[Senate Hearing 111-1035]
[From the U.S. Government Publishing Office]

                                                       S. Hrg. 111-1035



                                before a

                          SUBCOMMITTEE OF THE



                             SECOND SESSION


                            SPECIAL HEARING

                      MAY 26, 2010--WASHINGTON, DC


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                   DANIEL K. INOUYE, Hawaii, Chairman
ROBERT C. BYRD, West Virginia        THAD COCHRAN, Mississippi
PATRICK J. LEAHY, Vermont            CHRISTOPHER S. BOND, Missouri
TOM HARKIN, Iowa                     MITCH McCONNELL, Kentucky
HERB KOHL, Wisconsin                 JUDD GREGG, New Hampshire
PATTY MURRAY, Washington             ROBERT F. BENNETT, Utah
DIANNE FEINSTEIN, California         SAM BROWNBACK, Kansas
RICHARD J. DURBIN, Illinois          LAMAR ALEXANDER, Tennessee
TIM JOHNSON, South Dakota            SUSAN COLLINS, Maine
MARY L. LANDRIEU, Louisiana          GEORGE V. VOINOVICH, Ohio
JACK REED, Rhode Island              LISA MURKOWSKI, Alaska
BEN NELSON, Nebraska
MARK PRYOR, Arkansas
ARLEN SPECTER, Pennsylvania
                    Charles J. Houy, Staff Director
                  Bruce Evans, Minority Staff Director

 Subcommittee on Department of the Interior, Environment, and Related 

                 DIANNE FEINSTEIN, California, Chairman
ROBERT C. BYRD, West Virginia        LAMAR ALEXANDER, Tennessee
PATRICK J. LEAHY, Vermont            THAD COCHRAN, Mississippi
BYRON L. DORGAN, North Dakota        ROBERT F. BENNETT, Utah
BARBARA A. MIKULSKI, Maryland        JUDD GREGG, New Hampshire
HERB KOHL, Wisconsin                 LISA MURKOWSKI, Alaska
TIM JOHNSON, South Dakota            SUSAN COLLINS, Maine
JACK REED, Rhode Island
BEN NELSON, Nebraska
DANIEL K. INOUYE, Hawaii, (ex 
                           Professional Staff

                            Peter Kiefhaber
                              Ginny James
                             Rachel Taylor
                             Scott Dalzell
                             Chris Watkins
                       Leif Fonnesbeck (Minority)
                        Rebecca Benn (Minority)
                         Brent Wiles (Minority)

                         Administrative Support

                              Teri Curtin
                         Katie Batte (Minority)

                            C O N T E N T S


Opening Statement of Senator Dianne Feinstein....................     1
    Prepared Statement of........................................     3
Prepared Statement of Senator Patrick J. Leahy...................     4
Statement of Senator Lamar Alexander.............................     5
Statement of Hon. Ken Salazar, Secretary of the Interior, 
  Department of the Interior.........................................................     7
Containment Strategy.............................................     7
Personnel in the Gulf............................................     8
Bureau of Ocean Energy Management, Regulation, and Enforcement 
  (BOEMRE).......................................................     8
Ethics...........................................................     9
OCS..............................................................     9
Renewable Energy.................................................     9
Prepared Statement of Ken Salazar................................    10
Statement of Michael R. Bromwich, Director, Bureau of Ocean 
  Energy Management, Regulation and Enforcement, Department of 
  the Interior...................................................    14
    Prepared Statement of........................................    15
Reorganization of the MMS................................17, 18, 21, 32
Inspectors.......................................................18, 31
Culture Change...................................................    19
Moratorium.......................................19, 26, 28, 29, 31, 33
Accountability...................................................    20
Statement of Senator Jon Tester..................................    21
Monuments........................................................    21
New Leasing Standards for BLM....................................    22
Ethics...........................................................    22
Statement of Senator Susan Collins...............................    23
Accountability and Culture.......................................    23
Oil Spill Response Plans.........................................    24
Statement of Senator Byron L. Dorgan.............................    25
Inspector General Reports........................................    25
Accountability...................................................25, 26
Offshore Drilling and Production.................................    27
Statement of Senator Lisa Murkowski..............................    27
Statement of Senator Thad Cochran................................    29
Fail-safe Technology.............................................    30
Moratorium and Alaska Status.....................................    35
Questions Submitted to Ken Salazar...............................    35
Questions Submitted by Senator Dianne Feinstein..................    35
Structure Versus Culture.........................................    35
Lack of Oversight................................................    36
Interior Inspector General Testimony on MMS Inspections..........    37
Technology and the Reorganization................................    37
``Categorical Exclusions'' from Environmental Reviews............    38
Timing on Reorganization.........................................    39
Peer-reviewed Response Plans.....................................    39
Overlapping Responsibility.......................................    39
The 30-day Report to the President...............................    40
Questions Submitted by Senator Robert C. Byrd....................    40



                        WEDNESDAY, JUNE 23, 2010

                           U.S. Senate,    
      Subcommittee on the Department of the
       Interior, Environment, and Related Agencies,
                               Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 11:03 a.m., in room SD-124, Dirksen 
Senate Office Building, Hon. Dianne Feinstein (chairman) 
    Present: Senators Feinstein, Dorgan, Tester, Alexander, 
Cochran, Murkowski, and Collins.

             opening statement of senator dianne feinstein

    Senator Feinstein. This hearing will come to order.
    I would like to say good morning and welcome, everyone, to 
the Interior, Environment, and Related Agencies Subcommittee's 
oversight hearing on the proposed reorganization of the 
Minerals Management Service (MMS).
    On May 19, as part of his overall response to the ongoing 
environmental disaster in the Gulf of Mexico, the Secretary of 
the Interior issued an Order, the purpose of which was to ``. . 
. separate and reassign the responsibilities that had been 
conducted by the Minerals Management Service into new 
management structures that will improve the management, 
oversight, and accountability of activities on the Outer 
Continental Shelf (OCS), ensure a fair return to the taxpayer 
from royalty and revenue collection, and provide independent 
safety and environmental oversight and enforcement of offshore 
    Our principal witness this morning, the person who will 
walk us through the proposed reorganization, is the Secretary 
of the Department of the Interior, Ken Salazar. So thank you, 
Mr. Secretary, for finding time in what I know is an incredibly 
busy schedule.
    We are also joined by Michael R. Bromwich, a former 
Inspector General at the Department of Justice, who has been 
appointed by the President to implement the reorganization and 
reform effort. From my work on the Judiciary Committee, I have 
come to respect Mr. Bromwich. I welcome him to this effort. I 
believe he has a herculean task, and so we look forward to 
hearing his thoughts as well.
    In addition to reviewing the reprogramming, our purpose 
here is to focus on the performance of the MMS to try to 
understand what went wrong, to hear from the Secretary the 
details of his proposed reorganization and why he believes this 
proposal is the right way to go.
    The key question for me underlying everything that is 
discussed here today is this: How does the proposed 
reorganization, a changing of the organizational chart, change 
the culture of the MMS to protect the Gulf of Mexico and the 
people who live and work there?
    I want to be clear that by law the Department of the 
Interior is responsible for ensuring the safe and clean 
production of oil and gas on the OCS. No one else. This 
responsibility cannot be delegated.
    BP, Transocean, Haliburton, and the rest of the companies 
operating in the gulf and elsewhere are required to obey the 
law, abide by the decisions of the Interior Department, and 
clean up any mess they create.
    But they are not responsible for setting the safety 
standards, promulgating the rules, and ensuring full compliance 
with those rules.
    Ultimately, at virtually every juncture leading up to the 
Deepwater Horizon explosion and fire, the MMS failed in its 
    The MMS gave BP a categorical exclusion from an 
environmental impact analysis that in my opinion never should 
have been allowed.
    The MMS allowed BP to run a drilling operation without the 
demonstrated ability to shut off the flow of gas and oil in an 
    The MMS allowed BP to operate without remote shut-off 
capability in case the drilling rig became disabled.
    The MMS did not have an inspector on the rig to settle the 
heated argument between BP, Transocean, and Haliburton 
officials on how they would stop drilling and plug the well.
    The MMS did not have and did not require the industry to 
have emergency equipment stationed in the Gulf of Mexico that 
could respond immediately to an emergency.
    The MMS did not have a plan for responding to disasters.
    And the MMS did not, in fact, have a real inspection and 
compliance program. It relied on the expertise and advice of 
the industry on how and how much they should be inspected.
    Mr. Secretary, I understand that you intend to reimpose the 
moratorium on new drilling in depths more than 500 feet that 
was set aside yesterday by a Federal district court judge. 
Until you reimpose the moratorium, drilling will resume at 33 
wells in deep waters of the United States, some of which may 
not have adequate safety equipment, backup technology, or 
sufficiently trained personnel. This to me is deeply troubling. 
I want you to know that I fully support the moratorium and hope 
you do reimpose it as quickly as possible.
    The last 64 days have clearly demonstrated that the 
technology in use for deep water drilling is not sufficient to 
prevent or stop environmental disasters. Prior to the BP spill, 
containment and termination of oil leaks at depths of 5,000 
feet had never been tried before.
    I have outlined in this--and I will put in the record--the 
specific failures of the technology, the blowout fail-safe, the 
remotely operated vehicles that failed, the coffer dam that did 
not work, the soda straw that had to be removed, the top kill 
and junk shot that failed. And the only method that appears to 
have had some limited measure of success is the top hat which 
is in place on top of the wellhead, but it still allows oil to 
escape into the ocean because the method for applying it, 
diamond shears, failed to cut a clean edge on the pipe and the 
capping device does not fit well.

                          prepared statements

    Senator Feinstein. So we know that we have problems and we 
know this is difficult because this is without precedent. And 
yet you, Mr. Secretary, and the Department you so ably 
represent clearly have a mandate to see that the safety 
measures are in place and that the environmental decisions are 
correct ones.
    Senator Leahy will not be able to be present at today's 
meeting, but has submitted a statement which will be included 
in the official record.
    So with those words, I welcome you here today.
    [The statement follows:]
             Prepared Statement of Senator Dianne Feinstein
    Good morning ladies and gentlemen and welcome to the Interior, 
Environment, and Related Agencies Subcommittee's oversight hearing on 
the proposed reorganization of the Minerals Management Service (MMS).
    On May 19, as part of his overall response to the ongoing 
environmental disaster in the Gulf of Mexico, the Secretary of the 
Interior issued an Order, the purpose of which was to:

    ``. . . separate and reassign the responsibilities that had been 
conducted by the Mineral Management Service into new management 
structures that will improve the management, oversight, and 
accountability of activities on the Outer Continental Shelf;
    ensure a fair return to the taxpayer from royalty and revenue 
collection; and
    provide independent safety and environmental oversight and 
enforcement of offshore activities.''

    Our principal witness this morning--the person who will walk us 
through the proposed reorganization--is the Secretary of the Department 
of the Interior (DOI), Ken Salazar. Thank you, Mr. Secretary for 
finding time in what I know has been an incredibly busy schedule.
    We're also joined by Michael R. Bromwich, a former Inspector 
General at the Department of Justice who has been appointed by the 
President to implement the reorganization and reform effort. You have a 
Herculean task in front of you Mr. Bromwich, and we look forward to 
hearing your thoughts as well.
    The purpose of today's hearing is twofold.
    First, as members of the Senate Committee on Appropriations, we 
have a responsibility under the Constitution to provide for the use of 
taxpayer funds. Once we've done that--as we did through the 2010 
Interior, environment, and related agencies appropriations bill--we 
then have a responsibility to ensure that those funds are used by the 
agency they were directed to, and for the purposes specified in the 
    In short, it's our job to make certain that the legislative 
contract established between the Congress and the President is honored.
    There are times, however, when that contract needs to be altered 
and taxpayer dollars need to be reprogrammed. This is clearly one of 
those times.
    In addition to reviewing the reprogramming, our second purpose is 
to focus on the performance of the MMS; to try to understand what went 
wrong; and to hear from the Secretary the details of his proposed 
reorganization and why he believes this proposal is the right way to 
    The key question underlying everything that's discussed here today 
is this: How does the proposed reorganization address the manifest 
failure of the MMS to protect the Gulf of Mexico and the people who 
live and work there?
    I want to be clear from the outset about who is responsible for 
ensuring the safe and clean production of oil and gas on the Outer 
Continental Shelf. That responsibility, which is stated in law and 
cannot be delegated, lies with the DOI.
    BP, Transocean, Halliburton, and the rest of the companies 
operating in the gulf and elsewhere are required to obey the law, abide 
by the decisions of the Interior Department, and clean up any mess they 
    But they are not ultimately responsible for setting the safety 
standards, promulgating the rules, and ensuring full compliance with 
those rules.
    Unfortunately, at virtually every juncture leading up to the 
Deepwater Horizon explosion and fire, the MMS failed in its duty:
  --The MMS gave BP a categorical exclusion from an environmental 
        impact analysis that, in my opinion, should never have been 
  --The MMS allowed BP to run a drilling operation without the 
        demonstrated ability to shut off the flow of gas and oil in an 
  --The MMS allowed BP to operate without remote shut-off capability in 
        case the drilling rig became disabled;
  --The MMS did not have an inspector on the rig to settle the heated 
        argument between the BP, Transocean, and Halliburton officials 
        on how they would stop drilling and plug the well;
  --The MMS did not have--and did not require the industry to have--
        emergency equipment stationed in the Gulf of Mexico that could 
        respond immediately to an emergency;
  --The MMS did not have a plan for responding to disasters; and
  --The MMS did not, in fact, have a real inspection and compliance 
        program. It relied on the expertise and advice of the industry 
        on how and how much they should be inspected.
    Mr. Secretary, we look forward to hearing how the reorganization 
will prevent future disasters and how it will position the agency to 
quickly and effectively react if such a disaster should happen again.
    I turn now to the distinguished Ranking Member, Senator Alexander, 
for any comments he may wish to make.
             Prepared Statement of Senator Patrick J. Leahy
    Two months have passed since the explosion on the Deepwater Horizon 
rig, and more than 35,000 barrels of oil a day continue to gush into 
the Gulf of Mexico. Within weeks of the explosion, it was among the 
biggest oil spills in our Nation's history. Although we have seen 
heart-breaking photos of oil drenched marine life and birds and heard 
reports of the steady creep of oil outwards from the spill, it is clear 
that the worst environmental and economic damage is yet to come.
    In the aftermath of the most colossal environmental disaster in our 
Nation's history, it must be a priority to mitigate the impacts of the 
spill on both the delicate and vital gulf ecosystem, and on coastal 
communities where fisheries and tourism provide jobs for millions of 
Americans. However, it is also important that we continue to examine 
how this disaster was allowed to occur. I am particularly concerned by 
the close relationships that have developed between powerful oil 
interests and Government agencies such as the Minerals Management 
Service (MMS) at the expense of environmental safety and public well 
    I am encouraged by President Obama's directive to restructure the 
MMS in order ``to build an organization that acts as the oil industry's 
watchdog--not its partner.'' Sadly, the concerns about corruption and 
bribery within the MMS--the agency charged with the responsibly of 
managing our Nation's oil and natural gas reserves--are not new.
    In 2008, then Senator Salazar and I sent two letters to then 
Attorney General Michael Mukasey expressing our concerns over a report 
by then Interior Inspector General Earl E. Devaney detailing abuses 
within the MMS. Inspector General Devaney's report found that many MMS 
employees, including a former director, accepted gifts and bribes from 
the very energy companies they were supposed to regulate and engaged in 
a culture of ``substance abuse and promiscuity'' with employees of 
these energy companies. We were also concerned about uninvestigated 
allegations of sexual assault against MMS employees. I remain deeply 
concerned that a climate of such serious and pervasive wrongdoing and 
cronyism continue to characterize such an important regulatory agency.
    I had hoped that with the change of administrations, and the 
appointment of Secretary Salazar, that the Department of the Interior 
(DOI) would take serious steps to confront the pervasive corruption in 
the MMS. However, as the Congress now begins to investigate the events 
leading up to the Deepwater Horizon disaster, it is clear that little 
has changed at the MMS.
    A June 20 New York Times article explains how the MMS ignored its 
own advice about the importance of a blind shear ram as a final stopgap 
measure in the event of a spill. Over the past three decades, the MMS 
has commissioned many studies that demonstrated weakness in the blind 
shear ram, which, in the event of blowout, is supposed to slice through 
the drill pipe, sealing the well. Since 2003, the MMS has required that 
companies submit test data proving that their blind shear rams are 
capable of sealing wells in practice. This regulation was not enforced 
on the Deepwater Horizon rig. The MMS engineer who approved BP's permit 
did not even require test data because he had not been trained to look 
for it. It appears that despite all the research on the importance of 
blind shear rams, the MMS was not enforcing its own regulation, which 
could have prevented the BP disaster.
    If nothing else, this catastrophe will force us to make long-
overdue reforms to the MMS, in order to prevent future disasters. I 
applaud the plan to restructure the MMS, but am concerned by the 
comment of Acting Interior Inspector General Mary Kendall that ``the 
greatest challenge in reorganizing and reforming MMS lies within the 
culture--both within MMS and the industry.'' Her recent testimony 
before the House Subcommittee on Energy and Natural Resources 
highlighted the need for increased inspectors, particularly in the 
resource-rich gulf, technological training to keep up with advances in 
an ever changing field, and stronger regulations within the industry. I 
am concerned that the meager increase in appropriations that the 
administration has requested for fiscal year 2011 will not be 
inadequate to address the challenges the MMS faces, especially this 
need for increased inspectors and training. This disaster is a 
frightening lesson about what can happen when regulations on energy 
companies are not enforced; this is not an area where we can afford to 
cut corners.
    Reports that the MMS also may have over-ruled or ignored other 
agencies within the DOI are equally disturbing. The DOI needs to ensure 
that U.S. Fish and Wildlife Service and other agencies charged with 
protecting our ecosystems and wildlife are given at least equal footing 
with the MMS, and are funded at levels that allow them to perform their 
regulatory and oversight functions. The Secretary needs to oversee the 
entire Department in a way that protects our ecosystems, and does not 
see one agency run roughshod over the other. We cannot have agencies of 
the Federal Government, especially within the DOI facilitating the 
energy industry as they end-run the National Environmental Policy Act 
(NEPA), the Endangered Species Act (ESA), and other keystone 
environmental policies.
    While the gulf oil spill is the ongoing disaster that requires our 
focus today, we need to learn from this painful lesson and look at 
whether the MMS or other agencies may be catering to resource 
extraction industries in other locations such as the mountain top 
removal coal mines of Appalachia. Might we find that the Gulf of Mexico 
is not the only place where our own Government agencies are creating 
cover for industry to flaunt the NEPA, the ESA, the Clean Water Act, 
and other important protections?
    The DOI needs to be funded at a level, and with appropriate 
guidance, to investigate all of the potential abuses and correct the 
problems where they occur.
    I thank Chairman Feinstein for holding this important hearing today 
and I hope that Secretary Salazar will remember our efforts to 
investigate MMS corruption while he was in the Senate, and will work 
with the Congress to do more to improve the culture and functionality 
of the MMS.

