our task is to use all the possibilities in order to make our new world and more fair and just by many citizens of the countries the world where determined much more by talent and work rather than the federal circumstances rent where people will be negating a world where people are not afraid of authorities and international relations are free from democracy. the world where it is much better and efficient to work together jointly. in many countries the new generation have come and came into being at the end of the

cold war and by referring to russia to implement our dreams together. we are prepared and willing to do that. we are moving ahead to the agreed transparency and coordination and i believe that the process is as referred to because russia a new example of a new principal and process within the international politics. by the way i would like to remind you that yesterday our parliament definitively from the fight. we have to build from a number of well-known principles. sometimes we forget about them

>> [inaudible] any oral opening statements at hearings are limited to the chairman and the ranking minority members. this will allow us to hear from our witnesses sooner and help keep members on the schedules and others can be included in the hearing record under

unanimous consent. i ask unanimous consent all records opening statements be made part of the hearing record if they are submitted to the chief clerk by 5 p.m. today. hearing no objection so ordered. >> we have two witnesses today and i will make a formal introduction after our opening statements, but i am very pleased that they are here. they're spending all day on the hill. the first start was spent on the other side of the capitol and now we are here and i will welcome them formally in a moment it's been nine months since the explosion and oil spill in the gulf of mexico the resulted in the death of 11 men and the burning and sinking of the deepwater horizon raid. since then, 5 million barrels of oil spilled into the gulf resulting in the economic displacement of tens of thousands of fishermen, workers and people connected to the offshore industry. the oil spill was a terrible tragedy and the effects are still being felt today.

this committee proceeds with its oversight duties, we must be mindful of how we respond because that response could significantly impact american energy policy in the future the response to this event could be the difference between making offshore drilling the safest in the world or locking up our resources putting more americans out of work and from the relying on foreign countries for energy needs. it is because of these serious implications that i have stressed from day one the need to have all the facts and information surrounding the cause of the incident before there is a rush to judgment or rush to legislate. when president obama announced he was personally appointed in the commission many in congress and around the country were deeply concerned with both the makeup and the mandate of the commission. there were concerns the president's commission didn't have enough experts and

engineering with experience in the oil and gas industry and that it was comprised of individuals who had dedicated a significant portion of their career to opposing oil and gas drilling. while understanding these concerns, i kept and in keeping an open mind of the recommendation of the president's commission this is why this is the first scheduled committee hearing in this congress, and i am anxious to hear from the co-chairs. this report provides further insight whether it will be a factor in the congress discussions. however, even with the commission's report, we still don't know precisely what caused the explosion or wife of low wall preventer field to work. there will be additional reports in the coast guard marine hearings in the chemical safety board hearings and hopefully they will provide answers to these lingering questions among others.

through this on certainty what i do know for sure is that america needs american made energy. we need to keep and create american jobs and mitigate america's dependence on foreign energy that threatens potentially the national security. the oil spill was a terrible tragedy but it shouldn't be used as an excuse to further reduce america's access to the energy resources. some in congress view this bill as an opportunity to shut down offshore drilling. to me that is not a solution, that is giving up. this legislation aimed at this was introduced last year and will predictably be proposed again in this congress. this, despite the strong support among american people for continued offshore energy production. republicans want to make offshore energy drilling of the safest in the world. we believe in the need to make

smart, effective reforms that are centered on improving safety, putting people back to work, and allowing responsible drilling to move forward. the right response to this bill is to focus on making the ruling safe, not in possible. the importance of this committee's future work cannot be understated. gas prices are steadily rising. iran has assumed the presidency of opec and the rigs are leaving the goal for foreign countries like cuba, brazil and mexico taking american jobs with them. this isn't speculation. it's happening. my colleagues from the gulf can attest to the economic pain felt by people and businesses do to this administration struggling moratorium. production in the gulf of mexico has already fallen by more than 200,000 barrels per day and is predicted by the energy information administration to

fall by more than 500,000 barrels per day by 2012 to date every barrel we don't produce from the gulf means more lost revenue to the federal government, more lost jobs in additional transfer of american wealth to hostile nations. i believe in american ingenuity, and i know that we can get this right. the answer is to address what went wrong and make smart reforms and allowing drilling to resume. the stakes are too high to give up. our economic competitiveness, american jobs and national security our online. with that i recommend is believed to recognize the distinguished member. >> i thank you very much and on behalf of the democratic members of the committee, please accept our sincere congratulations on your appointment as chairman. on this side of the ogle we look forward to a productive working

relationship with you and the majority occasionally punctuated by knock down drag out fights over issues we care about deeply. while i applaud the chairman for holding this hearing today, i am also deeply saddened that this neighbor is necessary. industry and federal regulators assure the american public that a disaster like bp deepwater horizon spill could not happen. the event of last april and the subsequent investigations have demonstrated that those assurances were worthless. the american people are left to come the economic and environmental costs and even families are left without their loved ones. is vital to the nation's energy future that we examine the causes of this tragedy with

eyes, ss the lessons to be heard with open minds and commit ourselves to fundamental reform with firm resolve. in the testimony submitted for this hearing, the commission co-chairman, and we thank you both so much for your service to our country point out that, quote, the united states has the highest reported rate of fatalities for the and hours worked and offshore oil and gas drilling among the international peers. mr. chairman, that shocking statistic does not mean that bp or transocean or halliburton operate on safely. it means the entire american offshore and oil and gas industry operates safely compared it to its international peers. the quote from the witnesses again, the central lessons to be drawn from the capacity is that no less than an overhaul of both

current industry practices and government oversight is now required. mr. chairman, this is not a time for half measures or tinkering around the edges. this is a time for both reforms. the lives lost and the damage done as a result of this tragedy required nothing short of fundamental change in the way we conduct the business of offshore oil and gas development and production. i am proud that democrats in the house took a major step toward such an overhaul by passing the consolidated land, energy and aquatic resources act in the last congress known as the clear fact included many recommendations contained in the report. while michael leaves on the republican side may not have liked all that was in that legislation, it is my hope that

now that the commission has made many of the same recommendations that we can work together in a bipartisan effort to craft new legislation's. to that end, have joined with ranking members waxman and rahall, miller and johnson along with energy ranking member rush told and others to introduce new legislation combining the best elements of the act with recommendations from the commission. we welcome though review of that legislation by the commission and by our colleagues on both sides of the aisle. if we are shortsighted and complacent, today's hearing will be an end. if we are visionary and engaged, today's hearing is only the beginning of having america have to the most productive oil and natural gas industry. that should be our goal, and that is the goal which i think

every american should be aiming to achieve in any legislation we pass. in closing, again, offer my sincere gratitude to senator gramm, you come administrator reilly, and all of the commission members and staff for their hercules efforts and willingness to take on this investigation and the dedication to completing its in such a short period of time and such thoroughness. this committee and the american people are in your debt and i think you for your efforts and the chairman for extending me those few extra seconds to beat >> thank the gentleman for his opening comments. ra too look forward to working with you and i want to welcome the witness is here today. i know that since this event happened and the appointment of

the commission there was a lot of work done by both of you. the honorable bill riley is an administrator of the epa and of course on the hill people do remember florida senator bob graham and former governor if i'm not mistaken in the state of florida, so certainly there is an expertise. with that, i would remind you that under the committee's rules, you have five minutes for your oral testimony, however condor record and statement will appear in the record. over here we have these little boxes that have green lights, yellow lights, red lights. when the red light comes on you know you're at five minutes. when the green light is on you were up to four minutes and have four and a half minutes. we will open up to questions to a committee that once to talk. with the bible first introduce

