[Senate Hearing 111-653, Part 2]
[From the U.S. Government Publishing Office]



                                                 S. Hrg. 111-653, Pt. 2
 
                    OFFSHORE OIL AND GAS EXPLORATION

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                                   TO

RECEIVE TESTIMONY FROM THE ADMINISTRATION ON ISSUES RELATED TO OFFSHORE 
OIL AND GAS EXPLORATION, INCLUDING THE ACCIDENT INVOLVING THE DEEPWATER 
                     HORIZON IN THE GULF OF MEXICO

                               __________

                              MAY 18, 2010


                       Printed for the use of the
               Committee on Energy and Natural Resources




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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                  JEFF BINGAMAN, New Mexico, Chairman

BYRON L. DORGAN, North Dakota        LISA MURKOWSKI, Alaska
RON WYDEN, Oregon                    RICHARD BURR, North Carolina
TIM JOHNSON, South Dakota            JOHN BARRASSO, Wyoming
MARY L. LANDRIEU, Louisiana          SAM BROWNBACK, Kansas
MARIA CANTWELL, Washington           JAMES E. RISCH, Idaho
ROBERT MENENDEZ, New Jersey          JOHN McCAIN, Arizona
BLANCHE L. LINCOLN, Arkansas         ROBERT F. BENNETT, Utah
BERNARD SANDERS, Vermont             JIM BUNNING, Kentucky
EVAN BAYH, Indiana                   JEFF SESSIONS, Alabama
DEBBIE STABENOW, Michigan            BOB CORKER, Tennessee
MARK UDALL, Colorado
JEANNE SHAHEEN, New Hampshire

                    Robert M. Simon, Staff Director
                      Sam E. Fowler, Chief Counsel
               McKie Campbell, Republican Staff Director
               Karen K. Billups, Republican Chief Counsel


                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Bingaman, Hon. Jeff, U.S. Senator From New Mexico................     1
Murkowski, Hon. Lisa, U.S. Senator From Alaska...................    11
Salazar, Hon. Ken, Secretary, Department of the Interior, 
  Accompanied by David Hayes, Deputy Secretary; Wilma Lewis, 
  Assistant Secretary of Land and Minerals; and Liz Birnbaum, 
  Director, Minerals Management Service..........................     3

                                APPENDIX

Responses to additional questions................................    45


                    OFFSHORE OIL AND GAS EXPLORATION

                              ----------                              


                         TUESDAY, MAY 18, 2010

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.

    The committee met, pursuant to notice, at 11:04 a.m. in 
room SR-325, Russell Senate Office Building, Hon. Jeff 
Bingaman, chairman, presiding.

OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW 
                             MEXICO

    The Chairman. OK. Why don't we bring the committee to 
order.
    Let me just, at the outset, indicate that Senator Murkowski 
is on her way from the airport. She had to be in Alaska last 
evening for the funeral of former Secretary of Interior Hickel, 
and she is on her way and will be here shortly--but has advised 
us to go ahead.
    This is the second hearing on the continuing disaster in 
the Gulf of Mexico. The purpose of this and future hearings is 
to understand the cascade of failures that caused the 
catastrophic blowout of the oil well that was being drilled by 
the Deepwater Horizon rig, and to determine what Congress needs 
to do to ensure that it never happens again.
    Last week, we heard from 2 distinguished technical experts, 
and also from the heads of the 3 industrial firms responsible 
for the disaster, on what some of those failures might have 
been. Next week, we will have a hearing on the issue of 
liability for damages.
    But, today we have a chance to hear from the Secretary of 
Interior Salazar and his senior team in charge of responding to 
this catastrophic failure.
    I'd like to focus the hearing on the role of regulatory 
failure in causing the catastrophe, along with the failure of 
technological systems and the failure by people who were 
operating those systems. Regulatory failure is one of the 3 key 
interlocking failures that I believe are at the heart of this 
problem.
    There are several dimensions to regulatory failure. 
President Obama suggested one last week; he cited a cozy 
relationship between the Minerals Management Service, or MMS, 
and the industry it was regulating.
    There are 3 other regulatory areas I think bear close 
examination at the hearing. I'm sure other members will have 
others, but the 3 I wanted to mention are whether we had the 
right technical standards in place to govern the drilling being 
undertaken by the Deepwater Horizon rig; second, whether we 
have been taking a systems approach to oversight of deepwater 
drilling operations with sufficient staff resources and 
training to match the complexity of what has been undertaken; 
and, third, whether we had adequate mechanisms to follow up on 
changes that are being made to the complex drilling operations 
of this well as the drilling was proceeding.
    First of these forms of possible regulatory failure, 
failure to have the right technical standards in place, one 
example may be in the cementing of the well. It's possible that 
the extent of the cementing involved here was inadequate for 
this particular well, given the other designed features. 
However, the amount of cement appears to have met the MMS's 
technical standard. In some ways, having a prescriptive 
standard that is inadequate in certain systems might be worse 
than not having a standard at all.
    Second form of possible regulatory failure is not having a 
proper systems approach. This could be a result of a limited 
and reactive role that MMS seems to have taken over the years 
toward these highly complex wells. Many MMS employees do have 
relevant expertise and are involved in research in key areas of 
well safety. In my view, they need to be more fully engaged 
with industry in reviewing the overall design and 
implementation of these challenging deepwater wells.
    Finally, the third form of possible regulatory failure is 
exemplified by the lack of follow through on how approved plans 
are implemented, including the detection and response to 
unusual occurrences that might warn of bigger problems.
    There appears to have been a number of changes in the well 
plan during its construction, including those involving the 
number of structural centralizers being used and the point at 
which the drilling mud was withdrawn from the well.
    These decisions can be driven by cost and the desire to 
make up lost time in a drilling project. It's important to 
ensure that safety is paramount. This raises the important 
question of where the MMS was in this process. Was it 
consulted? Does it have an established role that ensures that 
it will scrutinize major changes to previously approved plans?
    We know that the MMS inspectors visit rigs to review 
activities taking place on them. While the documentary record 
of inspections on this particular rig appears somewhat cloudy, 
it seems it was inspected approximately on a monthly basis.
    Is this enough? How are unusual occurrences and abnormal 
events, which might indicate the need for more frequent 
inspections, communicated to the MMS in between those 
inspections? Are inspectors asking the right questions when 
they do these visits?
    Obviously, our job also is to determine what we do next. 
No. 1, I believe we should find out all we can about the 
problem that existed in this Deepwater Horizon, whether these 
problems are present in other deepwater drilling operations in 
the Gulf.
    No. 2, there should be a comprehensive and independent 
technical review of the precise drilling plan that was proposed 
for this well. I hope the Department of Interior will make the 
full drilling plan available for peer review by other industry 
experts.
    Finally, we need a more thoroughgoing independent review of 
the safety and regulations of the Outer Continental Shelf oil 
and gas operations, generally. We, as a country, have profited 
by such independent assessments after other major disasters, 
such as Three Mile Island and the loss of the Space Shuttle 
Challenger. I'm glad to learn that the President intends to 
establish such a commission, and we look forward to it 
beginning its work soon.
    Since Senator Murkowski is not here for an opening 
statement, we will reserve her right to do that when she 
arrives. But, let me now invite Secretary Salazar to go ahead 
with his testimony and to introduce those who are here with 
him.
    We welcome you. We appreciate your determined efforts to 
respond to this disaster and to address the regulatory issues 
raised by it. We look forward to working with you and learning 
from you at this hearing.
    So, Mr. Secretary, welcome, and please proceed.

  STATEMENT OF HON. KEN SALAZAR, SECRETARY, DEPARTMENT OF THE 
 INTERIOR; ACCOMPANIED BY DAVID HAYES, DEPUTY SECRETARY; WILMA 
   LEWIS, ASSISTANT SECRETARY OF LAND AND MINERALS; AND LIZ 
        BIRNBAUM, DIRECTOR, MINERALS MANAGEMENT SERVICE

    Secretary Salazar. Thank you very much, Senator Bingaman. 
Thank you to the Senators who are here.Let me say, Chairman 
Bingaman and members of the committee, friends that I see on 
both sides of the chairman, Democrats and Republicans, it is a 
solemn time in our country as we deal with this incident which 
the President has directed all of us to work on; not to rest 
until we get this whole situation under control.
    I appreciate the opportunity to share some thoughts with 
you here this morning, and also to engage in the conversation 
which I am sure is to come.
    First, what I thought I would do is give you a quick 
update, because I know this is something that all of you have 
been concerned about.
    We have been working on this from day one to stop the 
blowout from continuing. I have been to Houston, along with the 
best science minds in the country, including Secretary Chu, to 
make sure that we are riding herd on BP and its efforts to make 
sure that this well is brought under control.
    The latest report, as of this morning, is that the flow 
mitigation efforts, which are the efforts to contain the leak 
that is occurring, are underway. There are approximately 1,500 
to 2,000 barrels a day that are being collected through the so-
called ``riser insertion tube.'' The efforts are intended to 
ramp up over the hours ahead on a sequence of about every 2 
hours. We ought to have a better measure of what the flow is 
that is leaking from the well. So, that is with respect to the 
flow containment strategy.
    Second, there has been what I call the ``flow stoppage 
strategy,'' and that's the efforts to kill the well. They are 
complex, they are dynamic, they are data-driven. The best 
science minds of the world have been brought to focus on this 
problem. The alternatives that are being examined have led to a 
decision to move forward with what they call the ``dynamic 
kill'' of this well. The mechanisms have been built out over 
the last several weeks, and the expectation is that this 
Saturday or this Sunday the triggers will be pulled to try to 
accomplish the dynamic kill of the well.
    Third, at the end of the day, the ultimate relief here that 
needs to be accomplished has got to be the sealing of the well. 
That is the drilling of two relief wells. Both relief wells are 
underway. One of the relief wells has reached a depth of over 
8,762 feet from the sea floor. But, those relief wells are 
longer in coming. It will probably not be until August when 
they are completed. Hence, the importance of moving forward 
with respect to the flow containment strategy, which is 
underway, as well as the dynamic well-kill strategy, which is 
underway.
    Second, let me say that, from day one, there has been a 
comprehensive command-and-control effort with respect to this 
national disaster and this oil response by Secretary Napolitano 
and the admiral in charge of this effort, the Commandant, Thad 
Allen, as well as the President of the United States. The 
President has directed all of us to make sure that we do not 
rest until we get this problem under control, that the problem 
is fixed, and that the lessons to be learned here are learned 
in a way that will be useful to this country as it moves 
forward with respect to its energy future.
    I want to just make a few points that illustrate the extent 
of this effort. It is truly an army that is battling this war 
on all fronts. We have over 17,000 people, who are actually 
deployed out in the Gulf Coast, that are working on this 
particular issue. There are over 750 vessels. So, if you think 
about an armada of vessels that are out there battling the oil 
on the site of the explosion, as well as dealing with the oil 
slick which is occurring, that is a huge number of vessels that 
are being put out there to deal with the problem.
    The President has directed the U.S. Government to make sure 
that no energy is being spared here, that all the energy that 
we have is focused in on this particular problem. I'm delighted 
to do that.
    Before I make my last 2 remaining comments, I want to also 
just introduce the Deputy Secretary, David Hayes, who went to 
New Orleans the day after the explosion, on April 21, to take 
charge, along with the Coast Guard, of providing an effective 
response to this unprecedented problem; Assistant Secretary of 
Land and Minerals, Wilma Lewis, who has led many of the reform 
efforts in the Department of the Interior with respect to MMS 
and BLM and the other agencies under her jurisdiction, also 
joins me, to the left; and Liz Birnbaum, the Director of the 
Minerals Management Service, is to David's right.
    Let me make just some overarching comments with respect to 
this particular incident. I think it is important for all of us 
to recognize that this is a matter where we all have collective 
responsibility, that the finger-pointing that could easily 
occur, and is already occurring, is not going to get us to 
where we want to get. Where we want to get, as the President 
has directed us to get, is to fix this problem now, and, second 
of all, make sure that this problem never occurs again. In 
order to do that, there's plenty of responsibility to go 
around. So, as we move forward, the President's directive to 
me, and my directive to my people in working with the entire 
team that's responding to this matter, is that we move forward 
with that sense that we have a problem, and we have a 
collective responsibility to fix that problem.
    That responsibility, I will say, starts first with the 
Department of the Interior and the Minerals Management Service. 
We need to clean up that house. It's an effort which we started 
back, now, some 15, 16 months ago, which included dealing with 
sex and drug investigations that had been underway. People who 
have been involved in those issues have been prosecuted and 
have been terminated and other personnel actions have been 
taken. There are other efforts that are important for us as we 
move forward with respect to MMS.
    We eliminated the Royalty-in-Kind Program, because the 
Royalty-in-Kind Program had been an area as many of you on this 
committee know--which had been subject to some of these ethical 
lapses and problems. So, that Royalty-in-Kind Program was 
eliminated, at my direction.
    We have instituted new ethics codes for the Department. We 
have the Inspector General involved with this in making sure 
that the employees of MMS are abiding with the highest ethical 
standards that are possible.
    To be sure, this is just the beginning; there are more 
things that we have to do. A few days ago, I announced that we 
would be splitting up the Minerals Management Service's 
functions between the revenue collection functions, on the one 
hand, and the inspection and environmental enforcement 
functions, on the other.
    In the days ahead, there will be additional announcements 
that I will make, as Secretary of the Interior, concerning the 
reorganization of the Minerals Management Service.
    As I said, collective responsibility: yes, the Department 
of the Interior has its responsibility, but I would say this 
Congress also has its responsibility. I was proud to be a 
member of the Senate with, I think, everyone who currently is 
sitting in this committee today.
    From this Congress I would expect that we would move 
forward and we would see thoughtfully crafted, organic 
legislation for the Minerals Management Service. Some of you--
Senator Wyden--have pushed that effort for a while. I have 
supported that effort. It should be something that gets done. 
An agency the size of the Minerals Management Service that 
collects, on average, $13 billion a year, that has these 
responsibilities for the Outer Continental Shelf, in terms of 
the energy production and future of the United States of 
America, should not exist by fiat of a secretarial order that 
was signed almost 30 years ago. It is important that there be 
thoughtfully crafted, organic legislation for the new agency to 
be created. I will continue to make the efforts that I can, 
within the authority that I have as Secretary, to redo the 
Minerals Management Service. But, at the end of the day, it's 
going to be important that Congress take up that 
responsibility.
    In addition to that, when I speak about collective 
responsibility, it's also important for us to take a hard look 
at the laws that have governed the exploration and development 
of the Outer Continental Shelf. There has been much to-do in 
the news about the 30-day issue concerning the statutory 
mandate by the Congress, by the laws of our Nation, relative to 
acting on exploration plans. The 30-day mandate has been there, 
my understanding is, since 1978, which essentially requires the 
Minerals Management Service to turn around and to approve an 
exploration plan within 30 days from the day that it is 
submitted.
    So, those are the kinds of changes that I think we all need 
to look at, collectively. Congress will have its share of 
responsibility to make sure that, as we craft the new agency, 
and we take a look at the laws, that they are put in a place 
where we make sure we can achieve the goal of preventing this 
kind of accident from ever happening again.
    Third, when I speak about collective responsibility, there 
is also a collective responsibility here that has to be put 
right at the feet of BP. It's not only BP, it is Transocean, it 
is Halliburton, it is Cameron, and a whole host of other 
companies that have some association with the incident related 
to the Deepwater Horizon.
    The direction and the directive that we have given to BP, 
which it is carrying out, is that it has to do everything it 
can to stop this blowout. I gave an update on where their 
actions are today, and hopefully we will see that being 
effective in the days ahead.
    In addition, we have made it clear from day one that BP is 
the responsible party to take care of all of the costs 
associated with this incident, including whatever damages might 
arise from this incident to natural resources, as well as to 
people and businesses and communities who might be affected by 
this incident.
    BP has told me, orally, in meetings that I have had with 
Tony Hayward and others in my office, that that is what they 
will do. In addition to that, Secretary Napolitano and I sent a 
letter to BP to get their confirmation that they would live up 
to that responsibility, no matter what statutory caps are in 
place. They have confirmed that they will live up to that 
responsibility. So, our expectation, as the President has said 
from the beginning, is that, at the end of the day, every cent 
that is required to make the American people whole and to make 
the environment whole will, in fact, be there.
    The fourth point that I wanted to make, Mr. Chairman, in 
terms of a collective responsibility, is that there's also a 
collective responsibility here, on the part of the American 
people and all of us who have a role in government, to address 
the energy future of the United States of America. From the 
beginning of this Administration, the President has pushed hard 
for comprehensive energy legislation that addresses the 
principles that you and I have worked on for so many years; the 
imperative of moving our country to energy independence; the 
imperative of stopping the transfer of over $700 billion a year 
from our country to economies that, frankly, don't support the 
United States; the responsibility for us to tackle the great 
issue of the effects on our climate, which many of you have 
been working on for a long time. Those are issues that for far 
too long have gone unanswered because there has been a 
tepidness to approaching these larger issues of the energy 
future of this country.
    One of the things that I hope happens as a result of this 
incident is that it's another wake-up call, to all of us who 
have this collective responsibility, to move forward with a new 
energy future for the United States of America.
    Let me, finally, just conclude by saying that the employees 
at MMS, some 1700 of them, most of them are good public 
servants. There are some bad apples at MMS, and we have taken 
care of them, and, to the extent that MMS employees were 
involved in any kind of negligence here, or any other kind of 
failure, they will also be held accountable.
    I went through some of the changes that we have made at MMS 
over the last year. One that I wanted to spend just a few 
seconds on has to do with opening up the renewable energy 
functions within MMS and the Department of the Interior. We 
work closely with the Governors is the States, Democrats and 
Republicans alike, to usher in a new effort on offshore 
renewable energy, especially along the Atlantic States. There's 
a whole host of opportunities there that can help us really 
grasp this new energy future. MMS and the agencies to be 
created from what we will be announcing in the days ahead will 
help us grasp that new energy future.
    Finally, with respect to investigations. You have a lot of 
questions. I have a lot of questions. The President has a lot 
of questions. Everybody has questions. So, it's important that 
we get to the bottom of what the root causes were of this 
tragedy. It includes the questions, Chairman Bingaman, that you 
raised in your opening statement.
    To that end, the President of the United States will be 
announcing his formation of a Presidential commission. When one 
looks at the investigations that occurred after the Challenger 
blew up in space or in the aftermath of Three Mile Island, I 
think there are some lessons to be learned from that. In the 
case of the Challenger incident, it essentially put the Space 
Shuttle Program on delay for about a 2-and-a-half-year period. 
In the case of the Three Mile Island investigation and the blow 
up of one of the reactors at Three Mile Island, it essentially 
shut down the nuclear industry for a period of 30 years. So, 
how we handle this issue is of the highest importance. The 
President's effort, by bringing together a national commission 
that will look at all of the facts and bring all these 
investigations together, will help us guide the energy future 
of the United States so that, with respect to the oil and gas 
portion of that energy portfolio--and there will be an oil and 
gas portion of that energy portfolio--it can be conducted in 
the safest way possible so that this kind of incident does not 
happen again.
    I will briefly say there are a number of other 
investigations that are underway through a joint memorandum 
between Secretary Napolitano and me. We've directed the Coast 
Guard, along with MMS, to conduct an investigation as to root 
causes. That investigation is underway. I have asked the 
National Academy of Science's branch, the National Academy of 
Engineering, to also come in and provide us with an overview of 
the safety programs that ought to be in place to make sure that 
blowout preventers and cement and the rest of the aspects of 
drilling are, in fact, the safest in the world.
    Finally, the Inspector General of the Department of the 
Interior, who many of you in this room know does not shy away 
from the inspector general's responsibilities, has also been 
tasked by me to take a look at whether or not there were any 
improprieties with respect to MMS activity on this particular 
matter.
    With that, Mr. Chairman, I'd be happy to take questions and 
comments from all of you.
    [The prepared statement of Hon. Salazar follows:]

   Prepared Statement of Hon. Ken Salazar, Secretary of the Interior

    Thank you, Chairman Bingaman, Senator Murkowski, and Members of the 
Committee, for the opportunity to discuss current activities at the 
Department of the Interior related to oil and gas exploration on the 
Outer Continental Shelf, particularly about the ongoing response to the 
explosion of the Deepwater Horizon drilling rig.
    This massive and potentially unprecedented environmental disaster, 
which has resulted in the tragic loss of life and many injuries, is 
commanding our time and resources as we work to ensure that the spill 
is stopped; that our great natural resources along the Gulf Coast are 
protected and restored; and that we get to the bottom of what happened 
and hold those responsible accountable. Understanding the causes of 
this tragedy will help prevent similar events in the future.
    We are fighting the battle on many fronts. At the President's 
direction, his entire team will not rest until the oil spill is 
stopped, the cleanup is completed, and the people, the communities, and 
the affected environment are made whole.
    Let me be very clear: BP is responsible, along with others, for 
ensuring that----

   the flow of oil from the source is stopped;
   the spread of oil in the Gulf is contained;
   the ecological values and near shore areas of the Gulf are 
        protected;
   any oil coming onshore is cleaned up;
   all damages to the environment are assessed and remedied; 
        and
   people, businesses, and governments are compensated for 
        losses.

