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70–821 PDF 2011

MAKING THE GULF COAST WHOLE AGAIN: ASSESSING THE RECOVERY EFFORTS OF BP AND

THE OBAMA ADMINISTRATION AFTER THE OIL

SPILL

HEARING

BEFORE THE

COMMITTEE ON OVERSIGHT

AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

JUNE 2, 2011

Serial No. 112–59

Printed for the use of the Committee on Oversight and Government Reform

(

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

http://www.house.gov/reform

(II)

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

DARRELL E. ISSA, California, Chairman

DAN BURTON, Indiana

JOHN L. MICA, Florida

TODD RUSSELL PLATTS, Pennsylvania

MICHAEL R. TURNER, Ohio

PATRICK T. MCHENRY, North Carolina

JIM JORDAN, Ohio

JASON CHAFFETZ, Utah

CONNIE MACK, Florida

TIM WALBERG, Michigan

JAMES LANKFORD, Oklahoma

JUSTIN AMASH, Michigan

ANN MARIE BUERKLE, New York

PAUL A. GOSAR, Arizona

RAU ́ L R. LABRADOR, Idaho

PATRICK MEEHAN, Pennsylvania

SCOTT DESJARLAIS, Tennessee

JOE WALSH, Illinois

TREY GOWDY, South Carolina

DENNIS A. ROSS, Florida

FRANK C. GUINTA, New Hampshire

BLAKE FARENTHOLD, Texas

MIKE KELLY, Pennsylvania

ELIJAH E. CUMMINGS, Maryland, Ranking

Minority Member

EDOLPHUS TOWNS, New York

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, District of

Columbia

DENNIS J. KUCINICH, Ohio

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

STEPHEN F. LYNCH, Massachusetts

JIM COOPER, Tennessee

GERALD E. CONNOLLY, Virginia

MIKE QUIGLEY, Illinois

DANNY K. DAVIS, Illinois

BRUCE L. BRALEY, Iowa

PETER WELCH, Vermont

JOHN A. YARMUTH, Kentucky

CHRISTOPHER S. MURPHY, Connecticut

JACKIE SPEIER, California

LAWRENCE J. BRADY, Staff Director

JOHN D. CUADERES, Deputy Staff Director

ROBERT BORDEN, General Counsel

LINDA A. GOOD, Chief Clerk

DAVID RAPALLO, Minority Staff Director

(III)

C O N T E N T S

Page

Hearing held on June 2, 2011 ................................................................................. 1

Statement of:

Barbour, Haley, Governor, State of Mississippi ............................................. 7

Taffaro, Craig, president, St. Bernard’s Parish, Louisiana; Bill Williams,

commissioner, Gulf Country, Florida; Cory Kief, president, Offshore

Towing, Inc.; Frank Rusco, Director, Energy and Science Issues, Government Accountability Office; and Michael Bromwich, Director, Bureau of Ocean Energy Management, Regulation, and Enforcement, U.S.

Department of Interior ................................................................................. 84

Bromwich, Michael .................................................................................... 122

Kief, Cory ................................................................................................... 104

Rusco, Frank .............................................................................................. 109

Taffaro, Craig ............................................................................................ 84

Williams, Bill ............................................................................................. 96

Letters, statements, etc., submitted for the record by:

Barbour, Haley, Governor, State of Mississippi, prepared statement of ..... 11

Braley, Hon. Bruce L., a Representative in Congress from the State

of Iowa, prepared statement of .................................................................... 152

Bromwich, Michael, Director, Bureau of Ocean Energy Management, Regulation, and Enforcement, U.S. Department of Interior, prepared statement of ........................................................................................................... 125

Issa, Hon. Darrell E., a Representative in Congress from the State of

California, staff report .................................................................................. 24

Kief, Cory, president, Offshore Towing, Inc., prepared statement of ........... 106

McHenry, Hon. Patrick T., a Representative in Congress from the State

of North Carolina, letter dated June 17, 2011 ........................................... 143

Rusco, Frank, Director, Energy and Science Issues, Government Accountability Office, prepared statement of ........................................................... 111

Taffaro, Craig, president, St. Bernard’s Parish, Louisiana, prepared statement of ........................................................................................................... 87

Towns, Hon. Edolphus, a Representative in Congress from the State

of New York, prepared statement of ........................................................... 150

Williams, Bill, commissioner, Gulf Country, Florida, prepared statement

of ..................................................................................................................... 99

(1)

MAKING THE GULF COAST WHOLE AGAIN: ASSESSING THE RECOVERY EFFORTS OF BP

AND THE OBAMA ADMINISTRATION AFTER

THE OIL SPILL

THURSDAY, JUNE 2, 2011

HOUSE OF REPRESENTATIVES,

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM,

Washington, DC.

The committee met, pursuant to notice, at 9:37 a.m., in room

2154, Rayburn House Office Building, Hon. Darrell E. Issa (chairman of the committee) presiding.

Present: Representatives Issa, Burton, Platts, McHenry, Jordan,

Walberg, Lankford, Amash, Gosar, Labrador, Meehan, DesJarlais,

Ross, Guinta, Farenthold, Kelly, Cummings, Towns, Maloney, Norton, Kucinich, Tierney, Clay, Connolly, Quigley, and Davis.

Also present: Representative Palazzo.

Staff present: Ali Ahmad, deputy press secretary; Thomas A. Alexander, Peter Haller, and Kristina M. Moore, senior counsels; Will

L. Boyington and Drew Colliatie, staff assistants; Molly Boyl, parliamentarian; Lawrence J. Brady, staff director; Joseph A.

Brazauskas, counsel; Benjamin Stroud Cole, policy advisor and investigative analyst; John Cuaderes, deputy staff director; Adam P.

Fromm, director of Member services and committee operations;

Linda Good, chief clerk; Tyler Grimm and Ryan M. Hambleton,

professional staff members; Frederick Hill, director of communications and senior policy advisor; Christopher Hixon, deputy chief

counsel, oversight; Justin LoFranco, press assistant; Mark D.

Marin, senior professional staff member; Tegan Millspaw, research

analyst; Laura L. Rush, deputy chief clerk; Jeff Solsby, senior communications advisor; Becca Watkins, deputy press secretary; Peter

Warren, legislative policy director; Krista Boyd, minority counsel;

Lisa Cody, minority investigator; Kevin Corbin, minority staff assistant; Ashley Etienne, minority director of communications; Jennifer Hoffman, minority press secretary; Carla Hultberg, minority

chief clerk; Chris Knauer, minority senior investigator; Dave

Rapallo, minority staff director; and Susanne Sachsman Grooms,

minority chief counsel.

Chairman ISSA. The committee will come to order.

The Oversight Committee exists to secure two fundamental principles: first, Americans have a right to know that the money Washington takes from them is well spent; and second, Americans deserve an efficient, effective government that works for them. Our

duty on the Oversight and Government Reform Committee is to

2

protect these rights. Our solemn responsibility is to hold government accountable to taxpayers, because taxpayers have a right to

know what they get from their government. We work tirelessly in

partnership with citizen watchdogs to deliver facts to the American

people and bring genuine reform to the Federal bureaucracy. This

is our mission.

This morning we will review the enormous task confronted in the

gulf as a result of the BP oil spill and the Obama administration’s

choices made then and to this day. It is clear that this was a manmade disaster that 11 people died in what should not have happened, but it is the choices after an initial event that we will focus

on today.

That is not to take away BP’s ultimate responsibility, but this

committee reviews government actions, both prospectively and retrospectively. We cannot expect to do a better job next time if we

do not focus on what was done right and what was done wrong in

this disaster.

The government made several decisions under its authority. One

of them was not to use the Stafford Act and, in fact, to leave the

very entity that created this pollution in a position of authority and

lead. There are many reasons this may have happened but we have

to ask, should it happen again? Congress has the clear power and

authority to change the rules of the road. We should not have to

choose between holding a polluter responsible and empowering

leaders at the Federal, State and Local level to do what they are

responsible to do on behalf of their citizens.

The reimbursement for actions, directly and indirectly, belongs to

British Petroleum. They have said they will meet that challenge

and we will hold them to it. But as the days and weeks went on

after an initial spill 40-some miles out at sea, it became obvious

that we lacked the resources in place to do the job that was coming. The response was slow and chaotic.

Additionally, we will hear from testimony today that the secondary damage turned out to be in many cases far worse than the

little or no oil that came to the shores of communities. That is part

of what we have to do deal with here today.

Oil spills and other events are inevitable. In my hometown of

Cleveland, more than 60 years ago, a liquefied natural gas container went bad and many died. It has not stopped us from

resourcing and using natural gas in America. Three Mile Island is

still in the memory of people my age. It has not stopped us from

using nuclear fuel as a primary source for base load.

Coal miners, to our dismay, continue to die trying to harvest that

fuel around the world. It is a necessary part of our society, that

dangerous jobs are done by people who choose to do them and have

a right to be protected in that process.

But this hearing is not about the riskiness of any of these fuel

sources. It is in fact about whether the Federal Government knows

better this time than they did before this event.

Additionally, it is important for us to understand that just as

Hurricane Katrina told us that FEMA had problems working with

States, FEMA was not necessarily ready for a loss of vast areas of

response. We now know that even when the response capabilities

were in place, even when it was a single event of a company that

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did not do their job and did not play properly by the rules, we find

secondary events throughout the area. We find oil coming ashore

and not being responded to for a number of reasons.

We additionally find a loss of revenue in unrelated areas. We will

hear from our second panel and from our first that the loss of tourism was needless and extreme in areas in which the water was

clean, the shore was pristine, and in fact people were scared away.

We need to make sure that does not happen again. We need to

make sure that Governors and local officials are empowered to do

what is in the best interests of their people and that the American

people get a fair understanding of the scope of any problem or spill.

Last, we will hear today that as a result of one reckless action,

we find countless billions of dollars of revenue lost, good hardworking Americans out of work, resources necessary to make us

less oil-reliant on countries that often are not friendly to us, leaving for the very countries that in fact will now produce the oil that

we are forced to buy.

In America today, both sides of the aisle talk about jobs. I for one am not an economist, but I can understand that if $400 billion

worth of purchased oil were produced here in America, there would

be countless millions of direct and indirect jobs available to Americans. There are many things that we are not competitive on here

in America. Certainly one of them we are competitive on is natural

resource extraction from our coastal waters and onshore locations.

I look forward to hearing from my old friend and a considerably

well-known figure to all of us and a great Governor, Governor

Barbour. And with that I recognize the gentleman from Maryland

for his opening statement.

Mr. CUMMINGS. Thank you very much, Mr. Chairman, and good

morning.

Let me first welcome Governor Barbour, and I thank you very

much for being with us today. I also want to take a moment to recognize Dick Gregory, who is a person who has fought hard for so

many people for so long in our audience; and thank you, Mr. Gregory, for being part of this hearing today.

Governor Barbour, your State has been through a tremendous

amount of difficulty, and I sincerely look forward to your testimony.

Let me also welcome Michael Bromwich from the Department of

Interior. Mr. Bromwich, you agreed to be here with incredibly short

notice. So we thank you very much for your testimony and for your

expertise.

Finally, let me welcome the residents of the gulf who have traveled here today to share their views with the committee.

Earlier this year, the National Commission on the BP Deepwater

Horizon oil spill issued a comprehensive report on the causes of the

spill. The report found that this disaster was avoidable and that it

resulted from clear mistakes made in the first instance by BP, Halliburton and Transocean, and by government officials. These were

extremely difficult lessons to learn. I am encouraged that now more

than a year later, officials in both the oil industry and our government appear to be heeding these lessons and retooling the way

they do business.

First, we must never ever forget that 11 individuals lost their

lives in an explosion on April 20th. To address deficiencies that

4

contributed to these deaths, the Interior Department issued an improved workplace safety rule that many, including industry, believe

will significantly enhance worker safety.

The Department also completely reorganized the Minerals Management Service. MMS had been criticized because it oversaw the

safety of drilling, the environmental impacts caused by drilling and

the revenue generated from drilling. According to the National

Commission, MMS had a built-in incentive to promote offshore

drilling in sharp tension with its mandate to ensure safe drilling

and environmental protection.

The Department also implemented a number of critical safety

measures to ensure that a blowout like this would never happen

again. For example, a new drilling safety rule strengthened standards for well control procedure, drilling equipment and well design,

and it required independent and third-party inspections.

Finally, the Department issued a notice to lessees to require oil

companies to demonstrate that they can actually cap a well, that

they can actually cap a well and handle a deepwater blowout before

any new drilling permits were issued.

These were responsible steps taken after it became clear to the

Nation after 87 days that BP simply did not have the technology

available. In other words, the technology was far outdistancing our

ability to control it.

Mr. Chairman, I have to say that I am disappointed by your actions today. You stated that the committee investigations have

interviewed investigators, have interviewed more than fifty government officials, scores of residents, business owners and whistleblowers as part of this investigation. That is news to everyone on

this side of the aisle, because you completely excluded us from that

effort. And you have not explained why. Unfortunately, this is the

definition of partisanship and it undermines the integrity of this

committee.

And by the way, this report that is being submitted this morning

was submitted to the press before we even saw it.

Nevertheless, moving forward, it is our obligation as Members of

the U.S. Congress to develop constructive ways to help people in

the gulf rebuild their lives and their livelihoods.

In my former capacity as chairman of the Subcommittee on Coast

Guard and Maritime Transportation, I visited the Gulf twice while

oil was flowing from the Macondo well. I saw firsthand how this

spill affected small businesses that rely on tourism, fishing, and

other industries that were decimated by the spill.

I have offered several measures to provide real solutions to gulf

residents. Last Congress, I offered a provision in the legislation

that cut in half from 90 days to 45 days the amount of time responsible parties had to settle claims arising from the spill.

I also worked on provisions with Chairman Oberstar to strengthen the Coast Guard’s oversight of an oil spill response plans.

This year, just recently, I offered an amendment to H.R. 1229 to

require all oil and gas exploration development and production activities in the gulf to be conducted by U.S.-flagged vessels. Talking

about jobs, that is jobs. This which would have immediately stimulated the gulf economy. Unfortunately, the Rules Committee did

not allow a vote on my amendment.

5

My basic point is this. We have a tremendous opportunity in this

committee to really help people, people who have undergone extreme hardship. As the goal for today’s hearing if we can focus our

efforts on identifying even one positive proactive solution that we

can all agree on, then I think today’s hearing will be a success.

And with that, Mr. Chairman, I thank you.

Chairman ISSA. I thank you.

I ask for 1 minute unanimous consent to respond. Without objection.

To my ranking member, just for your edification, this investigation began under your predecessor, Chairman Towns. We went

down jointly and separately. He authorized minority trips when I

was in the minority, in addition to the joint trips we did, including

Members of both parties. When I took the chair, we continued that

investigation. We have had joint trips, in addition to we have authorized minority trips down there. As a matter of fact we have

never turned down a request by the minority to go on staff factfinding. Every request has that has been asked for has been granted.

It is true that both your side and my side, under both the majority and minority, have gone both together and independently, but

I certainly think that I don’t—I will not belittle any effort that your

side made to get at individual and independent facts. I hope you

were not intending to do so by saying that you were surprised that

we had made 50 trips when some of them were made together.

Mr. CUMMINGS. Mr. Chairman, may I have a minute?

Chairman ISSA. Of course.

Mr. CUMMINGS. Let me say this, Mr. Chairman. As I said from

the very beginning, my No. 1 concern is helping the American people, and it is about the integrity of this committee. I do not belittle

for 1 second the findings and the things that the majority has done.

What I am saying is that we want to be a true partner in all of

that. I have said to you privately and openly that we, too, care

about government operating properly. We, too, care about making

sure that every agency of government does what it is supposed to

do. We, too, want to make sure that there is no agency that is

caught up in a culture of mediocrity. We refuse to have that and

we have said that to this administration and we would say it to

any administration.

So I look forward—going forward, like I said, I want to move on,

but I want to make it clear we, too, are partners. We, too, were

elected by 700,000 people per district, and so we want to make sure

our voices are heard too, and I appreciate your comments.

Chairman ISSA. I thank the gentleman.

With that, we are prepared to introduce our first panel. I am

going to deny myself the honor of introducing Governor Barbour

and instead go to the newest Member of the Mississippi delegation,

Congressman Steven Palazzo for his introduction of his Governor.

And I understand you were Governor when you were in the State

house. The gentleman is recognized for an introduction.

Mr. PALAZZO. Good morning. Thank you, Chairman Issa, Ranking Member Cummings, and Members for allowing me the privilege

of introducing someone who I believe will provide your committee

with the most credible testimony today.

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I have experienced his leadership firsthand after the devastation

of Hurricane Katrina and, more recently, the Deepwater Horizon

oil spill. Indeed, no other Governor has been as frequently challenged to rise to the occasion of leading a State during a time of

crisis, whether man-made or natural, and each time Governor

Barbour shouldered the burden of leadership in a manner that

calmed tempers, mended broken hearts, and resulted in incredible

efficient outcomes.

To accomplish this, he met each event with a balanced regimen

of compassion and order, allaying fears and the sense of loss with

hope in the prospect of swift recovery. I vividly remember the many

times the Governor and his beautiful wife Marsha walked hand in

hand with the victims, and in the aftermath of it all, assured them

that everything was going to be all right.

More recently, he continues to guide our State through historical

floods and a severe tornado season. He has not only led Mississippi

through the country’s worst natural and man-made disaster, but he

challenged us to build back bigger and better. He is a great leader

in every sense of the word and, of course, I am talking about Mississippi’s 63rd Governor, Haley Barbour.

Mr. Chairman, as someone who represents a district devastated

by the oil spill, I appreciate you directing the committee to assess

the recovery efforts of BP and the Obama administration.

I would like to briefly mention that as someone who has worked

offshore on drilling platforms, I have a particular concern on how

the administration came to the decision to institute a moratorium

without conducting a study of how it will impact the Gulf Coast

economy. We know now that this thoughtless decision will decrease

oil production by up to 250,000 barrels per day for the next 2 years.

A loss of production of this magnitude will continue to have a negative impact on the Gulf Coast economy for years to come.

Studies conducted by Louisiana State University put potential

estimated job loss by the moratorium and subsequent permatorium

on the Gulf Coast region at around 24,000. The ripple effect of

these lost jobs and high energy prices hurts our national economy.

The majority of the jobs lost in Mississippi are from the Fourth

Congressional District of Mississippi, the district I represent.

I have worked offshore. I know the value of the jobs that the offshore drilling industry provides. I look forward to further investigation into the economic impact of the administration’s decisions and

their motivations.

I applaud the committee for the extensive work on this critical

issue and I look forward to hearing the testimony by the witnesses

and the outcome of this important hearing. And thank you again,

Chairman Issa and the Members, for allowing me the honor of introducing Governor Haley Barbour.

I yield back.

Chairman ISSA. I thank the gentleman.

Pursuant to the rules of the committee, Governor, would you rise

to take the oath.

[Witness sworn.]

Chairman ISSA. Let the record reflect that the Governor answered in the affirmative.

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Governor, you know this routine. You have seen it for years.

Your entire statement will be placed in the record. We will not hold

you to an exact 5 minutes, but come as close as you can.