mr. reilly. kuran. >> lynndie member markey, members of the committee, it is a privilege and honor for us to appear before you as it has been to serve on this commission particularly to me to serve with my distinguished friend and longtime friend and colleague bob graham. i will make a brief statement and ask that my testimony be included in the record. i want to begin by saying that with respect to oil and gas we need a resource. it's vital to the economy, in itself, a way of life and a contributor to productivity, jobs, the gdp, and avoiding even more necessity to important international oil markets. this commission believes we can

develop offshore oil and gas resources safely. we can do it in the deep water and i could signal that deep water is where it is. that is where the industry has been going and will be going in and even more significant way in the years to come up the country's confidence in offshore oil and gas development has been shattered to read the commission determined that the government and industry both were characterized by complacency. that has attracted a good deal of attention and some criticism. i would just say very briefly that when you have, as i learned from tony heyward, the ceo of bp the week after it took office as the co-chairmen when you learn from him there is effectively no subsea containment technology capability, when you look at

response plans to talk about protecting walruses in the gulf of mexico, when you see the inadequate technology that is in default since i oversaw 20 years before in prince william sound, and when you see that there has been 79 instances of loss of well control between 1996 and 2009 in the gulf and as was mentioned a fatality rate is five times that of the north sea and punishing and firemen and finally that you have present contractors which are deeply implicated in the bad decisions that contributed to the high risk that we uncovered. you have to conclude both of the other was an order of complacency and so many leaders as i said i didn't think this is possible, we didn't think this could happen, but also contractors who have supplied

faulty cement to a bp riggins or failed to detect gas rising in the drill pipe on the bp rig it is unconceivable given a wheel and gas doherty to let inconceivable to us this would be confined to one company which was my own promise starting out so we did conclude this is a systemic problem that has been characterized by an atmosphere of complacency. i want to signal one more thing and that is the history of the budget of the government regulatory agency on which we are quite hard and critical of its effectiveness, capability, professionalism to carry out the assignment the law gives. the budget for the mms has gone

down 20% since 1984 while offshore oil and gas production has tripled. so to address these issues we have three principal proposals. first is for a safety authority within the interior department and entirely walled off from political interference with a director appointed for a term which like the fbi director and adequately resource to and budgeted. we recommend the industry establishes safety institute, high-risk industries that have had catastrophes have learned from them, the chemical industry after responsible care, the nuclear industry after three mile island with the incident from the nuclear power operations, those should be focused on best practices and bring up the game of everybody and allow the companies to have some means of ensuring that one company, one bad performer doesn't bring everybody down and cause all of the rigs to be shot down in the gulf as was the case last summer.

i want to signal the dimensions of the issue if you get a map of the gulf mexico the united states has sovereign jurisdiction over far less than all of it. we now know mexico intends to go into deep water in two years, cuba, the next year or two and we need some kind of international understanding or treaty with respect to the standards that will apply to those activities. we also needed in the arctic where russia is intending to go into its arctic waters with bp and canada denmark is already begun and greenland last summer. we need the same kind of attention on the department to ensure the arctic waters are given the kind of special protection that the desert. we make a number of recommendations particularly relevant to science and the science that is needed to pursue wheel and gas development in those very different waters with all of the high risks the special storm action falcon and

the cold in tale. >> welcome those are some of the principal recommendations of wanted to cover, mr. chairman, and i would only say that they are relatively modest in my view in terms of both money, certainly in terms of bureaucracy and disruption to reorganize the department will not take much in the way of money to budget adequately the boemre. it's relatively small and the cost of the accident we just experienced and the overall revenue that the united states received from offshore oil and gas development and loyalty. i think it's money that would be well invested and we look forward to your questions and recognize the commission. over to you. >> thank you. >> i appreciate very much your testimony.

senator gramm, you are on. >> [inaudible] other members of the committee. i know many of you -- >> press the microphone, senator gramm. >> i know many of you are commencing your service in congress and let me extend my congratulations. you are beginning a journey which will have immense gratification and personal pleasure. i congratulate you and wish you well in your service. mr. chairman, our commission was established in may of last year. we were given three responsibilities. first is to determine the cause of the deepwater horizon explosion second coming evaluate the response to that disaster and third, advise the nation about future energy exploration particularly in the offshore environment.

january 11th we submitted our report called deep water, the future of -- the gulf disaster and the future of offshore drilling. we've been subject to some criticism. one was we've lacked independence in the course of our investigation we were able to make just about everybody mad at us. from time to time the industry was mad, the white house was mad, maybe this committee escapes that. we established the fact that we were looking at this from this perspective of the american people's interest and none other. second, there was criticism that we were not confident to carry out this task. but the modest to try to defend or competency. i would submit the report, its findings and recommendations and you can evaluate whether you think that we had the skills

both among the seven commissioners and an excellent staff led by mr. richard lazarus who gave tremendous support throughout this endeavor. i've like to make one general comment before i turn to the two areas i am going to particularly discuss, and that is that there is a difference in the offshore gulf from what we know which is the onshore oil and gas production. onshore oil and gas production is a combination of drilling on privately owned land and public land. all of the drilling in the gulf of mexico is on publicly owned land which belongs to the people of the united states of america. the way to look at this is not just as a regulator, a government regulating private enterprise going about its

private business. we also are in the role of a landlord. we have an obligation to protect this asset that belongs to all the people of america and to the table to continue to draw upon it for a variety of purposes. yes, energy, but all sorts of seafood and it is one of our major tourist areas just to mention three of the benefits that we derive from the gulf. so are we fulfilling our responsibility to be a prudent plan for? i am going to discuss the area of response and containment and then the issue of where do we go from here in terms of restoration of the gulf. my good friend bill reilly has already mentioned that the response to this event was to

say the least very disappointing although there were some respondents detective quickly, so heroically, the commission concluded that neither bp nor the federal government was prepared to conduct an effective response. there was a failure to plan in advance for such agent, failure to coordinate particularly between federal agencies and state and local officials. in addition neither the industry or the federal government at invested in their research to understand in a participatory way what we would be facing if we had such an event as the macondo blowout. much of the technology we were able to bring to the problem was the same technology that had been used 20 years earlier in the exxon valdez, which is to say there was almost no technological wide stance taken

as a result of the experience of exxon valdez. we have made a number of recommendations on the response and containment including at the department of interior in consultation with other agencies should develop a more rigorous set of requirements for industry response plans. .. the second area is restoration.

the data for this event is april night, 2010. if we define our goal has been to restore the goal of the condition it was not april 19, we have missed an enormous opportunity. frankly, the g-golf on april 19 with a degraded area. it had suffered for decades of misuse and most romantically shown by the marshes of louisiana, which has been receiving at a rate of over one football field every 30 minutes. we felt that this was a chance to begin a major process of restoring this very important part of our nation. we have recommended that 80% of the fines and penalties that we anticipate will be assessed under the clean water act the direct did at gulf restoration.

that will require your approval. only congress can make that commitment of those fines and penalties. but we believe it would be money well spent. we recognize that it will require a significant amount of time, probably an average of 20 to 30 years to complete restoration. we believe these funds would be the basis of a major down payment towards that objective. i'd like to conclude my remarks. i got the signal, mr. chairman. that truly is inherently risky. we can never reduce it to zero, but we believe the steps we recommended will substantially reduce the probability of other repeat of macondo and should that happen, will significantly

enhance our capacity to restrain its consequences. mr. chairman, i will submit my full report and they appreciate my willingness to receive it. i look forward to responding to your questions. >> i think the both of you. for the record, and it would not be the query of my throat that you responded to. nevertheless, i appreciate that. and i did allow -- it did want both of you to finish your remarks and they allowed that to which you want to stay as close as we can. i just have an observation and a question that i want to ask right from the get go. when the event happens and i was asked to respond, i sort of been on the order, number one, we need to stop the leak. number two, winning two of epa accountable and number three, we need to make sure that the restoration can get that part of

the country back to normalcy however you describe it. and i've been saying that right from absolutely say one. you spent a great deal of time on the report. most of your testimony talked about what should be done in the future. and i alluded to this in my opening statement that the key both to respond to it. we still don't know what caused the explosion unless we miss some rain. by the vop would cost the case. if there may be a time in the future when are going to answer that or we wait for other reports to come in before we draw conclusions? whoever wants to go first, i'd like both of you to respond to that. >> will cover what we know is the event occurred and we know a great deal about why the event

occurred. we've identified in our report nine instances, nine human decisions that were made in the hours before the macondo explosion, which we think was the precipitating cause of this immediate event. it is true that no one at this point have had the benefit of the full forensic examination of the ball preventer. it has had a massive facility in new orleans being closely examined. what we do know is that it didn't perform as it should have. if it had been able to perform ad hoc to my model, it's questionable whether that would have avoided the explosion because gas and dirty cotton beyond the ball preventer at the time that it would have gone into effect.