    Senator Feinstein. I would like to call on my very 
distinguished ranking member, Senator Alexander for any remarks 
he may care to make.


    Senator Alexander. Thank you, Madam Chairman.
    Mr. Secretary, Mr. Bromwich, welcome.
    I know Secretary Salazar well and I know these last few 
weeks have been terribly difficult on the gulf coast but also 
for him and all of his other responsibilities. My purpose here 
today is to try to be constructive in helping you discharge 
those responsibilities in the best possible way.
    I agree with the Chairman. I think accountability may be 
the area I would like to explore as we take time. I think about 
the commander of the Navy nuclear sub and how they have had no 
nuclear incidents since the 1950s. Most people think it is 
because the commander can ruin his career if there is a single 
accident in that reactor. Everybody knows who is on the 
flagpole. So both in terms of the responsible party such as the 
person doing the drilling and the regulator, who is on the 
    Second, I think we should explore whether a single 
regulatory agency like the Nuclear Regulatory Commission does 
for nuclear power might be better than the multiplicity of 
agencies that we have. I wonder whether a Price Anderson type 
insurance program that involves all of the oil companies who 
might be drilling and sharing best practices and cleaning up--
so you would have Chevron and Exxon not just sitting on the 
sidelines watching BP, but in the middle of trying to do 
whatever they could.
    Those are some of the questions I have. And as we hear more 
about the proposal to change the structure of the MMS, I share 
the chairman's question. We do not want to just move 
organizational boxes around. We want to make sure that whatever 
is done on an interim basis is consistent with whatever might 
be done long-term. There is apparently going to be an organic 
law passed that will have long-term consequences.
    And in this year's budget, we need to know what the cost is 
because we have a specific amount of money for very important 
projects, all the way from national parks to forest fires, that 
we have to deal with. And this could be a very expensive 
change, and we need to understand what we are talking about and 
know whether the administration is going to request a 
sufficient amount of money to do what needs to be done in the 
interim while we are waiting for the organic act to pass to 
create a long-term structure.
    So we welcome you and I welcome you.
    Now, I have one other question I would like to ask, and 
maybe you can comment on it and I will come back to it when the 
question time comes. And that is the question of the 
    I was struck by the data from the Department of the 
Interior report on May 27 about what an unusual event this 
tragedy in the gulf is. Your data says that the oil spilled 
from offshore drilling rigs, OCS rigs, and platforms over the 
past 30 years totals about 27,000 barrels. That is less than 
this oil spill is producing every single day. In other words, 
during the last 30 years, there has been less oil spilled than 
this one produces every single day. The Santa Barbara spill was 
more than 30 years ago. It was in 1969. It was 80,000 or 
100,000 barrels of oil in total. That is a tragedy. But this 
oil spill produces that every 2 days.
    So this is a real anomaly, it seems to me, and a situation 
where we have the Gulf of Mexico providing 97 percent of 
Federal offshore production--nearly 7,000 active leases. There 
have been 50,000 wells drilled since 1947. And we have this 
incredibly unusual event, it would seem, producing more spilled 
oil every day than all of those thousands of wells have spilled 
in the last 30 years, according to your data.
    So that makes me wonder why--think about Judge Feldman's 
decision where he said, are all planes dangerous because one 
was? Are all oil tankers like Exxon Valdez, all trains, all 
mines? That sort of thinking seems heavy-handed and rather 
    And as you fashion a new moratorium--and I agree that the 
prudent thing to do if you have a terrible plane crash is to 
say, whoa, let us stop. Let us see what happened to make sure 
it does not happen again. But we do not stop 1.6 million people 
from flying every day after for an indefinite period in the 
same way one-third of the oil that the United States gets comes 
from the Gulf of Mexico, 25 percent of the natural gas.
    So I would like to hear from you during this testimony at 
some point what you are doing as you think about a moratorium, 
as you think about taking these safety steps to make sure that 
the economic consequences of a moratorium are not more damaging 
than the environmental consequences of the oil spill.
    Thank you, Madam Chair.
    Senator Feinstein. And I thank you, Senator Alexander.
    Mr. Secretary, we will turn it over to you now. Please take 
whatever time you require, and then we will hear from Mr. 
Bromwich, and then open the floor to questions.
    Secretary Salazar. Thank you, Madam Chair Feinstein and 
Ranking Member Alexander, as well as the distinguished members 
of this subcommittee.
    Let me say, the way I look at the challenge facing the 
United States and the Department of the Interior is that there 
is a problem and obviously we have seen that problem and we 
have been living the problem and working at it very hard since 
the Deepwater explosion occurred on the evening of April 20. 
The President has directed us to be relentless and to work on 
this matter until we get it resolved.
    Our job is to make sure we are learning the lessons from 
this horrific incident which happened on the gulf coast and we 
will learn those lessons.
    Let me also say, Senator Feinstein and distinguished 
Senators, that today I am confident and resolute that we will 
get through this, and at the end of getting through this 
period, what I see happening is the creation of a catalyst that 
will have us move forward with a safer set of standards and 
enforcement mechanisms for oil and gas production in the OCS. I 
see this incident as being a catalyst for moving forward with a 
gulf coast restoration program that will finally bring about an 
ecosystem restoration program that is so important. I hopefully 
will be able to join with all of you as we move forward on a 
conservation agenda for the United States of America because I 
think that is one of the lessons to be learned.

                          CONTAINMENT STRATEGY

    I wanted to give you a very quick update on the latest 
information we have in terms of the leak containment strategy. 
From day one, it has been ``Let us fix that problem, let us 
stop the pollution, let us stop the leak, and let us kill this 
    For the last 24 hours, the number of barrels of oil that 
were picked up through containment mechanisms was 27,097 
barrels. That is a new high and a record for the amount of oil 
that has been picked up.
    By the end of June, the additional mechanisms we have 
pushed BP to put into place will have the capacity of 
containing somewhere between 40,000 and 53,000 barrels of oil, 
and by mid-July, as a result of the efforts of Energy Secretary 
Chu, U.S. Geological Survey Director Dr. Marsha McNutt, the 
science team, and myself, BP will be in a position where they 
will be able to catch between 60,000 and 80,000 barrels of oil, 
if that should be necessary. The exact flows are yet not known.
    We have pushed for additional capacity and have been able, 
through the assistance, Senator Alexander, of some of the other 
companies in the gulf, to identify additional options for 
expanded leak containment capacity. We now have identified of 
up to 90,000 barrels a day for leak containment capacity.
    But short of that and ultimately what is hoped for is this 
well will be killed. The relief wells are down very far now. 
The first of those relief wells will start its ranging 
operations to start to interface and try to find the location 
of the Macondo well. The kill operations hopefully will begin 
and that will ultimately control the source.
    That is what is going on with respect to the efforts to fix 
the problem at source control.

                         PERSONNEL IN THE GULF

    Under the leadership of Homeland Security Secretary 
Napolitano and the leadership of Admiral Allen and others in 
the Cabinet who have been involved, who have been fighting the 
oil on the sea and who have been fighting the oil near and on 
the shore, we have more than 25,000 personnel deployed to the 
region that are working on it very hard.
    For us in the Department of the Interior, for which this 
subcommittee has oversight with respect to our budget, you 
should know that the 43 national wildlife refuges on the gulf 
coast and the seven national parks units, including the Gulf 
Island National Seashore, are some of the crown jewels of the 
United States of America. We have nearly 1,000 people who have 
been deployed there to protect the wildlife refuges and 
national parks, and to work with our partners in the States to 
make sure that everything is being done to protect those 
treasured natural resources.


    Let me turn quickly and most importantly to the issue that 
is before this subcommittee today, and that is the BOEMRE. The 
MMS, which has existed by virtue of Secretarial Order since 
Secretary Watt was in the office under President Reagan, is no 
more. We have moved that agency into a new configuration now 
called the Bureau of Ocean Energy Management, and that Bureau 
of Ocean Energy Management, Regulation, and Enforcement and 
that bureau will be overseen by Michael R. Bromwich and 
Assistant Secretary for Land and Minerals Management, Wilma 
    Responding to some of the questions, Senator Feinstein, 
that you raised concerning the MMS and its functions, we put 
together a team. We have Assistant Secretary for Land and 
Minerals Management Wilma Lewis, who is a former prosecutor for 
the United States in the District of Columbia and former 
Inspector General, coupled with Michael R. Bromwich, who is 
also a former Inspector General for the Department of Justice 
and who has worked on a number of issues, including the Iran-
Contra scandal and the prosecutions involved in that case. You 
will see that what we are doing is attacking the issues which 
have been front and center on the issues of corruption with the 
MMS. I am confident that with their leadership, and with the 
support of this subcommittee, that we will be able to see the 
day where the BOEMRE can have the standards in place and the 
enforcement to be able to do the job it needs to do.
    It is, frankly, not a good thing that we have 62 inspectors 
essentially in charge of overseeing 4,000 production wells in 
the Gulf of Mexico and the Pacific and up in Alaska. That will 
have to significantly be expanded. We have, in front of this 
subcommittee for the last several years, included significant 
additional requests for inspectors for the MMS. We will have 
additional requests for all of you as we stand up the BOEMRE.


    Let me finally say, before I turn it over to Michael, that 
first, ethics have been important for the Department of the 
Interior from the time that I started there. We have issued 
ethics orders. We met with the employees. We have ethics 
requirements that are on the performance plans of people. Most 
of the conduct that the Inspector General (OIG) has looked at 
is conduct from years ago, but we will continue to ride the 
ethics program and make sure that we have high ethical 
standards followed by all our employees.


    Second, a major place of reform, which many of you saw and 
witnessed and asked questions about, had to do with the new 
plans for the OCS. There were very significant and broad-
ranging reforms that we took on with respect to the new OCS 
plan. Many of you were participants and we had discussions with 
all of you on what you saw moving forward with the plan, which 
we announced at the end of March. That was a major change from 
what we had inherited when I came on board.

                            RENEWABLE ENERGY

    Third, we have moved forward to stand up renewable energy, 
especially along the Atlantic Coast because we believe that is 
part of a new energy future for the United States of America.