STATEMENT OF HALEY BARBOUR, GOVERNOR, STATE OF

MISSISSIPPI

Governor BARBOUR. Thank you, Mr. Chairman, and to the ranking member and all the members of the committee, thank you very

much for having me here. I am going to not read my statement.

Let me start off by saying that this disaster is very different

from other disasters. When Representative Palazzo talks about

Katrina, we had utter obliteration on the coast. We had places

where it looked like the hand of God had just wiped away the Gulf

Coast for blocks and some places for miles. We had hurricane force

winds 240 miles inland, and to get people where they got confident

that the coast was going to come back, where they had hope for

their families and their communities, where they were willing to

return home, was an enormous part of the job.

In this case, keeping people calm, you know, you had an oil well

to blow out a hundred-plus miles away from our coast, and I should

say at this point, this experience for us was a little different than

for Louisiana. Louisiana was closer to the well. They got wet brown

oil into some of their areas. We didn’t. We were about 108 miles

from the wellhead to the city of Gulfport, and by the time oil got

to us, A, it had been a long time since the well blew out; B, what

got to us you would not recognize as oil. There was this orange

mixture of water and the remnant of oil that the oil people call

mousse, and then there were what we call tar balls and tar patties.

When I was a kid we used to go to the beach. We used to throw

them at each other, tar balls, because the Gulf of Mexico seeps out

somewhere as much as 1,400,000 barrels a year, according to the

U.S. GIS, every year through the floor. So, you know, we were used

to tar balls.

But when this happened, people were obviously very, very concerned, and one of the big jobs was to keep people calm, to keep

people understanding we are going to prepare, we are going to have

a good plan, we are going to have the resources to execute the plan,

we are going to protect the coast, particularly the habitat, particularly the coastal marshlands where the shrimp and other important wildlife actually are born and start to grow. And we had to

do that with a different set of rules.

And the first point I want to make is the Stafford Act. The decision was made that this disaster would be managed under the Oil

Pollution Act, not the Stafford Act, as has been said to the committee by others. A disadvantage of that for us is we are used to

the Stafford Act. Florida, Alabama, Mississippi, Louisiana, Texas,

we have managed disasters under the Stafford Act because that’s

what hurricanes are managed under, that’s what tornados are

managed under, that’s what floods like we have in Mississippi

today. So, A, it was something we knew, but very important from

a Governor’s point of view, the Stafford Act expressly says that the

Federal Government will supplement the work of the State, not

supplant it.

8

One of the problems we had under the Oil Pollution Act early on,

and lasted for several weeks, the Coast Guard who headed the unified command, and we are accustomed to unified command, we

have unified command under Stafford Act disasters, they took the

position that the National Guard worked for them. And this became a real issue which I’ll talk about in a minute. But under the

Stafford Act it’s very clear, the National Guard works for the Governor unless the President Federalizes the National Guard. We are

not mad at anybody about it, but it didn’t work well when they

tried to assume command over the National Guard.

And I should say President Bush, after Katrina, talked about

Federalizing the response, and I very loudly and publicly said no,

that we don’t want the Army coming into Mississippi or the Marines coming into Mississippi. They’re not trained for that. They

don’t know the terrain. They don’t know the people.

So Stafford Act, whether—and the Stafford Act, by the way, has

a lot of improvement that it needs, but the Oil Pollution Act ought

to be changed to say flatly, like the Stafford Act, it’s supplemental

to the States and it doesn’t usurp the States’ authority.

Where this came into play was in our plan to defend the State’s

shoreline against oil. We developed a layered defense plan, beginning outside the barrier islands, using the barrier islands to protect

us, protecting the gaps between the barrier islands that oil had got

through to the sound. That would be our principal place to try to

pick it up, to keep it from getting to shore, steering it toward

beaches, keep it out of marshlands.

As it turned out the Coast Guard approved that plan, never understood how to execute it; and after the second time that oil got

to our barrier islands completely undetected, much less contested,

undetected, we demanded that we be put in charge of this, and the

Coast Guard agreed and we worked out a system that worked.

I will just tell you before that there was no command and control. In fact, unified command could not even speak to the hundreds of vessels of opportunity that we had gotten BP to hire, to

form picket lines to spot the oil as far out where we could try to

steer it and collect it. They didn’t have any means of talking to

them. So we had to set that up to get command and control as it

should be.

Two other points I want to make. And I’ll be glad to—I am trying

not to get into too much detail. For us, this turned out to be primarily an economic disaster.

Now, it may be that there is something slushing beneath the sea

or that is going to develop that becomes ecologically dangerous, and

we are all over that, and not just Mississippi, all of the States, the

Federal Government, all kind of scientists. But thus far, environmental damage for us—again we are different from Louisiana—has

been very manageable.

We have on the coastline of Mississippi, we have 80 miles of

coastline. We never closed 1 mile of beach except for one time in

the whole experience. We had one 2-mile section of beach that we

closed overnight because we had a high tide after a hurricane

where some oil got across the highway and we couldn’t clean it all

up. Otherwise, we cleaned up the oil that got to the beaches every

9

day, the day it got there. So our environmental damage, unless

there is something to come, is not our issue.

Our issue is a gigantic economic loss. Talked about tourism. Our

tourism industry was clobbered. Our season starts when our

schools get out, which are earlier than in the North. Our schools

get out the middle of May. So that is when the tourist season

starts. Of course, this happened late April.

So people saw on TV the same brown pelican coated with what

looked like 3 inches of oil, I mean looked like a chocolate pelican,

and they showed it every hour, every day, 24 hours a day, 7 days

a week, for weeks and weeks and weeks and weeks. And the news

media, particularly 24-hour cable TV, gave citizens the impression

the whole Gulf Coast was coated in oil. People deduced from that

it was unsafe, unpleasant, don’t want to go there. They canceled

their reservations. They canceled their contracts to buy

condominia, and not just in Mississippi but all across the Gulf

Coast.

The President, to his credit actually, it got so bad that the President came to Mississippi, Alabama, and Florida, and held news

conferences on the beach to say, Look, the beaches are clean, the

water is clear, it’s beautiful down here, come on down here. But

that one news day can’t compete with what was being seen every

day, every hour for weeks. Huge economic problem and loss there.

And of course in the fishing side on seafood, huge losses because

they closed our waters; and I should say to you right now, we have

not since this oil spill had one sample of seafood in Mississippi waters that was tested that did not pass the test to meet every standard. The same is true for the Federal Government. We haven’t had

one, one sample of seafood that failed. Yet we have people that

won’t buy seafood from the Gulf Coast in New York and San Francisco and Chicago because of what they saw on television.

So the fishermen have some mitigation of their losses because

they got hired to be vessels of opportunity. The processors were

slammed. So seafood, a huge problem. The oil and gas industry, the

moratorium for which there was no reason. In fact, the government

appointed a panel to look at this and the panel disagreed with the

announcement that was made, that you got the impression it was

the panel’s recommendation to have a moratorium; and the panel

after said, Whoa, that wasn’t in our recommendation, we are

against that. That was added after the panel was through.

We drilled more than 31,000 oil wells in the Gulf of Mexico in

the last 50 years, and this is the first time anything vaguely like

this had happened. The moratorium hurt us financially; more important, hurt the country. Thirty percent of all the oil domestically

produced in the United States is in the Gulf of Mexico and about

80 percent of that is deepwater. Yet, in the last year, the number

of new—the number of permits for new deepwater drilling has decreased 85 percent. And that’s a huge problem.

Let me close by saying this. For those of y’all that want to help

the States that were hurt, understanding that this is an economic

problem for us—and again, Louisiana’s a little different from the

rest of us—this was an economic problem. Remember, the natural

resources damage assessments and the payments that can be made

under that are largely limited to environmental. And while there

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is some loss of use room there, largely these States cannot be compensated for their economic loss, except by getting part of the civil

fines that are going to be assessed against BP and the responsible

parties. And I would ask you to consider as Members of Congress,

looking at this and understanding that this is, this is the best way

to help these States recover, because it is economic recovery that

they have to get, unless something really changes on the environment.

I apologize I went over, Mr. Chairman.

Chairman ISSA. No apology required.

[The prepared statement of Governor Barbour follows:]

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Chairman ISSA. I now ask unanimous consent that the staff report entitled, ‘‘The BP Oil Spill Recovery Effort: The Legacy of

Choices Made by the Obama Administration’’ be entered in the

record. Without objection, so ordered.

[The information referred to follows:]

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Chairman ISSA. I would also note for the minority that after the

break, it’s my intention to have a committee vote to make this a

committee report. So during this intervening period, if the minority

has comments, questions, anything to add, the final report will reflect comments by the minority so that it is in fact a bipartisan report.

The gentleman is recognized.

Mr. CUMMINGS. It is my understanding that, according to the

committee rules, we have to have 3 days before a committee vote.

Chairman ISSA. That is correct. I am giving you more than 10

days’ notice.

Mr. CUMMINGS. I thought you said today.

Chairman ISSA. No, no. What I’m doing is I am—I asked and got

permission to enter this in the record. It’s a staff report. I am going

to elevate it to a committee report after the minority has entered

their comments and any adjustments are made. Right now, it’s the

basis for a committee report. The intention is to make sure that

your staff that has been working on the same set of facts edit,

make changes—suggest changes, make any other comments, so

that it becomes a joint report. And I wanted it to reflect both majority and minority opinion and——

Mr. CUMMINGS. So when will that vote be?

Chairman ISSA. It will be after the break at the earliest, so more

than 10 days.

Mr. CUMMINGS. Go ahead. I misunderstood you.

Chairman ISSA. I am just noticing it for the future. And with

that, I’d like to recognize the former chairman of the full committee, the gentleman from Indiana, Mr. Burton, for his 5-minute

opening—or 5-minute questions.

Mr. BURTON. Welcome, Governor Barbour. It’s great to see you

again.

Governor BARBOUR. Thank you.

Mr. BURTON. Looks like you elected a pretty good-looking, articulate young man to serve in the Congress, so congratulations.

Governor BARBOUR. Won’t take him long to get grey hair.

Mr. BURTON. That will come in time if he sticks around this

place.

First of all, let me say I have been to the Gulf Coast—not Mississippi, but I will come—and I walked on the beaches down there

and also on beaches I believe on the east coast of Florida, and I

saw these tar balls. This was when there was no oil well problem,

and so when you just said that 1.4 million barrel of oils leak out

naturally each year, I hope everybody in the country knows that;

because that amount coming out naturally doesn’t cause any kind

of a problem and that ought to be included in the discussion when

we talk about deepwater drilling in the gulf.

You also said that 85 percent, there has been 85 percent in loss

in drilling permits. That is tragic, especially in view of the fact that

we just sent $2 billion down to Brazil so that they can drill in deepwater; and we can’t, and it really surprised me. I think you said

there were 31,000 wells in the last 50 years down there? And it’s

been done—drilled without any real big problems. And yet right

now, this administration is stopping us from drilling here, and we

are sending billions and billions and billions of dollars over to the

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Middle East to countries that don’t like us very much, and that

really really bothers me.

And I hope that you are able to in effect go on a crusade to tell

the story that you told us today, because I think the American people need to know that. We have the ability to move rapidly toward

energy independence over the next decade if we use natural gas

and oil and shale coal that can be converted into oil, and we are

not doing any of that. And as a result, this country is really suffering. And I really sympathize with you on the impact, the fiscal

impact that was going on that took place down there in the gulf

during the terrible crisis.

And I want to say one more thing about the media. I really sympathize with you in this drum beat that went on and on and on

over a month or 2 months, showing the problems that were created

down there, which obviously had a devastating impact on you and

your economy. And I hope that in the future when these kinds of

tragedies occur, the media will not sensationalize it to the degree

that it hurts economies like that in the Gulf States.

I just have a couple of questions. You said that the Stafford Act

could have been handled—or it could have been handled much better under the Stafford Act. Can you elaborate—you may have mentioned this in your opening remarks, but what could have been

done that would have been better in helping to manage the problem in the gulf if you as Governor, and the Governor of Louisiana,

did have the control that you wanted?

Governor BARBOUR. The two big reasons of the Stafford Act being

preferable to State and local governments, we’re used to it. We deal

with it all the time. I think when you have some of the local officials later today, we have all had to work under the Stafford Act

because that’s what we do, hurricanes, tornadoes, floods, etc.

For me specifically as Governor, the Stafford Act expressly says

that the efforts of the Federal Government under the Stafford Act

are to supplement State efforts. Under the Oil Pollution Act, there

was an impression that the Federal Government was in charge

under the unified command and they told everybody what to do,

and that not only is contrary to the U.S. Constitution and bad law,

but it also didn’t work. I mean, our people were much better able

to do things than the Federal people were able to do. The Stafford

Act isn’t perfect, though, as I said.

Mr. BURTON. I know. But had the Federal Government recognized your jurisdiction under the Stafford Act, tell me how that

would have been more of a positive situation or solution for you.

Governor BARBOUR. Where it really became very apparent, we

had a defense plan to defend our shores from oil—different from

Louisiana because we were 100 miles away. We recruited 1,100,

‘‘vessels of opportunity.’’ Those were people who were willing to

rent their boats, paid for by BP. BP never flinched at paying for

this, put them out to essentially form picket lines to try to spot the

oil south of the barrier islands, between the barrier islands, in the

sound, OK, so we had actually a five-layered defense. We found out

weeks into that, the Coast Guard had no way of managing that.

They had approved the plan; they had no way of managing that.

We literally sent people to Wal-Mart to buy radios. We had a situation where our Air National Guard, starting 4 o’clock every

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morning, flew and did infrared photography of the whole Sound

and south of the Sound to find the oil. The Coast Guard had no

way to tell the vessels of opportunity where to go. We had to set

up a whole communications system and a command-and-control

system, which we did not do for weeks because we thought the

Coast Guard knew more about this than we did. But it turned out

that we had to set up the communications system. We had to set

up the command-and-control system; and frankly, they were cooperative when it got to it, but it should have never come to that. We

were lucky that this disaster was manageable enough that you

could make those kinds of mistakes and still clean them up.

Mr. BURTON. Thank you, Mr. Chairman. Thank you, Governor.

Chairman ISSA. Would the gentleman yield the remaining time?

Mr. BURTON. Be happy to.

Chairman ISSA. Oh, I am sorry, you were over it.

Mr. BURTON. I was over it, but I will be glad to yield.

Chairman ISSA. No, no. We do not yield the other side the remaining time.

With that, I recognize the gentlelady from New York, Mrs.

Maloney, for 5 minutes.

Mrs. MALONEY. I thank the chairman for recognizing me. And

welcome, Governor. Welcome, Representative. It’s very good to see

you again.

Governor BARBOUR. Thank you, ma’am.

Mrs. MALONEY. Thank you for being here.

Governor, the Government Accountability Office, the nonpartisan, bipartisan unit issued—and I believe they are going to be

testifying later on today on a panel—they issued several reports

warning that taxpayers are not receiving a just or fair return for

oil and gas leases in the Gulf of Mexico. Specifically, the GAO report faulted these so-called royalty reliefs granted by Congress in

the mid-1990’s when gas and oil companies were not doing as well

as they are today, but they encouraged additional exploration at

the time when oil and gas were lower. And under some of these

leases, oil companies pay absolutely no royalties at all to the American people when they drill on Federal lands, and this is oil that

is owned by the American people. It is on Federal lands. Usually

there is a royalty paid back to the government, to the taxpayers,

but here they are paid absolutely nothing back. And I would like

to quote from their report, ‘‘Special lower royalty rates, referred to

as royalty relief, granted on leases issued in the deepwater areas

of the Gulf of Mexico from 1996 to 2000, a period in which oil and

gas prices and industry profits were much lower than they are

today, could result in between $21 billion and $53 billion in lost

revenues to the American people—to the Federal Government compared with what it would have received without these provisions.’’

Our chairman, in a rare expression of bipartisan support, I want

to compliment you, Mr. Issa, for the significant work that you have

done in this area and on this issue. And you had called for an end

to these leases.

On October 7, 2009, Chairman Issa issued a staff report warning

that actual shortfalls to U.S. taxpayers could be much much larger.

And this is what his report said, ‘‘Depending upon the market price

of oil and natural gas, the total cost of foregone royalties could total

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nearly $80 billion. Oil and gas royalty payments represent one of

the country’s largest, nontax sources of revenue. Taxpayers must

get every cent that is owed to them.’’ And I agree completely with

Chairman Issa.

And Governor, do you agree with Chairman Issa on this statement?

Governor BARBOUR. Ma’am, I can tell you that we are very familiar with this, in that for more than 50 years the rest of the country

has been sucking the gulf dry and we get nothing. At the period

of time you are talking about in the late nineties, all this production out of the Gulf of Mexico, and the States were paid nothing,

zero, nothing. When you drill on government land in Wyoming, Wyoming gets some of the money.

But fortunately, in the last administration, this was changed and

we are going to start on a little stair-step basis, getting a little bit

of the royalty and ultimately maybe about 2017 or something, the

States will get a legitimate fair share of the royalties. So I am very

sympathetic to the royalty owner because we feel like we are—we

should be considered royalty owners, too, and that the Federal taxpayer and the taxpayer in Mississippi both ought to be getting a

fair royalty for the production of oil and gas, or if it’s coal on land,

or whatever, I think that is absolutely the case.

But I hope y’all will please understand, when there are only five

States in the country that allow offshore drilling, the other 45

ought to let us five who allow it, they ought to let us participate

as royalty owners, too.

Mrs. MALONEY. The real royalty owner is the American taxpayer.

So do you believe that the taxpayer has a right to every cent that

is owed to them under these leases and that they should be completely corrected, as the chairman said?

Governor BARBOUR. And that I believe the Mississippi taxpayer

should share in that when we are dealing in the waters that are

Mississippi waters and are part of the Outer Continental Shelf

that’s recognized as Mississippi. So, ma’am, I am not arguing with

your point about the Federal taxpayers; I just want to make sure

the State taxpayers get treated as royalty owners in the five States

that allow this. It’s not fair for the other 45 States to burn the oil

that we have taken out of the Outer Continental Shelf, and they

get treated the same way we do.

Mrs. MALONEY. Well, I must——

Governor BARBOUR. That was a ‘‘yes.’’

Mrs. MALONEY. I must state for the record, though, that Chairman Markey, or Ranking Member Markey, has a bill on this that

would correct it. And when it came before Congress early this year

as an amendment, and several other amendments, regretfully,

Chairman Issa, you voted against it. And I feel the same as Governor Barbour, that this should be directed—that the American

taxpayer is entitled to the royalties for oil extracted from taxpayerowned Federal and State-owned property, and I hope that you will

join with us in a bipartisan way to correct this going forward, so

that there is fair treatment to the States and to government and

basically to the American taxpayer. So I hope you will join us in

that.

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Chairman ISSA. I thank the gentlelady. We now recognize the

gentleman from Oklahoma, Mr. Lankford.

Mr. LANKFORD. Mr. Chairman, I’d like to yield my time back to

the chairman.

Chairman ISSA. I’d like to take it. I thank the gentleman.

Congressman, you don’t have to remain, since we didn’t swear

you in, but you are welcome to stay. You look good with the Governor. You always look good next to the Governor. That will look

good. I thank you.

Governor, Congresswoman Maloney did make a valid point but

I think I want to followup on your point, too. Today you are going

to have an economic loss that will be unreimbursed as a result of

the BP oil spill, correct?