so i believe that i report that adequately, accurately and comprehensively addresses both the immediate cause in the context in which that occurred and which was a long period in which government had done a very inadequate job of regulation, which the industry had on into this culture of complacency and what the consequences have been an enormous economic and environmental cost of the people of the united states. >> i would just add, mr. chairman, we know enough. we know what happened. we know that in the negative pressure tests, which was supposed to determine whether cementing had sealed off well, we note inconsistent inconsistent information came from the kill line and the drill pipe. in the good news was except to

what the conflicting information was rechecked it in the drill pipe itself, indicating there had not been a sealed. the cementing had failed. we know that. we know the disgusted rise in the drill pipe, it was not noticed although we have documentation of the instrumentation, the record that should've been recognized by a professional monitoring that instrumentation to indicate gas was coming up the race here. it was not recognized until it was too late. so we know those things. those are a couple of examples. a number of decisions are made by people who are not alive and we cannot speculate on how they came to make some of those decisions were to miss some of the information that they did have. and if you look at page 125 of our report, with less about nine decisions, seven of which had a corollary benefit of saving time. no doubt they were identified as more efficient ways to proceed

with the two alternatives to most of them and they were chosen. so these were -- the immediate proximate cause was a series of bad decisions, very hard to understand decision on the day of april 20th and leading up to with respect to halliburton supply of cement, which failed three of its own test and i'm subjected to by our commission by chevron's laboratory for testing demand. so we do know those things. and i'm quite confident we've established the facts here. >> attend is running out. i would just this observation against which you've alluded to both of you as somewhere along the line is something wasn't right. we heard that in testimony from the industry when they were here shortly after. they said we don't know what happened, but we suspect that this is going to be the case and that you have confirmed. but we still don't know what mechanically or whatever else the town.

i thank you for responding to that. mr. martin. >> thank you, mr. chairman very much. thank you for this report. this report is a blistering, scalding indictment of pratt says engaged in by the industry and by regulators that created the conditions that made this accident possible. my question to you is if your recommendations are not a top did or provisions similar to those which you recommend, do you think we run the risk of repeating that catastrophe once again in the waters of the night states? >> yes. as i said, even if all the recommendations for a top did, no one could issue an insurance policy that there would be no repetition. what i could issue an insurance

policy that the likelihood of the repetition and the consequence of the repetition will be significantly less if these recommendations are a top bid. one of the things they care erases these recommendations is they are not from outer space. most of them are from the north sea, a place which has a more punishing environment in the gulf of mexico, yet has a dramatically different record in terms of fatalities. we believe that some of the experience they are, ironically the same companies that are operating in the polls are operating under those standards in the north sea. so it is not a mystery or a new set of standards to those companies themselves. and as i said in my report, i am learned that if we do not, if

were cameras and if we have an enhanced likelihood of an event similar to the macondo, that we are all going to be pointed out as to why we were unable to recognize why we were unwilling to act in the public interest. >> do you agree? >> i do agree. i would add this is a very dynamic industry, which has transformed over the last 25 years estimate from shallow buttered deepwater which is a much more high-risk environment. it has not adapted its own to either prevent or respond to a problem of this support. i'll play one of the things -- well, it is free assuring that the rle adam hasner restrict good regulations to govern a lot of the things in the future.

frankly speaking, we don't consider that agency as it is now staffed, formed, trained and adequate to the tasks that they have. if it's not strengthened, i suspect we will see an incongruity between the sophistication of the industry and the dynamism and the failures of inspectors to understand some of the basic technologies to stand top of it. >> was a follow-up on that then. good demonstrations that can be implemented administratively by the obama administration. their other recommendations here that really need congressional action and so we change the laws. do you think it would be wise for us to not act legislatively to give that authority to the government so they can change business as usual? would be running the risk if we did not pass legislation? >> i think you'd be running a big risk. there's true crucial moves i believe the congress has to

take. one is to reorganize the interior department, simply to ensure that leasing revenue concerns that the sort that animated the agency over several administrations and three mms directors testified to before a commission, that those no longer in effect safety and environment regulation. the way to do that is statutorily on any kind of sustainable basis by creating a luff regulator within the department of the interior, the term apartment for the director. the second requirement in the first of the cost anything. second requirement is to adequately fund the omr we to carry out the responsibilities that it has. >> just a note here, bp has 760 osha fines versus one for exxon mobil. so we can understand there's something fundamentally wrong that they were allowed to continue to operate. senator graham, your

recommendation on legislation? >> i would agree with those two points and then the third is the one i made relative to restoration. only congress can designate a portion of the fines and penalties for the specific purpose of restoration, which we think in terms of the national interest in this region of america, the fac t manyf the problems that have led to the degradation of the gulf of mexico at the federal government at least as a part or if not the primary indicted figure. >> just very quickly, some people say it's just bp and the other is an play a role, including the government, the other companies didn't play a role. >> in the area of response, it was not just repeat. at the same thing at happen on virtually any of the riffs in

the gulf, would have had the same response because we would've had inadequate, unplanned capabilities that meet this such a unnecessarily significant impact on the economy and the environment in the gulf of mexico. >> i thank the gentleman. mr. alaska. >> thank you, mr. chairman. i think the witnesses. mr. chairman, i reviewed the report and i've also reviewed the members of the commission. and i have statements from every one of the members of the commission that do not support offshore drilling, including the two witnesses in divorce. and that concerns me because i can't figure out how this can be a report that was supposed to look for the cause is now trying to pass legislation when their basic goal is against offshore

development. in your statements, you said you know the importance. one gentleman said we can establish 75 years of the goal for independence. to meet that goal we have to reduce reduction, not reduce it. in the sincerity of really seeking a solution to a needed commodity, which is oil. i personally have another question because this administration. from either one of you, from a technical perspective, what makes deepwater drilling so significant and are these conditions typical of the u.s. ocs? what is different between the gulf and alaska? >> the difference between the gulf and alaska, 5000 -- a >> that i know and i appreciate your answer. i appreciate your answer.

as they reach a report from your position on arctic drilling with the president is we have stepped forward with caution. we have to make sure it can't be done to rapidly et cetera et cetera. but it's 150 versus 200 some odd feet -- 18,000 feet. and i worried about this country. we're going to spend about $400 again to buy our oil. in this commission are all against the development of offshore drilling. and i'm sure, by the way. some of the commission against opening in animal order. we are facing bankruptcy because we have not been able to develop our fossil fuels. and yet the commission, the majority, in fact all of them, our intent is not to a fossil

fuels. and i think that's inappropriate. lastly, if i can suggest one thing, mr. chairman, we have drilled in the polls about 42,000 wells including about oil wells. and nowhere do you report in your report or suggest why that was successful. we have one big spokesman hanna-barbera. now, how do we as a lack? was there any credit given for was done before and for those who did it? question, answer? >> to refer to sunday masses of oil and well. many contributed to the accident in several two fatalities. that's the record we have for the gold. deny, and he spills? >> i don't know how many spills were associated with those, but if you look at the list in the report that they were exposed to were near misses and close calls and enough to kill people.