                           PREPARED STATEMENT

    Finally, the reorganization of the MMS. I have long 
believed it is important to have organic legislation for the 
organization simply because of the fact that the mission is too 
important. It has a mission, first, to produce energy resources 
which fuel the economy and power America. Second, it also 
produces a very significant amount of money for the United 
States of America, an average of about $13 billion a year. An 
agency that has that kind of important mission assigned to it 
is also the kind of agency that should be backed by 
congressional legislation. We welcome the opportunity to work 
with all of you as we move forward on that agenda.
    [The statement follows:]
                   Prepared Statement of Ken Salazar
    Thank you, Chairman Feinstein, Ranking Member Alexander, and 
members of the subcommittee for the opportunity to be here today. I 
want to thank you for holding this hearing to review reforms of 
offshore energy activities that have been underway since I arrived at 
the Department of the Interior and the aggressive reforms we are now 
taking including reorganization of the Outer Continental Shelf (OCS) 
Program. I want to underscore our efforts to change the direction of 
the Department of the Interior and restore the confidence of the 
American people in the ability of their Government to carry out the 
functions under my charge. Last, I will review our continuing efforts 
to respond to the Deepwater Horizon oil spill and answer your 
    Before we begin, I want to introduce Michael R. Bromwich, the new 
Director of the Bureau of Ocean Energy Management, Regulation, and 
Enforcement (BOEMRE). His impressive background includes time as the 
Inspector General of the Department of Justice, as an Assistant U.S. 
Attorney, and since 1999, as an attorney in private practice. His 
extensive experience in Government and the private sector in improving 
the way organizations work make him an ideal choice to lead the 
restructuring and reform of the Department's offshore energy program.
    For the same reason I chose Michael R. Bromwich for this position, 
I chose Wilma Lewis who oversees the Department's energy bureaus as the 
Assistant Secretary for Land and Minerals Management. A former U.S. 
Attorney for the District of Columbia and Inspector General at the 
Department, Wilma has played a central leadership role in some of the 
most significant reforms during my tenure as Secretary. She has helped 
shape reforms ranging from our new approach to offshore oil and gas 
leasing and a new emphasis on renewable energy development on the OCS, 
to ethics reform, to the enhancement of leasing programs and the 
development of renewable energy programs onshore, to support for our 
study of policies designed to ensure fair return to American taxpayers 
for the development of public oil and gas resources. I have also 
appointed her to chair the Safety Oversight Board in the aftermath of 
the Deepwater Horizon oil spill, and to help spearhead the 
reorganization of Minerals Management Service (MMS) toward a new 
Offshore Energy Reforms Completed
    This is the first opportunity I have had to appear before this 
subcommittee since the April 20, 2010 explosion and fire on the 
Deepwater Horizon and the ensuing oil spill that has consumed our 
attention. Although this unprecedented disaster, which resulted in the 
tragic loss of life and many injuries, is commanding our time and 
resources, it has also strengthened our resolve to continue reforming 
the OCS program.
    The reforms we have embarked on over the last 16 months, and upon 
which we will continue to build, are substantive and systematic, not 
just cosmetic. The kind of fundamental changes we are making do not 
come easily and many of the changes we have already made have raised 
the ire of industry. Our efforts at reform have been characterized by 
some as impediments and roadblocks to the development of domestic oil 
and gas resources. We believe, however, that they are crucial to 
ensuring that we carry out our responsibilities effectively, without 
compromise, and in a manner that facilitates the balanced, responsible, 
and sustainable development of the resources entrusted to us.
    To review the reforms we have undertaken:
    First, we focused our efforts on ethics and other concerns that had 
been raised in the revenue collection side of the MMS. We began 
changing the way the bureau does business and took concrete action to:
  --Upgrade and strengthen ethics standards throughout the MMS and for 
        all political and career employees;
  --Terminate the Royalty-in-Kind program to reduce the likelihood of 
        fraud or collusion with industry in connection with the 
        collection of royalties; and
  --Aggressively pursue continued implementation of the recommendations 
        to improve the royalty collection program that came from the 
        Department's Inspector General, the Government Accountability 
        Office, and a committee chaired by former Senators Bob Kerrey 
        and Jake Garn.
    Second, we started reforms of the offshore oil and gas regulatory 
program, which included actions to:
  --Initiate an independent study by an arm of the National Academy of 
        Engineering to examine how we could upgrade our inspection 
        program for offshore rigs;
  --Procure substantial increases in the MMS budget for fiscal year 
        2010 and fiscal year 2011, including a 10 percent increase in 
        the number of inspectors for offshore facilities; and
  --Develop a new approach to on-going oil and gas activities on the 
        OCS aimed at promoting the responsible, environmentally sound, 
        and scientifically grounded development of oil and gas 
        resources on the OCS.
    In that effort, we cancelled the upcoming Beaufort and Chukchi 
lease sales, removed Bristol Bay altogether from leasing under the 
current 5-year plan, and removed the Pacific Coast and the Northeast 
entirely from any drilling under a new 5-year plan. We made clear that 
we will require full environmental analysis through an Environmental 
Impact Statement prior to any decision to lease in any additional 
areas, such as the mid- and South Atlantic, and launched a scientific 
evaluation, led by the Director of the United States Geological Survey 
(USGS), to analyze issues associated with drilling in the Arctic.
    Third, we laid the groundwork for expanding the mission of the MMS 
beyond conventional oil and gas by devoting significant attention and 
infusing new resources into the renewable energy program, thereby 
providing for a more balanced energy portfolio that reflects the 
President's priorities for clean energy. Toward that end, we took 
action to:
  --Finalize long-stalled regulations that define a permitting process 
        for off-shore wind--cutting through jurisdictional disputes 
        with Federal Energy Regulatory Commission in the process and 
        ultimately approving the Cape Wind project;
  --Announce the establishment of a regional renewable energy office, 
        located in Virginia, which will coordinate and expedite, as 
        appropriate, the development of wind, solar, and other 
        renewable energy resources on the Atlantic OCS; and
  --Commence discussions and enter into an memorandum of understanding 
        with Governors of East Coast States, which formally established 
        an Atlantic Offshore Wind Energy Consortium to promote the 
        efficient, orderly, and responsible development of wind 
        resources on the OCS through increased Federal-State 
Offshore Energy Reforms and Related Activities Underway
    Since the Deepwater Horizon explosion and oil spill, the reforms 
and associated efforts have continued with urgency, with particular 
focus on issues raised by, and lessons being learned from, the 
circumstances surrounding the event. We are aggressively pursuing 
actions on multiple fronts, including:
  --Inspection of all deepwater oil and gas drilling operations in the 
        Gulf of Mexico and issuance of a safety notice to all rig 
  --Implementation of the 30-day safety report to the President, 
        including issuing notices to lessees on new safety 
        requirements, and developing new rules for safety and 
        environmental protection;
  --Defending the moratorium on new deepwater drilling, which is 
        currently the subject of litigation; and
  --Implementing new requirements that operators submit information 
        regarding blowout scenarios in their exploration plans--
        reversing a long standing exemption that resulted from too much 
        reliance on industry to self-regulate.
    Additional reforms will be influenced by several ongoing 
investigations and reviews, including the Deepwater Horizon Joint 
Investigation currently underway by the BOEMRE, and the United States 
Coast Guard. In addition, at my request, a separate investigation is 
being undertaken by the National Academy of Engineering to conduct an 
independent, science-based analysis of the root causes of the oil 
spill. I also requested that the OIG undertake an investigation to 
determine whether there was a failure of MMS personnel to adequately 
enforce standards or inspect the Deepwater Horizon.
    Further, on April 30, I announced the formation of the Outer 
Continental Shelf Safety Oversight Board to identify, evaluate and 
implement new safety requirements. The board, which consists of 
Assistant Secretary for Land and Minerals Management Wilma A. Lewis, 
who serves as Chair; Assistant Secretary for Policy, Management and 
Budget Rhea Suh; and Acting Inspector General Mary Kendall, will 
develop recommendations designed to strengthen safety, and improve 
overall management, regulation, and oversight of operations on the OCS.
    Finally, the President established the independent bipartisan 
National Commission on the BP Deepwater Horizon Oil Spill and Offshore 
Drilling tasked with providing options on how we can prevent and 
mitigate the impact of any future spills that result from offshore 
drilling. The commission will be focused on the environmental and 
safety precautions we must build into our regulatory framework in order 
to ensure an accident like this never happens again, taking into 
account the other investigations concerning the causes of the spill.
Supplemental Legislation
    The administration will make sure that BP and other responsible 
parties are held accountable, that they will pay the costs of the 
Government in responding to the spill and compensation for loss or 
damages that arise from the spill. We will do everything in our power 
to make our affected communities whole. As a part of the response 
efforts, we expect to spend a total of $27 million through June 30, 
2010 for Interior's response activities.
    As part of our reforms, we are also building on the efforts we 
undertook in the last 16 months to strengthen the OCS budget. As I 
already mentioned, the 2011 budget includes a 10 percent increase in 
the number of inspectors. Our restructuring of the OCS Program will 
require additional resources to aggressively pursue the reforms I 
outlined earlier, to implement the 30-day report to the President, and 
to potentially address the results of ongoing investigations and the 
President's Commission. We are currently hiring an additional 12 
inspectors, 6 more than we proposed in the 2011 budget, and we are 
taking other actions that are outlined in the 30-day report to the 
President. Over the course of the next several years, our restructuring 
of a more robust OCS regulatory and enforcement program will dictate 
the need for engineering, technical, and other specialized staff.
    The President's supplemental request of May 12, 2010 includes $29 
million that will fund the near-term resources we need for these 
activities. I appreciate the Senate's prompt action in passing the 
supplemental on May 27. As you know, it is critically needed to support 
our full and relentless reforms--to bolster inspections of offshore oil 
and gas platforms, draft enforcement and safety regulations, and carry 
out environmental and engineering studies. The President's request 
included a proposal to extend the time allowed by statute for review 
and approve of oil and gas exploration plans from 30 to 90 days--this 
is also needed and I hope the Congress will include it in the final 
version of the supplemental.
Reorganization of the Minerals Management Service
    On June 15, I appointed Michael R. Bromwich as the Director of the 
BOEMRE. Michael will lead us through the reorganization--the foundation 
for the reforms we have underway. He will lead the changes in how the 
BOEMRE does business, implement the reforms that will raise the bar for 
safe and environmentally sound offshore oil and gas operations, and 
help our Nation transition to a clean energy future.
    Michael will join the team that has been working out the details of 
the reorganization. In a May 19 Secretarial Order, I tasked Rhea Suh, 
the Assistant Secretary for Policy, Management and Budget; Wilma Lewis, 
the Assistant Secretary for Land and Minerals Management; and Chris 
Henderson, one of my senior advisors to develop a reorganization plan 
in consultation with others within the administration and with the 
Congress. The report will provide the plan to restructure the MMS in 
order to responsibly address sustained development of the OCS's 
conventional and renewable energy resources, including resource 
evaluation, planning, and other activities related to leasing; 
comprehensive oversight, safety, and environmental protection in all 
offshore energy activities; and royalty and revenue management 
including the collection and distribution of revenue, auditing and 
compliance, and asset management.
    The Deepwater Horizon tragedy and the massive spill have made the 
importance and urgency of a reorganization of this nature ever more 
clear, particularly the creation of a separate and independent safety 
and environmental enforcement entity. We will responsibly and 
thoughtfully move to establish independence and separation for this 
critical mission so that the American people know they have a strong 
and independent organization ensuring that energy companies comply with 
their safety and environmental protection obligations.
    The restructuring will also address concerns about the incentives 
related to revenue collections. The OCS currently provides nearly 30 
percent of the Nation's domestic oil production and almost 11 percent 
of its domestic natural gas production and is one of the largest 
sources of nontax and nontrust revenue for the Treasury, collecting an 
average of more than $13 billion annually for the past 5 years. There 
will be clear separation between the entities that collect and manage 
revenue and those that are responsible for the management of the OCS 
exploration and leasing activities.
    As I outlined in a May 12 letter to the chairman and ranking 
member, we want your input and welcome your help to bring about the 
necessary restructuring of the organization and budget in an 
expeditious manner.
Sustained Response Efforts in the gulf
    Of utmost importance to us is the oil spill containment and clean 
up of the gulf. I have returned to the gulf region numerous times to 
witness the work Departmental staff and volunteers are carrying out to 
protect the coasts, wetlands, and wildlife threatened by this spill. We 
have deployed approximately 1,000 Interior employees to the gulf and 
they are directing actions to contain the spill; cleaning up affected 
coastal and marine areas under our jurisdiction; and assisting gulf 
coast residents with information related to the claims process, health 
and safety information, volunteer opportunities, and general 
information on the efforts being carried out in the region.
    Under the direction of National Incident Commander, Admiral Thad 
Allen, the Flow Rate Technical Group, which is led by USGS Director Dr. 
Marcia McNutt, and a scientific team led by Energy Secretary Steven Chu 
recently announced an improved estimate of how much oil is flowing from 
the leaking well. That estimate, suggests that the flow rate is at 
least 35,000 barrels per day, based on the improved quality and 
quantity of data that are now available. At the Government's direction, 
BP is continuing to make progress capturing increasing amounts of this 
    The Department's senior staff continues to offer coordination and 
guidance to the effort. Deputy Secretary David J. Hayes is devoting his 
time to coordinating the many gulf-related response activities we are 
undertaking. Assistant Secretary for Fish, Wildlife, and Parks, Tom 
Strickland, has been leading the Department's efforts for onshore and 
near-shore protection. National Park Service Director Jon Jarvis and 
Acting Director of the Fish and Wildlife Service (FWS) Rowan Gould 
continue to supervise incident management personnel and activities that 
their bureaus are taking to respond to the spill and clean up oil 
impacts. To protect the 8 national parks and 36 wildlife refuges and 
the numerous wildlife, birds, and historic structures they are 
responsible for in the Gulf of Mexico, the NPS and the FWS dispatched 
approximately 590 staff.
    Representatives from the FWS also participated with the U.S. Coast 
Guard, the Environmental Protection Agency, and State and local 
governments in a series of public meetings with local residents to 
answer questions and offer information on a variety of topics related 
to the spill and response activities.
    Finally, there are many, many people in the Department who are 
devoting significant time and energy to this event; to the various 
investigations and inquiries, both within the administration and in the 
Congress, that are being carried out; and to the ongoing reorganization 
and reform. I want to acknowledge their work and let them know those 
efforts are appreciated and are not going unnoticed. In the last 60 
days we also have been able to see what the employees in the BOEM are 
capable of, their professionalism, their dedication to the Department, 
and their enthusiasm for the reforms underway. With Michael's help we 
will be able to cast aside the shadow on the many dedicated employees 
that has been left by an errant few, and by previous policies that have 
prioritized production over ethics, safety, and environmental 
    Much of my time as Secretary of the Interior has been spent working 
to promote reform of prior practices in the MMS and to advance the 
President's vision of a new energy future that will help us to move 
away from spending hundreds of billions of dollars each year on 
imported oil. A balanced program of safe and environmentally 
responsible offshore energy development is a necessary part of that 
    As we evaluate new areas for potential exploration and development 
on the OCS, we will conduct thorough environmental analysis and 
scientific study, gather public input and comment, and carefully 
examine the potential safety and spill risk considerations. The 
findings of the joint investigation and the independent National 
Academy of Engineering will provide us with the facts and help us 
understand what happened on the Deepwater Horizon. Those findings, the 
work of the Outer Continental Shelf Safety Oversight Board, the OIG 
investigation and review, and the findings of the Presidential 
commission will help inform the implementation of the administration's 
comprehensive energy strategy for the OCS.
    We are taking responsible action to address the safety of other 
offshore oil and gas operations, further tightening our oversight of 
industry's practices through a package of reforms, and taking a careful 
look at the questions this disaster is raising. We will also work with 
you on legislative reforms and the finalization of a reorganization 
that will ensure that the OCS Program is effectively managed to achieve 
these goals.
    Last, let me assure you this administration will continue its 
relentless response to the Deepwater Horizon tragedy. Our team is 
committed to help the people and communities of the gulf coast region 
persevere through this disaster, to protect our important places and 
resources, and to take actions based on the valuable lessons that will 
help prevent similar spills in the future.