    From day one my job has been to make BP and other responsible 
parties fully accountable. That is why I have been to Houston three 
times to see firsthand that BP - and all of industry - is doing 
everything within its power to effectively and expeditiously address 
the spill. I have also met with BP executives many times here in 
Washington to deliver this same message and have required them to 
provide daily updates on all fronts related to this disaster.
    I have made absolutely clear in those meetings that BP, as a 
responsible party, will be held accountable for paying costs associated 
with this spill. BP will be held accountable for all costs of the 
government in responding to the spill and compensation for loss or 
damages that arise from the spill.
    In a letter to Homeland Security Secretary Janet Napolitano and me 
that we received this past weekend, BP has confirmed that it will pay 
for all of these costs and damages regardless of whether the statutory 
liability cap contained in the Oil Pollution Act applies. The bottom 
line is that the United States and the affected Gulf Coast communities 
will be made whole. There should be no doubt about that. And while the 
investigations as to the cause are still underway, we will ensure that 
those found responsible will be held accountable for their actions.
    To see that BP carries through on its responsibilities, I have made 
sure that the best science and engineering minds in the United States 
place fresh eyes on the BP response and various efforts underway to 
stop the flow. In that regard, I asked Secretary Chu to go to Houston 
with me to meet with BP executives, their scientists, and engineers to 
make sure they were considering every conceivable option to address 
this problem.
    I also deployed to Houston Dr. Marcia McNutt, Director of the U.S. 
Geological Survey, who is one of the nation's most preeminent marine 
geophysicists, to provide oversight and to monitor the effectiveness of 
the BP command center's activities. Dr. McNutt and the personnel 
assigned to the Houston Command Center by Secretary Chu, along with the 
Commanders of the U.S. Coast Guard, are there to ensure that no stone 
is left unturned as we search for solutions to the problem.
    The President has been clear: we will not rest until this leak is 
contained and we will aggressively pursue compensation for all costs 
and damages from BP and other responsible parties.

Action From Day One
    The Department has been actively and aggressively engaged in this 
spill from the first events. The morning after the explosion, I sent 
Deputy Secretary David J. Hayes to the Gulf to assist with coordination 
and response and to provide hourly reports to me and other 
administration officials of the ongoing events.
    In addition, I have dispatched the top leadership from my natural 
resources and science team to the Gulf incident command centers, 
including the Assistant Secretary for Fish and Wildlife and Parks, Tom 
Strickland; the Director of the National Park Service, Jon Jarvis; the 
Acting Director of the U.S. Fish and Wildlife Service, Rowan Gould; and 
the Director of the Bureau of Land Management, Bob Abbey. They are 
helping to lead the efforts to protect the ecologically complex and 
fragile Gulf Coast, including a number of National Wildlife Refuges, 
National Parks, and National Seashores under the Department's 
jurisdiction.
    These leaders, along with public servants from the Department's 
various bureaus and offices, are putting in long hours as they work 
alongside other federal, state, and local partners to monitor and 
respond to immediate threats to fragile habitat; assess and address 
long-term damage to impacted resources; and develop and provide data 
and information for use by the Unified Command.
    I also ordered immediate inspections of all deepwater oil and gas 
drilling operations in the Gulf of Mexico. We issued a safety notice to 
all rig operators reminding them of their responsibilities to follow 
our regulations and to conduct full and thorough tests of their 
equipment.
    I established a new Outer Continental Shelf Safety Oversight Board 
within the Department. Composed of top Departmental officials, it will 
strengthen safety and improve overall management, regulation, and 
oversight of operations on the Outer Continental Shelf (OCS). It will 
also help us evaluate the broader questions that this spill raises 
about those activities.And I have announced that no applications for 
drilling permits will go forward for any new offshore drilling activity 
until we complete the safety review process ordered by the President.

Reform During the Obama Administration
    I came to the Department of the Interior to change the direction of 
the Department and to restore the confidence of the American people in 
the ability of their government to carry out the functions under my 
charge. That confidence had been seriously eroded by well-publicized 
examples of misconduct and ethical lapses. This kind of fundamental 
change does not come easily, and many of the changes we have made have 
raised the ire of industry. In the past 16 months our efforts at reform 
have been characterized as impediments and roadblocks to the 
development of our domestic oil and gas resources.
    But we have not, and we will not, back down on our reform agenda. 
We have been making major changes at MMS, and we will continue to do 
so.
    Under MMS's management, the OCS currently provides 31 percent of 
the Nation's domestic oil production and almost 11 percent of its 
domestic natural gas production. The MMS is one of the largest 
collectors of non-tax and non-trust revenue for the Treasury, and has 
collected an average of more than $13 billion annually for the past 5 
years. An agency with responsibilities of this magnitude should be 
governed by thoughtfully considered organic legislation.
    I have already announced plans to restructure MMS to establish an 
independent safety and environmental enforcement entity . I have 
solicited the views of Members of Congress and my staff is working now 
to develop a proposal. In addition, we will aggressively look at 
broader options that may require new legislation.
    We have made MMS a major part of our vision for a new energy future 
by balancing its portfolio to include offshore wind and renewable 
energy production. Within months of my confirmation, we issued new 
regulations governing the establishment of offshore wind generation 
facilities, and concluded an historic Memorandum of Understanding with 
the Federal Energy Regulatory Commission to end a bureaucratic dispute 
that had delayed the introduction of renewable energy projects on the 
OCS.
    Earlier this year, I gave final approval to the Cape Wind project 
off Massachusetts' coast. And we have taken the first steps to stand up 
major wind projects off the coasts of New Jersey and Delaware. I am 
working with the Atlantic Coast Governors to give renewed impetus to 
developing the potential for offshore wind projects.
    In addition to changing the direction of MMS, we have implemented 
reforms to change the agency's culture of doing business. We began by 
issuing new ethics standards for all MMS employees, effective January 
2009, that require all MMS employees to receive ethics training and to 
certify compliance to a Code of Ethics that exceeds general government 
employee requirements.
    Responding to ethical lapses and criminal behavior uncovered during 
the previous Administration in connection with the MMS's Royalty-in-
Kind program, I terminated that outdated and flawed program. We have 
also implemented recommendations to improve MMS's royalty collection 
program. These recommendations have come not only from our Inspector 
General but also from the Royalty Policy Committee Subcommittee on 
Royalty Management, a committee chaired by former Senators Bob Kerrey 
and Jake Garn.
    I had previously asked the National Marine Board, also within NAS, 
to direct an independent review of MMS's inspection program for 
offshore facilities. The results of that review are due to us this 
Fall.
    The Department's fiscal year 2011 budget request has carried 
through on this theme of reform. It provides funding for an additional 
6 inspectors for offshore oil and gas facilities in the Gulf, an 
increase of more than 10 percent.

Additional Reforms Now
    This tragedy and the massive spill for which BP and others are 
responsible have made the importance and urgency of this reform agenda 
ever more clear. With this in mind, I announced last week a set of 
reforms that will provide federal inspectors more tools, more 
resources, more independence, and greater authority to enforce laws and 
regulations that apply to oil and gas companies operating on the OCS.
    As I mentioned above, I intend to restructure MMS to establish 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 holding energy 
companies accountable and in compliance with the law of the land.
    The Administration has also submitted to Congress legislation that 
requests an additional $29 million for the Department of the Interior 
to inspect offshore oil and gas platforms, draft enforcement and safety 
regulations, and carry out studies needed in light of this event. The 
funds will allow the USGS and the Fish and Wildlife Service to conduct 
general environmental studies related to the spill. The legislation 
would also extend the time allowed by statute for MMS to review and 
approve oil and gas exploration plans from 30 to 90 days.
    This legislative package is multi-Department and comprehensive and 
also addresses the funding of federal response activities through the 
Oil Pollution Act, food safety programs, unemployment and nutritional 
assistance, and other help for communities and individuals affected by 
the oil spill.

Active Investigation and Independent Review
    We are carrying out, with the Department of Homeland Security, an 
investigation into the causes of the April 20th explosion, and will 
hold public hearings, call witnesses, and take any other steps needed 
to determine the cause of the spill. In addition, the 30-day safety 
review that President Obama ordered us to undertake will help us 
understand what safety measures could and should be immediately 
implemented.
    Last week the National Academy of Engineering agreed to my request 
to review the Deepwater Horizon spill. This highly respected 
organization is a part of the National Academy of Sciences, will bring 
a fresh set of eyes to this tragedy, and will conduct an independent, 
science-based analysis of the causes of the oil spill. The NAS has 
carried out similar independent investigations into events like the 
space shuttle Challenger accident.
    We will get to the bottom of this disaster and will hold those 
responsible accountable.

Informed Energy Strategy
    Much of my time as Secretary of the Interior has been spent working 
to advance the President's vision of a new energy future and moving 
away from spending hundreds of billions of dollars each year on 
imported oil. During the past year we have offered new areas for oil 
and gas development, but instituted reforms to ensure we are offering 
leases in the right places and in the right way.
    Offshore development is a necessary part of that future, and on 
March 31st we announced a new, balanced, and science-based strategy for 
exploring and developing our oil and gas resources on the OCS - in the 
right ways and in the right places, providing order and certainty to 
industry and investors, and delivering a fair return to American 
taxpayers for the use of their resources. This strategy would use 
science and new technologies to expand oil and gas production on the 
OCS in new areas; provide for exploration in frontier areas; and 
protect areas that are simply too special to drill, such as Alaska's 
Bristol Bay.
    As we evaluate new areas for potential exploration and development 
on the OCS, we will conduct thorough environmental analysis and 
scientific study, gather public input and comment, and carefully 
examine the potential safety and spill risk considerations. The 
findings of the Joint Investigation and the independent National 
Academy of Engineering will provide us with the facts and help us 
understand what happened on the Deepwater Horizon. Those findings, and 
the work of the Outer Continental Shelf Safety Oversight Board, will 
help inform the implementation of the Administration's comprehensive 
energy strategy for the OCS.
    At the same time, we are taking aggressive action to verify the 
safety of other offshore oil and gas operations, further tighten our 
oversight of industry's practices through a package of reforms, and 
take a careful look at the questions that this disaster is raising.

Conclusion
    Neither time nor space allow for a detailed description of what our 
employees and our partners are doing every day on the ground on the 
Gulf Coast to respond to the spill and protect and restore affected 
natural resources. This Administration is committed to helping the 
people and communities of the Gulf Coast region persevere through this 
disaster, to protecting our important places, and to learning valuable 
lessons that will help prevent similar spills in the future.

    The Chairman. Thank you very much, Mr. Secretary.
    Before I start with questions, let me defer to Senator 
Murkowski for her opening statement.

        STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR 
                          FROM ALASKA

    Senator Murkowski. Thank you, Mr. Chairman and Secretary.
    I apologize for being late. I've been flying all night and 
came in about 20 minutes ago. But, it was important that I be 
here. I think you were made aware that I was attending the 
funeral of one of your predecessors at the Department of 
Interior, Walter Hickel.
    It was under his watch, back in 1969, that the Department 
of Interior was faced with the offshore oil spill out in Santa 
Barbara. It's a reminder then, it's a reminder now, as you say, 
of the collective obligations that we have. The collective 
obligations today are that BP, all those that are involved, are 
held responsible, held accountable, and also of our collective 
responsibility, as Americans, to deal with an energy policy 
that puts us on a path of energy independence.
    Wally Hickel was fond of saying that all of our resources 
are owned in common by the people. We've got an obligation to 
care for them in that manner.
    I do have a lengthier written statement. I know our 
colleagues want to get to questions. We've got a vote coming up 
here at 11:45.
    Senator Murkowski. But, let me just state this, that you 
are very welcome here before the committee to help us gather 
these answers to try to understand what happened, whether the 
process leading up to it included failures of our own in the 
MMS, or wherever the failures may be. We need to pursue an 
understanding of how the Interior Department can rise from this 
tragedy and be stronger and more confident in its ability to 
deliver to the Americans their resources--their resources which 
are held in common--in a manner that is more safe and more 
environmentally responsible.
    Deepwater Horizon is emerging as the reason that the 
Department of Interior has such a very difficult balance--or, 
difficult time in striking this balance. So, to gain in that 
understanding, there are a lot of tough questions. I appreciate 
that, as of yet, we don't have all of the answers. But, I think 
that hearings like this one--the debate, the markups, the floor 
time, the deliberation--all of these are ingredients that lend 
themselves to passage of a strong bipartisan legislation that 
can, hopefully, help to minimize the unintended consequences.
    I think your job, as you recognize, has been made 
enormously more difficult in this past month. So, you are, 
again, welcome before this committee to help us identify the 
ways that we can be working together.
    I thank you.
    The Chairman. Thank you.
    [The prepared statement of Senator Murkowski follows:]

  Prepared Statement of Hon. Lisa Murkowski, U.S. Senator From Alaska

    Good morning, Mr. Chairman, and thank you for convening this 
hearing. I apologize for being late but as it happens, I am just back 
from Alaska where I was sad to attend the funeral of Wally Hickel, who 
was faced with the last offshore oil spill of this magnitude, the Santa 
Barbara spill of 1969, as Secretary of the Interior. We will miss his 
wisdom and his experience in this time, and always.
    It's now been 29 days since the Deepwater Horizon exploded after 
what may have been a catastrophic well failure followed by an equally 
catastrophic failure of the blowout preventer. As containment and 
recovery efforts continue with very what appears to be some meaningful 
success, the Gulf Coast and countless livelihoods are still threatened.
    Secretary Salazar, you are very welcome here today to help us 
gather answers and understand how this happened and whether the process 
leading up to it included failures of its own. Central to our 
discussion is the Minerals Management Service, the MMS.
    Today, we also need to pursue an understanding of how the Interior 
Department can rise from this tragic spill stronger and more confident 
in its ability to deliver Americans their resources in safer and more 
environmentally responsible ways. Deepwater Horizon is emerging as the 
reason why the Interior Department has such a difficult job in striking 
this balance.
    To gain that understanding, there will be many tough questions 
today.
    Hearings like this one, debate, markups, floor time, and 
deliberation are all ingredients that lend themselves to passage of 
strong bipartisan legislation that can minimize unintended 
consequences. Secretary Salazar, in the past month your job has become 
enormously more difficult. So you are welcome before this committee 
today to identify ways in which we can help.

