[Senate Hearing 111-1167]
[From the U.S. Government Publishing Office]



                                                       S. Hrg. 111-1167
 
                   THE DEEPWATER DRILLING MORATORIUM:

            A SECOND ECONOMIC DISASTER FOR SMALL BUSINESSES?
=======================================================================


                                HEARING

                               BEFORE THE

            COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP

                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 27, 2010

                               __________

    Printed for the Committee on Small Business and Entrepreneurship


         Available via the World Wide Web: http://www.fdsys.gov




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            COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP

                     ONE HUNDRED ELEVENTH CONGRESS

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


                            C O N T E N T S

                              ----------                              

                           Opening Statements

                                                                   Page

Landrieu, Hon. Mary L., Chair, and a U.S. Senator from Louisiana.     1
Vitter, Hon. David, a U.S. Senator from Louisiana................    79

                               Witnesses
                                Panel 1

Treese, Ethan, Vice President, Federal Government Solutions, Dunn 
  and Bradstreet.................................................    10
Mason, Joseph R., Chair of Banking, E.J. Ourso School of 
  Business, Louisiana State University...........................    20
Briggs, Don, President, Louisiana Oil and Gass Association.......    72

                                Panel 2

Randolph, Charlotte, President, Lafourche Parish (Louisiana).....    88
Bertucci, Leslie, Owner, R&D Enterprises.........................    97
Lillie, Troy, Former Refinery Employee, Exxon Moblie.............   102
Nastasi, Kimberly, Chief Executive Officer, Mississippi Gulf 
  Coast Chamber of Commerce......................................   107

          Alphabetical Listing and Appendix Material Submitted

Bertucci, Leslie
    Testimony....................................................    97
    Prepared statement...........................................    99
Briggs, Don
    Testimony....................................................    72
    Prepared statement...........................................    74
Gulf Citizens United
    Prepared statement...........................................   191
Landrieu, Hon. Mary L.
    Testimony....................................................     1
    Prepared statement...........................................     6
    Letter dated July 21, 2010, to Christina Romer...............   121
    Letter dated July 26, 2010, to President Barack Obama........   123
Lillie, Troy
    Testimony....................................................   102
    Prepared statement...........................................   104
Mason, Joseph R.
    Testimony....................................................    20
    Prepared statement...........................................    23
    Report titled ``The Economic Cost of a Moratorium on Offshore 
      Oil and Gas Exploration to the Gulf Region''...............    50
    Responses to questions submitted by Chair Landrieu...........   130
    Report titled ``The Economic Contribution of Increased 
      Offshore Oil Exploration and Production to Regional and 
      National Economies''.......................................   136
Nastasi, Kimberly
    Testimony....................................................   107
    Prepared statement...........................................   109
Randolph, Charlotte
    Testimony....................................................    88
    Prepared statement...........................................    91
    Resolution from the National Association of Counties.........   126
    Responses to questions submitted by Chair Landrieu...........   134
Shaheen, Hon. Jeanne
    Testimony....................................................     5
    Prepared statement...........................................     6
Snowe, Hon. Olympia J.
    Testimony....................................................     3
Treese, Ethan
    Testimony....................................................    10
    Prepared statement...........................................    12
    Letter dated August 17, 2010, to Chair Landrieu..............   168
Vitter, Hon. David
    Testimony....................................................    79
    Letter dated July 22, 2010, to President Barack Obama........    80


                   THE DEEPWATER DRILLING MORATORIUM:
            A SECOND ECONOMIC DISASTER FOR SMALL BUSINESSES?

                              ----------                              


                         TUESDAY, JULY 27, 2010

                      United States Senate,
                        Committee on Small Business
                                      and Entrepreneurship,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:08 a.m., in 
Room SD-106, Dirksen Senate Office Building, Hon. Mary L. 
Landrieu (chair of the committee) presiding.
    Present: Senators Landrieu, Vitter, Thune, and Wicker.

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

    Chair Landrieu. Good morning. If the witnesses would take 
their seats, thank you so much.
    I appreciate everyone joining us for this very important 
hearing today. Ranking Member Snowe will be joining us in a few 
minutes, and when she gets here, I will recognize her for her 
opening statement. Then as members arrive, we will go into a 
line of questioning after our first panel and after our second 
panel, and each member will be allowed 5 minutes of 
questioning. We have about 2 hours set aside for this hearing, 
and I am very pleased to be able to call this hearing as Chair 
of this Committee. It is the first hearing conducted in 
Congress on the moratorium itself, which in the view of many of 
us that represent the Gulf Coast might be a greater economic 
disaster than the spill itself, which is what precipitated the 
calling of this meeting.
    Tomorrow will be the 100th day since 11 men perished on the 
Deepwater Horizon--and, Senator Vitter, as I said, when Senator 
Snowe comes, she will be able to give an opening statement, and 
then members will get 5 minutes of questioning for rounds.
    Tomorrow will be the 100th day since 11 men perished on the 
Deepwater Horizon drilling rig. First, the explosion that took 
the lives of those workers sent millions of barrels of oil 
spewing into the Gulf and onto our shores and into our marshes. 
Although this is not the subject of today's hearing, 
determining an official calculation of the amount of oil will 
be extremely important to assess the billions of dollars of 
penalties that will be leveled on BP.
    Second, the uninformed and heavy hand of the Federal 
Government reacted to this tragedy by halting all drilling 
activity in the Gulf for more than 30 days and canceled the 
western Gulf leases, which were scheduled to be leased or 
offered for bid in August. While some very limited shallow-
water drilling has been allowed to move forward, all deepwater 
drilling has been brought to a complete standstill for an 
indefinite period of time. In fact, we checked this morning, 
and not one new shallow-water permit, I believe, has been 
issued since this action was taken, and it is not officially 
under a moratorium.
    This decision to halt all new energy production in the Gulf 
of Mexico appears to have been made in an uninformed manner 
and, in my view, borders on reckless. As a result, thousands of 
Gulf Coast businesses are confronting a second economic 
disaster that not only threatens jobs and businesses--those 
businesses include oil and gas fuel service organizations, 
transportation organizations, and machinery companies--but it 
also threatens a way of life just as surely as the BP oil slick 
does, and perhaps even more.
    The Administration's decision to halt drilling activity did 
more than threaten the livelihood of thousands of rig workers 
and oil and gas service crews; it drastically reduced the 
amount of economic activity taking place in the Gulf Coast 
states of Louisiana, Texas, Mississippi, and Alabama.
    While we are here today to talk about the moratorium's 
economic impact on small business and the economy in the 
region, we cannot ignore its consequences on our environment 
internationally and on national security. This Administration 
seems to be ignoring the fact that this action has actually 
increased environmental risk, and I will explain.
    The fact remains that America consumes 20 million barrels 
of oil a day. That is what our economy needs to function. So by 
stopping new drilling here at home, the U.S. will tragically 
increase exports from other countries who have less 
environmental standards, countries like Egypt, Nigeria, Angola, 
and Venezuela and have less pressure, I might say, to keep our 
oceans clean and beautiful. So this begs the question. By 
stopping drilling in the Gulf, are we helping the environment 
or harming it? I believe we are actually harming it.
    The impact of the moratorium on national security is even 
starker. Obviously, a barrel not produced here is a barrel of 
oil that is vulnerable to geopolitical decisions outside of 
U.S. control. Most of us in this room are old enough to 
remember the OPEC embargo. That is not something I think 
Americans would care to repeat.
    Increasing our dependence on foreign oil has direct 
ramifications on our national security. Consider this: When oil 
prices spiked in 2008, Americans transferred nearly $700 
billion overseas to pay our fuel bill during the price spike. 
About $400 billion went to OPEC countries. That transfer of 
U.S. dollars occurred in just one year, and that is when the 
Gulf was producing. We must get the Gulf of Mexico back 
producing for national security, for our environmental, and for 
small businesses, which is the subject of this hearing, along 
the Gulf.
    So today our hearing is intended to address the economic 
impacts of this moratorium on Gulf Coast small businesses. To 
be clear, my concern here is not for major oil companies like 
Shell or Exxon or BP. That will be the subject of many other 
hearings. We want to focus on the impacts of this moratorium to 
small business. If big oil companies are prevented from 
producing here, they will simply transfer their capital to 
other countries, as I mentioned before. But the jobs that used 
to be based in America, many of them hired and employed by 
small businesses along the Gulf, will be devastated.
    I think it is noteworthy that the Administration was forced 
to revise its earlier ban this month after a Federal court 
decision ruled that its basis was not solid. As one of the 
first Senators calling for a full investigation into this 
accident and demanding more effective regulations, I share the 
Administration's goal of a safer oil and gas industry, not 
their method to achieve that.
    Louisiana's coastline is a working coast, bringing the 
country an abundance of seafood, energy, navigation assets, and 
much more through the mighty Mississippi River and the delta 
that it created. As residents of this working coast, no one 
wants drilling to be more safe than we do. No one wants the 
water to be more clean than we do. We have conducted these 
industries in balance for literally more than four decades, and 
we intend to continue that good balance into the future.
    But we also know that our ability to recover from this oil 
spill and any hope of a prosperous future depends on a robust 
plan to continue exploring and developing the abundant oil and 
gas reserves off of our coast. We know full well what prolonged 
suspension of deepwater drilling until November 30th, or 
longer, will mean for hundreds of oil service companies and 
other businesses. It will mean economic disaster.
    While the Administration has left open the possibility to 
resume drilling operations, it does not seem to be happening in 
the shallow water today, and there is no date certain for 
deepwater drilling in the future. For Louisiana alone, that 
puts some 330,000 people who earn a living in the oil and gas 
industry at risk.
    Our Federal Government has a responsibility, particularly 
in these difficult times, to make sure that their paychecks 
will not turn into pink slips. With our nation hopefully on the 
verge of an economic recovery, the last thing we need to do is 
to throw a wrench in the recovery that is underway on the Gulf 
Coast.
    I note for the record that on Wednesday, July 21st, I 
invited Dr. Christina Romer, Chair of the President's Economic 
Advisers, to testify before this Committee to provide the 
Administration's perspective and its own economic analysis in 
support of the moratorium. Unfortunately, the Administration 
was unwilling to provide a witness for today's hearing. So 
yesterday I spoke to Dr. Romer personally, and she indicated 
the Administration does not currently have the economic impact 
data, which is very disappointing to learn.
    It is my understanding that such a review has been 
initiated, however, which is encouraging, and with that in 
mind, I sent a letter to President Obama yesterday announcing 
my intention to hold another hearing no later than September 
16th where the Administration will submit their analysis and 
will provide testimony to this Committee regarding this 
moratorium.
    It is my sincere hope that this moratorium will be lifted 
by that time, but if not, I look forward and the people that I 
represent will look forward to that testimony.
    Consider what we know today. Idling the deepwater rigs that 
were permitted to drill in the deepwater Gulf will immediately 
impact as many as 46,000 crewmen, deckhands, engineers, 
welders, ROV operators, caterers, helicopter pilots, and others 
who operate these service vessels. I have said in speech after 
speech, to try to paint this picture as clearly as I can to 
other Americans, it would be like laying off every firefighter 
and every police officer in Alabama, Mississippi, and 
Louisiana.
    Dun & Bradstreet researchers who will testify at today's 
hearing have prepared a preliminary analysis that shows 2,828 
Louisiana small businesses will be affected by this moratorium, 
and it will not be just businesses in coastal communities. In 
fact, Dun & Bradstreet found that nearly 700 of these 
businesses are located in central and north Louisiana, and that 
is just the impact to Louisiana. Neighboring states will also 
be impacted, particularly Texas.
    For example, the International Association of Drilling 
Contractors has found that 46,000 jobs are at immediate risk in 
296 congressional districts. That is, 68 percent of all 
congressional districts will be negatively impacted by this 
near reckless decision. In addition, according to the Gulf 
Economic Survival Team, led by our Lieutenant Governor, Scott 
Angelle, long-term job losses in Louisiana could reach 120,000 
by 2014.
    While Gulf waters may be clouded by oil in some places, the 
data against the moratorium is crystal clear. We cannot close 
down the offshore oil and gas sector without devastating 
economic impacts to our region. These are businesses like 
Laborde Marine, a family-owned business headquartered in New 
Orleans. In the late 1950s, Mr. Laborde pioneered innovations 
that would revolutionize the offshore service vessel industry. 
Today the company owns and operates 21 vessels, all built in 
U.S. shipyards, and employs more than 300 people with a $14 
million annual payroll. They invested over $150 million to 
build or acquire this fleet. The moratorium is essentially 
telling them to park their vessels for 6 months. For this 
company to move internationally, they would have to compete 
with vessels built in foreign shipyards at much lower cost and 
often subsidized by foreign governments. This is grossly 
unfair.
    This moratorium will also affect many small businesses that 
have indirect relationships to the offshore industry, as 
Young's Grocery Store in Intracoastal City, Louisiana, can 
testify. Owner Scott Young says that his store has been 
supplying boats and production rigs with food for 12 years. Of 
the moratorium, Scott says, ``It will be a disaster I was not 
prepared for, one I cannot prepare for.''
    I would also note that it is not just Louisiana's economy 
and jobs at stake. This oil service company employs people all 
along the Gulf Coast and throughout our nation. Consider 
Broadpoint, a 27-year-old company with 100 employees, based 
throughout the Gulf Coast, with their headquarters are in 
Houston. Their operations are 99 percent directly related to 
providing telecommunications services in the Gulf through 
satellites. Reliable communication is essential for the health 
and safety of individuals in the Gulf, but Broadpoint will be 
struggling to keep their employees on board if this moratorium 
lasts much longer.
    Our hearing today is to learn more about how small 
businesses are being devastated by this moratorium. Our hearing 
today is to get testimony onto the record about the ill-
conceived and heavy-handed action of the Federal Government. It 
does not meet our environmental needs; it does not meet our 
national security needs; and, it most certainly does not meet 
our economic needs. It fails every test.
    I believe this Congress needs to hear these stories of 
small businesses impacted throughout the nation that will be 
decimated if this moratorium continues. I am committed and the 
members of the Gulf Coast are committed to do everything we can 
to get this message out so that some relief can be put into 
place.
    If the Gulf Coast is going to recover from this nightmare, 
it will be because of the health and production of coastal Main 
Street small businesses that support the production of energy 
that fuels our nation. We cannot continue to support a policy 
that will put them out of business.
    [The prepared statement of Chair Landrieu follows:]

