[Senate Hearing 111-1035]
[From the U.S. Government Publishing Office]
S. Hrg. 111-1035
MINERALS MANAGEMENT SERVICE REORGANIZATION
=======================================================================
HEARING
before a
SUBCOMMITTEE OF THE
COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
SPECIAL HEARING
MAY 26, 2010--WASHINGTON, DC
__________
Printed for the use of the Committee on Appropriations
Available via the World Wide Web: http://www.gpo.gov/fdsys
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COMMITTEE ON APPROPRIATIONS
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
BARBARA A. MIKULSKI, Maryland RICHARD C. SHELBY, Alabama
HERB KOHL, Wisconsin JUDD GREGG, New Hampshire
PATTY MURRAY, Washington ROBERT F. BENNETT, Utah
BYRON L. DORGAN, North Dakota KAY BAILEY HUTCHISON, Texas
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
FRANK R. LAUTENBERG, New Jersey
BEN NELSON, Nebraska
MARK PRYOR, Arkansas
JON TESTER, Montana
ARLEN SPECTER, Pennsylvania
Charles J. Houy, Staff Director
Bruce Evans, Minority Staff Director
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Subcommittee on Department of the Interior, Environment, and Related
Agencies
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
JON TESTER, Montana
DANIEL K. INOUYE, Hawaii, (ex
officio)
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
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Page
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
MINERALS MANAGEMENT SERVICE REORGANIZATION
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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)
presiding.
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
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, 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
duty.
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
emergency.
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
law.
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
go.
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
create.
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
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
emergency;
--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
being.
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.
STATEMENT OF SENATOR LAMAR ALEXANDER
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
flagpole?
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
moratorium.
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
overbearing.
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.
STATEMENT OF HON. KEN SALAZAR, SECRETARY OF THE
INTERIOR, DEPARTMENT OF THE INTERIOR
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
well.''
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.
BUREAU OF OCEAN ENERGY MANAGEMENT, REGULATION, AND ENFORCEMENT (BOEMRE)
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
Lewis.
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.
ETHICS
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.
OCS
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
questions.
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
future.
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
cooperation.
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
operators;
--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
flow.
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
protection.
Conclusion
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
future.
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
him.
Senator Feinstein. Thank you.
Mr. Bromwich, please proceed.
STATEMENT OF MICHAEL R. BROMWICH, DIRECTOR, BUREAU OF
OCEAN ENERGY MANAGEMENT, REGULATION AND
ENFORCEMENT, DEPARTMENT OF THE INTERIOR
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
comments.
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
convictions.
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
future.
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
possible.
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.
Overview
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
goals.
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
investigations.
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
organization.
Third, the creation of a separate office that would do the
revenue collection.
Now, let me make two quick comments about that
organization.
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.
INSPECTORS
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.
MORATORIUM
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
place.
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
years.
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.
ACCOUNTABILITY
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
result.
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.
STATEMENT OF SENATOR JON TESTER
Senator Tester. Thank you, Chairman Feinstein.
And thank you for being here today, both of you fellows.
MONUMENTS
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
here.
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
Montana.
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
development?
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.
ETHICS
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
actions.
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
appropriate.
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.
STATEMENT OF SENATOR SUSAN 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
provided.
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.
STATEMENT OF SENATOR BYRON L. 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
here.
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.
ACCOUNTABILITY
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.
MORATORIUM
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
circumstances.
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.
ACCOUNTABILITY
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
addressed.
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.
OFFSHORE DRILLING AND PRODUCTION
Senator Dorgan. You see additional offshore drilling and
production with additional safeguards and regulations and
procedures?
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.
STATEMENT OF SENATOR LISA 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.
MORATORIUM
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
moratoria?
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.
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.
STATEMENT OF SENATOR THAD 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.
MORATORIUM
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
already?
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.
INSPECTORS
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
proposals.
MORATORIUM
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.
MORATORIUM
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
distinctions.
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
at.
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
that.
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
place.
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.
ADDITIONAL COMMITTEE QUESTIONS
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
advocate.
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
hearing:]
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
assembled.
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
employees?
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
reviewed.
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,
stunning.
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
organization.
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
workforce?
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
statements.
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
together?
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
reforms.
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
programs.
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.
Bromwich.
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.]
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