    Mr. Secretary, I'll take the first 5 minutes of questions.
    Could you elaborate and give us any more information about 
this dynamic kill of the well that you referred to that you 
expect will occur as soon as this weekend? That sounds like 
something I was not aware was in the works, and I'd be 
interested in knowing any more detail on that that you feel you 
can give us at this time.
    Secretary Salazar. I would be happy to answer that, 
Chairman Bingaman.
    As I said, there are really 3 strategies. It's the flow 
mitigation, the full containment, and then the relief wells.
    On this flow containment that essentially would kill the 
well, there are 3 options that are alive that are being 
reviewed and peer-reviewed by the best scientists in the world. 
One of them would basically come in and kill the well by 
putting in junk that would go into the blowout prevention 
mechanism. That would stop the flow of oil into the riser, 
where there are the two leaks that are taking place.
    The second would be to forego the insertion of junk into 
this blowout prevention mechanism, which I think, from your 
testimony that you heard in this committee last week, you know, 
is a huge mechanism that weighs about 450 tons and is a very 
complicated mechanism at the bottom of the floor. It would 
forego putting the junk into the mechanism and, instead, put 
mud into the well itself through devices that are being 
constructed and being deployed on the subsea today.
    Then the third would be a dynamic kill option, killing the 
well through fluids and mud that would be inserted into the 
well itself.
    The other options relate to removing the top of the blowout 
prevention mechanism, and, in its place, putting either another 
blowout prevention mechanism or putting in a valve that would 
close down the well.
    The dynamic kill option, from the point of view of the 
scientists and the BP engineers and others who have been very 
involved in sorting out which is the best way to go, seems to 
be the best way to go, in large part because of some favorable 
pressure readings and good data that has come back.
    I will say this, Mr. Chairman and members of the committee: 
this effort really has brought to bear the best science in the 
world, including that of the Federal Government. The Department 
of Energy, Sandia Labs, Livermore, Los Alamos have essentially 
been on the scene, helping bring to bear some of the best 
science with respect to gamma ray and X-ray and other kinds of 
efforts, the diagnostics that are taking place, so that when 
the trigger is pulled for the ultimate kill, we'll have the 
maximum chance of success. This something that we very much 
appreciate.
    The Chairman. Thank you for that additional information.
    Back, a week or 2 ago, on May 7, a statement came out of 
the Department of Interior saying that Secretary Salazar 
announces that, ``As a result of this Deepwater Horizon 
explosion and spill, beginning April 20, the date of the 
explosion, no applications for drilling permits will go forward 
for any new offshore drilling activity until the Department of 
Interior completes the safety review process that President 
Obama requested.'' I think that's the 30-day safety review.
    This morning, there's an AP story which has in it this 
sentence. It says, ``Since a blowout on BP's Deepwater Horizon 
platform last month killed 11 workers and triggered a massive 
spill, the agency has approved at least nine deepwater 
exploration wells in the Gulf, with minimal environmental 
reviews.''
    I'd be interested in your comments on that. Is that 
accurate? Is it inaccurate? Does it contradict the earlier 
direction that you provided to MMS to cease approving these 
applications?
    Secretary Salazar. I will ask David Hayes to amplify on 
this conclusion. But, I can tell you that, based on all of the 
information that has been provided to me, there is no deepwater 
well in the OCS that has been ``spudded''--that means 
``started''--after April 20.
    There is, in fact, drilling that was already going on 
through some of the 30 deepwater rigs that are out there in the 
ocean today. That drilling continues, because we were not going 
to have those things stop midway. So, there's an oversight 
program and a number of other safety measures that we have 
taken.
    But, with respect to new permits on the OCS and deepwater, 
there is no well that has been spudded post-April 20. I'll have 
David amplify on some of these numbers.
    I will note, before David does that, I think one of the 
most interesting things about this whole incident is how the 
facts and figures and misunderstandings of what is going out 
there have been flying from all kinds of directions. I think 
that, as important as the energy future of the United States 
is, and as important as the appropriate response to this 
incident is, we have a responsibility to come up with the best 
information and the best facts with respect to all these 
issues.
    David.
    Mr. Hayes. Very quickly, Mr. Chairman, there were a few 
approvals, maybe close to a dozen, after April 20. They were 
suspended. Approximately May 6, the MMS issued an order 
suspending the APDs that had been granted for any deepwater 
drilling after April 20. So, no new deepwater APDs have been 
approved after April 20, or will be approved, until the safety 
report is provided to the President on May 28.
    The Chairman. Thank you very much. My time is up.
    Senator Murkowski.
    Senator Murkowski. Thank you, Mr. Chairman.
    There's been a lot of discussion about the relationship 
between MMS and the oil and gas industry, as it relates to the 
standards and establishing the standards for operation in the 
Gulf. But, I--as much as you will have those that suggest you 
should not have a relationship, I think we recognize that it is 
those within the industry that are out there operating everyday 
that have a level of expertise to offer. We're seeing that as 
we're dealing with this spill here.
    The question to you this morning is, What is the 
appropriate role, if any, for the industry to play in the 
process as you work to communicate, from industry to the 
regulator, the standards that should be put in place?
    Secretary Salazar. Senator Murkowski, it's a very good 
question. Let me just say that, first of all, there are 
obviously things that are inappropriate, and when you go back 
and you look at what happened back in 2008, relative to what 
was going on between MMS employees and industry and the 
personnel and criminal investigations that occurred from all 
that, that kind of behavior is absolutely inappropriate, and 
there has been, and there will be, zero tolerance of it while I 
am Secretary of the Interior. That's absolute.
    On the other hand, it is important to recognize that some 
of the best expertise in the world with respect to what is 
happening, whether it's in the shallow waters or in the deep 
water, is coming from industry. It would be foolhardy for us, 
as a Nation, or for us at the Department of the Interior, to 
close the door and say that we will not receive input from API 
or other organizations that have tremendous knowledge. 
Receiving input from them, however, does not mean that they are 
the ones who are crafting the standard or the regulations. That 
ultimately is the responsibility of the Federal Government that 
has that authority under the law.
    Senator Murkowski. Let me ask about threshold requirements 
that may be in place within MMS to certify that those that are 
operating offshore with these lease parcels, whether they have 
the financial assets, the equipment that's necessary to meet 
their obligations as a leaseholder. As we're watching this 
continue to unfold down in the Gulf, the price tag, of course, 
the liability, of course, mounts on a daily basis. What is the 
threshold to certify that these operators have the necessary 
assets?
    Secretary Salazar. There are a number of aspects to the 
responsibility of the operator. But, it's a whole 
responsibility as the lessee of resources that belong to the 
United States of America. As I said, in this particular case, 
BP is the lessee; BP is the responsible party. Under the 
national legal framework, which has been adopted through many 
Congresses and through both Democratic and Republican 
administrations, it is that party that has the responsibility 
to deal with the consequences of this particular incident. That 
includes everything from shutting down the well, to spill 
response, to whatever damages might arise from this particular 
incident.
    In terms of at least this incident, Senator Murkowski, when 
you think about what is happening today in the Gulf Coast, I 
think there's an enormous effort that is taking place. I cannot 
think of anything more that could be done today to try to deal 
with this issue. When you think about the armada of boats or 
the number of people who have been assembled or the 
preparations that have happened on shore, it is massive. It is 
perhaps the world's largest response ever to any oil spill.
    So the requirements that were there from the Department of 
the Interior and MMS, with respect to the oil response plan and 
the capability, are certainly being seen actuated on a day-to-
day basis in the Gulf.
    Senator Murkowski. Given the fact that this deepwater spill 
is at 5,000 feet, and all the focus that we have on operating 
in the truly deep water, do you envision a new, perhaps a more 
enhanced, set of spill containment and response that is 
directed specifically to the deep water as a consequence of 
this tragedy?
    Secretary Salazar. Yes. Yes. The answer to that is yes, 
Senator Murkowski. I would envision that the 30-day report that 
we will deliver to the President will have a number of 
recommendations that deal with safety enhancements.
    You know, I have been in the Gulf Coast many times since 
April 20, and in Houston, I think, on 3 occasions now, to the 
BP command center. But, one of the things I have already 
learned, simply by spending some time at places like Cameron, 
who manufactured this particular blowout prevention mechanism, 
and at another company by the name of Varco, is that there are 
significant enhancements that could be made to blowout 
prevention mechanisms.
    So, there will be a number of recommendations that will 
come forth in our report to the President of the United States.
    In addition to that, I would expect that the investigations 
that are underway that will determine the root causes of this 
particular incident will also inform us, relative to additional 
precautions that need to be taken.
    The Chairman. Senator Wyden.
    Senator Wyden. Thank you, Mr. Chairman.
    Mr. Secretary, it is long past time to drain this safety 
and environmental swamp at the Minerals Management agency, 
which, of course, is the lead Federal agency over oil drilling. 
Now, my view is, is that this agency has been in denial about 
safety problems for years. As recently as last week, a 30-year 
veteran of the agency, who just left in January, told this 
committee that the agency has been a safe--a effective and 
independent regulator of the oil and gas industry, and he 
questioned the agency's critics for shining a hot light on the 
agency.
    So, let me start, in terms of safety, with blowout 
preventers. They're, of course, used because we have these 
blowouts frequently, and they're the last line of defense. But, 
despite this certainty, Minerals Management does not require 
blowout preventers that will ensure that the well can be shut 
down under accident conditions, such as having acoustic backup 
activation systems. In fact, again last week, Mr. Dannenberg, 
who is this veteran of the agency, said it was OK to rely on 
remotely operated vehicles as a backup, when, in fact, a study 
was done for the agency, saying that this approach was 
completely unreliable.
    So, my first question is, Do you believe that Minerals 
Management has adequately regulated blowout preventers?
    Secretary Salazar. No. The answer is no. I don't. I think 
that there is additional work that should have been done with 
respect to blowout prevention mechanisms. Obviously, there are 
multiple redundancies that are built in. This incident should 
never have happened, because of the fail-safe kinds of 
procedures and redundancies that are in place. But, it did 
happen.
    When, Senator Wyden, you take a look at this blowout 
prevention mechanism itself, you will find that this mechanism 
has 3 pipe rams. It has a sheer ram, it has a blind ram, it has 
two annular rams. It has a number of different redundancies 
that were built in to keep this kind of incident from happening 
again. But, it should never even have gotten there, because the 
blowout itself should never have happened in the first place.
    So, I think that the question that you raise is, Are there 
additional things that can be done to enhance the safety, not 
only of blowout prevention mechanisms, but cementing, perhaps 
practices on the drill rigs themselves? The answer to that is, 
absolutely yes. That will be part of what will be included in 
the report to the President.
    Senator Wyden. Now, what's happening in the Gulf is 
obviously an environmental disaster of huge proportions, yet 
Minerals Management didn't require an assessment of 
environmental consequences of an accident when it approved BP's 
drilling permit, or its lease. It didn't require BP to have an 
emergency plan for an oil spill if it lost control of the well. 
Minerals Management basically just accepted the assurances of 
industry here; that's what took place. Minerals Management 
accepted the assurances of industry that the chance of these 
kinds of accidents was too remote to worry about. Was Minerals 
Management right on that?
    Secretary Salazar. Senator Wyden, with all due respect, 
there are huge efforts that the Minerals Management Service 
took with respect to the environmental reviews concerning this 
particular lease sale, this area. I will have David Hayes walk 
through what some of those are, just so you will see what the 
environmental reviews have been.
    In addition to that, the conclusion that this is an 
unregulated industry is not correct. It is a very highly 
regulated industry. When you look at our regulatory mechanism 
here in the United States and compare that to the rest of the 
world, we have one of the most regulated industries in the 
world. Now, that doesn't mean there isn't room for improvement, 
whether it's with the blowout preventers or other parts of the 
OCS development. But, the fact is that there are significant 
regulations in place.
    Senator Wyden. Mr. Secretary, the regulations--but they 
aren't adequate. My sense is that they aren't being enforced. 
Certainly--I appreciated your candor with respect to the 
blowout, you know, preventers, because clearly there were not 
adequate regulations of blowout preventers. But, for MMS to 
essentially take the industry's position that these accidents, 
that the prospect of these accidents, was just too remote--and 
people were writing articles that minimized the prospects of 
these accidents, as well.
    My view is, is that they shouldn't have made those 
judgments. This is now going to be an opportunity for you to 
drain the environmental and safety swamp. I commend you for 
what you've done on the financial side. We have worked closely 
on that, because those practices were outrageous. But, we got 
to play catchup ball in a hurry, with respect to the 
environmental and safety area, because the regulations that are 
there have not been adequate. Minerals Management hasn't done 
its job.
    Thank you, Mr. Chairman.
    Secretary Salazar. If I may just respond to that. I do want 
David to respond to the notion that there were not 
environmental reviews here. There is a very robust regulatory 
mechanism in place. We have asked the Congress for additional 
inspectors, even in the budget that we submitted some time ago. 
There will be tremendous lessons to be learned here with 
respect to the mechanics of the drilling of the well, the 
cementing of the well, the blowout prevention mechanisms of the 
well, the multiple redundancies that are built in to those 
wells, and a whole host of other things. Those are required by 
law.
    I won't get into the law itself in great detail, but I want 
to just say that when this investigation is completed, through 
the Presidential commission that will be looking at these 
issues, I think there will be a lot that will come out that 
will be of great interest along the lines that you're talking 
about.
    David, would you just talk a minute about the environmental 
review?
    Mr. Hayes. Sure, very, very briefly. There are really two 
aspects to the environmental review. There's the National 
Environmental Policy Act side, the NEPA side, and then there's 
the spill-response-plan side that comes from the Oil Pollution 
Act of 1990.
    On the NEPA side, there's been a lot of discussion about 
the fact that there's a categorical exclusion at the end of the 
process, here, for the exploration plan. That's part of the 
problem--the governing statute only allows 30 days for approval 
of that. The President has requested congressional change of 
that.
    Prior to that point, however, there were two environmental 
impact statements prepared that governed this particular lease.
    But, that's not to say that Senator Wyden doesn't have a 
point. We will be doing a review of NEPA, with the Council on 
Environmental Quality, to see if those reviews are adequate, or 
not.
    I will say, however, that with regard to the question of 
evaluating the impact of a spill, the spill response plan that 
comes out of the Oil Pollution Act of 1990 required BP to show 
that it had the capability to handle a spill of 250,000 barrels 
a day for 30 days. Frankly, it's because that spill response 
plan was so robust and was in place that we've been able to 
mobilize, in the Gulf, the effort that has been mobilized.
    Senator Wyden. Do you think the procedures are adequate, 
Mr. Hayes? That's really the question.
    Mr. Hayes. The administration has suggested a change in the 
Outer Continental Shelf Lands Act with regard to the 30-day--
    Senator Wyden. Thank you, Mr. Chairman.
    Mr. Hayes [continuing]. Review.
    The Chairman. Senator Bunning.
    Senator Bunning. Thank you, Mr. Chairman.
    Welcome, Secretary Salazar and all others.
    Without a doubt, this spill a terrible tragedy. Not only is 
there the potential for vast ecological damage, but the 
livelihoods of the people that depend on the water of the Gulf 
of Mexico have been seriously jeopardized.
    This is to say nothing of the human--the loss of human life 
that has already occurred. The family and friends of the 11 
workers who were lost in the accident deserve our thoughts and 
prayers. As the investigation of what happened here gives us 
answers, we must hold those responsible accountable. Whoever 
made this mess has to clean it up. It is our responsibility, as 
lawmakers, to make sure that this happens.
    However, with this in mind, we must keep in mind--this 
accident in perspective. Since 1969 Santa Barbara oilspill 
disaster, there have been tens of thousands of wells drilled in 
the Outer Continental Shelf. This is the first such accident in 
our waters in over 40 years. We need to keep that in mind when 
we deal with this crisis. It may not be ideal, but the United 
States depends on oil, and the OCS drilling is a domestic 
source of it. Simply put, at this time, the prosperity that 
Americans can expect cannot exist without it. We need to keep 
our heads cool and all of this in perspective as we move 
through this disaster.
    With this in mind, I would like to ask this: How do you 
think the Federal Government can best move through this crisis 
while ensuring that this domestic energy supply continues to 
provide the energy that America needs?
    Mr. Secretary.
    Secretary Salazar. Senator Bunning, I think the response is 
twofold. First, we need to deal with the immediate crisis. We 
have a crisis on our hands----
    Senator Bunning. Yes, we know that.
    Secretary Salazar [continuing]. We have not rested for a 
long time, and we are throwing everything at it to make sure 
that we protect the people and the Gulf Coast. So, we're doing 
that.
    No. 2, I think that the President's directive to me from 
day one has been, we should make sure that we are transparent 
and that every lesson learned from this accident is learned. 
We'll learn that together. It will require reform, including 
reform of the legal framework that this committee deals with.
    Senator Bunning. I thought Senator Wyden kind of hit the 
nail on the head when he said, ``Have we adequate controls over 
those who are drilling, presently, or are we waiving the law to 
allow a more expedited procedure?'' I would like an answer. 
Maybe Secretary Hayes could give us an answer.
    Secretary Salazar. I will answer that. Do the laws need to 
be changed? The answer is, yes. The administration has already 
sent up a proposal to eliminate the 30-day mandatory 
requirement under which exploration plans are approved. That's 
a change which needs to happen. I think that that is only the 
tip of the iceberg of what we have to deal with, relative to 
making changes to achieve the goal, Senator Bunning, which I 
know you care about.
    Senator Bunning. Did we get lax because we had no accidents 
over 40 years? Or what happened?
    Secretary Salazar. Senator Bunning, in the Gulf alone, 
there have been over 36,000 wells that have been drilled----
    Senator Bunning. Yes.
    Secretary Salazar [continuing]. Including many in the deep 
water. There had never been an incident like this. So, did the 
country, as a whole--the U.S. Congress, the Department of the 
Interior, the oil and gas industry, and everybody else who's 
affected by this decision--become lax? I would say yes. The 
answer is yes. That's why it's important that there be a 
collective and shared responsibility, relative to how we 
respond to the problem at hand.
    Senator Bunning. OK. Last question, because my time's 
almost up. Has--you are aware the sale of offshore drilling 
leases must comply with the National Environmental Policy Act 
and require detailed environmental impact studies. However, 
this law has proven to be extremely cumbersome. It can take 
years to get a permit, and this can be further complicated by 
litigation. In an effort to move things along at a reasonable 
rate, the Federal Government has provided waivers from the law, 
and BP was granted such a waiver for this project.
    It would seem to me that this process is broken. Current 
law makes it too difficult to get new permits, so in some cases 
the law is waived, as it was for this project, resulting in 
this spill. It seems our policy is stuck between a law that is 
so bureaucratic that it paralyzes action and a practice of not 
using the law, which at this accident might show can possibly 
lead to tragedy. How can we find a way to solve this problem?
    Secretary Salazar. Senator, there will be an extensive 
review, including the review that we are undertaking with the 
Council on Environmental Quality to determine what changes need 
to be made. I will say this, that with respect to the 
environmental analysis, Deputy Secretary David Hayes went 
through the different environmental impact statements that were 
related to this particular well and this particular lease sale. 
You know, the 30-day requirement on approval of an exploratory 
plan, I think, is an impediment, frankly, to being able to do 
the kind of assessment that needs to be done.
    Senator Bunning. Thank you.
    The Chairman. Senator Dorgan.
    Senator Dorgan. Mr. Chairman, thank you very much.
    Mr. Secretary, thank you for being with us.
    I don't know what to make of all this. It seems to me that 
there's a lax culture in some circumstances, and perhaps with 
some companies. I was just reading, this morning, that one of 
the companies involved in this moved its headquarters from 
Delaware to the Cayman Islands and now to Zug, Switzerland. It 
has a dozen employees located there and 1300 located in 
Houston, Texas. My assumption is, they, like other major 
corporations, have decided to avoid their tax obligations in 
the United States. You know, companies like this want 
everything America has to offer, but they don't want the 
responsibility to pay taxes.
    I just observed that because I think there's a culture 
sometimes in companies that do the same things, here. From what 
I've read, we're talking about dead batteries, leaking 
hydraulic hoses, and perhaps, the blowout preventer not 
working. That just seems to me like sloppy management. Then the 
question about, ``What are the requirements for inspection and 
equipment testing? Are those requirements adequate?'' gets back 
to what Senator Bunning and Senator Wyden were referring to. 
Regulation is very important. Regulation is critical in these 
circumstances. Frankly, I think it's kind of jaw-dropping that 
those who are drilling offshore, particularly deep wells--but, 
those who are drilling offshore had no plans, apparently, for 
the worst-case scenario. The same, perhaps, can be said of the 
MMS. I just find--I think almost all of us would have thought, 
if someone had asked the question, ``We're drilling offshore, 
in sensitive areas and so on,'' So ``Is there a worst-case 
scenario plan--that is, to address the worst?'' The answer, 
apparently, has been no.
    Is that how you see it? I mean, let me ask another way. If 
the 1st of April--month and half ago--I had asked you, 
Secretary Salazar, Do you think this can happen? My guess is, 
you would have said, ``No, I don't think it would happen, 
because sufficient safeguards are in place.'' So, are we 
worried that there's another rig out there today that might 
have exactly the same situation without an adequate worst-case 
scenario response plan ?
    One final point. 60 Minutes did a piece, as is so often the 
case, that I thought was really interesting, interviewing Mike 
Williams, who was the chief electronics technician in charge of 
the computers and the electrical systems on that rig. I would 
encourage anybody to take a look at the transcript of what 60 
Minutes learned from someone who was there. It is a scary thing 
to read.
    Mr. Secretary, your response?
    Secretary Salazar. I'll try to answer as many of the 
questions as I can. First, with respect to other rigs that are 
out there, and concerns about having another incident like this 
happen, we--those rigs are inspected, under the regulations, 
every 30 days. In addition, I ordered an immediate inspection 
of all those rigs right after April 20. We are conducting 
additional inspections, not only of those, but also of the 
production platforms out in the Gulf.
    Secondly, in terms of worst-case scenario, the worst-case 
scenario under this oilspill response plan, as Deputy Secretary 
David Hayes said earlier, assumed a spill response capability 
of up to 250,000 barrels per day. The numbers, even though they 
have been dealt with at different levels, should not 
approximate that number.
    Third, on inspections and their adequacy, you know, we have 
asked for additional inspectors, even before this incident 
happened. We will continue to ask for additional inspectors. 
We, in the President's proposal just a few days ago to the 
Congress, asked for additional money to be able to beef up the 
inspection function of the Department.
    In terms of the conclusions at the outset, relative to bad 
batteries and a whole bunch of other things, I know enough to 
know that there were a lot of problems here. None of those 
problems should be glossed over. The President and I have been 
clear from day one, as you would want us to be, Senator Dorgan, 
that we will get to the bottom of the story. So, we will find 
out exactly what happened here. Those investigations are 
underway. It involves eyewitness testimony that is being 
presented. It involves understanding what happened with this 
particular well. There will be a story that will unfold that 
will tell us the truth. We are not afraid of the truth, and we 
will get to the bottom of it.
    Senator Dorgan. Just quickly, do you believe there are more 
and difficult circumstances dealing with the safety and 
environmental stewardship with deep-well drilling, as opposed 
to the shallow-water drilling?
    Secretary Salazar. The answer is yes. That's because of the 
difficulty of operating in the very deep waters. My day, for 
all you, my colleagues, here is a little longer than it used to 
be when I was a U.S. Senator, especially the last 30 days. But, 
you know, I start out very early in the morning, and have 
watched everything that is going on in the subsea with respect 
to responding to this particular incident. The ROVs, the 
robots, that are essentially trying to operate down at a mile 
below the surface of the sea, are operating in what is a very 
difficult environment. I would expect that the Presidential 
commission will take a very serious and hard look at the 
capacity to deal with issues when they occur at these very 
deepwater zones.
    Senator Dorgan. Mr. Secretary, I know you'll come in for 
some criticism here and there, but I think that you've been 
very hands-on. You and some others in the administration have 
been pushing very, very hard to address these issues. I thank 
you for it.
    Secretary Salazar. Thank you, Senator.
    The Chairman. Senator Sessions.
    Senator Sessions. Thank you, Mr. Chairman.
    We've got a very serious problem. Mr. Secretary, I admire 
and respect you greatly, and I appreciate your attention to it.
    My observation would be that the Federal Government was a 
bit slow in moving into this area. We didn't activate, 
sufficiently, the network of emergency communications that we 
do, like for a hurricane. The burdens fell on the Coast Guard. 
It was focused so much on trying to stop the spill and the 
leak. So, we had some problems.
    But, our fundamental situation is what to do now. No. 1, I 
believe in offshore production of oil and gas. I believe that 
we must take every effort to make sure it's done safely. The 
companies who've made large profits from production of oil and 
gas have high responsibilities. I expect them, and I believe 
you agree, that they should pay for the damage that they've 
done.
    I guess I'll ask you if that's their responsibility, as the 
responsible party, and will you join with the Congress in 
insisting that they pay every responsible damage that this 
spill has caused?
    Secretary Salazar. Absolutely, Senator. We have done that 
administratively, through the executive branch, including 
Secretary Napolitano and myself, in meetings with Tony Hayward 
and the other executives of BP. We have communicated in writing 
and have their communication back, in terms of their 
assurances, and in terms of making sure that the legal 
framework is in place for the future, relative to any 
adjustments that have to be made.
    Senator Sessions. Even Federal expenditures that your 
agency may spend will--some of that will be billed back to the 
company?
    Secretary Salazar. All spill response costs, sir.
    Senator Sessions. Now, let me ask you one more thing. While 
this is an environmental disaster, it's got to be addressed 
with the most effective way--in the most effective way. I am 
hearing, from my mayors--Gulf Shores, Orange Beach, Dolphin 
Island--that there's no oil on the beaches. They are losing a 
lot of reservations. People are canceling, afraid to come to 
the beach. So, at least at this point, the waters are as safe 
as ever and the restaurants are serving food. Hopefully, if 
people--hopefully, we won't have the kind of influx of oil 
anytime soon that would actually shut down those beaches.
    With regard to this blowout, Secretary Salazar, can you 
tell us, was it a regulatory failure? Was it a technical 
decision that--erroneously made, somehow, in this process? Was 
it human error? Or was it something unexpected and not--and was 
unpredictable that resulted in this spill? Just fundamentally, 
what was the--what would you tell us about how it happened?
    Secretary Salazar. Senator Sessions, I have spent a good 
deal of time trying to understand what could have happened 
here. I think many things obviously went wrong. It would be 
premature for me, today, to put the finger on exactly what went 
wrong and who was responsible, until the investigations are 
complete. You know this from your own time as a prosecutor. The 
facts are being discovered. When the facts are discovered, we 
will know the truth about exactly what happened and who was 
responsible, whether it was human error, whether it was 
problems relating to the cementing of the well in a number of 
different places, whether it was a problem relating to the 
blowout prevention mechanism, or whether there were problems 
relating to the actuation of that BOP, or whether it was 
problems relating to activities on the drill rig, or problems 
related to regulatory failures. That's the purpose of the 
Presidential commission, is to get to the bottom so that the 
American people know the truth about----
    Senator Sessions. I appreciate that. I guess, from my 
perspective, just a fundamental perspective, we need to know 
that, sooner rather than later. I'm a little disappointed in--
some of our previous hearings, that we hear from--on 60 Minutes 
what we couldn't hear from industry witnesses in this room. The 
point is that you've stopped new permits. I accept that and 
