[Senate Hearing 111-1152]
[From the U.S. Government Publishing Office]


                                                       S. Hrg. 111-1152
 
      IMPACT OF THE DEEPWATER HORIZON OIL SPILL ON SMALL BUSINESS 

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

                                HEARING

                               BEFORE THE

            COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 27, 2010

                               __________

    Printed for the Committee on Small Business and Entrepreneurship


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            COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP

                     ONE HUNDRED ELEVENTH CONGRESS

                              ----------                              
                   MARY L. LANDRIEU, Louisiana, Chair
                OLYMPIA J. SNOWE, Maine, Ranking Member
JOHN F. KERRY, Massachusetts         CHRISTOPHER S. BOND, Missouri
CARL LEVIN, Michigan                 DAVID VITTER, Louisiana
TOM HARKIN, Iowa                     JOHN THUNE, South Dakota
JOSEPH I. LIEBERMAN, Connecticut     MICHAEL B. ENZI, Wyoming
MARIA CANTWELL, Washington           JOHNNY ISAKSON, Georgia
EVAN BAYH, Indiana                   ROGER WICKER, Mississippi
MARK L. PRYOR, Arkansas              JAMES E. RISCH, Idaho
BENJAMIN L. CARDIN, Maryland
JEANNE SHAHEEN, New Hampshire
KAY HAGAN, North Carolina
           Donald R. Cravins, Jr., Democratic Staff Director
              Wallace K. Hsueh, Republican Staff Director



                            C O N T E N T S

                              ----------                              

                           Opening Statements

                                                                   Page

Landrieu, Hon. Mary L., Chair, and a U.S. Senator from Louisiana.     1
Snowe, Hon. Olympia J., Ranking Member, and a U.S. Senator from 
  Maine..........................................................     3
Shaheen, Hon. Jeanne, a U.S. Senator from New Hampshire..........     5
Cantwell, Hon. Maria, a U.S. Senator from Washington.............     7
Murkowski, Hon. Lisa, a U.S. Senator from Alaska.................     8
Vitter, Hon. David, a U.S. Senator from Louisiana................    10

                               Witnesses

Rivera, James, Associate Administrator for Disaster Assistance, 
  U.S. Small Business Administration.............................    11
Zukunft, Rear Admiral Paul, Assistant Commandant for Maritime 
  Safety, Security, and Stewardship, U.S. Coast Guard............    15
Willis, Darryl, Vice President for Resources, BP America.........    33
Voisin, Mike, Owner, Motivatit Seafoods..........................    41
Sunda, Carmen, Director, Greater New Orleans Region, Louisiana 
  Small Business Development Center..............................    45

          Alphabetical Listing and Appendix Material Submitted

Cantwell, Hon. Maria
    Testimony....................................................     7
Landrieu, Hon. Mary L.
    Testimony....................................................     1
Murkowski, Hon. Lisa
    Testimony....................................................     8
Rivera, James
    Testimony....................................................    11
    Prepared statement...........................................    13
    Response to post-hearing questions from Chair Landrieu.......    62
Shaheen, Hon. Jeanne
    Testimony....................................................     5
    Prepared statement...........................................     6
Snowe, Hon. Olympia J.
    Testimony....................................................     3
Sunda, Carmen
    Testimony....................................................    45
    Prepared statement...........................................    48
    Response to post-hearing questions from Chair Landrieu.......    75
Vitter, Hon. David
    Testimony....................................................    10
Voisin, Mike
    Testimony....................................................    41
    Prepared statement...........................................    43
Willis, Darryl
    Testimony....................................................    33
    Prepared statement...........................................    35
    Response to post-hearing questions from Chair Landrieu.......    70
Zukunft, Paul
    Testimony....................................................    15
    Prepared statement...........................................    17
    Response to post-hearing questions from Chair Landrieu.......    67


      IMPACT OF THE DEEPWATER HORIZON OIL SPILL ON SMALL BUSINESS

                              ----------                              


                         THURSDAY, MAY 27, 2010

                      United States Senate,
                        Committee on Small Business
                                      and Entrepreneurship,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 2:34 p.m., in 
Room SR-428A, Russell Senate Office Building, Hon. Mary L. 
Landrieu (chair of the committee) presiding.
    Present: Senators Landrieu, Cantwell, Shaheen, Snowe, and 
Vitter.

 OPENING STATEMENT OF HON. MARY L. LANDRIEU, CHAIR, AND A U.S. 
                     SENATOR FROM LOUISIANA

    Chair Landrieu. Good afternoon. I would like to call the 
Small Business Committee to order.
    I have called this special Committee hearing together today 
to focus our Committee's attention on the impacts of the 
Deepwater Horizon oil spill on businesses in the Gulf of 
Mexico. We know that this current disaster is continuing to 
unfold, and there are some immediate and very serious impacts 
on businesses and individuals and families.
    I would like to begin by taking a moment to reflect on the 
crew members that were killed in this terrible incident, who 
lost their lives, as well as those that were injured. I have 
been able to meet with some of the families, and the stories 
and the heartache are hard to repeat. We want to remember them 
as we begin, and there are many, many other individuals that 
have been affected, not, of course, as deeply and as 
personally, but we are going to focus on that today.
    As we begin, I would like to remind all of us that 
Louisiana and the Gulf Coast supply a tremendous amount of 
seafood for our nation. In 2008, commercial fishermen in the 
Gulf of Mexico harvested 1.27 million pounds of fin fish and 
shellfish and generated over $659 million in revenue. Depending 
on the season, up to 40 percent of our nation's commercial 
seafood harvest comes from the Gulf of Mexico. This is an 
extraordinary asset that is at risk, and the individuals that 
work in this business.
    Louisiana seafood is a $2.4 billion industry, and it is 
responsible for more than 27,000 jobs. For every one of these 
direct jobs in the energy and seafood industry--and I have not 
even mentioned the energy industry yet--there are countless 
other related businesses dependent on them for commerce, not 
the least of which are our very famous restaurants in New 
Orleans, Louisiana, and the Gulf. Other businesses like ice 
houses, processors, grocery stores, B&Bs, hotels, large hotels, 
convention centers, and the suppliers that supply those 
businesses, et cetera, are all being affected. Today's hearing 
will focus on the impacts of the oil spill on the thousands of 
small businesses that are being affected as we speak. We are 
particularly interested in making sure that we are doing 
everything we can to help them.
    Two weeks ago, SBA Administrator Karen Mills and I went 
down to the region together. I have been down many other times, 
as she has, but we were able to travel together. I was 
heartened to see the response of the SBA and their many 
disaster centers, that they are stepping up, Mr. Rivera, but we 
need to do more. We will hear testimony from not only you, who 
are here in Washington, but people on the ground. We are 
looking forward to that testimony.
    We will also hear from BP and their claims office. They are 
the fourth largest company of any kind in the world, the third 
largest oil company in the world, and we expect their response 
to be commensurate with that size to put tremendous resources 
to this effort.
    To date, it looks as if BP has accepted its obligation to 
pay all of the obligations both to the Federal Government, the 
State government, and local governments. I am very interested 
in them living up to their responsibility to the above-
mentioned, but also to small businesses. I said when I went 
down this week--and this was a direct quote, ``If you made 
$50,000 last year and you cannot work this year because of BP 
and the accident, BP is going to write you a check for $50,000. 
If your business made $1 million last year and you cannot work 
this year, BP is going to make your business whole.''
    ``There is no question,'' I said, ``who will pay these 
bills to individuals, to business, to the parish, and to the 
government. Those bills will be paid in full.''
    This hearing is about how to make this promise come true, 
so we will go through a series of questions in just a moment. 
Lastly, we will get an update from the Small Business 
Administration to talk about the update of their centers, and 
then from the Coast Guard, and then, most importantly, from our 
fishermen and small businesses that are being affected in the 
Gulf Coast.
    I want to say that this will be a series of hearings that 
this Small Business Committee intends to have until we are sure 
that the claims process is the right process to be in place. 
Our people do not need more loans that they cannot pay. They do 
not need, you know, arbitrary deferrals with balloon payments 
at the end. They need real help right now to make sure that 
they are able to weather this actual, very terrible storm that 
is brewing in the Gulf literally.
    I would like to turn it over to my Ranking Member, Senator 
Snowe, for a brief, if you do not mind, Senator, opening 
statement and then recognize Senator Shaheen, and then I am 
going to recognize Senator Murkowski, who is a Senator from 
Alaska and a great colleague of ours who has some direct 
experience in the Exxon Valdez. Having been a leader from the 
State of Alaska, I thought she should perhaps start off this 
hearing with some thoughts about how her fishermen and 
constituents either were or were not supported through this so 
we can make sure we do a better job this time.
    Let me turn it over to Senator Snowe.