>> driver down the street, slipping on the ice. >> say it again. >> it's like driving down the street, slipping on the ice. there is no failsafe way to do anything. it can be done better as senator graham said. you cannot eliminate us. you can reduce it significantly. i would point out to you, mr. young, the first of all when you what we really believe, what we really believe is in this report. we have a lot of authority and documentation behind the recommendations and findings in here. so i actually would suggest a method of interpreting comments made by commissioners perhaps in an earlier time without this mission, you look at this as the definitive record of where we really stand and we are for offshore oil and development. we think it can be done safely we also specifically recommend moratoria and alaska. >> that means you want us to go forth? >> what you express that in your report? >> this commission believes we can go forward to drill in the

offshore and sees, but it recommends a series of scientific analyses of coast guard search and rescue movement, of the range of activities that will have to be supplied either by government or the industry to ensure over the long-term it would be done safely. but we don't recommend that you specifically say that would not be a barrier to moving forward. >> it does say you're supporting arctic drilling in the report? >> yes, sir. you setting your remarks you recommend it be done with caution and that is certainly true. the distinctive set of challenges represented there. >> that's what happens. for 40 years we've been drilling in the arctic, we've been drilling or when we had the path for her. we have the two line operation. we been doing the drilling and we've done the study. we've done the work.

and all the sudden we have the moratorium and place by someone who doesn't believe in fossil fuels. you heard them last night on the floor. he doesn't believe in fossil fuels. and i think i want all forms of power, but all of a sudden we've got a commission report i don't believe that really suggests we can do it with delay, but will send money overseas. mr. chairman, my time is up. >> thank you very much, mr. chairman. mr. stallone from new jersey. >> thank you, chairman hastings and ranking member marquee for having the hearing today. the report in front of us today is cleared, in my opinion, that we cannot kill safely off our shores under the current system and our coastal communities the production from untrustworthy big oil. on the big oil would claim that

we control faithfully and expand drilling in the wake of our country's worst environmental disaster and the fighting of the systematic failures. as the deepwater rising disaster, the president has reversed course and thankfully taken drilling in the atlantic off the table at least for the next five years and i commend him for that action and believe he must make the policy permanent. only than 20 feet from the greed of the oil industry. also, house democrats passed a clear tube oppose the legislation, saying we need to wait for the commission's report. now that we have it, it's time to take action to prevent pickler from wreaking havoc on our environment and that's why introduce the new new drilling to prevent the expansion of usher drilling, which i believe must be the policy at least until we can be certain another deepwater rising incident will not happen again. i represent a drastic along the jersey shore. i live along the jersey shore as well, have all my life.

and one of the things i want to ask the two members, the two members of the panel, as i believe very strongly that the further you go out in the deeper you were, the more dangerous it becomes. and arguing against the need for reform can't oil and gas industry likes to make the argument that the bp spill was like an outlier and they point to long history of drilling in the gulf. in reality, is that to the vast majority of the oil gas and issues in the gulf has been shallow water? were drilling is much less complicated than an ultra deepwater with a deepwater rising was operating. it's a basically as we go further out and certainly my understanding is the authentic is strictly deepwater, not shallow water, that the danger is greater and that's even one more reason why what your recommendations that she put forth are crucial. i'd ask either of you could answer that question. >> the answer is clearly there's a relationship between danger and risk the deeper you go.

and it is also true that up until about 1890, virtually all of the drilling that is ever taken place in the gulf of mexico within waters of less than 1000 feet, which is the definition of shallow drilling. the circumstances have dramatically changed. and at the same time that the industry was developing a tech policy that can frankly only be analogized to detect knowledge he and his sophistication, there was an enormous burst of the offensive capability to drill in deeper areas. there was not a commensurate increase in the defensive capability to respond should there be an accident and to create the safety environment that would reduce the prospects, not 20, but to the degree possible, that there would not

be access in the materials that have been distributed, there is a chart, which is called mms budget and gulf of mexico crude oil production 1984 to 2009. it's on page 74 of our report. you can see the degree to which the production in the gulf of mexico has gone from being shallow water production now not only to deepwater, but the greatest increase has been in what described as ultra deepwater, where the risks are even more significant. >> mr. riley coming did you want to respond? >> now, i think just to reinforce what senator graham said, that the formations are deeper in the deepwater. that is they are well under even very often certainly the case of macondo they were 18,000 feet which is 13,000 feet below the

month level. the formations are under much greater pressure, something up in the range of 30,000 pounds per square inch, which means all sorts of things in terms of the complexity of dealing with a well situation that also involves of course robots come which are the only way you can monitor and maintain and improve a repair technology down at that level. so for all these reasons, it's a much more challenging enterprise and that's why the industry in our view needs to improve its capacity, recognize they are in a different era from the one the character a shadow what are drilling and establish the kind of safety and institute would recommend. >> thank you, gentlemen. >> thank you, gentlemen. >> ima to thank both of the distinguished witnesses for

being here today giving your testimony. you said earlier that you do not know why the love preventer did not work. contemporary concerns that you didn't even wait until a cute new what the cause of it not working was before issuing your report. why did she wait until we knew why the blowout preventer didn't work? is a key element in this whole chain of events. >> as was clear from the start of the president created up with the mexican border created a timetable of six-month period we made clear to them we didn't expect the blowout preventer to be before they bachus would it was taken up and still hasn't been frantically analyzed. so it was always understood the blowout preventer would not be part of our report. we did not have access to it and make any judgments about it. the failure of the blowout preventer to work himself known as to specifically why it didn't

work. it remains to be seen. i think i'll are there aspects of the bill were subject to investigatory analysis and we were able to make the judgments they give us confidence, but we know would have been. wow, thanks for the answer, but i think you are the president should have had the patience to know why it didn't work and the report would've been much more significant had we had that information. >> as commissioners, we didn't have that option. >> okay. secondly, "the wall street journal" editorial from two weeks ago, takes on a single member of your commission is a drilling engineer for expert in oil exploration technology or practices. don't you think the commission would've been improved had you had people with that kind of expert background on your board? >> frankly i think i was a relevant question to ask in the summer of 2010. today we've submitted an almost 400 page report.

we would like our confidence to be judged on this report. and if there are areas that you think demonstrate a lack of capacity to make the judgments that we did, we would be pleased to know what those are and we would attempt to provide a response or an admission of our naïveté. i would say that i believe even if you took the most extreme explanation of why the blowout preventer failed to function, that doesn't trump the other 95 yours that we've identified, that were contributing causes to this. so while i'm curious to know what the gop did, i don't think you would change the findings of

the recommendations we have made. we certainly would not withdraw our recommendation that the oil and gas industry should adopt the nuclear power industry has some form of internal capability to assess safety. we would not change our position that we need to have an effective, competent, federal agency that could oversee the industry. we would not change our recommendation that the agency should be protected by independence within the department of interior. those are our key safety recommendations and i don't think there's any evidence that's going to come from the forensic examination that's currently going on in a facility in new orleans at the blowout preventer that would enable those. >> okay, i'll move on to my next question here. in its undertaking of the investigation of the deepwater horizon and today, the national

academy of engineering and the national research council announced that they would not be issuing their final report until it has been peer-reviewed, which is their standard practice for reports issued by the national academies. has your report been submitted for peer review to any other kind of body or experts? >> is a public document. so it's not just submitted two peers. it submitted to the american people for their comments and evaluation. >> i would -- i would just say that it's been pretty well reviewed and pretty well received and commented on by experts in the field. and i also want to note that we say in our formal testimony that a senior technology and science advisors on this enterprise was richard sears who is 33 years of experience, senior experience with shell oil. he was present throughout our deliberations on technology. i'd also like to acknowledge

