Senators Lautenberg, Gillibrand, Sanders,
Klobuchar, Carper, and Merkley, in writing to Attorney General
Eric Holder urging him to open an inquiry into whether BP
officials violated civil or criminal laws, including 18 U.S.C.
1001, by making false and misleading statements to the Federal
Government regarding the company's ability to respond to a
deepwater oil spill in the Gulf of Mexico.
Mr. Hayward argued that in the wake of the 1989 Exxon
Valdez spill in Alaska, BP and other oil companies developed
plans to contain oil on the surface of the water (even that
assertion appears dubious), but BP did not have the equipment
necessary to stanch a deepwater leak like the one in the Gulf.
He concluded that BP--and by extension presumably the entire
oil industry--will have to find ways to manage ``low
probability, high impact'' risks in the future.
It seems apparent that the existing legal and regulatory
frameworks governing offshore oil and gas exploration and
development--particularly in deep waters--need to be re-worked
to ``help'' BP and other oil companies in that task; it is
unlikely that they will do so adequately of their own volition
because of the cost. That's why S. 3305 is so important. For
too long now BP and other oil companies have systematically
understated the risks associated with offshore drilling--
especially deepwater drilling. Establishing higher liability
caps, reinvigorating the ability of plaintiffs to act as
watchdogs, and restoring a robust regulatory regime will help
to keep oil companies honest. We need to do that so we have
fewer ``black swans'' in the Gulf of Mexico and more snowy
egrets.
Senator Boxer. Thank you, Senator.
Senator Bond, followed by Senator Baucus.
OPENING STATEMENT OF HON. CHRISTOPHER S. BOND,
U.S. SENATOR FROM THE STATE OF MISSOURI
Senator Bond. Thank you very much, Madam Chair, for holding
this hearing today on the Senate Bill 3305 by Senators
Menendez, Sanders, and others. I regret to say that this bill
should be called the Big Oil Gulf Monopoly Bill, because that
is what it is. The Menendez bill would make operating in the
Gulf so expensive that only big oil or national oil companies
could afford it, giving them a virtual monopoly in the Gulf.
There is unanimous agreement on this Committee--and I
imagine in the Senate as a whole--that we need to raise the oil
spill economic liability caps. The only question is how much is
best. What does more harm than good?
This bill is a tragedy, and I am thankful that the
witnesses from Florida, Louisiana, and Alaska have come here
today to share their stories. Our thoughts and prayers are with
all the victims, but especially with those families that lost
loved ones in the first tragic explosion.
The public needs to know the pain of the victims of this
disaster so we can make them whole, deter future bad behavior,
and ensure future claims are paid. But I wonder if these
victims ever thought that the reaction to their tragedy would
be a proposal to reward the very big oil company that caused
this mess.
The Menendez bill is a reward to big oil, including British
Petroleum or British Pollution, if you want to call it that,
because it would hand big oil companies like BP, Exxon, and
others a virtual monopoly over future Gulf production. The $10
billion liability cap or unlimited liabilities proposed by
others would force Gulf production insurance rates to levels
unaffordable to all except big oil companies, a fact that has
been laid out in numerous things including by the PFC Global
Risk Company.
By their very name, big oil companies are large enough just
to write the check, pay any insurance premium, or even self-
insure. The Menendez big oil Gulf monopoly bill would kill all
competition that big oil faces. BP, Exxon, and others would be
free to roam the Gulf without competition from the smaller
American drillers who have drilled successfully and without
spills.
The Menendez big oil Gulf monopoly bill would turn the Gulf
of Mexico into big oil's own private pond. We know that the
sponsor of this legislation pulled the $10 billion liability
cap out of thin air. We know that in their rush to go public
with their proposal they may not have thought all the
unintended consequences. But now that we have time to reflect,
I urge this Committee to be thoughtful in reviewing what will
work best to compensate victims and not give an unfair
advantage to big oil in the future.
There have been some thoughtful proposals like expanding
the existing oil spill trust fund so that all users of oil pay
more for the risk they are causing. Others propose a Price-
Anderson-type model that the nuclear industry uses to ensure
against nuclear accidents. That model would have us raise the
cap for those that caused a spill, say, to $1 billion, and
spread the cost of damages above that amount across the entire
industry. There may be other solutions we should consider.
What we do know is that America will continue to need
petroleum for several more decades as we transition to cleaner
homegrown transportation fuels. And we have seen that the so-
called regulatory agency, the Minerals Management Service, is
badly broken and obviously did not demand that the proposed
driller have the kind of means in place to deal with a
catastrophic oil spill.
But the bottom line is we cannot close down the Gulf
without putting ourselves at hostage even further to the
Venezuelans, the Chinese, Russia, and the other groups and the
people in OPEC where they don't have to follow the same
environmental standards that I believe that we have rightly
imposed on drilling in the United States.
There are thousands of Gulf wells operating safely as we
speak. Over 40,000 of those wells have been drilled and
operated or are operating with no spill like this. I support
the Senate's considering new drilling safety reforms, but we
should all oppose the Menendez big oil Gulf monopoly bill.
I thank the Chair.
Senator Boxer. OK.
Just to be clear, that is not what Senator Menendez calls
it, but you have every right to give it your nickname. OK.
Senator Baucus.
OPENING STATEMENT OF HON. MAX BAUCUS,
U.S. SENATOR FROM THE STATE OF MONTANA
Senator Baucus. Thank you, Madam Chairman.
The circumstances in which we find ourselves are clearly
unacceptable, and the news regrettably keeps getting worse. We
are now in the midst of the worst oil spill in our Nation's
history. We are all asking the same questions. What happened?
How can we be sure it doesn't happen again? And today we are
evaluating one proposal to address some of these questions.
We want to encourage the use of robust spill prevention and
safety measures in offshore oil and gas development. That is
clear. We also want to prevent the American taxpayer from
subsidizing private enterprise by absorbing environmental risk.
We want to have a domestic oil and gas industry.
With these points in mind, should the liability cap under
the Oil Pollution Act be increased to a $10 billion level
proposed in S. 3305? This seems to be a straightforward
question with a simple answer. But in spite of our outrage we
should not react in haste.
The country needs domestic oil and gas, and we should
seriously evaluate each proposal that comes before us. This
hearing is a good step in that evaluation. A few key questions:
Should there be any Federal cap on liability at all? And if so,
what is the appropriate level? How much risk is the American
taxpayer absorbing on behalf of oil and gas companies as a
result of this liability cap?
And is that appropriate? Does the current cap fail to
provide incentive to offshore oil and gas producers to adopt
appropriate safety measures? What effect does raising the cap
have on our ability to develop domestic oil resources? And what
are the legal implications of the retroactive application of a
$10 billion liability cap?
Madam Chairman, I look forward to hearing from the
witnesses as we discuss these issues. Again, this spill is
tragic. It is caused by many mistakes on the part of many,
including British Petroleum, most likely Transocean, and
Halliburton, and the appropriate parties listed and others who
are appropriately liable and culpable should clearly bear the
burden of all the costs.
Senator Boxer. Thank you, Senator Baucus.
Senator Alexander.
OPENING STATEMENT OF HON. LAMAR ALEXANDER,
U.S. SENATOR FROM THE STATE OF TENNESSEE
Senator Alexander. Madam Chairman, thank you very much for
having the hearing.
And thanks to the witnesses for coming.
I have three observations I would like to make. Some of the
witnesses are from the Gulf Coast, and while this is not a
hearing about the oil spill liability trust fund, which is
funded by a 6 cents per barrel fee on industry to help pay for
clean up and to compensate those hurt by the spills, one of the
questions I am going to be asking is whether those from the
Gulf Coast think the money that is collected by that fund to
clean up oil spills ought to be spent to clean up oil spills.
They might be surprised to learn there is a proposal in the
House and in the Senate to raise the tax on the fund to clean
up oil spills and spend it on more government instead of
cleaning up the oil spills. And people must be wondering what
is Washington thinking about that, and that is a question that
I will have. Should the money raised to clean up oil spills be
used to clean up oil spills or spent on some other form of
government?
A second observation has to do with the need for new laws
and new regulations. Before we pass new laws and new
regulations on this whole subject, I would hope the Committee
would carefully look at the laws that have already been passed.
The Chairman mentioned the Oil Pollution Control Act, which was
passed in 1990 after the Exxon Valdez spill. One of the
provisions of that Act says that the President shall ``ensure
the clean up of an oil spill and have the people and equipment
to do it.''
One might ask: What was President Obama's cleanup plan? And
where were the people and equipment to clean it up? Now, if the
answer is that the Federal Government can't clean up an oil
spill, or that President Bush had the same plan, or that
President Clinton had the same plan, then perhaps we should
change the law. But what the law says, and it has for 20 years,
is that the President of the United States shall ensure that it
is cleaned up and shall have the people and equipment to do it,
instead of effectively delegating the clean up to the spiller.
The third thing, and final observation I would like to
make, is along the lines of one suggested by Senator Bond as
well. We might learn a lesson from other successful regulatory
actions that the Government now has, especially with the
nuclear industry. I mentioned at an earlier hearing, for
example, the accountability in the nuclear Navy is pretty
impressive. If there is a problem on a Navy reactor, the
captain might lose his job and his career.
And we have regulating oil a multiplicity of agencies. Some
have suggested 14 instead of 1, which is the Nuclear Regulatory
Commission in the case of nuclear power. So accountability and
multiplicity of regulators is something that might be looked
at.
In terms of the increase in liability, I think almost
everyone in the Senate believes there ought to be an increase
in liability, but the question would be: Should it be from the
current model that we now have? I would suggest we ought to
consider the Price-Anderson model that the nuclear industry
uses. In that case, the entire nuclear industry is responsible
for any accident. The industry is forced by law to insure
itself for the first $12.6 billion in damages related to a
nuclear accident. Each reactor must carry $375 million in
private liability insurance. Each reactor may be assessed up to
$111 million more for any accident.
In other words you have all of the operators and all of the
reactors very interested in what might be happening at any
other reactor. There are incentives to cooperate with best
practices, to share technology and information, and to assist
each other if there were to be an accident. So you wouldn't
have the prospect of Chevron or Exxon sitting on the sidelines
watching BP clean up.
So I would ask the Committee seriously to consider, rather
than just raising the liability limit on this model, should we
not explore a model like Price-Anderson. It wouldn't be exactly
the same. We would assign liability per reactor, but the oil
industry might be apportioned differently, possibly by risk, by
well, or by volume of production. The Price-Anderson has been
very successful with the nuclear industry. It might be helpful
as we look forward in the oil industry.
Thank you, Madam Chair.
Senator Boxer. Thank you.
Here is what we have: Senators Merkley, Whitehouse, and
Carper.
OPENING STATEMENT OF HON. JEFF MERKLEY,
U.S. SENATOR FROM THE STATE OF OREGON
Senator Merkley. Thank you, Madam Chair.
Oregon's beaches and continental shelf fishing grounds
contribute an enormous amount to the economy of our State
through harvesting of salmon, through harvesting of ground
fish, through crabs, oysters and other shellfish, and certainly
through tourism.
We take great pride in our beaches. In fact, Oregonians are
one of only two States where the citizens own the beaches. All
the beaches are public. There is no private access only. And I
can tell you that the citizens of Oregon through their
legislature have banned the drilling to the degree they can off
the coast of Oregon to the 3-mile boundary, and is it OK to
drill within those three miles? No, and the legislature has
spoken, and I think contains the wisdom of the State. Is it OK
to drill 70 miles off the Oregon coast? The answer is no. That
oil, if leaked, would wash up. It would affect the salmon and
the shellfish and the tourism and the coastline we so dearly
love.