support that. But, fundamentally, we need to find out if this 
was something that could easily have been prevented, what kind 
of mistake was made? Because we don't want to place our area at 
risk. If it's something totally unexpected and we need to do 
more research and to figure out how to prevent it in the 
future, then this is something we need to know also. So, could 
you tell me when you expect the commission to give us some--at 
least--the kind of fundamental questions about how this 
happened that could help us make plans for how we're going to 
proceed in the future?
    Secretary Salazar. Senator Sessions, you raise very good 
questions, because 30 percent of our oil comes from just the 
Gulf of Mexico, alone. So how we deal with this issue is 
important. It's both a near-term issue and a longer-term issue.
    I think in the near term, the report that we will present 
to the President will have recommendations on enhanced safety 
measures. I already know, just having been to blowout 
prevention manufacturers, that there are things that ought to 
be done to enhance some of those provisions. So, there will be 
a robust set of recommendations that the President has directed 
us to develop.
    then, in addition to that, you know, the outcome of the 
investigations is several months away. That's because the 
evidence has to be gathered. It has to be analyzed. It has to 
have the eye of independence on it. Then judgments have to be 
reached. The judgments that will be reached will be very 
significant, I can tell you. No stone will be left unturned as 
we get to the bottom of what happened and hold those 
accountable for this environmental disaster.
    Senator Sessions. Thank you. As a former attorney general, 
I know you'll get to the bottom of it.
    Thank you.
    Senator Dorgan. Senator Landrieu.
    Senator Landrieu. Thank you.
    Mr. Secretary, I'm pleased to have you before our 
committee. This is an extremely important line of questioning.
    I want to start the way I've started every time you've 
appeared before this committee, to tell you how proud I am of 
you, how pleased I am the President appointed you to this 
position, because your character and integrity are unquestioned 
and our country needs a leader like this to help us figure out 
what--when--what happened, why it happened, and the way 
forward.
    I also want to compliment you and the President for not 
running and hiding, for not retreating, and for restating the 
importance of this country continuing to press forward to 
identify the resources necessary for our economy to function 
and our Nation to be energy-secure. If there was ever an 
opportunity to run out the back door on offshore oil and gas 
drilling or expanded drilling, this was it. You have not.
    You have taken the measured and right approach, in my 
opinion, to stop all permitting until a significant 
investigation can take place, and then find a way to move 
forward. I want to compliment you on that, and your team.
    I also want to say, for the record, having witnessed the 
response in the Gulf, that it has been thorough, it has been 
comprehensive, not only from Minerals Management, but the Coast 
Guard. Unlike past disasters that have occurred when, not only 
mid-management wasn't sent, trainees were sent down, this 
President has sent his Cabinet, time and time again, for the 
last 3 and a half weeks. His Under Secretaries in his Cabinet 
have been on the ground. The people of the Gulf Coast 
appreciate that.
    One of my questions is--and I would ask the members of this 
committee, before they're so quick to criticize others, to 
think if the members of this committee have, themselves, been 
out on an offshore oil and gas rig, either in the shallow water 
or the deep. I know this Senator has tried to take dozens, and 
have succeeded in taking dozens, of new appointees and 
Assistant Secretaries and Secretaries, myself, to see this 
industry, because of its importance to the Nation and its 
importance to be regulated correctly.
    So, I want to just mention that and ask the members of the 
committee, if you haven't, yourself, to please take the 
opportunity to visit one of these massive platforms in the 
Gulf. There've been 50--42,000 wells drilled and over 2,000 
deepwater wells drilled in the last 31 years.
    My question, Mr. Secretary, is this. The people of 
Louisiana that support this industry, support this initiative 
off of our coast, we most certainly want it to be safe and more 
secure. We are horrified by this accident. We're also managing 
a delta, as you know, that loses, every 38 minutes, a coastal 
marsh the size of a football field. Decades of mismanagement, 
not only by inadequate regulation of this industry, but also 
lack of investment in the delta itself, has caused this to be 
one of the most pronounced ecological and human--humanitarian 
disasters. Oil being spilled on a marsh that is already fragile 
and weakened--you've flown over it many times yourself--the 
weakened marsh allows oil to penetrate more deeply, killing 
vegetation, destroying habitat. Once the marshy vegetation 
dies, the natural eroding forces of the ocean quickly churn 
soil into open water, eroding our natural levee system.
    You helped me to pass the Domenici-Landrieu Gulf of Mexico 
Act, Mr. Secretary, that helped to try to begin to redirect 
some of the billions of dollars that are generated by taxes out 
in the Gulf to help Louisiana coast and the Gulf Coast.
    I am going to request acceleration of revenue-sharing 
today. I would ask you for your comments about the needs for 
the Gulf Coast States to have the resources necessary to join 
in the protection of our marshes when and if situations like 
this occur. Will you give positive comments? Will you be able 
support that initiative?
    Secretary Salazar. Senator Landrieu, I think that, at the 
end of the day, one of the things that will come out of this 
will be that there is the need to have an intense focus on what 
is happening in the Gulf. It is, in fact, if you will, the 
``Oil Bowl'' of the United States of America, and the impacts 
on its coasts have been significant. You and I have flown over 
the coastal areas on many different occasions, and we see the 
erosion and the need for doing rechanneling on the Mississippi 
River to undo what happened in the past through the Corps of 
Engineers and the rebuilding of the marshes, et cetera.
    That doesn't happen by itself. You know, I'm proud of the 
work which the President and his team have done, in terms of 
the Gulf Coast restoration, in terms of what has now become the 
template for ecosystem restoration on the Everglades. There is 
no doubt in my mind that one of those crown jewels of 
environment and restoration is, in fact, the Gulf Coast. So, we 
need to find a way of moving forward. It is incredibly 
important to the entire Gulf Coast region.
    Within the Department of the Interior, it is important to 
note that, yes, we have responsibility with respect to MMS and 
the issues that we are dealing with now, but, in addition to 
that, Senator Landrieu, in the Gulf alone, we have 40 national 
wildlife refuges and national parks, all of which contribute 
significantly to the wildlife mission of America, as well as to 
the national parks and recreation mission.
    So, we look forward to joining with you and to working 
closely with the other Members of the Congress in finding a way 
forward with respect to Gulf Coast restoration.
    Senator Landrieu. Thank you.
    The final thing I'll say, because I've got to go to vote, 
but--I hope that this incident--I'm confident it will give us a 
new look at the issue. These are Federal resources. There's no 
doubt. This oil was 50 miles off the shore of Louisiana. Our 
State boundaries end at 6 miles. But, 100 percent of the risk 
is, right now, being absorbed by the States of Mississippi, 
Texas, Louisiana, Florida, and, if this oil travels up the 
Atlantic, also other coastal States. So, I hope this gives us 
not only a new vision to regulate more carefully, but also to 
share the risk and rewards of what we're doing more fairly with 
the States.
    I thank you, Mr. Secretary. I have further questions, but 
I'll return after the vote.
    The Chairman. Senator Barrasso.
    Senator Barrasso. Thank you very much, Mr. Chairman.
    Secretary Salazar, I wanted to talk a little bit about the 
national response to this. The initial explosion occurred April 
20. It's now May 18. The administration waited 9 days after the 
explosion to declare this a spill of national significance. The 
New York Times editorial board, not normally a critic of the 
administration, said the timetable is damning.
    The American people have been watching this disaster unfold 
for nearly a month. Meanwhile, oil has been leaking into the 
Gulf at an estimated 5,000 barrels per day. Some scientists now 
put it at up to 25,000 barrels a day. Lives have been lost. 
People's jobs--economic livelihood are in jeopardy.
    There's been a number of different ideas on how to stop the 
leak: the containment dome, the top hat, the junk shot, and now 
this undersea straw. It doesn't seem that anybody checked, 
beforehand, whether any of these things would actually work.
    So, the American people aren't just furious at British 
Petroleum, the American people are also furious that the 
government has allowed this to happen, with no real plan in 
place.
    The press reports reveal a litany of failures at the 
Department leading up to the explosion. An Associated Press 
investigation has shown that the rig that exploded was allowed 
to operate without safety documentation required by government 
regulations.
    There was a story in the Casper Star Tribune yesterday--
front page--``Feds didn't make inspections on rig, as 
claimed.'' Said, ``Regulation is so lax that some key safety 
aspects of--on rigs are decided almost entirely by the 
companies doing the work.'' It went on to say that, ``The 
Associated Press sought to find out how many times government 
safety inspectors visited the Deepwater Horizon, and what they 
found in response: MSS [MMS] officials offered a changing 
series of numbers.''
    So, if the Department can't keep track of inspections, how 
can they possibly believe that the Department is properly 
overseeing more 3500 active platforms in the Gulf? There are 
different reports, and this will all come out as time goes on, 
but, it seems that, as Senator Wyden said, policies and 
regulations serve no purpose if the administration doesn't 
enforce them.
    Now, you now are proposing dividing Minerals Management 
Service into two different parts. The job may be too big for 
one person. Yet, you have a chief of staff. It's no easy job 
overseeing 6700 employees, but he's also serving as Assistant 
Secretary for Fish, Wildlife, and Parks, which is also a full-
time job. When--I voted for his confirmation, but this Energy 
Committee questioned his ability, or anyone, to fulfill both 
jobs, during the confirmation process. It seems that those are 
both very big, full-time jobs.
    So, I have 3 obvious questions: Was this oilspill response 
plan grossly inadequate? What needs to be changed to ensure 
that we respond more quickly in the future? Would the country 
be better served, and the Department more able to prevent 
disasters like this and provide better oversight, if you had--
really separate those 2 jobs, the chief of staff from that of 
being the Assistant Secretary for Fish, Wildlife, and Parks?
    Secretary Salazar. Thank you very much, Senator Barrasso. 
Let me just, at the outset, say unequivocally that the 
President and my colleagues on this Cabinet have been 
relentless from day one. Deputy Secretary David Hayes was sent, 
the day after the explosion, to New Orleans, Louisiana, without 
a change of underwear and without a toothbrush, because of the 
urgency that we brought to this matter. That urgency has 
continued from that day. It has included members of the 
Cabinet, including Secretary Napolitano, who is on this matter 
in the day, in the middle of the day, in the night, and is 
relentless, along with Admiral Allen and his leadership at the 
National Incident Commander, Secretary of Energy Steven Chu, 
whose scientific world is being brought to bear on the problem.
    As you can see, with the massive deployment that is 
underway in the Gulf Coast, with an armada of ships and 
personnel and preparedness, there is not anything that is being 
spared to provide what is going to be, and has been, the most 
effective response possible in human history on this kind of an 
incident. So, the characterization of slowness is absolutely 
wrong and misplaced.
    Secondly, with respect to reform efforts and inspection 
efforts, we have pushed hard, Senator Barrasso, not only in the 
Outer Continental Shelf and MMS, but, as you are very well 
aware, based on our communications and correspondence, very 
hard, as well, in terms of what we do on the onshore, the 
elimination of categorical exclusions and a whole host of other 
things that need to be done right. We need to have the right 
regulatory regime in place. We will work on making sure that 
that happens.
    Part of the President's proposal that was sent up initially 
was to undo the 30-day statutory requirement, which requires an 
approval within 30 days by the Minerals Management Service. So, 
those are the kinds of things that we need to take a look at.
    I would say, as a footnote to that, Senator--you are my 
good friend and you are my former colleague--I would hope that 
one of the things that can happen with this kind of a national 
tragedy and national incident is that people can come together, 
as opposed to doing a blame game, and figuring out, first, how 
we fix this problem and, second, how we make sure that it never 
happens again. I very much look forward to working with you on 
that.
    In terms of your last question concerning my chief of staff 
and the Assistant Secretary of Fish, Wildlife, and Parks, Tom 
Strickland, I will only tell you that he's an extraordinary 
human being, with the capability of probably producing the work 
of 4 ordinary human beings. His days and weeks are like mine--
80- and 90-hour weeks and beyond. Along with the team that I 
have at this table, we have a bunch of workaholics who are 
doing a very good job at their assignments.
    Senator Barrasso. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Thank you very much.
    Let me ask another question or 2, until other Senators who 
have not had a chance to ask questions return from this vote.
    Mr. Secretary, one of the issues I alluded to in the 
opening statement that I made is this issue about MMS's ability 
to review modifications in the plan. Now, the way I understand 
this operates, a company that has a permit to drill--it submits 
a plan for what they're planning to do, and that is signed off 
on by MMS, and it has to meet whatever requirements imposesd. 
Then, in the course of the drilling, sometimes changes are made 
in the plan--or the plan is not followed, as written.
    I guess--you know, there are a lot of technical issues that 
have possibly contributed to this accident. Some of those you 
mentioned--cementing, the amount of cement that's used, the 
type that's used, the number of centralizers that are used to 
set the well, the absence of an inflatable packer to prevent 
anular gas leaks, displacement of drilling mud with seawater 
too early in the plugging, an abandonment process--a whole 
range of these things, some of which seem to me to be changes 
in the plan. To what extent is MMS involved in reviewing those 
modifications of the plan under the current regulatory system? 
Or does the current regulatory system need to change so that 
the MMS is involved before changes are made in the plan, if 
they're not currently involved?
    Secretary Salazar. Chairman Bingaman, I'm going to have Liz 
Birnbaum, the Director of MMS, supplement this comment, but 
some of those changes that you talk about that occur, occur at 
different places. The exploratory plan, once submitted, 
essentially has its 30-day congressionally mandated requirement 
for action. But, once beyond the exploratory plan, there is a 
permit that is granted to drill, the so-called ``APD.'' There 
are changes that occur once the drilling company starts to 
drill the well. They may come to a place in the formation where 
they have to make a change or they have to make some other kind 
of modifications. So, those kinds of modifications regularly 
occur.
    In this particular well, for example, you're going down 
about a mile below the sea surface. Once you get to the sea 
floor, you go down an additional 3 and a half miles to tap the 
reservoir that was tapped here. So, there are changes that 
occur as you're going down.
    I will have Liz comment a little bit more about exactly the 
process and how it works, relative to approval.
    Liz.
    Ms. Birnbaum. Thank you, Mr. Secretary.
    As the Secretary said, we are involved in both the initial 
approval of a drilling plan and in reviewing revisions. Those 
have to be revisions that are relevant to our regulations. So, 
there are some things they might change that were plans that 
they had that weren't submitted to us as something we needed to 
approve with respect to our regulations. I think, of the list 
of changes you mentioned, we did approve some of them, and some 
of them were not actually approvable under our regulations.
    We are doing a thorough review, as the Secretary said, of 
our regulatory scheme, and trying to figure out where there are 
gaps and where we might need to impose additional regulatory 
requirements. But, there were numerous approvals at various 
stages of this well, and approvals of changes.
    The Chairman. I guess, obviously, the kinds of changes that 
I'm concerned about are when the company--when someone might 
make the judgment, ``Look, we're behind schedule. We've got to 
get this done. We've got another well to drill. It's costing us 
a lot of money to continue with this, and therefore, we're 
going to replace the mud with saltwater before we should, or 
we're going to do--whatever else.'' Those are the kind of 
changes I'm worried about. Is it your view that MMS is 
consulted if those kinds of changes are made, or that they are 
not?
    Secretary Salazar. Let me have Liz respond to that, Mr. 
Chairman, if I may. But, let me make an overarching comment, 
here, which I've said several times in this hearing. The facts 
here are still being investigated and developed, and what I can 
assure you, Mr. Chairman, is that those responsible will be 
held accountable at whatever level of the law is necessitated 
by the facts as they unfold in this particular incident and 
circumstance. We will know a lot more about that, obviously, as 
the investigations move forward and we pinpoint the different 
places that caused this particular incident to occur.
    I will have Liz comment on the other part of the question.
    Ms. Birnbaum. I'm not sure I can add a lot more than what 
the Secretary said. I will say that MMS does not make decisions 
about approving changes based on whether or not the company is 
in a hurry. Our engineers review any changes proposed, based on 
whether or not they meet regulatory and safety standards.
    We do need to review all those standards, and we do 
anticipate there will be some changes as a result of this 
review. If I do find out that anybody approved a change based 
on the fact the company was in a hurry, that will be a major 
problem.
    Thank you.
    The Chairman. Senator Bennett has not had a chance to ask 
questions.
    Go right ahead.
    Senator Bennett. Thank you very much.
    Mr. Secretary, we welcome you here. Given the circumstances 
under which you come here, you might be wishing you were on 
this side of the dais again, but you asked for work when you 
got down there, and you certainly have it. I join with Senator 
Landrieu in welcoming you and praising you for your 
determination to take this job that has turned out to be 
perhaps more interesting and challenging than you might have 
thought.
    I respect what you're saying about the facts not being 
fully available yet. I think we need to be careful not to jump 
to too quick a judgment in some situations, and applaud your 
effort to get those facts investigated and together.
    Most of the questions that can and should be asked, with 
respect to the facts before us, have been. So, I'd like to just 
look out a little. I'm sure my line of questioning will not 
come as a complete surprise to you.
    You made the reference to Three Mile Island in your opening 
statement, and how this country, in my view, made a very 
serious mistake, following Three Mile Island, to pull back on 
nuclear power. I hope we don't make a mistake with respect to 
developing our resources, here, because we need the oil. We 
need it domestically. The more dependent we become on imported 
oil, the more difficult many of our challenges are. So, let's 
talk about not only drilling--how quickly we can resume 
drilling offshore, but let's talk about what we can do to 
increase the amount of drilling onshore to replace the oil and 
energy facilities that will be lost while we're engaged in this 
investigation and while we've got a moratorium on any further, 
going forward, until we get all the answers to which you've 
referred.
    You and I have had this conversation before about the 
regulations that, in my view, slow down looking for oil and gas 
opportunities here in the United States, particularly on public 
land. You've said to me that one of the reasons that royalties 
are down so dramatically in the State of Utah, and public-land 
States, is that the industry as a whole is--the price has gone 
down, and so, that's why people aren't drilling.
    Since that--we've had that conversation, I've been to 
Texas, and I find that, on private lands, they're--they are 
drilling for energy resources. One of the obvious differences 
is, if people choose to drill on private land rather than 
public land, there is no royalty paid either to my State or to 
the Federal Government. Now, there's money that's paid in 
taxes, in terms of the profits that these companies made.
    But, can I use this as a time to nudge you to try to speed 
up the process by which we can expand our search for oil and 
gas on public lands, onshore, that don't have the kinds of 
problems that you have in this particular challenge?
    Secretary Salazar. Thank you very much, Senator Bennett. 
Thank you for your friendship and your hard work here in the 
U.S. Senate.
    Let me respond in 3 ways to your questions and your 
comments.
    No. 1, the status that we are in today is that we have hit 
the pause button. The President has been very clear with me, 
``Hit the pause button.'' We have hit the pause button with 
respect to OCS development. That means we will make decisions 
in the days and weeks ahead about how, exactly, we will be 
moving forward on a panoply of issues relating to the OCS.
    Senator Bennett. I agree completely with that decision, 
that the pause button makes sense.
    Secretary Salazar. OK. No. 2, with respect to oil and gas, 
we have been clear, from the beginning of the administration, 
that we see oil and gas as being part of the energy portfolio 
of the United States. It's necessary for us for energy security 
reasons, for economic security reasons, and without it, we 
essentially would have an economy that would shut down. So, we 
will have oil and gas as part of our energy future, I have no 
doubt.
    No. 3, with respect to speeding up onshore development, 
Senator Bennett, you might remember, it was not all that long 
ago where I did the cancellation of the 77 lease sales in Utah, 
in large part----
    Senator Bennett. Yes, I remember that.
    Secretary Salazar [continuing]. In large part because what 
I wanted to do was to make sure that it was being done right 
and responsibly with the right environmental review.
    Deputy Secretary David Hayes will never forget his meeting 
in Vernal, Utah, where he came before a crowd of some 800 very 
angry people who were very concerned about the changes we were 
making. However, that has been resolved, and we're still 
working on a number of issues relating to that particular 
incident. I think it typifies what we have been doing as an 
administration, from the very beginning, and that is finding a 
way of doing business that brings balance to what we are doing 
with respect to oil and gas development. We believe that we 
need to develop oil and gas, but we also believe, strongly, 
that we need to develop it in a responsible way that respects 
both the environment and respects the ecological values that we 
are protecting.
    That is equally true with respect to the robust effort, 
which has been a new change for the Department of the Interior, 
on embracing the new energy future, which includes solar and 
wind and geothermal.
    I was in your State, in the last month, where the students 
at Milford, Utah, spoke about you in very positive terms, about 
what had happened in Milford, Utah. We are now moving forward 
there with 2 of the most extensive renewable energy projects in 
the country. This committee, at some point in time, Senator 
Bingaman, may want to actually go to Milford, Utah, to see what 
is happening there with respect to, first, a wind project, 
which will ultimately grow to about 1,000 megawatts of power; 
second, with respect to a geothermal plant, which is generating 
about 50 megawatts of power; and, third, with respect to a 
solar energy facility, which they are planning to propose 
there; and, fourth, what will be the newest expansions to 
transmission to get renewable energy from Milford, Utah, to 
places where it will be consumed.
    So, there's a lot of work that we have done, a lot of work 
yet remaining to be done.
    Senator Bennett. I appreciate that. I'm sure you didn't 
expect to come here without my raising the issue of, What can 
we do about getting the oil and gas leases moving a little more 
rapidly?
    Thank you, Mr. Chairman.
    The Chairman. Senator Udall.
    Senator Udall. Thank you, Mr. Chairman.
    Good afternoon, to all of you.
    Mr. Secretary, thank you for being here. I know you well. I 
know how serious you are about this situation. I know you're 
not afraid of the hard questions. You headed the Colorado 
Department of Natural Resources. You were the Governor's chief 
counsel--Governor Romer. You were the attorney general of 
Colorado. You've answered questions today in a forthright 
fashion. I thank you for that.
    I was reminded, too, Senator Murkowski, of Secretary 
Hickel's tenure. It was many years ago; I was a lot younger 
back then. But, I remember he famously said, ``The right to 
produce is not the right to pollute.'' Secretary, you put your 
finger on it when you said, ``This is a collective 
responsibility.'' But, certainly those involved have an 
additional responsibility to clean up, and to provide the 
resources to make the people of the Gulf Coast whole.
    So, again, thank you for being here.
    I have a series of questions, as we all do. But, let me 
just start with the confusion about how much oil is leaking out 
of the well, Mr. Secretary. Seems like the BP estimates are 
based on satellite images of the surface. Why aren't we getting 
better estimates of the total amount of oil that's leaking out 
of the well? Can you elaborate and edify for us what you think 
is happening?
    Secretary Salazar. I would be happy to, Senator Udall. 
First of all, I admire how fast you became the senior Senator 
for the State of Colorado.
    But, let me just say, with respect to your question on the 
amount of oil that is leaking out into the ocean, that is a 
very fundamental question. There's been a lot of effort to try 
to estimate what is out there. The number that has been used 
for purposes of dealing with the issue, up to this point, has 
been 5,000 barrels per day. That may still turn out to be the 
right number. It may turn out to be a different number. But, 
there is currently underway an effort that involves the United 
States Geological Survey, NOAA, and other agencies, to try to 
get a serious quantification of what has spilled out into the 
ocean, so that you have a conclusion that is one that we can 
have confidence in.
    Senator Udall. I look forward to further information, and I 
encourage you to unleash all the experts we have. I, again, 
don't want to cast aspersions on BP, but certainly the fact 
that we get these different--differing reports draws me to the 
conclusion that we ought to ask BP what actually is happening 
there.
    Let me----
    Secretary Salazar. Let me just say----
    Senator Udall. Sure.
    Secretary Salazar [continuing]. If I may----
    Senator Udall. Yes.
    Secretary Salazar [continuing]. Senator Udall, to interrupt 
you. The role of BP and the role of the Federal Government is 
one that needs to be understood. It's the national framework 
that makes BP the responsible party. But, we, as the U.S. 
Government, have the responsibility to be the oversight party 
and to hold them accountable. From day one, Secretary 
Napolitano, the National Incident Commander, Thad Allen, and 
others who are involved, have made that very clear.
    Senator Udall. I think Senator Barrasso referenced how many 
times MMS inspectors had been on the Deepwater Horizon rig. 
There was, I think, some reports that every month there is to 
be an inspection and a site visit. A 104 months the rig's been 
up. That would mean there should have been 104 inspections. Do 
you know the exact numbers in that regard, when it comes to the 
inspections that have occurred?
    Secretary Salazar. Senator Udall, it's a very good 
question. With respect to the time that the Deepwater Horizon 
was on this particular drill site, I have the schedule, and it 
was inspected monthly, which is what the regulatory requirement 
is.
    When you go back in time to the beginning of the Deepwater 
Horizon and its activities, inspections have occurred, of the 
Deepwater Horizon, 88 times since September 2001.
    You have to understand, too, that there are times where, if 
the rig is simply not doing anything but just standing there, 
it is not inspected during that particular month. But, during 
the critical time period here, based on what MMS has given to 
me, it is my understanding that it was inspected monthly.
    In addition to that, based at least on some preliminary 
information that I have seen on the inspections related to the 
blowout prevention mechanisms and other things, those did occur 
in accordance with the regulatory requirements.
    But, I will say this, as well--that the investigations that 
are underway will give us a complete picture of exactly what 
did happen and what didn't happen, and whether or not there 
were any problems. At the end of the day, what the President 
and I strongly believe is, we will learn the truth.
    Senator Udall. Mr. Chairman, I, like all Senators, have 
many, many more questions. But, I'll submit them for the 
record.
    Thank you again----
    The Chairman. Very good. Let me just advise folks, the 
order we have here is Senator Sanders next, Senator Menendez, 
and then Senator Cantwell, unless Senator Johnson returns, in 
which case we'll insert him in.
    But, Senator Sanders.
    Senator Sanders. Thank you very much.
    Mr. Secretary, thank you very much for your hands-on 
efforts in dealing with this terrible tragedy.
    I recognize, as we all do, that the immediate task at hand 
is to stop the flow of oil. We all recognize that. But, I 
think, as you indicated in your opening remarks, perhaps this 
is also a wake-up call, in terms of future policy--energy 
policy.
    My questions, to begin with, is the following: As you know, 
in 2008, both Congress and former President Bush lifted 
longstanding moratoria on offshore drilling in the Outer 
Continental Shelf of the Atlantic and Pacific coasts. The 
Energy Environmental Administration studied the issue, and what 
they found was that new drilling in the Atlantic and Pacific 
would deliver to consumers a total savings, in the year 2030, 
of 3 cents a gallon. Three cents a gallon. Meanwhile, by going 
forward with stronger CAFE standards of 35 miles per gallon, in 
that same year we're going to save consumers a dollar a gallon.
    Now, everything we do deals with risks and benefits. So, my 
question to you is, Would you recommend to the President that 
he reinstate the permanent moratorium on new drilling offshore 
in the Atlantic and Pacific and focus on saving oil through 
progressively higher fuel economy standards? In other words, is 
it worth it to expose ourselves to these risks to save 3 cents 
a gallon in the year 2030?
    Secretary Salazar. Senator Sanders, thank you very much for 
your service and for your questions. Let me respond in 2 ways.
    First, this administration, from the beginning that we have 
been involved in the energy debate--in fact, even during the 
campaign--we have made efficiency one of the highest orders of 
business, because we believe that that, ultimately, is critical 
for us to get to be----
    Senator Sanders. I know that you have.
    Secretary Salazar [continuing]. A more energy-independent 
nation. The CAFE standards alone, based on what the Department 
of Transportation and what EPA have done with respect to their 
regulations, are going to exceed far and above and beyond 
whatever this Congress ever contemplated. That will save 
millions of barrels of oil. So, the savings measure in your 
message is well heard and is being executed by this President 