    Secretary Salazar. What I would like to do, Madam Chair, is 
to have Michael R. Bromwich, who we strongly recruited, who I 
offered this job to, and who we are proud to have on the job 
now on his third day, share his thoughts. He has hit the ground 
running and is doing a great job and has a lot of work ahead of 
    Senator Feinstein. Thank you.
    Mr. Bromwich, please proceed.
    Mr. Bromwich. Thank you, Chairman Feinstein, and thank you 
for your kind words about my prior service. I have enjoyed 
meeting with Ranking Member Alexander. I have not yet had the 
pleasure of meeting with the other distinguished members of the 
subcommittee, but I am sure that will happen soon.
    As Secretary Salazar said, I was sworn in on Monday. Today 
is my third day on the job, and I view this really as an 
opportunity to introduce myself to you, particularly the 
Senators who I do not know, and to hear what your concerns and 
issues are with respect to the reorganization proposal.
    Let me tell you a little bit about my background and what I 
think are the reasons why the President and Secretary----
    Senator Feinstein. Somebody should run us through the 
reorganization proposal. The Secretary did not do it, so I 
trust you will do it.
    Mr. Bromwich. Well, I think the Secretary is going to do it 
in response to questions. That is my understanding.
    Again, I have seen an outline of the reorganization 
proposal. It is not something I even had the chance to study 
closely. As I think the Secretary will tell you, I am in the 
process of being briefed on it and will have the latitude to 
adjust it as I see fit, but I was not planning to outline that 
or justify it for you today.
    Secretary Salazar. Senator Feinstein, I would be happy to 
do that perhaps after----
    Senator Feinstein. That is what this hearing is about.
    Secretary Salazar. I will focus on that after Michael's 
    Mr. Bromwich. My prepared testimony goes into the various 
governmental experiences that I have had that I think are 
relevant in law enforcement and in overseeing organizations. 
Since I left Government in 1999, I have been in private 
practice and I have actually dealt with a number of issues in 
institutions that were in need of organizational reform. Those 
included being the independent monitor for the D.C. Police 
Department for 6 years on use-of-force issues. I had just 
started a similar assignment with the U.S. Virgin Islands 
Police Department that, regrettably, I had to give up in 
accepting this job.
    In addition to that, I did a major investigation of the 
Houston Police Department Crime Lab and the job was to diagnose 
and prescribe recommendations for fixing a range of problems 
that led to a number of bad outcomes, including wrongful 
    In addition to that, I did a lot of work for the Delaware 
Department of Corrections, looking at their program to provide 
medical and mental healthcare to inmates and helping them bring 
their standards and their practices up to snuff.
    That is my background I think is relevant, and the truth is 
I knew relatively little about this agency until a couple of 
weeks ago. It was a request from both Secretary Salazar and the 
President himself to take on the challenge of running this 
agency, of revamping this agency, and as Chairman Feinstein 
said, changing the culture of this agency. It was those 
requests that made me realize that this was a challenge, a 
public service challenge, that I really needed to accept.
    Very briefly, let me talk about two changes that have 
already occurred in the last 3 days.
    The first and the least substantive, obviously, is the name 
change, as Secretary Salazar mentioned. The full name is the 
Bureau of Ocean Energy Management, Regulation and Enforcement. 
It is a long name but I think it is important that regulation 
and enforcement are in there. I think those aspects of the 
mission may not have been followed as closely, carefully, and 
scrupulously as they should have and that I vow to do in the 
    The second important change which I am announcing today is 
that I am creating a unit called the Internal Investigations 
and Review Unit--the Investigations and Review Unit. It is, 
frankly, modeled after a similar agency that I set up in the 
Justice Department's OIG, the Special Investigations and Review 
Unit, which served as a SWAT team for me in addressing some of 
these most critical problems and issues that arose in the 
agency. It is that unit that did the investigation of the FBI 
laboratory. It was that unit that did the investigation of the 
FBI's role in the Aldrich Ames investigation.
    My 2\1/2\ days on the job have shown me that there is not 
that kind of investigative capability in my organization, and I 
think it is vital to create it. It is vital to create it both 
to investigate internal allegations of misconduct, that is, 
misconduct against people in my agency, but also to pursue with 
aggressiveness and diligence allegations that the companies who 
are under the regulatory supervision of my agency are not doing 
what they are supposed to do, have violated the terms of their 
leases, and may have made false statements or engaged in other 
misconduct in order to acquire those leases.

                           PREPARED STATEMENT

    I think it is a very important capability, and I feel proud 
to have created it at Justice. Secretary Salazar, when I 
proposed it just the other day, immediately embraced it and we 
are going to try to stand that up absolutely as soon as 
    I realize I am taking over this agency at a critical and 
challenging time. I look forward to the challenge and I look 
forward to working with all of you as we move forward.
    [The statement follows:]
               Prepared Statement of Michael R. Bromwich
    Thank you, Chairman Feinstein, Ranking Member Alexander, and 
members of the subcommittee for the opportunity to be here today with 
Secretary Salazar. I appreciate being included in this hearing and 
being part of the discussions about reorganization of the Outer 
Continental Shelf (OCS) Program.
    My appointment as the new Director started on Monday, and therefore 
I have had only a short amount of time to begin to understand the 
Bureau's programs, operations, and challenges. I would like to take my 
time to introduce myself and give you an overview of my vision and 
    When the President and Secretary Salazar asked me to take this 
assignment, I was a partner in the firm of Fried Frank. I headed the 
firm's internal investigations, compliance and monitoring practice 
group and concentrated on conducting internal investigations for 
private companies and other organizations; providing monitoring and 
oversight services in connection with public and private litigation and 
Government enforcement actions; and representing institutions and 
individuals in white-collar criminal and regulatory matters. I also 
provided crisis management assistance and counseling.
    Even while in private practice I have had significant experience 
with turning around troubled Government agencies. I served for 6 years 
as the Independent Monitor for the D.C. Metropolitan Police Department 
and had just begun performing the same role for the U.S. Virgin Islands 
Police Department, which involved overseeing sweeping reforms of those 
Departments' use-of-force programs. I also conducted a comprehensive 
investigation of the Houston Police Department's (HPD) Crime Lab and 
provided HPD with extensive recommendations for reforming its Crime 
Lab, which had a long history of very serious problems. In the private 
sector, I have conducted many major internal investigations for 
companies, including in the energy industry; reviewed the compliance 
programs and policies of major companies in a variety of industries, 
conducted extensive field reviews of such programs and made 
recommendations for their improvement; and represented companies and 
individuals in State and Federal enforcement proceedings and criminal 
    From 1994 to 1999, I was the Inspector General for the Department 
of Justice. I conducted special investigations into allegations of 
misconduct, defective procedures, and incompetence in the Federal 
Bureau of Investigation laboratory; the FBI's conduct and activities 
regarding the Aldrich Ames matter; the handling of classified 
information by the FBI and the Department of Justice in the campaign 
finance investigation; the alleged deception of a congressional 
delegation by high-ranking officials of the Immigration and 
Naturalization Service; and the Justice Department's role in the CIA 
crack cocaine controversy.
    From 1987 through 1989, I served as Associate Counsel in the Office 
of Independent Counsel for Iran-Contra. In January through May 1989, I 
was 1 of 3 courtroom lawyers for the Government in the case of United 
States v. Oliver L. North. I supervised a team of prosecutors and law 
enforcement agents that investigated allegations of criminal misconduct 
against Government officials and private citizens in connection with 
provision of aid to the Contras in Nicaragua and serving as overall 
coordinator of the Iran-Contra grand jury.
    From 1983 to 1987, I served as an Assistant U.S. Attorney in the 
U.S. Attorney's Office for the Southern District of New York. During my 
tenure, I tried many lengthy and complex cases and argued many 
appellate matters before the Second Circuit. I served as Deputy Chief 
and Chief of the Office's Narcotics Unit.
    From those experiences dealing with many organizations and 
institutions, I have accumulated substantial experience in seeing what 
works and what does not in organizations. I have had experience leading 
Government agencies, as well as reviewing the leadership styles in many 
agencies. Based on that experience, I am confident that I can lead this 
organization and implement the changes that are necessary.
Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE)
    As I said, I began my service as the Director, BOEMRE on June 21, 
2010. So far, my understanding of the events surrounding the Deepwater 
Horizon catastrophe are primarily based on the news coverage, what I 
have read, and initial conversations with Department of the Interior 
personnel. Therefore, my knowledge of the Bureau, its employees and its 
programs is at a very early stage.
    I look forward to becoming well-versed in the complex regulatory 
regime governing offshore oil and gas exploration and drilling and the 
Nation's emerging and promising offshore renewable programs. It already 
is apparent that the programs that the BOEMRE manages are 
technologically complex and involve a highly specialized workforce. As 
a bureau, we will be thinking carefully about, and proceeding quickly 
with, reforming the way the Bureau does business and oversees energy 
exploration and development.
    My goal is to develop a set of recommendations for the Secretary 
and the President that will improve the way the organization works. I 
am committed to eliminating improper incentives and influences, 
creating a culture for the OCS Program that is devoted to vigorous and 
effective regulation and enforcement, and establishing the Bureau as an 
agency that is focused on safety and environmental protections.
    I understand that the Department has been conducting an extensive 
analysis of the organization, its programs, and best practices in other 
countries and other agencies. I will take advantage of the work that 
has already been done. We expect to release a plan in the coming weeks 
that will guide the reorganization. I look forward to talking with you 
and getting your input to educate this process.
    These are important issues for the President, the Congress, and the 
Nation. Under Interior's management, the OCS currently provides 30 
percent of the Nation's domestic oil production and almost 11 percent 
of its domestic natural gas production. The Nation currently relies on 
the OCS Program to continue to make available energy resources that we 
and our economy need. I look forward to the challenges ahead, and to 
ensuring that we manage the development of the Nation's energy 
resources, while at the same time enforcing the law and aggressively 
regulating oil and gas exploration and drilling to ensure that this 
activity is conducted in a manner that is safe for workers and the 
environment. Thank you.

    Senator Feinstein. Thank you very much.
    We will begin with questions. The rounds will be 5 minutes. 
I will go back and forth between the sides. So it will be 
myself, Senator Alexander, Senator Tester, Senator Collins, 
Senator Dorgan, and Senator Murkowski.

                       REORGANIZATION OF THE MMS

    Secretary Salazar. Madam Chair, would it be your wish that 
I just take 2 quick minutes to review the reorganization?
    Senator Feinstein. Please do that. All we have are two 
pages that look like this.
    Secretary Salazar. We have taken the MMS and broken it up 
into three distinct units.
    The first of those is the BOEMRE. That will be the unit 
within the Department that would have the authority to do the 
resource determinations relative to the creation of the 5-year 
leasing plan and engaging in the leasing process.
    The second would be to create a Bureau of Safety and 
Environmental Enforcement (BSEE). We are splitting off the 
environmental and enforcement part of the organization from the 
functions that are involved in the leasing part of the 
    Third, the creation of a separate office that would do the 
revenue collection.
    Now, let me make two quick comments about that 
    What leads us to that organizational structure is that we 
believe it is important to separate the leasing from the 
enforcement functions and to separate the revenue from the 
enforcement functions as well. That is why we have created 
these three separate units.
    Now, we are hopeful that we will be able to work with you 
to move forward to have these organizations staffed up 
correctly. For example, within the BSEE, we believe we have 
approximately 380 people who we could move into that particular 
part of the organization. However, we also recognize that we 
need about 600 people, which would mean an additional 220 
people, to basically be able to do the inspections in the Gulf 
of Mexico and to significantly increase the environmental 
compliance and environmental enforcement staff. These kinds of 
numbers are the ones that we want to work with you so we can 
make sure that at the end of the day the environmental 
enforcement and the standards that need to be created can, in 
fact, be carried out.


    Senator Feinstein. Well, let me begin then with the 
technical stuff. If I understand it correctly, the MMS 
currently employs 60 inspectors to look after 3,800 platforms 
in the gulf, of which 1,000 are manned and subject to 
inspection. The administration's budget request for 2011 has 
asked for six additional inspectors. Now, that is clearly 
woefully inadequate.
    In addition to the numbers, there is a real problem with 
the relationship between the MMS inspectors and the oil 
companies they are supposed to be inspecting. Mr. Bromwich and 
I spoke about that. Last month, as you well know and we know, 
the Department's OIG reported on the problems of inspectors at 
Lake Charles, Louisiana, taking meals and gifts from the oil 
companies. One inspector was even negotiating a job with an oil 
service company at the same time he was inspecting one of the 
company's rigs.
    So this speaks to how do you change the culture and where 
do you get people who are fiercely independent and able to 
carry out their job of inspection and regulation. How does 
reorganization fix that problem?
    Secretary Salazar. We are not doing this because of 
cosmetic views. There is a problem and we need to fix it. We 
are going to do that with the request to this Congress for a 
robust increase in what we are able to do with respect to 
enforcement and inspections. You all know what the deficit 
situation is and what you have been dealing with here in this 
Congress, and we have been dealing with here for the last 
several years. Yet, we have asked for a significant increase in 
the number of inspectors even in these tough budget times in 
the last 2 years. It is obvious that is not enough. We will be 
coming forward with a budget amendment, Senator Feinstein, to 
be able to address these additional requests.

                       REORGANIZATION OF THE MMS

    We are in a position, Senator Feinstein, where we are 
moving forward with the reorganization, but I want to give 
Michael R. Bromwich an opportunity to dig further to address 
the cultural issues that you speak about. It is obvious that 
just having strong ethics standards and trying to root out 
ethics problems is not sufficient. There is additional work 
that has to be done. Michael, on his third day on the job, will 
be working with us to review these organizational plans so that 
as we come back to this subcommittee, we will have a greater 
degree of comfort and we expect to be able to have that before 
this subcommittee within the next several weeks.
    Senator Feinstein. Before you do that, just so you know, 
the Democratic leadership has said go ahead, appropriators, 
mark up your bills. So we are beginning to do that. We have not 
set a date for the markup yet, but the work is now beginning. 
So if you are going to submit something in addition to the six 
inspectors you have submitted, we are going to work within a 
very strict cap. So we are going to have to cut something else 
to do it. So if you could get that in to us quickly, that would 
be appreciated.
    Secretary Salazar. Senator Feinstein, we will work with the 
White House, Office of Management and Budget (OMB) and with 
your staffs to make sure this issue is addressed quickly.
    Senator Feinstein. Good. Thank you.

                             CULTURE CHANGE

    Mr. Bromwich. Senator Feinstein, on the need to change the 
culture issue, I think that is the key, and I think it is a 
combination of leadership and making clear what the mission of 
the agency is in unmistakable terms. I think it is a matter of 
making clear that cozy relationships will not be tolerated. 
That people, for example, who are doing inspections and seem to 
pull back and not be as aggressive as they might be, that that 
information gets to me and I find out about people who are not 
doing their job aggressively and that there are consequences 
for that.
    Now, I have already tried to start sending that message, 
but it is not going to happen overnight. I will need to visit 
the field installations. I will need to make that point in 
person. I think creating this unit, which I announced this 
morning, will send that message but it will take some instances 
of my making clear that I mean business for the culture to 
start to change.
    Senator Feinstein. Thank you very much.
    Senator Alexander, would you like to go next?
    Senator Alexander. Thank you, Madam Chair.