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    Chair Landrieu. I will recognize Senator Snowe when she 
arrives. Let us go to our witnesses, and I will allow you, 
Senator, to testify during your time, which the two of us will 
have plenty of time.
    Let us start with Mr. Treese until I can get a letter. Mr. 
Treese, go ahead.

 STATEMENT OF ETHAN TREESE, VICE PRESIDENT, FEDERAL GOVERNMENT 
                  SOLUTIONS, DUN & BRADSTREET

    Mr. Treese. I would like to thank Madam Chair Landrieu, 
Ranking Member Snowe, and the Committee members for the 
opportunity to testify today.
    Dun & Bradstreet (D&B) has been the leading provider of 
business information and insight since 1841. We maintain a 
global database of over 169 million businesses, ranging from 
sole proprietors to the largest multinational corporations. 
Through our DUNSRight Quality Assurance Process, we collect 
information from more than 20,000 sources, including public 
record sources, third parties, and business owners themselves. 
We have more than 23 million active U.S. businesses in our 
database and update our database about 2 million times a day to 
help ensure its accuracy, timeliness, and completeness. We 
serve as a trusted business partner for 95 percent of Fortune 
1000 companies, all 15 Cabinet-level departments, most 
independent agencies, as well as state and local governments 
who use our information for business verification, risk 
assessment, and for custom analyses.
    D&B provides its customers with insights about businesses, 
including those that may be impacted by crises. For example, 
following Katrina, D&B helped both private and public sector 
customers assess the impact on businesses in the coastal areas 
in Louisiana, Mississippi, and Florida. In the 12 months after 
Katrina, we found that 15,670, or roughly 5 percent, of the 
319,000 businesses we looked at in the impacted areas went out 
of business, resulting in the loss of roughly 89,000 jobs.
    Following the Deepwater Horizon oil spill, we conducted 
analyses on the potential business impact. We have since shared 
our findings with both public and private sector organizations, 
as well as Members of Congress.
    Our first analysis profiled businesses in the five Gulf 
Coast states by industry and number of employees to identify 
those industries most likely to be impacted by the oil spill. 
We determined the oil spill could potentially affect 7.3 
million businesses. We further analyzed the top 50 industries 
and found that eating places, repair services, gift and novelty 
shops, hotel/motel, and gasoline service station industries had 
the highest numbers of businesses and employees that could be 
impacted.
    Our second analysis, which is our topic today, focused on 
the potential economic impact a drilling moratorium could have 
on small businesses located in the five Gulf states. We first 
identified industry classifications related to the oil and gas 
industries, concentrating particularly on oil and gas 
exploration services, field services and field machinery, as 
well as air transportation. We then looked specifically at 
those businesses that met the Small Business Administration 
definition of a small business. Our high-level findings are as 
follows:
    There are at least 16,580 businesses in the five Gulf 
states that could be impacted by a moratorium in the industries 
I described.
    Approximately 98 percent of these businesses meet the 
definition of a small business, with 85 percent of these 
businesses having fewer than 10 employees.
    Six hundred sixty-seven of these small businesses are 
classified as woman-owned, minority-owned, or veteran-owned and 
97 percent of these small businesses are U.S.-owned businesses.
    These small businesses employ 153,502 individuals, with 
over 95 percent of them located in Texas and Louisiana, as 
shown on the chart.
    On average, these small businesses have been in operation 
for 16 years, but we also found that roughly 2,000 of these 
businesses, or about 13 percent, were established within the 
last 5 years, which puts them at an even greater risk for 
failure since newer businesses tend to fail at a higher rate 
than more established ones.
    When we look at the potential impact of a drilling 
moratorium from a geographic perspective, we see that:
    The distribution of small businesses at the state level, as 
the chart shows, is as follows: 12,140 in Texas; of particular 
interest to you, Senators Landrieu and Vitter, there are 2,831 
in Louisiana; 579 in Florida; there are 487 in Mississippi; and 
191 in Alabama.
    Only 27 percent of these small businesses, as you rightly 
point out, are located in coastal counties or parishes, while 
the other 73 percent are located inland, suggesting that a 
moratorium could be felt more broadly throughout the Gulf 
states. Tuscaloosa County in Alabama, Miami-Dade County in 
Florida, Lafayette Parish in Louisiana, Jones County in 
Mississippi, and Harris County in Texas may be 
disproportionately affected.
    In Lafayette Parish alone, as you rightly point out, there 
are 780 businesses employing close to 10,500 people that could 
be impacted.
    Now, while our analysis to date has focused on a finite 
number of industries within the five Gulf states, it is both 
prudent and reasonable to assume that there is an element of 
contagious risk which may extend beyond these industries. It is 
equally prudent to assume that this risk may extend beyond the 
five Gulf States and may impact small businesses throughout the 
country.
    In summary, D&B information and services are always 
available to the Committee, Congress, and others that can 
utilize this information to make policy decisions surrounding 
the drilling moratorium, the claims handling process, or other 
areas where sound decisions on policy can be achieved through 
the use of trusted information and analysis.
    I thank you for the opportunity to appear before the 
Committee, and I look forward to responding to any questions 
you may have.
    [The prepared statement of Mr. Treese follows:]
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    Chair Landrieu. Thank you very much, and I failed to 
introduce you properly, and I ask for your apology.
    I want you to understand that Mr. Treese oversees 60 
government specialists assisting Federal, State, and local 
agencies with business verification, risk assessment, and 
custom analysis. We really appreciate your testimony today. I 
think you added a depth of insight that has been missing from 
the Congressional Record on this subject, and we look forward 
to continuing to call upon you all for objective and 
independent verification of the arguments that we are trying to 
make, and we thank you very much.
    Dr. Joseph Mason is Professor of Finance and Louisiana 
Bankers Association Endowed Chair of Banking at Louisiana State 
University. Dr. Mason is also a Senior Fellow at the Wharton 
School. He has consulted for and advised many Government 
agencies, research institutions, and corporations. I look 
forward to hearing your testimony.
    And we have Don Briggs at the request of Senator Vitter and 
myself, President of the Louisiana Oil & Gas Association. Mr. 
Briggs is a native of Miami, Florida, a 1964 graduate of 
Southwestern Louisiana. He began his career with Owen Drilling 
Company and has been with the industry for 45 years. Don will 
testify on behalf of the thousands of businesses that are part 
of his association.
    Mr. Mason.