and his administration every day.
    No. 2, on your question concerning the Outer Continental 
Shelf and bans on the Atlantic and the Pacific. If I may, Mr. 
Chairman, maybe I ought to take a few minutes and just give you 
more of an overview of that--since this question relates to the 
Outer Continental Shelf and what our proposal had been. It may 
take me a few minutes to do this.
    Senator Sanders. You guys supported the Bush administration 
in lifting the moratorium.
    Secretary Salazar. Let me be specific on what our plan is 
with respect to the OCS. I will start with you, Senator 
Sanders, concerning the Atlantic, because I know that that's an 
important part of it.
    But, let me back up and say, when I look at the Outer 
Continental Shelf, there obviously are the 4 major areas that 
have to be looked at. It's the Atlantic, it's the Gulf of 
Mexico, it's the area in the West, along California, Oregon, 
and Washington, and then, obviously, the Alaskan areas. The 
plan that we put together in March essentially was a coming 
together of what was a very thoughtful way forward, in terms of 
dealing with the Outer Continental Shelf.
    So, in the area of the Atlantic, which I know you are 
concerned about, in the northern part of the Atlantic, we said 
we will not even do seismic up there. There will be no lease 
sales.
    In the area of the Mid-Atlantic and the South Atlantic, 
because of different considerations there, including the strong 
support from the State of Virginia and the two U.S. Senators 
from the State of Virginia, what we said there is that we 
essentially would develop additional information. I still think 
that is the right thing to do, because we need to know what the 
facts are so that, if there's a debate about it, we know what 
we're fighting about. You know, no one has done anything with 
respect to seismic out in the Atlantic for a period of 30 
years.
    With respect to the Virginia lease sale itself, that is 
something which is on the schedule from the current OCS plan. 
There are issues that are being considered in the environmental 
analysis, including conflicts with respect to the military.
    With respect to the Gulf Coast, which I know Senator 
Landrieu and others----
    Senator Sanders. Mr. Secretary, I'm running out of time. 
But, you----
    Secretary Salazar. OK.
    Senator Sanders [continuing]. Can you give me an answer to 
the question? Is it worth the risk? Is 3 cents a gallon in the 
year 2030 worth the potential risk of another disaster like 
this? Should we reinstate the moratorium?
    Secretary Salazar. Senator Sanders, the reality of it is 
that we will be depending on oil and gas as we transition to a 
new energy future. When you look at certain areas, specifically 
in the Gulf of Mexico, that is where we know there are huge 
energy--oil and natural gas resources. You are not going to 
turn off the lights of this country or the economy by shutting 
it all down. So, it's important for us to.
    Senator Sanders. No, no one is talking about shutting it 
all down. We're talking about reinstating the moratorium that 
had been going on, existing for many, many years.
    Secretary Salazar. You know, I think, Senator----
    Senator Sanders. From new drilling.
    Secretary Salazar [continuing]. Senator Sanders, I don't 
mean to be argumentative with you, but I think what we need to 
do, as the President has done, and as we have done, is, to hit 
the pause button, OK? We will be evaluating a number of 
different issues and making decisions about how we are going to 
move forward.
    Senator Sanders. OK. Let me just conclude. Thank you, Mr.--
I don't believe the risk is worth 3 cents a gallon in the year 
2030.
    The Chairman. Senator Menendez.
    Senator Menendez. Thank you, Mr. Chairman.
    Mr. Secretary, you know, I have the highest regard for you, 
on a personal as well as a professional basis. I appreciate the 
effort that you have had in leading the response to this 
disaster. But, I personally believe that you and the country 
have been ill-served by the Mineral Management Service. I want 
to ask you, do you believe that MMS has underestimated the 
risks associated with offshore drilling?
    Secretary Salazar. I would say that this effort, here, with 
respect to this particular incident, I think, demonstrates that 
there are safety issues which are very important for this 
country to consider. It raises the question of whether or not 
all the appropriate safety mechanisms are in place. I would say 
my initial read on that, Senator Menendez, is that there should 
be additional safety requirements.
    Senator Menendez. But, beyond the safety requirements, I'm 
asking, Has the Department underestimated the risks to offshore 
drilling?
    Secretary Salazar. You know, I think that the risks that we 
are seeing here are still to be determined. We have, 
essentially, a well which has yet to be shut down, as I 
indicated in my opening testimony. There's nothing in life, or 
in any program or any Federal resource development effort, 
Senator Menendez, that is risk-free. There are risks. The 
question will be to have whatever program it is that we design 
for the Outer Continental Shelf achieving the highest safety 
standards possible.
    Senator Menendez. I appreciate that basically--is it fair 
to say, what you're saying is, the question is still open--
judgment on that question I've asked you is still open? Is----
    Secretary Salazar. That's why----
    Senator Menendez. Is there a yes or no to that?
    Secretary Salazar. The answer is yes to that. That's why 
the pause button has been hit, so that we can do an evaluation 
and make a report to the President. We'll do that.
    Senator Menendez. Here's where I have a problem, Mr. 
Secretary. For those who suggest the Department has not 
underestimated the risks, then I'd ask, Why is it that MMS has 
repeatedly felt the need to overrule NOAA and allow drilling to 
move forward without proper permits? Why is it that scientists 
at MMS were regularly pressured--they said that they were 
regularly pressured by agency officials to change the findings 
of their internal studies if they predicted that an accident 
was likely to occur or if wildlife might be harmed? Why is it 
that, in September 2009, NOAA accused the Minerals agency of a 
pattern of understating the likelihood and potential 
consequences of a major spill in the Gulf, and understating the 
frequency of spills that have already occurred there? I look at 
all of that. I don't know if you had the chance to see the 60 
Minutes, call it, ``expose'' of one of the people, the chief--I 
think it was--chief technology officer was his title, aboard 
the Deepwater Horizon, and how so many issues came up. There 
was a drive by BP to just get this open. Yet, all of those 
safety issues--the breaking of the--you know, the rubber seal 
around the--you know, the drill, and all of the rubber 
particles that were--subsequently came to the part, the drive 
to move in a different direction.
    I look at all of this and I say to myself that we have 
dramatically underestimated--it doesn't mean that we won't--
that there won't be a policy decision--but, we have 
dramatically--MMS has dramatically underestimated the potential 
risk here.
    I look at--you know, we have the--in March, you announced 
the revised 5-year program for 2007 and 1912, which includes 
drilling off the coast of Virginia, less than 100 miles from 
the Jersey shore. We asked for that public comment period to be 
extended beyond May 3. Shouldn't we reopen that comment period 
until we can find out what happened here, and--or is it the 
policy of the administration to expand, not to just keep 
offshore drilling where leases have been let in areas have--are 
subject--but to expand offshore drilling, no matter what we 
find in this investigation?
    Secretary Salazar. Senator Menendez, let me say, first of 
all, with respect to the March announcement and the 5-year 
plan, you know as well as I do what the history of that plan 
was. That is that, when we came into office, we essentially had 
a plan that opened up everything in the Outer Continental 
Shelf, with the exception of the small area near Florida that 
is subject to the congressional moratorium. Nothing else is 
under moratorium today.
    So, we move forward to undo, essentially, what had been the 
5-year plan of the prior administration, which would have 
opened up everything along the Atlantic, the Pacific, Alaska, 
the Gulf, the eastern Gulf, and everywhere else. We not only 
moved forward to make changes, but we also postponed the 
effectiveness of that plan, which we did by extending what was 
a comment period that had been mandated to be ``60 days to 180 
days'' to half a year. We took additional time to come up with 
what we thought was the best thoughtful analysis of how to move 
forward with energy development in the Outer Continental Shelf. 
So, we have taken significant comment on that.
    Let me, number 2, just say to you that with regard to the 
findings on the 60 Minute program, I've not, frankly, had a 
chance to watch television. I've been trying to get this 
incident under control. The facts will tell us a lot when these 
investigations are done, Senator Menendez. They will tell us 
about what happened, about whether or not there was negligence, 
gross negligence or other culpability here, and by whom--
whether it was the companies, whether they were inspectors, 
whether there were other factors that were involved. But, we 
will get to the truth, and the truth will be given to the 
American people.
    So, we'll learn the lessons from that. I'm certain that all 
of those lessons will be a part of what will inform what we do 
with respect to the future of the Outer Continental Shelf.
    Senator Menendez. Mr. Chairman, my time is up, but I do 
hope that the Chair will consider bringing some of these 
scientists and others, and NOAA and others, before the 
committee, because I think we need to know what MMS told their 
scientists to do, or not to do. I think we need to hear from 
NOAA about how they were consistently overruled. I have real 
concerns about that.
    Secretary Salazar. If I may, Mr. Chairman, just on that 
point, we have made science the benchmark of our Department 
since I came on board. Frankly, if I find that there is someone 
within our Department that has ignored the science, their heads 
will roll. Their heads will roll with respect to this incident 
or with respect to anything else that we have done. That should 
not happen, and that will not happen.
    The Chairman. The last person in this first round of 
questions is Senator Cantwell.
    Senator Cantwell. Thank you, Mr. Chairman.
    Thank you, Mr. Secretary. I'm sure you have been working 1-
hour days, and so we appreciate you being here. Obviously we 
are all concerned about things that we can do to reform our 
system, as well as making improvements right now. So, I 
wondered if I could just ask you several questions, part of 
which are about moving--about the future.
    One of them is that the Coast Guard makes sure that vessels 
and drill rigs and undersea drill systems are approved by a 
third-party independent agency; in this case, the American 
Bureau of Shipping. Wouldn't it be smart to have an independent 
engineering expert provide the same kind of classification or 
certification for the drilling systems?
    Secretary Salazar. I'm going to have the Assistant 
Secretary for Land and Minerals, Wilma Lewis, who is also a 
former prosecutor for the District of Columbia, U.S. Attorney 
and Inspector General for the Department, argue the question.
    Ms. Lewis. Thank you very much, Mr. Secretary, and thank 
you, Senator Cantwell--thank you very much, Mr. Secretary and 
Senator Cantwell.
    I think one of the things that the Secretary has mentioned 
during the course of his testimony today is the importance of 
making sure that, as we move forward, we learn the lessons of 
this very tragic incident. That's one of the important parts or 
pieces of what we expect to be doing and what is ongoing at 
this point, in fact.
    As a result of investigations that are being taken as a 
result of our own reviews, consultations with experts, 
consultations with individuals from industry, as well as 
outside of industry, and our own framing or screen through 
which we'll put all that information, we will be looking very 
hard at issues of the nature that you have just raised. That is 
to say, What are the current regulations? Oversight, 
management--should they be improved? To the extent that a 
third-party reviewer, which sounds like a very credible and 
good and legitimate suggestion, should be included in the 
review of equipment or otherwise, that's the kind of thing that 
we'll be examining.
    I think that we really have to make sure that at the end of 
the day, we learn from this tragedy and we impose various 
procedures, processes, as we go forward, to make sure that this 
doesn't happen again.
    Senator Cantwell. I thank you for that answer. But, I think 
part of the issue is that--well, I'm definitely going to be 
drafting legislation in this regard, because I think it's clear 
that things as critical as blowout preventers that don't have 
third-party validators basically saying that they do work, is 
kind of missing the system. Why, basically, say that, you know, 
you approve the ship and you approve some of the drill system, 
but not the undersea drill part? Now, here we are without--you 
know, we have industry association hearings, all of these 
things, basically, with evidence that the blowout preventers 
weren't as fail-safe as people thought.
    I have a second question. Mr. Secretary, you testified that 
you ordered a median inspection of deepwater oil and gas 
operations in the Gulf. Does that include the Atlantis?
    Secretary Salazar. Senator Cantwell, there is currently an 
investigation underway with respect to the Atlantis.
    If I may, with respect to your first question, the 
President has us been very clear and resolute in his direction 
to us, to develop a set of recommendations on the safety issues 
on the systems. We have already brought in the National Academy 
of Engineering, which is essentially at an equal par the 
National Academy of Sciences, to provide us this kind of input. 
So, you're on the right track.
    Senator Cantwell. Thank you. Thank you, Mr. Secretary.
    Do you know--my colleague brought up this--well, he brought 
up the whole NOAA advice to MMS. Here is a letter, from 
September 2009, which talks specifically about the extensive 
science and management. Basically it was talking about the risk 
of impacts in the draft proposed Outer Continental Shelf Oil 
and Gas Leasing Program. So, they basically were showing their 
concerns and identifying problems. Do you know if MMS responded 
to that letter, or can we get a copy of it if MMS--can we just 
get an answer, one way or another, whether MMS did respond to 
it, and can we get a copy of it?
    Secretary Salazar. We will get you that response, Senator 
Cantwell.
    Secretary Salazar. Let me just add a comment about the 
input that we did receive from lots of different sources; I 
think there were close to half a million comments that were 
made as we move forward with this very extended 180-day comment 
period and then beyond, taking a very thoughtful view what we 
were going to do.
    It was precisely because of concerns related to the Arctic 
area, in the Beaufort and in the Chukchi Seas, that we ended up 
concluding that we would cancel 5 proposed lease sales--2 in 
the Beaufort, 2 in the Chukchi, and one in Bristol Bay. In the 
case of Bristol Bay, it's because of the ecological values that 
are there. In the case of the Chukchi and the Beaufort, as 
Senator Murkowski and Senator Begich were aware of and worked 
with us on this, there are concerns about oil spill response 
capability and other issues. So, that's why we landed at the 
place that we did with respect to the 5-year plan that we 
announced at the end of March.
    Senator Cantwell. One last question, just really quickly. I 
know my colleague asked you, in general, but why can't we get 
an answer to the amount of oil that basically is flowing into 
the ocean? I mean, can't we get that critical data from BP? The 
Woods Hole Oceanographic Institute have extensive expertise in 
sea floor vents, and offered their services to BP, but they've 
declined. So, are--is BP blocking this information?
    Secretary Salazar. The answer to that is no, Senator 
Cantwell. The 5,000 barrels per day is what the estimate is. 
But, it is difficult to get to a quantum with complete 
certainty, at this point in time, because of the subsea 
conditions where the leaks are occurring.
    I will say that Dr. Marcia McNutt, who is probably one of 
the best scientists in the United States of America and the 
director of the U.S. Geological Survey, is working with a team 
of scientist to come up with our own independent conclusion, 
relative to what the numbers are. We need to know what those 
flow numbers are, for a variety of reasons, including issues 
relating to natural resource damages and a whole host of other 
things. So, we will have our own independent number.
    Senator Cantwell. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    All Senators have had a chance to ask one round of 
questions. I've asked 2 rounds of questions. Let me just call 
on those who are still here if there are additional questions 
that they feel they need to pose at this time.
    Senator Murkowski. Thank you, Mr. Chairman.
    Mr. Secretary, I appreciate the fact that you have 
acknowledged that we're going to need oil from some time to 
come. Just suggesting that we can shut it all off is really not 
an option. I would take this opportunity to follow on Senator 
Bennett's comments, that we have an opportunity, up north in 
Alaska, onshore with Anwar, where we have the potential of 
about 16 billion barrels of oil. Right now, within the 
Department of Interior, you are doing an assessment to make a 
determination as to expanded wilderness areas. I think it is, 
particularly at this time, shortsighted of us as a Nation to 
even think about putting Anwar into wilderness status and 
basically taking off the table our opportunity to explore and 
produce in an area 45 miles to the east of where we have been 
producing from Alaska's North Slope for decades.
    So, I think the delegation has been pretty united in 
recommending that Interior save their money and respect the 
``no more'' clause. But, we'll be working with you on that.
    I just have one additional question that I would like to 
add. I had asked you about what you felt was the appropriate 
relationship between industry and MMS in establishing 
standards. I appreciate that answer. Do you--do we have, within 
MMS employees, whether in the permitting in the inspection 
offices that have substantial, direct, and professional 
experience, when it comes to well casing and cementing, and 
also in blowout preventer design construction and maintenance--
recognizing that, in order for MMS to really be inspecting and 
to know clearly--and we keep going back to the science of this, 
which I absolutely appreciate--but, to really know what it is 
that we are inspecting--do we have this level of capability 
within the agency at this point in time?
    Secretary Salazar. I'm going to have Liz respond to that. 
But, let me just take 2 quick stabs at answering a couple of 
your questions.
    No. 1, with respect to the Alaska National Wildlife Refuge, 
the President has been clear, and I have been clear, that we 
will not drill in Anwar.
    No. 2, there is a production component that is one which is 
potentially very robust in Alaska. We're working through some 
of those issues with you and your staff, as well. We see 
production as being very much a part of our agenda; oil and gas 
will continue to be a part of our agenda.
    No. 3, with respect to our expertise, I've been dealing 
with a lot of MMS engineers and scientists, and there is a 
robust capability there. But, I will have Liz respond more 
specifically to your question.
    Ms. Birnbaum. Thank you, Mr. Secretary.
    Senator Murkowski, we have at MMS a number of employees 
with a wide range of experience with respect to all aspects of 
drilling engineering.
    You asked specifically about inspecting, and I think that 
there is a question the degree to which that expertise carries 
over into inspections. We will be, as we look at a 
reorganization of MMS, evaluating what qualifications we need 
to make sure that all inspections are carried out with that 
full range of expertise.
    Senator Murkowski. So, it would be your intention, then, to 
make sure that they have, again, what I'm calling substantial, 
direct, and professional experience in these various areas.
    Ms. Birnbaum. We will ensure that the inspection staff has 
all the expertise necessary to evaluate all of the facilities 
that they're inspecting.
    Senator Murkowski. Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Senator Wyden. Thank you, Mr. Chairman.
    Thank you, Mr. Secretary.
    About a couple of hours ago, I asked you whether you 
thought that, in the past, Minerals Management had adequately 
regulated blowout preventers; and to your credit, you said, 
``No.'' You gave a candid answer, and an answer I happen to 
think is accurate. So, what I want to do with this one question 
is just walk through how that constructive answer would, in 
effect, beef up safety under the reform proposal that you have 
outlined. Let me be very specific here.
    In the reform proposal, you advocate splitting the agency 
and creating a separate enforcement--an inspection agency; in 
effect, a new cop on the beat, a cop on the beat who'd do 
enforcement. What I'm concerned about, however, is that the 
problem starts before you get the cop on the beat involved. The 
problem starts, as your answer to me indicated, with respect to 
inadequate regulation of these blowout preventers--the problem 
starts with respect to getting strong safety standards. So, my 
question to you, Mr. Secretary, is, How would your reform 
proposal work to make sure that we get the strong safety rules 
that your new independent agency would then enforce?
    Secretary Salazar. That's a very good question, Senator 
Wyden. You're correct that, first, we have had an effort 
underway, including in our budgets of the last 2 years and this 
current year, to get more cops on the beat. That's essential. 
We may even need more than what we have asked for. But, we will 
have those cops on the beat.
    The question you ask here is fundamental, and that is the 
safety standards that are place with respect to the blowout 
prevention mechanisms. That is why Deputy Secretary of Interior 
David Hayes and I have worked directly with the National 
Academy of Sciences and National Academy of Engineers to help 
us develop what those standards will be.
    So, they will be independent standards. I have no doubt, 
knowing what I know today, that you will have significant 
enhancements with respect to those standards, as well as with 
respect to the manufacturing of these blowout prevention 
devices.
    Senator Wyden. I want to work very closely with you, Mr. 
Secretary, in going forward with this reform proposal. I 
appreciated your comments. Early on, you know that I introduced 
a bipartisan proposal. I think you'll have bipartisan interest.
    I think the central question is, to get the maximum value 
out of your new enforcement effort, we've got to attack the 
problem at the outset. Clearly, in a number of these areas, 
which you have identified in response to my questions and 
colleagues' questions, we've got safety problems that need to 
be addressed in order to make sure that the enforcement arm 
which you propose is really going to make a difference.
    So, I look forward to working with you. I know we'll have a 
bipartisan effort here in the committee.
    Secretary Salazar. Mr. Chairman, may I ask my Deputy 
Secretary to just give a short----
    The Chairman. Of course.
    Secretary Salazar [continuing]. Comment on this issue, as 
well, since he's working on it relentlessly?
    Mr. Hayes. Senator, we're focusing right on this specific 
question in connection with the reorganization. We actually 
have under consideration the idea that the independent 
enforcement arm would also be the folks who develop the safety 
standards. They would not be the folks who do the leasing and 
that type of activity, precisely to your point. The safety 
standards should be developed independent of the leasing 
activity and the commercial activity.
    The Chairman. According to the order of arrival here, I'm 
advised Senator Menendez is next, and then Senator Landrieu.
    Senator Menendez. Thank you, Mr. Chairman.
    Mr. Secretary, the administration has indicated that they 
support an effort to raise the liability cap that exists right 
now. I have legislation to raise it to $10 billion. I'm 
wondering, Where is the administration at, in terms of 
quantifying or supporting where they're ready to lift the 
liability cap to?
    Secretary Salazar. You know, the administration's position, 
Senator Menendez, is that the liability cap does have to be 
lifted. We look forward to working with you and with other 
members of the Senate to determine what would be the 
appropriate liability cap. We did not put out a specific 
number. But, I do believe that the current number is 
inadequate.
    Senator Menendez. So, how--what process are we going to 
work toward to try to determine what the liability cap should 
be? There are some who suggest there should be unlimited 
liability.
    Secretary Salazar. I think that's something that does need 
to be worked through. You know, in this particular case, you 
have BP, which is, I believe, the third largest company in the 
world, making profits last year at $16 billion. There is a 
willingness, on the part of the chairman of the company and 
their executives, to say these liability caps will not apply to 
this incident. So, that's important to recognize for this 
incident, which is where my focus has been.
    With respect to the future, it is important that we be 
thoughtful, relative to that--what that cap will be, because 
you don't want only the BPS of the world to be the ones that 
are involved in these efforts, there are companies of lesser 
economic robustness. But, having said that, it ought to be high 
enough so that we make sure that the responsible party will be 
able to live up to whatever consequences result from their 
activities.
    Senator Menendez. That's----
    Secretary Salazar. I don't have a specific number.
    Senator Menendez. I want to take off the last part of your 
answer, because there have been some, as we've tried to move 
this, who suggest that, ``Well, not everybody's a BP.'' I 
understand that. But, even independent entities have a $40-
billion worth and--you know, so, it's--the range is quite 
significant.
    The question becomes, Regardless of your size, if you could 
create the potential risk that we have in this spill, and you 
could be the cause of this spill, does the size matter? 
Because, in essence, we'd be saying, ``If you're smaller, you 
should have less liability.'' I don't think the American 
taxpayer would believe in that, as a proposition.
    So, at some point, the suggestion that too high a cap, or 
an unlimited cap, will hurt all of these other entities--well, 
that simply means that if you're smaller, you can get away with 
taking the same risk, but having less liability. That certainly 
wouldn't be the administration's view.
    Secretary Salazar. No, not at all. People will be held 
accountable and responsible. We want the environment restored 
and people to be compensated. So, we will work with you and 
other Members of the Congress at getting to a number that makes 
sense and is not an arbitrary number.
    Senator Menendez. One final question. BP certified to MMS 
that it had the, quote--this is on page 7-1 of its exploration 
plan for the lease sale that is the subject of the spill--it 
had, quote, ``capability to respond to a worst-case discharge 
resulting from the activities proposed in our exploration 
plan.'' Do you really think--do you really think that BP was 
capable or had a real plan for the worst-case discharge? What I 
have seen is a series of unprecedented techniques, trying to 
figure out what might or might not work. Some have failed; 
others having partial success, it seems. You know, do we really 
think that they had a plan B for the worst-case scenario? Or 
are they going from pillar to post, trying to figure out how 
they respond to this?
    Secretary Salazar. I'm going to have David comment on the 
specifics of the exploration plan. But, I will just say this.
    There is a herculean effort underway today, Senator 
Menendez, that I don't think this Nation has ever seen. It's 
unfolding 5,000 feet below the sea, and it's unfolding onshore, 
with lots of people and lots of effort.
    Senator Menendez. But, if an entity tells you they are 
``capable of responding to the worst-case discharge,'' I don't 
think anybody reasonably would believe that BP had a plan for 
the worst-case discharge----
    Secretary Salazar. There is actually a very coherent answer 
to that question, with respect to the regional response effort 
and the numbers, but I think I will have David respond to it.
    Why don't you go ahead, David.
    Mr. Hayes. Senator, I think there are 2 aspects to your 
question, really. One is, Was there a plan in place if the 
blowout preventer failed and there was an inability to stop the 
leak? Certainly, that has not been a happy story, in terms of 
the ability to stop that leak.
    The broader question, though, in terms of a worst-case: the 
spill-response plan that's in place anticipated the resources 
available to cover a 250,000-barrel-per-day spill over a 30-day 
period, which is actually larger than the current spill. So, in 
terms of spill response, there was and is a robust plan that is 
now being implemented.
    But, I think your question went to the other issue, about 
the technology issues, which we are giving significant 
attention to today.
    The Chairman. Senator Landrieu.
    Senator Landrieu. Thank you.
    Just a final point and question following up on some 
colleague's comments about risk. When we view offshore drilling 
in isolation, it does appear risky. The fact, Mr. Secretary, is 
that it is risky. But, I think the fairer question is, Is it 
riskier to import 100 percent of the oil this country needs or 
to try to drill more safely at home? What would the answer to 
that question be? Is it riskier to import 100 percent of our 
oil, because we're importing close to 70 percent, or is it less 
risky to try to drill more safely at home?
    Secretary Salazar. You know, Senator Landrieu, I think it's 
a very good question. That is why the President's comprehensive 
energy plan contemplates that oil and gas, as well as nuclear, 
will be part of that future energy portfolio. We need to have a 
balance. But, we also need to break the addiction that this 
country has had to oil for so many decades. Again, I know you 
and Senator Bingaman have been involved in bipartisan efforts 
to move forward the President's comprehensive energy plan; you 
have your plan.
    You know, this is probably a time for this country to come 
to grips with the risks associated, with our current energy 
consumption. You are putting your finger on what one of those 
risks is, and that is the national security of the United 
States, and the fact that we are importing our oil from places 
that don't have the best interests of this country in mind.
    Senator Landrieu. Finally, Mr. Chairman, thank you for your 
patience in extending this committee by almost 30 minutes, but 
it's also important, this liability issue. The people of 
Louisiana and the Gulf Coast want to know and have confidence 
that BP is going to do everything that they are required to 
under the law, and more, to pay for any damage to individuals, 
to businesses, et cetera.
    I want to submit to the record a letter* that was received 
by BP to the other committee that I sit on, Homeland Security, 
in that regard.
---------------------------------------------------------------------------
    * Document has been retained in committee files.
---------------------------------------------------------------------------
    But, the question of this liability issue, going forward, I 
want to commend you for taking your time to decide on the right 
answer, because if we don't do this correctly, we could put 
independents and smaller companies, that employ 1.8 million 
people in this country, at risk if this issue isn't handled 
correctly.
    So, with all due respect to my colleague, who I have the 
utmost admiration for, Senator Menendez and others that are 
calling for unlimited liability, it will put out of reach the 
possibility for insurance, which is extremely important for 
this and any industry to have to operate. So, it has to be done 
in the right way. I thank you for taking your time on the 
details of that.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Mr. Secretary, thank you for being so generous with your 
time. Thank you for the aggressive approach that you and David 
Hayes and all of your team have taken in response to this 
terrible circumstance that we have in the Gulf of Mexico.
    But, that will conclude our hearing, and we will continue 
to work with you to find solutions.
    [Whereupon, at 1:29 p.m., the hearing was adjourned.]