In fact the West Coast Senators as a whole--and I am proud
to have joined Senator Boxer in this--have come together, all
six of us, and proposed not a moratorium but a permanent ban on
drilling off the Pacific Coast because the value of the oil
that would be extracted is very small, would have no impact on
the international price, and it puts at peril a huge number of
jobs and a huge valuable ecosystem that serves us so well.
We currently have a liability cap that creates a moral
hazard, a moral hazard because companies drilling say we don't
need to be thorough and careful. We can take shortcuts. And if
we make a mistake, the public will pay. We will shift our costs
to the U.S. citizen. This is not all right for Wall Street, and
it certainly isn't all right for oil drilling.
And we have seen the sorts of shortcuts that occur from
this moral hazard. We have seen that equipment placed at depth
often hasn't been tested at depth. We have seen equipment
placed a depth that wasn't designed to shut off and shear off
the very thick pipes used 5,000 feet under the ocean. We have
seen carelessness in regard to the hydraulic system. We have
seen carelessness in regard to the charging of batteries.
We have seen claims for equipment ready to go to clean up
and respond to a spill that was not ready to go. We have seen a
container placed over the top of the spill that had never been
tested and was filled with ice and didn't work. We have seen
point after point in which shortcuts were taken because BP knew
it could shift the cost to the American citizen, and that is
not OK for the pocketbooks of the American citizen, and it is
not OK for the thousands of folks who depend on the Gulf for
their living that have been affected by this terrible disaster.
So I applaud you for bringing this bill forward, Senator
Menendez and Senator Nelson, and I am proud to be cosponsor of
it.
Thank you, Madam Chair.
Senator Boxer. Thank you so much.
Senator Whitehouse.
OPENING STATEMENT OF HON. SHELDON WHITEHOUSE,
U.S. SENATOR FROM THE STATE OF RHODE ISLAND
Senator Whitehouse. Thank you, Madam Chair.
Rhode Island considers itself our informal name, the Ocean
State, and so I can't help but note the context in which this
spill has taken place. Our oceans presently are populated by
massive dead zones. In the Arctic we see melting ice caps. In
the tropical seas we see collapsing coral reefs. And we see
vast plastic and waste out in our farthest oceans.
We see marine mammals so poisoned by human release of
various chemicals and poisons that they are now swimming toxic
waste, and one of the lead scientists who studies marine
mammals predicts their extinction.
We see ocean acidification at its highest level in 800,000
years, portending a sea in which the baseline creatures in the
food chain become soluble in their environment. We see 90
percent and more losses of major pelagic species. We see
stresses in shore from warming waters and changing habitat. And
this is sort of the last call that we cannot ignore our oceans.
We do so at our peril.
Madam Chairman, our energy legislation needs to attend to
this. It needs to attend to the effects of our energy use on
coastal States and on the oceans. It is not enough to treat
coastal States as if they were land-bound terrestrial States.
There is no great constituency for the oceans in Congress, but
we will find to our peril very soon that if we don't take
better care of them, the cost will be high.
I submit that we need to improve the Outer Continental
Shelf Lands Act and the liabilities under that Act. And I have
put legislation in to that effect. We need to lift the cap on
punitive damages that the Supreme Court protected Exxon with,
and I have submitted legislation to do that.
We need to support Senator Menendez's legislation to lift
the cap on Oil Pollution Act liability, and we need to support
Chairman Leahy's legislation under the Deaths on the High Seas
Act to make sure that seafaring oil rig workers are treated as
fairly as people involved in airline disasters.
So this is a very important hearing, but it is also a part
of a larger picture that I know Senator Menendez and Senator
Nelson see very clearly as representatives of States that are
ocean States in their own right.
For another day is the question of what the consequences
should be for regulators who are asleep at the switch when
disaster and recurring indications of unpreparedness such as
Senator Merkley just described take place, particularly when
they are asleep at the switch having been lulled to sleep by
industry lullabies.
We have a lot of work to do here, and I think this is an
important step. I appreciate this hearing very much.
Senator Boxer. Thank you.
Senator Carper, followed by Senator Klobuchar, and then we
want to end this and turn to our witnesses, who have been
extremely patient.
OPENING STATEMENT OF HON. THOMAS R. CARPER,
U.S. SENATOR FROM THE STATE OF DELAWARE
Senator Carper. Thanks, Madam Chair.
And thanks to our witnesses who have been extremely
patient.
I want to thank you for holding this hearing today on
Senator Menendez's legislation. And I look forward to the
opportunity to take a closer look at liability issues that are
associated with our Nation's offshore oil and gas industry.
As I have mentioned before, my heart goes out to the folks
that are impacted by this terrible accident, to the families of
the 11 workers who died, and those that were injured. My heart
also goes out to the thousands of workers, the individuals and
families in the Gulf of Mexico who depend on the Gulf's waters
and shores for their economic livelihood.
As a member from a coastal State I can say that I truly
understand the importance of our shorelines to our own local
and national economies. Our oceans and our shores give life to
many, many industries, among them tourism, recreation, fishing
industry, transportation, construction, research and education
and real estate and many, many more.
So we need to work together to make sure that the laws that
we have in place protect these critical industries from
economic harm in a fair and a real way.
Today's hearing is an important step in helping Congress
figure out what kinds of reforms are needed, to make sure that
liability for the offshore oil and gas industry holds
responsible parties accountable for their actions or for their
inactions.
I look forward to hearing from our witnesses today on how
we might best go about reforming liability laws for the
industry and what other reforms might be needed to better
protect our businesses and our environment from suffering
further damage in the wake of this terrible accident.
Again, thank you very much.
Senator Boxer. Thank you, Senator Carper.
Senator Klobuchar.
OPENING STATEMENT OF HON. AMY KLOBUCHAR,
U.S. SENATOR FROM THE STATE OF MINNESOTA
Senator Klobuchar. Thank you very much, Madam Chairman.
Thank you, Senators, for being here.
A few weeks ago, I actually went down to the Gulf and saw
firsthand the scope of the disaster, which many have since
seen, and I remember flying over it and thinking this is so
much worse than it looks on TV when you see the miles and miles
of orange waves.
And now what we have seen since is worse, the pelicans on
television hobbling around drenched in oil; the wildlife in
peril. We are losing an entire ecosystem and the foundation of
our Nation's Gulf Coast economy, from the fishermen across the
Gulf Coast who sit idle to the hotel rooms sitting empty to the
countless beaches that are now home to tar balls instead of
beach balls.
It has now been over 50 days since the disaster began, and
the costs have begun to increase exponentially. We still, as we
all know, don't know exactly how much oil has leaked, but we do
know that this is likely the worst oil spill in our Nation's
history and perhaps in the world's history.
Yesterday, I joined Senators Shaheen and Gillibrand and
others on a bill to give the President's Gulf Oil Spill
Commission subpoena power. We also had a hearing with Senator
Whitehouse and some other Members, Senator Cardin, of the
Judiciary Committee, and actually heard testimony from the
brother of one of the victims. That really brought it home.
At the same time, over the last few weeks we have listened
to the Chairman of BP America and the leaders of Transocean and
Halliburton testify before us. BP has indicated that they will
pay for the spill. Now, they are spending millions of dollars
on fancy television ads to talk about how they are working to
make up for this disaster.
The problem for me is that the story is all too familiar. I
want to bring you back to the Exxon Valdez. Why do I care about
this? Well, a Minnesota law firm actually represented the
fishermen from the very beginning to the end in that case. At
the time of the Exxon Valdez spill CBS News reported after the
disaster that Exxon executives were quoted telling fishermen,
you have my word, we will make you whole again.
But for 20 years Exxon fought the Minnesota law firm,
fought them for paying damages and Appeals Court decisions
multiple times. They have still not paid in full. Years of
fighting and court appeals on Exxon's part finally concluded
with a U.S. Supreme Court decision in 2008 that found that
Exxon only had to pay $507.5 million of the original 1994 court
decree for $5 billion in punitive damages.
Twenty years later some of the original plaintiffs are no
longer alive to receive or continue fighting for compensation
from Exxon. An estimated 8,000 of the original Exxon Valdez
plaintiffs have died while waiting for their compensation as
Exxon fought them in court.
We cannot let the victims of the Gulf oil disaster suffer
this same fate. And that is why I am so focused on the bill
that Senator Menendez and others up here have worked on to lift
the liability cap for offshore drilling accidents. I
immediately got on that bill because I had seen what happened
to the fishermen with the Exxon Valdez.
It is a pretty basic free market idea, an American idea,
that if you take a risk you should be the one to get the
rewards, but also the one to incur the costs.
I thank you, Madam Chair, for holding this hearing. I truly
believe that if we hadn't had that $75 million cap in place,
perhaps different calculations would have been made. When you
know that there is a $75 million cap on damages, and you have
to make a decision about whether you are going to have a backup
to a blowout preventer, whether you are going to have a
redundant safety system in place, you can't help the
accountants, the number crunchers look at it, and go, well, it
is $75 million.
And I am not saying for a minute, for a minute that BP
would have made the same decision if they had known what
disaster awaited them. They wouldn't have. They would have made
it safer. But the point is all they knew at that time was that
there was a $75 million cap on damages.
And that is why I feel strongly both for the victims of
this disaster, for our taxpayers in Minnesota, across the
country, but also for incentives going forward that we have to
raise that cap.
Thank you very much, Madam Chairman; I yield the floor.
Senator Boxer. Thank you.
We have been joined by Senator Udall.
Do you have an opening statement?
Senator Udall. No, I don't, but I would like to go to
questioning in the proper order.
Senator Boxer. All right. That is fine.
We will go then to Senator Menendez.
Your bill is the focus of this hearing, and again, any
Member can raise their own bills, but we are very, very
grateful to you for your leadership. We want to put in the
record at this time an article, White House Endorses Unlimited
Liability Cap for Oil Spillers, saying we need to ensure there
is no arbitrary cap on corporate responsibility for a similar
major oil spill.
So congratulations, you have gotten that support.
[The referenced article was not received at time of print.]
OPENING STATEMENT OF HON. ROBERT MENENDEZ,
U.S. SENATOR FROM THE STATE OF NEW JERSEY
Senator Menendez. Thank you very much, Chairman Boxer and
Ranking Member Inhofe, and distinguished members of the
Committee, for holding this hearing on S. 3305, which I want to
just make sure for the record is the Big Oil Bailout Prevention
Liability Act. We need to act quickly to make sure oil
companies are held fully accountable for all damages related to
an oil spill. And we have all come a long way since I
introduced this legislation with a whole host of my colleagues
about a month ago.
The Administration, as you just cited, has moved to embrace
the idea of unlimited liability for drilling in deep waters for
all future drilling operations. Senators Vitter and Murkowski
have introduced legislation that they say would hold BP
accountable for unlimited damages for this incident, but it is
silent on future spills.
And my proposal, with my colleagues, has changed as well.
When the disaster first occurred a $10 billion liability cap
not only seemed adequate to compensate all those impacted by
the spill, but it represented a sizable increase from a
ridiculously low current level of $75 million.
But this spill is larger in scale than anything we have
seen in U.S. waters. It has forever changed our understanding
of the potential size of oil disasters, even for someone like
me who had long warned about the danger of rig blowouts. So for
that reason, along with 20 cosponsors, we have amended the
legislation for unlimited liability.
So we have come a long way, but there is still a ways to
go. Now, I find it interesting that those who say that we need
to hold the victims harmless in the process and take care of
them want to keep largely the present system in place. That is
the voices I hear, a system of rather limited liability, of $75
million. BP made $94 million each day in the first quarter of
this year, so that is less than 1 day's consequence.
And I wonder at the same time--they are pursuing drilling
that has unlimited risks. So I wonder whether the ``drill,
baby, drill'' crowd ever thought about the ``spill, baby,
spill'' consequences, because that is what we have today.