  STATEMENT OF JOSEPH R. MASON, HERMANN MOYSE, JR./LOUISIANA 
   BANKERS ASSOCIATION PROFESSOR OF FINANCE, LOUISIANA STATE 
         UNIVERSITY, AND SENIOR FELLOW, WHARTON SCHOOL

    Mr. Mason. Thank you, Ms. Landrieu, Ranking Member Snowe, 
members of the Committee, for inviting me to testify today on 
this timely and important topic.
    My study ``The Economic Cost of a Moratorium on Offshore 
Oil and Gas Exploration to the Gulf Region'' was released last 
week--and I would like to ask that it be included as part of my 
written testimony for the record here today.
    Chair Landrieu. Without objection.
    Mr. Mason. Thank you. It presents very conservative 
estimates of the economic loss caused just by the moratorium, 
assuming no expansion, assuming that it is lifted in November, 
and only affects the 33 deepwater projects. But even by my 
conservative estimates, the numbers are extremely large. Just 
the 6-month moratorium alone can reasonably be expected to 
result in the loss of approximately $2.1 billion in Gulf Region 
output, 8,000 jobs, and about $500 million in wages, and nearly 
$98 million in forfeited state tax revenues in the Gulf Region.
    The economic benefits to coastal and state communities from 
offshore drilling are substantial. Moreover, these offshore 
drilling activities revolve around small businesses, and many 
smaller oil companies will be crippled by this moratorium. The 
Wall Street Journal routinely reports that the oil industry in 
the Gulf of Mexico was largely developed by relatively small 
oil and gas companies. In the early 1990s, small players like 
Kerr-McGee, Ocean Energy, and Unocal were acquiring acreage in 
deep water, and their finds helped prove the Gulf's worth to 
bigger brethren like Chevron, Devon Energy Corp., and Anadarko, 
which later bought these successful companies at a premium.
    More recently, new generations of companies have started 
exploratory offshore businesses in the Gulf, and it is those 
new companies that are most at risk from the Administration's 
policy. For example, Cobalt International Energy is already 
experiencing delays in its business because the ``U.S. 
Government moratorium on drilling would delay the planned 
drilling of an exploratory well in the Gulf by at least those 6 
months.''
    In response, President Obama has asserted that the Small 
Business Administration will be stepping in to help businesses 
by approving loans and allowing businesses to defer existing 
loan payments. The Administration seems to understand that 
businesses will be hurt, but what they do not understand is 
that some Gulf companies are already expressing worries that 
they have taken on heavy debts after Katrina and may not be 
able to repay those loans, much less take on additional loans.
    Of course, the simple solution would be to withdraw the 
moratorium. Unfortunately, that is not being discussed. 
Instead, the effects of the moratorium reverberate. Table 5 
from my paper reports the total expected losses in employment 
from my study broken down into job types. Of course, a sizable 
proportion of those losses will occur in mining, about 26 
percent. But a larger proportion of job losses, approximately 
38 percent, are in high-skilled fields such as health care, 
real estate, and professional services, manufacturing, 
administration, finance, education, the arts, information, and 
management. The region can reasonably be expected to lose 974 
health care providers and 260 teachers. Nationwide, we will 
lose about 1,270 health care providers and another 321 
teachers.
    While those employment and wage losses seem palatable on a 
national scale, it important to remember the effects of this 
are primarily local. Some communities' job losses tied to the 
moratorium may mean the difference between having a local 
hospital or a local school or sending their children on a bus 
an hour and a half each direction to attend a school in a 
different area.
    As recently as March, the Administration was opening up the 
OCS planning areas that are on the map--that I had on the 
easel, but that is okay. Now they are talking about shutting 
those planning areas down. With each passing day, the 
moratorium costs the Gulf Region more jobs. But the 
Administration has apparently only begun to increase its 
hostility toward the sector. Some Members of Congress are now 
proposing changes to the Tax Code that would needlessly 
debilitate the oil and gas industry further, such proposals 
that really do not support economic recovery, jobs, or energy 
independence.
    But whether it is financial or environmental regulatory 
policy, regulators need to more effectively adapt to innovation 
and change. The escalating rhetoric that we see from this 
disaster, therefore, needs to be replaced with a clear 
direction for energy regulation. Regulators, regardless of 
sector, need not only clear responsibility, but clear 
unmitigated authority to act to investigate unfettered on the 
basis of their own suspicions.
    The reason regulators require this kind of freedom is that 
they are often investigating new technologies--drilling or 
financial technologies--that, because they are new, cannot be 
deemed safe or risky beyond a substantial degree of error. 
Nonetheless, the error has to be biased in the direction of the 
social and economic good. That means we cannot just throw 
around moratoriums without economic analysis.
    Chair Landrieu. Can you take your 30 seconds to wrap up?
    Mr. Mason. Yes. That also means that we cannot just rely 
upon another application of the precautionary principle to 
address this crisis.
    Last, we have to accept that we are always going to have 
crises, and we have to develop strategies to deal with those 
crises. We need to be careful to set up incentives that reward 
those operating safe platforms in this instance and punish 
those who did not. That is, we need to be careful to preserve 
capitalism; we need to design policy more intelligently so that 
it is not obviated by markets but is instead magnified by 
market directions.
    Thank you.
    [The prepared statement of Mr. Mason follows:]
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    Chair Landrieu. Thank you, Dr. Mason. It occurs to me that 
the irony of all of this is that the only company drilling in 
the Gulf of Mexico today in deep water is the company that 
caused the spill--British Petroleum.
    Mr. Briggs.

    STATEMENT OF DON BRIGGS, PRESIDENT, LOUISIANA OIL & GAS 
                          ASSOCIATION

    Mr. Briggs. Chair Landrieu, Ranking Member Snowe, and 
members of the Committee, I am Don Briggs, and I represent the 
Louisiana Oil & Gas Association that has over 1,100 companies 
that operate and drill in the Gulf of Mexico and in Louisiana. 
Thank you for this opportunity.
    In Louisiana alone, the deepwater drilling moratorium now 
in place in the Gulf of Mexico stands to eliminate more than, 
very quickly 17,500 jobs in the next coming months. Overall, 
this detrimental policy will threaten the jobs of more than 
200,000 hard-working Americans in Texas, Louisiana, 
Mississippi, and Alabama. In addition, this moratorium 
threatens the nearly $100 billion impact the offshore oil and 
gas industry contributes to the Gulf Coast states' gross 
domestic product.
    For over a century, the State of Louisiana has served as an 
integral part of our nation's energy infrastructure. Over 50 
percent of the fuel, diesel and gasoline, that enters into this 
country runs through the intricate pipeline systems of 
Louisiana. And you can see by this chart, which is a telling 
story--I always call it the aorta of the U.S., our pipeline 
infrastructure.
    For decades oil and gas companies have explored and 
produced natural resources from the deep waters off our state. 
In total, oil and gas production in the Gulf of Mexico provides 
the U.S. with one-third of its oil and one-tenth of its natural 
gas. Nearly 80 percent of the oil produced and 45 percent of 
the natural gas is produced from the deep water.
    The Federal moratorium imposed on deepwater drilling in the 
Gulf of Mexico is creating a financial disaster for the Gulf 
Coast states and our nation. Nearly 3 months ago, there were 55 
rigs operating in the Gulf of Mexico. There are 13 rigs 
operating today in the Gulf.
    In addition to the drastic decrease we are seeing in deep 
waters, this moratorium has created a stifling effect on all 
operations in the Gulf, including the shallow water, that were 
not supposed to be affected by this policy, as, Senator, you 
mentioned. In the past 3 months of May, June, and July, a total 
of four permits have been granted. In comparison, 56 permits 
were granted in the 3 months of February, March, and April.
    When we end the day today, we will have consumed 20 million 
barrels of oil to run our nation's economy. Today, we will 
consume 65 billion cubic feet of natural gas. In addition, we 
will consume 1,200 carloads of coal. On a daily basis, there 
are approximately 250 million vehicles driving the roads in 
this country. Around 96 percent of the fuel that runs those 
vehicles comes from oil. In the U.S., we produce 5 million 
barrels of oil. Of those 5 million barrels of oil production, 
1.8 million come from operations in the Gulf of Mexico.
    Prior to the imposition of the Federal drilling moratorium, 
nearly 85 percent of the U.S. natural resources in the Outer 
Continental Shelf were off limits. Now, that number is 99.9 
percent. If we look at other nations around the world, our 
country now has the largest prohibition to natural resource 
exploration in the world. In support of U.S. District Judge 
Martin Feldman's recent decision to grant a preliminary 
injunction halting the moratorium, I too believe the moratorium 
is arbitrary and capricious. In my opinion, this detrimental 
policy does not reflect our American way of life.
    Industry has drilled over 4,500 deepwater wells around the 
world and 2,500 in the deep waters of the Gulf of Mexico. Yes, 
we do have the technology to drill safely. The Horizon incident 
should not have happened. Let us have an open discussion about 
the specifics of the Deepwater Horizon and find positive 
solutions to prevent any further disaster like this from 
happening. I believe industry can effectively work with the 
Administration to develop sound safety regulations and a long-
term vision for America's economic and energy future. We can 
accomplish safety measures while ensuring we do not endanger 
the economic welfare of all Americans. It is time that we get 
back to doing what we do best in Louisiana, and that is, 
fueling our nation.
    I thank you again for this opportunity to testify, and I 
stand ready to answer any questions you may have. Thank you.
    [The prepared statement of Mr. Briggs follows:]
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    Chair Landrieu. Thank you very much.
    I am going to recognize Senator Vitter at this time. I have 
received a letter from Senator Snowe designating him as her 
designee, so he will be allowed to make an opening statement, 
and then we will go into a line of questioning. We have been 
joined by Senator Thune, and we appreciate him joining us this 
morning as well.
    Senator Vitter.