Governor BARBOUR. There’s no question of that as it currently

stands.

Chairman ISSA. And so for the foreseeable future, if there were

to be another one, you would potentially have another oil loss in

which the Federal Government was able to get fines. The Federal

Government would—I don’t think we actually collect royalties on

what’s spilled into the gulf, but short of that we would continue

from that particular rig; that’s not a relief one, it’s not covered by

the Clinton-era contract failures. The fact is you stand at risk without an ability to get any premium on that risk in the gulf——

Governor BARBOUR. That’s correct.

Chairman ISSA [continuing]. If it’s outside the period.

Governor BARBOUR. We are not compensated for what we do.

Chairman ISSA. So let me ask a straightforward question. Do you

believe that from this side of the dais, that we should look at legislation that provides sooner and more specific revenue-sharing

based on the potential risk; in other words, effectively insurance

policy, where you would have revenue not for current expenditure,

but for contingent expenditure if you have another economic event

like this.

Governor BARBOUR. Well, two things. There is legislation that

was passed, I think in 2006, that is going to stair-step up, that’s

going to give the States a share and stair-step it up—and maybe

by 2017.

Chairman ISSA. Gets 10 percent of the royalties or something.

Governor BARBOUR. And maybe go up to 35 percent or something. But until that goes into effect—and I would urge y’all, put

it in effect immediately, you know, that’s what we would like to

see, put it in effect immediately—then we would have some compensation for the risk we take. Right now, the only way that I see

that we can reasonably be compensated for the damage done to us

is if you take the Clean Water Act fines and they are going to be

Clean Water Act fines here potentially in the billions, and that the

States that were affected be given a share of that, with enough

flexibility that they can spend it to help their economy; that they

not have to get the money and say, We are going to use all this

money to clean up from the BP oil spill. BP’s already paid the

cleanup for the BP oil spill. Our damage is economic damage to

tourism, to the seafood industry; not that the seafood was hurt,

just that nobody would buy it. They wouldn’t let us fish for it. And

then to the people that work in the oil and gas industry.

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Somebody mentioned a very sad thing, that 11 people died on

this oil rig. Four of them were from Mississippi. Now this well

wasn’t in Mississippi waters, but that gives you an idea, sort of reference, that we have a lot of people that work in this industry; and

right now you know where they are? I went and visited the Leviathan oil rigs 80 miles west of Haifa, Israel. I met two guys from

Mississippi who were working that oil well in Israel, who had been

working in the Gulf of Mexico the year before, and they had to

leave because of the moratorium.

Chairman ISSA. Well, there you go. We certainly have seen a lot

of those rigs sail off.

Let me ask you a followup question. You mentioned the immediate following, the too much control by the Federal Government

and BP. But, Governor, doesn’t that continue till today? Isn’t BP

still in the driver’s seat on a lot of things, including compensation?

Aren’t you sort of in a back-end ability to help your people?

Governor BARBOUR. Regardless, you know, I am not—I am a recovering lawyer, so I know that a judge has ruled that the Gulf

Coast Compensation Facility, whatever it’s called, that is not truly

independent of BP and that may legally, technically be right. I

think they are trying to do a good job. We don’t get many complaints in Mississippi.

They are doing something that’s complicated, and I will say this

about it. It is sure better than having to litigate all this, where people wouldn’t get their money for years and years and years, and

the trial lawyers would get half the money. So it is a long way from

perfect, just like what I do is a long way from perfect, but I think

it is better than the alternative of litigation. And as I say, we have

cases that are difficult cases where people are not satisfied, but we

really don’t get many complaints. And we have been paid. Mississippi companies, people have been paid about $340, $350 million.

Chairman ISSA. And the gentlelady from New York has left, but

I might note for the record that I still am trying to find a constitutional way to adjust for those flawed contracts that were signed.

This committee held hearings much earlier on it, found that the oil

companies thought they were going to be paying royalties and were

actually surprised when they found out that the defect in the contract allowed them not to.

With that, I recognize the gentleman from Maryland, the ranking

member, for 5 minutes.

Mr. CUMMINGS. Thank you, Mr. Chairman.

Governor Barbour, in the Animal Kingdom down in Disney

World, there’s a saying over at Animal Kingdom that says this. It

says, ‘‘We do not inherit our environment from our ancestors, we

borrow it from our children.’’

And in that light, you know, I was reading your written statement and it said, ‘‘The other major economic impact resulted from

the moratorium on drilling.’’ And I want to shift away from broad

generalities and focus on specific measures to prevent this kind of

massive oil spill from ever happening again.

Everyone remembers BP’s repeated failures to cap the well. It became clear immediately that BP had no idea how to end this disaster. Every week they would try a new strategy, but it was a comVerDate 17-JUN-2003 14:35 Nov 30, 2011 Jkt 000000 PO 00000 Frm 00069 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\70821.TXT KATIE PsN: KATIE
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plete trial-and-error fiasco. They tried the top hat. By the way, I

was down there when they were trying to build the top hat, and

I actually watched them do it. This was a massive steel containment dome lowered into the well. Of course, that failed.

They also tried the junk shot. They injected golf balls and shredded tires and drilled floor into the blowout preventer, but that too

failed. They tried several more times until finally they tried the

static kill. They basically injected mud into the blowoutpreventer

to start regulating the flow of oil. But that all took 87 days, and

it was crystal clear to everyone watching that BP simply did not

have the technology to handle a deepwater blowout, which I think

is atrocious.

Governor, I want to ask you about a specific requirement issued

by the Department of the Interior to require all companies to prove

that they can cap a well before receiving a drilling permit. It was

called NTL 2010–N10. Are you familiar with that requirement?

Governor BARBOUR. I am not familiar with that specific requirement, Congressman.

Mr. CUMMINGS. All right. Let me read exactly what it says. Each

oil company must demonstrate, ‘‘that it has access to and can deploy surface and subsea containment resources that would be adequate to promptly respond to a blowout.’’

Is that—and so, Governor, here is my question. Do you think this

specific safety measure should be repealed?

Governor BARBOUR. Congressman, superficially that’s a reasonable statement that you have just made. How it’s enforced and regulated is something of which I am ignorant, but what I do know

is we have had more than 31,000 wells drilled in the Gulf of Mexico

in my life. This is the only time anything like this, anything vaguely like this has ever happened. And when you consider the amount

of our domestic oil production that comes out of the gulf and comes

from offshore drilling elsewhere, when you consider the fact that

we have an energy security, a military security, and a national security issue in this country because we import way too much foreign oil, including a lot from people who are not our friends, then

I would not be in favor of anything that reduces the production of

domestic oil.

I think the risks are way too small compared to what you’d give

up.

Mr. CUMMINGS. So in other words, if this were to happen again,

if we had 87 days of oil spewing out into our waters, you’re saying

that the risk of that far outweighs the economic situation; is that—

I’m not trying to put words in your mouth, I’m trying to make sure

I understand you.

I will tell you, I saw a lot of what you’re talking about. I saw

the pelicans. I saw—I talked to the fishermen. I talked to the tourism people. I even talked to the industry people, a lot of them. And

you know what they said? They said, you know what—this is before we knew the full impact of it—they said, you know what, we

agree we ought to have some kind—we should have the ability, and

it should be proven ability to cap something like this before we

even continue.

Governor BARBOUR. I think beyond that, Congressman, it is very

clear that this well blew out because normal, standard procedures

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and protocols weren’t followed. I don’t think there’s any question

that corners were cut. I don’t know whose fault it was. I don’t know

who the specific responsible party is, but I don’t think there’s any

question that was the cause of all this. And this is why I say the

risk, 1 out of 31,000, is worth taking when you’re talking about

something that is so important to the economy and the United

States of America. That’s why I have that view.

Mr. CUMMINGS. I understand. Thank you.

Chairman ISSA. I thank the gentleman. The gentleman from Tennessee, Mr. DesJarlais, is recognized for 5 minutes.

Mr. DESJARLAIS. Thank you, Mr. Chairman. Thank you, Governor Barbour, for being here.

Along the lines of the negative effects of stricter drilling regulations on the offshore industry, why don’t we take a minute and

have you expound on the effects that the Bureau of Ocean Energy

Management, Revenue and Enforcement has been issuing. Let me

back up. The Bureau of Ocean Energy Management, Revenue and

Enforcement has been issuing a great deal of new regulations affecting offshore drilling. Have your constituents been in touch with

you about these new rules.

Governor BARBOUR. Yes.

Mr. DESJARLAIS. Do they find them problematic?

Governor BARBOUR. Well, the people that talk to us don’t know

all the details of the rules. All they know is that the regulatory efforts of the government are shutting down the gulf, have shutdown

the gulf. I mentioned earlier I was in Israel this winter, like in

February; went on an offshore drilling rig and two of the guys

working on the rig were from Mississippi. Almost every American

on that rig had been working in the Gulf of Mexico the year before.

They had got run out of the gulf because of the moratorium and

because of the belief, the perception, that it was going to be a long

time before there was going to be drilling again in the Gulf of Mexico.

That’s what we get, people who’ve lost their jobs, whose kids

have lost their jobs, who are worried about—who are worried about

this.

The service—we have people who work offshore, but we also have

significant service industries in our State that repair rigs, that

build service boats, that work on boats and that, so it’s a big industry in the gulf South.

Mr. DESJARLAIS. OK. How about let’s talk a little bit about BP’s

actions during the spill and recovery. There were many officials

and citizens that felt BP played too large a role in the spill response and the Federal Government should not have let them play

this large of a role, and that was a common criticism we heard in

the media at the time of the spill as well. At any point, either during the disaster or during the recovery phase, did BP have too

much of a say in the response?

Governor BARBOUR. No question, BP had a big say in the response and they were paying for it. But I have to tell you, Congressman, sometimes BP was easier to deal with than the government. That’s just a fact of life that we learn that sometimes the

Federal Government is not the easiest group to do business with.

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In fairness to BP, for us, everything that we asked them to do—

and of course everything we were asking for they had to pay for—

everything that we asked them to do they considered, and almost

every time they did it; where many times we would ask the Federal

Government for something like skimmers—when we were trying to

get skimmers, we thought the Federal Government was supposed

to have skimmers for us when the oil got close enough. Turns out

we had to go get BP to give us the money to get some shipyards

in Mississippi to build the skimmers so we’d have enough skimmers. So I’m not going berate that part of the Oil Pollution Act.

What we didn’t like was the usurpation of State sovereignty by the

Federal Government.

Mr. DESJARLAIS. If you want to put on your teacher’s hat for a

moment and grade response efforts of BP, the Coast Guard and the

Obama administration, what grade would you give each of them?

Governor BARBOUR. You know, when you have been through the

worst natural disaster in American history as Governor of Mississippi, its—you learn not to criticize people too harshly for unprecedented, unforeseen disasters, natural disasters or otherwise.

They had a hard time, they seemed slow to try to get in charge.

We had the problems I’m talking about with command and control,

but I don’t want to be overly critical, because when stuff like this

happens you make mistakes. And so that’s why I try not to assess

blame. Let’s just figure out how to do it better.

Mr. DESJARLAIS. I think that’s very diplomatic and reasonable.

No one can fully prepare for this. We always learn and we try to

make improvements. And I think that I agree with your statement.

One last thing on the seafood, you said in your opening statement the seafood is safe to eat. What about the reproduction, and

are the seafood stocks where they should be, or is it too early to

tell?

Governor BARBOUR. Well, we have had no evidence whatsoever

or finding of anything from the oil spill that got into the reproductive chain. We’re not seeing fish with four eyes or anything like

that. But for a variety of reasons we had a really great fall, but

with the fresh water that’s being allowed into the Mississippi

Sound because of flood control on the river and the opening of the

Bonnet Carre floodway through Lake Pontchartrain, we’re getting

an enormous amount of fresh water in the Sound that is going to

kill all the oysters. It’s got nothing to do with BP, literally, but it

is going to kill all our oysters. We’ll have to rebuild. The oysters

can get away. The shrimp and fin fish, they all run away from the

fresh water. It shouldn’t affect them. We have had some losses in

dolphins, sea turtles, that are more than normal. The peculiar

thing about it is we started seeing it before the oil spill. Just a little bit before the oil spill this started happening. So nobody has

been able to tie it. But that is something we got an antenna up

about is that we have seen mortality rates among sea mammals

and sea turtles for some reason have been rising since last March

or so.

Mr. DESJARLAIS. Thank you, Governor.

Governor BARBOUR. Thank you, sir.

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Chairman ISSA. The gentleman’s time has expired. We now go to

the gentlelady from the District of Columbia, Ms. Norton, for 5

minutes.

Ms. NORTON. Thank you very much, Mr. Chairman.

Governor, I appreciate your coming. I’ve listened to what you had

to say; much of it is reasonable. For example, you say it is a lot

better than having to litigate. If you litigate, that means everybody

is messed up. You have to have some impartial person.

I also agree that you have blessings and curses in your part of

the economy. The United States depends on much of your economy

with the oil advocacy through there and they are sometimes at

odds with one another. So there are certain of risks that have to

be taken.

I take it you would agree, therefore, that the best way to handle

those risks is to prevent them.

Governor BARBOUR. Well, ma’am, if you mean——

Ms. NORTON. I mean——

Governor BARBOUR. Drilling oil.

Ms. NORTON. I mean preventing oil spills.

Governor BARBOUR. No, ma’am, I don’t think that’s the best way.

Ms. NORTON. Well, obviously, Governor, I mean preventing an oil

spill.

Governor BARBOUR. I’m sorry.

Ms. NORTON. I mean preventing an oil spill.

Governor BARBOUR. That’s right. Follow the right protocols and

procedures, because you don’t have one to start with.

Ms. NORTON. Yes, sir, that’s what this hearing is about is the oil

spill.

Now the administration has focused on how to prevent it from

happening again. But it has been severely criticized for regulations

that would apparently accomplish that. It’s been criticized for these

regulations; it’s too burdensome. It has been criticized because

these regulations would cost jobs. Therefore, I was intrigued by

what some of the—from the very top of the oil industry is saying,

and I’d like your view on this.

Let’s take John Watson who is the chairman and CEO of Chevron. He indicates that he himself—they themselves have a burden

here. But he says, and I’m quoting now, ‘‘Far from resisting those

rules’’—he means the regulations that are coming out—‘‘our industry is helping to strengthen them. The proactive, uncompromising

approach to safety is the test we should all apply to any company,

starting with our own. In an industry that is always edging up

against the frontiers of geology and engineering’’—here goes your

risk point—‘‘the best practices should be the only practices. Corporate responsibility does not end with meeting market demand.’’

Would you agree with Mr. Watson, the chairman, the CEO, with

his statement?

Governor BARBOUR. As I understand the statement I would, because I think what he’s saying is as the chairman of a big oil company, his incentive, among others, is he doesn’t want his stockholders to be out $20 billion like the BP stockholders are, and that

he’s going to make sure they do it right the first time.

Ms. NORTON. And he is saying, and what is—what is—what is

really interesting in what he’s saying is that the company not only

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supports the administration’s new safety measures, but they are

working with the administration to make them stronger. He does

not appear to be fighting the regulations for which the administration has been criticized.

I want to give you another example from the top of the industry,

the President of Shell, Marvin Odum, again shouldering his own

responsibility, but he says additional safeguards, beyond what he

himself would do, must be strengthened across the industry to develop the capacity to quickly respond and resolve a deepwater well

blowout in the Gulf of Mexico regardless of how unlikely it is that

this situation will occur.

That doesn’t come from Members of Congress or from environmentalists; that comes from the top of the oil industry. I just want

to know if you would agree with Mr. Odum as well?

Governor BARBOUR. Well, I certainly don’t take any issue with

what you said.

Ms. NORTON. Because I agree with you about the importance of

preventing, rather than litigating, as you said. The only way to do

that is to hold the industry accountable. Here you have another oil

executive arguing for more robust requirements to demonstrate the

capacity to cap a well if there’s a blowout. I just think it’s important to bring out how the industry, instead of fighting regulations,

now is working with the administration for tougher regulations.

I think their concern, Governor, is that these regulations be

across the board, so some of them are not engaged in spending

more money to be more safe than others. So if there are regulations

saying, all of you are held now to the highest standard given this

blowout, then everybody, it seems to me, in the marketplace will

be on an even playing field.

Chairman ISSA. The gentlelady’s time has expired.

Governor BARBOUR. I would simply say, ma’am, these companies

have huge incentives to self-regulate. We went from 50 years with

one—no occasions in 31,000 wells before BP. It’s the only time it’s

ever happened. And I think what the CEO of Chevron is saying

and the CEO of Shell are saying, is yes, we want to work with the

government, we want to make sure there’s rational regulation.

That’s not saying every regulation everybody can think of is something that we’re for. In fact, Mr. Watson has been very, very public

in saying that the moratorium was terrible and was a huge mistake.

Ms. NORTON. There is a difference between a moratorium and

new regulations.

Governor BARBOUR. Well, it is a form of regulation; we’re going

to shut you down while we write new regulations. So while everything that you said I am very comfortable with, there are connotations there that I don’t think we should take too far. If the idea

is that no risk is too small and no cost is too high, I don’t think

any of—in any company in any industry would agree with that.

Balance risk with costs——

Ms. NORTON. Of course, Governor, that’s a straw man.

Chairman ISSA. The gentleman from Pennsylvania is recognized,

Mr. Kelly.

Mr. KELLY. Thank you, Mr. Chairman. I would like to yield my

time back to the chair.

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Chairman ISSA. I thank the gentleman. Governor, that means

he’s given me the time.

Governor BARBOUR. I couldn’t see him, I’m sorry.

Chairman ISSA. I have no shortage of questions and responses.

Governor, are you familiar with the Marine Well Containment Co?

Governor BARBOUR. No, ma’am—no, sir. Sorry, I was thinking

about Ms. Norton.

Chairman ISSA. A different line of questioning. They are the

group basically overseeing a billion dollars’ worth of funds that

were put together by the various oil companies so that if this happens again, that 1 in 31,000 times, they would have a whole different category of response. Does that refresh your memory?

Governor BARBOUR. I didn’t know it by that name. But it is the

industry effort for post oil spill. Yeah, I’m familiar with the program, not with the name.

Chairman ISSA. And wasn’t that billion dollars spent by the companies who had never had a significant spill in the gulf?

Governor BARBOUR. I think exclusively.

Chairman ISSA. Right. Exxon, Mobil, Shell, Chevron, and Conoco.

Another thing I want to get into the record. As you know, Governor, when you and I first met, I was a businessman and you were

a recovering lawyer then, too. That was a long time ago.

Governor BARBOUR. A long time.

Chairman ISSA. It takes a long time to recover. But the number

you gave earlier was meaningful enough to repeat it; 1.4 million

barrels per year seep into the gulf approximately, automatically.

Right?

Governor BARBOUR. Yes, sir. That is what the U.S. GIS says.

Chairman ISSA. And for eons, the gulf has absorbed that. It

defuses it, things eat it eventually. It ultimately is part of the ecosystem.

Well, let’s go through the numbers here. As a businessman, one

always wants to figure out the P&L as quickly as possible. The

Federal Government estimates that approximately 25 percent of

that 4.—or the Federal Government estimates 4.9 million barrels

seeped in, or came out of the well into the gulf. Approximately 25

percent, or a little over 1.2 million, were recovered. That leaves us

about 3.7 million barrels that got into the gulf in this disaster.