publicly we have strong cooperation from industry, three companies that spent several hours with us. chevron, shell and exxon mobil and cooperation obviously from the department of the government , for mr. bromwich and secretary salazar. widowed for range of inputs and plenty of opportunity on the scientific agencies, noah, coast guard, to ensure that what we say is grounded in good science and respectable technology. and i don't think so far. i must say we've become a little impatient, bob and i with the criticisms of our confidence or criticism of our commissioner, which maybe was okay to raise six months ago. but the proof is here. is there something wrong or if there are people who have objections to the findings are think they are wrong, we would be very happy to debate on that point. but it seems to me now a little

churlish to refer back to them without power there related to the advocacy for their park from which no one seems to be doing. >> thank you. >> thank you, mr. chairman. john amend, the offshore policies is based on some similar assumptions as i understand it. one was the blowout preventer's actually work. that was an assumption. the assumption was the industry have the ability to contain spills. the assumptions were that spills offshore won't ever hit onshore. there was an assumption based at our rate operated as safe as possible. and as they read through your report, that brought into question those assumptions. and so as a result and just for both of you gentlemen, don't we have two be right our offshore

policy based on the fact that we don't have assumptions we can make right now? senator? >> well, i think some of the assumptions are that drilling in the offshore is going to be a continuing and increasing part of america's energy supply. number two, that its acceptability to the american people will be closely aligned with the safety. you may recall that when three-mile island blue almost 25% of america's electricity was coming from nuclear power and there was an expectation that the percentage was going to grow, and maybe even to where frances, which is over 70%. but that one can vent so show the public towards a nuclear power that we had effect of lake

a 30 year hiatus of any expansion and therefore the percentage of the tri-city from nuclear power is dramatically less than it was 30 years ago. now whether to continue to do these in the gulf, macondo could have more effect as an island as a nuclear power industry, we can all speculate. but i think it's in everybody's interest that we can do this industry to the high standards. would anyone answer the question why should drilling for offshore oil in the gulf of mexico p. at a lower standard for safety and environmental protection than it is in the north he? is there some explanation as a matter of public policy by we should accept a lower standard, then i think we could have a very -- a very good debate. no one has come forward with making that assertion.

>> the other point i think you called the liability cap arbitrary of the report, the question is lifting the cap entirely as a means to assure that the tax payer doesn't get stuck with any bill beyond the cap. and two, as incentive to meet the highest standards of the senator just mentioned for drilling. any reaction to no cap at all on my abilities? >> would have recommended that the cap be lifted and we did not go beyond that. clearly the $75 million cap, which is now 21 years old, just the sheer change in the value of money as a result of inflation over 21 years would cause you to believe the 75 million was not adequate. i can, as bill pointed out, when

that cap was established, virtually all of our offshore drilling was known comparatively safe, low pressure areas and today the larger share of our jelly is in much riskier, deeper water. i am now going beyond what the commission recommended and just saying own feeling is that if we have liability caps, the rationale is to maintain a competitive marketplace in the gulf of mexico, that we don't want only the largest oil companies in the world to be able to drill. but we also don't want to have financially incapable company of causing enormous consequences. so that would lead me to feel that the congress might be able to fashion a policy built around

liability limits in relationship to risk. it's one thing to have liability limit for 100 feet of water than 18,000 feet of water. today the law applies to the same standard to both of those two cases. >> that which is that if i that, congressman, that the establishment of some kind of liability caps at both ensures a continuing capacity of independent to operate in the gulf, that doesn't just restrict to leasing for getting to a future majors, but also protects the public against being handed a bill for major damages caused is something that is going to take more time than we had in the six-month and probably more involvement of the insurance industry said i assume an insurance consortium of some sort would be necessary to address this. and i also would note that the liability cap in canada's

$35 million. if he gets 50 million pounds in britain and it does strike me with respect to those resources, such as a goal for me are sick or other countries activities are also involved, there may be some merit in working at a uniform system of liability which applies systematically to all oil and gas development in these areas. >> mr. fleming from louisiana. >> thank you, mr. chairman and thank you, panel members, for being here today and your service. there is no question about it this was a disaster. and like any disaster, even though we don't own the precise cause of the blowout, we know that some things have been better typical of disasters. because this is a high-risk operation, much like many other things we do, travel in space, flying in airplanes, rarely is

one thing the cause of the disaster. it's usually a number of different situations and make occurrence in bad situations that align themselves from which probably over time have occurred, but because some of backup redundancy the disaster was prevented and that can sometimes be a bad thing because what happens is we become, in your words, complacent. if i make a mistake as a backup system that will solve that problem for me. and obviously that is something on the industry side in the government side mini to bear in mind going forward. it was a disaster to louisiana, my home state in two ways. one comments were ecology, no question about it. but maybe even worse and longer term and jobs. louisiana has now left tens of thousands of jobs because these rates are so expensive, they have left our shores in some cases and more will calm to go

to brazil and africa and other places. what is interesting as they are going to other parts of the world that have less standards than we do. so i think that's a real issue we need to look at. now, the president lifted the moratorium. and i've been researching this. i can't find one single permit for deepwater drilling that's been issued since the lifting of the moratorium. but we don't know when they ever will. so what i'm concerned about and i would like to have your reaction to this as i see recommendations for more legislation, but i think we need to be careful about just moving the chairs on the deck. for one thing, we're asking noaa to sign off on things and that's a good thing, but is that going to make the permit process for difficult and slower? i'd love to have the reaction from both of you gentlemen.

is this really going to get us where we need to be and how is this going to affect the job which are so desperately needed and finally the price of gasoline and oil that going up because of the lawson supplied. >> i would say two things. i would agree with you completely to the degree that we restrict our own domestic production. we are essentially given our demand on supply, intending to get more oil and gas from risky places like the delta or venezuela. that's a given. that's an international perspective and recognize that in those places counts to the delta, some 25 accidents over the last 10 years. so that's a perfectly fair point. i think it's one that ought to underlie our approach many of these questions. with respect to the moratorium of, senator graham and i were specific early on.

we did not understand it. but it was excessive in considered a more selective approach that did not penalize those companies with good records come particularly once they have been -- after they had once been a did as they all were in the weeks following the trend for disaster. once those few infractions that were found were directed for, it struck us that it would've been reasonable to resume drilling at that time. but that is not happened. i would say going forward to the decree that we continue to fund her staff, underprepared, under form, underfinanced the regulatory agency, we are probably going to find that it is more like it to issue permits, less confident about finding the name to a permit unless able to get us back into business. >> do you have a response? >> i would just add to what bill

said he had happens to be the position of the major petroleum companies in great britain, that they actually affirmatively support a strong well-financed competent regulator as a key part of their ability to do their business. i believe they are right and i hope that we will calm to the same conclusion as to the industry here in the united states. >> can i get a commitment from you and mr. reilly yesterday suggested that the president not only lifted the official moratorium but allow permits, do away with what we have now which is a de facto moratorium. would you vote for the president should move forward and allow the issuance of permits? >> as i understand it and in fact there is a new story today that the orla vista primary

reason for the delay in issuing permits for those rigs that has met the individual standard, rick by rick contessa industry has not demonstrated that it has the capability to respond and contain or if it does, those standards have not yet been incorporated in the permit applications. if that the case, that actually, in my judgment, is a positive signal that were now down to essentially one issue and there also is some indication that the ability to meet that standard of adequate response and containment is near at hand. >> thank you, gentlemen. >> thank you on mr. chairman. i want to thank members of the commission for being here today and for your work. thank you: mr. reilly, senator