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

    Senator Vitter. Thanks, Madam Chair. Thanks to all of you 
and the other panelists for being here. This is a very, very 
important topic.
    I am going to be very brief. I really want to underscore 
something the Chair noted. We appreciate your being here, but 
really the most important witness we should have before us is 
some significant representative of the Administration, of the 
President, that imposed this moratorium. Like Senator Landrieu, 
I invited the President to send any responsible witness to lay 
out the rationale for the moratorium, whether it be from the 
White House, the Interior Department, the Energy Department, 
NOAA, EPA, anywhere. Unfortunately, they were unable to produce 
a single witness, and I think that is very, very telling and 
really a shame. So I will submit for the record the letter I 
also sent requesting that witness.
    [The letter follows:]
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    Senator Vitter. I look forward to hearing from the 
Administration what we have not heard since the beginning of 
this moratorium and the beginning of this discussion, which is 
a clear economic rationale for the moratorium. Instead, what we 
have heard, whether it is from Secretary Salazar or Director 
Bromwich or the President himself, are excuses. The first 
excuse pointed to their 30-day commission, and then the 
Commission members immediately piped up and said, no, we did 
not recommend and we do not support this moratorium. Now the 
Administration is pointing to their Oil Spill Commission, the 
longer-term Commission. I talked to Bill Reilly, a co-chair, 
yesterday and he did not defend the moratorium in any way. And, 
in fact, he said he was very concerned about the economic 
impact of the moratorium, particularly based on the testimony 
they heard from many folks in Louisiana.
    So, again, I hope we can continue this discussion and hear 
directly from the President, from the Administration that 
imposed this moratorium, about what rationale, what grounds 
there are for it.
    Chair Landrieu. Thank you very much.
    Let us get right into our first round of questions. Let me 
begin with you, Mr. Treese. For the Committee record, was your 
report commissioned or funded by any outside group?
    Mr. Treese. No, Senator. We conducted this analysis on our 
own, without being requested--without a request from anyone.
    Chair Landrieu. Okay. And, Dr. Mason, I understand that you 
are funded or have been before by the American Energy Alliance, 
which is a nonprofit advocacy group for the industry. Could you 
elaborate so that we can understand, people watching today, if 
your testimony was in any way influenced by that? Or do you 
want to comment on that situation?
    Mr. Mason. The study was financially sponsored by the 
American Energy Alliance. They played no part in directing any 
of the conclusions that were reached in the study or directing 
any of the analysis.
    Chair Landrieu. And both of you, where did you access some 
of your base information? Was it accessed through the portals 
of the Federal Government for your assessments? Starting with 
you, Mr. Treese.
    Mr. Treese. We maintain a database of 169 million 
businesses. We used the information that we have.
    Chair Landrieu. Is this data available to the Federal 
Government?
    Mr. Treese. Yes, ma'am. We work with Federal, State, and 
local agencies and provide this content in a variety of 
different ways based on their needs.
    Chair Landrieu. So if the Federal Government was interested 
in getting this data, they could access the same information 
that you received to make an analysis of this economic impact 
if they wanted to.
    Mr. Treese. Yes, ma'am.
    Chair Landrieu. And, Dr. Mason, is the information that you 
are using available to the Federal Government?
    Mr. Mason. Purposefully, I ran essentially the study that 
the Federal Government would have run. I relied upon 
multipliers from the Bureau of Economic Analysis that are 
published by them and sold by them. I followed methodologies 
that would routinely be followed by GAO and other Government 
research arms that would----
    Chair Landrieu. And how long did that take you, basically, 
to conduct that kind of analysis?
    Mr. Mason. I believe it was 2 weeks.
    Chair Landrieu. Mr. Briggs, many Members of Congress, we 
believe, have a wrong view that this moratorium is affecting 
big oil, the big oil companies. Could you comment based on your 
representation of the independent companies along the Gulf 
really what you see are the effects of this moratorium relative 
to the smaller companies? That is really the focus of this 
hearing.
    Mr. Briggs. Yes, I would be glad to, and it is a common 
misconception that it is big oil in the deepwater Gulf of 
Mexico. In fact, 70 percent of all the leases in the deepwater 
Gulf of Mexico are leases owned by independent oil and gas 
producers. The independents represent about 45 percent of the 
total activity in the deep water, and they represent 80 percent 
of the activities on the shelf, which is the shallow-water Gulf 
of Mexico.
    Chair Landrieu. Thank you.
    Mr. Treese--is it ``Treese'' or ``Tracy''?
    Mr. Treese. ``Treese.'' Thank you.
    Chair Landrieu. ``Treese.'' I am sorry.
    Mr. Treese. Quite all right.
    Chair Landrieu. Mr. Treese, another misconception--and this 
is going to help us to get this message out--is that there are 
only a few counties or parishes being directly affected by oil, 
either coming up on the marshes or washing onto the beaches. 
You know, you have seen the Pensacola view, the Venice view 
from Plaquemines Parish. We have seen shots of Port Fourchon 
and Lafourche. We have the President testifying, but your 
testimony was in stark contrast. You said it is not just the 
coastal counties and parishes that are going to be affected 
economically. You said many inland parishes are going to be 
affected as well. Could you elaborate on that data? Because I 
found that to be very, very interesting, not only the effects 
nationally but also inland in other counties and parishes in 
the Gulf Coast states that are not actually on the coast.
    Mr. Treese. Yes, I would be happy to. I believe the point 
you are referring to is that when we looked specifically at the 
drilling moratorium data, we found that only about a quarter of 
the businesses or the small businesses we looked at are located 
in coastal counties or parishes. Three-quarters of them or 
roughly three-quarters of them are actually located inland, 
which speaks to your point that the moratorium will not just 
have economic impact on the coast alone but, rather, will reach 
farther inland.
    Bear in mind as well, for the purposes of the drilling 
moratorium analysis, we looked just at four or five industries. 
It is our belief, as we indicated prior, that there is a level 
of contagious risk that will extend out into many other 
industries, some of which you noted before. Whether they are 
catering services or uniform providers, it will indeed have an 
impact throughout the Gulf Coast and more broadly, we believe, 
in businesses, small businesses throughout the country that are 
trading partners of companies in the Gulf Coast.
    Chair Landrieu. Thank you.
    Senator Vitter.
    Senator Vitter. Thank you all again for your testimony.
    Mr. Treese, can you broaden your discussion a little bit 
and talk about the impact of the moratorium on minority- and 
women-owned businesses?
    Mr. Treese. Yes, sir, I would be happy to. In the analysis 
we did on just the five counties alone, as referenced in the 
record, we found that 667 of the small businesses are 
classified as women-owned, minority-owned, or veteran-owned. So 
we have not broken it down farther than that. However, if you 
so desire, certainly we can do some additional analysis and 
submit it to the Committee for the record.
    Senator Vitter. Okay, thank you.
    Mr. Treese and Dr. Mason, if you consider the spectrum of 
business from very large to very small, from a multinational 
major oil company to a Mom-and-Pop coastal shop, where will the 
impact of this moratorium be felt the most?
    Mr. Treese. Based on our analysis, and given the fact that 
roughly, I believe, 85 to 90 percent of the businesses that we 
have analyzed are small businesses which employ thousands of 
people, by simple numbers alone there will be more small 
businesses impacted by this than larger businesses. And the 
numbers that we have for small businesses in these industries 
in the Gulf states mirror really what we see across the nation 
in that 90 percent of the companies that we have in our 
database, roughly 90 percent of the companies do indeed meet 
the definition of a small business as laid out by the Small 
Business Administration.
    Senator Vitter. Dr. Mason.
    Mr. Mason. The small businesses, too, operate with lower 
levels of reserves, are far less flexible than larger 
businesses. Larger businesses can move their operations 
elsewhere in the world. Smaller businesses are primarily local 
and stuck. They are the ones who will most likely fail, have to 
go through a bankruptcy process, and hopefully be able to re-
emerge into a resuscitated economy, which is in doubt.
    Senator Vitter. Right. And, Mr. Briggs, one misperception 
up here I am very concerned about is that for this moratorium 
these rigs, these businesses are just going to sort of sit back 
and wait and then 6 months and a day will turn the light switch 
back on and go back into activity. I do not think that is the 
case at all. Can you describe what is beginning to happen in 
the industry in terms of moving assets and capability out of 
the Gulf? And how do you see that progressing over 6 months to 
a year?
    Mr. Briggs. Well, many of the companies are laying off 
people today. There is no way the smaller businesses that we 
have can withstand a 6-month moratorium. One of the big 
problems they are all faced with is that certainty or that 
trust that at the end of November this will be over. And that 
is something that, you know, when you think about it, they 
really are having difficulty doing. So they are laying a lot of 
people off.
    Companies like Schlumberger, some of the larger firms, they 
are deploying their people to different parts of the world, and 
you will probably hear testimony to some of that. But many of 
the companies, the small ones throughout the Gulf Coast, some 
of them have given their people vacation time, temporarily laid 
off. But the jobs are going down, literally thousands of them 
as we speak, and that will be happening in the next several 
months. And, yes, there are three rigs that are already gone. 
Each one of those rigs, you know, employ about--direct and 
indirect, about 1,400 to 1,500 people, according to two 
different studies. So you are talking about, of the 33 rigs, 
50,000 jobs. And a lot of those----
    Senator Vitter. Direct.
    Mr. Briggs. Direct. Direct jobs. You have got 250 for each 
rig, and then you have got about an eight-person-per-rig 
individual ancillary type jobs--your boat captains, your metal 
tool companies, your mud companies. And a lot of these 
companies are on hold. A lot of them are fortunate that they 
have had a good year. You know, business started getting back 
so they are holding onto people. They do not want to turn loose 
their people because it takes so much to train them. But many 
of them are having--we cannot really quantify today at this 
very moment exactly how many people have been laid off, but 
many have.
    Senator Vitter. Right. And, Mr. Briggs, you mention in your 
testimony a startling figure, if you could repeat it, the 
percentage of our area in the United States that we have now 
moved off the table in terms of natural resource production. 
What is that again? And how does that compare to any other 
industrialized or resource-rich nations in the world?
    Mr. Briggs. We are the only nation in the world that, prior 
to this moratorium, had 85 percent of natural resources on the 
coastal areas off limits for exploration. We are off limits on 
the east coast, the west coast, Alaska now, and the only place 
we were really about to drill and explore in the OCS was in the 
central and western regions of the Gulf of Mexico. We are 
talking about the eastern Gulf, but now that that is shut down 
and we know we have moratorium--and there is not a moratorium 
on the shelf, and I understand that. But, Senator Landrieu, as 
you well said, the permits coming out of there, as you saw, are 
just--you know, our companies are not able to get permits 
today. And the independents are the ones--the small businesses 
are 80 percent of that shelf activity.
    Senator Vitter. So that 85-percent figure pre-moratorium is 
now about what?
    Mr. Briggs. Well, if you calculate it, probably 99.9 
percent. I mean, for all practical purposes, we feel in the 
Gulf of Mexico that we are shut out.
    Senator Vitter. Thank you.
    Chair Landrieu. Senator Thune.
    Senator Thune. Thank you, Madam Chair, and I want to thank 
you and the Ranking Member for holding today's hearing on a 
topic that I think has been largely overlooked in the reaction 
to the Gulf oil spill, and that is the economic damages that 
are caused by the Administration's offshore moratorium on oil 
and gas exploration.
    Congress and the Administration should be focused on 
permanently fixing the leak, on cleaning up the gulf, and 
restoring the gulf coast economy. Unfortunately, I think some 
of the actions that have been taken by the Administration 
proposed by some Members of Congress would actually have a 
damaging impact on the Gulf Coast economy, which is already 
devastated by the effects of the oil spill. And I appreciate 
the testimony that you have offered this morning that I think 
illustrates the impact on the way of life for thousands of 
families that depend on good-paying jobs related to the oil and 
gas industry along the Gulf Coast. You have already referenced 
the idle oil rigs that are being moved to other areas of the 
globe while workers wonder if their jobs are ever going to come 
back. We still have Members of Congress calling for a total 
repeal of liability limits for offshore energy production. 
While we all know that a major international oil company was 
responsible for this spill, such proposals also punish smaller 
independently owned oil and gas companies and leave the United 
States even more dependent upon foreign national oil companies 
to produce our oil and gas resources. So I see this as just a 
major issue that impacts, of course, directly people in the 
Gulf, but also has profound implications for energy in this 
country and the dangerous dependence that we already have on 
foreign supplies of energy.
    Mr. Briggs, could you tell me just how the moratorium is 
affecting not only the deepwater but also the shallow-water 
rigs, those that are in 500 feet of water? Is that still going 
on or is that----
    Mr. Briggs. Yes, that is correct. What happened, you know, 
when the President and MMS or BOM or whatever it is called now, 
they immediately put in some new regulations to tighten up the 
safety operations in the Gulf of Mexico. So all those new 
regulations went into place. The problem is nobody knows what 
they are, and so when you apply for a permit, you do not know 
what you want to change; and if you want to ask a question, 
then nobody in the Administration can answer the question. And, 
consequently, that is why we have had this tremendous decline 
in the permits. There is no moratorium.
    Lieutenant Governor Angelle has been up here quite a bit 
working on these issues directly with the Administration or the 
MMS, but still it has been--the recent one permit that came 
out, that was for Apache Corporation and for a natural gas 
well. The new guidelines and new rules are very, very vague, 
and so nobody can get the information out of the 
Administration.
    Senator Thune. And do you know how many rigs have left or 
are leaving already the Gulf area?
    Mr. Briggs. I can say this, and from very good sources, you 
know, we know three have left, and two have gone to Congo, one 
to Angola. There are some contracts being negotiated for 
Brazil. But, you know, it is really a horrible thing to believe 
that it is politically safer to drill in Angola than it is here 
in the Gulf of Mexico.
    The other countries around the world are very happy about 
this, and the reason they are is simply that the demand for 
these type of drilling vessels are very high. There are not 
that many of them. And, consequently, they will take--some of 
these vessels will stay for a while, no question about it. But 
they are not fully manned, and so they are not operational. 
They are just sitting out there.
    Senator Thune. Have any of you looked at, had an 
opportunity yet--there is a piece of legislation that Senator 
Vitter and others are putting forward that would mandate that 
the moratorium not apply to rigs that have met new inspection 
safety requirements that are required by the Department of 
Interior, and additionally it requires Interior to make a 
decision on these permits within 30 days of compliance. I am 
just wondering if anybody has had an opportunity to take a look 
at that legislation and whether or not that might be a better 
approach than what is being put forward by the Administration 
in the form of this moratorium.
    Mr. Mason. I have looked at that. That is a standard crisis 
approach policy that makes perfect sense, because we need to 
get the industry back running again. Think of it this way: What 
if in response to the financial crisis we would just say, 
``Let's put a moratorium on all investment banking activity 
until we kind of figure it out, and we will form a committee'' 
and that is where it stopped? Well, that is what we have today 
in the Gulf. We need to get these inspected, again, reward the 
safe operations, shut down the unsafe ones or remediate the 
unsafe ones and get the business operating again.
    Senator Thune. Mr. Treese, would you be willing to provide 
the Committee with the same analysis that you provided in your 
testimony for the five Gulf States but on a nationwide basis? 
Is that possible to provide that analysis, the impact, the 
ripple effect, so to speak, that that would have?
    Mr. Treese. Thanks for the question, Senator. I think we 
can--yes, we are happy to do additional analysis as requested.
    Senator Thune. Okay. I see my time has expired. Thank you, 
Madam Chair.
    Chair Landrieu. Thank you.
    If you would, Dr. Mason, I was particularly intrigued with 
the middle paragraph on page 21 of your testimony, and I would 
like you just to either read it into the record or just 
summarize it. It starts, as you try to get to it, that your 
research says that the current moratorium in the Gulf Coast 
will lose more than 8,000 jobs, $500 million in wages. Can you 
just repeat that for the record? Because I think I might have 
cut you off before you got to that point.
    Mr. Mason. Indeed, my study that I released last week, 
again, just the minimum effects of the 6-month moratorium, 
assuming business comes back immediately when that moratorium 
expires, is reasonably expected, based on Government estimation 
methods, to be 8,000 jobs, about $500 million in wages, $2.1 
billion in economic activity, and about $100 million in state 
and local tax revenue just for the Gulf states alone.
    Chair Landrieu. And that is assuming the best-case 
scenario, and we are not on a glide path to that right now, in 
my view.
    Continue to go on, on the spillover effect of that.
    Mr. Mason. The spillover effect to the entire nation would 
be a total cost of 12,000 jobs, about $3 billion in economic 
activity nationwide, another $200 million in Federal tax 
revenues.
    Chair Landrieu. And if it lasts longer, what did your 
analysis show?
    Mr. Mason. Well, I looked at a worst-case scenario where 
the rhetoric escalates to the point of kind of a precautionary 
principle application throughout the Gulf of Mexico. We could 
very easily go to 25,000 jobs in the intermediate scenario. 
These loss estimates can double and triple very quickly. If we 
go up to really shutting down the entire Gulf, we get to about 
420,000 jobs and about $95 billion in economic activity.
    Chair Landrieu. Okay. Well, I would strongly suggest with 
numbers like this overlaying a fragile economic recovery that 
the Administration get very busy with its own economic 
analysis, because this must inform, in my view and in the view 
of Senator Vitter and many others, the decisions that move us 
forward.
    In addition, there is a question that this panel cannot 
answer, but my question would be: Who is going to pay the 
businesses that go out of business for this action? Who is 
going to reimburse the workers that have lost this job because 
of this Government action? And where will that money come from?
    We will hold the answer to that question to potentially our 
next panel. Thank you very much, and if the second panel would 
come forward, we appreciate it. For time purposes, I am going 
to start introducing you all now.
    Mrs. Charlotte Randolph has served as Lafourche Parish 
President since 2003. Mrs. Randolph represents a community 
greatly impacted by the Deepwater Horizon disaster and the 
current drilling moratorium. She is past editor of Lafourche 
Gazette and is here to represent many businesses in the 
Lafourche Parish and region.
    Leslie Bertucci is a lifelong resident of New Orleans. With 
her husband, Dan, she owns R and D Enterprises, a specialty oil 
field equipment company that leases tanks and racks used for 
offshore rigs, including she was servicing the Deepwater 
Horizon. Mrs. Bertucci has firsthand knowledge of the economic 
stress caused by this moratorium, not just on her family but on 
the 14 full-time employees that work for them.
    Troy Lillie is a former offshore platform worker. He spent 
29 years working in an Exxon refinery, is now in retirement. He 
does some freelance work for small businesses in which he 
writes safety training manuals for the industry. We look 
forward, Mr. Lillie, to your testimony today.
    And, finally, we have Kimberly Nastasi who is CEO of the 
Mississippi Gulf Coast Chamber of Commerce. She was former 
Executive Director of the Biloxi Chamber of Commerce, and we 
are pleased to have someone of that stature representing 
Mississippi with us today.
    Ms. Randolph, why don't we start with you?