                                APPENDIX

                   Responses to Additional Questions

                              ----------                              

    Responses of Hon. Ken Salazar to Questions From Senator Bingaman

    Question 1. I understand that about 90 exploratory or development 
rigs are currently operating in the Gulf of Mexico, about 40 of them in 
deep water. These rigs by definition are not producing oil, so 
suspension of those operations would not affect near-term supply. Have 
you considered suspending these operations until we know the cause of 
this accident? What have you done to ensure that the issues raised by 
this accident are not present on any of these ongoing rig operations?
    Answer. Immediately after the explosion, we carried out inspections 
of all deepwater oil and gas drilling operations in the Gulf of Mexico 
and issued a safety notice to all rig operators in the Gulf. A second 
Notice to Lessees requires operators to submit information in their 
exploration plans regarding blowout scenarios- reversing a long 
standing exemption in a 2008 NTL that resulted from too much reliance 
on industry to self-regulate.
    In July 2010 the Department of the Interior announced temporary 
suspensions of deepwater drilling on the Outer Continental Shelf. These 
suspensions, which were lifted on October 12, were essential to protect 
communities, coasts, and wildlife from the risks that deepwater 
drilling then posed and provided us with the time for investigation and 
implementation of some of the needed new safety, containment and oil 
spill response capability measures. The decision to lift the deepwater 
drilling suspensions was based on information gathered in recent 
months, including a report from Bureau of Ocean Energy Management, 
Regulation and Enforcement (BOEMRE) Michael Bromwich on October 1 that 
shows significant progress on reforms to drilling and workplace safety 
regulations and standards, increased availability of oil spill response 
resources since the Macondo well was contained on July 15 and killed on 
September 19, and improvement in blowout containment capabilities.
    Question 2. I understand that you have ordered post-accident 
inspections of all offshore rigs, and that the inspections of the 
exploratory rigs are complete. Is that correct? We also need to know 
what you inspected for. Were these inspections the same inspections 
your officials perform monthly on these rigs? Or were they instructed 
to pay particular attention to the blow out preventer and to the list 
of issues that have been raised as possible causes for this accident? 
Without that, how can we be sure that these inspections will have any 
effect in ensuring safety and lessons learned from this accident?
    Answer. Following the explosion of the Deepwater Horizon drilling 
rig, inspections were ordered of all 29 deepwater oil and gas drilling 
operations in the Gulf of Mexico with subsea blowout preventer stacks 
in the Gulf of Mexico. The operation consisted of targeted inspections 
that followed an inspection protocol to specifically address issues 
potentially raised by the Deepwater Horizon event.
    The inspections began on Tuesday, April 27, 2010 and were completed 
on May 4, 2010, with Incidents of Non-Compliance found on two rigs. 
Those violations were corrected and no other violations were found. A 
copy of the inspection report from this effort can be found at: http://
www.doi.gov/deepwaterhorizon/upload/05-11-10-MMS-Deepwater-Horizon-Rig-
Inspection-Report.pdf.
    Question 3. As you know, questions have been raised by experts 
about a number of technical issues that are possible contributors to 
the Deepwater Horizon accident. These include: cementing--both the 
amount and type used; number of centralizers used to set the well; 
absence of an inflatable packer to prevent annular gas leaks; 
displacement of drilling mud with seawater too early in the plugging 
and abandonment process; failure to react to anomalous pressure data; 
and multiple design and maintenance issues with the blow out preventer.
    Question 4. I'd like to discuss the regulatory issues with you with 
these technical areas in mind. Does the current regulatory system give 
you the ability to review the well design as a system and ensure its 
integrity? Does it give you the ability to review modifications to the 
plan made on the rig? Would you say we need to look at enforcement of 
the existing regulatory system or reform of the system or both?
    Answer. While we await the results of the investigations into this 
tragedy, we have undertaken reviews of key systems and made 
recommendations in our 30-day Safety Report to the President, issued in 
May 2010, that are intended to result in sufficient redundancy in the 
blowout preventers, better well control, and facilitation of a culture 
of safety. Specifically with regard to well integrity, these 
recommendations include:

   additional review and certification of well design by a 
        professional engineer;
   new training requirements for casing and cementing 
        operations that help focus industry and rig personnel on the 
        importance of proper casing and cementing operations;
   additional operational requirements for casing installation 
        and cementing operations that will add new assurances that 
        adequate barriers are in place before continuing on to new 
        drilling activities; and