I’m not reducing this for a minute, but let’s just do the numbers.

So of that, approximately another 25 percent was burned off, and

another 25 percent was estimated to be dispersed, using dispersement. And we all understand there is some controversy about

whether to use dispersement.

So if you take the amount that was evaporated and burned off,

you’re now down to about half; you’re down into the 2.-some million, nearly 3 million barrels. No matter how you look at it, whether you take the whole amount or the reduced amounts, you’ve got

less than 3 years of oil in one short quarter of a year period. You

have about 2 years if you would give credit for these efforts to mitigate.

Is it any surprise to you that the gulf fish, shellfish and so on,

are doing just fine when in fact this is essentially, including the

natural amount that’s still coming into the gulf—this about 3

year’s worth, maybe total, that went into the gulf in 1 year—that

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this is not such a big thing, even though it is a big thing to us individually and a big thing when it gets to your shores?

Governor BARBOUR. Congressman, right after the oil spill happened—when I say right after, the first month or so—we had professors and experts who told us that the gulf would over a period

of time, for lack of a better term, digest this; that there are microorganisms in the Gulf of Mexico, and I think in other places where

you have oil seeps, that eat the oil——

Chairman ISSA. Including Santa Barbara, California, where it

has come ashore for years.

Governor BARBOUR. I think probably the first place in the country that it was ever talked about was Santa Barbara, that they

have oil that seeps through the floor there. But there were signs

that predicted that the gulf would essentially eat this up, that

these little organisms, that’s what they do, and that there are a lot

of them and that they would multiply.

Now if you’re in the job of disaster management, you don’t assume that’s true. So we never assumed it was true. But it looks

like to the laymen from afar, that is in fact what happened; that

the micro-organisms were able to manage this, and maybe that

wasn’t totally unforeseeable because they do eat up so much oil

every year.

Two or things I would mention. Unlike Exxon Valdez, this was

light oil. And second, the water was warm. Exxon Valdez, the

water was very, very cold. Here the water was pretty dang warm,

and the light cuts, the benzenes, the toluene, the xylenes, they all

evaporate faster in that warm water.

Chairman ISSA. I thank the gentleman. The time has expired. I

recognize Mr. Clay for 5 minutes.

Mr. CLAY. Thank you, Mr. Chairman. And thank you, Governor,

for coming today to the hearing.

Governor BARBOUR. Thank you, sir.

Mr. CLAY. The National Commission Report noted something

that may seem obvious, which is that the offshore oil and gas industry is inherently dangerous. But the Commission also reported

that accidents are surprisingly common that involve loss of well

control.

Here is what the report said: Drilling rigs are themselves dangerous places to work, dense with heavy equipment, hazardous

chemicals, and flammable oil and gas, all surrounded by the open

sea environment, far from shore, where weather and water conditions can change rapidly and dramatically. The seriousness of these

risks to worker safety and the environment are underscored by the

sheer number of accidents.

Governor, the Commission report then says that there have been

76 accidents in the gulf, between 1996 and 2009, that involve loss

of well- control accidents. And many of these accidents occur very

close to your Sate. Were you aware of these figures, 76 accidents?

Governor BARBOUR. Of course. My State is an oil and gas State,

not just offshore. And a drilling rig is dangerous. I mean, you see

a lot of people who worked in the oil fields that have lost fingers,

got hurt, got hurt one way or another, got burned. It’s—it’s a dangerous thing.

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The accidents you’re talking about, though, all turned out to be—

were managed; they were manageable and managed. This, the BP

Macon well spill is unique. But yes, sir, it’s a dangerous industry,

and there are accidents that happen on shore and off.

Mr. CLAY. Do you think these numbers indicate that new safety

measures were long overdue well before the deepwater oil spills?

Governor BARBOUR. I think the industry tries very hard to protect their people, because it is very expensive when they don’t. So

rational regulation is something we ought to all be for. We need to

be careful of the excessive, unnecessary, harmful regulation is my

point.

Mr. CLAY. OK, fair enough. Governor, some have suggested that

new safety measures should apply only to deepwater wells because

that’s where BP’s rig was when it exploded. Do you believe that

shallow water drilling should be exempt from new safety measures

the administration is implementing?

Governor BARBOUR. Well, again, if you’re talking about safety

measures to try to prevent injuries—I don’t think that’s what

you’re talking about—I think you’re talking about treating shallow

water wells the same as—my only view is I would treat deepwater

wells in the Gulf of Mexico the same way as deepwater wells off

the shore of Brazil.

Mr. CLAY. Thank you for that answer.

Governor, Dr. Harriet Perry of the University of Southern Mississippi Gulf Coast research lab, identified oil droplets in blue crab

larvae last summer. This was the first time she had seen anything

like that in 42 years of studying the species. Do you think those

oil droplets were due to the moratorium or the BP disaster?

Governor BARBOUR. If they had showed up in any samples that

we ever took out of the gulf, I would have been concerned about

it, seafood samples. We’re very proud of the Gulf Coast laboratory

of UM, but that finding was never replicated, or we didn’t have any

similar findings in any samples that came out of the catch. And

that’s why it hasn’t—that hasn’t bothered me. We just have had no

seafood sample—neither has the Federal Government, according to

what they reported to us—that had any kind of evidence or oil pollution on it.

Mr. CLAY. Well, Governor, there are a number of reports of red

snapper showing up with lesions in the gulf. A Louisiana State

University professor is fairly confident that these lesions are consistent with the toxic oil exposure.

I can share it with you, but here is a photo of the lesion on the

red snapper. Do you think that was a result of the spill?

Governor BARBOUR. Again, Congressman, if this were showing up

in any samples of seafood taken by the government, Federal Government or State government, I would be more concerned about it

than when a college professor finds it in some anomalous place.

Mr. CLAY. But would you be concerned about digesting this?

Governor BARBOUR. If it was showing up in seafood samples that

we’re sampling by the thousands between the Federal Government

and State government, then that would give me real pause. But

we’re not. The fact that we’re not finding it means that I’m really

not—I don’t know what the professors are finding or purporting to

the news media.

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Chairman ISSA. The gentleman’s time has expired. The question

has been asked and answered.

We go to the gentleman from Texas. And please, Mr. Foretold,

do not get into this Texas versus Mississippi oil. You are recognized

for 5 minutes.

Mr. FARENTHOLD. Absolutely not. Texas and Mississippi share a

common bond. Both border the Gulf of Mexico and are both deeply

affected by what happens in the Gulf of Mexico, both environmentally and economically.

I think you alluded in the answer to one of your answers to the

previous questions, Governor, there are other countries that are

drilling in the Gulf of Mexico, and whose oil and gas rigs, if there

were to be an accident similar to BP or even smaller, would affect

our coast; is that not correct?

Governor BARBOUR. Particularly Florida. Texas too, sure. Sorry.

Mr. FARENTHOLD. You have Brazilians looking at drilling, Cuba

offering leases, just immediately nearby to Florida. Mexico for a

long time has been exploring the Gulf of Mexico. I realize you’re

only a recovering attorney. I’m a recovering attorney, too.

Your recollection of lawsuit—United States doesn’t have any jurisdiction over any of those drilling operations. We can enact every

imaginable regulation. Cuba or Mexico or Brazil can say, eh, no.

Governor BARBOUR. That’s correct as I understand.

Mr. FARENTHOLD. So don’t you think it might be a better use of

our resources, rather than crippling our domestic companies and

our domestic exploration and 25 percent of our domestic oil supply,

that we might be focusing on how to respond in the event one of

these accidents or any sort of accident occurs again?

Governor BARBOUR. I do think it’s more—I think it is appropriate

that the oil industry is doing it itself, paying for it. They know

more about it than anybody else. It looks to me we ought to be

using our resources to have more American energy, that we need

to get ourselves off of foreign energy. And the best way to do that

is it to increase supply and production of American energy.

This has hurt that, because this is a big source of domestic oil

and the number of permits for new deepwater wells which produce

80 percent of the 30 percent, about a fourth of all our oil, is down

85 percent the first year. And whether its coal or oil or gas or hydraulic fracturing, we need to produce more American energy.

Mr. FARENTHOLD. And in your opinion, no amount of government

regulation can protect us from what other countries——

Governor BARBOUR. If we have rational regulation, that is good.

But to have excessive regulation, unnecessary regulation, that’s

bad.

Mr. FARENTHOLD. And regulations like—and slowdowns in

issuing permits I think you would consider to be falling under—to

be a problem, too.

Governor BARBOUR. Of course it is.

Mr. FARENTHOLD. And like Texas, I assume Mississippi has seen

significant job loss as a result of this.

Governor BARBOUR. We have. Most of the guys have just left.

Mr. FARENTHOLD. Are y’all seeing assets that have been based in

your State moving into other areas of the world, drilling platforms?

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Governor BARBOUR. What we saw happen after the moratorium,

some of the big rigs came in for maintenance. Good time for maintenance because you can’t work. But after the maintenance was

done, they left. And, you know, the way the industry works, those

big rigs, they work on big jobs. They are very expensive to move,

not only in cost of moving, but opportunity costs. They get paid

huge amounts of money a day to operate them. Whether they will

come back, how soon they will come back, is a very serious issues.

So we saw not only the jobs move, but we saw the drilling rigs

that produce the jobs go to Australia, go to Angola, Brazil. So that’s

a big damage to us, not just in jobs on the platforms, but jobs in

the service industry.

Mr. FARENTHOLD. I appreciate your coming up and taking time

to share your experiences with us. I know your time is valuable so

I’ll yield back.

Chairman ISSA. Would the gentleman yield?

Mr. FARENTHOLD. Yes, sir.

Governor BARBOUR. Thank you, sir.

Chairman ISSA. Governor, 250,000 barrels a day less are going

to be taken out of the gulf. If more than a quarter of that is Mississippi related—economic related, what does that do to your economy relative to oil in the foreseeable future? That’s the estimate.

It is undenied for the next 2 years.

Governor BARBOUR. We get so little of it——

Chairman ISSA. I’m not talking about the royalty revenues, I’m

talking about the jobs.

Governor BARBOUR. Well, it does have an effect on jobs. We have

a lot of people who work offshore. As I said, I don’t mean this as

precision, but 4 of the 11 people killed on the rig were from Mississippi, which gives you a sense of the number of people that we

have working in the industry on rigs, in the service industries. We

have companies in my State that manufacture drilling rigs, that

build service boats. So it ripples all through the economy.

Chairman ISSA. Governor, last question. Isn’t it really a question

of do we get it in America or do we get it somewhere else? Isn’t

that really the gulf question today?

Governor BARBOUR. Well, if you look at when has the United

States had reduced use of oil, it is every time there’s been a recession. And so I don’t want a recession. If we’re going to keep a

strong economy, we’ve got to produce more energy in the United

States, including oil. And to go shoot the best goose we’ve got laying golden eggs, the Gulf of Mexico where we’re getting 30 percent

of our oil—or we were—and that production is going down now,

and it’s going to keep going down.

Remember, oil production today is based on decisions that were

made in the past, normally several years in the past. A moratorium

is one of the few things that has an immediate impact. When we

see what we’re seeing right now with high energy prices, the speculators are speculating the United States is going to be producing

less and less oil, because they think the administration’s policies

will result in that. So they are betting the price of oil is going to

go up.

And then you take that with the value of a dollar, which oil

prices are denominated in dollars, since the value of a dollar goes

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down, then that’s a double-whammy for the people who are paying

$4 for gasoline. And for the people who think you’re going to deal

with that by raising taxes on oil companies, forget that; they won’t

pay those taxes. They are just going to pass it along to the guy who

pumps gas and his pickup truck. The best thing is produce more

oil, and at the end of the day—not next week or next month—that’s

the best thing to keep oil prices reasonable.

Chairman ISSA. Thank you, Governor. Mr. Davis is recognized for

5 minutes.

Mr. DAVIS. Thank you very much, Mr. Chairman. And thank you,

Governor, for being here.

Governor BARBOUR. Thank you, sir.

Mr. DAVIS. I’ve listened intently to your testimony. Of course, I

grew up in the Mississippi Delta on the other side of the river, near

Greenville, Mississippi, just a few miles. And as Dick Gregory

knows, in Chicago we fondly say that the only place where you will

find more African Americans from Mississippi is in Mississippi

than in Chicago.

Governor BARBOUR. Amen.

Mr. DAVIS. And so we have a tremendous relationship with the

State itself, and we watch very closely what takes place and what

goes on.

I know we’re talking about the worst environmental disaster in

the history of our country, but as you indicated in your testimony

it also had a massive economic impact, particularly the fishing and

tourism industries. And I want to focus a little bit there.

According to the NOAA, the total amount of shrimp caught commercially in the gulf decreased 27 percent from 2009 to 2010. The

amount of shrimp caught commercially in Mississippi was down 60

percent last year from the year before.

Could you share—and you’ve done it eloquently—a bit more of

the economic impact that has occurred in the State as a result of

the oil spill?

Governor BARBOUR. The fishing industry hurts very badly because waters were closed. Federal waters were closed first. Mississippi waters were closed once we had encroachment. Louisiana,

because they were closer to the well, their waters were closed very

early as well. And this is fisheries for us for shrimp. We have big

shrimp boats that will go all the way down to Texas coast and

come all the way back around the Florida coast, but there are not

that many of them that are that big that go that far. So we have

a lot of fishermen in the shrimp industry whose waters were closed

to them.

Their losses were mitigated by the fact BP was willing to hire

their boats to be part of this Vessels of Opportunity program.

About 1,100 boats participated, and most days we would have 500,

600, 700 boats out there. And they would be getting paid, some of

them more than they made fishing. But the processors got clobbered. And so the fishermen are nowhere if they don’t have processors. And so while they were getting a chance to be helped, there

was nobody who was helping the processors. And without the processors, there’s no fishermen. And so fishing was hurt that way.

Recreational fishing, which is a real industry in my State. There

are people from Chicago who come down there and pay boat capVerDate 17-JUN-2003 14:35 Nov 30, 2011 Jkt 000000 PO 00000 Frm 00080 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\70821.TXT KATIE PsN: KATIE
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tains to take them out fishing. Shut out, shut down. Again they got

some relief from the VOO, but hurt very badly, just in that little

small segment.

If we ever talk about motels, restaurants—Louisiana, to their

great credit, they have New Orleans. And if there is oil on the

beach in Venice, tourists will come to New Orleans.

Mr. DAVIS. Are you confident that our Food & Drug Administration and Environmental Protection Agency, that the agencies that

we rely upon to determine the safety in many instances of especially the things we consume, that they are equipped to really give

us the information that we need to know to feel comfortable and

secure?

Governor BARBOUR. I have no reason not to be, Congressman, so

I am. It’s a team, State and Federal. But yes, sir.

Mr. DAVIS. Let me ask you, other than perhaps the listing of any

moratorium, what else can the Federal Government do that might

assist with the economy? We know that the economy obviously was

hurt badly. We know what the economy was even before the spill.

What can the Federal Government do to add further assistance?

Governor BARBOUR. The Federal Government is able to collect

enormous fines under the Clean Water Act. The Federal Government can assess through fines and through whatever process, either through agreement or by litigation—say BP’s going to pay X

billions—the Federal Government could take that and just put it

in a general Treasury and move on, use it to reduce the debt. It

might cover a day or two worth of deficit.

But we think the best thing the Federal Government can do is

let some of the fine money—and there’s legislation in the Senate,

I believe, to let most of the fine money go to the States. Let the

States use the money with flexibility for economic growth there.

Maybe it has to be related to the gulf and the gulf economy. We

are going to have people who were fishermen 2 years ago, who are

not fishermen today, and they will never be fishermen because because of the capital investment and the cost. We need to create jobs

for them on the coast, maybe at the port; maybe in Alabama

they’ve got something totally different; or maybe in Florida there

is a whole different concept. But we would like to see a significant

part of the fine money be given to the States and the States allow

the flexibility to use the money to produce the maximum economic

growth in the coastal areas for that state.

Mr. DAVIS. Thank you very much.

Governor BARBOUR. Thank you, Congressman, for asking.

Chairman ISSA. I thank the gentleman. We now go to the gentleman from Idaho, Mr. Labrador, for 5 minutes.

Mr. LABRADOR. Hello, Governor.

In Idaho, obviously, we don’t have an oil industry, so I don’t

spend a lot of time thinking about this, but I think about common

sense. It seems like there is a lot of common sense just lacking

here. And I’m going to just give you an example. You’ve had a colloquy with several people here on the panel, I mean on this side,

and sometimes common sense just seems to lack in Washington,

DC.

A couple weeks ago, or maybe a month ago, the First Lady, her

plane was close to—they claim that there was close to an accident.

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And apparently she was within 3 miles of another plane. And the

regulations said that all planes should be within 5 miles of each

other, and apparently the First Lady was within 3 miles. I’ll get

to my point, and I think you’ll get it in just a second.

So the response in Washington, DC, was not hey, geez, somebody

screwed up and they failed to comply with the regulation; it should

have been 5 miles instead of 3 miles. The response in Washington

was, we need new regulations. It seems like that’s all I ever hear

about in Washington, DC. When somebody screws up, when somebody makes a mistake, we don’t say, hey, that idiot didn’t follow

the regulations. What we say is, we need new regulations. And it’s

just to me incomprehensible that all we can ever think about is

adding regulation upon regulation when the regulators are not

doing their job. They already have regulations that should actually

be enforced. And instead, all we ever talk about is making it more

difficult for industries, for private enterprise, and for individuals to

live to survive.

So can you explain to me, and I think you mentioned this earlier,

I think you mentioned that the Macondo incident occurred because

regulations were not followed. In fact, I think your word was that

some corners were cut.

Can you explain that a little more to me, what you meant by

that?

Governor BARBOUR. I can’t slight the regulatory regime, but in

the normal standards and protocols of shutting in a well, it was

clear from the reports at the time, and nobody has denied it, that

they didn’t follow the standards and protocols that the industry

had been using, settled on, and had worked with great results for

a long, long, long, long time. This was widely reported.

And so it always seemed to me pretty clear why the well blew

out. And this was reportedly, again with nobody arguing, this was

a pretty tough well. They had trouble with this well. It had hiccups, it had belches of natural gas that they had trouble with. They

had to shut the well down at least once during this. So this wasn’t

a well to cut corners on. This was a big elephant well, but they did

cut corners. And you’re right when you say the issue is following

the regulations we got now. I can’t improve on your statement.

Mr. LABRADOR. So why is it that here in Washington we don’t

seem to understand this? Why is it that we can’t understand that

we have regulations? I think you used the number, we’ve done this

in the gulf over 30,000 times and this is the first time something

like this happened. Can you repeat that again? You said——

Governor BARBOUR. Yeah. There have been more than 31,000 oil

wells drilled in the Gulf of Mexico in the last 50 years—or since

they opened the gulf—in our four States and there has never been

anything vaguely like this to happen.

Mr. LABRADOR. I think I will yield the rest of my time to the

chairman. For the life of me, I cannot understand why we cannot

in Washington, DC. Just understand that if we enforce the regulations that are in place, we will actually be able to have a good environment, we will be able to have good water, and we will be able

to have jobs and the economy will improve. Thank you very much.