OPENING STATEMENT OF HON. OLYMPIA J. SNOWE, RANKING MEMBER, AND 
                   A U.S. SENATOR FROM MAINE

    Senator Snowe. Thank you. Thank you, Chair Landrieu, for 
holding this hearing on what is now the largest oil spill in 
the history of this nation. I am pleased to welcome our 
colleague Senator Murkowski, who is the Ranking Member of the 
Energy and Natural Resources Committee, to talk about the 
claims process for affected individuals, small businesses, and 
lessons learned in the wake of the Exxon Valdez spill back in 
1989, as well as what worked in the State of Alaska.
    I want to welcome our panelists. I know Mr. Rivera was here 
last week. We thank you for being here again this week. And to 
Admiral Zukunft, I appreciate the fact that you are here on 
behalf of Admiral Allen, as well, who I know is in the Gulf 
today and obviously addressing a very serious situation. We did 
not want to take him away from that.
    I also want to express our thanks to the second panel as 
well, and Mr. Voisin, who is an oysterman from Houma, Louisiana 
and having to experience firsthand the devastation of this 
tragedy.
    Today, 37 days after the Deepwater Horizon drilling rig 
exploded and sank, tragically claiming the lives of 11 workers, 
there is news that the top kill technique may yet succeed in 
finally plugging the leak, and we hope that that effort 
continues to work. The oil that has spilled in the interim is 
now fouling the wetlands and beaches of Louisiana, the Chair's 
state, soiling birds and wildlife, driving tourists away. That 
it took so long to implement a technique we still are not sure 
will be the final solution is certainly unconscionable.
    Furthermore, it was not until this morning that the 
Government released a revised estimate of the daily flow rate, 
suggesting that the amount of oil spilled is 2\1/2\ to 4 times 
higher than previously thought, 12,000 to 19,000 barrels per 
day, 3 to 5 times higher than the 4,000-barrel worst-case 
scenario estimate that BP included in its exploration plan that 
was rubber-stamped by the Federal Government in approving 
drilling operations. These new figures demonstrate that this 
spill can now be as much as 3 times larger than the Exxon 
Valdez accident.
    That it has taken more than a month to get an accurate 
assessment of the amount of oil spilled is emblematic of the 
dysfunctional relationship and the lack of urgency on the part 
of Federal agencies responding to this crisis that have allowed 
BP to dictate the pace and tenor of the response.
    I was further disturbed this past Tuesday to hear Admiral 
Allen quoted as saying he is satisfied with the coordination 
that is going on between BP and the Federal Government. We 
should be anything but satisfied. Every day that we fail to 
develop a solution is another day when jobs and communities' 
entire way of life are destroyed.
    Yet, thus far, BP has only responded to 10,000 of the 
25,000 claims filed, and as this chart shows--and I am going to 
demonstrate it right here--it certainly illustrates the 
convoluted process by which small businesses must first seek 
recovery from BP, and if the company does not respond or denies 
the claim--and BP has 90 days to do the processing for each of 
the claims--the claimant can either sue BP and incur the costs 
and the uncertainties inherent with litigation, or attempt 
recovery through the Oil Spill Liability Trust Fund. And if 
their claim is over $10,000, that requires a forensic 
accounting by the Coast Guard, which would add more months of 
delay. So in many cases, it might be half a year before BP or 
the fund provides compensation.
    Well, what about small businesses? Which small businesses 
could sustain 6 months of no income while they wait to recover 
damages for an egregious wrong for which they bear no 
responsibility? That is the point today, that the SBA and the 
Federal Government must understand and respond to the level of 
urgency given that the people's jobs, their livelihoods, their 
way of life, and their businesses are literally at stake.
    Today I expect answers from BP, the Coast Guard, and the 
SBA on what is being done to help these innocent small 
businesses who face tremendous uncertainty about the future as 
it becomes abundantly clear that the effects of this disaster 
will continue to devastate the fishing waters, the local 
communities, the economies, and the culture of the Gulf Coast 
region for years or even decades.
    Specifically, I want to know why BP is not making fishermen 
whole. A payment of $5,000 for fishermen who bring in that much 
in a single day's catch in the water alone is unacceptable. 
Payments need to be reflective of their total losses, and these 
fishermen need certainty from BP on how the company is going to 
replace their lost profits from this season and possibly years 
into the future.
    Why is the SBA pushing loans on these businesses when many 
of them already have debt from Hurricane Katrina? They do not 
want to take on additional debt, and they do not know if their 
businesses will even survive this calamitous, man-made 
disaster. The SBA should be helping small businesses get money 
from BP, not more loans from the Government. Who is 
coordinating the assistance for small businesses? Clearly, the 
Federal Government is sitting back and letting BP figure out 
how to stop the oil spill, and from all accounts to date, the 
administration is also letting BP dictate how and if small 
businesses are being compensated for their losses.
    My staff visited the SBA's Disaster Recovery Centers in 
Port Sulphur and Venice, Louisiana, last week, and it is clear 
that there is no coordination between the SBA, the SBDCs, the 
Coast Guard, and BP. There should be a one-stop shop for 
businesses so that they are not receiving mixed messages, 
having to drive all over town to fill out applications and 
producing the same documents multiple times.
    Is the Administration going to demand that BP reimburse the 
SBA for the $1.7 million being spent per month on the agency's 
field operations, not to mention the subsidy costs, processing 
costs, and 30 years' servicing costs of any loans made to 
affected businesses? Finally, is BP hiring small businesses to 
help with the clean-up and disaster response?
    According to reports, BP is talking a good game, but 
hundreds of workers and small business owners are standing on 
the docks ready to work while BP is contracting with only a 
select few. I believe it is fitting that BP will answer 
questions and hear comments from an oysterman, Mike Voisin, who 
is here representing hundreds of fishermen in the Gulf who have 
been disabled because of BP's disregard.
    It is incumbent upon BP to look these entrepreneurs in the 
eyes and explain how they intend to work with them to alleviate 
the burden that they have created. It is paramount that over 
the coming weeks we continue to ramp up the pressure on BP and 
all the Federal agencies who are so far falling behind and 
failing the people, the small businesses, and communities that 
have been devastated by this disaster.
    Thank you, Chair Landrieu.
    Chair Landrieu. Thank you, and I would just say that we 
want to make sure that the agencies of the Federal Government 
have the laws that they can respond appropriately to this 
situation. That is what this hearing is about, and there will 
be many hearings about that at every level in almost every 
committee of Congress.
    Senator Shaheen.

 OPENING STATEMENT OF HON. JEANNE SHAHEEN, A U.S. SENATOR FROM 
                         NEW HAMPSHIRE

    Senator Shaheen. Thank you, Chair Landrieu, for holding 
this hearing, and Ranking Member Snowe. I just want to say that 
my heart goes out to the people of Louisiana and all of the 
Gulf States who are directly suffering the consequences of this 
disastrous spill. I know that you, Chair Landrieu, are doing 
everything you can to help those people who have been affected, 
as are the other Senators representing the Gulf States.
    Our goal here is to try and make sure that all of the small 
businesses that have been affected are getting the help that 
they need, and that BP and the contractors that it hired who 
are to blame, who are deemed to be blamed for this spill pay to 
make sure everyone whole.
    I will submit the remainder of my statement for the record, 
Senator Landrieu, but I think this hearing is very important 
and I appreciate your holding it.
    [The prepared statement of Senator Shaheen follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Chair Landrieu. Thank you, Senator Shaheen. I really 
appreciate that.
    Senator Cantwell.

 OPENING STATEMENT OF HON. MARIA CANTWELL, A U.S. SENATOR FROM 
                           WASHINGTON

    Senator Cantwell. Thank you, Chairwoman Landrieu, and thank 
you for holding this hearing. Like many of my colleagues, we 
have deep concerns about the Deepwater Horizon oil spill, and 
not only the issues as it relates to the oil spill but what it 
does to the economy in the area.
    The Deepwater Horizon oil spill is an environmental tragedy 
of monumental proportions. We also must recognize that it has a 
human tragedy of monumental proportions. Not only have 11 men 
already died in the original explosion, but the oil spill 
damaged the Gulf of Mexico, and its coastlines will touch 
countless families, jobs, and small businesses. Virtually no 
part of the region's coastal economy will go unscathed.
    As Chair of the Commerce Subcommittee on Oceans, 
Atmosphere, Fisheries, and Coast Guard, I held a hearing 1 year 
ago on the nation's blue economy and the role of oceans and 
coastlines in our nation's economic future. At that hearing 
Senator Snowe and I heard results of the newly released report, 
``State of the U.S. Ocean and Coastal Economies,'' and 
according to that report, our nation's ocean economy directly 
supports 2.3 million jobs and contributes $138 billion to our 
gross domestic product. Further, coastline counties contribute 
50 million jobs and $5.7 trillion to the U.S. economy. Anything 
that jeopardizes our oceans and coastal environment jeopardizes 
the economies of those regions and countless small businesses 
that depend on them.
    So, Madam Chairman, I am glad we are having this hearing. 
Moving forward, we need to learn the hard lessons that we 
learned from the Exxon Valdez oil spill that taught us some 
very valuable lessons. It taught us that major oil spill 
devastation lasts for decades after the oil is gone, and over 
20 years after the Exxon Valdez oil spill, Pacific herring 
fisheries still show no sign of recovery.
    It also taught us that improperly doing a clean-up can also 
be as harmful as the original spill, and so we need to learn 
from that lesson. And it taught us that many of the worst 
impacts for citizens and small business came from the trauma of 
the clean-up and the litigation following the spill, tearing 
entire communities apart.
    We need to move forward on answers that will help these 
communities, and so I thank you and Senator Snowe for holding 
this meeting, and I hope that we can cut to the chase in making 
sure that these small businesses get compensated.
    I thank the Chair.
    Chair Landrieu. I thank you.
    Senator Cantwell serves both on this Committee and on the 
Commerce Committee, as does Senator Snowe, that has 
jurisdiction over the Coast Guard, so we hope to do some of 
these hearings jointly until we get to the bottom of some of 
these questions.
    Senator Murkowski, I would like to have you begin.