    Most of the recommendations in the Safety Report have been codified 
in an interim final rule that BOEMRE published in the Federal Register 
on October 14.
    In the months since the Deepwater Horizon rig exploded in the Gulf 
of Mexico, the Department has been carrying out the most aggressive, 
advanced, and rapid offshore drilling reforms ever implemented, 
building a program with a focus on worker and environmental safety, 
administered by an agency that has the authorities, resources, and 
support to provide strong and effective regulation and oversight. We 
have put industry on notice that their OCS oil and gas operations will 
be held to the highest standards.
    Question 5. Would you support the creation of an independent 
scientific panel to support the Interior Department in its regulatory 
and permitting work on offshore development on an ongoing basis?
    Answer. While the results of the ongoing investigations may require 
additional reform efforts in the offshore program, the comprehensive 
reforms we have been implementing at the Department have put science 
back in its rightful place in decisions about offshore oil and gas 
development.
    The science resources available at the Department are some of the 
most robust in the United States and include thousands of scientists in 
the United States Geological Survey, the United States Fish and 
Wildlife Service, the National Park Service and BOEMRE. The various 
programs in the USGS and the science and research programs within 
BOEMRE also play key roles in providing scientific information 
concerning impacts from offshore energy and mineral exploration.
    Science Advisor and USGS Director Dr. Marcia McNutt is a world-
class scientist whose professional expertise and leadership qualities 
continue to be invaluable in guiding the USGS. She played a key role in 
the impressive government team that was instrumental in monitoring and 
in ensuring the successful killing of the Macondo well. In support of 
government efforts during the spill, the USGS filled a key role in 
estimating the oil flow rate of the well; providing geospatial support; 
providing sampling data for water, sediment, and biota as we work to 
establish baseline conditions of our resources; and in reviewing 
relevant scientific information. We will lean heavily on the scientific 
expertise of the USGS as we move forward with our offshore planning.
    BOEMRE's Offshore Energy and Minerals Management Program manages 
research associated with renewable energy, oil and gas operational 
safety, and oil spill response. That program administers the National 
Oil Spill Response and Renewable Energy Test Facility, located in 
Leonardo, New Jersey, which provides oil spill response testing, 
training, and research opportunities to government, industry, academia, 
and private organizations on a reimbursable basis. BOEMRE also has an 
Environmental Studies Program that has a broad mandate, covering fields 
as diverse as oceanography, atmospheric sciences, and social sciences. 
Through this program, BOEMRE spends tens of millions of dollars 
collaborating with other federal agencies, educational organizations, 
and private entities to carry out research and synthesize available 
environmental and social and economic science information to support 
decision-making related to development of offshore energy and mineral 
resources.
    Question 6. Do you believe that current law requires industry to 
use best practices in the design of offshore wells and their systems in 
all cases? In reviewing applications for permits to drill does MMS 
consider cost factors in well design, or are best practices required in 
all cases regardless of cost?
    Answer. Under existing offshore regulatory processes, operators are 
required to use the best available and safest drilling technology where 
economically feasible, practicable, and the benefits are found by the 
Secretary to outweigh the costs. 30 CFR 250.107; 43 USC 1347. The 
Department reviews an operator's exploration or development plans and 
Applications for Permits to Drill to verify use of these technologies. 
The Department subsequently inspects the operations to verify the use 
of approved equipment and its maintenance. Upon completing the 
engineering review, the Department may approve the APD with conditions 
if warranted, return it to the operator for modifications, or deny it. 
If the applicant makes changes to the drilling application, the 
Department must grant approval before the applicant performs its work.
    The Deepwater Horizon spill has underscored the point that, as 
drilling activity has moved into deeper water, it is important to 
reevaluate whether the best practices for safe drilling operations 
developed over the years need to be bolstered to account for the unique 
challenges of drilling in deepwater. As a consequence, our 30-day 
Safety Report issued in May makes recommendations for new inspection 
and verification requirements to ensure that both operators and the 
BOEMRE are using the most up-to-date best practices. Many of the 
recommendations in that report have been addressed in the Interim Final 
Drilling Safety rule and the Safety and Environmental Management System 
rule.
    Question 7. Your current Departmental Manual (effective since May 
2004) provides that exploration, production and development plans and 
applications for permits to drill offshore oil wells are generally 
``categorically excluded'' from NEPA analysis. This means that these 
operations are assumed to have no significant environmental impact and 
no environmental reviews need to be done. Will you continue to use 
categorical exclusions as currently set out in your NEPA plan pending 
review of procedures by the Council on Environmental Quality?
    Answer. We are committed to full compliance with both the letter 
and the spirit of National Environmental Policy Act, and agree that our 
decision-making must be fully informed by an understanding of the 
potential environmental consequences of federal actions permitting 
offshore oil and gas development. In August, the Council on 
Environmental Quality issued its report on the NEPA process for 
environmental reviews in the offshore program. The report found that 
the Minerals Management Service had conducted numerous levels of 
extensive environmental reviews, relying on the ``tiering'' process in 
which prior reviews should be incorporated into subsequent, site-
specific analyses. The report also offered several recommendations, 
which BOEMRE has committed to using as guideposts as it continues its 
reform and reorganization activities. On August 18th the Department and 
BOEMRE announced that the use of categorical exclusions for offshore 
oil and gas development would be restricted to activities involving 
limited environmental risk while the Department carries out a 
comprehensive review of its NEPA process and the use of categorical 
exclusions for exploration and drilling on the Outer Continental Shelf.
    Question 8. What is your access to industry data, documents and 
witnesses? Have you or other agencies moved to secure all relevant 
evidence in this accident? When was that done? At what point did the 
Federal government have access to witnesses? Were you able to secure 
witness statements near in time to the date of the accident? Do you 
have sufficient statutory authority to insist that you have full access 
to all evidence and that all evidence be preserved?
    Answer. Several investigations of this event are still underway. 
For purposes of this response the most notable is the one being carried 
out by the Department, through the BOEMRE, and the Department of 
Homeland Security, through the U.S. Coast Guard, pursuant to authority 
in the Outer Continental Shelf Lands Act and in accordance with a pre-
existing Memorandum of Agreement. The team was convened on April 27, 
2010. Hearings began shortly thereafter on May 11th, and are 
continuing.
    The public hearing portions of the investigation are being convened 
under Coast Guard Marine Board of Investigation procedures, the highest 
level of investigative effort following a maritime casualty. These 
investigations are intended to determine the probable causes of the 
casualty to the fullest extent possible, promote safety of life and 
property at sea, and obtain information for the purpose of preventing 
or reducing the effects of similar casualties in the future. The board 
has the power to administer oaths, summon witnesses, require persons 
having knowledge of the subject matter to answer questionnaires, and 
require relevant industry data and documents and any other evidence to 
be submitted. It is also a transparent process. All relevant evidence 
was secured immediately following the event and continues to be secured 
as it is collected. Witness statements were obtained by US Coast Guard 
and MMS inspectors from offshore personnel rescued from the Deepwater 
Horizon rig while they were enroute to shore.
    Question 9. NEPA environmental review, while very important, was 
not designed for, and is not sufficient to ensure the safety of the 
well design or the adequacy of measures to deal with a spill, would you 
agree? Do you agree that your agency has at least two areas of 
responsibilities here--to fully implement the required environmental 
reviews and to design and implement a regulatory structure to ensure 
operational safety?
    Answer. As noted in the response to question 7, the Department is 
committed to full compliance with both the letter and the spirit of 
NEPA, and we agree that our decision-making must be fully informed by 
an understanding of the potential environmental consequences of federal 
actions permitting offshore oil and gas development.
    Regarding the need for operational safety, since April 20th we have 
embarked on substantive and systematic reforms that address the 
failures that we have seen and the shortcomings that we have identified 
in the offshore program. We are creating a strong and independent 
agency with the resources, tools and authority it needs to hold 
offshore operators accountable to the law. We have raised the bar on 
industry's safety practices and equipment. We are ensuring that 
companies that want to drill better explain to us how they will deal 
with catastrophic blowouts and oil spills. And we have put science back 
in its rightful place in decisions about offshore oil and gas 
development. As the results of the ongoing investigations become 
available, we will continue to build on these reforms.
    Question 10. Do you believe that prescriptive requirements can and 
should be written for the key aspects of well design and fail safe 
mechanisms that will insure system integrity and safety over a range of 
different wells and areas? Will such prescriptive requirements be 
sufficient, or should the regulations be written to take a systems 
approach to well design?
    Answer. As we noted in our 30-day Safety Report, in our review and 
while developing the recommendations contained in that report we were 
guided by the principle that feasible measures that materially and 
undeniably reduce the risk of a loss-of-well-control event should be 
pursued. For that reason, some of the measures that are recommended in 
the report are necessarily prescriptive. We also committed in that 
report to working on a rulemaking that would require operators to adopt 
a systems-based approach to safety and environmental management. Many 
of the recommendations in the 30-day Safety Report for new inspection 
and verification requirements to ensure that both operators and the 
BOEMRE are using the most up-to-date best practices have been 
implemented through the Interim Final Drilling Safety rule, while the 
SEMS rule requires operators to have a Safety and Environmental 
Management System in place to reduce human and organizational errors as 
the root cause of work-related accidents and offshore oil spills. The 
results of the ongoing investigations may require additional reform 
efforts in the offshore program.
    Question 11. Many of the specifications and practices in the 
Department's regulations that are applicable to OCS operations are 
industry-developed standards incorporated by reference into the 
regulations. Do you view this as an inherent conflict of interest? How 
can you ensure that best practices are required under these 
circumstances?
    Answer. The Department follows a standard process for developing 
regulations that includes a comment period that allows industry, other 
government agencies, private individuals, and other groups to provide 
input. In some instances, standard industry practices are developed 
through industry organizations, and the Department may incorporate 
recommended practices and standards from industry associations and 
technical standard setting groups, such as the American National 
Standards Institute, American Petroleum Institute standards and 
recommended practice documents, and National Association of Corrosion 
Engineers documents, by reference.After reviewing these practices, or 
engaging an independent third party to review and confirm the validity 
of the standards, BOEMRE may incorporate some or all of the suggested 
standards, either as written or with modifications to make them more 
stringent.
    Question 12. I understand the President will soon announce the 
creation of an independent commission to investigate this accident and 
make recommendations on regulatory structure going forward? At least 
one bill to do that has been referred to our Committee. How soon will 
the President act, or should Congress begin work on legislation to 
establish this Commission?
    Answer. The National Commission on the BP Deepwater Horizon Oil 
Spill and Offshore Drilling was established on May 21, 2010, when 
President Obama signed Executive Order 13543.
    Question 13. There have been reports that MMS approved OCS leases 
and permits without the proper consultation with the National Oceanic 
and Atmospheric Administration (NOAA), particularly regarding the 
Endangered Species and Marine Mammal Protection Act. Please state your 
understanding of the requirements for MMS consultation with NOAA during 
the 5-year planning process, the lease sale process, the exploration 
plan approval, and approval of applications for permits to drill on the 
OCS. Please state your understanding of the requirements of the 
Endangered Species Act and the Marine Mammal Protection Act as 
applicable to the above MMS processes. Please state whether any leases, 
exploration plans, or permits to drill have been approved since January 
2009 without obtaining the required permits or without the required 
consultation with NOAA.
    Answer. The reports referenced above are not accurate. In fact, 
BOEMRE regularly coordinates with National Oceanic and Atmospheric 
Administration in regards to the development of the five-year oil and 
gas program and the development of environmental analyses and approvals 
under NEPA, the Endangered Species Act (ESA), and the Marine Mammal 
Protection Act (MMPA).
    With regard to the ESA and MMPA, BOEMRE is coordinating closely 
with NOAA, primarily through NOAA's National Marine Fisheries Service, 
in regards to the approval of oil and gas activities under our purview. 
However, we are reviewing our ESA and MMPA compliance as part of our 
examination of BOEMRE's environmental review processes.
    BOEMRE is also in the process of coordinating with National Marine 
Fisheries Services (NMFS) and the Fish and Wildlife Service (FWS) to 
evaluate effects of the Deepwater Horizon spill on protected species. 
On July 30, 2010, BOEMRE requested re-initiation of consultation under 
Section 7 of the ESA with NMFS and the FWS given that the Deepwater 
Horizon spill exceeded the spill volumes and scenarios considered in 
the original consultation. On September 24, 2010, BOEMRE received a 
response letter from NMFS requesting further information. A similar 
letter was received from FWS on September 27, 2010 along with a request 
for a meeting in early 2011. BOEMRE is in the process of responding to 
these requests for additional information.
    Question 14. Please provide complete copies including appendices 
and drawings for all documents approved by MMS related to the Macondo 
well. Please include all permits for the well design and any approvals 
of modifications to that design. If any portions of those documents are 
viewed by MMS as business confidential, please provide any agreement 
with industry that in your view requires such confidentiality. Please 
explain, for any documents withheld as business confidential, why in 
your view the public interest is served by entering into such 
agreements, and why in your view waivers of such confidentiality would 
not be warranted in the circumstances of a catastrophic failure such as 
the Deepwater Horizon accident.
    Answer. Responsive material will be forwarded under separate cover.
    Question 15. Please identify any changes to any permits approved by 
MMS that were given oral as opposed to written approval by MMS. Please 
identify the MMS employees who provided such approval and indicate the 
changes that were approved.
    Answer. We understand that this issue is being looked at as part of 
the ongoing investigations.
    Question 16. Will BP or any other operator be allowed to re-enter 
the reservoir that was penetrated (and was the origin of the 
hydrocarbons in the blowout) at the Macondo well? Will they be allowed 
to develop the field for eventual production?
    Answer. BOEMRE will not approve reentry into the same well, but 
other substantive decisions related to the underlying lease have not 
been made and depend upon the results of the ongoing investigations 
which will provide us with a more complete picture and will help inform 
future decisions and actions.