Now, one of the objections I have heard to removing the
liability cap is that it will cause mom and pop drillers to go
out of business. My view of this is not a question of small
versus big companies. This is about safe versus unsafe
companies. If you are drilling in the Gulf and are cutting
corners the way BP allegedly has, then there is no doubt that
insurers will be charging you more because you are a risky
company. And if you are an unsafe company I am sure regulators
are going to force you to overhaul your operations and use
better equipment. That will definitely cost an unsafe company
some money to get its operations into compliance.
But a company with a higher safety standard should not have
those same issues to worry about. The insurers and regulators
alike would be able to see that you are operating safely, and
in turn you should be able to continue your operations without
the fear of major cost increases.
Lifting the liability cap, as we do under the legislation,
also instills discipline on oil companies, as Senator Klobuchar
was referring to, not to cut the corners, not to take the
calculation that the cost of doing business if something goes
wrong is a limit of $75 million. And so by lifting the
liability cap we make sure that the incentives are not perverse
as they are under the present law.
However, if you are an unsafe company that is also small,
then we should be all concerned. According to a recent analysis
by Credit Suisse, BP's cleanup costs, economic damages, and
other related costs could total $37 billion. That is a
shockingly high number, but one BP will likely be able to
absorb since it is a company well worth over $100 billion.
But what if a similar unsafe but smaller company had caused
this leak? As you can see from the bar chart that I have
brought and the report I have provided to the Committee, there
is a company worth less than $500 million drilling in over
4,000 feet of water in the Gulf. If a $500 million company had
been the operator, and a spill causing $37 billion in costs and
damages had taken place, I think it is clear that the residents
of the Gulf and the American taxpayer would be holding the bag
for over $36 billion. Is that the liability standards we want?
Is that the risk we want to our collective economy?
So unsafe companies that are not so big that they could pay
for their catastrophic mistakes might have reason to worry, but
small safe companies should be able to continue operating in
the Gulf without fear.
Finally, as I have mentioned previously, I applaud Senator
Vitter for embracing unlimited liability for damages stemming
from this bill, but I believe we need to change the law for all
potential future spills so that the American taxpayer knows all
companies will pay for that which they spill.
I also don't believe that Senator Vitter's approach will
survive judicial scrutiny because it attempts to form a
contract without the consent of the parties and because it is
an unconstitutional bill of attainder on just one company and
one incident. By contrast the Department of Justice and the
Congressional Research Service have both testified that our
bill would survive constitutional challenge. Superfund law is
an example of that. We created responsibility for polluting
parties that had already polluted, and we created the liability
subsequently, and that has been litigated and upheld.
So we need to pass legislation that would hold all oil
companies accountable and hold up in court. It is time we
finally start treating oil companies like we do everyone else,
Madam Chairman. The average taxpayer does not enjoy a liability
cap. The guy installing solar panels on your roof does not have
a liability cap, and neither should oil companies.
The mom and pops we should be worried about are not oil
companies, but mom and pop taxpayers who shouldn't have to pay
for the cleanup spills of others.
Thank you, Madam Chairman, for the opportunity to testify
on our bill, and I am happy to answer any questions.
Senator Boxer. Thank you very much.
Senator Nelson, to be followed by Senator Vitter.
OPENING STATEMENT OF HON. BILL NELSON,
U.S. SENATOR FROM THE STATE OF FLORIDA
Senator Nelson. Madam Chairman, this comes down to whether
or not you want to lessen the likelihood that you have these
kinds of spills in the future. So that all those mistakes that
were made, starting with the coziness with the Government
regulator never happens again; starting with all of those
backup systems on the blowout preventer that did not work,
never happen again; and that all of the mistakes that are being
made now, the fishermen that are being promised that they are
going to be hired and they don't get paid, and they said give
us a 14-day requisition and we will pay you in 14 days. That is
28 days. Where are they going to get the money to pay their
crews? And it goes on and on and on.
Madam Chairman, this is NOAA's projection, and obviously
you can see it, but you can go on the NOAA Web site. This is
the projection for Friday. This is a 72-hour projection. And it
has it now the winds are not blessing us as they have on the
Florida coast, the Alabama coast, and the Mississippi coast.
The winds are changing, and by Friday are sending it to the
coast of Florida.
The National Park Service has already put out a warning not
to go into the water on the Gulf Islands Seashore Park, and
that includes part of Perdido Key as well, which is a part of
Florida.
Now, it is hard for someone who has exposure to the Gulf,
but for that matter, any of the Senators that have exposure to
any of the oceans, not to be very emotional about this when you
see as a result how your people are going to suffer.
And so we come to you with a simple little proposal, and
that is that the person who makes the mistake ought to be
responsible. And if the penalty is that they are going to be
responsible and have to pay, they are sure going to be a lot
more careful about what they are doing.
I don't think, Madam Chairman, that the Government
regulator is going to make the mistake that we have for the
last couple of decades, and I think that house is being
cleaned, and it sure needed to be cleaned.
And so this Committee we would ask you, as you deliberate,
let's don't delay this. Let's get it out there so that it sends
a strong signal to the future exploration that these mistakes
should not be made.
Thank you.
Senator Boxer. Thank you, Senator.
Senator Vitter.
STATEMENT OF HON. DAVID VITTER,
U.S. SENATOR FROM THE STATE OF LOUISIANA
Senator Vitter. Thank you, Madam Chair, and thanks for the
opportunity to present S. 3461 by Senator Murkowski and myself.
This bill is very simple. You have it before you. It does
two things. First of all it removes any and all liability cap
on BP for this event. It absolutely does that without
equivocation to give certainty on that issue to the people of
the Gulf Coast who are going through an ongoing crisis.
And second it establishes an expedited claims process
because it is crucial that these folks not just be made whole
eventually, but they start to be made whole now because they
are struggling month to month.
This bill has also been completely cleared on the
Republican side, so it stands ready to move immediately.
Now, Madam Chair, as I have said several times in this
Committee and sort of tried to gently remind folks, this is an
important issue we are discussing, this whole event, but it is
not just an important issue. It is an ongoing crisis. It is an
ongoing disaster in the Gulf because the flow continues, the
pollution continues, and it expands and is now hitting four
States, not just mine.
And that is very much the perspective I am coming from.
This is an ongoing crisis, and we need to act in certain ways.
And that is why I bring this bill because we can act
immediately on this to address this ongoing crisis.
Now, clearly--clearly the economic damages liability cap
needs to be increased to a great extent permanently, and we all
agree on that. But just as clearly, that will not pass
immediately. Hopefully, it won't take extremely long, but it
will not pass immediately. So that is why, again Senator
Murkowski and I cleared entirely on the Republican side, have
brought this bill.
And again, the bill is real simple. No. 1, it removes
completely, completely any cap on BP for this event. No. 2, it
sets up an expedited claims process to make these folks in the
Gulf whole, not just eventually but starting right now as they
struggle month to month. And finally with regard to the details
of the bill, let me say, Madam Chairman, that we drafted the
bill very specifically to avoid legal challenge from BP or
anyone else. However, we are open to technical revision. And if
Senator Menendez has a version that he would support, we are
open to that. We just want this passed immediately to address
this ongoing crisis and would be happy to work with him on a
technical revision regarding the liability issue.
Finally, Madam Chairman, let me submit for the record and
read this letter which I think sums up very well the attitude
of folks facing this ongoing crisis in the Gulf. It is from
four leading local elected officials who all happen to be
Democrats: ``Dear Senator Boxer: If there is any national
policy challenge that is not and should not be treated as
partisan in any way, surely it is the ongoing oil disaster in
the Gulf. Although there is universal agreement about this in
Louisiana, apparently that may not be the case in Washington,
DC. Several weeks ago, Senator David Vitter introduced
emergency legislation to completely remove the existing cap in
Federal law for economic damages as it pertains to BP and our
disaster.
``The bill also includes an expedited claims process so
that affected fishermen and others aren't just made whole, but
are paid something immediately in an ongoing basis. When
Senator Vitter tried to pass this through the Senate
immediately, it was blocked by Senator Robert Menendez,
Chairman of the Democratic National Senatorial Committee.
``We urge you to intervene with Senator Menendez and others
so that this important legislation can be passed through the
U.S. Senate and then the U.S. House. This should be made the
law immediately to help us deal with this ongoing crisis. We
realize that permanent revisions to OPA will require more
debate, but this focused change for the BP disaster can and
should be passed immediately. Thank you for focusing on this
urgent request quickly.''
And I will submit this for the record.
Thank you, Madam Chair, and I look forward to our
discussion and hopefully quick action.
[The referenced letter was not received at time of print.]
Senator Boxer. Thank you.
Well, I regret that politics was entered into the record,
but that is your choice, Senator Vitter.
Senator Vitter, let me just say I do have a suggestion. I
am going to ask Senator Menendez about it. What you are saying
is your State and you have decided, you have decided that you
want to make sure that for this particular spill affecting your
State that there be no limit on the liability of BP.
And you are not willing to at this stage at least, and
maybe we can move you toward it, to admit that once something
happened on the Atlantic coast, and Senator Lautenberg found
himself in the same position as you, but it is a different
company, he wouldn't have the same protection. That is the
constitutional question. Why should one State and one spill get
treated a different way?
So I am wondering, Senator Menendez, if Senator Vitter took
his bill and basically said all other spills that will occur
from this day forward with different companies will be treated
the same way, unlimited liability. That would be a technical
change, I suppose you could call it. Would that be something
that you could work with, if he agreed that all other spills be
treated the same way with different companies at different
places?
Senator Menendez. Madam Chair, first let me just say my
opposition had nothing to do with being the Chairman of the
Democratic Senatorial Campaign Committee. It had everything to
do with that proceeding with one incident and one company and
saying, yes, you have unlimited liability and no one else has,
is bad public policy, and I think is also illegal.
So the answer to your question is yes.
Senator Boxer. Good.
Senator Menendez. If in fact we have unlimited liability
across the board for the future, that is in essence what we are
trying to accomplish. And I would hope that since the
Republican Caucus has cleared, according to Senator Vitter, the
proposition that unlimited liability should exist for this
incident, then the precedent and the principle is set for any
other.
Senator Boxer. Right. And I would recommend, Senator
Menendez, that you work with all of us and Senator Vitter to
try and make this proposal on the floor of the U.S. Senate
today, that we amend this bill to ensure that any other spill
with different companies, that the people in that region, the
fishermen, the recreation industry, the tourism industry, they
be made whole as well. And then we can come together as
Democrats and Republicans because that is my goal is to get
this thing done.
Senator Vitter. Madam Chairman, may I respond?
Senator Boxer. Yes, and then Senator Nelson.
Senator Vitter. OK, thank you. Because it is obvious that--
--
Senator Lautenberg. Madam Chairman, forgive me, but we have
in front of us a bill to be considered. And I think that we
ought to do that business and not let it be diverted even if it
sounds right.
Senator Vitter. Madam Chair, I would refer to your
unanimous consent which was passed which clearly allows this
discussion.
Senator Boxer. Yes, but what I am going to do is ask the
people, I want to have answers. So I guess I want to ask
Senator Nelson a question here.
Senator Vitter. Madam Chair, since you clearly----
Senator Boxer. Senator, when you want to come back up here.
I am asking a question to specific Senators. I have 2 minutes
remaining.
Senator Vitter. Which have everything to do with my
proposal, and I can't respond----
Senator Boxer. I will be glad to give you as much time as
you want, but these two have to leave. So I would like to get
the benefit of their time.
Senator Vitter. OK. I will be happy to wait to respond
until they have responded.
Senator Boxer. Well, after they leave.
Senator Nelson, and I would ask to have 30 seconds added
back on because I am losing my time here.
