[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
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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
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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:]
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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:]
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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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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.]
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