   STATEMENT OF CHARLOTTE A. RANDOLPH, PRESIDENT, LAFOURCHE 
                       PARISH, LOUISIANA

    Ms. Randolph. Good morning, Madam Chair and members of the 
Committee. I very much appreciate the opportunity to testify 
today.
    On May 8th, oil first appeared on the shores of Lafourche 
Parish from the Deepwater Horizon blowout. We have now endured 
70 days of relentless effort to protect our valuable wetlands 
and our wildlife, and fishermen cannot make a living.
    Then came the moratorium on deepwater drilling, literally 
adding insult to injury. Nine of the top ten taxpayers in 
Lafourche Parish are located at Port Fourchon, which services 
all 33 rigs singled out in the moratorium. The spill has 
decimated the fishing industry. The moratorium will essentially 
end life as we know it in our parish.
    Up to 40 percent of our tax base could be lost by 2012 as a 
result of the drilling ban. At other hearings, testimony by rig 
owners indicates that they intend to leave the Gulf for other 
opportunities. Some employees have been offered transfers to 
other locations. Families are now making decisions as to 
whether the husband and father will live elsewhere, with the 
rest of the family staying behind to finish schooling. These 
are the lucky ones; the rest will be terminated.
    In April 2010, unemployment in the Lafourche Parish was 4.4 
percent, the lowest in the nation. By November 30th, the so-
called end of the moratorium, the number of unemployed will 
increase dramatically. In his State of the Union address, the 
President said, ``Jobs will be our number one priority in 
2010.'' People in Lafourche Parish and those associated with 
the oil and gas industry and its support services are not 
expendable Americans. We fuel this country.
    Now, Madam Chair, I have letters from other companies from 
our area. One of them is a trucking business with 20 people. At 
the beginning of June, they looked at what was happening in the 
industry. They haul offshore oil equipment to Port Fourchon and 
other areas. According to this, they anticipate that by the end 
of that moratorium, 20 employees will have lost their jobs.
    A riser company in the Gulf is now employing 23 indirect 
and 89 direct labor employees. In June, they anticipated 
reducing their workforce by 20 percent. If the moratorium 
continues, they anticipate losing 60 percent and losing $16 
million in revenue.
    Another company, an insurance company, has 30 employees. 
They anticipate laying off 50 percent of their staff because 
most of their insurance coverage and risk management is tied to 
the oil and gas industry.
    A communications company has 116 employees. Naturally, this 
is an issue and an industry that depends on disposable income. 
But the continuance of the moratorium, there will be no 
disposable income.
    Finally, a Gulf towing company with two boats, they have 12 
highly trained and qualified personnel. They anticipate having 
to let those people go at the end of the 6 months, as well as 
potentially two shore personnel as well. Their annual payroll 
is about $6 million.
    I had the opportunity to personally ask President Obama to 
reconsider his decision, but he declined. He did send out an 
economic team to assess the impact on our parish, and they are 
studying it now.
    We are very, very concerned about the fact that the 
shallow-water drilling, as Mr. Briggs mentioned earlier, is 
also impacted by this.
    Based upon the rationale behind the new moratorium, we are 
very concerned that Secretary Salazar is saying that there are 
no assets or very little assets to protect the Gulf Coast in 
the event of another spill, and they are citing that as one 
reason for the moratorium.
    We are very concerned about the tanker traffic that is in 
the Gulf of Mexico right now. We have about 11,000 tankers that 
traverse the Gulf annually, about 3,000 a month--I am sorry, 
about 300 a month. And, quite frankly, the tankers have a four 
times greater chance of spilling into the Gulf of Mexico than 
an oil rig does. So we implore the Administration to consider 
that.
    Finally, I have a message from a woman whose husband left 
to go to work in the oil fields of China. He worked 33 years in 
the Gulf of Mexico, and his choice was either transfer to China 
or to actually lose his job. He chose China. She says her 
family is familiar with the sacrifice of sending him away from 
home to work, but this time it was very different. No longer 
does he have a short boat ride to reach his rig in the Gulf of 
Mexico. He now faces a complete day of flying across the world 
to China so that he can provide for his family.
    The Gulf of Mexico oil field can be a dangerous place to 
work, but that risk is one that my husband can train for in the 
many safety trainings he attends. This new journey risks: the 
risk of flying across the world, the risk of going to a country 
that does not have a strong democracy and liberties that we 
have here, the risk of working in an environment where the 
English language is not primary. Communication is paramount to 
have a safe work environment. Being so far away from home, my 
family loses the comfort that if an emergency takes place, my 
husband cannot just come home. His 86-year-old mother, who 
relies on Ed for everything she needs due to her age and a 
stroke, is unable to have the comfort of her son available to 
handle her health care decisions and basic needs.
    Our jobs are in jeopardy. Bring back our experienced 
workers to home soil with domestic jobs. I beg for the 
President and the Secretary to stop killing our economy and 
livelihoods. Repeal the moratorium so that we can earn a 
living. Bring my husband home.
    Thank you, Madam Chair.
    [The prepared statement of Ms. Randolph follows:]
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    Chair Landrieu. Thank you.
    Mrs. Bertucci.