Governor BARBOUR. Thank you.

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Chairman ISSA. I’m going to followup on the gentleman’s line of

questioning because I think it was excellent.

Governor, on the day that the oil well blew 100 miles off your

shore, there were two MMS officials, a father and son team. They

came on, reviewed, passed and left; isn’t that so, as far as you

know?

Governor BARBOUR. I don’t know that, but I——

Chairman ISSA. It wouldn’t surprise you.

Governor BARBOUR. I assume it is true.

Chairman ISSA. We’re going to have the administrator of the successor organization, MMS, next. That’s going to be one of our questions, is why is it that what failed before won’t fail again? And

that’s going to be a line of questioning is not just other new regulations, but an agency that failed to ensure safety; what has changed

there? So hopefully they will be as candid as you’ve been.

Governor BARBOUR. Well, I have to say to you, I accept that because the 31,000 wells I actually go from Janet Napolitano, so I accept people in authority’s statement of fact. So I accept the fact

that those two guys were there.

Chairman ISSA. I thank you, Governor. The gentleman from Virginia, Mr. Connolly.

And by the way I didn’t have to look up what chutzpah was in

your opening statement, but it was interesting to see you using imported words.

Mr. CONNOLLY. Thank you. Where I come from, chutzpah is a

very common word.

I want to welcome Governor Haley Barbour to this committee.

And I was just thinking to myself, I regret very much you’re not

running for President. I think you would have added some good,

common, political sense and a lot of good humor, and would have

humanized the process. It desperately needs it, so we’re sorry we

are not going to see your candidacy.

Governor BARBOUR. Thank you very much, Congressman, that is

very gracious.

Mr. CONNOLLY. And thank you for your service.

Governor, I was listening to your exchange with Congressman

Burton and complaining about the negative media attention. As

somebody who ran a very large county with 1.1 million people, I

can sympathize. But on the other hand, was it the bad media that

caused a hit to the Mississippi economy, or was it the devastation

of the oil spill itself?

Governor BARBOUR. Congressman, we didn’t have devastation.

The problem was, the news media took the very, very, very worst

areas in Louisiana and they repeatedly showed that over and over

and over. And it gave people the impression that’s the way it was

all the way over the Gulf Coast. They would actually have stories

about Mississippi and pictures from Louisiana.

Mr. CONNOLLY. Hmm.

Governor BARBOUR. And you may not have been in here—literally, on our 80-mile shoreline, we never closed 1 foot of beach for

1 day except on one occasion. We had a high tide either right before

or right after a hurricane missed us, and it pushed some water

over the highway and through a culvert, and it pushed some oil

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patties up there. And we closed that beach for more than—we actually closed that beach overnight. That is the only time.

But if you watched TV in Virginia, you saw Louisiana and you

thought Mississippi and Florida and Alabama, for that matter, and

Texas were all the same way. And that’s what killed our tourist

season.

Mr. CONNOLLY. Yes. Common problem with the media sometimes.

Governor BARBOUR. Amen. That’s a bipartisan.

Mr. CONNOLLY. Absolutely.

When you look back now, and if someone gave you a truth

serum, do you think in retrospect that the process for permitting

and improving the Deepwater Horizon oil rig was flawed? For example, it got a categorical exclusion under the process because the

process allowed for that. In retrospect was that a mistake?

The NEPA—and then one other aspect, Governor, and then

please respond—the NEPA process predicted under the NEPA review, which was truncated, that under the worst-case scenario we

were looking at 4,300 barrels of oil spilled and it would never reach

the shore.

Governor BARBOUR. Congressman, in answer to your question, I

think that what we have done for 50 years, with more than 31,000

oil wells, with very positive results—in fact, nothing like this ever

having happened—I would not take issue with that. I mean regardless of what we do, occasionally you’re going to have the bad outcome. But we’re not going to make people quit taking left-hand

turns, we’re not going to outlaw left-hand turns because they are

a little bit more dangerous than regular driving. And I really see

this, that rational regulation of this had resulted in 31,000 times,

nothing like this—now this has happened one time. Does that

mean we have to turn the world upside down? And I think the answer is no.

Mr. CONNOLLY. Governor, I would agree with you. I don’t think

we have to turn the world upside down. But really my question,

isn’t that—that’s not our only choice. The question is: Could we in

retrospect have tightened up regulation and been more rigorous in

the review process, such that—and the enforcement, for example—

get the blowout protection equipment that might have stemmed the

spill or contained it?

I mean, I take your point that the devastation wasn’t what was

presented visually on television. I fully respect and understand

that. But on the other hand, at one point the extent of the spill on

the surface of the water would have gone from my district in

Northern Virginia, Dale City, all the way to New York City, if it

were superimposed on the map here. That’s eye-popping and that’s

of deep concern to all of us.

All I’m asking, don’t turn the world upside down, but could we

not on a bipartisan basis agree that in light of that experience, it

only requires one to create such environmental havoc. This isn’t the

category it seems to me of a nuclear disaster, it only requires one.

Turning left hand and having an accident, God forbid, is a terrible

thing if someone is hurt, but it is a very contained thing.

Governor BARBOUR. If the chairman is correct that there were

two government regulators on the rig that day, and if the reports

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that have been written over and over and over, without contradiction, they did not follow the normal protocols and they did not follow the standards, and these two regulators were on the well that

day, I think the Congressman from Idaho’s point is the right point.

It’s not that we need more regulation, it’s that we need to actually

enforce the regulations in real life, if, that is factually accurate. I

have no reason to think it’s not.

Mr. CONNOLLY. Mr. Chairman, will you indulge me just one——

Chairman ISSA. The gentleman is recognized for one more question.

Mr. CONNOLLY. Just a clarification, Mr. Chairman, thank you.

Do you mean by that, let’s have the full regulatory process that’s

on the books right now, no more exclusions?

Governor BARBOUR. I couldn’t go that far because of my lack of

information. There may be some exclusions that are well-founded,

that are like we see in many, many other processes, regulatory and

otherwise. You fill out the form, if the answer to C is no, skip down

to F. I just don’t know if those exclusions are of that type.

Mr. CONNOLLY. Thank you, Governor.

Chairman ISSA. I thank the gentleman.

Governor, this may come as a surprise to you, but I haven’t had

my round of questioning yet, and I’m going last. There may be another minority member coming, but I’m going now and recognizing

myself for 5 minutes.

Governor, I’m going to put up on the board a quote from Secretary Salazar for your comment. I’ll read it. ‘‘There is no question

that the suspension of deepwater drilling will have a significant,

negative, economic impact on direct and indirect employment in the

oil and gas industry, as well as other secondary economic consequences.

Governor BARBOUR. That’s correct.

Chairman ISSA. But he did it anyway.

Governor BARBOUR. That’s correct.

Chairman ISSA. Can you explain why somebody would know that

it was going to hurt economically—and by the way, he follows that

up, which isn’t on this quote—he follows this up by noting that

there’s an extremely good history of safety in the oil and gas industry.

Governor BARBOUR. Mr. Chairman, my own view is that the policy of the administration is to increase the cost of energy so that

people will use less of it and, therefore, there will be less pollution

and alternative forms of energy will become more economically

competitive. I have said that publicly a thousand times. I might as

well say it here.

When they did the moratorium, that was my assumption, that

this was consistent with that policy. And, look, it’s one policy that

works. I mean, we have $4 gasoline; and gasoline in January 2009

was a dollar eighty something. But that’s what I took to be the rationale for that is. To make these other alternatives economically

competitive, you had to increase the price of oil and other traditional.

Chairman ISSA. Well, it’s certainly done that.

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By the way, the quote that wasn’t on the screen is, I am also

aware that, as a general matter, the safety record for deepwater

drilling has been good.

I am going to go to one more very interesting quote, because the

next panel’s going to be dealing with this.

Last week or 2 weeks ago, I guess it was, Secretary Hayes was

here and told us there was no connection between high oil prices

and domestic production, meaning he was quite sure that if we

drilled more here it wouldn’t change the global price.

I’m going to take you to page 23 of an MMS report, titled MMS

Economic Impact Assessment. At the time, they were assessing—

and I will just read it because it’s a little hard to read that one—

they were assessing that at $75 a barrel—which is where we were,

not where we are, unfortunately—that if production went down by

84,000 barrels a day, .84 million barrels a day, that we would have

an increase of about 47 cents a barrel. Now, it went down by three

times that.

Now, you’re not an oil speculator, neither am I, but it would not

surprise you that if you got a half dollar increase for such a minor

one and if you decrease by three times that amount, wouldn’t you

guess it would go up a whole lot more than that; $10, $15 a barrel

could certainly happen if you took that much out of the limited

economy?

Governor BARBOUR. And potentially, if the market believes that

this is going to be policy for a while, that you are going to have

a moratorium in the Gulf, that you’re going to reduce production

in the Gulf, that you’re going to issue 85 percent fewer new deepwater drilling permits, that the market sees that as there’s going

to be less U.S. oil production. And while whoever said you can’t affect the price of oil overnight, well, of course, that is absolutely

true, but if there is a belief that the United States is going to

produce less and less oil going forward, particularly because of government policy, then the price of oil is going to go up.

Chairman ISSA. One more thing I wanted to get into the record.

Governor, you are one of the many States that are Right to Work

States, aren’t you?

Governor BARBOUR. Yes, sir.

Chairman ISSA. In fact, every State in the Gulf of Mexico—every

oil State is a Right to Work State.

Governor BARBOUR. I think all the States in the Gulf of Mexico.

I don’t know if every oil State——

Chairman ISSA. I’m sorry. California is an oil State. We’re not

Right to Work. But every Gulf oil State is, in fact, a right to work

State.

Governor BARBOUR. My belief.

Chairman ISSA. Does it surprise you that the policies of this administration seem to be targeting the economic well-being of your

area—and I’m not trying to say it’s a big plot or anything else—

but it does seem like if 9/11 aircraft fly into the Pentagon, fly into

the Twin Towers, the next day we are figuring out how to get airplanes back in the air. And yet the economy, the seafood economy,

the tourism economy, and the oil economy of your State, when

you’re suffering, it seems like there’s no limit to how long this administration will take to have a moratorium to think about whethVerDate 17-JUN-2003 14:35 Nov 30, 2011 Jkt 000000 PO 00000 Frm 00086 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\70821.TXT KATIE PsN: KATIE
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er or not they can let you do something that’s so vital to your economy.

Governor BARBOUR. Well, the moratorium was a mistake. It was

very harmful not only to our State but I think, more importantly,

very harmful to the country. And I can’t read what’s in people’s

hearts or what’s inside their heads, but I have noted—and I hadn’t

said it here, but I think it is appropriate to say—there has been

an effort to raise taxes on the oil industry because it’s a very profitable industry.

Chairman ISSA. Every day here, Governor.

Governor BARBOUR. It’s interesting, in the Senate bill to raise

taxes on the oil industry, the idea was deficit reduction to raise the

taxes $2 billion a day—I mean, $2 billion in a year. The problem

is that’s half of 1 day’s deficit. You know, you would have to raise

the taxes on the oil industry by a factor of 700 times more than

that, because a $2 billion tax increase on the oil industry is equal

to one-half of 1 day’s deficit.

I mention that because it says to me that can’t be the real reason. I mean, the real reason can’t be to touch the deficit, because

it doesn’t even touch the deficit. And of course, as we know, the

guy who’s going to pay it is the one who pumps gas in his truck.

So do I think there are some people who don’t like the oil industry or think it’s a good whipping boy politically, I suspect that. But

I can’t say what’s inside people’s hearts or minds and don’t pretend

to, but I do know it wouldn’t do anything about the deficit.

Chairman ISSA. Well, Governor, I couldn’t agree with you more

that we can’t be sure of somebody’s motives. Although, I can be

sure that if Wall Street were to cause an economic meltdown that

this administration would allow it to be up and running the next

day. Because they did. The last administration did. This administration did. We have had great disasters and great impacts in other

areas of the economy, but, amazingly, the reforms came after everyone was back up and running, not before they were allowed to

go back up and run.

Governor, you have been very kind with your time. We appreciate your being here. You’re probably the most welcome relief to

us in Congress, to see somebody who’s doing the right things, who’s

making the right decisions, who’s steering a course for your State,

and we appreciate you taking your valuable time to be up here

today.

Governor BARBOUR. Thank you, Mr. Chairman. Thank you, Congressman Cummings.

Chairman ISSA. We will now take a 5-minute recess to set up the

next panel.

[Recess.]

Chairman ISSA. We now recognize the second panel.

We have Mr. Craig Taffaro, who is president of St. Bernard’s

Parish in the State of Louisiana. Mr. Bill Williams is commissioner

of Gulf County District 3 in the State of Florida. Mr. Frank Rusco

is the director of Energy and Science Issues at the Government Accountability Office—GAO was prominently mentioned in the first

panel. Mr. Cory Kief is president of Offshore Towing, Inc. And Mr.

Michael Bromwich is—and is very welcome—director of the Bureau

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of Ocean Energy Management, Regulation, and Enforcement, previously referred to as MMS but now reformed.

With that, as you saw in the first panel, I’d ask all the witnesses

to rise and take the oath.

[Witnesses sworn.]

Chairman ISSA. Let the record reflect that all witnesses answered in the affirmative.

Gentlemen, the first panel was one; you are five. I will ask you

to please summarize your opening statements and stay within the

5 minutes for each others and our side, and I apologize for the first

panel going long, but, hopefully, it’s set up questions and answers

for all of you in the second panel.

Mr. Taffaro.

STATEMENTS OF CRAIG TAFFARO, PRESIDENT, ST. BERNARD’S PARISH, LOUISIANA; BILL WILLIAMS, COMMISSIONER, GULF COUNTRY, FLORIDA; CORY KIEF, PRESIDENT,

OFFSHORE TOWING, INC.; FRANK RUSCO, DIRECTOR, ENERGY AND SCIENCE ISSUES, GOVERNMENT ACCOUNTABILITY OFFICE; AND MICHAEL BROMWICH, DIRECTOR, BUREAU OF OCEAN ENERGY MANAGEMENT, REGULATION, AND

ENFORCEMENT, U.S. DEPARTMENT OF INTERIOR

STATEMENT OF CRAIG TAFFARO

Mr. TAFFARO. Thank you, Mr. Chairman, committee members,

Ranking Member Cummings. Appreciate the opportunity to speak

with you today.

While there have been numerous reviews, reports, and studies

completed in relation to the BP oil spill disaster, the reality of the

impact continues to unfold, and the intermediate and long-term obstacles and effects are just coming into focus.

The experiences and lessons learned through the first year of the

oil spill response must be used to guide us through the remaining

years of the oil spill recovery. These insights, while certainly fueled

by the passionate experiences of those directly and indirectly impacted by this spill, are offered as just that, insights.

My hope is that the message delivered is not lost in the corporate

world of spin marketing or in the spin-off media exposes designed

to sensationalize the event and leave the victims and the coast

without the attention it is warranted.

Insight one. Hold the responsible party accountable. There are

few axioms of our society more basic than the one we learned in

some of our earliest social development. If you make a mess, clean

it up. As simple as this axiom sounds, there has been an everpresent allowance in this disaster that has allowed BP to make it

right on their own terms and not based on the terms of the impacted States, communities, businesses, and individuals.

Unlike the natural disasters that we continue to respond to as

a Nation, this disaster has an identified responsible party. There

is no value in talking about the disaster in terms of responsibility

if there are loopholes and justifications that allow the agent that

created the mess to define the terms of the response.

Added to this axiom referenced here is the understood message

about the mess versus the mess maker. Somehow we seem to be

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routed into an ongoing focus of is BP good or bad or is deepwater

drilling good or bad, instead of a consistent focus of who is responsible for the mess and has it been cleaned up quickly, comprehensively, and in a way that does not create another mess. The reality

is that the value in cleaning up a mess that was created offers as

much immunity and positive spin to the mess maker as any spin

marketing campaign could accomplish.

The second insight I offer is to remove the response and restoration authority from the responsible party. This insight must not

confuse the terms ‘‘authority’’ and ‘‘responsibility.’’ The responsible

party being responsible should translate into doing what is deemed

to be required to complete the actions involved in addressing the

environmental, coastal, social, economic, medical, and emotional

impacts of the given disaster. Removing the authority to decide

what those interventions that shall be required from the responsible party protects the impacted States, communities, businesses,

and individuals from further victimization. In an oversimplification

illustration, when we are involved in a car accident, the person

who caused the accident doesn’t get to dictate how and what treatment or repair is dictated.

Insight No. 3. Legislate for the disaster that will happen versus

one that has already happened. A critical lesson that continues to

face us is the need to address current legislation in a way that

transcends the most recent disaster. While the need to know causal

information in any disaster is important, the framework of legislation that allows flexibility in accomplishing the overarching mission of effective and expedient response and the ability to require

action by a responsible party must be examined.

While new legislation will not correct any of the ills of the BP

Deepwater Horizon spill, we can implement language that authorizes broader oversight and intervention authority, stiffer penalties

for a lack of cooperation, including language that revokes a company’s ability to operate under other permits if it has not been

compliant, while in all terms making sure that production is not

mutually exclusive with safety.

Unfortunately, we as a collective unit of citizens, government officials, and industry leaders cannot predict the next disaster, but

we can predict the next response. We can predict the next worstcase scenario and ensure that legislation with the appropriate flexibility and force is enacted to protect the interests of all citizens.

And, finally, the last insight is to localize the response process

to better serve the impacted victims. The shortest distance between

two lines is a straight line—or the shortest distance between two

points is a straight line. No one argues that, but we continue to set

aside this scientific law as we develop and address local needs at

a nationalized approach.

While impacted citizens of St. Bernard Parish continue to have

less than 25 percent of their claims settled, the monthly payment

to Mr. Feinberg continues unfettered. While I have no problem

with an honest day’s pay for an honest day’s work, I do question

an assignment of claims processing and the payment thereof without a performance clause in favor of the victims.

We were told that claims processed through the Feinberg plan

was independent. It’s not true.

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We were told that the claims would be easier to process at the

local level in the Feinberg plan. It’s not true.

We were told that the Feinberg plan had greater flexibility and

was implemented to address the victims, regardless of the impact

to BP. We have found that this is also not true.

I have met Mr. Feinberg and have no personal problem with him

as an individual. I do not claim to know his business, but I do

know that, because of the lack of ability to resolve claims at the

local level, his program and process has been ineffective. St. Bernard has offered at no cost to the Feinberg plan to assist him in

identifying claimants that are likely to be questionable versus

those whose local work history supports their need for assistance.

A common tenet in the disaster response industry is that disasters are local. This is supported because the impact of disaster is

most real for the individuals living or mourning through it. We

would ask that the local government and local involvement continue to be involved not only in the compensation process but

equally in the response and restoration phase of all disasters.

Thank you for allowing me to share my thoughts, and thank you

for keeping this issue at the forefront of your agenda.

[The prepared statement of Mr. Taffaro follows:]

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Chairman ISSA. Thank you.

Mr. Williams.

STATEMENT OF BILL WILLIAMS

Mr. WILLIAMS. Thank you, Mr. Chairman.