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

    Senator Murkowski. Thank you, Madam Chair, for the 
invitation to spend just a few minutes with this Committee to 
not only speak about Alaska's experience when they faced the 
disaster of an oil spill back in 1989, but to also share with 
you a proposal that I have just introduced that would allow for 
an expedited claims process, which I think will be helpful and 
would hope that this Committee would consider.
    I will just take a point of personal privilege and say it 
is a delighted to be in front of your Committee, a Committee 
that is clearly dominated by my female colleagues, and it is a 
good feeling. I wish I could come to more committees like this. 
But, again, I thank you for your leadership.
    We had an opportunity on Monday to fly over the spill and 
to share that experience with four of our other Senate 
colleagues as well as Secretary of Interior and Secretary of 
Homeland Security. And as one who has, again, lived in a State 
where we had our own disaster, there was so much that I saw 
looking down that reminded me of where Alaska was 20-some-odd 
years ago. And it brought back in my mind those very difficult 
times, very difficult times for our families, our fishermen, 
our communities, and it was not just the environmental 
disaster, as Senator Cantwell has recognized. There is the 
immediate impact of the disaster that is upon you and how you 
deal with that on a day-to-day basis. But to know that so many 
of the claimants in the Exxon Valdez lived with this as part of 
their daily life for 20 years as they pursued finality through 
the courts, this was and is a tragedy unto itself in that there 
was disaster at the time and then there was emotional disaster 
that continued, and there was no closure for these people that 
were damaged. There was no closure for these communities that 
were damaged.
    You can deal with clean-up aspects of it, but when you have 
not been able to sign off on this issue because of fights and 
the ongoing stress of what you have dealt with, this is a 
disaster on its own. We cannot allow this to be repeated to 
those people in the Gulf of Mexico, to those families that you 
represent.
    Now, we have got three members of the Energy Committee 
sitting up there on the dais as well. You know that on Tuesday 
the Energy Committee held a hearing on the existing liability 
compensation that applies with the Deepwater Horizon spill. I 
think we can recognize that there is not a shortage of avenues 
to pursue damages. The amount of limitations on liability is 
one where BP has stated repeatedly--and it has been reinforced 
by the administration and all members that I have come across--
that there is no limit on the amount that BP and others can 
eventually be required to pay. But the concern here is there is 
a shortage of quick, efficient, fair mechanisms to pay the 
claims to those who are desperate and in immediate need of 
help. And when we were down there in the gulf and we listened 
to the representative from the fishermen, the representative 
from the charter boat operators, Mike Voisin from the 
oystermen, what they need now is they have got a boat payment 
that must be made, and they cannot get their boats out into the 
water. They have got a home mortgage that needs to be paid, and 
they have no income coming in.
    Again, I will remind the Committee, after the Exxon Valdez 
it took 20 years for the final settlement, and in the case that 
we are dealing with now, with Deepwater Horizon, you are 
dealing with small businesses and individuals who depend on the 
resources of the ocean, of the marshes or the beaches for their 
employment, for their sustenance, and this is truly a situation 
where justice delayed can be and will be justice denied.
    We have met with many of the affected communities, the 
fishermen, but many of the community organizations representing 
the victims are really frightened, they are outraged at the 
prospect of losing their identities to this spill. And they are 
not comfortable--they are not comfortable with letting the 
responsible party administer the claims process, and given the 
accounts of spill compensations that they have heard coming out 
of Alaska, you can hardly blame them for that.
    So the concern about where we are, we have discussed the 
liability cap issue in the Energy Committee, but raising the 
liability cap under OPA 90 is--well, it is something that I 
absolutely support, and we are working on that issue. It does 
not get the Deepwater Horizon claims paid more quickly. BP is 
making an effort to play the claims. You have mentioned that, 
Madam Chair. They have set up dozens of claims offices. They 
have expended millions in this effort already. But BP is not an 
organization with the administrative skills or the experience 
and the capacity to handle such an unprecedented process. And 
those that are filing the claims, quite honestly, are concerned 
about the fairness aspect of having BP judge the legitimacy and 
the amount of their claims.
    So I have introduced legislation that establishes this 
expedited claims procedure. An administrator would be put in 
place to quickly and fairly resolve the claims for economic 
damages that are caused by the disaster. The act would 
establish an Office of Deepwater Claims Compensation that would 
provide timely, fair compensation on a no-fault basis to 
persons and State and local governments that have incurred the 
damages from the Deepwater Horizon spill.
    The residents and local governments of the gulf region 
would have options for pursuing their claims either in court or 
under the expedited claims process. The bill provides for a 
claimant assistance program, including assistance for the 
claimants, training for nonprofit organizations, and State and 
local government entities to provide the assistance.
    One of the things that we are hearing is people are saying, 
``Well, I have got to go on the Internet. I do not know how to 
do it. I do not now where to go. I do not know what to do. And 
there is nobody there to help.''
    The goal is to provide a system that allows the recovery of 
damages through a process that will not require the citizens of 
the gulf to go out and hire lawyers. We have all heard those 
stories about those that really got rich were the lawyers in 
the case. We do not want these individuals to have to give up a 
large percentage of their damages award and participate in a 
decades-long process.
    So this act will establish multiple resource centers. I 
know your concern, Madam Chair, was making sure that these 
services are available where the people are. You do not want to 
have to send them to Houston to go resolve their claims. These 
resource centers need to be located in existing Federal 
offices. They will assist claimants with the preparation and 
filing of their claims. We establish an advisory committee on 
the Deepwater Horizon compensation that will consist of 
representatives of claimants and responsible parties and 
persons with expertise in marine and coastal ecology, oil spill 
remediation, fisheries management, and administering 
compensation programs. And these individuals will then advise 
the administrator.
    There are also some other provisions that protect the 
interests of the claimants, provisions that require the 
administrator to notify and assist those who may file 
incomplete claims. Oftentimes you file it. You think you are in 
queue, and nobody tells you that you have not completed your 
claim. So it is a process that is designed to work for the 
claimant, not necessarily a process that is designed to work 
for BP or for the Coast Guard or for anybody else, but designed 
to work for the claimant.
    So I would encourage the Committee to take a look at what 
we are proposing we would like to work on this with you so that 
we ensure that those who have been damaged, those who are 
continuing to see the fear approach their shores, that we have 
a process that treats them fairly and expeditiously.
    And with that, Madam Chair, I thank you for the time that 
you have given me.
    Chair Landrieu. Thank you, Senator Murkowski, and I just 
want to say--then I am going to recognize Senator Vitter, who 
has just come, for a short opening statement and then turn it 
over to our panel--how grateful I am for you stepping up and 
filing this bill. This Committee will look very hard at your 
bill. I do not know if it will be assigned to this Committee in 
terms of jurisdiction, but you can rest assured that we will 
look at every aspect of it and make our own recommendations as 
to how it can be improved or give it support as much as we can, 
because you have hit the nail on the head, and your experience, 
having dealt with Valdez, can be a great help to us. I look 
forward to working with you, as we have in many ways on the 
Energy Committee, on this subject.
    Senator Vitter.

  OPENING STATEMENT OF HON. DAVID VITTER, A U.S. SENATOR FROM 
                           LOUISIANA

    Senator Vitter. Thank you, Madam Chair. I want to thank you 
for this hearing. It is a very important topic involved in this 
disaster, and I want to thank our colleague Lisa for her 
enormous contribution on this expedited claims idea.
    We have a combined bill, and half of it is that, which is 
essential, and the other half is removing the economic damage 
cap for BP for this event immediately, which they have said 
that they will not use the present $75 million cap.
    So I would hope that really immediately, by UC hopefully, 
we could pass those two concepts put together, which I think 
are very important and timely and necessary for this event, 
removing the cap for this event while we debate longer-term 
policy and this very important expedited claim process. And I 
have been reaching out to many folks, Senator Durbin today, 
Senator Menendez, others, and I would think this is something 
we absolutely can and should do quickly on a bipartisan basis.
    But, again, I want to thank Senator Murkowski for her great 
work on this.
    Chair Landrieu. Let's go to our first witness, if we could. 
Mr. Rivera, you were just here last week, and let me do a brief 
introduction. He is the Associate Administrator for the SBA's 
Office of Disaster Assistance. He has provided leadership in a 
number of capacities at the SBA since he started his career in 
1989. So if you do not mind--and then we are going to go right 
to Rear Admiral Zukunft, Assistant Commandant for Maritime 
Safety, Security, and Stewardship, who oversees the claims 
office that the Coast Guard is now running based on the act of 
1990. Let us start with you, Mr. Rivera.

  STATEMENT OF JAMES RIVERA, ASSOCIATE ADMINISTRATOR FOR THE 
      OFFICE OF DISASTER ASSISTANCE, U.S. SMALL BUSINESS 
                         ADMINISTRATION

    Mr. Rivera. Good afternoon, Chair Landrieu, Ranking Member 
Snowe, and members of the Committee. Thank you for inviting me 
back to discuss SBA's continuing efforts to help small 
businesses affected by the Deepwater Horizon oil spill. Chair 
Landrieu, I want to thank you for speaking on this issue at 
National Small Business Week and for your overall leadership in 
our response efforts.
    Many small business owners who earn their living fishing in 
the gulf--as well as seafood retailers, boat yards, shipping 
companies, processing plants, and other coastal small 
businesses--are facing significant financial losses from having 
to shut down operations. The SBA has undertaken several efforts 
to help these small businesses survive and make it through 
these tough times.
    First, we have set up a network of 28 outreach centers 
throughout the gulf region to provide individual assistance to 
small businesses. We currently have 13 in Louisiana, 5 in 
Mississippi, 2 in Alabama, and 8 in Florida. We have deployed 
55 staff in Louisiana and 32 in Mississippi, Alabama, and 
Florida. These are experienced customer service 
representatives--many of whom speak two or more languages. They 
have already met with hundreds of small business owners, and 
they have answered hundreds more phone calls from small 
business owners who are interested in applying for Federal and 
State assistance.
    Already, we have started approving our first Economic 
Injury Disaster Loans, which can help small businesses meet 
ordinary and necessary expenses. These loans offer working 
capital of up to $2 million, with a low 4-percent interest rate 
and terms up to 30 years to businesses that cannot obtain 
credit elsewhere. We are currently turning around these 
applications within 5 days in the gulf region, which is well 
within our overall goal of 18 days, and a dramatic reduction 
from our turnaround times during Katrina.
    Another step we have taken is to allow existing SBA 
disaster loan borrowers to request a deferment. If a small 
business has been current on their existing SBA disaster loan 
for the past 90 days, we are granting them up to 12 months of 
deferment. Thus far, SBA has issued 64 deferments for those who 
have suffered both from a hurricane or previous disasters, in 
addition to the Deepwater Horizon oil spill.
    In addition, we are working closely with our network of 
resource and lending partners. For example, we are strongly 
encouraging the lenders who participate in our 7(a) and 504 
guaranteed loan programs to offer deferment relief to 
businesses that have been impacted. We are also coordinating 
with Small Business Development Centers in the gulf region, 
many of whom are collocated at our outreach centers. They have 
been helping to assist fishermen and other small businesses in 
filing claims and obtaining other assistance.
    And I should note that while we are working in the gulf 
coast today, our 1,400 employees and our reserve force of over 
2,000 are responding to 47 other disaster declarations, 
including the flooding in Tennessee where we are collocated 
with FEMA in 30 disaster recovery centers.
    We firmly believe that our ability to respond effectively 
to disasters is a direct result of the improvements SBA has 
made internally. Over the past few years, we have increased the 
number of workstations from 300 to 1,750 in the Fort Worth 
facility. We have added 25 loan officers and a 10-person legal 
team who are solely dedicated to the oil spill. I should also 
mention that we have also invested in technology that allows 
borrowers to apply online, and about one-third choose this 
method.
    Although our response has been quick, effective, and 
thorough, we know our persistence will be paramount. We are not 
letting up, and both the Administrator and I are committed to 
getting the job done right.
    I look forward to further describing these efforts and to 
answering your questions. Thank you.
    [The prepared statement of Mr. Rivera follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Chair Landrieu. Thank you.
    Admiral.