STATEMENT OF LESLIE BERTUCCI, OWNER, R AND D ENTERPRISES OF LA, 
                              LLC

    Mrs. Bertucci. Chair Landrieu, Senator Vitter, members of 
the Senate Committee on Small Business and Entrepreneurship, 
first I would like to personally thank you for giving me this 
opportunity to tell you a little bit about my experience as a 
small business owner in Louisiana.
    I was born and raised in New Orleans, and my husband and I 
have raised six children there. Together we own R and D 
Enterprises of Louisiana.
    We are a small family-owned and -operated business in New 
Orleans since 1983. At R and D we rent to the drilling 
companies very specialized tanks and racks that we designed and 
patented that are used specifically to safely transport and 
store drilling chemicals to only deepwater rigs. Our customers 
are the drilling companies. We employ 14 people, and these 14 
people have families to take care of. Forty-two spouses and 
children, to be exact, rely on our 14 employees for their 
financial support. In addition, we have more than 40 vendors 
that we order supplies and services from every single month 
that rely on us and other companies like us for their 
sustenance.
    We are all very sickened by the loss of life and the 
ecological devastation that has taken place in the Gulf due to 
the BP Horizon explosion and subsequent oil spill, and we do 
not wish to minimize that.
    My company had equipment on the BP Horizon rig, and at the 
time of the explosion we also had equipment on 23 of the 33 
rigs in the deep water in the Gulf. Much of my equipment is 
still out on those rigs. If these rigs are not allowed to 
drill, our equipment sits idle and produces no revenue. With no 
revenue, we will not be able to order from or pay our vendors. 
If we have no revenue, we will not be able to pay our business 
loans. If we have no revenue, we will have to lay off our 
employees, all of which were affected in some way or another by 
the devastation of Hurricane Katrina just a few years ago. One 
of my employees was actually unemployed for 2-1/2 years after 
Katrina, prior to working for us.
    Some of my employees' spouses have already had their jobs 
affected by the moratorium. My office manager has three 
children. Her husband is a territory sales manager in 
southeastern Louisiana for a flooring manufacturer, and in the 
last 6 weeks alone, specifically because of the moratorium, his 
sales are 50 percent off. He reported yesterday that 10 percent 
of his customers have had to actually close their businesses in 
the last 2 months, and they attribute that directly to the 
moratorium on drilling in the Gulf, because of the other people 
who were affected and losing their jobs being unable to 
purchase flooring. So it is not just the people in the oil 
field that are affected.
    Since the ban on drilling in the Gulf, my husband and I 
have decreased our own personal salaries by 75 percent in one 
of my many efforts to slash our operating costs, in an effort 
to keep our employees on the payroll and off of the 
unemployment rolls. Unemployment benefits are not a viable or 
desirable option for any of the hard-working people that I know 
in the Gulf Coast region. We do not want to file claims. We 
want to work. We want to be able to do our jobs, support our 
families, and support our local economies. We really want to 
remain self-sufficient.
    This blanket moratorium on drilling in the Gulf is not and 
will not resolve the damage that has already occurred to the 
families that lost their loved ones, our precious ecosystem, or 
our seafood industry. The moratorium simply adds insult to 
injury, and I personally think it is very irresponsible. The 
people of Louisiana and the Gulf Coast region need to know that 
the rest of our country does care about us and will be willing 
to consider the long-term effects that this moratorium is 
causing. The economic ripple effect is now and will continue to 
be catastrophic to our entire region.
    We do agree that that safety should be number one; however, 
we also know that banning all drilling in the Gulf does not 
solve that at all.
    On behalf of my company, my employees, the thousands of 
others companies and employees, and our entire community, we 
implore the Administration and Congress to please take into 
consideration the big picture and try to understand that this 
moratorium has already caused much more damage than good and it 
needs to be lifted as soon as possible.
    Thank you.
    [The prepared statement of Mrs. Bertucci follows:]
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    Chair Landrieu. Thank you, Mrs. Bertucci.
    Mr. Lillie, speak into your microphone and press your 
``Talk'' button, please.
    Mr. Lillie. Senator, if possible, I may have 30 seconds or 
so over.
    Chair Landrieu. Go ahead.

 STATEMENT OF TROY LILLIE, FORMER REFINERY EMPLOYEE, EXXONMOBIL

    Mr. Lillie. Honorable Member of the U.S. Senate, thank you 
for allowing me to speak to you today about the deepwater 
drilling moratorium. I am Troy Lillie and my wife, Melanie, and 
I live in Maurice, Louisiana. For 29 years I worked in the 
ExxonMobil Refinery in Baton Rouge and since have worked part-
time writing refinery manuals. Last summer, I was blessed to 
work with a great bunch of people on an offshore oil platform. 
I am a very concerned citizen about what this moratorium is 
doing to the lives of our Louisiana people. My daughter and her 
husband work for oil field companies in our area. As Mr. Briggs 
said, my son-in-law is being transferred overseas as soon as he 
can get a visa. My daughter must remain behind with their two 
young daughters. They are lucky. They still have jobs. Many of 
the Louisiana people are losing their jobs and fear the worst. 
There were 33 deepwater rigs operating in the Gulf with 
approximately 200 personnel onboard. And I believe you all have 
better information from the first panel, but this was my 
guesstimate, that 6,600 jobs would be lost immediately, and I 
think have, and probably for each one of those, ten more, so 
that is up to the 66,000 range. And God only knows how many 
small businesses will fail.
    We live in the oil field corridor from Lafayette to New 
Iberia, Morgan City, Houma, Grand Isle, and New Orleans that is 
the location for countless small businesses that support the 
offshore industry. They are a family, and word spreads fast of 
layoffs and failing businesses. One can already observe in the 
shops and malls that there are fewer people shopping. Smaller 
businesses are losing customers because people are scared of 
the uncertainty. If the deepwater rigs leave the Gulf, their 
fears will be realized, I promise you. The tens of thousands of 
jobs and many, many small businesses may be lost while we are 
told that we are creating. People in our area have a hard time 
believing the sincerity of job creation by the President.
    Having been in the oil industry for three decades, I can 
tell you without a doubt that the culture of the oil field puts 
safe operations first, offshore and onshore.
    The Horizon accident is truly a tragedy and the loss of the 
11 men onboard is something none of us want. All who work in 
the oil field know the dangers and accept them. It is no 
different than working as a fireman, a policeman, serving in 
the military, working in a coal mine, or any other occupation 
that has inherent dangers. We had a coal mine accident or two 
in the last year, and that did not justify a moratorium, so we 
wonder why does the Horizon accident justify a moratorium.
    Most in my state do not accept it is because of the 
possibility of another blowout. Using this excuse to do far 
more damage to Louisiana, the Gulf Coast, and the nation than 
the spill has done is motivated, we believe, more by politics 
than sound reasoning. Supertankers offload millions of barrels 
of crude oil offshore of Louisiana each day. Odds are probably 
better--and I think we have already heard that--that something 
will happen with one of these tankers than it would with a 
deepwater drilling rig on the magnitude that Horizon did.
    Also, why does the executive branch of Government ignore 
the two rulings of the judicial branch and continue to ruin our 
economy, our small businesses, and our way of life with this 
unwarranted and we believe now unlawful moratorium. It also 
goes against the spirit of the law. This should not and must 
not be a political game. Tens of thousands of hard-working 
American lives hang in the balance, the economy of Louisiana, 
and serious damage to the Nation in higher fuel prices and 
operating costs for businesses.
    This can be prevented today with the President lifting 
moratorium. Just as he recently apologized for a knee-jerk 
reaction in the story about the USDA employee, he needs to do 
the same thing in this moratorium. This was one life that was 
affected; this moratorium is tens of thousands of lives that 
are being affected.
    Louisiana has been through several disasters since 2005, 
including Hurricanes Katrina, Rita, Ike, and Gustav, the 
Stanford fraud costing thousands of retirees their life 
savings, and now the Deepwater Horizon accident. Louisiana will 
work hard and recover from the disasters, but many in my state 
now believe that we may have difficulty recovering from this 
moratorium and may not be able to. It is our prayers and our 
hopes that the President will do the right thing and lift this 
moratorium before it is too late. There is a phrase in Cajun 
French called ``Joie de vivre,'' which means joy of life. 
Lifting this moratorium can give us back its ``Joie de vivre.''
    [The prepared statement of Mr. Lillie follows:]
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    Chair Landrieu. Thank you, Mr. Lillie.
    Ms. Nastasi from Biloxi, Mississippi.