On behalf of Florida’s 67 counties, and more specifically our

coastal communities and counties of northwest Florida, I would like

to thank Chairman Issa and the committee members for the opportunity to address the House Oversight and Government Reform

Committee this morning.

Before I begin my presentation to the committee, I would also

like to take the opportunity and tell the Chairman thank you for

sending down two great staff members that saw firsthand the

things within my community and the State of Florida, Mr. Tyler

Grimm and Mr. Ryan Hambleton. Their presence provided a special opportunity for our entire community to share their experiences and tell their stories firsthand to Members of this committee.

I am here today to speak to you about the struggle that the Florida counties and our constituents faced in the days and months following the Deepwater Horizon oil spill. It is clear in hindsight that

even in the face of these struggles we cannot ignore the good intentions and Herculean efforts by the Federal and State response

teams. Even though the response—and even the responsible party

tried to do their best while facing this unique and global tragedy.

However, as a lifelong Florida resident and survivor of more than

20 hurricanes, best efforts and good intentions are not enough. We

must learn from our mistakes so that the disaster response is not

just swift but clear, organized and collaborative for the communities impacted.

There is no question that Florida has the foremost disaster response team in our country and arguably the world. With a hurricane season that lasts 6 months and can boast up to 20 named

storms, Florida can ill-afford anything but to be the best. Yet in the

immediate aftermath of the Deepwater Horizon oil spill, our expert

response teams were forced under Oil Pollution Act of 1990, rather

than the tried and true Federal Stafford Act.

Our traditional emergency management system was turned upside down and on its head, leaving the Florida counties at the

mercy of a unified command structure that was established outside

of Florida altogether. For example, during the first critical weeks

of the oil spill, individuals based in Alabama who had never

stepped foot in Gulf County or other Panhandle counties of Florida

that were using 10-year old ACP, or area contingency plan maps

were making final decisions regarding how Gulf beaches and all of

Florida’s beaches would be protected. Local expertise and resources

were ignored as strangers decided whether to place oil protection

booms near county beaches, inland water bodies, and sensitive environmental resources.

To compound matters, communications from unified command

was limited and rarely consistent from day-to-day, leaving my

county and all of Florida counties in the dark and concerned that

any preparation and response effort would be too little, too late.

With little information coming from unified command, local communities were forced to expend significant financial resources gearVerDate 17-JUN-2003 14:35 Nov 30, 2011 Jkt 000000 PO 00000 Frm 00100 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\70821.TXT KATIE PsN: KATIE
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ing up and preparing for potential events that could be quantified

or predicted. These financial commitments came, as you well know,

at a time when Florida counties and most governments were laying

off employees and facing extreme budget shortfalls due to the economy. Yet it took more than 4 months to begin seeing reimbursement for the emergency expenditures.

Faced with these challenges, our coastal counties organized

themselves under the umbrella of the Florida Association of Counties to address a range of concern as we evolved from response to

recovery. And while counties consistently met with State and Federal officials, in most instances the role of the local community was

minimized. More importantly, in spite of our efforts, recommendations regarding what type of recovery structure would meet our

needs and the communities directly impacted were never specifically sought.

This story and the experiences have produced a short list of priorities that I would like to call lessons learned. I share this with

you in hopes that Congress will take these concepts, review them,

and develop proposals so that any future disasters are operated

with clear organization, collaboration, strong communication, focused on the local community, individuals and the businesses directly impacted.

We strongly encourage Congress to review and evaluate OPA.

Florida’s emergency response system, which operates under the

Stafford Act, doesn’t just work. It is an example to be followed.

Why not take the best response plans and teams in the world and

use them as the foundation of our disaster. The Stafford Act works

because local communities are the first responders, the State Government responding to our local needs and the Federal Government responding to the State needs.

OPA failed because it was a top-down approach that looked to

the responsible party rather than to utilize local expertise and resource. This lack of collaboration created duplication and

triplication of all efforts.

In regards to the claims in general, it would be our recommendation that Congress provide greater clarity and direction to the process. Probably the greatest frustration for everyone involved, both

private and public, were constant changes in the claims process.

There were eight different policies, procedures, processes and applications within the first 2 months. The summer was almost over before our businesses and individuals finally had a solid process.

As for our public or government claims, it would be our recommendation that costs associated with first responder expenses

such as protection, prevention strategies, mitigation strategies, and

cleanup should be clearly laid out similarly to the Stafford Act and

not held hostage by the responsible party. In preparation for the

next potential event, a separate funding process should be established so State emergency operations and local first responder

plans are not abrogated or delayed because of questions of financial

capacity or whether the responsible party will approve the specific

cost.

In addition, loss of revenue claims by public entities should be

included in a process that incorporates an independent third-party

review. The parties should not have leverage over the States and

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local communities concerning economic issues, determining methodologies for measurement, and potential veto over certain claims.

Any independent, unbiased process should be established, almost a

year before it was completed as instituted by the loss revenue

claims.

We also ask Congress to establish and approve a Gulf Coast Recovery Fund, with 80 percent going directly to the environmental

restoration and economic recovery of the Gulf Coast region. I personally support and ask Congress to support the recommendations

of the Secretary of the Navy’s report published in September of last

year.

Mr. Chairman, like you, we are committed to working with our

Federal and State partners, and we appreciate the opportunity to

be before you today.

[The prepared statement of Mr. Williams follows:]

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Chairman ISSA. Thank you.

Mr. Kief.

STATEMENT OF CORY KIEF

Mr. KIEF. Good morning and thank you for the opportunity to

testify on behalf of Offshore Towing and how we have been impacted in the Gulf of Mexico as a result of the BP disaster, the

moratorium, and related issues.

Offshore Towing is a partnership with three smaller marine towing companies who collectively operate a fleet of seagoing tugboats

in the Gulf of Mexico, providing services in the oil and gas sector,

primarily towing drilling rigs to and from various locations in shallow water. We are located along the Gulf Coast in Larose, LA, and

collectively employ approximately 110 people.

Although the moratorium has been lifted and the shallow water

sector was not to be impacted as the deepwater sector, substantially negative economic impacts have been felt and economic recovery is more distant now than ever before. This company used to

move 25 to 30 rigs a month, and now we move 10 or less due to

the lack of drilling permits being issued. On top of that, other rigs

are leaving the Gulf as well due to the challenges with issuance of

drilling permits.

We do not have term contracts and work on the job to job on the

spot market. BP will not compensate companies like ours because

they claim that our economic losses are a result of the moratorium,

not the spill.

I was present at Mr. Bromwich’s testimony in March before the

House Natural Resources Committee and heard his testimony. He

testified that he felt as though the government was responsible as

well for the blowout, but this administration continues to reflect as

much light as they can on BP or anyone else that they can blame.

$20 billion sounds good but grants us no relief, and unforgiving

governmental agencies, such as the BOEMRE, do not provide much

hope for us when it comes to addressing our economic issues.

We have had few layoffs because of this crisis because we maintained an optimistic view relative to the industry rebounding in a

timely fashion. We have used capital blended with lines of credit

to offset the shortcomings that normal earnings would support, but

even that exercise has its thresholds. The beginning of the tolerance levels that have been established have been met now. Expectations for a timely recovery are lower than ever. Our confidence

in this administration, government, and its agencies are not what

they used to be, and we do not believe in any reasonable solutions

are in our near future. We have recently reduced wages on employees and have started a plan to begin reducing employees. We can

no longer afford to subsidize unemployment and must enforce these

unpopular but necessary exercises.

Our maintenance schedules have also been modified and changed

to later dates because the necessity to replace and/or overhaul machinery will no longer be necessary due to the lack of use. Factories

such as Caterpillar, General Motors, and John Deere, who produce

our engines and replacement parts, will begin to be impacted as

well. Therefore, States such as Michigan and Illinois will be feeling

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ferent items that could be identified, but this is the biggest example that I could describe.

We understand that precious lives were lost and that an environmental disaster that was some years in the making should not be

ignored. However, there was a governmental agency that had a

hand to play in this along with the others. Environmentally, the

American government and several administrations over the past 60

years have ignored our environmental needs in this region. The

Louisiana coast, marshes, and wetlands are disappearing at astonishing rates. So our government has ignored more environmental

issues, including Macondo, than anyone else.

Mr. Bromwich claims to be offended by the term ‘‘permitorium’’,

but he doesn’t understand that millions of people are offended by

the actions or lack of actions of this administration, the government, and its agencies.

The administration, the government, the agencies, the media,

and the press have done a good job of separating the American people by creating political boundaries to satisfy political agendas.

When the truth of the matter is that America is more interwoven

than what it is being given credit for. We need our brothers and

sisters in Michigan and Illinois, and they need us. Americans all

over this country depend on one another for a variety of different

resources. Our leaders should focus on that.

This government is so broken and is beginning to virally infect

the American people who deserve better. It is your duty as stewards of the public to fix this. Please do your best for the American

people. Put this Nation back to work.

Thank you again for the opportunity to be heard.

[The prepared statement of Mr. Kief follows:]

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Chairman ISSA. Thank you.

Mr. Rusco.

STATEMENT OF FRANK RUSCO

Mr. RUSCO. Thank you.

Chairman Issa, Ranking Member Cummings, and members of

the committee, I’m pleased to speak with you today about the Department of the Interior’s challenges associated with managing

Federal oil and gas in the aftermath of the Macondo oil spill.

Interior leases Federal lands and waters for oil and gas exploration, development, and production. These activities provide a domestic source of energy, create jobs, and raise revenues that are

shared between Federal, State, and tribal governments. Revenue

generated from oil and gas on Federal lands and waters is one of

the largest non-taxed sources of Federal Government funds, totaling billions of dollars annually.

The deadly explosion onboard the Deepwater Horizon and resulting oil spill emphasize the importance of Interior’s permitting and

inspection processes to ensure operational and environmental safety. As found by the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, this disaster was the product

of several individual missteps and oversights by BP, Halliburton,

and TransOcean which government regulators lacked the authority, the necessary resources, and the technical expertise to prevent.

In recent years, GAO has evaluated many aspects of Interior’s

management of Federal oil and gas resources. We have found material weaknesses in three broad areas; and, as a result, in 2011,

GAO placed Interior’s management of Federal oil and gas on the

high-risk list.

First, Interior has been unable to complete production inspections, maintain reliable royalty and production data, and provide

reasonable assurance that the public is receiving its fair share of

oil and gas revenues. In recent years, Interior has not consistently

met its statutory or agency goals for verifying that companies accurately report volumes of oil and gas produced on Federal leases. Interior has also lacked consistent and reliable data on the production and sale of oil and gas from Federal lands and has been unable to provide reasonable assurance that it was appropriately assessing and collecting royalties.

Second, Interior faces longstanding challenges in hiring, training,

and retaining staff in key oil and gas inspection and engineering

positions. In addition to hampering production verification efforts,

these human capital challenges have resulted in delays in issuing

leases and caused Interior to be unable to meet its statutory and

agency goals for performing safety and environmental inspections

of oil and gas facilities.

Finally, in May 2010, Secretary Salazar announced plans to reorganize the Minerals Management Service into three bureaus.

Under this reorganization, offshore leasing, planning, and permitting will be done in the Bureau of Ocean Energy Management; offshore inspections and enforcement by the Bureau of Safety and Environmental Enforcement; and revenue collection by the newly created Office of Natural Resources Revenue.

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Organizational transformations are complex endeavors, requiring

concerted and sustained efforts of management and staff. Interior’s

reorganization will be challenging, because it is happening at a

time when the agency is working to implement dozens of recommendations made by GAO, Interior’s Inspector General, and

other entities and because Interior is still responding to the

aftereffects of the Macondo oil spill. These efforts include implementing new practices and procedures for planning, permitting, inspections, and enforcement. In addition, Interior has stated that its

reorganization will require increased levels of funding, and this will

be very difficult to achieve in this time of tight budgets.

It is essential that Interior gets this reorganization right. The

agency must provide Congress and the public with reasonable assurance that billions of dollars of revenues owed the public are

properly assessed and collected and that oversight of oil and gas activities on Federal lands and waters maintains an appropriate balance between efficiency and timeliness on one hand and protection

of the environment and operational safety on the other.

While Interior has already come a long way toward implementing organizational change and has responded to many recommendations, it may require congressional attention to fully accomplish its goal of restructuring and improving the management

of public oil and gas resources.

This ends my oral statement. Thank you. I will be happy to respond to any questions you may have.

[The prepared statement of Mr. Rusco follows:]

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Chairman ISSA. Thank you.

Mr. Bromwich.

STATEMENT OF MICHAEL BROMWICH

Mr. BROMWICH. Thank you, Chairman Issa, Ranking Member

Cummings, and members of the committee. I’m happy to be here

in response to your invitation and to discuss the activities of the

Bureau of Ocean Energy Management, Regulation, and Enforcement following the Deepwater Horizon oil spill in the Gulf of Mexico.

These activities include putting in place strengthened safety

measures and regulatory reforms relating to reviewing and approving exploration and development plans and applications for permits

to drill. Those measures and the many other steps we have taken

over the past year have been part of our response to Deepwater

Horizon and its aftermath. But, as you know, aside from one grant

program, my agency is not directly involved in Gulf Coast recovery

efforts, nor do we work with BP on its recovery efforts. To the extent that the issues the committee is exploring today extend beyond my agency’s jurisdiction I will take those questions back to

the Department of the Interior to other agencies.

At BOEMRE, we have devoted enormous efforts over the past

year to put in place a new and necessary set of rigorous standards

for safety and responsibility in our offshore development program.

Our aggressive reforms to offshore oil and gas regulation and oversight are the most extensive in U.S. history. These reforms

strengthen requirements for everything from well design and workplace safety to corporate accountability and are helping to ensure

that the United States can safely and responsibly expand development of our energy resources.

Over the past year, multiple reviews and investigations have produced reports advocating the need for change in our agency. The

President’s Commission on Deepwater Horizon, the Department of

the Interior’s Inspector General, the Department’s own Safety

Oversight Board, and multiple committees of the House and Senate, including this one, all have highlighted the need for reform in

the way the Department does business and in the way oil and gas

operations are carried out offshore.

Many of the recommendations presented in these reports have

validated the administrative actions and reforms we have been undertaking at the Department to promote safety and science in offshore oil and gas operations. These changes were necessary to ensure that industry and government worked to help prevent an accident like Deepwater Horizon from happening again.

We have issued new regulations to bolster safety and to enhance

the evaluation and mitigation of environmental risks. Our new

drilling safety rule put in place tough new standards for well design, casing, cementing, and blowout preventers, including the requirement that the drilling process be certified by a professional

engineer. Our performance-based SEMS rule requires operators to

develop a comprehensive safety and environmental management

program that identifies the potential hazards and risk reduction

strategies for all places of activity.

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BOEMRE has also issued notices to lessees that provide additional guidance to clarify how operators must comply with existing

regulations. We have clarified that operators must have a well-specific blowout and worst-case discharge scenario that provides the

assumptions and calculations behind those scenarios. We have

clarified that operators must certify that they will conduct their

drilling operations in compliance with all applicable agency regulations, including the new drilling safety rule, and we have clarified

that we will assess whether each operator has submitted adequate

information to demonstrate that it has access to, and can deploy,

subsea containment resources sufficient to respond to a deepwater

blowout.

In addition to our enhancing drilling and workplace safety, we

have focused much of our attention on the reorganization of the

former MMS into independent entities with distinct missions.

These missions are leasing and energy development, the regulation

of offshore drilling, and the collection of revenues from Federal energy development. Having these three conflicting functions reside

within the same bureau enhanced the potential for internal conflicts of interest among the objectives of the agency. Instead of one

agency with multiple and conflicting missions, we will have three

new entities, as Mr. Rusco has just described. They are BOEM,

BSEE, and ONR. We are on track to complete the reorganization

by October 1st of this year.

BOEMRE continues to facilitate domestic exploration by issuing

permits. We have continued to issue shallow water permits in

every case where the application complies with the heightened

standards that apply to shallow water operations. To date, 55 new

shallow water well permits have been issued since last June when

new safety and environmental standards went into effect. Just

seven of these permits are currently pending, with seven having

been returned to the operator for more information.

Deepwater drilling applications fall into two categories. First,

there are deepwater permits that involve activities that were

barred by the deepwater drilling moratorium. We have approved 40

of these permits for 15 unique wells since industry demonstrated

in mid-February that it had developed subsea containment capability. Twenty-five permits are pending, and 20 permits have been

returned to the operator.

Second, there is a category that is frequently ignored in discussions, deepwater activity not barred under the moratorium, including water injunction wells, completions, and workovers. Since the

implementation of these safety and environmental standards, 40 of

these permits have been approved. Only one is currently pending.

Although our permitting of drilling activity has been moving

ahead steadily over the past 3 months, there are good reasons why

the pace is somewhat slower than in the past. Our new regulations

have required operators to make sure their applications fully comply with the new requirements. In addition, our drilling engineers

have had to work to ensure compliance with the expanded set of

requirements. This process may have proved frustrating to some in

the industry, but the additional rules and heightened scrutiny are

completely appropriate and in the best interests of this Nation.

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In closing, Mr. Chairman, we have made significant strides in reforming the way offshore oil and gas programs are carried out at

the Department of the Interior and on the Outer Continental Shelf.

We have raised standards and promoted safety and science in offshore oil and gas operations; and because of the hard work of industry and people in BOEMRE, we have been approving and

issuing plans and permits and getting people back to work.

That concludes my statement, and I’m happy to answer any

questions you or the other Members may have.

[The prepared statement of Mr. Bromwich follows:]

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Chairman ISSA. Thank you, sir. Thank all of you.

I now go to the gentleman from Texas, Mr. Farenthold, for 5

minutes.

Mr. FARENTHOLD. Thank you very much, Mr. Chairman.

And I’d like to first, the members from industry on our panel, I’d

like to thank you guys for coming up and sharing your thoughts

and concerns. I hope you will excuse me if I ignore you and talk

to the government regulator that I think may be giving you some

of the problems.

So if I could ask a couple—Mr. Bromwich, you went through a

lot of numbers here pretty quick, and I just want to make sure I

got an adequate handle on those and talk to you a little bit about

the pace that we are looking at. So you said there have been permits on 15 projects that have been issued since the moratorium

was ended; is that correct?

Mr. BROMWICH. For deepwater wells, for activities that were prohibited under the moratorium, we have permitted 15 unique wells.

The 15th was yesterday.

Now there are multiple permits frequently for individual unique

wells which leads to the larger number.

Mr. FARENTHOLD. And of that 15, how many of them were in the

process before the moratorium went into effect?

Mr. BROMWICH. It depends what you mean by ‘‘in the process.’’

Can you clarify what you mean?

Mr. FARENTHOLD. That have filed the application, that y’all have

been working on and just, you know, stuck on the shelf.

Mr. BROMWICH. Well, we haven’t stuck any on the shelf. A number of the projects were ongoing. They were stopped by the moratorium, and then applications had to be resubmitted to make sure

that they complied with new enhanced safety regulations.

Mr. FARENTHOLD. Right. So the number I have—and you can correct me if I am wrong—is there have been about four or five that

are actually new ones that weren’t resubmitted or however you

want to—they weren’t already in the works prior to the moratorium.

Mr. BROMWICH. That’s about right. I think the number actually

may be slower, but those are still projects that are ongoing to put

people back to work. So the distinction between projects that had

been previously submitted and new projects is really quite irrelevant.