 STATEMENT OF REAR ADMIRAL PAUL ZUKUNFT, ASSISTANT COMMANDANT 
  FOR MARITIME SAFETY, SECURITY, AND STEWARDSHIP, U.S. COAST 
                             GUARD

    Admiral Zukunft. Good afternoon, Chair Landrieu and Ranking 
Member Snowe and distinguished members of the Committee. Thank 
you for the opportunity to appear before you to discuss the 
loss of the mobile offshore drilling unit, Deepwater Horizon, 
and the ongoing response to this truly unprecedented spill.
    As the Commandant's Assistant Commandant for Marine Safety, 
Security, and Stewardship, I have been immersed in this event 
since 10:35 p.m. on the 20th of April in all facets involving 
the spill and certainly some of the issues that we have come 
here to discuss today. As you know, this tragic event began 
with a fire and explosion aboard the Deepwater Horizon. For the 
Coast Guard, first among our concerns were the safety and 
rescue of those in peril. And as we know, we commemorate the 
loss of those 11 crew members who were honored in a ceremony 
just 2 days ago in Jackson, Mississippi.
    I would also like to acknowledge the motor vessel Damon B. 
Bankston, an offshore supply vessel that was on scene and very 
instrumental in the rescue of the 115 survivors following the 
tragic loss of the Deepwater Horizon.
    As you know, the Deepwater Horizon was a foreign-flagged--
Marshall Islands--mobile offshore drilling unit; however, the 
crew was comprised completely of U.S. citizens as required to 
operate on the outer continental shelf. Also, it carried a 
Certificate of Compliance issued by the Coast Guard before it 
was allowed to operate, and this Certificate of Compliance was 
issued in July of 2009 and was due to expire in 2011. There 
were no outstanding safety deficiencies from the July 2009 
examination.
    The Coast Guard shares jurisdiction with Minerals 
Management Service relating to offshore activities. To ensure 
we approach our respective responsibilities in a coordinated 
fashion, we have developed a series of memorandums of agreement 
with Minerals Management Service which ensure that we have the 
right degree of interoperability and that we have a clear 
process for investigating accidents. In essence, the Coast 
Guard has the lead for the safety systems of the vessel, 
wherever that may be, while MMS has oversight of the sub-
surface activity as it relates to drilling operations.
    We have yet to establish the reasons for this casualty. To 
understand what happened, the Coast Guard and Minerals 
Management Service are jointly conducting a formal Marine Board 
of Investigation. There are hearings ongoing today in Kenner, 
Louisiana, to address the vessel and drilling operations. This 
investigation is due to conclude not later than 27 January 
2011.
    Unprecedented in its scope, complexity, and indeterminate 
nature, the spill has required an extraordinary unified 
response across all levels of government. Under the Oil 
Pollution Act and the National Contingency Plan, we have 
established this as a Spill of National Significance. Admiral 
Allen, who stood down as the Commandant of the Coast Guard on 
the 25th of May, continues to serve as the National Incident 
Commander and has oversight of this spill. He is in charge. 
Admiral Papp, our 24th Commandant, will be in the region 
tomorrow as well to look at what forces the Coast Guard may 
require to enhance the response effort occurring across the 
region.
    As we talked about the claims process, as the Coast Guard 
is dealing with activities surface, sub-surface, and mitigating 
impacts as oil reaches shore, has been working with BP. The 
Federal on-scene coordinator directs the activity, the day-to-
day activity, and including that is claims adjudication. One of 
the concerns is the make-up of those submitting claims, to 
include those that do not speak English as a primary language, 
to ensure that we have specifically Vietnamese and adjusters 
that can speak Spanish as well. Over 438 adjusters have been 
deployed to the area, and there have been over 26,000 claims 
submitted. Over $32 million in damages has already been 
awarded, and to date, none of those claims have been denied.
    Subject to your questions, I look forward to our further 
dialogue. Thank you.
    [The prepared statement of Admiral Zukunft follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Chair Landrieu. Thank you very much.
    Let me begin, and we will go through as many rounds as our 
time allows. Let me start with the SBA. The SBA announced they 
would provide up to $2 million in working capital for business 
loans in Louisiana, Mississippi, Alabama, and Florida. As you 
have heard, however, many of our businesses are weary of taking 
on additional debt, particularly because they are paying off 
loans from 2005 to 2008. I want to submit for the record that 
there are currently 11,745 loans outstanding in the Gulf. There 
are 7,575 in Louisiana, 2,226 in Mississippi, and 1,744 in 
Texas, for a total of 11,074. We have also broken down the 
outstanding balances by parish in Louisiana for the record. Our 
people have borrowed up to the hilt.
    What is the idea that BP has in terms of turning these 
loans more into advances, if you will, using the BP claim as 
collateral as opposed to using someone's house or boat that 
they might have already put up to get the last loan, they might 
be short on collateral for this one?
    So, Mr. Rivera, let me ask, do you have the authority under 
the current law to do this, to use BP's promise of payment, 
designated liability under the law, and statements on the 
record that they will pay these claims as collateral? Yes or 
no?
    Mr. Rivera. Our goal is to get disaster assistance to 
victims as quickly as possible, and we do have the authority 
based on, you know, how you have described the claims process. 
Our experience has been that we can get quicker assistance when 
we deal directly with the borrower. We have some tools that we 
have been using. For example, of the 64 individuals, 20 of them 
are homeowners who have lost their jobs because of the oil 
spill, in relation to the oil spill.
    Chair Landrieu. Before we get to the specific 64, I just 
want to be clear for the record, because this is very 
important. You are testifying that you currently have 
authority, you believe, in the current law to make up to a $2 
million loan to anyone that can show legitimate loss of income 
relative to this spill and use the BP claim as collateral?
    Mr. Rivera. Yes, ma'am.
    Chair Landrieu. Yes.
    Mr. Rivera. We can make up to $2 million loans, but if I 
can explain----
    Chair Landrieu. Go ahead.
    Mr. Rivera. If I can explain, our interaction with the 
borrower is much more efficient when we provide--our process is 
much more efficient when we provide directly with the disaster 
borrower, and we can disburse the process much quicker when we 
do not take the assignment approach, versus if we were to take 
the assignment approach, our experience has been that we have 
to get the acknowledgment from the oil companies, from the----
    Chair Landrieu. And that has not been successful in the 
past?
    Mr. Rivera. No, ma'am. We have not been successful in the 
past.
    Chair Landrieu. So you are testifying that although you 
have the authority to do that, when you have tried to do it, 
you have not had very good success?
    Mr. Rivera. Yes, ma'am.
    Chair Landrieu. And you are saying that going the regular 
route, which is requiring these borrowers to put up some kind 
of collateral, is easier?
    Mr. Rivera. It is much more--it is a faster process, and, 
again, from a collateral perspective, we take whatever 
collateral is available. So if they already have a first lien 
in place on their house or they have a mortgage on their house, 
we will take a second lien or a third lien or whatever 
collateral is available.
    Chair Landrieu. Okay. I am just going to say now that is 
not going to be sufficient. On behalf of the people that I 
represent, the last thing they need is more loans. We are going 
to have to try to figure out a way to force these companies to 
either use their promise of a claim as collateral and expedite 
that process or come up with some additional ways to get them 
the help that they need.
    Let me ask the Coast Guard, could you just very quickly say 
under the new law which was passed--not by this Congress or 
this Administration, and most certainly not by this Chairman, 
this law that is up here, complicated, convoluted, and 
uncoordinated response to the oil spill for small business, 
which was passed, I think, through the Commerce Committee in 
1990, putting the Coast Guard in charge of this, can you 
comment about why you think this process is not working and 
what we could do to change it?
    Admiral Zukunft. Madam Chair, our first objective is for 
the responsible party to be forthcoming and resolve claim--
claim resolution.
    Chair Landrieu. Have you analyzed this situation up here--
because this is what the current situation looks like, and it 
does not look very promising to me--and do you have some 
recommendations as to how we can get it changed?
    Admiral Zukunft. We are closely monitoring the claims 
process as we speak, and for that reason, the Federal on-scene 
coordinator has directed the ramp-up of adjusters to facilitate 
the processing of these claims. As I mentioned, over 26,000 
claims have been submitted. None to date have been denied; $32 
million has already been outlaid, and there is no indication 
that BP will hold to its $75 million threshold.
    For any claim that is denied, then it would come under our 
oversight of the Oil Spill Liability Trust Fund, and then we 
can provide relief, and then at that time we would look to seek 
compensation from the responsible party.
    Chair Landrieu. Okay. I am going to take just 30 more 
seconds and give the same to my colleagues. I think that you 
are going to hear not just from our Committee but from the 
second panel that this claims process is not working as well as 
it should, and I just want to go on record that it has been in 
place for 20 years, since 1990, and it may need some changing. 
This Committee is going to be very focused on getting that 
done.
    Ranking Member Snowe.
    Senator Snowe. Thank you, Madam Chair. I am going to yield 
to Senator Vitter because he has to leave for another meeting. 
Thank you.
    Senator Vitter. Thank you very much, Senator, and I will be 
brief, and I do have to leave for another meeting, but thank 
you for that courtesy.
    I would like to direct this to Mr. Rivera primarily. this 
is a very important question that has come up, a practical 
question for people on the ground, and the question is: If they 
get an SBA disaster loan, does BP have to pay back the 
principal and interest and administrative costs of that? There 
are a lot of them taking disaster loans on the assumption that 
BP, by definition under law, is going to cover that. I think 
that would be fair and just, but I want to give them the right 
advice about what the law is. So what is the answer to that 
question?
    Mr. Rivera. Well, as you know, the President has been very 
clear that BP is the responsible party, and they will be held 
accountable for the impact.
    Senator Vitter. Mr. Rivera, I know all that. Under Federal 
law, is BP legally obligated to pay SBA disaster loans that 
people take out?
    Mr. Rivera. You know, I am not sure.
    Senator Vitter. Can we get your counsel to give us a 
written answer?
    Mr. Rivera. Sure.
    Senator Vitter. Because that is something that comes up 
every day on the ground, and I want to be able to give people 
good advice.
    Mr. Rivera. We will get back with you for the record.
    Senator Vitter. Okay. And I do not mean to cut you off, but 
it comes down to what the law is now so we can advise people. I 
certainly think BP should cover it, but that is not the 
question. Second question, real quick, is: Under OPA Section 
2713(f), there is a mandatory loan program for fishermen. It 
says, ``The President shall establish a loan program under the 
fund to provide interim assistance to fishermen and aquaculture 
producer claimants during the claims procedure.'' I had asked 
you in our last Small Business hearing why that had not been 
done, because it seems to me that is a mechanism for immediate 
help. Is there an Administration answer about why that 
mandatory program has not been set up?
    Mr. Rivera. I apologize. I do not have a response for that 
either, but we will, you know, get with our staff and our 
general counsel, and we will get a response back to you.
    Senator Vitter. Okay. Admiral, OPA is also under the Coast 
Guard. Do you know why that mandatory program has not been 
begun?
    Admiral Zukunft. Senator, as you know, the program exists 
currently, there are no monies allocated to that particular 
account. I will say and for the record we have not encountered 
any claims delays, and it is an issue that we are very 
sensitive to, to the point where particularly in Louisiana that 
has been especially hard hit, we have established Coast Guard 
liaison officers, lieutenant commanders and commanders assigned 
to each parish president in Terrebone, Saint Bernard, 
Plaquemines, and Jefferson parishes to look at both the 
response effort and also to ensure that this claims 
adjudication process does not become cumbersome. And as a boat 
owner and having fished Barataria Bay on many an occasion, I am 
very sensitive to the work life situation down there, and we 
cannot wait 90 days or 100 days.
    So we as a service are very sensitive to the needs and the 
livelihood that is at jeopardy as a result of this catastrophic 
spill.
    Senator Vitter. Okay. I think I heard the first part of 
your answer, there is no money. There is $1.6 billion in the 
OPA trust fund. This is under OPA. This is a mandated program. 
Can you all between the two of you respond why this has not 
been set up?
    Admiral Zukunft. There is a $1 billion cap applied to each 
incident, so under the Oil Spill Liability Trust Fund, there is 
that $1 billion cap by law. And so that is the cap that we work 
with within the Oil Spill Liability Trust Fund. As a result, 
that is why we are leaning on the responsible party to provide 
due payment in a timely manner so we do not accelerate the 
drawdown of that $1 billion cap.
    Senator Vitter. And I have no issue with that. I am simply 
asking why a mandated program has not been established.
    Thank you. Thanks, Senator.
    Chair Landrieu. Thank you.
    Senator Snowe.
    Senator Snowe. Thank you, Madam Chair.
    I am trying to make sense of this process right now for the 
immediacy, both as the Chair and Senator Vitter have indicated, 
these are extraordinary circumstances and people need 
assistance. They need to be made whole. That is what you 
continue to hear in all the programming and the coverage of 
this disaster. And I am not clear how they are being made whole 
at this point.
    Now, Mr. Rivera, you are saying that you have 28 centers 
throughout the Gulf region. How many loans have you issued? 
Before I get to the idea of even issuing loans, I am not 
hearing any coordination with BP. That is what I am trying to 
understand, because you are issuing loans--there are a lot of 
costs to these individuals to take out a loan, and why foist 
loans on them when BP should be directly reimbursing these 
individuals and these businesses as opposed to seeking loans? 