    STATEMENT OF KIMBERLY NASTASI, CHIEF EXECUTIVE OFFICER, 
           MISSISSIPPI GULF COAST CHAMBER OF COMMERCE

    Ms. Nastasi. Good morning, Chairwoman Landrieu, Senator 
Wicker, and the distinguished members of the Senate Committee 
on Small Business and Entrepreneurship. My name is Kimberly 
Nastasi, and I am the CEO of the Mississippi Gulf Coast Chamber 
of Commerce, and I would like to thank you for the opportunity 
to testify today on the economic damage that the deepwater 
drilling moratorium is causing to the region that my chamber 
represents.
    The Mississippi Gulf Coast Chamber of Commerce fosters 
leadership and the advancement of the community vision and 
interests of its members. Coast Chamber strives to improve the 
business climate through facilitating, advocating, and 
providing information on behalf of the region. Mississippi Gulf 
Coast Chamber of Commerce is a membership organization 
comprised of businesses in Harrison County and throughout South 
Mississippi.
    I am here today to speak against the drilling moratorium 
which suspended all current and pending deepwater drilling 
operations in the Gulf of Mexico, placing 33 oil rigs 
temporarily out of service.
    In a Bloomberg national poll released last week, 85 percent 
of Republican respondents, 73 percent of independents, and 65 
percent of Democrats said they opposed the Administration's 
drilling ban. It was reported that the wide-ranging moratorium 
is punishing an entire industry and region for BP's 
catastrophe.
    People in Mississippi, especially along the Mississippi 
Gulf Coast, are resilient as proven by their recent experience 
and survival of Hurricane Katrina. Next month marks the 5-year 
anniversary of the worst natural disaster in American history. 
The Gulf Coast was devastated by Katrina and has attempted in 
the last 5 years to come back smarter and stronger. And then 
the recession began in the midst of the recovery. Isolated to 
an extent because of the widespread rebuilding, the Mississippi 
Gulf Coast saw the loss of numerous new projects and investors. 
2011 was to be our year, a year that we expected to be back to 
pre-Katrina levels in jobs, tourism-connected industries, and 
our way of life was on the upswing--until April 21st, when the 
Deepwater Horizon oil rig explosion and consequently the oil 
spill occurred. To this day we still do not have a defined end; 
therefore, we truly do not know what to expect.
    Mayor Holloway of Biloxi said that we have been through 
everything--hurricanes, tropical storms, tornadoes, recessions, 
depressions, everything--and we have survived it all. But the 
common denominator in those events is that they had a 
beginning, a middle, and an end.
    In Louisiana and Mississippi, the oil industry and the 
seafood industry is a way of life and a part of our fiber, our 
very being. Our neighbors in Louisiana certainly have fared far 
worse, and our hearts go out to our friends and our neighbors.
    Mississippi too has been significantly impacted. According 
to the American Petroleum Institute, what happens in the oil 
and natural gas industry reverberates throughout the economy. 
That is because the industry is connected to a wide variety of 
industries that use oil and natural gas products either 
directly or indirectly. About 23 percent of businesses and 35 
percent of employees in Mississippi are heavily affected by 
policies imposed on the oil and natural gas industry.
    According to Dun & Bradstreet's preliminary Business Impact 
Analysis of Drilling Moratorium on Mississippi, a total of 379 
Mississippi businesses and nearly 3,000 employees will be 
impacted negatively. And I agree with Senator Landrieu when she 
said this was ``unnecessary, ill-conceived, and a second 
economic disaster for the Gulf Coast. The BP oil spill was the 
exception rather than the rule.''
    In mid-July Senator Wicker said that there is no doubt that 
the Federal Government needs to review thoroughly the Deepwater 
Horizon explosion so we can prevent a disaster like this from 
happening in the future, but this should not be done at the 
expense of the Gulf Coast economy. Now is the time to foster 
economic development in the Gulf rather than to stifle it with 
more bureaucratic red tape. The oil spill threatens the jobs 
and livelihoods of Mississippians. The Administration should 
not add to this threat with policies that send American jobs 
overseas.
    The U.S. Chamber of Commerce urged Congress to reject 
hastily prepared legislation ``that would keep American energy 
resources offline and thus drive energy producers overseas, 
along with their infrastructure and expertise, and hundreds of 
thousands of well-paying U.S. jobs.'' And almost 3,000 of these 
are filled by Mississippians.
    The U.S. Chamber continued by adding that many of the 
legislative proposals under consideration could have serious 
consequences, such as increased dependence on foreign oil at 
higher costs in the short- and the long-term, growing energy 
security risks, and a less competitive and potentially crippled 
gulf coast economy. The impact of legislation could be severe 
considering that the oil and natural gas industry employs more 
than 9 million Americans, including 46,000 in our region.
    Once again I greatly appreciate the opportunity to testify 
today, and I look forward to addressing any questions that you 
have.
    [The prepared statement of Ms. Nastasi follows:]
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    Chair Landrieu. Thank you. I sincerely appreciate that, all 
of you, and for your very personal testimony and reflections on 
the current situation, which is extremely serious.
    We have been joined by Senator Wicker. We will go through 
just a few questions. I want to make a statement, though, 
before I go into my round of questions.
    I started this hearing knowing that this decision was 
heavy-handed and ill-conceived. But after listening to this 
testimony, I want to add just a few thoughts to that.
    This decision was made by this Administration in disregard 
to their own committee of professionals that they assembled to 
advise them as to a path forward. This decision was wrong-
headed, it is irresponsible, and it is reckless. It has 
increased our risk to the environment. It has increased our 
national security risk. It has increased our risk for job 
security for thousands of hard-working Americans in my state, 
in Mississippi, in Texas and Alabama, and throughout the Gulf 
Coast. And it must be reversed now.
    We are going to continue to have hearing after hearing in 
this committee, if necessary, until this issue is brought 
squarely before the American public. This is unacceptable--
unacceptable--on the part of the Federal Government.
    I want to state for the record again, from 1947 until 2009, 
there were 42,645 wells drilled in State and Federal water in 
the Gulf of Mexico. And 99 days ago, one of them blew up. 
Eleven men lost their lives. But an entire industry has 
virtually been shut down.
    My question to President Obama and to his Administration 
after they scrambled to put an economic analysis together that 
they should have put together before they made this decision 
is: Who is going to pick up the cost of this? And what taxes 
are you going to raise or what revenues are you going to put 
forward to do so? Because someone has to pay for the 
recklessness of this decision.
    Ms. Randolph, would you say again for the record that nine 
of the ten taxpayers in Lafourche Parish are located in Port 
Fourchon? This is because Port Fourchon is our small port, but 
it is the number one port that services the deep water. Could 
you just give another minute or so of testimony about how this 
moratorium is affecting the small businesses in Lafourche, not 
just the rather large or medium-size businesses that service 
the Gulf, although Mrs. Bertucci most certainly represents the 
small businesses with 14 employees that we are--but something 
about what you are hearing as parish President in the last 30 
days or 60 days in your parish from small business owners that 
work indirectly, how is this moratorium affecting them? And in 
your view, is it worse than the spill itself or about the same?
    Ms. Randolph. First, Madam Chair, I would like to say 
``Amen'' to your statement. I did not think applause was 
appropriate, but I thought I would say ``Amen.''
    Secondly, in Lafourche Parish, the uncertainty of this is 
what is causing so much of the decrease in employment. It is 
causing people to fear spending money. They do not know what 
tomorrow is going to bring. People who have had jobs for many 
years, Mom-and-Pop businesses, men and women who have worked 
side by side now for 40 years are talking about either retiring 
or perhaps following their children to where they are 
elsewhere.
    The uncertainty of this is what is causing everyone to fear 
any type of large spending. Mrs. Bertucci mentioned the tile 
company. I talked to our permits department, and our permits 
are down. People are not applying for loans to build houses. It 
is impacting every level in the parish right now just because 
of the uncertainty.
    Chair Landrieu. Now, I understand you met with the 
President personally about probably 3 or 4 weeks ago, as I 
recall, you had the opportunity to walk with him on the beaches 
of Grand Isle. When you brought this issue to him, did he give 
you any indication that he was going to try to make it clear in 
the near future if he supports oil and gas drilling going 
forward in the Gulf? Or did he make any definitive statement to 
you at the time or show any understanding of the situation as 
it affects the economy in your parish?
    Ms. Randolph. The short answer is no. His response to my 
request was that the mood of the nation was such that he had to 
take this action. If I could expand on that, we just recently 
returned from the National Association of Counties' annual 
conference which represents 77 percent of the counties in the 
United States. We put forth a resolution to ask the President 
to lift the moratorium in 30 days. It passed the National 
Association of Counties. So the mood of the nation is such that 
they do not agree with this shutdown. It was a test, and it 
indicated to me and to all others there that it was not just 
Louisiana who is concerned about this. The entire nation is 
concerned about this impact to us.
    Chair Landrieu. Thank you.
    Mrs. Bertucci, let me just ask you, you talked at great 
length and beautifully about your own company. You talked about 
one of the companies associated with one of your workers, I 
think the flooring company. But I understand, as Mr. Lillie 
said, this really is a family; it is a very large family along 
the Gulf. Is there any one or two other short stories in a 
minute or less that you would like to share about any other 
companies that you know that are experiencing hardship or just 
any other comments you would like to add in closing?
    Mrs. Bertucci. Sure. I believe there are many, many 
companies that are experiencing hardships right now. There is 
one particular company in Harvey, Louisiana, that we purchase 
our industrial hoses from, for example, and this particular 
company also supplies the ice houses that supply the fishing 
industry. And it was very normal for me, my company, my little 
tiny company, to order $30,000 a month in industrial hoses from 
him. We have not been able to order any hoses from him since 
this has happened. I am not sure exactly how many other 
companies like myself have all of a sudden not been able to 
order anything from him. I know that he is struggling. Everyone 
I know is struggling.
    There is a very well-known restaurateur in New Orleans that 
owns multiple, very successful restaurants that I know for a 
fact just borrowed $3 million to open a restaurant in 
Lafayette, Louisiana, right before the moratorium and the spill 
happened. And I know for a fact that they are devastated and 
not knowing what is going to happen because Lafayette, as we 
all know, is also very much impacted. So it is a restaurateur. 
Everyone I know is impacted, and people are afraid to spend 
money. People are holding onto money. People are not going out 
to eat. They are not spending money on anything that they do 
not absolutely have to, and that is affecting every other 
business in our area.
    Chair Landrieu. Mr. Lillie, let me ask you one question, 
and then I am going to turn it over to Senator Wicker, and then 
we are going to probably have to wrap up. You have spent 29 or 
30 years in the safety aspect of this industry. Without going 
into the details of the Horizon, could you just give a minute 
or two to help Americans understand? I think some people might 
have an idea that despite the fact that we have drilled 42,000 
wells and we have had one--we have had other accidents. I mean, 
I am not going to indicate we have not, and those are public 
and for the record. But this sort of extraordinary explosion we 
have not seen in quite some time. Even after major hurricanes 
come through, we have not seen this amount of oil released in 
our Gulf.
    In fact, just for the record, Mrs. Randolph was correct. 
Tankers have four times, according to the National Academy of 
Sciences--this is not from Exxon. This is not from Shell. This 
is not from BP. According to the National Academy of Sciences, 
tankers are accountable for 4 percent of all spills globally. 
Offshore drilling, prior to the Horizon, was 1 percent. Runoff 
and small spills from cars, boats, and other sources is 32 
percent, which is the second highest percentage. And natural 
seepage itself is 63 percent.
    So with 1 percent of the risk, this action was taken, 
without economic data supporting it, without an understanding, 
in my view, of the extraordinarily damaging effects, and still 
to date, 60 days or so into this moratorium, we still do not 
have any clear answers or expectations as to why or when this 
could be changed.
    So, Mr. Lillie, what would you like to add to the record 
for a minute or so about your experience about how maybe safety 
has either improved or not improved on the rigs, in personal 
safety, in your length of experience? Because my understanding 
is--and if I am wrong, go ahead and correct me--that 20 years 
ago and 30 years ago there were lots of things that were not 
done appropriately because we were just learning how to do 
this. I have been feeling more comfortable myself in the last 
10 or 15 years. That is why this accident is so shocking to so 
many of us, because we observe that things are getting so much 
better and safer. Is that your view or is it just the whole 
industry gone run amuck?
    Mr. Lillie. Let me say that my career was at Exxon refinery 
in Baton Rouge, and during my career, when I first started, 
safety was not as paramount to them as it is now. Now, within 