graham. as mentioned earlier there were some questions about the qualification of the commission i want to say i have a high regard for the members of the commission. senator graham -- chairman graham of the intelligence committee and my father were chaired the intelligence committee about the same time that we have a warm regard for you in your work. so i want to thank you for your service. i want to touch on a couple of things that were coming in now, in this book do we have here before us. i think the vast majority of the recommendations, actually a lot of the industry would say they don't really have a problem with. and you know, you're listening to someone who is a big supporter of the oil and gas industry coming from oklahoma. but some of meant that burbridge, sometimes even just the word -- just to pick out of the report again about some concerns about. one was the use of the term systemic, that there are these systemic problems in the

industry. and if you look at the 30 year history, you know, over the last 30 years, the history of offshore oil and gas reduction, there have been demint, but i think a major incident is very rare. if you compare with the airline industry for the commuter train industry or any other industry, the oil and gas industry has done quite a good job. the last few years we have seen documentaries like gas land on hydraulic fracturing. a lot of lists about there is driven by emotion. it really is driven by fax or science. and so i'm really concerned to read your comment even the state of the human life and about the oil and gas companies are making all this money, was through smart tags on them. there's a lot of good quality jobs created in states like oklahoma, louisiana, all across this country. and they want to do the right

thing. i want to do the right thing for the environment as do most americans. a couple of questions, really one question i do have about the clear act regulation legislation brought out earlier about the cap on liability. i've got independent oil and gas producers in oklahoma that have this question. we've been talking quite a bit about this, but given such liability requirements, did your staff for the commission asked the insurance industry of any independent operators would be able to obtain an insurance policy under such guidelines or circumstances? the reason why asked the question is i'm worried any kind of touched on this earlier with mr. grijalva, if we only have one or two u.s. companies that do the drilling, the chinese are going to be the only folks that can drill these wells, i'd like to see -- i'm not talking about a mom-and-pop company. i'm talking about devin energy

is a huge company in oklahoma, you know, but it's not as large as some of the big majors. these are thousands of employees covered very well capitalized. these are types of companies that could do this drilling without any problem. are you worried about that? in the shootout to the insurance industry about whether or not these smaller companies could in fact do this? >> we are worried about it and that's what we did not elect a member with respect to an increase. we said it be increased or we didn't say how much. we do what was required insurance company consultation and advice and help you didn't think we have time to get it. so we did not meet with the insurance industry on the liability cap. but for all the reasons you mention and our own sense that use a valued contribution that independent operators make to the economy, to the culture, industry and the gulf, we did not want to make the

irresponsible choice without adequate should not take inhibitor dignities or possibly even cause them to move to other jurisdictions for the liability cap is lower even than it is in the united states. >> i would agree with that statement. we try to operate within our areas of competence. and so the specific recommendations we made, we are prepared to defend them, weren't issue without sight of what we thought was a regional competence, such as the role of insurance come to me in determining the liability caps and how the role of -- of the role of insurance come any night you means of giving some assurance that we would not be limited to just a handful of companies. we didn't feel competent to comment on that. we did feel that on its face the

$75 million liability cap across the board for activities that are disproportionately risky and shallow in ultradeep fodder needed to be lifted in re-examined. we also were aware that the congress is going to make that ultimate decision and we did not feel that we had anything -- in the corporation for secure. i know your district son. i served on the board of an oil company who half of which used to be based headquartered in cartersville. senior executives they are -- >> are stunned by the use of the term systemic. and it perfectly willing to acknowledge they didn't see this coming, were prepared for, didn't think it could have been and how to response plan which

the chairman acknowledged was embarrassing to him because it had the same characteristics as the other response plan. so i would just say we do not by any means intend to disparage safety or environmental standards of some of her leading iconic oil and gas companies, whether the majors with the independent. but the facts i think speak for themselves with respect to this particular disaster in the latest report what we did. >> thank you, mr. chairman. mr. mcclintock, california. >> tournament coming thank you for being here today. -- failed catastrophically. the rogers administration was impaneled with particular experts. it painstakingly recovered the wreckage from underneath the

ocean it determined. a reassembled by package and then determine the precise cause of the disaster and then recommended changes so that the space program could move forward. the one thing we know for sure in this or was that the blowout preventer failed. let me ask you quite directly. she determined by the blowout preventer failed? >> the answer is no further reason that we gave you. >> did you like -- >> can i finish answering the question. >> it's a yes or no question. it's nighttime, senator. if i'm at it, so please. did you even look at the blowout preventer? >> no. >> most of the time or where it would've taken a robot to take us down and get there. >> let me read you "the wall street journal" particular part for ideological bias, and lack of expertise, credibility, lack of thoroughness.

and this is what they said. unable to name were called the well fill your results to a hodgepodge of speculations. adding to the confusion, it acknowledges he could find no evidence of bp's contractors and shows the risk of alternative and so forth. the commission didn't even wait to get not topsy of the field will preventer and again coming from "wall street journal," which is resting on the louisiana talk. why should we take your report seriously if you've not even made that modicum of effort to determine the actual cause of the disaster? >> well, as mr. reilly said to an earlier question, we had a presidential six months charter. we knew early on that charter was going to run out before the forensic examination -- >> did you ask for an extension of your deadline? >> we did not.

>> cu participated in a rush to judgment without even looking at the cause of the failure they created this entire disaster? >> well, i would just direct your attention to page 125 of our report, which lists the nine steps that we assessed that contributed. >> again, don't you understand how good the rogers commission issuing a report without looking the record. >> is cementing failed at this matchup failed to contain the well free from hydrocarbons. we said that. >> when i look at the question of ideological bias. this is also an engagement in "the wall street journal" editorial. they said the conclusion to report were quote all too predictable given the political history of commission members. former democratic senator bob graham fought drilling off

florida. william reilly cited the anti-drilling world wildlife fund and francis mckeever in the natural resources defense council, which is supposed to carbon fuels. not a single member with a drilling engineer or expert in oil exploration type knowledge your practices. >> congressman, i would say the use of the word predictable as surprising to me because what was predictable in a few of "the wall street journal" when they wrote their first critical editorial was that we would recommend against future offshore oil and gas development, which we very definitively did not. >> you are recommending a whole new level of iraq or see top of an obviously already failed to perceive that the obvious aim and indefinitely delaying of the production of our nation energy reserves. how much -- what is the economic damage caused by this disaster? do we have a figure on that?

>> we know it's in the tens of billions. >> i have an estimate here of worst-case and base case analysis of the economic damage caused by the moratorium and it runs from 279 billion on the way up to $341 billion. billion? >> alien i believe. i haven't seen those numbers. i would only say with respect to the bureaucracy question, he made clear my opening statement that the report and the detail on every organization of the interior department should be cause that we do want to segregate the functions from the environment safety regulation. that's a matter straightforward reorganization. second light, the degree to which we add the ending is

intended to provide more capability, more expertise, more professionalism and agencies. and i would fully expect based on my own environmental protection agency of facilitating a better regulatory oversight of the industry. i don't think that it could work to delay. >> i think it would work to improve and create more efficient in the relation between the regulator and the industry. [inaudible] >> mr. chairman, thank you for image. another support hearing is going to outlive the recommendations to prevent another deepwater rising disaster from happening again which is why think were here. it's not to debate whether one supports or opposes offshore drilling. it's to make sure we don't want this happen again and they'll understand the roles we have to play to get the.