The Price-Anderson model, which has been suggested by
Senator Alexander, I have asked for a review of that. And what
happens there is that the taxpayers are on the hook when the
liability goes over $10 billion, and then the taxpayers have to
come in and fund it. The reason I like Senator Menendez's bill,
which is broad, I like Senator Vitter, the fact that he holds
BP accountable, but I like the Menendez approach better because
it includes all companies, is because taxpayers will never have
to bail out.
And your point I thought was so well made. We are looking
at preventing this type of thing from happening. And if there
is a situation where, like Price-Anderson, where taxpayers are
on the hook above a certain amount, won't they do what Senator
Klobuchar said they did with the $75 million, which is to take
into account what the rules are, and maybe they will cut
corners because they feel they can rely on taxpayer bailouts.
Could you respond to that?
Senator Nelson. Yes, and you already have taxpayer
participation with regard to the trust fund. And the trust fund
is for cleanup expenses, and it is at a limited amount of 6
cents per barrel. You ought to consider raising that to 25
cents because it is only a matter of something in excess of $1
billion in the trust fund, and obviously you can see these
cleanup expenses are going to be enormous. So you have already
got taxpayer participation.
This is a question of liability for the overall economic
damages, and that is where this artificially low limit of $75
million is completely unrealistic. And if you want to make
people all the more responsible, they need to understand they
are going to suffer the economic consequences of paying for the
damages as a result of their malfeasance and misfeasance.
May I also say, Senator, when you are considering the
legislation, you may want to take a good example from the Act
of 1990 that set up a citizens oversight panel that then looked
at the implementation of all the clean up and the damages over
time, and that citizens oversight panel has become most
effective with regard to the Exxon Valdez. I am going to file
legislation on that in the next few days and would ask that you
all consider that as you approach this whole program since you
are the Environment Committee.
Senator Boxer. My time has run out.
Senator Inhofe.
Senator Inhofe. OK. First of all, let me clarify something,
and I think it speaks well of both of us, Madam Chairman.
You mentioned that you were kind enough to let Senator
Vitter be heard, and I would point out that we didn't know
about Senator Menendez until Monday at 5 o'clock and Nelson
until 7:20 last night. And so we didn't object to that, and I
don't object now.
But I would like, since Senator Vitter does want to respond
to many of the things that have been said, for you to go ahead
and take my time as you see fit to respond.
Senator Vitter. Thank you, Senator, very much.
And just to respond to the Chair, my entire point seems to
be lost on some folks. The point is that we need a permanent
revision of the law, but there is clearly disagreement about
how to do that. And that is clearly not happening this week or
next week. We should have that debate. We should move it along
as quickly as possible. And I have a proposal which, by the
way, increases the liability cap on BP to $20 billion, which is
double the original version that Senator Menendez introduced
which is before us.
But in the meantime, I would again urge us and plead that
we can act to address the ongoing crisis in the Gulf through a
focused bill. Now, I don't think it hurts Senator Menendez's
effort at all. In fact I can make an argument that it helps
build momentum for it, so I don't understand the tremendous
opposition to it. But again I urge and plead that we come
together in a bipartisan way, do that immediately, and continue
to have this debate not for years, but continue to have this
debate to come toward a permanent solution. And that is all I
am urging with my bill.
Senator Inhofe. Madam Chairman, I won't even use the
remaining 3 minutes that I have, but my staff tells me that it
was an understanding that we were not going to have questions
of the Members, and we do have several witnesses that we would
like to hear from. In fact, they would have answers to a lot of
these questions, so I would like to move on, if I could, to the
panelists as soon as possible.
Senator Boxer. That is fine.
Senator Lautenberg. Madam Chairman.
Senator Boxer. Yes.
Senator Lautenberg. If I may, you were very generous in
permitting this intrusion into the discussion of the bill at
hand. And it is obtrusive, and the fact that we had a political
introduction, DSCC, it shows you the tone, the sincerity with
which this is delivered.
Madam Chairman, I want to comment my colleague, Senator
Menendez, who is diligent about everything he does; excellent
testimony. I was quick to join him once we saw what the
liability situation was going to be there.
And it is customary, is it not, for these Committees to
generally excuse the Senators after their testimony. And I move
that we get on with that and get the regular discussion going.
Senator Boxer. I apologize. I was just wanting to see if we
could come together here, and I think we may have found a way.
A friendly amendment to the Vitter bill so that everybody is
protected is something that I am going to be working on with
you, Senator Vitter, and you, Senator Menendez. And I
apologize.
Senator Vitter. Madam Chair, let me just apologize to
Senator Lautenberg. As a member of the Committee coming from
the most affected State by this ongoing crisis, for having the
gall to have legislation to try to address it now.
Senator Boxer. That is not what Senator Lautenberg said.
We are going to move on now. We thank Senators very, very
much.
And now we are going to go to our panel: Mr. D.T. Minich,
Executive Director of Visit St. Petersburg-Clearwater, which
promotes tourism for key portions of the western coast of
Florida; Captain Mike Frenette, a professional tournament
angler and guide and is the owner and operator of the Red Fish
Lodge located in Venice, Louisiana, which caters primarily to
anglers. He is also the President of the Venice Charter Boat
and Guide Association and a member of the Board of Directors of
the Louisiana Charter Boat Association.
Mr. R.J. Kopchak. Mr. Kopchak has been a commercial
fisherman for over 35 years in Prince William Sound, the Cooper
River Delta, and Northern Gulf of Alaska. In 1989, when the
Exxon Valdez ran aground, he played a key role in the local
response to the spill. He is a Board Member of the Cordova
District Fishermen United, a local fishermen's organization,
and is the Development Director of the Prince William Sound
Science Center.
Mr. Kenneth Murchison is a Professor of Law at the Paul M.
Hebert Law Center at Louisiana State University, where he has
been a member of the faculty at the Law Center since 1977 and
taught environmental law since the early 1980s.
Mr. Barry Hartman, a Partner with the law firm of K&L Gates
and a former Acting Assistant Attorney General. Mr. Ron Baron
is Executive Vice President of Willis Global Energy Practice.
We want to welcome this distinguished panel, and we are
going to start with Mr. Minich, Executive Director of Visit St.
Petersburg-Clearwater.
STATEMENT OF D. T. MINICH, EXECUTIVE DIRECTOR,
VISIT ST. PETERSBURG-CLEARWATER
Mr. Minich. Good morning. I thank you all for calling this
hearing today.
I am the Executive Director of Tourism for the St.
Petersburg-Clearwater area, which is on the Gulf Coast. When
you take in Tampa Bay as a whole it is the largest tourism area
really on the Gulf Coast of Mexico.
Tourism is the No. 1 industry in the State of Florida, $61
billion a year; almost a million people are employed in
tourism. And the reason that for over 100 years many, many
people have been coming to our State and enjoying our State is
because of the tremendous beaches and pristine waters that we
have. And all of that is currently at risk.
My area alone is a $6 billion industry, tourism, for just
my county, and there are over 80,000 people directly employed
in tourism in Pinellas County alone. So you can see that it is
a very, very big industry, and it is currently at risk.
You might wonder why I am here talking today because right
now there is no oil, and for the short term there doesn't look
like there will be oil on our beaches, but I will get to that
in a minute.
We have had experience in Pinellas County with an oil
spill. In 1993 three tankers collided right at the mouth of
Tampa Bay, and oil was spilled, and oil ultimately affected 14
miles of our 35 miles of beach. Now, let me tell you this
number, and let me tell you it slow. Those three boats and this
oil spill was 362,000 gallons. That is coming out of there
every couple of hours, 362,000 gallons. So in terms of gallons,
in terms of barrels, it was a very minor spill.
We saw cancellations of 40 percent to 60 percent, and it
took us 2 years to recover from a relatively small spill that
was cleaned up in a relatively short amount of time.
So the effects of this spill are huge and tremendous, and
no one knows where we are going. This is so uncharted. We don't
even know how long this is going to affect us.
I also, because of our concern, have met with some of the
folks in Alaska tourism, and I have been told some things that
astounded me. First of all the Valdez was a very small area of
Alaska. It was concentrated. It was pretty predictable where
this was going to effect and how it was going to effect, unlike
the current situation. It took Alaska tourism 5 years of
advertising, of very, very aggressive advertising to get in
people's minds that Alaska still was not covered with oil, to
also understand that this was a very small part. This wasn't
where the Alaska cruise ships go or anything like that. As you
have heard, 20 years to get claims back, and they told me no
tourism entities received any of those claims.
What it means to us right now is that we are seeing 25
percent reduction in reservations right now for the summer
months. We are getting families that are calling in that have
been coming to St. Pete-Clearwater for years and years and
years, and they are saying we don't want to risk it. Our hotels
have all removed the cancellation policies, that they will
refund the money if they check in and there is oil. But they
don't want to risk it because they don't want to buy for a
family of five, five airline tickets that are nonrefundable for
August, and then when August comes around, and they discover
there is possibly oil on the beach where they plan to vacation,
they are not going to get that money back.
We met with the Governor Monday, and I have a family, the
Hubbard family, fifth generation operating a marine and fishing
charter and restaurant on John's Pass, and she was almost in
tears. The creditors were flying down Tuesday from Des Moines
to talk to her, and their business is in jeopardy, and they
have been there five generations, and this business is in
jeopardy.
We have been through hurricanes. We have been through
wildfires. We have been through all kinds of economic ups and
downs, and this is the worst thing and the scariest thing that
we have seen in Florida tourism because it is so unpredictable
and because it has the potential to affect, if it gets in the
loop current, as Senator Nelson was showing earlier, it gets in
the loop current, it could affect the Keys. It could affect the
East Coast. It is already affecting the west coast, and $75
million is nothing. BP is spending $50 million, two-thirds of
that on a public relations campaign for their own benefit right
now.
We have to lift this cap. We have to remove this cap
because we don't know where this thing is going. This could
affect us for 20 years or more.
[The prepared statement of Mr. Minich follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Lautenberg [presiding]. Thank you very much.
Mr. Frenette.
STATEMENT OF MIKE FRENETTE, CAPTAIN,
VENICE CHARTER FISHING
Mr. Frenette. As you can see, there will be some pictures
that will be scrolling with my testimony here.
First of all, I would like to thank everyone on the
Committee for the opportunity to express my comments relative
to the modification of caps on liability in the Oil Pollution
Act of 1990. We are all aware of BP's tragic accident that
occurred April 20, 2010. At this time I would like to extend my
sincere condolences to the 11 families who immediately saw the
effects of these lost 11 lives. I think that is very important.
Twenty-nine years ago I pursued my dream, turning a passion
into a business, and today I own a lodge located in Venice,
which is in the heart of the Mississippi Delta, the area where
the impact of this oil spill hit immediately and is affecting
us until this day. It will continue to affect us.
The rich estuary feeds into the Gulf of Mexico and creates
life for more than 400 marine and coastal fish in addition to
wildlife species. The near-offshore waters of the Gulf as well
as the intricate inshore waters incorporate a complex system of
bays, bayous, canals, and marshland that are the breeding
grounds for the majority of these species.
The delta is the spawning grounds for countless numbers of
marine life, mammals, and birds. Included in this beautiful one
of a kind estuary the ecosystem is brought to a full circle. It
all begins in this estuary, starting from the plankton and the
invertebrates, to the eggs and larva of numerous marine lives,
to the delicious seafood that the entire country, as well as
the rest of the world, enjoys. Yes, this estuary is home to 30
percent of the seafood that is cultivated for the United States
and is the area where 70 percent of Louisiana seafood is
cultivated.
This is the home for jumbo shrimp, oysters, blue crabs, and
more fish than I have time to mention. Within this delta region
thousands of commercial fishermen, charter fishermen and
guides, recreational fishermen have a strong economic impact on
Louisiana's economy.