probably 5 years after I went to work, safety is everything. 
You go in there, and they spend a large part of their budget on 
safety. And these folks are the same ones that have the 
offshore platform.
    Now, I can tell you firsthand that, you know, last year, 
last summer, I went out on an offshore platform working as a 
clerk for a while, and it is the same thing out there, maybe 
even more. Folks out there are so worried and so conscious of 
the environment and of safety that you just do not see people--
I mean, you get beat up. When I was on the rig, we would start 
out--we would wake up at 5:00; 6 o'clock we had a safety 
meeting of the--it happened to be a Shell rig, and the Shell 
folks and the construction folks that I was working for would 
have a safety meeting together with the supervisors. Then we 
would go up there, and every man on that platform that was 
working in the construction crew, we had a safety meeting. And 
I can promise you, the inspectors demand safety out there from 
the time I was out there.
    Now, I did not serve, you know, the majority--I was out 
there for a summer trying to make a living. But I can tell you 
the industry--because I worked in that refinery, and, I mean, 
it is just a culture now. Everything has to be done safely. 
That is paramount. And if you do not do that, you do not do it.
    Now, I cannot explain what happened with the Horizon. I 
would suspect that there will probably be findings that folks 
broke the rules. But, I mean, you cannot legislate breaking the 
rules. We can put all kinds of rules in effect, and if someone 
or some individual or some company chooses to break that rules, 
there is not much you can do about that other than what will be 
done, I am sure, with BP when this happens. But that is all I 
can say.
    Chair Landrieu. And that is the irony--and you are right. 
That is the irony of the situation, as I have said, and I going 
to turn it over to Senator Wicker for his line of questioning 
and then we will end. But the company that broke the rules, 
that obviously just did not follow some procedures--we have 
read a lot of the testimony in the press that has done a very 
good job of covering the fact the alarm system was turned off, 
the fact that there were not proper certifications of BP 
supervisors. The irony of this decision is that they are the 
only ones drilling right now in the Gulf.
    Mr. Lillie. Exactly.
    Chair Landrieu. And everybody else who has a much better 
safety record, everybody else that had nothing to do with this, 
is sitting on the sidelines quickly going broke or 
contemplating bankruptcy in some cases.
    Senator Wicker.
    Senator Wicker. Thank you very much, and I appreciate the 
bipartisan spirit of this hearing today, and I certainly 
appreciate the words of the Chair of this Committee. Madam 
Chair, you are absolutely right. Runoff puts more oil pollution 
in our waters. Tankers put more oil pollution in our waters. 
Seepage is responsible for more.
    One company takes shortcuts, engages in what I believe will 
be proved to be gross negligence, and causes this one in 42,000 
event, and if it is not enough that the residents of the Gulf 
states and the citizens of our nation have to experience the 
consequences of this explosion, the families, of course, the 
loss of life and the economic devastation that has been caused 
by this--if that is not enough, then here comes the Government, 
our own Government that we pay taxes to that is supposed to be 
encouraging job creation, and in defiance of their own panel, 
in defiance of two decisions by a Federal court, does an end 
run, in effect, around the considered opinions not only of a 
Federal district judge but also a Fifth Circuit Court of 
Appeals panel, and says we are just going to do it anyway, and 
we can do it by taking another run at it and changing our 
pleadings. And apparently they are able to get away with it.
    You know, back when I was a very young man, we had the 
Three Mile Island incident in Pennsylvania, and an overreaction 
to that cut off nuclear power development in the United States. 
It allowed the rest of the world to get ahead of the United 
States in that regard, and we are just now coming back to the 
point where we could be realistic in the United States about 
joining France and other Western European countries in using 
nuclear power for part of our energy. It is the same 
overreaction by the Federal Government. And I would say to the 
Administration, listen to your own experts. Listen to the 
facts, as the Chair of this Committee has so articulately 
pronounced them today, and let us have our jobs back.
    It is very conceivable that this action by our own 
Government will turn out to have more economic devastation than 
the spill itself. Wouldn't that be adding insult after insult 
after insult to injury for our own Government to take this 
action against the families, the workers, and the economy of 
our region?
    I appreciate all the panelists. I realize we had a panel 
before us that testified also. I particularly appreciate Ms. 
Nastasi coming on behalf of the Gulf Coast Chamber of Commerce 
today. This is really the third major hit that our economy has 
had in 5 years. Isn't that a fact, Ms. Nastasi?
    Ms. Nastasi. Absolutely, and Katrina, which--as I stated, 
we were looking forward to being back this year. This was going 
to be our year, 2011. We really thought we would be in pre-
Katrina jobs, the tourism-related industry, and then the 
recession hit and the oil spill hit. But the moratorium is man-
made, and the moratorium, our industries are tourism, gaming, 
all small business-related, seafood industry, and oil and gas. 
So these industries were directly affected by Katrina, by the 
recession, and now when things are on the upswing, the oil 
spill and all of those--the tourism, the fishing, the 
recreation--are affected by it--the seafood industry. And the 
moratorium is so much more than the oil and gas industry 
because our neighbors in Louisiana frequently visit our area 
for tourism. And if they are not working, then that leads into 
another indirect industry that is impacted by the moratorium.
    So it is just the multiplier effect of who is being 
affected, and it is not just the coastline. Mississippi has 
nearly 400 businesses in the states, over 3,000 employees that 
will be affected, and the majority are small businesses.
    Senator Wicker. You are right; it is not just the 
coastline. I would have to say to small businesses in 
Mississippi--and it is true all throughout the Gulf--the 
resilience shown after Katrina by the local folks, not 
necessarily the politicians but the local people and local 
governments stepping forward, is just amazing. It is a 
wonderful testimony in determination and resilience and 
recovery.
    Senator Landrieu and I were candidates for election in 
2008, in September, when that economic crisis hit, and it 
seemed like the stock market was coming down, and everybody was 
losing their pensions. And I was getting myself acquainted 
politically on the coast there as a statewide candidate for the 
first time, and we had to face that devastation and try to 
wrestle with what the real causes were. And hopefully we have 
gotten the right answers--I am not so sure about that--in terms 
of our response.
    And then here comes this disaster, and you are right. It is 
not just the Gulf Coast counties; it is not just the Gulf Coast 
states. It is everybody. It is Americans from Maine and South 
Dakota; we all rely on this energy.
    Let me ask you this: I was on a panel the other day where a 
representative from another state talked about how they have 
more tourism than we might have in Louisiana and Mississippi, 
more beaches in some states than in Mississippi and Louisiana. 
Talk to us, if you will, any of you, about how we co-exist. 
Tourism is a major industry in the three Gulf Coast counties of 
Mississippi. Is that correct, Ms. Nastasi.
    Ms. Nastasi. That is absolutely correct.
    Senator Wicker. And also the seafood industry, and also the 
oil and gas and petroleum industry, and I think it would be 
fair to say that people of the Gulf Coast are among the most 
environmentally sensitive and aware of anybody in the United 
States of America. Would you say that is a good 
characterization?
    Ms. Nastasi. I would agree.
    Senator Wicker. We have to co-exist with all of those, 
don't we?
    Ms. Nastasi. We do.
    Senator Wicker. Would anybody else like to comment about 
that?
    Chair Landrieu. Senator, I would, if I could.
    Senator Wicker. Yes.
    Chair Landrieu. I would, if I could, while they are 
thinking about that, because you brought up an excellent point, 
and this record would be incomplete without it, and it is an 
extremely important point. This Gulf Coast that we are proud to 
represent is home to many industries that use this water and 
have used it safely and carefully and respectfully for many 
years.
    This action sends such a wrong message to places in the 
world. The message is: We are not sure if you can fish in the 
same waters that you can drill oil and gas. We are not sure 
that you can operate your boats safely and your fishing 
trawlers. We are not sure if your oystermen and your crabbers--
and so we are just--the greatest country on Earth is saying to 
the rest of the world, ``We are not sure.''
    It is a really troubling message, and I want to say as a 
Senator, the senior Senator from my state, and one of the 
senior members from the Gulf Coast, this is a point of extreme 
pride to our region. We are proud. We make no apologies. And we 
believe that we can have a vibrant tourism industry. We believe 
and know we can have a vibrant manufacturing and fabrication 
industry. We believe we can have high-tech science and 
engineering jobs on our coast. We believe we can have some of 
the finest restaurants in the world. And we believe that we can 
have an extraordinary quality of life--not maybe represented by 
the per capita income, but not everything great in the world is 
actually measured by wealth. Let me say that to the people of 
Washington, D.C. And all of this has been put in jeopardy.
    So if anyone wants to answer that question, then we are 
going to have to wrap up this hearing.
    Ms. Randolph. Real quickly, Senator, you know as well as we 
do how much money the oil and gas industry contributes to the 
national treasury. Just off our coast is $6 billion a year. We 
are significant. And in order for any other industry to 
operate, they need oil and gas. And that has to be an accepted 
fact, and it has to be something that we react to now and that 
we lift this moratorium and say let us resume tourism, let us 
resume fishing, let us resume everything else. But we can only 
do that if we lift this moratorium.
    Thank you, Senator.
    Chair Landrieu. Mrs. Bertucci.
    Mrs. Bertucci. What comes to my mind right now is I feel 
like our Government and our Administration, the job should be 
to protect and to serve the people. And in this particular 
instance, I do not feel like we are being protected or served 
at all. I feel like we are being devastated, and I think that 
is the opposite effect of what should be happening. And there 
is no real rationale for it. It does not accomplish anything 
positive for anyone or any industry. It just simply exacerbates 
the devastation.
    Chair Landrieu. Mr. Lillie.
    Mr. Lillie. Yes, Senator, just to reinforce what you said, 
I believe the people in this area and along the Gulf Coast have 
known for years and decades that our great steel reef--barrier, 
reef, whatever--offshore, the oil rigs themselves are one of 
the reasons that we have such a fine fishing industry and such 
a fine--a lot of divers. It is a mecca for scuba divers, and 
that brings in a lot of tourism, a lot of sport fishing. And 
you cannot go to a single rig that there are not boats out 
there fishing. And I can tell you from working on the platform, 
you cannot go to Sea World and see as good a show as you can 
see by looking down through the grate of that rig.
    Chair Landrieu. It is quite amazing, the sight.
    Mr. Lillie. It is unbelievable, and, yes, it does co-exist 
very well. It fits very well together. Thank you.
    Chair Landrieu. If it is managed appropriately.
    Ms. Nastasi.
    Ms. Nastasi. I would just once again like to thank you for 
allowing me this opportunity to represent my region and 
Mississippi specifically. I do think that all of the industries 
on the Gulf Coast are very interconnected, and they are 
impacting each other. And right now because of the moratorium, 
we are crippled with fear, and that is paralyzing the Gulf 
Coast. And I appreciate you listening to our testimony today 
and certainly hope that the outcome will be beneficial for our 
areas.
    Senator Wicker. Madam Chair, I do not know of a single 
visitor to Sea World that does not want to fill up their car 
with gasoline and have their home air-conditioned and heated, 
and all of that takes energy. We are talking about jobs for 
Americans today. We are talking about energy for the entire 
country of the United States of America, not just for one 
region.
    Thank you. Thank you for this hearing.
    Chair Landrieu. Thank you. Thank you, Senator, and we are 
talking about trying to use our intellect and our rationale to 
move forward, and that should be paramount. And it is absent, 
in my view.
    I want to submit to the record two letters--one that I 
wrote to Dr. Romer, and she has assured me that she will be 
here and someone else is--well, she assured me she will be here 
in September for the next hearing that we are going to hold, 
and that letter will be entered into the record.
    [The letter follows:]
    [GRAPHIC] [TIFF OMITTED] 77970.086
    
    Chair Landrieu. And this is a letter I sent to President 
Obama on July 26th, and that should be reflected in the record.
    [The letter follows:]
    [GRAPHIC] [TIFF OMITTED] 77970.087
    
    [GRAPHIC] [TIFF OMITTED] 77970.088
    
    Chair Landrieu. I would also, Ms. Randolph, like to ask you 
to submit for the Congressional Record the resolution from the 
National Association of Counties.
    [The resolution follows:]
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    [GRAPHIC] [TIFF OMITTED] 77970.090
    
    Chair Landrieu. And if any of you have accessed any other 
official resolutions from your specific areas, if you would 
submit that for the record. And we are going to build this 
record. It will be open for 2 weeks, the record of this 
Committee. But I can say in conclusion I intend to hold hearing 
after hearing about the effects of small businesses affected 
along the gulf coast and the Nation until this moratorium is 
lifted.
    Thank you. The meeting is adjourned.
    [Whereupon, at 11:58 a.m., the Committee was adjourned.]
                      APPENDIX MATERIAL SUBMITTED

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