    Mr. Secretary, do you plan to issue a new moratorium on all 
exploration of oil in the Gulf of Mexico at depths of more than 
500 feet?
    Secretary Salazar. The answer to that is ``Yes'', Senator 
Alexander. The point of view we have taken as we move forward 
with the moratorium is, as I have explained to other committees 
in the Congress, we had a choice of just essentially three. One 
is letting things go as if nothing had ever happened. Some 
advocated that what we do is press the stop button forever and 
never do any more production or drilling in the OCS. And the 
third was to press the pause button. The President and I chose 
to press the pause button. This will allow us to learn the 
lessons from the Deepwater Horizon explosion and to deal with 
the issues of standards and enforcement while also making sure 
the many measures that are supposed to be in place to prevent 
this kind of thing from ever happening again are in fact in 
    Senator Alexander. It is hard to disagree with pressing the 
pause button, after such a severe tragedy, on the 33 wells that 
are exploring. But the judge yesterday made to me a cogent 
argument, and your data, as I mentioned--you just said that you 
hope by mid-July to be capturing 60,000 to 80,000 barrels of 
oil a day or have the capacity to do that, which is two or 
three times as much oil as has been spilled in the last 30 
    So how will you take into account, as you develop a 
moratorium, the possibility that a moratorium will help create 
higher prices, lost jobs, will cause the United States to bring 
more oil to our shores by tankers which have a worse safety 
record than the drillers, will make us more dependent on 
foreign oil?
    I agree with the pause, but how can you do what I think we 
would do if there were a terrible airplane crash, immediately 
find out everything we could about it, but then get back to 
flying as soon as we could because of the damaging consequences 
to the country if we did not?
    Secretary Salazar. Senator Alexander, we will in the weeks 
and months ahead take a look at how it is that the moratorium 
in place might be refined. It might be that there are 
demarcations that can be made based on reservoirs where we 
actually do know the pressures and the risks associated with 
them versus those reservoirs which are exploratory in nature, 
where you do not know as a company what it is that you are 
drilling in. The moratorium order we will issue will include 
the criteria under which it is appropriate to take a look at 
lifting the moratorium.
    We will also work with the President's Deepwater Horizon 
Commission to get their views on when they believe it is 
appropriate for us to lift the safety button.
    I am always cognizant of the fact, as I know you are too, 
Senator Alexander, that we are still in a very dynamic 
situation. We know that conduct leading up to April 20, in my 
view on the part of those who were involved on that rig was 
reckless conduct.
    We also know we are not going to have a critical piece of 
evidence from the bottom of the ocean, the blowout preventer 
(BOP) mechanism, that can be thoroughly examined, until after 
we get this well killed. The killing of the well is still some 
30 to 60 days away, maybe hopefully sooner, but we do not know.
    When we get all that evidence together and we continue to 
hear from engineers, as Michael comes on board working with 
Wilma Lewis, we will make whatever adjustments are appropriate.


    Senator Alexander. Mr. Secretary, on the question of 
accountability, I mentioned the flagpole theory. When I was 
Governor, I asked the whole cabinet to pass a bill they failed. 
I then put one of them on the flagpole and it passed the next 
week. Collective responsibility is not always the way you get a 
    There are 14 various Federal agencies involved in the 
regulation of offshore drilling from the MMS to the Coast Guard 
to the Corps of Engineers, to Navy, to the Marine Fisheries 
Service, and you are proposing, in effect, to split one of 
those into three. How does adding to the number of agencies 
increase the principle of accountability of the kind the Navy 
captain has of the nuclear reactor on his ship?
    Secretary Salazar. Senator Alexander, the law which was 
passed decades ago by this Congress, the Outer Continental 
Shelf Lands Act (OCSLA) is essentially what creates the 
national framework for the development of the OCS. It gives 
that responsibility to the Secretary of the Interior. The 
Secretary of the Interior created a Secretarial Order under 
Secretary Watt, which has been continued through Republican and 
Democratic administrations.
    In our view, there are some fundamental flaws with respect 
to how that organization was created. The need for the 
separation of the environmental and enforcement functions from 
those that essentially lease out the resource is one essential 
flaw that needs to be corrected. Another flaw that needs to be 
corrected is those who are making the money for the United 
States at a rate of $13 billion a year also need to be 
separated from the environmental and enforcement functions. We 
will work with Michael R. Bromwich to honor the existing law of 
the United States with respect to the OCS.
    Senator Alexander. Thank you, Madam Chair.
    Senator Feinstein. Thank you, Senator Alexander.
    Senator Tester.


    Senator Tester. Thank you, Chairman Feinstein.
    And thank you for being here today, both of you fellows.


    I am going to step away from the MMS issue just for a 
moment for a Montana-centric issue, as long as I have got you 
    There are all kinds of documents that are flying around the 
Internet that seem to be reinventing the issue around the 
Interior Department's monument memo. Back in March, you were 
here, you were before this subcommittee, and you told me that 
there were no plans for a monument designation in Montana. You 
have also responded to written requests with the same message, 
that nothing would move forward without substantial public 
input. But this has not stopped a few folks from continuing to 
believe that there will be a national monument designation in 
    So I guess the first question is, do you know something I 
do not? Or are folks just out there fanning the flames?
    Secretary Salazar. I think it is folks fanning the flames.
    As you know, Senator Tester, you were one of the key 
leaders in Montana pulling together the America's Great 
Outdoors listening conference. Our hope is, the President's 
hope is, that will launch the new century of conservation which 
many members of this subcommittee have been leading for a very 
long time. It is out of that process we hope that we move 
forward with a conservation agenda, but it involves listening 
to the people and it does not involve the heavy hand of 
Government coming in and imposing the monument authority. That 
is our message. It has not changed over time.
    Senator Tester. Okay. So if there are no plans, what can we 
do to reassure folks in Montana that there are no secret deals 
being crafted in back rooms that are dimly lit, smoke-filled, 
or whatever there might be, to create a monument designation in 
eastern Montana?
    Secretary Salazar. On Friday, we have another listening 
session in Annapolis, Maryland on the America's Great Outdoors, 
and I will be happy to issue a statement before then with 
respect to the monument issue.
    Senator Tester. Okay.

                       REORGANIZATION OF THE MMS

    Back to the MMS, the reforms that you instituted for MMS' 
structure, as you pointed out, divide into leasing, 
enforcement, and collection. I agree that for the protection of 
natural resources and the taxpayers, the same folks who 
regulate should not be collecting the funds or inspecting them.
    With that in mind, how will the restructuring of the MMS 
impact onshore revenue collections from Bureau of Land 
Management (BLM) leases since the MMS currently collects their 
payments? Will there be a change in procedures or will it be 
under the current processes?
    Secretary Salazar. The Office of Natural Resources Revenue 
would be the entity that would have the responsibility for 
collecting those revenues, and as you know, the MMS has done 
that for both onshore as well as for offshore activities. That 
effort would be one that would be moved over into the Office of 
Natural Resources Revenue.
    I hasten to add, Senator Tester, that our proposal is one 
that we have put together over the last year, but we have put 
it down on paper over the last several months.
    It is important for Michael R. Bromwich. I recruited him, 
hired him, and am delighted to have him on board running the 
organization. I want his input on how this organization can 
best be stood up to do the job it has to do. I am going to give 
him that opportunity before we press the final triggers.
    Senator Tester. Okay.

                     NEW LEASING STANDARDS FOR BLM

    Protecting rural America is critically important to both of 
us and cutting corners is just--is unacceptable. Let us just 
put it that way.
    This winter you released new leasing standards for BLM. Are 
those standards enough? Can you assure me that problems like 
this are not going to happen on public lands or onshore 
    Secretary Salazar. Yes, we have put Bob Abbey in place as 
the Director of the BLM, whom I am sure you know well. He has 
been moving forward with a great part of our reform agenda, 
including the elimination of the categorical exclusion issues 
with respect to onshore leasing, the 77 lease sales, and a 
whole host of other things we have been working on. There are 
things we can do better. We are always willing to listen.


    Senator Tester. In the arena of ethics, Mr. Bromwich, you 
talked about transparency and oversight. Are there ethical 
standards that you folks have in mind to put in place for the 
MMS? And this can be for you, Mr. Bromwich, if you would like.
    Mr. Bromwich. I need to do a careful review of what ethics 
standards, including the new ones, are currently in place, and 
if there are additional enhancements I think are appropriate, I 
will consult with the Secretary and we will put those in place.
    Senator Tester. A quick follow-up. You talked about 
consequences for not doing the job. What do you think the 
consequences should be for folks who potentially--potentially--
were not doing the job in this case?
    Mr. Bromwich. Well, it depends on what they did not do. But 
if it is severe enough, they should lose their jobs.
    Senator Tester. Thank you.
    Secretary Salazar. If I may add to that answer. First, you 
will know that from the OIG reports dating back to January, as 
well as more recent reports that really dealt with behavior 
that was pre-January 2009, there have been actions taken that 
have included criminal prosecutions. They have included 
referrals for prosecutions, and they have included personnel 
    With respect to this particular incident on the Deepwater 
Horizon, I have asked the OIG to take a look at the involvement 
of the MMS employees with whatever happened on the Deepwater 
Horizon. I am looking forward to getting that report, and when 
Michael and I get that report, we will take whatever action is 
    Senator Tester. Well, I thank you for that statement, 
Secretary Salazar. I think the punishment should be severe. 
This is a major ecological and environmental disaster. I do not 
need to tell you that. You know this. And people who were not 
doing their job intentionally, assuming that it was 
intentional, need to pay the price.
    Senator Feinstein. Thank you, Senator Tester.
    Senator Collins.


    Senator Collins. Thank you. Thank you, Madam Chairman.
    Secretary Salazar, it is great to see you even if it is 
under a difficult circumstance discussing issues that are 
absolutely critical.

                       ACCOUNTABILITY AND CULTURE

    I want to follow up on the point that both Senator 
Feinstein and Senator Alexander made, and that is that just 
reorganizing the MMS does not deal with the essential issues of 
accountability and culture. And Senator Tester was starting to 
get into those issues.
    I have read both the September 2008 OIG report and the 
report from May of this year, and they both paint an absolutely 
appalling picture of an agency that is rife with cronyism and 
corruption. As the OIG said in September 2008, we are talking 
about very serious misconduct.
    My basic question is, are the employees who were cited for 
serious misconduct still working for the Department? You 
mentioned that in some cases there had been criminal charges 
brought, but are you confident? Can you assure us that all of 
the agency's employees that were cited for serious misconduct, 
such as taking gifts, negotiating employment while they were 
still working with the Federal Government, have been removed 
from their positions or otherwise sanctioned?
    Secretary Salazar. The answer to that, Senator Collins, is 
appropriate action has been taken, which means that some of 
them have been terminated. Some of them have been referred to 
prosecution. Some of them have been dealt with under the 
personnel system. The more recent report, which also dealt with 
conduct dating back to 2004 and 2005, is a recent report in the 
last, I think, 20 or 30 days. We have taken appropriate 
personnel action. They have been put on leave without pay, and 
we are in the process of moving forward to determine the 
appropriate ultimate personnel action that should be taken and, 
if necessary, other kinds of action.
    Senator Collins. What is alarming to me is the first report 
was nearly 2 years ago, and yet we have a subsequent report 
just last month that indicates the same kinds of problems, 
albeit in different offices. Same agency. That means there was 
not a systemic reaction to the first report. So I know you have 
a new director in Mr. Bromwich, and those are issues you are 
charging him with. But I think it is important for this 
subcommittee to know specifically what actions have been taken 
both to correct this culture of corruption, but also to deal 
with the individual employees, and I would ask that that be 

                        OIL SPILL RESPONSE PLANS

    Let me go on to a second issue. The Homeland Security 
Committee also held an oversight hearing to look at the 
coordination among the various agencies that are responsible 
for reviewing the oil spill response plans, and what we found 
is that current law divides that responsibility. The Coast 
Guard is responsible for approving the oil response plan for 
vessels. The MMS reviews and approves them for offshore 
facilities. The Environmental Protection Agency (EPA) approves 
them for onshore facilities. There is very little exchange of 
plans or approvals among those three agencies.
    I was disappointed, for example, that there exists no 
requirement for the MMS to share the oil response plans for 
offshore facilities with the Coast Guard which is responsible 
for approving the vessel that is right over the well. Should 
there not be more coordination among those three agencies? 
Should the plans not be shared between the MMS and the Coast 
Guard, for example?
    Secretary Salazar. The answer to that is absolutely yes, 
that should happen. There was, in fact, consultation. I do not 
know, to the greatest degree, whether that happened in the way 
it should have happened, but the answer to that is yes.
    If I may on the culture of corruption issue, Senator 
Collins. We are looking at both of the OIG reports for the 
royalty in-kind program, mostly in Lakewood--that was the sex 
and drug scandals--and then the most recent report also 
relating mostly to 2004, 2005, 2006 conduct in the Louisiana 
offices. We are taking a look at those issues.
    I also have asked the OIG to take a look at whether or not 
the ethics initiatives we took at the beginning of the 
administration have changed the culture. I have asked her to 
look at what is happening with these kinds of issues between 
January 2009 and now.
    Second, that is a charge I have given to Michael R. 
Bromwich. I would like him to respond just generally because I 
think it is a question that you all have, how we are going to 
attack this culture of corruption because it goes beyond, 
frankly, just issuing ethics orders and performance plans, if 
that would be okay, Madam Chair.
    Mr. Bromwich. It does. It obviously goes well beyond the 
issuing of formal ethics orders. It goes beyond training, 
although both of those elements are important. It is how you 
deal with the kinds of misconduct that you identified appeared 
in those two OIG reports. I have read them as well, and it is 
shocking behavior. It is absolutely shocking behavior.
    I hope and I think it is not pervasive across the agency. I 
hope it is limited to pockets of personnel, some of which are 
already gone and the rest of which, if I have my way, will be 
gone soon. There will be zero tolerance for corruption, 
coziness, et cetera. We will work aggressively both through the 
OIG and through the new internal unit I am setting up, which I 
think is a sign to the organization that I personally mean 
business, to root out the vestiges of what should not have been 
there to begin with but regrettably was.
    It will be a sustained push. It will be making clear that 
there will be zero tolerance for what has apparently been 
tolerated in the past. There will be the encouragement of 
people to come forward with information suggesting corruption 
among others. In the short term, Senator, there may be more of 
these allegations that come forward. It is not going to stop 
overnight and we are not going to have unearthed everything 
already. I would ask for your patience on that, but I pledge to 
all of you that I will work in a very determined and very 
aggressive way to get that out of this agency.
    Senator Feinstein. Thank you very much, Senator Collins.
    Senator Dorgan.


    Senator Dorgan. Madam Chairman, thank you very much.
    There are two points that I would make with respect to 
Senator Collins' points.

                       INSPECTOR GENERAL REPORTS

    Number one, I think both of the OIG reports largely refer 
to a time period back in 2006, 2007, and 2008. So that is 
important to understand because I think things have changed to 
a degree since then and if not, there are serious problems 
    But there was a shameful culture of corruption. We are 
talking about sex and drugs and various problems--but aside 
from that, incompetence, secret handshakes, and so on that 
warrant not only criminal prosecution where necessary, but also 
the rolling of heads. And I think what you heard from Senator 
Collins and Senator Tester, they want to know that those who 
were engaged in this culture of corruption are no longer on the 
public payroll. We want to know that appropriate, proper, and 
tough action has been taken to make sure that there is a lesson 
for everyone who is serving at the agency today. This is public 
service and you have responsibilities to the public.
    So I wanted to just mention those two things.


    And let me mention one other, and that is the fractured 
responsibility. Senator Alexander made the point, and I agree 
with it. As it has been mentioned, you have eight different 
agencies that have a piece of this responsibility. On the other 
hand, it is the Congress that often creates those 
circumstances. For example, I am so frustrated with the Defense 
Department because every single branch of the military service 
wants to do every thing. That is why unmanned aerial vehicles 
are now in the Air Force, Marines, and the Navy. So we have a 
responsibility for that fractured jurisdiction across agencies.