This seems to be a very tough process to put these individuals 
through. So why are they going through SBA?
    Mr. Rivera. We are just providing them with another avenue 
of assistance from the perspective of, you know, we have a loan 
program, it is in essence a bridge loan while they are working 
on the claim with BP.
    Senator Snowe. Okay. I just cannot understand why this is 
not all being coordinated. It has to be one-stop shopping. And, 
Admiral Zukunft, you are working through this law here, I 
presume. Correct?
    Admiral Zukunft. That is correct.
    Senator Snowe. And then you have BP with its own centers, 
mediation process, does it not, for processing claims? What do 
you do? You get the reimbursements from BP? You charge them 
through the trust fund?
    Admiral Zukunft. No, we work with BP, and a 
mischaracterization of the National Contingency Plan and the 
role of the Federal on-scene coordinator that has complete 
oversight of the spill, and now we have elevated that to a 
level where now Admiral Allen is the National Incident 
Commander dealing with all matters pertaining to this response, 
including claims adjudication. Admiral Allen has a personal 
daily dialogue with BP on level of response, including 
resolution of claims, to ensure that BP is doing all it can 
within its capacity, including multilingual claim adjusters, to 
get to the very heart of the issue here today to ensure that 
there is no delay, no bureaucracy in resolving claim matters.
    Senator Snowe. Okay. So for those who go through SBA, how 
many loans have you issued, Mr. Rivera, through SBA?
    Mr. Rivera. We have approved 23 for $831,000.
    Senator Snowe. So 23 loans. Throughout your 28 centers?
    Mr. Rivera. Yes, ma'am. We opened the centers a couple of 
weeks ago, as you know, and we are processing those, on 
average, within 5 days.
    Senator Snowe. See, but I do not understand why there 
should be any difficulty for a business owner or individual who 
has been directly affected financially by this disaster that 
they do not directly--are not able to directly get a 
reimbursement from BP immediately. I just do not understand 
this, because going through your process in SBA, if you are a 
catalyst at solving it and doing one-stop shopping, I mean, 
that would be one thing. But you are doing a parallel approach 
to that that ultimately has to come to some resolution for this 
individual in terms of BP being required to reimburse them for 
the cost of securing that loan and in terms of having to offer 
any collateral if that is a requirement, and it generally is in 
SBA loans; that this is a loan that is serviced by the 
Government for up to 30 years.
    I just do not know why this is not being done immediately 
through BP, that you are not coordinating that effort. I just 
think this is making life infinitely harder for individuals in 
the final analysis in getting a true accounting. Now they have 
taken out additional loans, incurred additional costs, and 
somehow they have got to resolve that eventually with BP. Why 
not just do this up front in coordination together? You have 
got a lot of centers. Obviously, I gather BP has centers. You 
have centers, Admiral, correct? Everybody has centers. Why 
can't you all get together, just have one-stop shopping? Is 
that possible? Why isn't that possible? Can either one of you 
give me an answer to that?
    Chair Landrieu. Please answer.
    Admiral Zukunft. I will be glad to answer. Yes, the first 
stop is the responsible party, and then going----
    Senator Snowe. Right. Could you go over to that responsible 
party's center? I mean, move everybody over there? Can't 
everybody get together under one roof, you know, and if they 
have a number of centers, then be part of that one center so 
that you can resolve these issues, help to expedite it?
    Admiral Zukunft. I believe it would be helpful--and I do 
not have the information with me, you know, where these claim 
processing centers are located, and then also to be able to 
track from, you know, time claim is submitted to time claim is 
paid. I believe we can get that information to you, but I do 
not have that information available right now.
    Senator Snowe. Well, you know, according to recent reports, 
over 26,000 claims have been submitted with payments of more 
than $36 million. This represents 12,194 claims paid just in 
Louisiana by BP thus far. I mean, they have 400 claim centers. 
So I just do not understand why this cannot all be sort of 
funneled under the same roof so that it can expedite this 
process, not to mention less than 10 percent of the claims paid 
have gone to businesses outside of the fishing industry, and 
most of the claims paid to those who are in the fishing 
industry are not complete claims. They are just installments of 
$5,000 or $2,500, depending on their profit history and boat 
size. That is hardly enough to get by in the final analysis. I 
mean, they need more certainty than this rather than sending 
them through a bureaucratic treadmill here. I think we really 
have to resolve this, and we would like to have some 
recommendations from you folks. We ought to be able to funnel 
all of this into one process to make life easier and to make 
them as whole to the extent possible rather than just sort of 
these incremental payments over time that is going to make 
their lives even more miserable under these harsh 
circumstances.
    Chair Landrieu. Thank you, Senator.
    Senator Cantwell.
    Senator Cantwell. Thank you, Madam Chair, and I am sorry I 
stepped out for a while. I wanted to get on the conference call 
that Admiral Allen had--or I guess I should say Incident 
Commander Allen--so I missed some of the testimony. But I 
wanted to go back to Mr. Rivera on the issue of the payment. 
You know, it sounds good. I know that in the Exxon Valdez oil 
spill, the Alaska Operations Director at that time said, ``You 
have had some good luck, and you do not realize it. You have 
Exxon and we do business straight. We will consider whatever it 
takes to keep you whole.'' That is what they said at the time.
    Also, the chairman of Exxon at that time said, ``We will 
also meet our obligations to all those who suffer damage from 
the spill.''
    Now, we know that took a long time. That was the statement 
on the ground. So I wanted to ask you whether you believe that 
BP will really pay all legitimate claims. And do you trust this 
process?
    Mr. Rivera. You know, we cannot--we have been very clear 
that BP is a responsible party, and, you know, I am not sure 
what else to say from that perspective. You know, we provide 
the loan program for those individuals that are interested in 
trying to obtain bridge financing while they are working on 
their claim.
    Senator Cantwell. Let me ask this differently, Rear 
Admiral. I want to be clear to make sure I understand the 
process. If a small business files a claim and BP delays in 
paying that claim, they can go back to the Coast Guard and 
protest that, and the Coast Guard could pay that money directly 
to the small business out of the Oil Spill Liability Trust 
Fund. Is that correct?
    Admiral Zukunft. That is exactly correct. Then we would 
submit a claim against the responsible party based on the claim 
submittal, but that payment to the small business would be made 
out of the trust fund. We would seek relief then from the 
responsible party for that payment.
    Senator Cantwell. And how long would that take? How long do 
you think that process would take?
    Admiral Zukunft. The worst case could be up to 90 days, and 
we are very sensitive to what that time limit is.
    Senator Cantwell. So 90 days from when the protest by--if 
BP says no, I do not--I mean, let us just take shrimp 
fishermen, for example. They say, you know, we are owed damages 
now--I mean, as I understand it, Madam Chair, the industry is 
being shut down at this moment.
    Chair Landrieu. Some parts of it, yes.
    Senator Cantwell. So you have segments of people who will 
be losing their jobs and shutting their factories. Say if BP 
says, ``Well, you know what? I know we said we would pay all 
legitimate claims, but first we are going to have a little 
legal battle with Transocean and Halliburton over who caused 
what end of the problem, so we are not going to pay the claim 
until we are sure we are legitimately responsible.''
    So, okay, you get that answer back from them. You are 
saying now 90 days later the Coast Guard could decide to go 
ahead and make that payment to those shrimpers for that 
compensation of loss.
    Admiral Zukunft. Right, and that 90 days is probably the 
worst case. Again, if these are small incremental amounts, 
these are made quite expeditiously by the Coast Guard. Again, 
our indication right now is the fact that we have not had to 
adjudicate any of these. There have not been any claim denials 
to date of those nearly 27,000 claims that have been submitted.
    Senator Cantwell. And in that process, then, if BP turned 
around and had a claim against--you know, basically protested, 
do you have a review process for that?
    Admiral Zukunft. We do indeed.
    Senator Cantwell. And how long? Is that included in the 90 
days?
    Admiral Zukunft. That would be during that 90-day review 
process.
    Senator Cantwell. How long do you think it would take, 
then, before the $75 million would be gone from the Liability 
Trust Fund?
    Admiral Zukunft. We have only seen the beginning of this 
spill. If this top kill were to be effective today, it will be 
at least another 60 days to remove the oil that is there, and 
it will be an additional--it will be years to do the full 
natural resource assessment in terms of the long-term impact, 
especially to the shellfish industry. So this will go on for 
some time.
    Senator Cantwell. Thank you. Well, again, Madam Chair, I 
appreciate you and Senator Snowe having this hearing. Four 
years after the Exxon Valdez oil spill, the local community 
became so frustrated--I am glad our colleague from Alaska was 
here to give testimony, and I think looking at her bill is 
important. But 4 years after that, people were so frustrated at 
the Exxon spill and at the Federal Government that they were 
ignoring the long-term impacts in the area and the livelihood 
of those businesses that they actually formed a blockade, the 
Valdez Narrows, and 60 boats formed a wall stopping oil tanker 
traffic for 2 days until they got a response. So we do not want 
to get to that. We do not want to get to that level of 
frustration, and so I hope that we can get answers for the 
people of the Gulf, and I appreciate your leadership in this 
area for your region.
    Chair Landrieu. Thank you, Senator Cantwell.
    I just want to follow up with one question, if we could, 
and then go to our second panel. I want to get clear from the 
SBA, following up on what Senator Vitter said, because this is 
very important. You have testified that the SBA is authorized 
to use the claim from BP, but you testified that it is 
difficult to press that claim. Is that correct? Yes or no.
    Mr. Rivera. Yes, ma'am. That is correct.
    Chair Landrieu. So one strategy would be for us to help you 
make it less difficult to press that claim with BP. Correct?
    Mr. Rivera. Yes, that would be a good strategy. But from 
our perspective, our experience has told us to provide the 
disaster assistance directly and more expeditiously to the 
small business. It is just easier for us to deal directly with 
the borrower and then have them--while they go through the 
claims process with BP----
    Chair Landrieu. I appreciate that, Mr. Rivera, but, you 
know, a lot of us are not interested in what is easier for the 
Small Business Administration right now. We are interested in 
what is easier, less stressful for these businesses that have 
been through quite a bit. So we are going to press that.
    But I want to ask you this: Does the Small Business 
Administration have the authority now to defer payment of 
principal and interest on a case-by-case basis? Do you have 
that authority now, and are you exercising it for the loans 
that are outstanding?
    Mr. Rivera. Yes, ma'am.
    Chair Landrieu. Do you know how many people have requested 
loan deferrals of principal and interest in the Gulf since the 
spill?
    Mr. Rivera. We have 64 currently that we have deferred.
    Chair Landrieu. Okay. Now, under the current law, however, 
while you can defer principal and interest, it is my 
understanding that that interest continues to accrue? Yes or 
no.
    Mr. Rivera. Yes, that is correct.
    Chair Landrieu. So you will need a law change in order to 
have that interest forgiven or some portion of it forgiven?
    Mr. Rivera. Well, we do not currently have the authority to 
forgive any part or any portion of a loan.
    Chair Landrieu. Some of us have recommended, as you know, 
for some of that to be forgiven to give some help to the 11,700 
businesses that are struggling to pay these loans back as well 
as to try to expedite different opportunities for them moving 
forward.
    And my last question: Of the 27,000 claims that have been 
requested of BP, what is the average amount of those claims or 
a median to give us an understanding? We are talking about 
$5,000, $10,000, $20,000, or $2,000?
    Admiral Zukunft. These are mostly in the $2,000 to $2,500 
range.
    Chair Landrieu. Okay. I need an average, and I would like 
you to submit it in writing. I need the median and I need an 
average, because I want to understand two different things 
here. It is important. We have 27,000 claims that have been 
filed. I am going to guess they are approximately anywhere from 
$1,000 to $10,000, relatively small. The SBA, on the other 
hand, has the authority to lend up to $2 million. Some 
businesses need more than $5,000 right now. May I suggest this: 
$5,000 is not going to get them very far. There has got to be 
something between the $2 million loan possibility and a 
submitted claim for $5,000 every 30 days to help these 
businesses, and that is what this hearing is about.
    We have got to go to the second panel. I am going to ask 
the second panel to come up, and thank you all very much.
    The second panel will come forward, and I will introduce 
them as they come because our hearing is going to end at 4 
o'clock.
    Mr. Darryl Willis is Vice President for BP America. He is 
currently overseeing the claims process, so he can give us some 
understanding of the 27,000 claims that are being filed and how 
that is being taken care of. Mr. Willis, if you will have a 
seat, please.
    Mr. Voisin is a Board Member of the Gulf oyster industry. 
Mike is owner of Motivatit Seafoods and has been in my view an 
extraordinary, strong voice for not just the oystermen but for 
fishermen in many places.
    Ms. Carmen Sunda is the Director of the Louisiana Small 
Business Development Center. Carmen, you have got more than 25 
years of experience. You are a veteran. You have been through 
Hurricanes Katrina and Rita, so you have a pretty good handle 
of what many of the businesses in this area have been facing.
    Mr. Byron Encalade is the owner of Escalade Fisheries in 
East Pointe a la Hache in Plaquemines Parish--he is seated in 
the audience. Thank you very much for being here--one of the 
minority oystermen in our area who is here to testify on a 
different Committee, and we are very grateful to have his 
presence.
    Let us start with you, Mr. Willis, if we could, please.