Let's put this into perspective. The following industries
which are directly impacted by this disaster contribute the
following sums annually to the local economy: oyster industry,
$317 million; the shrimping industry, $1.3 billion; blue crab
industry, $293 million; Louisiana's charter boat and guide
industry, $419 million; recreational fishing alone in
Louisiana, over $1 billion. And again the area that is affected
the most was Plaquemines Parish, where I am from, where 70
percent of the seafood is cultivated and harvested.
At this point oil covers many miles of the estuary, and
quite honestly a large part of it is dying daily as a result of
the spill. Vegetation that was once green is now covered with
oil, and more and more areas are dying as I speak. As the oil
saturates the delta area it is saddening to see the devastation
that I have personally observed. Oiled birds, oiled crabs, and
dead fish floating in oil saturated areas are sights that quite
honestly have brought tears to my eyes.
This devastation is not a natural disaster. This disaster--
and it truly is a disaster of great magnitude--was created by
man, a disaster that I truly feel could have been avoided. Oil
companies at this time have the opportunity to hide behind a
veil of a $75 million liability cap, a cap that obviously would
not cover the economic losses that the hard working people of
this beautiful part of the United States are currently
experiencing and will continue to experience for quite some
time.
I am sure that there will be arguments from the oil
industry side as to how they will be affected if the $75
million cap is lifted. But I ask: Should corporations that net
billions of dollars annually be allowed to hide behind a
protective veil of liability cap even while their actions
devastate thousands of lives?
The possibility truly exists for many livelihoods to cease,
livelihoods that have existed for generations, and now are on
the brink of financial disaster because of poor decisions by a
super-corporate entity that has created the worst oil spill in
the history of the coast of Louisiana.
Profits in the oil industry can be tremendous, and of
course I understand for super-corporate companies to make great
profit they need to take a great financial risk as well. But
the risk should be just that, financial. Why should our
environment, our way of living, our livelihoods be included in
those risks? Our industry as well as other industries that I
have previously mentioned have come to a halt.
Fishing, both commercial as well as recreational, is shut
down. Our estuary, or I should say your estuary, is under siege
at this moment by chemicals that could have permanent
devastating results not only to the fisheries but
catastrophically to humans in the form of a collapse of a
strong economic catalyst that drove not only Plaquemines Parish
but unfortunately stretches across the Gulf and now in a
rippling effect that covers the United States.
At a minimum BP or any other oil company that is deemed
responsible for damages to wetlands, wildlife, and fisheries
and for the economic damages to individuals and businesses
should be held accountable for these damages. The wetlands,
wildlife, and fisheries should be returned to their original
condition or even better that existed prior to any spill.
It is impossible to clean these wetland areas, and BP
should be held accountable for restoring the productivity,
vibrancy, and reintroducing the water and sediments of the
Mississippi River that can make these areas sustainable.
Additionally, every human being or business that was affected
as a result of the oil spill and governed under the OPA should
be compensated for every current and further loss that is
attributed to this accident.
Please do not allow my dream and that of many others,
including my two sons, to vanish. BP, including Mr. Tony
Hayward himself, has stated on many occasions that they will
restore the wetlands, wildlife, and fisheries back to the
original condition, in fact, if they can, even better than
before, and they will make every individual or business who has
been affected and experienced a loss as a result of this
tragedy whole no matter what.
If Mr. Hayward stands by this statement, then I say to each
and every one of you, it is time to lift the $75 million
liability cap and truly hold any company that recklessly
creates such a disaster responsible for their actions.
Thank you.
[The prepared statement of Mr. Frenette follows:]
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Senator Boxer. Thank you very much. And I might thank you
for providing these photographs, and thank you for your
heartfelt testimony.
Mr. R.J. Kopchak is a commercial fisherman for over 35
years in Prince William Sound.
Mr. Kopchak.
STATEMENT OF R. J. KOPCHAK, CORDOVA DISTRICT FISHERMEN UNITED
AND PRINCE WILLIAM SOUND SCIENCE CENTER
Mr. Kopchak. Thank you, and again our hearts go out to
those who lost their lives and to our fellow fishermen and
their families and assorted businesses in the Gulf.
In 1989, when the Exxon Valdez ran aground, I was the Vice
Mayor of Cordova. I organized the Cordova Oil Spill Response
Center to coordinate immediate community-based response and
also incorporated the Prince William Sound Science Center where
I served as their President.
The Center is home for the Oil Spill Recovery Institute,
which was created in OPA 90 to complement State and Federal
efforts over the long timeline of oil spill recovery. I have
served on the Public Advisory Committee of the Oil Spill
Trustees and organized and chaired the Herring Recovery
Planning Team in an effort to better understand why Pacific
herring have yet to recover from the spill.
I was an owner and board member of the Copper River
Fishermen's Cooperative, a small fisherman-owned processor. I
am a board member of and active in the local fishermen's
organization, Cordova District Fishermen United, and recently
rejoined the Science Center as their Development Director.
My background offers unique perspectives, but I speak today
on my own behalf and represent no organization.
I share with you a real life example of the potential
impact to the Gulf fisheries from the long-term oil damage and
what level of liability might arise from the loss of just one
fishery to just one community if in fact we were to make
fishermen whole.
Like the timing of the Gulf of Mexico spill, the Exxon
Valdez spill coincided with the spring reproductive season.
Like the shrimp in the Gulf, our herring were about to spawn.
Herring eggs were laid on oiled beaches, and emerging herring
larva drifted with the chemical soup that was a result of the
spill, the dispersants and the recovery operations.
Studies following the oil spill revealed that fish eggs and
developing embryos and larva could be damaged at exposures to
oil as small as parts per billion, not in the parts per million
as we previously thought prior to Valdez. Herring mortality
skyrocketed over the next 4 years, resulting in the collapse of
the herring population. Twenty-one years later, herrings are
still listed as damaged and not recovering from the spill.
Once over 1,100 people directly participated in our herring
fishery. Small and mid-sized family fishing vessels with
between two and five crewmen harvested herring and herring egg-
covered kelp for special markets in Japan. In addition to 500
herring harvest permit owners, who operated about 300 vessels,
about 40 spotter pilots and about 300 folks who picked kelp and
harvest by hand participated in the fishery. Fish processors
employed another 200 in shoreside jobs that depended on the
herring fishery as much as the commercial fishermen.
The value of the herring permits that were owned in 1989 by
commercial fishermen exceeded $34 million. Today those permits
are worth nothing, zero. Since 1994, the year litigation ended
and the Exxon appeals began, herring fishermen have lost over
$166 million. No compensation for these losses, they were post-
litigation.
In addition to what fishermen were not paid, the impact to
the regional seasonal economy is estimated at over $650
million. That is about a 4-time multiplier. They use 10-times
multipliers in the Great Lakes region: wholesalers, retailers,
packaging, shipping, local grocery stores, marine repair,
restaurants and hotels, fuel distributors, longshoremen, to
name a few. Lost fish tax revenue added another $6 million of
losses to my community, or if you added all of the lost fish
tax, about $18 million to all of the impacted communities.
My family is representative of those still being impacted.
Our two herring permits have gone in value from $145,000 to
zero. Herring equipment once worth over $50,000 is today of no
value. As an average fisherman I wasn't a high-liner. We made
about $28,700 a year. If you count it up, over $460,000 in lost
revenues in the 16 years. If you add it all together, the
equipment, the permit value, and the lost revenues, $650,000 in
lost revenues to my family.
In addition to herring we lost our fisherman-owned
processing cooperative, the Copper River Fishermen's Co-op had
135 fishermen-owners and depended on the banks for financing.
That is the money we needed each year to buy, process, market,
and distribute our fishery products. With the interruptions in
product availability, the banks withdrew their financing, and
we lost our equity, over $3 million.
Cordova used to wake up from the winter sleep in mid-March
each year when the herring fishermen began to arrive to prepare
for the season. It is now early May. A 6-month economic window
is now only 4 and a half months long, and one of our major
economic drivers is gone.
A $75 million limit in liability is a disservice to the
working class men and women most impacted by the careless and
maybe perhaps criminal actions of one of the world's most
profitable businesses.
One last comment. Limiting liability also affects
restoration, recovery monitoring, and punitive damages. Courts
could limit these awards to a percentage of liability, severely
restricting the funds available for recovery and recovery
monitoring.
And what about long-term liability? The herring fishermen
have experienced 16 years of collapse; no compensation for
those liabilities.
We encourage you to deal with this. Limiting liability in
oil spills transfers economic impact from those responsible and
most able to pay to those who are victimized; who have lost
their way of life and perhaps their ability to make a living.
Thank you.
[The prepared statement of Mr. Kopchak follows:]
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Senator Boxer. Thank you very much.
Mr. Kenneth Murchison, Professor of Law at the Paul Hebert
Law Center, Louisiana State University.
STATEMENT OF KENNETH M. MURCHISON, PROFESSOR, PAUL M. HEBERT
LAW CENTER, LOUISIANA STATE UNIVERSITY
Mr. Murchison. Chairman Boxer, Ranking Member Inhofe,
members of the Committee, thank you for inviting me to appear
before you today. As the Chairman indicated, my name is Ken
Murchison. I am the James E. and Betty M. Phillips Professor at
the Paul M. Hebert Law Center of Louisiana State University.
The views I express today are my personal opinions. They do
not necessarily represent the views of the Law Center, the
University, or the State.
I have been a member of the faculty at the Law Center since
1977, and I have regularly taught environmental law since the
early 1980s.
My written statement briefly describes the liability
provisions of the Oil Pollution Act. I will not repeat that
summary except to note that the Oil Pollution Act creates
strict liability subject to very narrow defenses for removal
costs and damages, which includes damages to natural resources
and property, as well as most economic losses suffered by
individuals, businesses and government. The $75 million cap
that S. 3305 proposes to raise applies only to damages under
the Oil Pollution Act when the damages result from a spill from
an offshore facility.
S. 3305, as you know, changes the limitation of this
liability damages by increasing that amount for which a
responsible party can be held liable from $75 million to $10
billion. In my judgment, both economics and morality support
the proposed change.
The economic case for increasing or eliminating caps on
liability is relatively straightforward. Immunizing a
commercial actor from bearing all the economic costs associated
with its operation has the effect of under-deterrence. That is,
the actor will engage in conduct that would not be profitable
if the actor bore the full economic cost or would forego safety
or environmental controls that would be cheaper than paying the
costs the actor is avoiding.
The question of immunizing economic actors from full
liability also has a moral dimension. If a disaster occurs the
amount of damages that individuals and property owners suffer
does not decline because an actor is not required to pay the
full cost associated with the economic activity.
Instead some people suffering the injury are not
compensated at all, or each person suffering injury recovers
only a portion of the damage. In either event individuals with
no connection to the economic activity suffer injury and are
forced to bear the costs of the loss. The cap is, in effect, a
contingent tax on a group not directly involved with the
economic activity.
A basic principle of justice suggests that it is fair to
make the party who experiences economic gain of the activity
bear the loss, rather than the innocent bystander. This
principle of fairness seems to be particularly applicable to
the present spill in the Gulf of Mexico, where many thousands
of innocent property owners and businesses have suffered losses
that threaten their livelihood and financial well being.
Some have expressed concern that eliminating the limits on
liability will preclude smaller companies from drilling
operations and lead to further domination of drilling
activities by a small group of major companies. But even if one
assumes the domination of drilling activities by major
companies could increase because of the liability risk
associated with unlimited damages, a damages cap is a
particularly inappropriate way of responding to that market
imperfection when other fairer methods of spreading the risk
are available.
Obviously, smaller companies could establish contractual
arrangements that would share the risk. If those private
arrangements are inadequate, the Government could create
mandatory pooling arrangements to which all participants in
drilling activities contribute in proportion to their
involvement in drilling activities.