    Yesterday, Mr. Secretary, I heard, as I was listening to 
the radio going home, criticism of you for not moving fast 
enough, and then I heard criticism that you were overreacting. 
So it is pretty hard to win, it seems to me, in those 
    And I was thinking about this issue of the moratorium in 
the gulf or ``pause.'' Let me say to you, first of all, in the 
context of all of this blizzard of language that is directed in 
every direction, I have confidence in you. I have served with 
you. I know you, and I have confidence in you. I know that you 
are working very hard to do the very best that you can do.
    The easiest thing is to look in the rear view mirror, as 
long as we have unobstructed vision. So I am asking this. Let 
us assume it is now March 1 or February 1 and you decide there 
have to be safety reviews, third-party verifications, a major 
structural reform of the MMS into the three parts, time out to 
inspect offshore rigs and so on. What do you think the reaction 
would have been? I assume there would have been an apoplectic 
seizure by people who would be affected.
    Listen, I support offshore drilling, as you know. We get, I 
believe, 30 percent of domestic supply from offshore. We are 
going to continue to have offshore production and drilling. But 
I assume we are going to do this in a way that is sort of like 
driving a car. If the brakes are not fixed, you do not drive 
it. So you have put in place a moratorium. I hope it is more a 
pause so we figure out how do we make sure the worst case, if 
it happens in the future, will not be something that we cannot 
control or cannot respond to.
    So I guess I have given you a number of things to chew on 
from my comments, but especially the question of overreacting. 
The criticism that you are not doing enough--in my judgment, I 
have watched you. I have watched every single day what you are 
doing. You are doing everything humanly possible to address 
these issues. I hope you will comment on the criticism of 
overreacting and the kinds of things that you have put in 
place. Had you taken aggressive actions earlier this year, 
there would have been a firestorm of protests.
    Secretary Salazar. Thank you very much, Senator Dorgan, for 
your kind comments.


    As I said at the outset in my opening remarks, there is a 
problem, and we have to fix it and we have to learn the lessons 
from it. The fact is that when you think about more than 40,000 
wells drilled in the Gulf of Mexico without this kind of a 
blowout and some of the statistics that Senator Alexander was 
mentioning earlier on, I think there was a sense of great 
safety and a complacency that needs to be re-examined, and that 
is exactly what we are doing now.
    At the end of the day, looking ahead, my sense is that we 
will have a new set of standards, but standards will not do it 
alone. We then need to have enforcement. With respect to both 
of those, we are going to need to have a beefed-up agency and 
we are going to need to have the right kind of leadership to 
make sure those standards are the best standards achievable and 
enforcement actually occurs.
    Senator Dorgan. It is very hard to gaze into the future. No 
one would have predicted what we now are facing. But if you 
would, transport yourself to about, oh, December 1. Where are 
we at this point with respect to the leaking well, with respect 
to the issue of pause, moratoriums, safety, regulations, and 
more? Where do you see us?
    Secretary Salazar. December 1. Let me see we are June----
    Senator Dorgan. Well, another 5-6 months from now.
    Secretary Salazar. Six months from now at a minimum, I 
would see a revision in the moratorium because it is, as the 
President has said, a pause button. We would have in place the 
implementation of many of the recommendations we issued to the 
President with respect to safety. I would see us moving forward 
with the new organization under Michael's leadership to make 
sure the issues all of you have raised are, in fact, being 
    In a larger sense--and it is why I am so confident in the 
future--I see us moving forward to have what will be a safe and 
environmentally protective program with respect to production 
of oil and gas on the OCS. I see us moving forward with a gulf 
coast restoration plan as part of America's Great Outdoors 
which I think we will put on steroids and we will see happen 
under the leadership of Secretary Mabus and many of us who are 
working with him on that. I also see us moving forward with a 
conservation agenda which you, the members of this 
subcommittee, have been such great champions of for so long.


    Senator Dorgan. You see additional offshore drilling and 
production with additional safeguards and regulations and 
    Secretary Salazar. If you take a close look at what we did 
with the OCS plan we announced, the Gulf of Mexico was where 
most of the known resource is. When you look at the different 
factors that are set forth in OCSLA, I am very comfortable that 
the decision reached there was, in fact, the correct decision. 
It is also important for us to make sure that we do not move 
forward with additional drilling until we know that it can be 
done in a safe way. We are spending a huge amount of our time 
on right now understanding--from the best scientists in the 
world, including Secretary Chu, including the members of the 
National Academy of Engineering, and others to make sure that 
when we do move forward, that it can be done in a safe way.
    Senator Feinstein. Thank you, Senator Dorgan.
    Senator Murkowski.


    Senator Murkowski. Thank you, Madam Chairman.
    Welcome. Good to see you, Secretary.
    As has been noted by several of our colleagues, these are 
difficult times certainly. The effort to restructure the MMS, I 
think we all have agreed, is one that is necessary. We will 
have an opportunity to have you before the Energy Committee 
tomorrow to discuss further that restructuring.


    The comments I have got this morning relate to the 
moratoria. The judge's decision yesterday, you have to admit, 
is pretty scathing when he uses words like ``arbitrary and 
capricious'' in stating that the ban exceeded Federal 
authority, when he says that the report makes no effort to 
explicitly justify the moratoria, and then goes further to say 
it does not discuss any irreparable harm that would warrant a 
suspension of the operations. It is a pretty direct and a 
pretty tough statement.
    Now, you have already affirmed that you do intend to issue 
yet another moratoria. I have to assume that it is going to be 
different than the blanket ban that you put in place, otherwise 
you are subjecting yourselves to another court coming back and 
saying that in fact all things were not considered.
    Now, you made some statements about--and I will look to my 
notes here, but you said you are going to look to specific 
criteria in lifting the moratoria, make adjustments as 
appropriate. Is it accurate for me to believe then that you are 
leaving some latitude that in fact prior to the termination of 
the moratoria, that Interior would look to allowing for leases 
to come back on line when you have had an opportunity to review 
it, but prior to the end of the time period that has been set? 
Did I read that correctly?
    Secretary Salazar. Two points, Senator Murkowski, if I may.
    First, with respect to the moratorium, I believe it was the 
correct decision. I believe it is the correct decision today, 
and with all due respect to the honorable court, we disagree 
with the court. We are taking that decision on appeal.
    At the same time, it is important that this moratorium stay 
in place until we can assure that deep water drilling can be 
done in a safe way. We are not there today, and we will move 
forward with the executive authority which I have to make sure 
that the moratorium does, in fact, stay in place.
    Your larger question, I think is a most important one, is 
when do you lift the moratorium. What the President said and 
what I have said is we pressed the pause button, and as we move 
forward and we learn from this disaster in the gulf, there may 
be adjustments that can be made.
    Senator Murkowski. Prior to the expiration of the 
    Secretary Salazar. We will have more information on that in 
the coming week, and we will be sure to share it with you and 
with your staff, Senator Murkowski.
    Senator Murkowski. Let me ask you then, Mr. Secretary, 
because I think you understand--not everybody understands, but 
there are distinctions. When you are out in deep water, you 
have got the exploratory wells as the Deepwater Horizon and the 
Macondo was. There are five of those. There are 28 that are now 
subject to, or were subject to, this moratoria that are in the 
phase called the appraisal development phase.
    And in terms of risk factors, there is--and again, those 
that had, as I understand, made the recommendation about a 
moratoria made this distinction that the risk factors are much, 
much different between a well that is in this appraisal and 
development status as opposed to the exploratory when we do not 
know what the pressures are, we do not know what those unknowns 
    Are you, in fact, looking to make a distinction rather than 
putting everything off limits and subject to a moratoria, or 
are you looking at the factors that actually contribute to risk 
and allow for those that are in a development and appraisal 
phase to proceed, notwithstanding any moratoria that may be in 
place in deep water?
    Secretary Salazar. Senator Murkowski, those are exactly the 
kinds of issues we are looking at. There is a difference 
between drilling an exploration well where you are drilling 
into formations where you do not know anything about it and you 
do not know the pressures or any of the other geophysical 
factors you are contending with versus drilling into reservoirs 
where you already have the geophysical information and 
knowledge of the reservoir.
    We are looking at all of those issues, and at a point in 
time when we can give assurance to the American people that we 
can move forward safely, we will make whatever adjustments are 
appropriate. But I do not have a timeline for you today.
    Senator Murkowski. Madam Chairman, I have some additional 
questions. I am hoping that we will have a second round here. 
But I would ask you then, as you are looking to--because it 
sounds that you are clear that you are planning on imposing 
again another moratoria there. I am not certain whether there 
is any assurance that once this moratoria is complete, that 
there is a process in place that will allow those who have been 
waiting to resume at the conclusion of that moratoria. We all 
know around here 6 months may be 6 months on paper, but in 
terms of their ability to restart again--those are some of the 
questions that I want to explore in a second round here.
    Senator Feinstein. Thank you very much, Senator.
    Senator Cochran.


    Senator Cochran. Madam Chairman, thank you, and let me join 
you and the other members of the subcommittee in welcoming the 
distinguished Secretary to our Interior Appropriations 
Subcommittee hearing.


    One thing that occurred to me, when the moratorium was 
first announced, was that it was overly broad if it was 
designed to suspend drilling and production of oil and gas from 
deep wells in the Gulf of Mexico when it in fact included a 
much broader definition of activity of exploration and 
production that captured natural gas wells that were in place 
producing natural gas without damage to anybody or anything and 
very, very important to the energy security of not just the 
gulf region but the entire United States. These are major 
national assets that provide important energy for our country.
    Am I correct in assuming that most, if not all, of those 
shallow water, by comparison, wells are going to be permitted 
to go back into production sometime soon if they have not 
    Secretary Salazar. Senator Cochran, I appreciate the 
question and your leadership on these issues in Mississippi.
    Let me take a few minutes and do a little broader 
explanation here.
    There is a very huge distinction between the safety 
recommendations we received that I delivered to the President 
and my decision to issue the moratorium. They are separate and 
apart. I received the safety recommendations. The President and 
I made the decision on moving forward with the pause button.
    Second, it was our decision to move forward with allowing 
shallow water drilling to continue because at the 500-foot 
level, they can still be anchored to the bottom. It is still a 
place where the wellhead can be reached by divers, and those 
who are involved in the industry have told us that was an 
important part that could move forward. We have allowed that 
part to move forward with the requirement that some safety 
requirements we put in a notice to lessees be followed.
    Third, what I would say, Senator Cochran, is that it is 
important for all of us to remember, while this is a moratorium 
on drilling, that significant production that has been built up 
over many years in the Gulf of Mexico continues unaltered. 
There has been very little disruption in terms of either oil or 
natural gas production from the Gulf of Mexico during the last 
65 days.
    Senator Cochran. Thank you, Madam Chairman.
    Senator Feinstein. Thank you very much, Senator Cochran.
    Senator Murkowski has asked and so perhaps we could have 
another round. Very quickly, Senator, I want to ask one 
question and make a brief statement.

                          FAIL-SAFE TECHNOLOGY

    Is there, to the best of your knowledge, any failsafe 
technology to stop any leaking of a deep water drill 
penetration below 400 meters or 1,300 feet, and if so, what is 
that failsafe technology?
    Secretary Salazar. The procedures and the efforts in place 
had multiple redundancies to stop this. That is why you have 
40,000 wells in the Gulf of Mexico where you have not had these 
kinds of problems before, and in other places.
    Senator Feinstein. That is not my question. What is the 
technology that is failsafe that will stop a leak at this depth 
or greater depth?
    Secretary Salazar. The technology that is there has to do 
with all the components of the construction of the well, 
including the redundancies which you should never have to get 
to if it is done right. That is the BOP, which should be 
functional and which should operate. There are significant 
improvements in my view that can be made to the BOP mechanisms 
that have to be required of industry, and some of those are 
addressed in the 30-day report. There may be others that we 
will be implementing.
    Now, to I think your ultimate question, Senator Feinstein, 
can you ever do this with 100 percent certainty that you are 
not going to have another blowout, I do not think there is that 
kind of guarantee that anybody will ever be able to give. We 
live with some risk.
    Senator Feinstein. I think you mistake me. I do not doubt 
that we can get there someday. To the best of my knowledge, 
there is no technology today that can absolutely prevent and 
give the public the general assurance that nothing as dire is 
ever going to happen again. I mean, you look back in Australia. 
That was new technology. That thing did not blow up, but 
leaked. I do not think we are there yet.
    And what bothers me--and this is my statement--there are 
very powerful interests that want to proceed at all costs, and 
I do not think we should. I think we have an imperative and 
that imperative is to see that the technology is in place 
before we drill, to see that it is monitored, to see that 
inspectors are not from the oil community but that they are 
truly independent, that they are well-trained, and that they 
have the authority to shut something down, that they cannot 
waive an environmental impact report like happened with BP.
    I mean, I think there is a whole litany of things that have 
shown that the path that we were on was a dire path. And I 
think you are going to have to be very strong to really change 
that because I think for all intents and purposes, the pressure 
is going to be enormous to go back to business as usual.
    Secretary Salazar. I agree with you, Senator Feinstein, 
there are a litany of things that have to be done. When you go 
back and look day to day at what happened with this particular 
blowout, my own view, having taken a review of some of the 
preliminary investigations that have been done, is there was 
reckless conduct involved. How do you police that reckless 
conduct? Well, part of it may be what we are coming to this 
subcommittee for, saying that we need approximately 250 
additional inspectors to get the job done.


    Senator Feinstein. You are asking for six right now. So it 
is a big jump.
    Secretary Salazar. We have had an increase, I think, every 
year for the last 2 years with respect to the MMS. But it is 
insufficient, I agree with you. It is insufficient when you are 
asking a group of inspectors to go and do the job of inspecting 
the panoply of production facilities and pipelines, which are 
so crucial to this Nation's national energy security, to 
essentially believe Government staffed at that level can 
actually do the job. Even if you take away the issues of 
corruption and coziness of industry, which must happen, and 
that is the zero tolerance doctrine we have in place. If you 
take that out of the picture, the fact is that 62 people cannot 
do the job.
    Senator Feinstein. I agree, and we will do the level best 
we can, Mr. Secretary. I assure you of that. Some of it--I do 
not know--might have to come through a supplemental because we 
will likely have a cap on our budget. But we will do the very 
best we can. And there is no question as to the need and the 
necessity. So thank you.
    Senator Alexander.
    Senator Alexander. Thanks, Madam Chairman. Thanks for this 
hearing, and I look forward to discussing in more detail the 


    Just to go back to the moratorium question just a moment, I 
guess my inclination--I will just speak for myself. Well, I 
will not compare mine to others. Let us just say I think those 
of us who have raised questions about the moratorium--here is 
my view.
    Nothing is 100 percent safe. There is a fellow we have not 
heard much from lately named Cass Sunstein in the OMB who made 
quite a name for himself balancing risks and the cost/benefit 
of decisions that need to be made. What I am trying to say is 
that I perfectly understand the difficulty of the decision of 
saying okay we have got a terrible tragedy here, let us see 
what we can do.
    But we spilled 1 billion gallons of coal ash in a coal 
plant in Tennessee and we did not stop burning coal. But we 
tried to figure out how we do not ever have that happen again, 
and EPA is going to take over that kind of regulation.
    A coal mine killed a number of miners not long ago in West 
Virginia. We did not stop mining coal, but we took immediate 
steps to try to see if we could keep that from happening again.
    A natural gas plant blew up in Connecticut, but we are 
expanding the use of natural gas.
    And if an airplane crashes, we sometimes look at the model 
of the airplane or the type of pilot or the training of those 
pilots. We do not say 1.6 million Americans stop flying for 6 
months because there are countervailing balances.
    And the countervailing balances here are higher prices, 
lost jobs. The tankers bringing the oil are more likely to 
spill oil in our history than offshore drilling. That we will 
be relying more on foreign oil if we do not explore for oil 
here, and that you have testified that by mid-July, you hope to 
be able to recapture twice as much every day as we spilled in 
the last 30 years and that this seems to be an anomaly.
    So I do not question the pause. I think a pause is wise. I 
would hope that in devising any other moratorium, that you take 
into account the judge's reasoning and the countervailing 
public interests, pressures that involve jobs and make sure 
that the economic consequences are not worse than the 
environmental consequences as a result of the moratorium. That 
is all that I am trying to say and I suspect other Senators.