 STATEMENT OF DARRYL WILLIS, VICE PRESIDENT FOR RESOURCES, BP 
                            AMERICA

    Mr. Willis. Chairwoman Landrieu, Ranking Member Snowe, 
members of the Committee----
    Chair Landrieu. Please push this closer to your mouth. 
Thank you.
    Mr. Willis. Okay. I am Darryl Willis, Vice President, 
Resources, BP America.
    On April 29, 2010, I accepted the role of overseeing BP's 
claims process, which was established in the wake of the 
explosion and fire aboard the Transocean Deepwater Horizon 
drilling rig and the ensuing oil spill. I am here to share 
information with you about that claims process.
    This horrendous accident, which killed 11 workers and 
injured 17 others, has profoundly touched all of us. There has 
been tremendous shock that such an accident could have happened 
and great sorrow for the lives lost and the injuries sustained.
    I would like to make one thing very clear: BP will not rest 
until the well is under control and we discover what happened 
and why in order to ensure that this never happens again. As a 
responsible party under the Oil Pollution Act of 1990, we will 
carry out our obligations to mitigate the environmental and 
economic impact of this incident.
    I would also like to underscore that the causes of the 
accident remain under investigation, both by the Federal 
Government and by BP itself. So I am prepared to answer your 
questions regarding the claims process. I cannot, however, 
respond to inquiries about the incident itself or the 
investigation.
    Above all, I want to emphasize that the BP claims process 
is integral to our commitment to do the right thing. We will be 
fair and expeditious in responding to all claims. To date, we 
have paid out more than $37 million in claims. We understand 
how important it is to get this right for the residents and 
businesses, as well as for the state and local Governments.
    To that end, we have established 24 walk-in claims offices 
operating in Louisiana, Mississippi, Alabama, and Florida, and 
a call center is operating 24 hours a day, 7 days a week. We 
have also established an online claims filing system to further 
expand and expedite our capacity to respond to potential 
claimants. All together, we have nearly 700 people handling 
claims with over 400 experienced claim adjusters on the ground 
working in the impacted communities. We will continue adding 
people, offices, and resources as required and are committing 
the full resources of BP to making this process work for the 
people of the Gulf Coast.
    Our focus is on the individuals and small businesses whose 
livelihoods have been directly impacted by the spill and who 
are temporarily out of work. These are fishermen, crabbers, 
oyster harvesters, and shrimpers with the greatest immediate 
financial need. BP is providing expedited interim payments to 
those whose income has been interrupted. Approximately 13,500 
claims have already been paid, as I said, totaling over $37 
million.
    The claims process was established to fulfill our 
obligations as a designated ``responsible party'' under the Oil 
Pollution Act of 1990. Thus, we are guided by the provisions of 
OPA 90--as well as by U.S. Coast Guard regulations--when 
assessing claims.
    I am not an attorney and therefore cannot speak to 
particular legal interpretations or applications of OPA 90. I 
can, however, reiterate that BP does not intend to use the $75 
million cap in the OPA 90 statute to limit our obligation to 
pay these claims. We expect to exceed it, and we will not seek 
reimbursement from the Oil Spill Liability Trust Fund.
    In conclusion, I would like to add a personal note. My ties 
to the Gulf Coast run deep. I was born and raised in Louisiana. 
I went to high school there, college, and graduate school 
there. My family spent many summers vacationing along the Gulf 
Coast. My mother lost her home of 45 years in Hurricane 
Katrina, and the recovery process was time-consuming and at 
many times frustrating. I know firsthand that the people in 
this region cannot afford lengthy delays in addressing economic 
losses caused by this spill. I volunteered for this assignment 
because I am passionate about the Gulf Coast. It is the place I 
call home, and I want to be a part of the solution.
    With that, I welcome your questions.
    [The prepared statement of Mr. Willis follows:]

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    Chair Landrieu. Thank you, Mr. Willis, and that is very 
comforting for those of us looking for some comforting messages 
these days, and we appreciate that. You have got a big job 
ahead. We want to try to help you do it.
    Mr. Voisin.

      STATEMENT OF MIKE VOISIN, OWNER, MOTIVATIT SEAFOODS

    Mr. Voisin. Thank you, Senator Landrieu and Senator Snowe, 
for this opportunity to speak to you, The Louisiana seafood 
community, of which my family has been a part for now eight 
generations--I am seventh generation--if I push the button, it 
is better?
    Chair Landrieu. Go ahead. That is better.
    Mr. Voisin. Okay. Of which I am seventh generation and my 
sons are eighth generation, comprises about 17,000 commercial 
fishermen. It indirectly affects over 31,000 jobs and has an 
overall influence of over 91,000 jobs. Last year, we 
accumulated in the neighborhood of $2.9 billion worth of 
seafood sales. We are number one in shrimp, oysters, crawfish, 
alligator. We are number two in blue crab and fin fish, and our 
overall production ranks us number two in the country, behind 
Alaska, at about 1.5 billion pounds annually here in the Gulf 
of Mexico.
    The tragic event that occurred on April 20th was a tragedy 
in the Louisiana community. We have an oil and gas community 
that produces subsea, sub-ocean floor resources and harvests 
that resource similar to us in the fishing community that 
harvest that resource above the sea floor. It was a tragedy. 
Half of my family works in the oil and gas community. Half of 
them work in the seafood community. It was a tragic event and 
one that hopefully will not be repeated.
    You know, the world generally is not interested in the 
storms that you encounter but whether or not you bring in the 
ship. And I am here to tell you that we will bring the ship in. 
This is a challenging moment in time. The seafood community is 
challenged by this.
    The claims process at BP as set up, in my opinion, at this 
point is adequate to accomplish the goals to help people back 
to the dock. We met with BP probably 8 days after the event 
occurred, and what we saw was a willingness for them to put in 
place a response that would be adequate to satisfy the needs of 
the seafood community. Is it a perfect response? No. But it is 
very adequate. You have to remember this is our fifth major 
disaster in a 5-year period, and we are used to 2\1/2\- to 3-
year delays. We saw claim checks being written in 2\1/2\ to 3 
weeks. It was almost miraculous in a lot of people's minds that 
we could see that occur. It will not be perfect, but it is much 
better than what we have seen in the past.
    Today we are beginning to see some processing plants sit 
idle and challenges relating to that. We are in the middle of 
our spring larval reproductive cycle in the gulf, and there is 
lots of concern about what is going to happen there.
    We are concerned long term. One of the greatest challenges 
today is probably the emotional stability of a lot of people. A 
lot of people are on edge as a result of a lack of knowledge 
about what is going to occur as a result of this.
    I would like to thank the Chairwoman for putting in the 
Southeast Hurricane Small Business Disaster Relief Act of 2010 
and support that concept of aiding some of these people that 
have Small Business Administration loans so that they could get 
some interest relief. That is critical at this point. They are 
in debt up to their ears or eyeballs, or however you want to 
say it, recovering from four major events over a 5-year period.
    The seafood community is a good community. It is one, as I 
have said, my family has been in a long time.
    You know, Charles Darwin said one time, ``It is not the 
strongest of the species who survive nor the most intelligent, 
but the most responsive to change.'' And I have lived in South 
Louisiana, and I can tell you that people there are very 
resourceful, probably the most resourceful people I have ever 
met. They will change. They will adapt. They will accomplish 
working through this challenge. Will it be a perfect challenge? 
No. Will we respond accordingly and appropriately at every 
step? No. But I will assure you we will come out on the other 
end better than we did prior to April 20th. This tragedy 
hopefully will help us turn the lemons that we have been dealt 
into lemonade, and I stand here and I am ready to answer any 
questions. And I am glad I am sitting next to Mr. Willis 
because, honestly, the seafood community has built a 
relationship with BP that I think is positive towards helping 
us rebuild a better South Louisiana.
    [The prepared statement of Mr. Voisin follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Chair Landrieu. Thank you, Mr. Voisin.
    Ms. Sunda.