Some others who oppose responding to the Gulf tragedy with
an initial focus on the damage cap argue the cap is a minor
aspect of the problem revealed by the Gulf release. In making
this argument they emphasize the several reasons that BP's
liability for the Gulf bill will greatly exceed $75 million.
These opponents of the statutory change in the liability cap
are correct that the $75 million limit is not an absolute cap
on all liability for releases in the Gulf of Mexico. I think
they underestimate the impact of the cap, and so I support the
change proposed in S. 3305.
My comments to this point reflect my views as an
environmental law professor whose career is nearer its end than
its beginning, but I am also a citizen of Louisiana with deep
roots in the State. I think I am like most Louisianans in my
reaction to the catastrophe unfolding in the Gulf. We are
dismayed by the horrific damages to one of the richest
ecosystems, but we are not primarily concerned with fixing
blame, and we are emphatically not looking for a handout.
We are interested in seeing fair compensation for the
tremendous loss we have suffered and seeing meaningful reforms
that will lessen the likelihood of a similar disaster and
provide an improved response when the next oil spill occurs.
Thank you for the opportunity to appear today. If you have
any questions regarding the matter, I will certainly be happy
to try to answer.
[The prepared statement of Mr. Murchison follows:]
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Senator Boxer. Thank you so much, Mr. Murchison.
Mr. Barry Hartman, a Partner with the law firm of K&L Gates
and former Acting Assistant Attorney General, welcome.
STATEMENT OF BARRY M. HARTMAN, PARTNER, K&L GATES
Mr. Hartman. Thank you very much, Madam Chairman, Ranking
Member Inhofe, and members of the Committee. I appreciate the
opportunity to be invited here today. I will keep my remarks
very brief.
My perspective on the cap issue comes from my experience,
and I speak today only of my personal experience, not my
clients' views or my firm's view.
In 1989 when I was at the Justice Department, I was
responsible for overseeing and ultimately negotiating the final
plea and civil and criminal agreements in the Exxon Valdez
case. Since that time I have had the privilege of representing
the Rhode Island Lobstermen's Association in Senator
Whitehouse's State in connection with the North Cape oil spill
back in 1996, so I have seen this from the viewpoint of the
victims as well.
I have also represented individuals and companies who are
on the receiving end of civil and criminal charges. So I will
try to provide you with a perspective of seeing this from many
different views.
The purpose of my testimony is to briefly provide you with
my views on the question of whether the current cap on
liability under OPA should be changed, and if so by how much.
Needless to say, this is an important issue. The liability
scheme under OPA and other laws is extraordinarily complicated
and detailed, and you must carefully consider how changing that
liability scheme and the cap affects other provisions of the
law because I am sure nobody wants to change one provision and
have an unintended bad effect on another. So I will simply
raise the following issues that should be taken into account.
First of all, is the existence of this cap under OPA the
real issue given the many other bases for liability that exist
under the law? What is the relationship of the cap to the
current trust fund which has, I believe, $1.6 billion available
to back up a party who may not be available to pay for its own
damages?
If the purpose of the liability cap is to ensure there is a
source of payment for damages, some suggest that it would
create a disincentive if the cap were removed to engage in
conduct that would be risky. My experience is that under
current Federal laws there are extraordinarily more effective
civil and criminal remedies that already provide a much greater
financial and personal incentive, not the least of which is the
Alternative Fines Act. And those things are the things that are
going to cause companies and individuals to act properly, I
believe, as opposed to a liability cap that might or might not
be real in the first place.
Is the reason for increasing the cap because it doesn't
cover most spills? That is something I think the Committee
should look at very carefully. The Coast Guard did a study from
2004 to 2009 which I read to say that there were no spills that
resulted in damages where they were not paid as a result of the
cap being exceeded. It is not to say the cap shouldn't be
changed. It is simply a fact that I think you should take into
account.
What is the relationship between the cap and the current
financial assurance requirements that exist under OPA? Under
OPA, a company must show that it can pay what the cap is. If
there is no cap, what will be the financial assurance
requirement? I learned in law school my first day in civil
procedure that you can't get blood from a stone. So you can
have unlimited liability, but if the people who are responsible
don't have the money to pay and don't have financial assurance,
I am not sure what that gets you. A study by Resources for the
Future suggested this as well.
The OPA liability limits are part of a much more complex
structure, as I mentioned. There are civil and criminal
remedies available. There are State law remedies available.
In the current Gulf situation, I would submit the following
observation. I think that the OPA statute and the liability cap
have been rendered kind of irrelevant. I believe there have
been over 6,000 lawsuits filed so far in State courts, and I
think some Federal courts along the Gulf States where there are
no limits on liability.
So the question is if you want to increase the liability
limits under OPA, it might be a good idea, but do you want
people to get into the OPA compensation process which was
designed to get compensation for people more quickly? And are
there going to be incentives created to cause people to want to
go into that process rather than simply going to court? If they
are just going to go to court, it kind of doesn't matter that
there is an OPA at all because there is no liability limit
there.
Thank you very much for the opportunity to testify. I am
happy to provide any answers to questions, and as others have
said, my heart goes out to those in Louisiana and other places
who have been impacted by this.
[The prepared statement of Mr. Hartman follows:]
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Senator Boxer. Thank you so much, sir.
Mr. Ron Baron, Executive Vice President, Willis Global
Energy in Texas.
Correct, sir?
Mr. Baron. Yes.
Senator Boxer. Welcome, sir.
STATEMENT OF RON BARON, EXECUTIVE VICE PRESIDENT, WILLIS GLOBAL
ENERGY, WILLIS OF TEXAS, INC.
Mr. Baron. Good morning, Madam Chair Boxer, Ranking Member
Inhofe, and members of the Committee. On behalf of Willis I
would like to thank the Committee for inviting me to testify.
My testimony is focused on the energy insurance market
capacity for two kinds of risk related to offshore exploration
and production activities. They are third party liability,
including pollution and control of well risk.
There is a worldwide insurance market for offshore energy
risk. The traditional leading market is Lloyds of London. There
is a finite amount of capacity available from the market which
varies depending on the type of insurance coverage being
provided as well as other factors. Generally speaking third
party liability insurance provides coverage for property damage
and bodily injury liability arising from a company's
operations. Control of well insurance provides coverage for
costs and expenses in controlling a well, re-drilling,
pollution clean up, and containment.
Another product offered by the market is oil spill
financial responsibility certification. This product is
typically backed by corporate indemnities and/or control of
well and excess liability insurance maintained by the company.
When talking about capacity, I will use two descriptive
words: theoretical and working. Theoretical capacity is the
maximum dollar amount that the market could commit to any
single risk. Working capacity is the dollar amount that the
market would actually commit to any single risk.
For working capacity the third party liability insurance
coverage offshore of the United States is in the range of $1.25
billion to $1.5 billion. The theoretical capacity for third
party liability is close to $1.9 billion. The working capacity
for well risk is in the range of $600 million to $750 million.
Theoretical capacity for these risks is closer to $1 billion.
It is important to note that here is a standard provision
in both the third party liabilities and control of risk
policies that reduces the limits of coverage provided by the
insurance market. That provision spells the limit of coverage
to the percentage interest that the insured has in a well.
As an example, if a company has a 50 percent interest in a
well, and their policy provides $400 million of limit, then the
limit of coverage for that well under their policy would scale
down to $200 million. The working capacity for all spill
financial responsibility certification is even more limited,
and I would estimate the top range to be no more than $200
million.
As a consequence of the Macondo well incident, there was a
reduction in the capacity being offered by the insurance market
to third party liability and control of well coverage. Also,
the cost for this coverage has increased. The magnitude of
increased premiums has and will vary dramatically on the
profile of the particular insured, which would include their
exposures, operating areas, and loss experience.
We have begun to see some new capacity coming to the market
due to the higher premiums that are being charged. In
particular we know of one insurance company who has provided
some pricing indications to a number of interested buyers for
additional limits of excess third party liability. And we
understand those amounts are in the range of $500 million to $1
billion.
We have heard that another insurance buyer has given their
broker an order to secure coverage in the amount of $1 billion
overall limit for their control of well coverage. But to date
that placement has not been completed due to lack of capacity.
In addition to the capacity available from the commercial
insurance market, there is an oil industry association in
Bermuda. There are 54 member companies, half of which are
engaged in exploration and production activities. The coverage
provided by OIL includes property damage or loss, control of
well, and pollution risk. However, OIL membership is restricted
to companies with a minimum of $1 billion of gross assets, and
some companies are not comfortable with the mutual concept.
The actual working capacity in the insurance market as of
today is in a state of flux. And although increased premiums
could attract additional capacity over a period of time, it
will not be sufficient to satisfy the liability and financial
responsibility limits being proposed under Senate Bill 3305.
Thank you.
[The prepared statement of Mr. Baron follows:]
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Senator Boxer. Thank you so much.
I want to read to the panel what BP said on its permit
application when it applied to get a permit for this particular
well. It said the following: ``In the event of an unanticipated
blowout resulting in an oil spill, it is unlikely to have an
impact, based on the industry-wide standards for using proven
equipment and technology for such responses and implementation
of BP's regional oil spill response plan which addressed
available equipment and personnel, techniques for containment
and recovery and removal of the oil spill.''
That is what they said. They said they had the ability to
respond with proven equipment and technology.
Then after it happened, this is what they said: ``All the
techniques being attempted or evaluated to contain the flow of
oil on the sea bed involves significant uncertainty because
they have not been tested in these conditions before.''
So before they got their permit they said everything was
fine. They had proven ``equipment and technology'' for such
responses. I quote them.
Eight Members of the Senate--I think all on this
Committee--sent a letter to the Justice Department asking for
an investigation, criminal and civil investigation, into
whether these were false statements. I want to know if any
member of the panel disagrees that there ought to be an
investigation into whether or not BP told the truth in the
permit. Does any member of the panel disagree that there ought
to be an investigation into this?
OK. Thank you.
Mr. Minich, the size and importance of the tourism industry
to Florida's economy is remarkable. In my home State of
California, coastal tourism, recreation, and fishing generate
$23 billion in economic activity and 388,000 jobs. Now, I just
have a simple question because frankly I am married to a
lawyer. My father is a lawyer. My son is a lawyer. Will they
listen to Mr. Hartman and all the technicalities?
I would like to strip that away and ask a direct question
so we keep our eye on what we should be doing here, in my
opinion, and that is, again, do you think that those who caused
the disaster should be held accountable?
Mr. Minich. Absolutely, 150 percent, they should be held
accountable.
Senator Boxer. OK. Then you think they should be held
accountable whoever they are if they did this damage.
Mr. Minich. Absolutely. There is no question.
Senator Boxer. Does anybody have a disagreement with that
on the panel?
Well, then I think we are speaking, I mean the panel is
basically saying by your silence to this that we ought to move
and hold people accountable. And I guess I am going to try, Mr.
Hartman, in an attempt to understand better what you were
saying.
Don't you think it would be a good idea to simplify what we
are doing here because if there is a lot of confusion
surrounding it, you wind up 21 years in court? Now, I know you
have represented Halliburton in the past. Are you representing
them, your company, in this particular matter?
Mr. Hartman. Madam Chairman, my firm does not represent
anybody involved in this spill at all.
Senator Boxer. OK. That is good. We had your client list.
They were on it, but you don't represent them in this, so that
is good. So you don't have any conflict, so I am going to ask
you this question.
If we had a very straightforward bill that simply said to
the oil companies who undertake this, or gas companies, that
you are responsible not only for the full clean up, which they
are now under law, the clean up they are responsible for, but
also to make whole the Mike Frenettes, the R.J. Kopchaks. Don't
you think it is cleaner to just say you caused the damage, you
pay the damage, period, end of quote.