in the lives lost 15 people. 200,000 of crude oil that ruptured in northern alaska. these are real incidents. what is most significant about the report is that it reveals

the culture of undermining safety standards is not just an issue for bp but an epidemic feel you're facing the entire offshore drilling industry putting directly from the report the blowout was not the product decisions made by the rogue industry or government officials rather the root causes are systemic reform and with industry practices, government policies, the bipartisan commission's report only confirms that congress must take action, do our part to prevent the disasters like this from happening again. during the 111th congress this committee could work to develop safeguards would modernize safety and environmental protections for federal offshore programs. many expressed an interest to see the report before we move forward. we now have that report and as i hear from witnesses of the bipartisan commission today, we have to ask ourselves what are we going to do, what is our role as congress to make sure this never happens again? are we going to sit back and

allow this to continue? we cannot turn a blind eye on this. the report outlines congress needs to act to protect the safety of people, the welfare of the communities and habitat of federal to the kawai of life. seven months ago we saw the images of the explosion that killed workers. the plumes of oil that devastated marine life, and vulnerable wetlands and the two entered 5 million gallons of oil spilled in the gulf because the deepwater horizon spell. let's never forget the people impacted in the families who lost their loved ones. it's in everyone's interest including industry cannot let this happen again. to understand the responsibility we have to do our part to prevent that. the first question i have is a yes or no question. we also learned during this bill how underprepared the federal government was to estimate the actual flow rate of oil spewing from the well. in fact the federal response was initially entirely dependent on

misleading the flow rate estimates provided by idp which had every reason to lowball them because we knew the life devotee was tied to the calculations on a per barrel basis. the legislation democrats introduced today creates a permanent scientific group that includes scientists from the national laboratories and the energy that will maintain expertise needed to estimate flow rates. is this consistent with your recommendation? >> it is consistent. yes, it is. we determined that one consequence of the structure of the law is the responsible party takes the lead in overseeing response we want to keep the liability fixed but one part of it which the government should have an independent capability to carry out is the determination of the flow rate and director has said that wouldn't be an issue next time. >> one last question and then we can get this answered leader is to report rebuilds the positives bill was over mismanagement and

adequate government regulation and a lack of political will to ensure proper oversight of the offshore oil industry as the push drilling into deeper waters. describing your report this problem is pervasive of offshore drilling industries. so my question is what will be the consequence of the reform feel to be prioritized including the passage of proper legislation to minimize the chances of a disaster like this from happening again? mr. chairman i know we are out of time and i want to be respectful to the other members so we asked the witnesses to mabey send goes back to us. so i think there is a very thoughtful the answer that we need as a part of that. thank you. >> thank you, mr. chairman. >> i thank the gentleman. >> thank you, mr. chairman. gentlemen, thank you for being here today. it's a privilege. in addition to serving on this distinguished committee also serve on the small business committee and my first question to do all in this regard is gentlemen, what would you say to the owners of the small

businesses in this region struggling to survive until operations are restored in the gulf? these people have lost most of the revenue streams if not all the revenue streams. it made extraordinary personal and professional sacrifices to retain employees and retain their businesses but they cannot hold on indefinitely. i would like you ought to address that, please. >> of course what you just described describes a number of the industries that are dependent on the gulf. there are thousands of fishermen who lost their ability to acquire their incoming and there was a degradation of the brand of the gulf seafood 20 to 30% drop almost overnight and the consumption the seafood which has not yet been overcome. we need some specific recommendations on that subject. the tourism industry which depends upon people's feeling they are going to go to a place

that is clean and healthy and enjoyable. it also suffered a tremendous damage. so the consequences of an even like this have rippling effects. mr. reilly has described the fact that we believe their needs to be a safe industry, there can be a safe industry but that there needs to be an offshore oil industry to meet the energy requirements in the united states. so, and we sympathize for all the small businesses with the be fishermen, restaurant owners or suppliers to the oil and gas industry and we hope we can get back in business as rapidly as possible with the safety measures that will protect all those interests. >> thank you. congressman, i don't know if you have had this experience, but i ordered some oysters in new york some time in september and asked

whether they were from the gulf and was reassured confidently by the waitress know we wouldn't serve any seafood from the gulf. that problem persisted through the fall. i understand it's not entirely disappeared now. people continue the, the fishermen, continue to suffer. i remember talking to the governor around memorial day of mississippi who told me that there wasn't any oil within 60 miles of the beaches of mississippi but there was 30% occupancy in what usually is the most important occasion tourism year, weekend year of mississippi. those stories and of europeans cancelling trips to key west where the we'll never approached are very poignant stories. vietnamese fishermen impressed me more than those of any other in my experience when i was in the gulf, and we had hearings. the first was in new orleans. we became familiar with the problems you described and they are as serious as you say.

>> thank you. i have a follow-up question. in additional fees and proposed taxes on the industry, what would the total government take away the including royalties, severance taxes, property taxes, income taxes, least bonuses and proposed additional fees and taxes mentioned in the report? >> i don't think that we have costed those numbers in total. the only thing i would say is it is important to keep in perspective the amount of revenue the government takes in from the oil offshore development anywhere from $68 billion in one year up to buy feed $18 billion in 2008. the second largest revenue generator after the irs, and we can afford to spend some very small proportion which would be in dollar numbers reasonably significant ensuring that it's better done than it has been done by the government. senator? >> according to the chart that appears on 73 of the report in

the year 1984, the budget of the mms was rendered $50 in 2009 and was somewhere south of 200. at the same time, the industry has the same chart displays as moved from being a relatively well-known shallow water industry to increasingly 80 potter high risk industry. you would have thought that the lines of cost of effective regulation would have coincided with the increase risk. i can't tell you a exactly what the member is, but it would be hard to justify what appears to be about a 60 to $70 million a year reduction in the kit devotee of the regulatory agency at the time the industry is

going into more risky areas. >> thank you, senator. >> dr. chris jansing. >> thank you, mr. chairman, and i want to thank our panelists for being here. on, too, want to commend you for the broad array of contributors to this very comprehensive report. among the many areas of concern come on, too come have to say i cannot understand the standards were lower than other countries and specifically lower than the u.k. if i remember correctly where bp should be the highest in the world. and i also want to support before i get to my questions, senator gramm's response on a moratorium, because according to my report, the department of interior since june of last year of sure shella water 500 feet or less, and only four or five shallow water permits under deep

water drilling the moratorium was lifted on october 12th and gas operators have to comply with the new regulations to show that the it strategy to actually contain a blowout. according to the interior department, thus far no one has been able to demonstrate that all the line of they are working on at and that is the holdup, not the department of the fact the companies are not able to respond adequately at this time. on the good news according to the department some companies are getting closer to being able to demonstrate that ability and i do share the majority hoped that this could happen as quickly as possible. my first question i wanted to follow-up and saying that a systemic failure occurred did you mean systemic in this case of the three companies and their management of the deep water horizon drilling or did you need

to apply to the entire industry and say that the entire industry has been complacent? i just want to understand what you meant by systemic. >> we didn't mean parents. that is that all companies were equally subjective as the culture of complacency. there are some companies that have a very strong record. what we meant to say was that there were evidences that the industry had not responded to the recognition that there were some out lawyer companies that needed to be sanctioned. you're medical physician if there was a physician in the u.s. virgin islands who was known by the others performing at a rate that people's lives at risk i would assume would be your professional responsibility to bring that into the attention. we do not feel the industry

carried out its obligation for self policing and the support the recommendation for the input organization. second, the example of response. response is an industrywide obligation. we don't expect every company to have all of the equipment is necessary to respond, but we expect the industry writ large to have the capacity to respond, and it was clear that not only was there not capacity but it had been relatively little investment in tuck technology or research development in the understanding of the environment that would have put them in a position to have produced response. >> with a comment on your point about the u.k. experience. we have discovered in the course of our research the companies and industries get serious about reforming practices and improving them when they have their catastrophe.

the u.k. this race catastrophe that cost 187 lives in 1989, our chief counsel was intimately involved in investigating the accident. there was after that that the regulator was separated revenues for regulation just as we are proposing here and to develop a different motive regulation is known as the safety case where were the particular is likely to be entailed in a particular situation that is with the acknowledgement of the formation that and all the rest be explained by the company in which the company proposes to address those risks made clear to the regulators that is the system now. norway has a similar system and they came to that after their catastrophe. australia today dealing with a blowout that occurred last year. it is that the commission of inquiry and the are reforming their own practices. islamic are you having that happen now?