                       REORGANIZATION OF THE MMS

    One other thing I would like to ask you. I am trying to 
understand. Is there not some risk that by splitting this 
agency up into three parts--let us say Mr. Bromwich does a 
really good job of getting the culture right here. We are 
talking about 33 offshore drilling exercises. You have got 
3,600 production wells in the Gulf of Mexico. But let us say 
you get the culture right. Is it not possible you are confusing 
things by dividing things up by three? I mean, who is really 
going to be ultimately in charge? Will it be the Secretary, 
whether it is you or the next Secretary in another 
administration? Who do we look to to say if another spill 
happens, it is my fault? And to whom do all these people 
report? Some Assistant Secretary, some Deputy Secretary, or to 
the Secretary himself or herself?
    Secretary Salazar. The configuration that you have in front 
of you, Senator Alexander, is in large part based after the 
current configuration for the regulation of offshore oil and 
gas exploration and production in Norway and the United 
Kingdom. What I asked a group of senior advisors including the 
Assistant Secretary of Policy, Management and Budget, Rhea Suh, 
and Chris Henderson in my office, to do was to go out and craft 
the concept for me on how we needed to reorganize the MMS. They 
reached out to the Ministers of Energy in Norway, as well as 
the United Kingdom, and in those particular nations, there was 
a reorganization that occurred after there was an incident that 
was a horrific incident for those nations. That was one of the 
reasons why we ended up with this organization that is in front 
of you.
    In addition, I feel strongly it is important to separate 
out within the organization those who are involved in leasing 
the resource and those who are involved in bringing in, on 
average, $13 billion a year into the Federal Treasury from 
those who are involved in actually doing the inspection and 
enforcement and environmental compliance. I think that is an 
important division that has to be made. As I said earlier in my 
testimony, Michael R. Bromwich will work closely with me and 
with other people who have been involved to tailor the 
organization to the needs today. We will be working closely 
with your staffs as well, to make sure that the organization, 
moving forward, is the appropriate organization and organic 
legislation to be able to do the important missions that have 
been assigned to the Department of the Interior and through 
this bureau is developed.
    Senator Feinstein. Thank you very much, Senator.
    Senator Murkowski.
    Senator Murkowski. Thank you, Madam Chair.


    Secretary, in response to my colleague from Mississippi 
here, you made clear that a distinction had been made between 
the shallow water operations and the deep water, and you said 
that there were very huge distinctions and that in shallow 
water you are allowing the drilling to continue because of a 
list of factors, anchored to the bottom and the like.
    I would again urge you--and it goes back to Senator 
Alexander's point about also considering the economics as we 
look to other factors. But when we are looking at risk factors, 
there is a distinction between the exploratory wells, the 5 
that are out there, and the 28 others that are in that 
subsequent phase. If there could be a process that allows them 
to move forward, perhaps, just perhaps, some of what we are 
seeing in terms of the economic devastation will not be as 
pronounced. And I think it is important that we look to those 
    And as I talk about the distinctions, I have to ask the 
question about the decision as it relates to Alaska's offshore 
and the Chukchi and Shell's operations up there. As we know, 
their proposal was to explore in relatively shallow waters at 
depths of no more than 150 feet. So clearly in shallow waters. 
So the question has to be asked if in fact we are allowing 
exploration to proceed in the shallow waters in the gulf, why 
are we not allowing offshore to proceed in the shallow waters 
in the North? I am still trying to determine whether or not the 
Alaska leases are technically under this same moratoria that 
relate to deep water or are they subject to a special delay of 
their own.
    Secretary Salazar. Senator Murkowski, as you well know, I 
am very familiar with that effort based on conversations I had 
with you over the last year. Our view is there are a number of 
different issues that are important in addressing oil and gas 
development in the Arctic. The science, number one. Number two, 
specifically with respect to the exploration wells that you 
referred to, is the question of whether or not there is the oil 
response capability that would be sufficient in the event that 
you would have some kind of an unexpected disaster, the way 
that we have had with the Deepwater Horizon. The pause button 
gives us an opportunity to take a look at the whole set of 
issues in the OCS, and that will be one that we will be looking 
    Senator Murkowski. But how are we defining that pause? 
Because if it is a moratoria, a moratoria that is brought about 
because of a decision made by the administration as a result of 
the Deepwater Horizon disaster, then there are funds that have 
been made available by BP to assist those displaced workers who 
would be subject to this moratoria. We have got about 600 
people in the State of Alaska that had planned on going to work 
right now, and those people are no longer needed in the sense 
of being able to do the supplying, do the training, be 
physically out there.
    But we do not know what our status is. All we know is that 
we have been put on hold. We do not know if the process to 
allow for the appeals process that is underway with the air 
quality permits--whether that can be allowed to proceed so that 
when the pause button is then unhinged, Shell will be able to 
move. There is an uncertainty that is in play in Alaska that is 
so indefinite and leads to so much, I think, confusion about 
the status. There can be no further movement until some signals 
have been given from the administration. We just do not know 
what our status is. And so to suggest that, well, it is just a 
pause, what does that pause really mean to us in Alaska?
    Secretary Salazar. Senator Murkowski, you raise a very fair 
question, and let me respond with two points.
    First, we are in a very dynamic situation in the midst of a 
crisis that no one in the Senate and no one in the executive 
branch ever anticipated we would be dealing with right now. We 
are trying to bring this crisis under control, and the most 
important thing I think that we can do is to do that and fix 
the problem and then learn the lessons from that problem. That 
is what the President has directed me to do. That is what we 
have directed our people in Interior to do, and we will do 
    Second, with respect to the exploratory wells that you 
speak about for Shell, frankly there is an issue which I think 
is apparent to everybody, and that is the oil spill response 
capability is something that has to be taken a look at. Right 
now, as you know, part of the reason why the Gulf of Mexico 
made the most sense in terms of moving forward with oil and gas 
production is that is where you have essentially the focal 
point of the infrastructure, the support of State governments, 
but in addition to that, it is where you had the massive oil 
spill response capability that had been amassed there over 
time. We do not have that same oil spill response capability 
through the Coast Guard or anybody else in the Arctic. It is my 
view that the pause button is very appropriate for these wells.
    Senator Murkowski. Well, and at the time that the decision 
was made, I too said that we need to ensure the level of safety 
and assurance offshore in Alaska and said at that time, it was 
reasonable to make sure that we had that level of assurance in 

                      MORATORIUM AND ALASKA STATUS

    What I am asking today is for a greater certainty as to 
that Alaska status. Are we in a moratoria? Is it a special 
delay of its own? If that is the case--and as I understood your 
comments at the time that this moratoria was put in place, it 
was Alaska was not under a moratoria. Alaska was being viewed 
differently. But what we had asked for was that there be a 
process that would ensure that permits did not lapse, leases 
did not toll, and that Shell would be able to have sufficient 
notice to do the redeployment, to make sure that all those 
assets that they are counting on for any kind of a response are 
able to be deployable. So if we are kind of in this limbo where 
we do not know when or if, it is going to be very difficult to 
re-engage any level of operation offshore.
    So I am just looking for some clarification as to our 
status. The 600 people who are not working this summer, as they 
had hoped, are looking for some clarification of status. And we 
are hopeful that with all the work that Shell has done, all the 
scrutiny that they have received not only from the MMS and 
every agency from the Coast Guard to the EPA, through every 
level of the judicial process, that the plan that they have 
proffered and supplemented since the Deepwater Horizon spill 
will be one that works to not only provide the jobs and the 
resource that we need but to do so in a manner that is air-
tight when it comes to response capability and capacity.
    Thank you, Madam Chair.


    Senator Feinstein. If you would like to answer that 
quickly, and then we are going to recess the hearing.
    Secretary Salazar. I am happy to respond to it very 
quickly. The moratorium in place does, in fact, apply to the 
Alaska wells and to the exploration wells Shell had proposed to 
put into place. It is because we need to have a greater level 
of certainty that the kind of tragedy unfolding in the gulf 
does not occur up there. We will be working on it in the weeks 
and months ahead and we will be working with you as well to 
make sure we are doing the right thing for the environment in 
Alaska as well as for the interests that you and others 
    Senator Feinstein. Thank you very much, Senator Murkowski.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
                   Questions Submitted to Ken Salazar
            Questions Submitted by Senator Dianne Feinstein
                        structure versus culture
    Question. Mr. Secretary, your Secretarial Order of May 19 directed 
that the Minerals Management Service (MMS) be structurally reorganized 
into three new bureaus. The stated purpose was to ``. . . improve the 
management, oversight, and accountability of activities .''
    At the same time, a decade or more of Inspector General reports and 
Government Accountability Office reports suggests that what has ailed 
the MMS has as much to do with the culture of the organization and the 
ethical failures of its employees as it does with how the office is 
    As you go about implementing this reorganization, I am concerned 
that this could become nothing more than an exercise in moving boxes on 
an organizational chart.
    My first question to you, then, is this: How do you see this 
reorganization reversing the culture that has permeated the MMS for so 
many years and what assurances can you give the subcommittee that 
changing office titles will actually improve accountability among your 
    Answer. The Department of the Interior (DOI) is implementing a 
range of reforms to the operations of the former MMS to address 
problems that had been well-documented for years, as well as new issues 
that came to light in the aftermath of the Deepwater Horizon disaster. 
The reorganization is an important component of these reforms, but it 
is not intended to address every problem. We are also working to both 
change the culture within the new entities that will replace MMS and to 
make sure that they have the resources they need to meet their 
responsibilities to the public.
    The reorganization, which is necessary to separate conflicting 
missions, is already well underway. On October 1, 2010, the Office of 
Natural Resources Revenue was placed under a different Assistant 
Secretary and will continue its responsibility of collecting and 
verifying all monies due the Federal Government. The remainder of the 
BOEMRE will be divided into two new bureaus in 2011. The new Bureau of 
Ocean Energy Management (BOEM) will be the resource manager responsible 
for access to Federal offshore lands and for related environmental 
assessments and reviews. The Bureau of Safety and Environmental 
Enforcement (BSEE) organization will be responsible for compliance and 
enforcement of all regulations pertaining to Outer Continental Shelf 
(OCS) activities. The internal and external controls planned for these 
bureaus will provide the necessary oversight to improve accountability 
and help ensure that these bureaus meet statutory mandates in a 
complete and forthright manner.
                           lack of oversight
    Question. Last month, during the investigation into the causes of 
the Deepwater Horizon explosion, the New Orleans-based MMS engineer who 
was responsible for giving BP the go-ahead to drill the exploratory 
well admitted he was not aware that BP was required to prove that its 
so-called BOP would actually work in the case of an emergency.
    Furthermore, according to press reports, the gentleman stated that 
he wasn't even aware the MMS had a regulation requiring such proof. So 
not only did he not ask BP to provide the proof, he says his office 
never required it on any of the 100 drilling applications the office 
    Mr. Secretary, the fact that the person allowed to approve drilling 
applications does not even know that oil companies are required to show 
proof that their emergency equipment works, is, in my opinion, 
    And this lack of knowledge does not appear to be an organizational 
issue. Rather it appears to be a case of an agency failing to carry out 
its mandated mission.
    What is it in the proposed reorganization that will enable the 
Department to enforce regulations any better that what's happening 
under the current organization?
    Answer. As part of the reorganization and reform effort, we plan to 
take a fresh look at the entire inspection and oversight process to 
make sure that the BSEE has a clear risk-based strategy for maintaining 
safe OCS operations. In the new organization, we plan to bolster the 
oversight of the proposed BSEE by reinstituting formal controls that 
had been successfully used in past operations. These controls were in 
the form of administrative oversight procedures such as follow-up 
inspections to ensure that the BSEE's oversight was consistent and 
comprehensive with respect to the regulations. This level of oversight 
became impossible to maintain with an increasing inspection workload 
and static level of inspection staffing.
    There will be an internal auditing function that will be 
responsible for ensuring that all permits issued will be in compliance 
with all relevant statutes and regulations. Performance of all 
employees involved in approving permits and conducting inspections will 
be regularly evaluated. Additionally, the Director of the BOEMRE has 
established an internal investigation and review unit that will report 
directly to him and will help to expedite his oversight, enforcement, 
and re-organization mandates. This includes investigation of misconduct 
allegations, response to high-priority issues, and assistance in 
implementing the reorganization of BOEMRE.
    Additionally, we have prepared two new rules that will help improve 
drilling safety by strengthening requirements for safety equipment, 
well control systems, and BOP practices on offshore oil and gas 
operations, and improve workplace safety by reducing the risk of human 
error. We are also actively recruiting more inspectors, engineers, and 
other personnel to strengthen safety oversight within the new 
        interior inspector general testimony on mms inspections
    Question. Last week, the Acting Interior Inspector General Mary 
Kendall testified before the Natural Resources Committee in the House 
of Representatives. During her testimony she pointed out several 
critical problems with the MMS inspection system that need to be 
addressed as part of any reorganization. I will quote her directly. Ms. 
Kendall testified that:

    ``We recently learned that MMS has a dearth of regulations 
governing their inspection program--four brief, general subsections.
    ``The MMS also has difficulty recruiting inspectors due to its 
grade and pay structure. Industry tends to offer considerably higher 
wages and bonuses.
    ``When they can be recruited, inspectors for the MMS receive 
primarily on-the-job training.''