And don't you think it will be, as the panel so testified,
because we would have that simple approach, a way to avoid this
from happening in the future? Because don't you agree, because
you are an attorney who has represented people, you said
yourself, who get sued, that many times, and we learned this
from a lot of the automobile crash tests, that companies put
into their balance sheets what the costs are if there is an
accident?
If they have no limit, and they just have to step up and
pony up to make people whole, won't that be a deterrent from
what happened?
Mr. Hartman. Well, Madam Chairman, as somebody who is
related to many lawyers, I am sure you will appreciate that I
am going to say it is a complicated question. But fundamentally
I think that is what the laws currently do. Do they all work
right? No. Are they complicated? Yes. There have been issues
for years and years about should you preempt State laws and
make one simple Federal remedy. Twenty years ago when I was
involved with OPA, for the Justice Department these were the
same issues. And they are legitimate questions. They are just
complicated.
Senator Boxer. OK. Well, let me just finish by asking Mr.
Murchison how he feels. Because in my view if you say that is
what the law is supposed to do, and 21 years later in Alaska
they still haven't cleaned up the mess, and people got $15,000,
people who lost $650,000. Do I remember that right? That did
not resolve. The current law did not resolve anything. That is
why we changed it, but it still has problems.
And I would just close and ask Mr. Murchison to respond to
whether or not a very straightforward, simple deal: you make
the mess, you clean it up, and you make people whole.
Mr. Murchison. The short answer I would give would be yes,
but I would agree that there are complications in terms of the
financial responsibility that the Committee will need to deal
with going forward. But I would start with the problem of
saying that those who cause the injury--and not the innocent
people--ought to bear the loss.
Senator Boxer. And that is what has happened in Alaska. We
heard it right here.
Mr. Murchison. That is what is happening right at this
moment in the State of Louisiana.
Senator Boxer. It can't happen in Louisiana because we are
going to hold BP's feet to the fire on it, and I am going to do
everything I can, with my colleagues, to make sure it doesn't.
I am going to ask Senator Inhofe to go next, and I am going
to give the gavel to Senator Lautenberg because I have to be at
a 12:30 meeting with the Majority Leader.
Senator Inhofe. And since I wasn't invited to the 12:30
meeting with the Majority Leader, I will go next.
[Laughter.]
Senator Inhofe. First of all, I have eight documents, four
from the insurance industry, two from industry, and two from
expert witnesses and ask consent that they be made part of the
record.
Without objection, so ordered.
Senator Lautenberg [presiding]. Without objection.
[The referenced documents follow:]
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Senator Inhofe. Mr. Baron, I don't think there is a Member
of Congress who doesn't agree that the limits that were put in
place back during the Exxon Valdez--I happened to be in the
House at the time. I actually went up there. I am very familiar
with the process that took place. But that $75 million is too
low, we all understand that, and it certainly needs to be
changed. And I made that very clear on the floor when I
objected to the Menendez motion on the $10 billion. I think
that is arbitrary.
But let me just ask you, this is kind of hard to answer,
but kind of guess with me on this. If we were to raise that to
$10 billion or eliminate the caps altogether, about how many
companies, roughly, would be left to explore and produce in the
Gulf?
Mr. Baron. I am really not in a position to comment about
how many companies would be left. I can say that from an
insurance market standpoint, there is not sufficient capacity
to provide companies insurance protection to limits which are
being proposed.
Senator Inhofe. Well, the big five, I would contend, and
this is an argument I made on the floor, may be the last ones,
along with the national oil companies, if it were raised to $10
billion. Do you strongly disagree with that?
Mr. Baron. No, I do not.
Senator Inhofe. And BP is one of the big five. In other
words, if we raised it up, I would say this would put them in a
more advantageous position than they would be in today. That is
my opinion.
If that were raised up there, how many of the independents,
let's take the next step down below the five majors, would be
able to purchase insurance to be able to operate?
Mr. Baron. Well, again, there is not sufficient capacity
from the insurance market to meet these proposed limits, and I
believe that then you would have to rely on their balance
sheets and their ability to demonstrate the financial
responsibility test.
Senator Inhofe. Yes. My concern and the reason for
mentioning this is that I am one of these few in Congress who
believes in order to run this machine called America we have to
have fossil fuels. And one of the great sources is offshore. I
know a lot of them, in fact we are suppliers in my State of
Oklahoma, as are many who are out there. And it would appear to
me that if we were to take the cap altogether off it could be
instituting a de facto ban on offshore drilling. Do you think I
am unreasonable in coming to that conclusion?
Mr. Baron. No, Senator.
Senator Inhofe. Mr. Hartman, you used a term that I asked
the staff about, and I wasn't familiar with it and they weren't
either. Maybe you could help us out. You said Alternative Funds
Act or Fines Act. What were you saying? Would you repeat that?
Mr. Hartman. The Alternative Fines Act is under title 18 of
the U.S. Code, and it gives a court the discretion to fine
anyone convicted of a covered crime an amount equal to twice
the economic harm caused by the crime or twice the economic
gain as a result of the crime. That has been on the books for a
number of years. It was the statute that was used in the Exxon
case that resulted in the $1.1 billion resolution instead of
$25,000 a day.
Senator Inhofe. I see. Well, that is interesting. Our staff
is going to look into that because as we progress on this thing
that might be a place to be looking.
Let me ask you a question that I think is very basic, and
maybe everyone knows the answer but me. Many years ago I was a
claims adjuster. That is what I did for a living. Establishing
losses is something that is not an easy thing to do. Under the
CRS report there are six categories of economic losses and
different types of economic losses and natural resource
damages. I have put them in those two categories because I
think that is where this comes in.
And I would like to have you tell us first of all the
relationship between the way the current claims process is
operating and the current liability cap. Would this bill as
written or any other bill that simply raised or removed the cap
altogether have any effect on the claims process?
Mr. Hartman. In partial response, and the Chairman made the
observation about what happened in Alaska, of course, that was
before OPA was passed. And one of the purposes of the Oil
Pollution Act and that process is to provide a quicker and more
expeditious claims process. And the incentive for people to go
into that process, at least in my experience, is that it is
easier to prove the loss and the damages in that process than
it is in court, and you don't have to prove liability that you
have to prove in court.
Senator Inhofe. I see.
Mr. Hartman. But of course, that process is only available
for claims under OPA. If I understand your question, if you
expand or make it an unlimited liability amount, I suppose more
claims, if there are claims beyond $75 million, could go to
that fund. Hopefully, it would create an incentive to make more
people go to the fund and they wouldn't have to wait 20 years
for recovery by having to go to court.
I don't know if I have answered you.
Senator Inhofe. Yes, you have. And all the way through this
thing, I have been wondering when they talk about economic
damages, that sounds good. That sounds easy. And certainly you
folks know what economic damages that you would feel you would
be entitled for some kind of remedy or recovery, but it is not
an easy thing to address. It is very complicated.
OK, for the record I would like to ask you to submit to me
some of the complications in determining economic losses, as
well as natural resources damages. Is that fair?
Senator Lautenberg. I have no objection.
Senator Inhofe. OK. Good. Thank you very much.
Senator Lautenberg. Thanks very much.
I am going to turn my question period over to Senator
Klobuchar, and we will continue. I will pick up after that.
Senator Klobuchar.
Senator Klobuchar. Thank you very much, Senator Lautenberg.
And thank you to all the witnesses, and thank you for being
patient.
I just would like to hear from some of the people who are
in the Gulf area. I am particularly, Mr. Minich, sympathetic
about the tourism industry. That is the Subcommittee I chair on
the Commerce Committee. I know what a rough time the tourism
industry has had. People don't realize that one of eight people
in this country is employed in tourism. Every percentage point
we lose of tourism costs us 170,000 jobs in this country.
So one of the things I was wondering about is how people
are actually sort of feeling down in the Gulf. Do they truly
believe that BP is going to compensate them? And are they aware
of what happened with Exxon with that continuing lawsuit and
how it took 20 years for the fishermen, to our people from the
fishing area, to collect their damages? And are they concerned
about this?
Mr. Minich. A lot of folks in the tourism industry are not
aware of the 20-year situation. We are all extremely, extremely
worried about the situation. And there is no one in the tourism
industry, if they get any compensation, they are not going to
be fully compensated because we are seeing anywhere from 20
percent to 30 percent reduction in reservations for the rest of
the summer. Well, you can't turn in a claim for that. That is
just lost business. It is gone.
In our county, we are tracking dollar amounts for
cancellations. If they are canceling an entire week's stay, we
have a dollar amount that we can put toward that.
But the situation, too, is that there is so much
uncertainty with this particular spill and where it is going
and what it is going to do and how long it is going to be
around that. Twenty percent of just Pinellas County alone, 20
percent of our summer business is European. And they don't want
to make that long haul flight and come over here and have
something happen.
So we are very concerned. The tourism industry in Florida
was just making the turn from the last 2 years of the terrible
economy. We felt really good about things in April. The
indicators were up. Everything was positive, and then this
thing hits April 20th, and it was downhill from there.
Senator Klobuchar. And the fishing perspective on this?
Mr. Frenette. What I certainly can say, and reiterate what
he just said, but since April 20th and about 5 or 6 days after
that, our area, which was immediately impacted, the estuary,
was completely shut down for fishing. My business was
completely shut down.
Senator Klobuchar. I have no doubt about the damages. I am
just wondering if people believe some extra protection would
help them. Or do they think BP is just going to pay?
Mr. Frenette. I think everybody has a lot of doubts, a lot
of questions, especially from what happened with Valdez. Pretty
much everybody in our area is aware of that and how long it
took. We are really concerned about comments that have been
made by Mr. Hayward from the inception of this accident. And
quite honestly nothing really has been done yet other than a
small disbursement of checks to some people. It is hard. Do I
have complete faith? Absolutely not.
Senator Klobuchar. All right. My other perspective, just
from being not in the Gulf region, being a land of 10,000 lakes
as opposed to the Ocean State of Rhode Island, is just that the
taxpayers of my State and others not have to pay for this when
BP clearly made some decisions that were wrong decisions.
And I am again wondering if we don't raise the cap, who do
people think is going to pay for this? Is it the taxpayers?
Mr. Baron, do you think the taxpayers should be paying for
this?
Mr. Baron. No, I don't.
Senator Klobuchar. All right. So you believe that BP should
be paying for it?
Mr. Baron. Yes.
Senator Klobuchar. All right. Then our concern here, as
expressed by people in the communities, is just that we have to
make sure that they pay for it.
The last series of questions I want to ask is just about
this incentive going forward, which I identified in my opening
statement.
If we are going to have a $75 million cap, and BP made $16
billion last year, how is it an incentive for them to take
safety measures, we know it is now, but in other ways going
forward, if we don't at least have a realistic cap for the
damage that it causes?
And I wondered, Mr. Murchison, if you would comment about
that incentive issue. I believe that if you bask in the rewards
and make $16 billion a year, you should also have some
liability for this. As I said yesterday at our Judiciary
hearing, if an ethanol or a biofuel plant blew up in the middle
of a corn field in Minnesota, they would be liable. If a wind
turbine or a solar panel created some damage, they would be
liable. And you don't have those kinds of incentives in place
when you put this cap that is so disproportionate to the damage
cost.
Mr. Murchison. And BP is going to be making money from this
field long after they have quit restoring the fisheries of
south Louisiana. When we are talking about people in south
Louisiana going broke, we mean really going broke.
Senator Klobuchar. OK.
Mr. Hartman, do you just want to add to that?
Mr. Hartman. Only that under current law, first of all,
that cap--to the extent it is a cap--disappears if there is a
violation of any Federal safety construction or operational
regulation, any one. And so to the extent you are concerned
about the liability cap issue and risk taking, current law
addresses that. Plus, there is also an exception if they don't
follow any reasonable order of the Government.