Mr. FARENTHOLD. So how long are we looking at—if I had gotten

a lease and wanted to drill a well, how long under the current process would it typically take, assuming I’m reasonable about my paperwork?

Mr. BROMWICH. Well, that’s a big assumption. One of the challenges that we have seen that industry has faced—and they fully

acknowledge this—is that they have frequently submitted both

plans that are incomplete and noncompliant—and let me finish—

and permit applications that are incomplete and noncompliant. We

are working with industry every day to try to eliminate the number

of times that we have to return either plans or permits so that we

can process them straight on through and approve them.

Mr. FARENTHOLD. But is this a result of the fact there’s so many

new regulations that y’all aren’t even completely sure what needs

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to be done? The complaint I’m hearing from my friends in the industry—I’m from Corpus Christi, TX. It’s pretty big in Gulf drilling—is that they don’t even know what they need to do to satisfy

your criteria. I mean, I understand there’s some growing pains, but

these things were getting out in 2 weeks prior to the Deepwater

Horizon.

Mr. BROMWICH. Before the new enhanced safety environmental

regulations. That’s right. They were being churned out quickly, and

the new safety and environmental rules makes the process move a

little more slowly.

Mr. FARENTHOLD. So are we talking now 2 months, 6 months? I

mean, if we have only got four new ones since February, that

seems like we are looking at much longer.

Mr. BROMWICH. Well, I can tell you, Congressman Farenthold,

that if a fully compliant exploration plan was submitted and then

a fully compliant ATD, application to drill, was submitted, we’re

talking about a few weeks, not a large number of months. That has

not so far been our experience so far.

But I take issue with your suggestion that industry doesn’t understand what the requirements are, because I think they do. I

think they didn’t fully understand them at the beginning. I think

they do now, and if you talk to them today, I think they would acknowledge that.

Chairman ISSA. Would the gentleman yield?

Mr. FARENTHOLD. I will. Yes, Mr. Chairman.

Chairman ISSA. Would you say that months ago when the moratorium officially was lifted that you had full and complete guidance

available to those oil companies on that day?

Mr. BROMWICH. No, I don’t think we had full and complete guidance. But let me make something clear——

Chairman ISSA. That’s all I really wanted.

Mr. BROMWICH. But the new rules that I focused on in my opening statement were issued October 15th, so 3 days after the moratorium was lifted, and that’s what began the adjustment time and

cost both for industry and, to some extent, for us. So I just wanted

to clarify the timeline.

Mr. FARENTHOLD. What’s happening with the 33 previously permitted deepwater wells?

Mr. BROMWICH. Well, we don’t track them that way, Congressman. A number of them have not resubmitted their applications.

We obviously can’t do anything about that. We can only act on the

applications that we have.

Mr. FARENTHOLD. So they were permitted, the rules changed, you

moved the goalpost, and they have to start over again?

Mr. BROMWICH. No, that’s not the way I’d put it at all.

One of the main obstacles to companies getting their permits approved is the fact that they now have to demonstrate access to and

ability to deploy containment. I don’t think you or I want anybody

drilling in deepwater that can’t show that.

Mr. FARENTHOLD. I am out of time. So if we get to another round

of questions, I do have a couple more. So thank you very much.

Chairman ISSA. I thank the gentleman.

The gentleman from Maryland, ranking member, for 5 minutes.

Mr. CUMMINGS. Thank you very much, Mr. Chairman.

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Director, first, thank all of you for your testimony. It’s been extremely helpful.

One of the things that I say to my constituents is that this is our

watch. We are on the Earth now, and we have a duty to pass on

a better environment than the one we found when we came upon

this Earth. And I truly believe that.

And, Director Bromwich, you know, I was listening to Governor

Barbour; and he said something that was very interesting. When

I asked him about the Department of Interior drilling permit requirement—and it’s called NTL 2010-N10—and what it says, and

it was talking about the moratorium, and it said that these companies they have to show it has access to and can deploy surface and

subsea containment resources that will be adequate to promptly respond to a blowout.

And, you know, it’s interesting and it kind of surprised me when

Governor Barbour said that he felt that the risk—the risk of what

happened with Deepwater Horizon was worth it when he considered the cost. And I understand—believe me, I sympathize with

people being out of work. As a matter of fact, I have done everything I know how to try to make sure they get compensated. But

tell me, do you have an opinion on that based upon what you have

been doing in the administration?

Mr. BROMWICH. Yes, I do. I actually would like to take issue with

something else Governor Barbour said, which was that the Deepwater Horizon blowout was the first event of its kind or anything

close to it in the history of deepwater drilling. The President’s

Commission says that’s not so. They cite 79 incidents of loss of well

control, which is what Macondo was, loss of well control, between

1996 and 2009. So another way to describe that is 79 near misses,

79 almost Deepwater Horizons. So, without going into the details

of each one, that’s what the President’s Commission found.

So to say that the risk is one in a million or one in X thousand

of deepwater wells drilled is not accurate. Now we will never be

able to reduce the risk to zero. We know that, and you know that.

But we have to work constructively to try to diminish those risks

in a balanced way so that we don’t impose inappropriately high

costs on industry and yet we do raise the bar on safety.

We have done that. So I think we have lowered the risk, and my

risk threshold may be different from Governor Barbour’s because

I would not have been comfortable going forward without the

strengthening of the safety rules that we put into place.

Mr. CUMMINGS. Let me ask you, the administration also put in

place a requirement that all companies have a formal contract to

call on that service if service is needed.

Let me quote the new requirement. It says, BOEMRE will evaluate whether each operator has submitted adequate information

demonstrating that it has access to and can deploy surface and

subsea containment resources that will be adequate to promptly

deal with the blowout.

Let me ask you this. Can you explain in laymen’s terms why you

now require oil companies to demonstrate that they can respond to

deepwater blowouts before new permits are issued?

Mr. BROMWICH. For the very reason that I think you and other

Members said in the questioning of Governor Barbour. I think we

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were all sickened by the fact that for 87 days the oil flowed into

the Gulf with the trial-and-error process that was used to try to

cap the well. And, finally, after 87 days, it was capped.

We don’t want that to ever happen again. We want industry to

be prepared. And, in a way, talking about the period of the moratorium is a false issue, because the fact is the containment requirement is critically important, and industry admits it was not ready

with containment until the middle of February of this year.

Mr. CUMMINGS. Now, you say in your testimony that the temporary moratorium on deepwater drilling was lifted in October of

last year, but you didn’t issue the first deepwater drilling permit

until February. Why is that?

Mr. BROMWICH. Because there were not the containment systems

and resources that were ready until the middle of February. In the

first panel, we talked about the Marine Well Containment Co.

There’s another group, the Helix Well Containment Group, but neither of those groups was ready, had its equipment, had tested its

equipment, until the middle of February this year.

Mr. CUMMINGS. I see my time has expired. Thank you.

Chairman ISSA. I thank the gentleman.

The gentleman from New Hampshire for 5 minutes, Mr. Guinta.

Mr. GUINTA. Thank you, Mr. Chairman.

Mr. Bromwich, I just have one question for you. Then I want to

get to some of the other panelists.

In considering the plans or permits, how much do you look at the

economic impact and the loss of economic activity in considering

the process by which your agency goes through?

Mr. BROMWICH. Well, the individual plans and permits are reviewed by our field personnel in the Gulf of Mexico. I have absolutely no role in that. And I don’t think it would be appropriate for

them to scrutinize the plan applications or permit applications for

any other reason other than to determine whether they are complying with all applicable regulations. So they do not, and they

should not.

Mr. GUINTA. So they do not consider the economic impact.

Mr. BROMWICH. They do not, and they shouldn’t.

Mr. GUINTA. OK.

Mr. BROMWICH. Somebody who is inspecting plans and permits

should not do that.

Mr. GUINTA. I want to move to Mr. Kief. Thank you as well for

coming.

Can you just describe to me very, very quickly the type of company you have and then the average employee that you have, the

kind of individual that you represent?

Mr. KIEF. We are in the tugboat business, so we move drilling

rigs for a living. And I would say 80 percent of our employees are

sailors, ordinary seamen, engineers, captains, mates; and the rest

of the 20 percent are staff, from maintenance people to personnel

and administration.

Mr. GUINTA. How many people are employed?

Mr. KIEF. Approximately 110.

Mr. GUINTA. And has that number changed since the moratorium?

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Mr. KIEF. Well, as I stated, we have had few layoffs, but we have

had to adjust wages on our employees. And, you know, we have

thresholds that we are meeting where we know that we are going

to have to lay off people and tie up equipment.

Mr. GUINTA. So not only are you going to have to lay off people

in the future but you have reduced salaries?

Mr. KIEF. Yes, sir.

Mr. GUINTA. For almost everyone in the company?

Mr. KIEF. For about 50 percent of——

Mr. GUINTA. About 50 percent. These are families that are depend on that source of income?

Mr. KIEF. Yes. As a matter of fact, three of the companies we

have—this company, Offshore Towing, is a partnership of three

companies. One of them was actually founded by my grandfather,

and my aunt actually owns it now and her daughters, and I run

that company as well.

Mr. GUINTA. I assume it’s safe to say you’d like to see the economy grow, come back as quick as possible, and you’d like to see the

government participate in a positive way to make that happen?

Mr. KIEF. Yes, I would.

Mr. GUINTA. Thank you very much.

Mr. Taffaro, thank you for being here.

I also wanted to ask you a little bit about economic impact. It

seems to me here in Washington we are so focused on the regulatory side of this, and there’s good reason to be concerned about

the regulatory environment. I don’t think anybody disagrees that

we want to have safety. We want to make sure that this never happens again. I don’t think that’s a partisan issue. I think that makes

sense, good public policy.

My concern is with the thousands of people who are negatively

impacted for the long term in the decisions that have been made

by this administration. My heart goes out to each and every individual who no longer has a job, who is waiting desperately to have

the possibility of getting back to work. And I believe that we ought

to consider that as we move forward in just about every public policy decision that we do.

Now, it doesn’t mean that you provide a permit if it’s not appropriate. It doesn’t mean that you provide a permit to someone who’s

not capable of handling it. But I do think that we have a responsibility to consider the negative impacts that have occurred to regular, everyday people who are desperately looking for employment.

Can you just talk a little bit about how that’s impacting the people that you’re representing.

Mr. TAFFARO. Well, the main issue I think is that we have to

keep in mind that part of what happens is there’s a trickle-down

effect. A rig not being permitted or a drill operation not being permitted doesn’t just affect those men and women who work the rig.

It affects every other spin-off company and agency that provides

support for those businesses or for that operation. That’s where we

really feel the effects in St. Bernard Parish and along the entire

coastal Louisiana and beyond, as you heard.

The main issue that we want to make sure is that the comprehensive impact is reviewed. While we want safety, and certainly

we don’t want to have another impact or another disaster such as

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the one that we experienced just over a year ago, we definitely

don’t want to exacerbate that call to safety by undermining the economics of our region.

Mr. GUINTA. Thank you. Thank you, Mr. Chairman.

Chairman ISSA. I thank you.

Mr. Clay for 5 minutes.

Mr. CLAY. Thank you so much, Mr. Chairman; and let me thank

the witnesses for being here.

People who have long been concerned about the public welfare

have raised some important questions about the aftermath of the

BP oil spill disaster. Some disturbing information has come to light

regarding money spent during efforts to recover from the spill.

For example, from my hometown, Mr. Dick Gregory, who is here

today, he and others have brought to my attention some investigative articles written by ProPublica and the Washington Post. These

articles are worrying. They allege that there are some who profited

from the BP oil spill disaster. These people apparently gamed the

system to take so much money inappropriately that they earned

the nickname ‘‘spillionaires’’. Two of those who were named in

these investigative articles are here testifying today on this panel.

Now, as a politician, I know what it is like to read a newspaper

article about issues with which I am involved. I have had the experience of reading articles where I cannot recognize the events as

they have been described by the reporters. So I know how it can

be sometimes for others in similar circumstances, and we don’t always have an opportunity to respond to those articles and perhaps

set the record straight.

Therefore, I feel duty bound, Mr. Taffaro and Mr. Williams, to

give you the opportunity here today to respond to those articles and

to what they have alleged about your conduct in the wake of the

BP oil spill disaster.

Mr. Taffaro, would you like to take a stab at it.

Mr. TAFFARO. Sure, Congressman. I will be glad to. If you could

give me a specific question, I’ll be glad to answer it.

Mr. CLAY. Sure. In both articles, the Washington Post and

ProPublica, they talk about hand-picked contractors. They talk

about you implementing a 30-day emergency, which allowed you to

pick contractors outside of normal government procedure. One contractor was leasing land at $1,700 a month and hap- pened to lease the land back to BP for $1.1 million a month. Is that

accurate?

Mr. TAFFARO. Well, I would be glad to respond to that, Mr.

Congressman——

Chairman ISSA. The gentleman will suspend.

You’re under oath. You’re not—you’re required to speak truthfully. You are not required to answer questions outside the scope

of this hearing. You may choose to answer. But that would be true

of any of our witnesses, is that if something is outside the scope

and the meaning of this hearing, including, quite frankly, any impugning of individuals who came here to testify, there is no obligation to respond. But the gentleman——

Mr. TAFFARO. I would be glad to.

Unfortunately, this is exactly the concern that has been raised

and is raised again, that—excuse my frankness—a hatchet job by

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Ms. Barker, who had no—I think if your staff researches that information—has no factual data to compensate or substantiate your

comments.

The idea is we were under a state of emergency. I did declare a

disaster. I think everyone who had any involvement in the process

would certainly see that as justifiable.

As far as handing out contracts, St. Bernard Parish government,

me as the elected—chief elected official, signed one contract regarding the operations of the BP oil spill disaster.

Mr. CLAY. And that was the company owned by the Saint Bernard Parish Sheriff——

Mr. TAFFARO. That’s not accurate, Mr. Congressman.

Mr. CLAY [continuing]. Who charged more than $1 million a

month for land it had been leasing——

Mr. TAFFARO. I think what you point out is exactly the problem

with the way the operations were run. BP executives authorized

representatives on the ground with BP to initiate and negotiate

land deals, vendor agreements, use of resources, and then changed

those personnel out and then didn’t pay them what they were

owed. That is a true economic impact of what we have going on.

Mr. CLAY. How about the selection of certain fishermen to help

with the cleanup and then some getting picked and some didn’t get

picked? What was the criteria there?

Mr. TAFFARO. Every selection process that we used to employ the

exact individuals who were impacted by the spill, whose livelihoods

overnight were ripped from them, whose generational, cultural

identity overnight was ripped from them, every selection process

that was implemented was done in a public forum and was continuously reviewed and modified to make sure that those individuals who were most impacted were those people who were being

put to work, to respond to the disaster of no doing of their own.

Mr. CLAY. Thank you for your response.

Mr. Chairman, may I ask Mr. Williams?

Chairman ISSA. Yes, your time has expired.

Mr. Williams, you may respond.

Mr. WILLIAMS. Congressman, I appreciate that question; and I

think it is very critical, as Mr. Taffaro indicated.

I come from a county in northwest Florida that has less than

20,000 people. We’re a very small county. We have an operating

budget on a millage based on $9 million. You’re going to run into

family folks.

I felt like—and certainly I’m glad that we’re here in an office of

oversight and reform, because personally—not that I take offense.

I appreciate the question. But I feel like it is a red hearing for the

issues that we are here to address today.

We were under a tremendous amount of pressure. I have two

people in my emergency management department, two. We had no

resources from the State. We had no guidance from the Federal

Government. We were put under tremendous strain.

And the article that you’re referring to, the author of that never

came to my county, never stepped foot in our county. What you’re

indicating there is that a girlfriend worked as a public information

officer, and she had volunteered through that period of time tremendously through that process.

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So I think, with all due respect, sir, my scenario would be you

have to understand that I’m proud of what we did, trying to put

people to work together, amassing what we had, basically a militia

of people who were trying to fight what was coming on our shores.

And so I appreciate the question, but I think it is very misleading

to the ultimate goal that I would like to do and present from the

Federal Government what you can do to help me at the local level.

Mr. CLAY. And I’m glad that you both have responded in the way

you have.

Chairman ISSA. Thank you.

For the record, did your ethics board clear that action?

Mr. WILLIAMS. Yes, Mr. Chairman. I appreciate you giving me

the opportunity.

Actually, before that was done, the board of county commissioners did not approve any of the contracts, as my colleague indicated. This was done primarily through our county administrator.

However, we went through our legal counsel. We went to the State

of Florida’s ethics commission. We also went to the Governor’s task

force that was guiding that and asked for permission ahead of time

to make sure it was there.

So I feel like the media certainly exploited this scenario to make

it look bad for a lot of folks who were doing the best they could

and being proud to work for their communities.

But, yes, sir. Mr. Chairman, I appreciate you giving me the opportunity. Because I was ahead of time—we did it right. We

stopped profiteering. I served on the Governor’s task force. We

went through, and we saw companies coming in and asking for several hundred thousands of dollars to man some of these small counties. We refused to do that. We turned and asked the Governor for

assistance; and, through the Department of Emergency Management, we worked under the guidelines and under the premises; and

we did the best we could under the circumstances.

Mr. CLAY. Thank you for your response.

I yield back. Thank you.

Chairman ISSA. I thank the gentleman.

I now recognize myself for 5 minutes.

I’m just old enough to remember, I guess, the 1960’s in some

cases, but Mark McCormack, who was a prolific writer, wrote,

among other things, the terrible truth about lawyers and what they

don’t teach you at the Harvard Business School. And I don’t take

away every quote from all of those books, but I take away one,

which is that a problem is something money can’t solve.

Mr. Bromwich, if money was not the problem—and I presume money was available, whether it is the $20 billion from BP, the billion dollars from the industry to form a quick response for future

potential spills, etc.—why did it take you not just the 6 months of

the moratorium but essentially another many, many months of

permitorium before you had guidance so that we could begin having oil wells—new oil wells drilled again and permitted?

Mr. BROMWICH. Mr. Chairman, I think it is fair to say that Deepwater Horizon was an earthquake through the industry—they acknowledged that—and through the government.

Chairman ISSA. Please answer my question.

Mr. BROMWICH. I am answering your question.

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Chairman ISSA. Well, no. Let’s put it in perspective. Your agency’s inspectors went on a rig that had not one but two battery

packs not active, an oil well that—you mentioned the 79—this

thing had had repeated missteps. This oil well was like a drunken

driver swerving, crossing the line repeatedly, and MMS did nothing

to do it. MMS had a study back in 2003 that questioned the bypass

blowout preventers but did nothing but say pick one. All of these

things had occurred prior to that date.

So was it an earthquake in your organization or was it an earthquake to the oil industry? The oil industry has made it pretty clear

that BP was a bad actor on this well and a bad actor in the Gulf,

but that in fact there was a reason that their actions were not consistent with other drillers in the Gulf. So which earthquake was it?

Was it an earthquake within the oil drilling industry or an earthquake within your agency?