    I find it astonishing that an agency with such heavy 
responsibilities has been permitted to function without documented 
inspection standards and mandatory training for inspectors.
    Mr. Secretary, how will the reorganization address the lack of 
basic inspection program regulations and the inadequate inspection 
    Answer. The reorganization will create a bureau whose primary 
function will be to enforce safety and environmental standards for 
offshore oil and gas activities. An independent bureau dedicated solely 
to this purpose will enable the bureau to focus all its resources on 
this effort, instead of competing for resources and leadership 
attention within a bureau with broader responsibilities. The BOEMRE and 
the Department have already worked together to identify areas in need 
of additional resources and developed a budget request to support those 
needs. These funds will not only support additional personnel that will 
be in the field inspecting facilities, but also additional personnel to 
develop needed regulations and provide reviews of applications to 
ensure that requirements are met. The BOEMRE has hired a consulting 
firm to assist in the restructuring process, which will further ensure 
successful implementation of an organization committed to an improved 
regulatory program.
                   technology and the reorganization
    Question. We have been told over and over by the Federal agencies 
working on the oil spill that the attempts to stop the leak at 5,000 
feet have never been tried before. It has been a mantra that all of 
these attempts--the coffer dam, the soda straw, the top hat, the top 
kill, the relief wells, the bottom kill, and so on--have been tried and 
have worked in shallow water, but you just didn't know if they would 
work in deepwater or ultra-deepwater.
    The Department's Technical Assessment and Research Program has 
funded numerous studies dealing with exactly the issues we see today. 
Here are just a few of the research studies the DOI has funded:
  --BOP procedures for deepwater drilling;
  --Floating vessel blowout control;
  --Study of human factors in offshore operations;
  --Reliability of subsea BOP systems for deepwater applications;
  --Development of a blowout intervention method and dynamic kill 
        simulated for blowouts in ultra-deepwater;
  --Review of shear ram capabilities; and
  --Evaluation of shear ram capabilities.
    Mr. Secretary, surely some of this research provided warnings about 
all the things that could go wrong with drilling in ultra-deepwater. 
Surely some of this research explained the difficulties that would 
accompany a large-scale failure. The DOI must have been warned and 
chose to proceed with permitting ultra-deepwater drilling anyway.
    What will this reorganization do to ensure that necessary research 
is conducted and subsequently put to use in guiding future OCS policy?
    Answer. A number of steps are under consideration or have been 
initiated to refocus and expand BOEMRE's existing Operational Safety 
and Engineering Research (OSER) Program including:
  --An independent third-party review (in progress) of the OSER 
        Program's research studies performed over the past decade to:
    --Assess which prior findings and recommendations remain valid and 
            what implications this has for BOEMRE management and 
            regulatory oversight; and
    --Determine what additional research is needed to either fill a 
            void or reassess operations in cases where new 
            technologies, absent at the time of prior research, are now 
            in use; and
  --Expanding direct distribution of OSER findings to include more of 
        the front-line regulators and inspectors so that the latest 
        technologies and findings generated through the OSER Program 
        are available to assist in approval and inspection of new 
        equipment and operations; and
  --Performing an internal review of the OSER Program to determine 
        whether the Program's scope and breadth should be expanded to 
        better address the obvious challenges of deepwater and other 
        offshore development.
         ``categorical exclusions'' from environmental reviews
    Question. The BP Deepwater Horizon was granted a categorical 
exclusion from environmental impact statement and endangered species 
laws by the MMS prior to the explosion and fire.
    There have been press reports which suggest that the National 
Oceanic and Atmospheric Administration (NOAA) has told the MMS in the 
past that continued drilling in the Gulf of Mexico was harming 
endangered marine mammals.
    Mr. Secretary, what is the administration's current position on 
issuing categorical exclusions?
    Answer. On August 16, 2010, Secretary of the Interior Ken Salazar 
and BOEMRE Director Michael R. Bromwich announced that the DOI will 
restrict its use of categorical exclusions for offshore oil and gas 
development to activities involving limited environmental risk, while 
it undertakes a comprehensive review of its National Environmental 
Protection Act (NEPA) process and the use of categorical exclusions for 
exploration and drilling on the OCS. This announcement follows the 
release of the Council on Environmental Quality's (CEQ) report on the 
former MMS's NEPA Program. The report was done in close consultation 
with the DOI and the BOEMRE which replaced the MMS.
    On October 8, 2010, the BOEMRE published in the Federal Register a 
Notice of Intent to Conduct a Review of Categorical Exclusions for 
Outer Continental Shelf Decision. The 30-day public comment period for 
the review ended November 8, 2010. The BOEMRE received more than 3,200 
comments. All comments will be reviewed and considered in the process 
of revising the content and use of categorical exclusions. While this 
review is underway, the BOEMRE will be using categorical exclusions on 
a more limited basis. For actions that potentially involve more 
significant environmental risk, Interior officials intend to subject 
more decisions to environmental assessments or environmental impact 
    The limited use of categorical exclusions will allow the BOEMRE to 
move forward with new permits under the Secretary's NTL-06 and NTL-10, 
which notified offshore lessees that shallow water drilling activity 
could proceed as soon as they provide additional information about 
potential blowout scenarios and implement additional safety measures 
for rigs and platforms. Director Bromwich has made clear that until the 
comprehensive review is completed, categorical exclusions should not be 
used to approve deepwater drilling activities.
    When the review is completed, the BOEMRE will announce a new 
approach to NEPA compliance that takes into account the joint 
recommendations included in CEQ's report, statutory and/or regulatory 
constraints, and other appropriate factors. This is consistent with the 
CEQ's regulations directing all Federal agencies to periodically review 
their NEPA policies and procedures.
    Exceptions to a categorical exclusion may arise and Federal 
agencies are required to develop procedures to determine whether a 
normally excluded action may have a significant environmental effect. 
The Categorical Exclusion Review determines whether a proposal that is 
categorically excluded may meet any of the Department's extraordinary 
circumstances criteria, requiring an environmental assessment or 
environmental impact statement.
                        timing on reorganization
    Question. You stated in your May 19 Secretarial Order that you 
would have an initial timeline and plan for the MMS reorganization by 
Friday, June 18. Obviously, we haven't seen the details yet.
    Can you tell us when you think those documents will be released? 
And do you anticipate providing us with a proposed budget structure for 
the each of the new bureaus and offices at the same time?
    Answer. The DOI continues to focus its resources on responding to 
the BP Deepwater Horizon disaster and implementing necessary reforms 
that will protect people and the environment. As part of the response, 
the DOI is preparing organizational changes that are necessary to 
strengthen oversight of the companies that develop energy on the OCS. 
The DOI is evaluating a variety of options for restructuring the BOEMRE 
in order to enhance the ability to fulfill what have been conflicting 
missions. The reorganization will separate the inspection, oversight, 
and investigation mission from both the collection of energy revenues 
and the leasing activities related to offshore energy development. 
Establishing a new entity within the Department, focused primarily on 
enforcing energy laws and regulations will provide greater authority 
and autonomy for the BOEMRE charged with overseeing the safety and 
compliance of energy operations.
    This crisis is evolving and the DOI has several teams focusing on 
the ongoing response to the spill, the reorganization, regulatory 
reforms, and related issues. The DOI appreciates the concern of the 
subcommittee and the need to provide specific details in a timely 
fashion; particularly for items that present budgetary impacts. The 
Department will prepare a 2011 budget amendment as quickly as possible.
                      peer-reviewed response plans
    Question. Mr. Secretary, as you and I have discussed, the culture 
of the agency and the industry must change. I believe that the safety 
record of a company, and the viability and thoroughness of its response 
plans for leaks at the depth of the proposed lease, should also be 
under consideration when leases are given.
    I have worked with Senator Brown of Massachusetts on legislation 
that would mandate that leases include response plans that have been 
peer-reviewed at the time of leasing, and that the Secretary certify 
that the response plan is technologically feasible.
    Our legislation is S. 3497 and I would ask that you please take a 
look at that bill.
    Do you agree with me that it's a good idea to allow leasing 
decisions to be based not only on which company will pay the most, but 
also which company will be the best and safest steward of our natural 
resources and citizens' safety?
    Answer. The BOEMRE regulations at 30 CFR 256.35 provide the BOEMRE 
the right to disqualify entities from acquiring any new lease holdings 
or lease assignments if their operating performance is unacceptable. 
Unacceptable performance is defined in 30 CFR 250.135-136 and includes 
the consideration (individually or collectively) of accidents and their 
nature; pollution events, environmental damages and their nature; 
incidents of noncompliance; civil penalties; and failure to adhere to 
OCS lease obligations. The BOEMRE has exercised this authority in 2008 
for a company that did not adhere to its OCS lease obligations.
    As part of the ongoing response to the BP oil spill, we will be 
looking closely at existing BOEMRE regulations and policies, including 
oil spill response plans and lessee qualifications, to ensure the 
greatest protection of human health and safety and the environment. The 
new rules that we recently developed are designed to raise the bar for 
safety and accident prevention processes.
                       overlapping responsibility
    Question. There is another aspect of the regulation of OCS oil and 
gas production that I find to be very troubling. There is a complex web 
of Federal agencies that are responsible for different aspects of OCS 
operations. The MMS is responsible for the adequacy of the drilling and 
production technology and practices. The Environmental Protection 
Agency (EPA) and the Fish and Wildlife Service (FWS) have 
responsibilities related to environmental and wildlife safety. The 
Coast Guard (USCG) inspects rigs and other vessels for seaworthiness 
and qualified crews. The NOAA monitors weather conditions. This 
arrangement requires close cooperation and coordination among the 
agencies under the best of circumstances.
    How does your reorganization address the complex web of Federal 
agencies, and have you engaged these agencies as put this plan 
    Answer. The BOEMRE agrees that managing activities on the OCS is a 
complex mission that requires coordination with multiple agencies and 
their respective jurisdictional authorities. We believe that we have 
the mechanisms and contacts in place to work closely with these 
agencies so all parties can meet the demands of their statutory 
requirements. The division of BOEMRE into three discrete entities is 
being done with careful attention to all statutory and regulatory 
requirements, including necessary ongoing coordination with other 
Federal agencies.
    There are many agencies engaged in oversight of OCS energy 
development activities beyond the four agencies mentioned above (i.e., 
the EPA, FWS, NOAA, and USCG). To name a few, the BOEMRE also works 
with the Department of Commerce (Coastal Zone Management Program); the 
Federal Energy Regulatory Commission (renewables); the Department of 
Transportation (pipeline transportation issues); Army Corps of 
Engineers (Rights-of-Way); various State oil and gas programs (fields 
that cross Federal/State boundaries); and the Navy and Air Force 
(restricted areas).
                   the 30-day report to the president
    Question. On May 27, the Interior Department released its report to 
the President that included recommendations for immediate actions to 
improve the safety of OCS oil and gas operations. The first 
recommendation is that all BOPs used in drilling operations be 
immediately re-certified by an independent, outside, third party.
    Mr. Secretary, you have the responsibility to ensure the safety of 
drilling operations. The MMS was established by Secretarial Order to 
perform this function. Why then does the recommendation require an 
outside party to offer the certification? Shouldn't the Department be 
required to possess this expertise?
    Answer. The independent third-party requirement was made to ensure 
that an expert would examine the BOP equipment and certify that it 
would operate as originally designed. This party would be outside of 
any influence from the operator, drilling contractor, or the regulator. 
This independent review is necessary to show all stakeholders that the 
equipment being examined is fit for service. This is also one of the 
issues that will be closely examined in the coming months. The BOEMRE 
will establish a team to investigate what additional certification 
requirements need to be developed for BOP equipment and systems, 
including how and by whom this certification should be made.
             Questions Submitted by Senator Robert C. Byrd
    Question. In your recent testimony you expressed great optimism 
that the new Bureau of Safety and Environmental Enforcement (BSEE) will 
improve inspection and regulatory oversight of drilling on the Outer 
Continental Shelf (OCS). You note that you currently have 60 inspectors 
to oversee 4,000 rigs in the Gulf of Mexico. You estimate more than 200 
additional inspectors will be necessary for the BSEE to achieve its 
goals but the President's 2011 budget requests funding for only 6 
additional inspectors.
    Do you expect to realign or cancel other Department of the Interior 
(DOI) priorities in order to offset the cost of additional permanent 
personnel? If so, what programs will be under consideration? What 
framework will you use to evaluate the safety of drilling technology 
and the additional costs associated with implementing a new safety and 
regulatory regime? Do you expect the oil industry to assume any of the 
additional costs? If so, how will these costs be allocated, recovered, 
or paid?
    Answer. We do not expect to realign or cancel other DOI priorities 
to offset the cost of additional permanent personnel. The DOI 's 2011 
budget proposed a balanced set of programs to support the 
administration's initiatives and the Secretary's high-priority goals 
and will implement the reorganization while maintaining a robust agenda 
for clean energy and climate change, WaterSMART, treasured landscapes, 
youth, and a renewed commitment to tribal nations. The DOI is relying 
on the enactment of the President's 2010 supplemental request that 
includes $29 million for DOI needs related to the BP oil spill and OCS 
    The framework for the evaluation of safety will be based on the 
results of the 30-day report to the President, recommendations from the 
President's commission, the results of investigations underway, and 
other information. The framework will consider the best practices of 
other countries such as Norway and the United Kingdom and evaluations 
of effective practices of other Federal regulatory and enforcement 
    The is the potential to consider additional inspection fees--the 
2011 President's budget increases inspection fees from $10 million 
charged in 2010 to $20 million. A key component of the OCS reforms 
underway is hiring an additional 12 inspectors, which would be funded 
from the $29 million supplemental.
    Question. The DOI recently released its plan to open up certain new 
areas of the OCS for oil and gas drilling. Since the tragic BP 
Deepwater Horizon oil spill began on April 20, there have been numerous 
indications that this catastrophic event will affect the DOI's 2012-
2017 leasing plan, including how other Federal agencies contribute to 
the plan.
    In terms of projected revenues to the Federal Government, please 
characterize the significance of leasing these new areas. Similarly, 
how would Federal revenue be affected should the previous drilling 
moratorium as described in fiscal year 1998-fiscal year 2008 
appropriations language be reinstituted? If the DOI eliminates the 
categorical exclusion for the central and Western Gulf of Mexico from 
certain environmental reviews in the leasing plan, what will be the 
costs to the Treasury? Please describe in detail. Please quantify the 
additional amount of oil that will be directly available to the 
domestic United States market as a result of leasing these new areas.
    Answer. At the time the March 2010 OCS oil and gas strategy was 
developed, Federal revenues from leasing the new areas included in the 
strategy (i.e., Eastern Gulf of Mexico, mid-Atlantic, and South 
Atlantic), were estimated to increase OCS revenues over the life of 
development (approximately 40 years) by slightly less than 7 percent 
relative to a baseline that assumed development in existing program 
areas in the Central and Western portions of the Gulf of Mexico, as 
well as Cook Inlet, Beaufort Sea, and Chukchi Sea in Alaska. However, 
the Deepwater Horizon disaster has resulted in the need to reassess the 
risk of development in these areas, as well as the underlying 
assumptions regarding development costs.
    It is difficult to estimate the impact of re-imposing a legislative 
moratorium on leasing in these areas, as it would depend on both the 
time period for which the moratorium applied and the amount of 
development one assumes would take place in these areas in the absence 
of legislation. The administration has decided not to include these 
areas in its revised 5-year (2012-2017) OCS leasing plan in light of 
lessons learned from the Deepwater Horizon disaster.
    If categorical exclusion 516 DM 15.4(c)(10) was eliminated, 
approximately 600 additional EAs would be prepared for activities that 
previously would have gone through a thorough, activity-specific NEPA 
analysis under a Categorical Exclusion Review. The cost of each 
environmental assessment is estimated at about $4,000, thereby making 
the total cost to be approximately an additional $2 million per year. 
This represents the cost of the NEPA analysis only.
    Leasing in the new areas included in the original March 2010 OCS 
oil and gas strategy had been estimated to contribute 1.2 Bbbl of oil 
and 4.2 tcf of gas to the stream of production, starting in 2020 and 
continuing through the life of production. However, the Deepwater 
Horizon disaster has resulted in the need to reassess the risk of 
development in these areas, as well as the underlying assumptions 
regarding development costs.

                         CONCLUSION OF HEARING

    Senator Feinstein. Thank you, Mr. Secretary. Thank you, Mr. 
    The hearing is recessed.
    [Whereupon, at 12:35 p.m., Wednesday, June 23, the hearing 
was concluded, and the subcommittee was recessed, to reconvene 
subject to the call of the Chair.]