And as I said before, regardless of the cap, under State
law, it doesn't exist and under these other provisions like the
Alternative Fines Act, there is no cap, not to mention the
other sanctions that could be available.
So I am just simply making the observation, as you think
about that, think about the other existing incentives and how
changing the cap would relate to those. That is all.
Senator Klobuchar. Thank you.
Senator Lautenberg. We will keep the record open.
Senator Whitehouse.
Senator Whitehouse. Thank you, Chairman.
Let me ask a few questions about some of those other areas.
Mr. Hartman, did you when you were at the Department of
Justice ever engage in criminal prosecution of environmental
cases? Or were you entirely on the civil side?
Mr. Hartman. Criminal as well.
Senator Whitehouse. Criminal as well. In terms of
restitution under a criminal judgment, would there be any
restriction on a judge imposing an order of criminal
restitution above and beyond a civil liability cap, indeed,
taking that civil liability cap into consideration in
determining a criminal restitution order to make sure people
were fully compensated?
Mr. Hartman. I don't believe under the Alternative Fines
Act, for example, plus a judge's authority as a condition of
probation to deal with victim restitution, that there is any
technical, legal limit on his or her ability to use those
processes.
Now, there are practicality issues as to whether it is
appropriate to do it in a criminal process or whether it is
going to unduly complicate the process.
Senator Whitehouse. Yes.
Mr. Hartman. But in theory, it exists.
Senator Whitehouse. In theory, it is perfectly available.
And are you familiar with the Rivers and Harbors Act?
Mr. Hartman. I am.
Senator Whitehouse. That is a criminal statute.
Mr. Hartman. There is a criminal provision in that.
Senator Whitehouse. And it provides a very low standard. It
doesn't require negligence. It is simply a discharge that is
not permitted. Correct?
Mr. Hartman. It is strict liability, like the Migratory
Bird Treaty Act and the Refuse Act. That is correct.
Senator Whitehouse. So in effect, from a prosecutor's point
of view, if you can prove the act, the rest of it is a lay-down
hand.
Mr. Hartman. It certainly is an easier case than proving
one when you have intent.
Senator Whitehouse. Yes. Here is no mental standard
required, no punitive mens rea.
Mr. Hartman. That is correct.
Senator Whitehouse. With respect to State law, before we
had the North Cape-Scandia in Rhode Island we had the World
Prodigy, which went ashore at Brenton Point and also did
considerable damage. I was in the Attorney General's office
then, as a young lawyer. And in that case there was the
application of a doctrine called the Robins dry dock rule which
bars recovery for economic damages in cases of an unintentional
maritime tort. There are some specific limitations for things
like commercial fishermen, but shore-based industries such as
fish stores, hotels, those sorts of things seem to be exempted.
These types of businesses tried to recover damages after
that 1989 World Prodigy spill, and their claims were dismissed
in Federal Court in Rhode Island on the grounds that the court
could no award economic damages under State law because that
part of Rhode Island's law conflicted with the Federal maritime
law.
So in that context I am just a little bit skeptical or have
some questions about your claim that it doesn't matter if we
cap the damages because there is always the State law. At least
this decision that took place in Rhode Island a Federal Court
essentially barred State law actions because of that
restriction under Federal maritime law.
Is there not risk that a similar decision would pertain
with respect to damages above the OPA cap?
Mr. Hartman. I haven't studied that, frankly. I don't
believe that was a factor. I may be wrong about this. I don't
believe that was a factor in the claims made by fishermen in
the Exxon case. I just don't remember why. I am sorry.
Senator Whitehouse. Professor Murchison, can we all agree
that--actually I think we had President Galligan. Does he still
teach at your school, or did he use to?
Mr. Murchison. He is now the President of Colby-Sawyer
College.
Senator Whitehouse. President of Colby?
Mr. Murchison. But he was a colleague of mine for 12 years
at LSU.
Senator Whitehouse. He was before the Judiciary Committee
yesterday. He was a wonderful witness, by the way, as were you.
So well done, Hebert Law School.
Is there any doubt that as a matter of corporate law a
corporation has a solemn obligation to its shareholders to
maximize its economic return?
Mr. Murchison. I am not a corporate law scholar, but that
is what I remember from law school, Senator. And I think so.
By the way, I did briefly ask President Galligan about the
question you are asking. He wouldn't concede that there is no
possibility of State law applying to that claim because there
is some admiralty doctrine that might be incorporated, but he
did see that as a risk of not applying State damage law,
particularly to a spill that occurred as far offshore as this
particular one did. It is not clear about the reservation of
State law authority for an oil spill that occurs out in the
exclusive economic zone.
Senator Whitehouse. But lifting the damage cap would be
nice and clear.
Mr. Murchison. That seems to be the basic idea is what
everybody seems to agree ought to happen, would happen. That
is, BP pays for the economic damages and for the long term. You
know, long after my lifetime, they are going to be working to
restore the fisheries. That is the most prolific fishery area
in the world.
Senator Whitehouse. Thank you very much. My time is
expired.
Thank you, Chairman, for your courtesy in allowing me to go
ahead of you.
Senator Lautenberg. Thank you.
You have heard from one of our distinguished lawyers, a
former U.S. Attorney and a legal scholar. I have the good
fortune of not being any of those things. I come from the
business world, and I ran a fairly good sized company before I
came here. I knew one thing that though we had obligations to
shareholders, we also had obligations to employees. We also had
obligations to clients. We also had obligations to the
community in which we existed.
So there are all kinds of things, including the fact that
you have a moral obligation, I think, to operate honestly to
the fullest extent, period. That is where I come in.
Mr. Kopchak, it is very interesting to hear that you were
also in a black cloud, first to Cordova and now to the Gulf. I
was in Cordova, and I arrived at the most 3 days later after
the Exxon Valdez ran aground. I was Chairman of the
Subcommittee on Coast Guard at the time. So they rushed me up
there.
And I saw tragedy dressed in the most beautiful colors you
ever saw because as the oil skimmed over the water, the color,
the kaleidoscope of color was quite a thing to see. But then to
see employees of the Federal Government from Fish and Wildlife,
the Park Service, Interior, caressing the birds and the ducks
and the seals with a cloth to try and save their lives was
quite a touching experience. I didn't see any joy in Alaska at
that time, I must tell you.
For general information, Exxon in 1989 made $3.8 billion,
1989; equivalent today to about $6 billion in earnings. And
fighting all that time to me shows a general contempt for the
public at large because they fought the punitive claim, the $5
billion claim over these years; got it down to $500 million;
instead of stepping up to the good citizenship obligation they
have in this monopoly virtual situation, commodity situation
that they had. It shows an attitude that is distressing, and I
think we see the same thing here with BP.
Mr. Baron, I think you were wonderfully candid when you
said that there is a finite amount of liability that can be
covered, period, which says to me--and any who disagree, I
would appreciate expression--that says that maybe this is an
enterprise that has never been fully paid for. If we say, if it
is suggested that the taxpayers ought to be the last recipient
of the bill for damages that others caused, we are not the kind
of society that we think we are. And it is absolutely unjust,
in my view.
Mr. Hartman, you say, well, let's not rush into this. Let's
look at all of the possibilities out there. Is there enough
justification to say that profits from offshore drilling ought
to be able to pay for their mistakes? Or is the taxpayers'
obligation to bear the risk for mismanagement?
Mr. Hartman. I am not sure I quite understand what you are
asking.
Senator Lautenberg. Well, what I am asking--you are
suggesting, give it time. Did I misunderstand what you said?
Give it time so that we can see absolutely where the fault lies
and State laws, et cetera?
Mr. Hartman. No, if that was what I said, then I misspoke.
That wasn't certainly what I intended. I am only suggesting
that in considering what to do with the liability cap, just
consider how it implicates other provisions of the law because
it is a complicated question. In the financial assurances, for
example, you can't have unlimited financial assurances. Nobody
will write that, I don't think.
So if you want to make sure there is somebody there that
can pay, you have to say, well, how much do you have to pay?
Well, make sure you can pay everything. Well, that is fine, but
there is a provision of the law that says you have to show
financial assurance up to some level. You have to change that
provision if you are going to change it to unlimited liability.
Just an example of how things relate. I am simply saying
look at these things carefully because they are complicated.
That is all.
Senator Lautenberg. Here we have heard this very frankly
heart wrenching testimony from people who were directly
affected and whose families' lives have changed forever. Where
is that cost borne? They are innocent bystanders. When I
listened to Mr. Frenette, you define over $2 billion worth of
contributions from shrimp and other parts of the industry, some
of it commercial, some of it recreational. We start off with
over $2 billion, $2.5 billion worth of contributions just from
those activities. Where does this get paid for?
The notion of $10 billion coverage by my distinguished
colleague from New Jersey was almost immediately eliminated
because we knew very well the common expectation that this is
so far above $10 billion that just take the cap off. You did
it? Pay for it.
And so Mr. Minich, when you described the kinds of losses
contemplated, how do these things get paid for?
Mr. Minich. Senator, Senator Boxer read from the
application that BP did for this rig, and it said that if there
was any kind of spill, they could cap it. And they haven't been
able to cap it. They have not capped it. So why would we cap
the limitations on their liability? I mean, that is just the
bottom line. There should be no cap on their liability. They
can't cap this thing. Why would we cap their liability?
Senator Lautenberg. Well, what we have seen when we look
back at history and the trip for me to the foundering Exxon
Valdez is just brought home by Mr. Kopchak. The fact is that
the herring species are gone. There is a depletion of it and
some of the other quantities of fish available there. There has
been a shift.
I saw something on television the other day that had a
fellow with a shovel picking up rocks that were still covered
by oil, so the damage is virtually permanent. How do these
things get done, Professor? How will you get these things
restored? Who pays for it? Where is the obligation to clean up
after you mix things up?
It was mismanagement, obviously here, and I will draw a
conclusion, that said OK, we are going to take the less
protective area. It costs less, and we will be able to do what
we have to.
But when I asked the three witnesses that we had there one
day from BP, from Transocean, from Halliburton whether it was
anybody's fault there, whether the spill was anybody's fault,
everyone said, well, no.
Well, whose fault is it? Is it the fault of the American
public who need the nutrition, the recreation, the livability?
Whose fault is it, Professor?
Mr. Murchison. Well, I think that is why the oil pollution
damages are a no fault liability. I think the exactly the
purpose of it was so that we didn't sit around arguing about
that. We defined a responsible party by certain functions they
operated. And to be honest with you, Senator, long after you
and I are gone, it will be working on this fishery in south
Louisiana.
Senator Lautenberg. I don't know whether that is a
prediction for me, but so far we are doing pretty good.
I guess, Mr. Hartman, you are unwilling to say that BP is
responsible for the spill in any way?
Mr. Hartman. I am not saying that at all, Senator.
Technically under the law, they are the responsible party under
OPA. I was only asked to give you my views on how the cap
system worked to make sure that you have information that might
be relevant to your consideration.
Senator Lautenberg. I just wanted to be sure of the
conclusions that we draw. By the way, your testimony, all of
you, was excellent, clear. And you weren't afraid, Mr. Frenette
and Mr. Kopchak, to show the amount of pain and excruciating
result that your families, your friends, your community is
paying for this. We don't often see that. People are usually
steeled before they get here not to show any emotion. They tell
us not to, but I have been here long enough it doesn't matter.
What we are going to do is we are going to keep the record
open. You will get questions, I believe, in writing. And we are
asking so that we can move ahead with the liability question
altogether that we will have questions go out by 10 o'clock
this Monday. And I would ask each of you if there are written
questions to respond to those questions by noon on the
following Thursday.
With that, we will adjourn this Committee hearing and say
thank you to each one of you for the work that you put into and
for the clarity of your testimony. Thank you very much.
[Whereupon, at 1 p.m. the Committee was adjourned.]
[Additional material submitted for the record follows:]
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