   Responses of Hon. Ken Salazar to Questions From Senator Murkowski
    Question 1. Has your department or the Administration conducted an 
economic analysis on what the potential impact could be if a $10 
billion economic cap were put in place? Similarly, has your department 
or the Administration looked at the impacts to domestic production if 
there are fewer companies in the OCS and what the revenue impacts would 
be on the treasury?
    Answer. The Administration is looking at a number of factors, 
including how changes in liability will impact industry structure and 
markets. However, we have also stated that the current liability caps 
are inadequate to deal with the potentially catastrophic consequences 
of oil spills and need to be updated. The Administration strongly 
supports the repeal of the limit on damages liability for offshore 
drilling and increasing the liability caps for other activities that 
could result in a spill. Regardless, in this instance BP has confirmed 
that it will pay for all of these costs and damages regardless of 
whether the statutory liability cap contained in the Oil Pollution Act 
applies.
    Question 2. If not, could you please provide the committee with 
that analysis and have OMB provide a score on the proposal?
    Answer. As noted in the response to the previous question, the 
Administration is currently looking at this issue.
    Question 3. When will the Department be able to make a 
determination as to what activities will be permitted in the OCS going 
forward?
    Answer. Immediately after the explosion, we carried out inspections 
of all deepwater oil and gas drilling operations in the Gulf of Mexico 
and issued a safety notice to all rig operators in the Gulf. A second 
Notice to Lessees requires operators to submit information in their 
exploration plans regarding blowout scenarios- reversing a long 
standing [NTL2008 G-04] exemption that resulted from too much reliance 
on industry to self-regulate.
    In July 2010 the Department of the Interior announced temporary 
suspensions of deepwater drilling on the Outer Continental Shelf. These 
suspensions, which were lifted on October 12, were essential to protect 
communities, coasts, and wildlife from the risks that deepwater 
drilling then posed and provided us with the time for investigation and 
implementation of a number of new safety, containment and oil spill 
response capability measures. The decision to lift the deepwater 
drilling suspensions was based on information gathered in recent 
months, including a report from BOEMRE Director Michael Bromwich on 
October 1 that shows significant progress on reforms to drilling and 
workplace safety regulations and standards, increased availability of 
oil spill response resources since the Macondo well was contained on 
July 15 and killed on September 19, and improved blowout containment 
capabilities.
    Question 4. In your decision to re-organize MMS you spoke of 
dealing with perception issues. In your opinion, would having three 
separate agencies have prevented the Deepwater Horizon accident?
    Answer. Conclusions about the root cause of the explosion and spill 
will not be drawn until all key investigations are completed and the 
results are published. However, the reorganization plan we announced in 
May is based on the premise that the activities formerly carried out by 
the Minerals Management Service must be clearly defined and distinct 
from one another in order to eliminate both real and perceived 
conflicts within the organization. Another key objective of the 
restructuring is to establish necessary checks and balances in the 
relationship of the three new entities, but to also ensure that 
critical linkages among the three organizations are maintained to 
provide a predictably administered program. The plan balances the 
imperative to move quickly with the analyses and planning required to 
effectively achieve the identified objectives.
    A major step in this reorganization was realized on October 1, 
2010, when the Office of Natural Resources Revenue was formally 
established. The creation of the Bureau of Ocean Energy Management and 
the Bureau of Safety and Environmental Enforcement will continue to 
move forward as the reorganization is implemented.
    Question 5. Did your political team feel ``pressure'' to force 
permit approvals, waive laws or not do inspections?
    Answer. The Administration's focus on offshore oil and gas 
development has been to do it right, based on science, and in the right 
places.
    Question 6. Will the new MMS divisions have strong inter-division 
communication systems in place prior to establishment?
    Answer. Communication is an important aspect of both the early 
development and ongoing processes of these new entities. It is 
important to engage employees in the process of structural change as we 
move to implement this reorganization. Once established, strong cross-
communication between entities is critical to ensuring that key 
linkages among the three organizations are maintained.
    Question 7. Will you be seeking to make the heads of these new 
agencies Senate confirmed?
    Answer. We are in the process of implementing the administrative 
reorganization and we do not anticipate at this time that these 
positions will be Senate-confirmed.
    Question 8. How much should Interior rely on Congress for the 
creation of these new agencies?
    Answer. Reorganization is an essential element of a broader program 
that includes major new safety requirements, investigation of the 
Deepwater Horizon accident, legislative and regulatory reform, and 
programs to enhance enforcement and inspection activity. We have 
supported the need for organic legislation for the functions performed 
by the former MMS, and agree that an organization with such important 
responsibilities should be governed by a thoughtfully considered 
organic act. Moreover, it is important for organic legislation to 
provide the Secretary with the discretion to implement the 
administrative details of a reorganization as complicated as this.
    Question 9. You spoke of cleaning up the mess at MMS. My 
understanding is all of the personnel actions related to the scandal at 
MMS was handled under the Bush administration. Did Interior take 
additional personnel action against the career employees involved?
    Answer. The vast majority of people in the Department, including in 
BOEMRE, do their work every day and do it ethically and well. Many have 
been working long hours as we have moved through this crisis, and have 
devoted significant time and energy to various investigations and 
inquiries that are and have been carried out, and to the ongoing 
reorganization and reform.
    Since the beginning of this Administration, the reform agenda of 
the Department has been a high priority. Specifically, with respect to 
the former MMS, we moved forward with an ethics reform program in the 
Department to address indiscretions that had been identified, and the 
findings of the Inspector General have been appropriately addressed. We 
also moved forward with the reform agenda by terminating the royalty-
in-kind program, which had become a kind of magnet for ethics lapses 
and scandalous behavior. These reforms, along with BOEMRE Director 
Michael Bromwich's leadership and commitment to integrity ensure that 
OCS oil and gas operations in the Department will be held to the 
highest standards.
    Question 10. Did civil service laws prevent you from firing 
individuals or holding people more accountable than you would have 
preferred in that scandal?
    Answer. Please see the response to question 9.
    Question 11. Does MMS have employees in its permitting and 
inspections offices with substantial, direct, and professional 
experience at well casing and cementing?
    Answer. Rather than focusing on a single component of the process, 
the bureau's inspectors, engineers, geologists, geophysicists, physical 
and environmental scientists, and vital support staff include personnel 
with considerable experience performing and supervising the overall 
components of planning, permitting, and drilling wells. This experience 
is evidenced by the thousands of inspections of facilities and 
operations on the OCS that BOEMRE staff carry out every year, including 
coverage of tens of thousands of safety and pollution prevention 
components to prevent offshore accidents and spills and to ensure a 
safe working environment. Inspections of all oil and gas operations on 
the OCS are performed annually to examine safety equipment designed to 
prevent blowouts, fires, spills, and other major accidents. For 
example, in 2009, inspectors completed approximately 27,000 compliance 
inspections.
    And we are working to improve this program. As part of our reform 
agenda, an OCS Safety Oversight Board established by the Secretary 
issued its report in September. Discussed in more detail in the 
response to the next question, the report provides recommendations to 
strengthen inspections and enforcement, and BOEMRE has formed an 
internal team that has begun reviewing, revising and reforming our 
inspections program.
    Question 12. Does MMS have a program in place to recruit inspection 
and permitting personnel with substantial, direct, and professional 
experience at well casing and cementing?
    Answer. The President's 2011 budget amendment, released on 
September 13, 2010, includes an additional $100 million for BOEMRE 
reform efforts, including funding for more inspectors and engineers. 
Our restructuring of the OCS program will require additional resources 
to implement the aggressive reforms we are pursuing, and these 
amendments will provide this necessary funding. We are currently hiring 
an additional 12 inspectors and taking other actions that are outlined 
in the 30-day report to the President. 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 
enacted supplemental request includes $27 million to fund near term 
resources for these activities. We are also working to implement 
recommendations made in the OCS Safety Oversight Board's recently-
issued report, available at http://www.doi.gov/news/pressreleases/
loader.cfm?csModule=security/getfile&PageID=43677, which provides 
recommendations to strengthen inspections and enforcement, among other 
things.
    Question 13. Does MMS have employees in its permitting and 
inspections offices with substantial, direct, and professional 
experience at blowout preventer design, construction, and maintenance?
    Answer. Please see the response to question 11.
    Question 14. Does MMS have a program in place to recruit inspection 
and permitting personnel with substantial, direct, and professional 
experience at blowout preventer design, construction, and maintenance?
    Answer. Please see the response to question 12.
    Question 15. As you begin to cut MMS into two agencies, will 
personnel within the inspections and permitting arm or will personnel 
in the leasing arm conduct NEPA work?
    Answer. One of the key premises of the reorganization is that the 
activities formerly carried out by the MMS must be clearly defined and 
distinct from one another in order to eliminate both real and perceived 
conflicts within the organization. We are working diligently to define 
the most effective structures and processes for the new bureaus and 
will keep Congress informed as the reorganization proceeds. A major 
step in this reorganization was realized on October 1, 2010, when the 
Office of Natural Resources Revenue was formally established. The 
creation of the Bureau of Ocean Energy Management and the Bureau of 
Safety and Environmental Enforcement will continue to move forward as 
the reorganization is implemented.
    Question 16. Will any new/additional career staff need to be hired 
to support either new agency?
    Answer. As previously noted, the President's 2011 budget amendment, 
released on September 13, 2010, includes an additional $100 million for 
BOEMRE reform efforts, including funding for more inspectors, 
engineers, environmental scientists, and other key staff. The amendment 
also proposes raising inspection fees from $10 million to $45 million. 
Our restructuring of the OCS program will require additional resources 
to implement the aggressive reforms we are pursuing, and these 
amendments will provide this necessary funding. We are also currently 
hiring an additional 12 inspectors and taking other actions that are 
outlined in the 30-day report to the President. The creation of a more 
robust OCS regulatory and enforcement program will dictate the need for 
engineering, technical, and other specialized staff.
    Question 17. Will any new/additional political appointments be 
necessary to support either new agency?
    Answer. The final details of the reorganization of the functions to 
be carried out by the Bureau of Safety and Environmental Enforcement 
and the Bureau of Ocean Energy Management are under development. As 
noted in the response to question 7, however, we anticipate that none 
of the leadership positions in these new, administratively-created 
agencies will be Senate-confirmed.
    Question 18. How much funding can you redirect for purposes of 
cutting MMS into two new agencies without awaiting reprogramming 
through the Congressional appropriations process?
    Answer. We are working diligently to implement the BOEMRE 
reorganization within the resources currently available, which include 
base funding under the Continuing Resolution, carryover balances, and a 
portion of the $29 million provided to DOI as part of the FY 2010 
Supplemental Appropriations Act. A major step in this reorganization 
was realized on October 1, 2010, when the Office of Natural Resources 
Revenue was formally established. The creation of the Bureau of Ocean 
Energy Management and the Bureau of Safety and Environmental 
Enforcement will continue to move forward as the reorganization is 
implemented. However, as noted previously, we will require additional 
resources to implement the aggressive reforms we are pursuing. The 
President's 2011 budget amendment, released on September 13, 2010, 
includes an additional $100 million for BOEMRE reform efforts, 
including funding for more inspectors, engineers, environmental 
scientists, and other key staff. The amendment also proposes raising 
inspection fees from $10 million to $45 million to help offset these 
added costs.
    Question 19. If there is a delay in reprogramming through the 
Congressional appropriations process, what effect will this have on the 
proposal to cut the agency in two?
    Answer. We are continuing to responsibly and thoughtfully move to 
establish these strong and independent organizations, and realized a 
major step in this reorganization on October 1, 2010, when the Office 
of Natural Resources Revenue was formally established.
    Question 20. What threshold requirements does MMS have in place to 
certify that those bidding on offshore lease parcels have the equipment 
and financial assets to meet their obligations as leaseholder?
    Answer. Oil Spill Financial Responsibility amounts are assessed 
based on worst-case oil-spill discharge total volumes associated with 
the covered offshore facility. Although a mobile offshore drilling unit 
(MODU) is classified as a vessel while in transit, a MODU is classified 
as an offshore facility under the Oil Pollution Act of 1990 while it is 
in the process of a drilling operation on the OCS. For facilities 
located wholly or partially in the OCS, the applicable amount of 
financial responsibility to be assured ranges from $35 million for 
worst case oil spill discharge volumes of over 1,000 to up to 35,000 
barrels to $150 million for worst case oil spill discharge volumes of 
over 105,000 barrels of oil.
    In addition, the Act provides that parties responsible for offshore 
facilities must establish and maintain financial responsibility for 
those facilities according to methods determined by the President. 
Responsible parties must demonstrate as much as $150 million in 
financial responsibility if the bureau determines that it is justified 
by the risks from potential oil spills from covered offshore 
facilities. Parties responsible for more than one covered facility must 
demonstrate coverage for the highest amount that applies to any one of 
the facilities. Certification must be by surety bond, insurance, self-
insurance or guarantee, and coverage must be continuously maintained by 
the responsible party for all its leases, permits, and rights of use 
and easements.
    For each OCS lease, 30 CFR 256.53(d) and (e) provide the Regional 
Director the authority to require additional security in the form of a 
supplemental bond, based upon a calculation of the potential 
decommissioning liability and an evaluation of the lessee's ability to 
carry out present and future financial obligations in this regard. Each 
lease, right-of-use and easement, and right-of-way with determined 
liability must be covered by a supplemental bond unless at least one 
lessee or holder of a right-of-use or right-of-way demonstrates to the 
satisfaction of BOEMRE that it has the financial ability to ensure that 
wells can be plugged and abandoned, platforms removed and the drilling 
and platform sites, including pipeline corridors, cleared of all 
obstructions, per BOEMRE regulations. Supplemental bonds may 
additionally be required to satisfy other lease obligations, as 
determined by the Regional Director.
    Question 21. Please state the inspection record for the Deepwater 
Horizon's blowout preventer over the 6 months leading up to the April 
20th explosion.
    Answer. Regulations require that documentation of blowout preventer 
inspections be made available to BOEMRE during rig inspections. 
Operator inspections of the blowout prevention mechanisms occurred in 
accordance with the regulatory requirements. The results of the 
investigation will provide us with a more complete picture, but bureau 
documentation provided after the explosion shows that BOEMRE 
inspections occurred on the Deepwater Horizon rig in November 2009 
while on location in Mississippi Canyon Block 727 and monthly after it 
moved to the Macondo well location in February 2010.
    Question 22. The International Association of Drilling Contractors 
has ``formally'' requested your Department lift the temporary ban on 
new well permits for shallow water operators (under 1000 feet.) Have 
you made a decision on this request, and if not when will you have done 
so?
    Answer. The temporary suspensions, which were lifted on October 12, 
2010, were applicable only to deepwater drilling activities.
    Question 23. Should individual activities on federal lands be 
examined by individual Environmental Impact Statements?
    Answer. We are committed to full compliance with both the letter 
and the spirit of NEPA, and agree that our decision-making must be 
fully informed by an understanding of the potential environmental 
consequences of federal actions permitting offshore oil and gas 
development.
    In August, the Council on Environmental Quality issued its report 
on the NEPA process for environmental reviews in the offshore program. 
The report found that MMS conducted numerous levels of extensive 
environmental reviews, relying on the ``tiering'' process in which 
prior reviews should be incorporated into subsequent, site-specific 
analyses. The report also offered several recommendations, which BOEMRE 
has committed to using as guideposts as it continues its reform and 
reorganization activities. On August 18th we announced that we are 
undertaking a comprehensive review of BOEMRE's NEPA process, including 
the use of categorical exclusions, for exploration and drilling on the 
Outer Continental Shelf.
    Question 24. Do you believe a ninety-day period for making a 
decision on the Deepwater Horizon in 2009 would have led MMS not to 
permit this well?
    Answer. It would not be appropriate to speculate on this issue 
given the outstanding investigations into the root cause of the 
explosion and spill. However, the Department and the Administration 
have recognized the significance of extending the time allowed under 
the OCSLA for review of oil and gas exploration plans from 30 to 90 
days, and have proposed legislation to make this change.

    Responses of Hon. Ken Salazar to Questions From Senator Menendez
    Question 1. Secretary Salazar, in the hearing you indicated it is 
still ``an open question'' whether the Department of the Interior and 
the Minerals Management Service (MMS) underestimated the risks 
associated with offshore drilling. There have also been recent reports 
that MMS scientists were pressured to underplay offshore drilling risks 
and that leases were approved without appropriate environmental 
permits. Given that you do not have complete confidence in your 
Department's assessment of these risks and since MMS has come under 
fire for these same assessments, doesn't that bring into question the 
recent announcement to expand offshore drilling? After all, this 
Administration has made reliance on science a core value. If the 
decision to expand offshore drilling was made based on inaccurate 
information shouldn't this decision be reconsidered? Or is the policy 
of this Administration to expand offshore drilling no matter what is 
found out in this investigation?
    Answer. The Department's proposed 2012-2017 offshore oil and gas 
program reverses the plans of the previous administration and provides 
a new approach to 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. We made it 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- or south-Atlantic, and we launched a scientific 
evaluation, led by my Science Advisor and Director of the USGS, Dr. 
Marcia McNutt, to analyze issues associated with drilling in the 
Arctic. We introduced a new emphasis on both science-based decision-
making and public outreach, and we will carry this emphasis through as 
we move to develop the final plan.
    Regarding the science resources at the Department, they are some of 
the most robust in the United States and include thousands of 
scientists in the USGS, the FWS, the NPS, and BOEMRE. The various 
programs in the USGS and the science and research programs within 
BOEMRE also play key roles in providing scientific information 
concerning impacts from offshore energy and mineral exploration.
    Question 2. Secretary Salazar, on page 7-1 of BP's exploration plan 
for the lease sale in question, BP certified to MMS that it had the 
``capability to respond . . . to a worst-case discharge . . . resulting 
from the activities proposed in our Exploration Plan.'' Do you think BP 
was truly capable of responding to this spill? If it was capable, why 
has it had to try so many unprecedented techniques to address the spill 
such as domes, applying hundreds of thousands of gallons of toxic 
dispersants, and what has been termed a ``junk shot''?
    Answer. We are awaiting the results of the ongoing investigations 
into the root cause of this tragedy. However, we must acknowledge that 
this extraordinary event has caused all parties to reexamine the 
processes they manage. At the Department, we are and have been actively 
working to determine the best strategies to ensure enhanced health and 
environmental safety standards for offshore operations, including an 
evaluation of how oil spill response planning has to change.
    Question 3. BP's lease sale received a categorical exclusion from 
the NEPA process last year. How could such an inherently dangerous 
activity not undergo thorough environmental review? I understand that 
it was announced that the process of granting categorical exclusions is 
being reformed. Does that mean Interior has committed to ending the 
practice of granting any categorical exclusions for offshore oil wells?
    Answer. We are committed to full compliance with both the letter 
and the spirit of NEPA, and agree that our decision-making must be 
fully informed by an understanding of the potential environmental 
consequences of federal actions permitting offshore oil and gas 
development.
    In August, CEQ issued its report on the NEPA process for 
environmental reviews in the offshore program. The report found that 
MMS had conducted numerous levels of extensive environmental reviews, 
relying on the ``tiering'' process in which prior reviews should be 
incorporated into subsequent, site-specific analyses. The report also 
offered several recommendations, which BOEMRE has committed to using as 
guideposts as it continues its reform and reorganization activities. On 
August 18th the Department and BOEMRE announced that the use of 
categorical exclusions for offshore oil and gas development would be 
restricted to activities involving limited environmental risk while the 
Department undertakes a comprehensive review of its NEPA process and 
the use of categorical exclusions for exploration and drilling on the 
Outer Continental Shelf.
    Question 4. Secretary Salazar, I know you and dozens of other 
employees at Interior have had to drop what you were doing and head to 
the Gulf to help oversee the spill response. Each employee has incurred 
their own travel costs, lodging, and meals. I feel quite strongly BP 
should be on the hook for all response costs, including these sorts of 
incidental costs to the American taxpayer. I sent a letter on May 17, 
urging all federal departments to keep records of all expenses 
associated with mobilizing personnel and resources to clean up BP's 
mess. As far as I am concerned Mr. Secretary, if you recently had a cup 
of coffee in Louisiana, BP should be paying for it. Do you agree? Are 
all of these expenses carefully tracked and recorded?
    Answer. The Administration is committed to holding those 
responsible accountable for all eligible costs associated with the 
Deepwater Horizon spill, and the Department is tracking all spill-
related costs. As of early September, the Administration had sent six 
bills to BP and other responsible parties for oil removal costs. The 
first five of those bills have been reimbursed in full by BP.
    Costs which fall within the statement of work under the Pollution 
Removal Funding Agreement (PRFA) the Department has with the U.S. Coast 
Guard are being reimbursed through a coordinated department-wide 
process. Every bureau and office with a Deepwater Horizon related PRFA 
is tracking these costs according to the USCG's PRFA reimbursement 
guidance. Currently efforts to prepare and process reimbursement 
packages for costs incurred from April 21, 2010 to June 30, 2010 within 
the various PRFA agreements throughout the Department are underway. 
These packages will be prepared and submitted to the USCG on a regular 
basis until all Deepwater Horizon work is complete and expenses under 
the PRFA's are reimbursed.
    The Administration regularly bills responsible parties for oil 
removal costs, and has sent seven bills, to-date, of which the first 
six have been paid in full by BP, totaling $518.4 million. More 
information about oil spill costs and the reimbursement process - 
including copies of the bills that have been sent to responsible 
parties--is available here: http://www.restorethegulf.gov/release/2010/
10/13/oil-spill-cost-and-reimbursement-fact-sheet.
    Departmental costs that are not currently being reimbursed through 
one of the various PRFAs are being tracked in accordance with 
interagency guidance and will be provided to DOJ.

    Responses of Hon. Ken Salazar to Questions From Senator Cantwell
    Question 1. When blowout preventers experience failures, 
malfunctions, or failed tests, are those failures required to be 
reported to the Minerals Management Service? If so, what is the 
regulatory basis and scope of that requirement and what is the Minerals 
Management Service's process for responding to those reported failures?
    Answer. The regulations in 30 CFR 250 govern important drilling 
operations on the OCS. Subpart D covers all aspects of the drilling 
operation including permitting, casing requirements, cementing 
requirements, diverter systems, blowout prevention systems, drilling 
fluids requirements, equipment testing, and reporting.
    Fatalities, injuries that require the evacuation of the injured 
person, losses of well control, fires and explosions, and other similar 
significant events must be reported immediately via oral communication 
to the BOEMRE District Manager. Beyond whatever immediate action may be 
necessary to respond to a significant event, a written follow-up report 
is required within 15 calendar days. Oral presentation of information 
for events required to be reported is limited to information that can 
be transferred quickly due to a potentially ongoing emergency, and 
includes the date and time of occurrence, name and contact data, lease 
and block data, the name of the facility involved, and the type of 
incident and injury or fatality. Written reports, however, require 
submittal of data that has been verified after the response, and 
involve discussion of any corrective actions taken and data on monetary 
damage.
    The Secretary, the Secretary of the Army, and the USCG have the 
authority to pursue civil and criminal enforcement actions against 
persons who violate the Outer Continental Shelf Lands Act, the 
regulations created to implement the OCSLA, and the terms of any lease, 
license, or permit issued under the Act. The Department maintains a 
National Potential Incident of Noncompliance (PINC) List to help 
inspectors carry out enforcement actions: it contains a checklist of 
requirements for specific installations or procedures and prescribed 
enforcement actions consisting of written warnings, shut-in of a 
component, including wells, equipment, or pipelines, or shut-in of an 
entire platform if noncompliance with the National PINC is detected. If 
the violation does not impose an immediate danger to personnel or 
equipment, a warning Incident of Noncompliance (INC) is issued. An INC 
must be corrected within 14 days from the time specified on the INC, 
and the operator may not continue the activity in question until it has 
corrected the INC.
    Question 2. Does the Minerals Management Service have a record of 
any reported failures, malfunctions, failed tests or other problems 
with the blowout preventer at issue in the Deepwater Horizon incident 
prior to the April 22nd blowout and explosion? If so, please detail 
those reported problems, how those reports of problems were handled by 
the Minerals Management Service, and whether any waivers were granted 
that allowed the operator to continue drilling without fixing those 
reported problems with the blowout preventer.
    Answer. Regulations require that documentation of blowout preventer 
inspections be made available to BOEMRE during rig inspections. 
Operator inspections of the blowout prevention mechanisms occurred in 
accordance with the regulatory requirements. The results of the 
investigation will provide us with a more complete picture, but bureau 
documentation provided after the explosion shows that BOEMRE 
inspections occurred on the Deepwater Horizon rig in November 2009 
while on location in Mississippi Canyon Block 727 and monthly after it 
moved to the Macondo well location in February 2010.
    Question 3. Based on the shocking ``60 Minutes'' report this past 
Sunday, it looks like other offshore oil rigs like the ``Atlantis'' may 
be woefully out of compliance, with engineering drawings and schematics 
that are inaccurate and not approved by engineers. Why is MMS allowing 
the Atlantis oil rig to continue operating without a full and complete 
set of engineer-approved drawings and schematics?
    Answer. In April of 2009, a whistle blower filed a complaint under 
the federal ``False Claims Act'' alleging that BP falsely certified 
safety records relating to BP's Atlantis Project. The parties agreed to 
a dismissal of that suit in January 2010. On May 13 the whistle blower 
asked the court to reopen the case; the government did not object to 
the request. In the meantime, BOEMRE launched its own investigation 
into safety operations on the Atlantis. That investigation, which also 
responds to Congressional requests, is nearing completion and a report 
is being finalized. The BOEMRE Director will be providing the report to 
the requesting and interested Members of Congress.
    Question 4. Who specifically is charged with investigating the 
allegations about the Atlantis oil rig?
    Answer. The investigation is being led by BOEMRE's new 
Investigation and Review Unit with support from BOEMRE's Office of 
Field Operations in the Gulf of Mexico Region.
    Question 5. What is your expected time-line for the ongoing 
investigation into the Atlantis oil rig? Do you anticipate that a 
formal, publicly-released report will result from the investigation?
    Answer. As noted in the response to question 3, the BOEMRE 
investigation, which also responds to Congressional requests, is 
nearing completion and a report is being finalized. BOEMRE Director 
Bromwich will be providing the report to the requesting and interested 
Members of Congress.
    Question 6. Has the Department of Interior received any allegations 
of wrongdoing with respect to the Thunder Horse oil platform? Are there 
currently any investigations into safety, compliance, or other issues 
with respect to the Thunder Horse oil platform?
    Answer. On November 13, 2009, the New Orleans District office 
received an e-mail from a former BP employee stating that BP had safety 
violations ongoing at the Thunderhorse MC 778 A platform. On November 
19, 2009, two inspectors arrived at the Thunderhorse facility to 
investigate. The inspectors were unable to substantiate the reported 
safety violations.
    Question 7. It seems that an uncontrollable oil well blowout and 
multi-week or multi-month oil leak is not typically considered to be 
the worst-case scenario in risk and environmental analyses for offshore 
oil drilling. The worst-case scenario is often stated to be much less 
severe in magnitude. Do you believe that future risk and environmental 
analyses should consider an uncontrollable well blowout and multi-month 
oil leak to be the worst case scenario, rather than setting the `worst-
case scenario bar' at a lower and more optimistic level?
    Answer. The Department, through BOEMRE, is evaluating how oil spill 
response planning has to change after the Deepwater Horizon tragedy. 
This extraordinary event has caused all relevant federal agencies to 
reexamine their processes. For example, it may be necessary for 
operators to demonstrate the ability to respond in a shorter timeframe 
than in the past; faster containment also seems to be the most 
effective tool in open water response. From deepwater spill containment 
to use of ocean booms, we are working to ensure that sufficient 
resources are available to contain spilled oil before it spreads beyond 
our capability to recover it.

                                    

      
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