   STATEMENT OF CARMEN SUNDA, DIRECTOR, GREATER NEW ORLEANS 
      REGION, LOUISIANA SMALL BUSINESS DEVELOPMENT CENTER

    Ms. Sunda. Chair Landrieu, Ranking Member Snowe, members of 
the Senate Committee on Small Business and Entrepreneurship, I 
am Carmen Sunda, Director of the Louisiana Small Business 
Development Center Greater New Orleans Region. I appreciate the 
opportunity to tell you of our experience with small businesses 
in crisis since the BP oil spill.
    I would like to thank you, Senator Landrieu, and SBA 
Administrator Karen Mills for your visit to New Orleans on May 
10th to open the Business Recovery Centers and meet with local 
officials. Senator, this is the third time in 5 years that the 
Louisiana Small Business Development Center has mobilized to 
assist businesses impacted by disaster events. Long-term 
technical assistance over these 5 years has included business 
strategies, revised business models, relocation strategies, 
assistance with loans, cash flow projections, financial 
statements, and even marketing the business globally. SBDC also 
provides business continuity strategies to prepare for any 
business interruption. Since 2005, we have assisted thousands 
of small businesses in recovering and rebuilding.
    On May 3, 2010, the Greater New Orleans Region SBDC 
collaborated with local partner Seedco Financial and staffed 
the Southeast Louisiana Fisheries Assistance Center in Belle 
Chasse, Louisiana. At that time, this was the only assistance 
center open, and in 3 days, nearly 200 businesses sought 
assistance. By May 10th, there were ten business recovery 
centers opened, and by May 17th, 12 business recovery centers 
were open. Since May 3rd, the SBDC has assisted over 800 
impacted businesses.
    The LSBDC learned how to respond with Katrina/Rita. We 
improved it with Gustav/Ike, and now the SBA, the SBDC, the LED 
partnership is responding to the BP crisis fairly smoothly. 
Regrettably, we are getting good at this.
    We do truly appreciate the coordinated effort of the SBA. 
LSBDC will be working with these impacted businesses for a long 
time to come.
    Nearly all the impacted businesses are seasoned disaster 
survivors, as my colleague has said. And for the fisheries, 
fishing is just not what they do. It is their culture, their 
heritage. Some of them have expressed that no amount of money 
in the world can pay them for their heritage. We need to try to 
appreciate and understand the deep cultural issues.
    A lot of businesses tell us, ``We know how to prepare and 
recover from storms, but this is worse than any hurricane we 
have ever had.'' People cannot really estimate the long-term 
losses or the long-term impact because they cannot define 
``long term.'' Does it mean this season, a few years, a 
lifetime? To think that this will effect more than this season 
is unthinkable, and for many this was the season. Yet they are 
all aware that the damages being done is going to change their 
lives immeasurably. The uncertainty is probably the most 
devastating part of it.
    As has been stated many times, most of these businesses 
that were impacted already have disaster loans on their homes 
and businesses from Katrina/Rita and Gustav/Ike. Even with the 
deferments on existing disaster loans and deferments on the 
payments of the new loans, they are still afraid they will not 
be able to pay the loans and that they will lose their 
property, their home, their boats. This is what they express to 
the SBDC. They all ask us the same question: ``What if BP does 
not pay enough money on my BP claim? How am I going to pay 
these loans back without income?''
    We are also seeing a multiplier effect that goes beyond the 
fisheries, the docks, and the seafood processors. We have 
charter boats and vacation property owners whose customers have 
canceled. They have no income. We have beauty salon operators, 
interior decorators, and construction contractors with 
decreased sales and contracts on hold or canceled; real estate 
owners with rental properties by people who cannot pay the 
rent.
    A tugboat owner whose contracts were put on hold; he has 
$10,000 a month in insurance. BP has told him that his tugboat 
is not eligible for vessels of opportunity because he is too 
big.
    We have got a used car dealership that his monthly sales 
are down $20,000.
    Tackle shops report sales down 80 percent. In fact, if he 
does not get some relief soon, he is going to be out of 
business in 6 weeks.
    And some of the retail sporting goods stores that are miles 
away from the coast, up in the Jefferson Parish area, report 
the same 80-percent drop in fishing-related sales.
    A Mardi Gras business has severe cash flow challenges 
because this is the time of year that the Krewes put their 
downpayments on all the stuff. And the customers that they have 
have lost income or are so uncertain about the future, they are 
not spending the money now.
    And then we had a manufacturer of crab traps trying to 
figure out how to retool and manufacture something else to keep 
from going out of business.
    In addition to assisting these businesses with economic 
injury, we are also assisting the businesses with the SBA loan 
disaster deferments and help them through the BP claims process 
and, most especially, making sure that all their business 
accounting records and documentations are current in 
anticipation of the next BP claim phase.
    We also have in the SBDC two Vietnamese consultants and one 
Hispanic. Two of our consultants, as you know, are very 
experienced in the fisheries and speak fluent Vietnamese, so 
that has been a big help.
    In closing, the SBDC would like express support for Senator 
Mary Landrieu's SBA disaster assistance relief legislation. The 
small businesses in our region are still struggling daily. The 
current economic crisis due to the BP spill just complicates 
the businesses' full recovery. In many cases, the largest debt 
payment is the SBA disaster loan, and many small businesses 
have had to lay off employees or reduce staff hours to part-
time. So this waiver of the interest on the SBA disaster loans 
of up to $15,000 would really make a huge difference for these 
businesses and jobs would be saved.
    Thank you. I would be happy to answer your questions.
    [The prepared statement of Ms. Sunda follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Chair Landrieu. Thank you very much. I think all three of 
your testimonies were really terrific and right on point.
    Let me start with you, Mr. Willis, and I think that Ms. 
Sunda has outlined beautifully in her testimony the atmosphere, 
the situation, and the breadth of the impacts of this. While we 
focus a great deal on the independent oil and gas industry, 
which has also been put on pause while these reviews take place 
and the thousands of jobs and we focus on fisheries, I think 
her touching on Mardi Gras Krewes and beauty salons and camp 
operators and B&Bs and hotels helps us understand, 
unfortunately, the potential of the expansion of the economic 
negative impacts in this region. So I want to ask you this: The 
SBA testified that under the law they are authorized to use the 
BP claim as collateral, therefore, basically putting you all on 
the hook to pay these loans back if someone wanted to borrow 
$50,000 or $100,000 or $1 million based on actual income data, 
tax receipts, et cetera. Are you of the understanding that that 
could be a process that would work for you all? Are you willing 
to consider using your responsibility under the law as 
collateral? Or would you suggest that we try this a different 
way?
    Mr. Willis. Chairwoman Landrieu, we are responsible for the 
damages that have been caused by this spill, and my answer to 
your question is that our bias would be for a person, a 
business, not to take out a loan but to file a claim and get 
reimbursed through the claims process. We have a process that 
is efficient. We have processed many individual claims. So far 
we have processed some smaller business claims, but we are 
prepared to process larger, more complex business claims.
    Just to give you an example, when we started this process, 
it was going to take about 30 to 45 days to process an 
individual claim. Being from Louisiana, having been fishing and 
shrimping and crabbing, I knew that people needed money faster 
than 30 or 45 days, so we cut our 45-day process down to a 48-
hour process and very simple documentation that would get money 
into the hands of the community quickly.
    If we do not fulfill our obligation to pay a claim within 
90 days, it goes over to the Coast Guard for them to make a 
decision. What we announced yesterday was that we were putting 
an intermediary in place to make sure that as we evaluate 
claims, we are doing it in a fair, efficient, practical way. 
But I would encourage a business, before they take a loan, to 
file a claim.
    Chair Landrieu. Okay. Let me ask you this: Are you prepared 
to take claims up to $1 million?
    Mr. Willis. Yes.
    Chair Landrieu. Are you prepared to take claims up to $5 
million?
    Mr. Willis. Yes.
    Chair Landrieu. Are you prepared to take claims up to $10 
million?
    Mr. Willis. I would assume so.
    Chair Landrieu. Okay. Are you prepared to take claims, let 
us say, up to a certain amount that would cover them through 6 
months and then take a second and third claim from the same--I 
mean, as long as they are legitimate and they show you, because 
this could go on for a year, 2 years, as has been testified. We 
do not know how some of these impacts are going to be. So you 
are not only open to take large claims but potentially process 
multiple claims for the same claimant?
    Mr. Willis. What I will say is that we are going to make 
sure--my job is to make sure that the process we put in place 
for individuals and businesses is practical, is reasonable, and 
is fair, and it is expeditious. So I want to pause and say that 
although we are paying individual claims in 48 hours, it is 
going to take a little bit longer to pay business claims 
because they are more complex. There is more data that is going 
to be required to understand and substantiate the claim and to 
prove that it is a legitimate claim. But we realize that this 
is not going to end when the well stops flowing, that we will 
have to be in this for the long haul, and we will be.
    Chair Landrieu. Okay. Ms. Sunda, what are you suggesting to 
businesses that come, if they do have reservations about loans? 
Are you able to give them some information about this claims 
process? And what are your business people telling you about 
their ability to access BP's claims process?
    Ms. Sunda. That was a long question, but I think I got it.
    Chair Landrieu. Okay. I am sorry.
    Ms. Sunda. Chair Landrieu, when someone comes in, we look 
at all their options, and the first thing we ask is do they 
have an existing SBA disaster loan. That is number one. And so 
the first thing we do is put the paperwork through to get that 
loan deferred.
    Then the second question almost simultaneously: Do you have 
a disaster loans? Have you filed your BP claim? And so we are 
able to get information from the BP people on the ground, and 
so I, too, like Mike here, our experience has been that they 
are pretty open and you can get to them rather quickly, so we 
get good information, to answer your question.
    Chair Landrieu. So would it be fair to say that you are 
encouraging them to seek relief through the claims process 
first and then only fall back on loans if there is some trouble 
or situation that is not being handled appropriately through 
claims?
    Ms. Sunda. Correct. And many of them come for the 
information. You know, our job is to arm them with information, 
so they come for the information about all the options 
available to them, and then many would take the new application 
but take a wait-and-see attitude.
    Chair Landrieu. One more question. When you defer these 
loans, which you can do on a case-by-case basis, which you are 
doing and we are grateful for the 11,000 folks in the Gulf--the 
11,700 that have them, you are not yet able, however, to waive 
the interest without action by this Congress. Correct?
    Ms. Sunda. Correct.
