[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
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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
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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
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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:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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.]
APPENDIX MATERIAL SUBMITTED
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