Mr. BROMWICH. Both. And as the President’s Commission notes,

it is inappropriate to single out BP as the only bad actor here. That

report, which is based on a thorough investigation, pointed out that

Halliburton was at fault and Transocean was at fault. As you

know, Halliburton and Transocean do work and are involved in

providing services in a huge percentage of deepwater——

Chairman ISSA. I hear you, Mr. Bromwich. But isn’t it true—actually, I’ll go to Mr. Rusco. Isn’t it true that the reorganization is

as much at fault for the delay in the ability to get America working

again in the Gulf? Isn’t that what the GAO study finds, is that this

is a distracted agency because it is reorganizing?

Mr. RUSCO. I think it’s a complicating factor. I can’t say that it

caused the delays. I take Mr. Bromwich’s point that, once they decided that companies needed to demonstrate the ability to contain

a blowout, that was the binding constraint until——

Chairman ISSA. And when was that request made? When was

the starting date for that?

Mr. RUSCO. I’m going to have to defer to Mr. Bromwich.

Chairman ISSA. Mr. Bromwich, when was the starting date for

the blowout preventer’s demonstration requirement that they could

contain if the blowout——

Mr. BROMWICH. Two different things, Mr. Chairman, blowout

preventer, additional——

Chairman ISSA. If it failed, if the blowout preventer failed containment, when did you say they must prove they can contain?

Mr. BROMWICH. We clarified what we think had been clear to

many, but we clarified it in writing on November 8th.

Chairman ISSA. November 8th?

Mr. BROMWICH. Yes.

Chairman ISSA. How long was that after the moratorium began?

Mr. BROMWICH. Less than a month—after it began?

Chairman ISSA. Yes.

Mr. BROMWICH. The first moratorium was put in place, I believe,

in May, so several months after.

Chairman ISSA. So you have a 6-month moratorium, and a

month after that moratorium is over, basically, then you say you

have to do that. Isn’t this a second—isn’t this taking 6, 7 months

to decide that you’re going to add one more way to stop the oil industry from starting again? Wasn’t that reckless to go 7 months

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and discover—6 months and discover that you had missed something as basic as that?

Mr. BROMWICH. No, I don’t think it was reckless; and I don’t

think we——

Chairman ISSA. How did it get missed for 6 months?

Mr. BROMWICH. Nobody said it was missed, other than you. It

wasn’t missed——

Chairman ISSA. Why wasn’t it asked——

Mr. BROMWICH. The industry, as you know, Mr. Chairman,

formed the Marine Well Containment Co. in July. So they knew at

that point that was going to be an obstacle to getting deepwater

permits until they could put together the resources. So it took

them, and then it took later Helix, a number of months, close to

7 months, from the time they recognized that it needed to be done

and they announced it until they were ready to go. The mere fact

that we clarified what was required in November didn’t start any

clock and doesn’t reflect any recklessness at all.

Chairman ISSA. Mr. Bromwich, are you still clarifying various

things for the industry?

Mr. BROMWICH. Of course. That’s what a regulator does.

Chairman ISSA. So when will it be clear?

Mr. BROMWICH. I think it’s clear to 95 percent of the operators

now. The other 5 percent come forward and ask questions of us,

we’ll clarify it for them.

We meet all the time, Mr. Chairman, with operators. We met

this week with a group of Gulf area operators, a delegation headed

by Director of Natural Resources for Louisiana, Scott Angelle. They

have been a forum for asking questions, asking for clarification and

getting them.

Chairman ISSA. Mr. Kief, I’m sorry that we really can’t do more

for you today, but we are not going to give up on this, on any of

your testimony here today.

Mr. Bromwich, you said you would take something back if it was

outside of the mainstream. I want to make sure you take this back

today. There’s pending litigation or there is current litigation in the

Eastern District of Louisiana challenging seismic surveys in the

Gulf of Mexico by the infamous NRDC vs. Salazar. Our information

is that the Secretary has in fact worked out to stay that case and

is discussing settlements.

The question for Department of Interior is, if you settle one more

time with a radical environmental group that sues and then gets

settlements leading to regulatory changes or areas off limits, don’t

you have a conflict of interest? In fact, shouldn’t this case be a case

in which those with a vested interest, the States and the oil companies, should have a seat at the table, rather than having a settlement issued around what they would call their interest, along with

the gentlemen here today?

Mr. BROMWICH. I don’t need to take that one back, because I’m

involved in that matter.

First of all, I think the characterization of NRDC as a radical environmental organization is not accurate——

Chairman ISSA. They sue and bill endlessly.

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Mr. BROMWICH. But, second, we have to make litigation judgments. The solicitor’s office has to make litigation judgments about

whether to settle cases or not.

Without going into the details of settlement discussions, there

are settlement discussions ongoing; and I will tell you that one of

the goals of such settlement discussions is to prevent more radical

injunctions or actions being taken by a court.

With respect to the involvement of the oil companies, they are

interveners in that case, so they have a seat at the table.

Chairman ISSA. But they are locked out if you settle.

In fact, the NRDC has on their Web site their litigation motive

and method as part of their fundamental way of doing business. So

you may not consider them radical, but an organization that basically litigates in order to legislate and an agency that settles in

order to effectively create legislation is exactly what this committee

is concerned about. So you may not consider them radical, you may

not consider your settlement around the intervenors as in fact

somehow unAmerican or that you have a conflict, but this organization here is finding that conflict more and more consistent.

I want to thank you all for your—oops, I want to thank you all

for your continued testimony. We now recognize the gentleman

from North Carolina, Mr. McHenry, for 5 minutes.

Mr. MCHENRY. I thank the chairman, and I thank the witnesses

for being here today.

Mr. Bromwich, I’ve got a question about the Marine archeologist

rule, the new rule that your organization’s promulgated. So is it

true that operators will have to employ a Marine archeologist in

order to comply with this?

Mr. BROMWICH. Do they have to what?

Mr. MCHENRY. Pardon me?

Mr. BROMWICH. Is it true they have to what? I didn’t hear what

you said.

Mr. MCHENRY. Oh, OK, I’ll repeat.

In context of the new archeological assessment report, is it true

that operators will have to employ a Marine archeologist to comply

with this rule?

Mr. BROMWICH. They will have to have a survey conducted,

whether its by hiring somebody, contracting with someone or whatever. We don’t mandate that, but they will have to do an archeological survey, yes.

Mr. MCHENRY. And why is that necessary?

Mr. BROMWICH. Why is that necessary? It’s because a number of

discoveries have been made in recent years of shipwrecks and other

structures that are protected by various Federal laws, including the

National Environmental Policy Act.

And as we’ve eliminated the categorical exclusions with which we

used to do exploration plans and now are doing environmental assessment, site-specific environmental assessments, the way the

process works is we have different subject matter experts who have

to look at the issues and our archeologists subject matter experts

will simply not sign off on an exploration plan without that kind

of a survey. So that’s the reason.

Mr. MCHENRY. OK. Well, so in terms of what your organization

does, does that have anything to do with safety?

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Mr. BROMWICH. It has to do with protecting the environment,

which is part of our mandate.

Mr. MCHENRY. OK, all right. Was there a cost benefit analysis

in context with this regulation?

Mr. BROMWICH. I’m not—I’m not sure whether there was or there

wasn’t.

Mr. MCHENRY. Would you be willing to followup with the committee and give us your assessment of the cost and benefits of this

regulation?

Mr. BROMWICH. Sure, I’d be happy to.

Mr. MCHENRY. Thank you.

[The information referred to follows:]

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Mr. MCHENRY. Mr. Williams, thank you for being here today. It

is certainly an interesting process to testify before Congress.

But, in context with your experience, there’s a difference between

the OPA and the Stafford Act in terms of responsibilities and everything else. Do you think that operating under OPA was reasonable, proper, good? Was it a better outcome than operating under

Stafford?

Mr. WILLIAMS. No, sir.

Mr. MCHENRY. Would you turn on your mic?

Mr. WILLIAMS. I’m sorry. No, sir, it actually paralyzed us at the

local level.

I think components of OPA—we’re not trying to basically supplant OPA with the Stafford Act, but we are trained, particularly

in the State of Florida. We have test modeled. We have put everything through, over and over, case studies. And because we are so

impacted by our storms, we were unable at the local level to make

decisions firsthand. It has always been at the local level and work

that up.

Under the unified command, the responsible party high-jacked

the entire process. We were basically at their mercy, their decisionmaking. We were disconnected from our State partners and I believe from our Federal partners in the process.

We actually called it unidentified command. We would wait for

weeks and weeks trying to get things done. We wasted incredible

amounts of time looking at boom strategies and national contingency plans and area contingency plans that were extremely dysfunctional. They were antiquated. There was no span of control.

There was no unified command.

The State of Florida in my area in the Panhandle was being controlled from Mobile. It was a breakdown, as the Governor indicated

earlier, from communications and processes, the methodologies. It

was completely broken.

So to answer your question, emphatically no. OPA did not work

on the ground level, it did not work at the State level, and I think

it failed the folks in our country.

Mr. MCHENRY. So this was a management problem.

Mr. WILLIAMS. Yes, sir.

Mr. MCHENRY. Clearly.

Mr. WILLIAMS. Yes, sir.

Mr. MCHENRY. And your experience with storms is what?

Mr. WILLIAMS. Primarily living in Florida, and I guess growing

up originally it started, I guess, when I was 4 in Camille, MS. But,

with Florida, I’ve been elected since 2004, 2005. You know the history where we crisscrossed our State with four hurricanes in 1

year, heavy, heavy damage. And as an elected official I have

watched a masterful process.

And, obviously, Florida has mastered—Mr. Fugate now being

head of FEMA coming from Florida. We know how to do it at the

ground level. We make good decisions. We work with our emergency management partners. We work with our State partners to

make those critical on-line decisions. This process was dysfunctional and broken.

Mr. MCHENRY. And Stafford was clearly better?

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Mr. WILLIAMS. Yes, sir. It gives the local government the ability

to pull on the resources as necessary, but to make on-the-ground

field decisions that we can implement immediately. We had to go

through an approval process. To give you a very poor analogy, it

is like go ask your mom, go ask your dad; and I could never get

a straight answer.

It is a system that I think this group particularly in Congress

has to look at. There are lessons in Homeland Security. There are

lessons—as the Governor indicated earlier, if we drill off of Cuba,

China, etc., as bad as the responsible party scenario was, without

a responsible party, where would we be? Multijurisdictional lines

and centralized command has to be charged.

One point I would like to make, I came a few months ago during

the National Association of Counties and met with Intergovernmental Affairs and requested the ability for Intergovernmental Affairs from the administration to work with the directors of emergency management within the five affected States so that we could

go back and look at case examples and studies and what could we

do better. That I think is very critical. And I would ask that the

chairman and this commission review that so we can get down to

our emergency management people at the State level and to our

county level so this never happens again.

Mr. MCHENRY. Thank you again.

Chairman ISSA. We are not going to do a second round, but there

will be just a couple of quick comments, one from the gentleman

from Texas and one from the ranking member.

Please go ahead.

Mr. FARENTHOLD. Thank you very much.

To Mr. Bromwich, do you think that what’s going on now—the

increased permitting process and the time involved—is driving up

the price of gasoline at the pump?

Mr. BROMWICH. No, I don’t.

Mr. FARENTHOLD. You don’t think there is a concerted effort

going on to do that with the slowdown in the Gulf of Mexico, which

is a quarter of our domestic supply?

Mr. BROMWICH. Concerted effort by whom?

Mr. FARENTHOLD. I think this administration.

I’m typically not a black helicopters guy, but if you look at what’s

going on, if I were a speculator, I would be buying oil futures.

We’ve got the slowdown in the Gulf. We’ve got a slowdown of

land leases. We’ve got the EPA talking about fracking regulations.

We’ve got the sage lizard, which is another quarter of the production, in the Permian Basin of Texas. It is like we’re trying to run

these gas prices up.

Mr. BROMWICH. Well, I can speak for the issues that I’m aware

of, which is offshore. There is no such effort. There has never been

any such effort.

Chairman ISSA. Would the gentleman yield for just a second?

Mr. FARENTHOLD. Yes, please.

Chairman ISSA. If the gentleman could respond to the MMS finding up on the board which we cited earlier, that might clarify it,

since MMS found that there was a correlation between a reduction

in the Gulf and increase in price. That’s your own study.

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Mr. BROMWICH. Chairman, I’d never seen that before. I don’t like

to comment on things that I’ve just been introduced to.

I have read in recent weeks a lot of very knowledgeable commentators, including economists, who say it is a world market. And

a relatively minor slowdown in permitting here has virtually no impact on prices.

In addition to that, as you know——

Chairman ISSA. The gentleman’s time——

Mr. BROMWICH [continuing]. There has been no cessation or

delays in production. Production has continued all along. There

was never a moratorium on production.

Mr. FARENTHOLD. I do want to just reclaim my time for a second.

Historically speaking, you actually see a spike in the price of oil,

whether it is driven by speculators or the market, even when

there’s a hurricane that’s delaying production in the Gulf just over

a couple of days. How can you rationally say that a long-term slowdown in the permitting process isn’t going to affect the price of oil?

Mr. BROMWICH. Because I don’t—well, you asked me whether it

was causing a rise in the price of oil now. My understanding of

world market conditions is that production has continued at pace,

that the projections for declining production are not for the present,

they are for the future. And, therefore, I thought the question was

about the present; and I don’t think it is having an effect at

present.

Mr. FARENTHOLD. Just real quickly, there have been reports—

you know, we’ve had record oil production in 2010—domestic production. Do you think that record is going to continue through 2012

as we start to see the results of some of these changes in policies?

Mr. BROMWICH. Well, the EIA, which is considered the most reliable sources of energy production, does predict a decline in 2011

and in 2012. I don’t have a crystal ball, but I’m not in a position

to dispute that.

Mr. FARENTHOLD. So a decrease in production typical under supply and demand would probably result in an increase in price of

oil and corollary price of gasoline at the pump?

Mr. BROMWICH. Well, but that presumes that we only have a domestic market, which we don’t.

Chairman ISSA. We’ve been joined—I thank the gentleman.

We’ve been joined by—wait a second, would the gentleman yield

for just a second from his time?

Mr. FARENTHOLD. Yes, sir.

Chairman ISSA. Mr. Bromwich, I would just like you to—we will

give you a copy of it, but since that study that said there would

be a rise based on a lesser reduction in the Gulf than actually occurred or is occurring, that was delivered under our discovery request from your organization. You gave it to us. So, hopefully,

you’ll take it back, look at the information that we received pursuant to our request from you, and figure out whether or not you

should have seen that document before your agency allowed you to

come here.

Mr. BROMWICH. Just to be clear, Mr. Chairman, I don’t review

every document that you ask for and receive. Just to be clear.

Chairman ISSA. I understand. But since this one said just the opposite of what Mr. Hayes said and what you’re saying, I think it’s

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a good one for to you review. And you can comment back about

whether you think it was accurate, since it was an internal document.

Mr. BROMWICH. Happy to do it.

Chairman ISSA. And we’ve been joined again by the gentleman

from Virginia, Mr. Connolly, for 5 minutes.

Mr. CONNOLLY. Thank you, Mr. Chairman. I have another hearing at Foreign Affairs, so that’s why I’m going back and forth, and

I think the Chair’s indulgence.

Mr. Bromwich, during the first panel you probably heard what

I heard Governor Barbour state, that simply enforcing existing

rules would prevent future oil spills. When the National Commission of the Gulf Oil Spill issued its report, did it say that simply

enforcing existing regulations would be sufficient?

Mr. BROMWICH. No.

Mr. CONNOLLY. What did it say?

Mr. BROMWICH. It pointed to a series of contributing causes to

the oil spill, a variety of primarily human errors committed by personnel from BP, Transocean, Halliburton, and so forth. And it specifically said that, I believe, as I recall, that enforcement of existing

regulations would not have prevented it.

Mr. CONNOLLY. Would not?

Mr. BROMWICH. Would not have prevented the oil spill.

Mr. CONNOLLY. Are there improvements in the enforcement or in

the regulatory framework itself that could be helpful?

Mr. BROMWICH. Yes, and we have already taken many of those

steps. Our drilling safety rule, which is addressed to well design,

well casing, cementing, and blowup preventers, we think substantially reduces the risks of another spill like Deepwater Horizon.

As I said before—I’m not sure you were here—we will never be

able to reduce it to zero. We won’t. But we have reduced it already

substantially. And I think over time, as industry wants to go into

deeper and deeper water and the regulatory process needs to keep

up, I hope that we can further reduce that risk. But it will never

be reduced to zero.

Mr. CONNOLLY. One of the arguments made by Governor Barbour

and others is that you have 31,000 oil rigs, the safety record is fine.

You know, once in a while one bad apple shouldn’t cause us to turn

everything on its head.

My point to Governor Barbour was, well, but one blowout of this

magnitude is pretty significant, and shouldn’t we be doing everything on our part to try to minimize that ever happening? And the

fact that this happens once is once too many, given the severity

and magnitude of the disaster.

What is the view of the administration with respect to sort of

rolling the dice and taking our chances on a blowout?

Mr. BROMWICH. Well, we don’t want to roll the dice and take a

chance on a major blowout.

Again, the risk will never be reduced to zero. But we think we

can do and have already done many commonsense things to reduce

that risk.

And, further—I’m not sure whether you were here at the time—

but this is not unprecedented in the sense of losses of well control

that nearly led to blowouts. This was the only actual blowout, but

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the President’s Commission found that there were 79 instances of

loss of well control between 1996 and 2009. So another way to put

it is 79 almost Deepwater Horizons.

Mr. CONNOLLY. So the idea that this is a unique event and really

apparently an act of God or something like that is misleading.

Mr. BROMWICH. Well, thankfully, it was unique in terms of the

fact that the well totally blew and you had 4.9 million barrels of

oil spill into the Gulf. But in terms of the problems that arise particularly in deepwater with high pressures and so on, no, it’s not

so far out of the norm that it begs to be dismissed.

Mr. CONNOLLY. One of the things that the Obama administration

did that some might view as prudent after such a high-magnitude

accident was a temporary moratorium on additional permitting

until we had our arms around the causes and the prevention and

so forth. In listening to some of the rhetoric and even reading some

signs we seem to favor around here, one would have the impression

that that moratorium has led to a significant plummet in domestic

production. Is that the case?

Mr. BROMWICH. No, it’s had no impact on production, because

production was never stopped or delayed.

Mr. CONNOLLY. It is not true, as a matter of fact, that domestic

oil production in the Obama administration is actually higher than

that of the Bush administration?

Mr. BROMWICH. Yes. As of the end of 2010 that’s exactly right.

Mr. CONNOLLY. And is it also true that applications for permits

to drill actually increased in the Obama administration over the

Bush administration?

Mr. BROMWICH. I believe that’s right.

Mr. CONNOLLY. And is it also true that production on the Outer

Continental Shelf actually also increased under the Obama administration over the Bush administration?

Mr. BROMWICH. It has.

Mr. CONNOLLY. Thank you very much.

Chairman ISSA. I thank the gentleman.

We have had a vote called on the floor; and so, with that, I want

to thank all of our witnesses for your generosity of your time. The

record will remain open for an additional week to allow you to add

additional information, plus opening statements of Members on the

dais who were not able to be here.

With that, we stand adjourned.

[Whereupon, at 1 p.m., the committee was adjourned.]

[The prepared statements of Hon. Edolphus Towns and Hon.

Bruce L. Braley follow:]

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