    Chair Landrieu. Okay. Senator Snowe.
    Senator Snowe. Thank you all for being here today.
    Mr. Willis, in the processing of claims--and I mistakenly 
mentioned 400 earlier, claim centers. It is 400 individuals and 
2,400 claim centers. Is that correct?
    Mr. Willis. It is 400 individuals in 24 claim centers.
    Senator Snowe. In 24, right.
    Mr. Willis. Centers across the four states along the Gulf 
Coast.
    Senator Snowe. In four states, okay. First of all, I would 
be interested to know what percentage of claim amount has not 
been paid overall?
    Mr. Willis. We have received--we have paid--let me start 
with the number that is in my head. We have paid around 13,000 
claims, and we have received around 27,000 claims.
    Senator Snowe. And what about the amounts? What is the 
average amount? And what is the percentage of the claims--I 
mean, what is submitted by individual small business owners----
    Mr. Willis. Right. So 90 percent of the claims have been 
submitted by individuals; 10 percent of the claims have been 
submitted by small businesses. Of the claims that have been 
paid, 88 percent have been paid to individuals, 12 percent to 
small businesses to date.
    Senator Snowe. Okay. What is the average claim?
    Mr. Willis. The average claim is $3,100. That is the 
average if you just sum it all up.
    Senator Snowe. Are these claims--I mean, obviously that is 
a limited amount given the duration that they expect to be out 
of service or out of business. So what does that represent as a 
percentage of a claim on average, the $3,100?
    Mr. Willis. I do not understand your question. I am sorry.
    Senator Snowe. Well, if you are paying an individual 
$3,100, did they file a claim for $20,000? That is what I am 
trying to understand here.
    Mr. Willis. I understand. Typically, what we have been 
doing--and I will tell you how it works, actually. I was at one 
of our claims centers in Venice, Louisiana. Actually, I opened 
it up on the 8th of May. And what happens is a person comes in 
who has been hurt or damaged by this spill, and we ask them to 
bring their claims number, and we ask them to bring some 
substantiating documentation with them, either a tax return, a 
paycheck for 2 weeks, a deposit slip showing how much they 
made, or even trip tickets or fish tickets, just something to 
substantiate their monthly income. And with that information 
and the application, they can walk into a claims center--and I 
have seen it for myself--and 45 minutes after providing their 
documentation, walk out with a check compensating them for 30 
days' worth of income.
    Senator Snowe. So the $3,100 represents 30 days of income?
    Mr. Willis. The average, and it is a dangerous number to 
look at because the mean is actually a little bit higher than 
that. But the average is $3,100.
    Senator Snowe. Well, what is BP's estimate in terms of 
being able to turn this around for individuals and fishermen 
who are depending on the sea or marina owners or restaurants 
that are all dependent on the fishing industry? That is a very 
limited period of time, wouldn't you think, the 30 days?
    Mr. Willis. Yes, and what is going to happen is if this 
spill continues for another 30 days, they will automatically 
receive a second payment.
    Senator Snowe. Okay, so----
    Mr. Willis. And if it continues another 30 days, they will 
receive a third payment, as long as they are being affected by 
the spill.
    Senator Snowe. Okay. And if they, for example, submitted a 
full claim, when would they receive a full claim? How long 
would this go? On a monthly basis----
    Mr. Willis. That is actually----
    Senator Snowe. What do you consider to be a full claim? On 
a monthly basis? I mean, what if this is of 6 months' duration? 
Obviously, given what has happened here and the enormity of it 
and being able to clean this up, many of these individuals may 
be out of business for a long period of time. At what point are 
you going to determine that they need to be paid more in 
advance?
    Mr. Willis. We are going to keep them whole for the damages 
that they have experienced and the income that they have lost. 
What we have done is put what I would call an interim process 
in place to get money into the community quickly. We could have 
designed the perfect process and processed the perfect claim, 
but it probably would have taken longer than 48 hours to get 
money into the hands of the community. So what we have been 
trying to do is to get money in the community, and we are going 
to refine this process as we go along. But the main thing we 
are going to do is to make sure every person who has a 
legitimate claim and it has been substantiated gets the money 
that they are due.
    Senator Snowe. So a prompt payment is immediate?
    Mr. Willis. I am sorry?
    Senator Snowe. Is a prompt payment immediate, you know, in 
providing the individual with a payment? How quickly do they 
receive their payment?
    Mr. Willis. Yeah, yeah, I mean, I will give you an example. 
I was in Venice--the example I mentioned, I was in Venice and I 
actually witnessed people going in and in 45 minutes coming out 
with a check. Some people were leaving within 25 minutes. It 
just depends on the complexity of your claim. If you are a boat 
captain and you have your boat registration and your fishing 
license, it is easier. But if you are a deckhand, there is a 
little bit more documentation that is required, because we have 
to confirm with your captain that you actually work on a 
specific boat, and it just takes a little bit longer.
    Senator Snowe. One other question. What does BP determine 
to be a legitimate claim?
    Mr. Willis. A legitimate claim, and really we are looking 
at the guidance as it is described in OPA. Essentially it is 
around damages that are directly caused by the spill, losses to 
earnings that are directly caused by the spill. We expect that 
claims will be substantiated with some documentation. We will 
cover all costs that are reasonable and necessary. And through 
the whole process, our goal is to be practical, efficient, and 
fair. The damages that we are talking about are damages and 
property destruction, wages that have been lost as a result of 
the spill, or loss of use of the natural resource to live, net 
government losses, as well as increases in public services due 
to the impacts of the spill.
    Senator Snowe. Now, is there a reason why less than 10 
percent of the claims have gone to businesses outside of the 
fishing industry, such as restaurants?
    Mr. Willis. No, not at all. Actually--and I can speak to 
that. When this process started about 3\1/2\ weeks ago, my 
primary concern, our primary concern was making sure the 
fishermen, the oystermen, and the shrimpers were sorted and 
taken care of. We are actually spooling up the business 
components of this as we speak. As of last night, we have 
currently 1,500 complex business claims that are currently 
being reviewed for payment.
    Senator Snowe. Mr. Voisin, what is it that you believe 
should be done immediately that is not being done?
    Mr. Voisin. Senator Snowe, I am actually almost in shock of 
how much is being done. I do not know what else can be done. I 
am really amazed at the quick response that we have dealt with.
    Now, from an emotional standpoint, hopefully they can get 
this thing shut down, and I think that will begin to calm a lot 
of the fears that we are dealing with in the Gulf Coast. We are 
used to 14-day events, 4 or 5 leading up to a hurricane, which 
is our major event; 2 or 3 when you leave and you evacuate, 
then you come home; and then 3 or 4 days to evaluate the 
damages--not repair it in 3 or 4 days, but we are used to 14 
days of being on real edge. This is 38, I think, or 39 today, 
whatever it is, and people have lived on that edge.
    So there are a lot of edgy challenges going on in the Gulf 
at this point, but in terms of response, I cannot say that--
from a local government, state government, Federal government, 
BP as a responsible party, the seafood community working 
together with all of that, I cannot think of one thing that we 
could be doing a lot faster and a lot better. I would tell you 
if I could. I would have already shared it with Darryl and his 
crew.
    Senator Snowe. Well, you are seventh generation, which is 
absolutely remarkable in the oyster industry. That is 
absolutely extraordinary. So we want you to continue.
    Mr. Voisin. My two sons who work for me and my daughters 
are anxious. They want to continue as well.
    Senator Snowe. Thank you.
    Chair Landrieu. Let me ask just another question to BP, and 
we will have to wrap up in just a few minutes. In your 
testimony, you mentioned that under the Oil Pollution Act, you 
are responsible for increased or additional public services 
resulting from the spill. The Coast Guard indicated in their 
testimony the trust fund is available to reimburse Federal 
agencies for operations. The SBA has increased its staff by 125 
employees to respond to this disaster and set up 28 business 
recovery centers. Will BP reimburse the SBA for these and other 
costs associated with this disaster? Yes or no?
    Mr. Willis. Any costs that have been incurred that are 
directly associated with responding to this claim that were 
reasonable and necessary will be covered by BP.
    Chair Landrieu. Okay. Thank you. It is good to hear that 
this claims process is working, at least, Mr. Voisin, from your 
position, and I have heard mixed reviews. You are more 
positive, but I do appreciate the position that you are in to 
give that view. The claims process is working, but if this 
continues to go on and other businesses are, you know, affected 
for a longer period of time, we have already heard of some 
cancellations of conventions and some cancellations of vacation 
rentals, et cetera, along the Gulf, even in places where there 
is no oil. We are just not sure of the extent of this, and some 
of these claims may rise much greater, Senator Snowe, than the 
$3,100, I can promise you. We have got to be prepared to meet 
people at much higher levels, of course, when they are 
legitimate and there is documentation.
    I am glad the SBA, though, is down there in force as well 
to give another level of support. Of course, grants and 
advances are much preferable to loans, but it is probably 
better to have everything available than just, you know, one 
choice. We hope that you all will continue, though, to work as 
closely together as possible.
    We are going to look at the claims process, expediting it, 
that Senator Murkowski talked about, and many of the colleagues 
are looking at that. We will continue to have hearings to make 
sure that these businesses are staying in business, that these 
people who have been so traumatized from several events in 
recent years do not lose another home, another boat, or their 
future over this incident.
    Does anyone have any final words?
    Mr. Voisin. Thank you, Senator Landrieu. I just thought a 
little bit more about the question Senator Snowe asked. If 
there was one thing that I could wish for in all of this, it is 
that people would realize that the seafood in the marketplace 
is safe today. Louisiana is only partially closed. There are no 
closures in Mississippi, Alabama, or Florida. There is a 
tremendous amount of safe seafood in the market. NOAA, FDA, and 
EPA have all been testing, as well as the state health 
agencies. In Louisiana, only about 50 percent of the fishing 
grounds are closed. That is creating a lot of challenges, but 
the seafood in the market is safe, and we want people to feel 
comfortable with that, that we are precautionarily closing 
areas. They are being closed well in advance of any of the oil 
that is moving into the area. They are being tested 
organoleptically and also for hydrocarbons before reopenings 
occur. So seafood in the market is safe, and that is the one 
concern we have, is people will--the brand of Gulf seafood is 
already being challenged. We need that challenge to go away.
    Thank you.
    Chair Landrieu. A very good note to leave on.
    The meeting is adjourned. Thank you.
    [Whereupon, at 4:14 p.m., the Committee was adjourned.]



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