>> we know that the industry is very seriously examining the possibility and practical challenges to the safety institute of the source we recommend a and we very much look forward to having the result of those inquiries and we hope they will do something along the lines that we have recommended. we think that it's very possible that they will. we certainly know that several ceos of major companies take it seriously mr. kaufman of cover-up. >> thank you, mr. chairman. first of all thank you so much for your work and what you have accomplished. i can't you mentioned some things that need to be done from your perspective some kind of international agreements others uniform standards. i think you talked about responsibility to an accident if it occurs having a definition of

that, but perhaps some insurance requirements reviewing that lawyer devotee issues. i think what i'm hearing from you is in terms of the prevention one is responding and the other is prevention. so in terms of prevention i guess my question to you is it adequate regulations exist, but was it merely the enforcement of the regulation that was the problem? because certainly we know that mms had very significant problems and i think there was a report in 2008 that talks about how dysfunctional mms was command and we heard in this situation here how the inspection simply didn't occur in the manner that they were prescribed and we are supposed

to occur, and so sometimes we have problems i see where we actually have laws on the books, regulations on the book but they are not being enforced. and so, i think that when we look at what is now the bureau of ocean and energy management regulation and enforcement mr. reilly it is reported that you come in yourself, said that personnel working for this agency are, quote on quote, often badly trained to be the secretary salazar said that he has already considered and executed some of the suggestions that your report is highlighted, hopefully effective training and cultural shift at his organization were implemented as well. do you lead the reforms among the others that secretary salazar is said to have made would have been sufficient to

correct the missteps the were made by mms prior to and during the deepwater horizon spill let's just go into the prevention. if in fact we have a functional regulatory organization that was enforcing the tax system rules would that have been adequate to prevent the incident occurred? >> let me say that i think the recommendations that -- and the new policy prescriptive regulations that the secretary have in pos are very desirable and are likely to be effective. - pressure tests are now prescribed. they were not before. a new range of requirements that appear to make sense, but the reality is that the existing personnel complement entails an inspector for every 55 rigs in

california is one for every six. the answers given to a series of interlocking for questions posed by the interior department and the coast guard in their investigations make clear that basic petrochemical technologies, guest technologies like cement and centralizing - pressure tests are not really understood by the inspectors who have said frankly that they take industry lead on those technologies, the the his been evolving over time and that we simply have to provide better formation, editor training and better compensation for the people conducting that work. so even if today the regulations are sufficient to guard against the repetition of this set of problems, on worries that in the fast evolving industry in three to five years the media outdated and in order to keep them up-to-date i think we are going

to have to bring them the game among the professionals in the agency. >> senator gramm? >> i would agree with that, and i believe that our recommendations such as the independence of the safety function within the department of interior are as important as the decisions that, chris made a number of years ago to make the fbi calls on independent agency within the department of justice. just like the fbi, the safety function within the department of interior is susceptible to the political interference and in fact in the case of mms it was rented interference and we think it's a combination of good regulations, confident capacity, adequate capacity and the insulation from inappropriate

external influences that are all part of what's necessary to get us up to world-class standards of safety in this industry. >> mr. treen, i yield back. >> mr. sarbanes of maryland. >> thank you, mr. chairman and all of you for being here. i know it's been a long day. i first wanted to commend you on the report i haven't had a chance to read it from beginning to end but i did look at a summary of the findings made are helpful and will be for a lot of us going forward. my understanding of gotten some criticism about whether you had everything in front of you, whether you had a blowout preventer and so forth but as i look at the recommendations, they seem to me to be confined to a kind that you could make with a lot of confidence without having the fix to a piece of information at your disposal. it doesn't strike me that

anything about your recommendations will be changed in any kind of sycophant way based on other information that comes forward because you have really deride from what you saw. there was also a comment about your recommending lawyering another bureaucracy on top of a failed bureaucracy, but as i again read the recommendations i think what you're doing is suggesting a reasonable set of regulatory oversight which in many ways will substitute has been a field bureaucracy. >> on the issue of bureaucracy, i would ask you to respond to a proposal to be the this is something i suggested in earlier iterations of legislation addressing the oil spill. it was a provision that we tried to include in the clear act and this would be a requirement that the ceo of the corporations of

the company's would certify, personally certified with a potential for liability to the adequacy and safety of the response plan. for the simple, you talked but many have diluted hokies response plans that were developed really across the industry it was highlighted in bp's particular oil spill response plan but were an adequate, so i'd like you to speak what we ought to give meaningful consideration as i would like to see to a requirement when the part of the corporate ceo to certify the these plans are in fact good plans and they do good diligence and can do more in terms of changing the culture of those companies with that one piece of leverage than a whole new

bureaucracy so if you could speak to that i would appreciate it. >> my own sense is the way that such certifications would occur practically is the head of offshore or north america would sign a certification the chief financial settlor officer might sign the certification and chief save the environment vice president would sign the certification and fulfill those signatures were present in the ceo will sign, and i don't know that would enhance the liability assignment that you would like to see. it might be from a personal point of view more closely involved, more intimately include a ceo and a decision that is made, but as mr. heyward said, he didn't know anything about problems that characterize the situation and didn't know that it had been a troublesome well. it hadn't been particularly involved in making decisions for

it or apparently didn't even know that it was coming in late. it's a very large company, and so i am not confident myself based on my own experience with boards of directors that would contribute that much to safety frankly. >> do you think he would have bothered to no more if he had been required to certify as based inadequacy of the plant's? >> he would have probably had to find scores of certifications without any individual personal knowledge of the degree to which the characteristics of the situations were familiar to him, and so i have reservations about that particular recommendation. i had a conversation with mr. waxman. i know that it was strongly supported in the part of the committee, but from my point of view and it's not that, and another high-risk industries either to try to fix the responsibility of the very top.

it's there any way if the company encounters it tend to 20 to $30 billion expense obviously. and now i think everybody's attention is very focused on liability. and to my knowledge, every company has stood down to examine their own form of political their own risk and to get their practices improved. but that's my personal judgment. we did not as a -- i actually consulted our senior technology adviser on that particular issue and we gave it some consideration within the commission and didn't go forward with it. >> can i get the senators answer to that question briefly? >> if the center can do it and 15 seconds which is a test. your question is will this be worthy of exploring a think the answer to that question is yes. my colleague has done some of the exploring and it does come to the conclusion that he has but i think it is an issue that

frankly you're father has given us the opportunity to move this from being a theory to reality, and that is has it changed the corporate executives that under his legislation they now are required for public companies to sign personally as to the accuracy of their financial statements to be interesting to do some oversight and that might be in a better position to evaluate potential applicability to offshore oil drilling. >> you didn't quite do it, senator, but my stride. [laughter] >> well, i got a little bit off. >> that's all right, you're talking to the son of a senator, i know how that happens. mr. duncan of south carolina. >> thank you, mr. chairman. gentlemen, thank you for being here. i have studied this all afternoon and went to comment on it -- >> you're the only one who can

read it. >> you have reference to it several times today and have come to some conclusions i think are flawed and here's why. i spent some time on the mms ocs committee will look at the natural gas and come up with recommendations for the next plan those leases would be granted, and it struck me during the time that the only areas we could even talk about within that committee was deepwater gom and alaska. nearshore the 1,000 ft or shallower were off-limits to even talk about for the next five-year period so when you see an increase of activity in deepwater exploration and production, i think it is strictly attributable to the fact that policies of the united states government have pushed the oil exploration and production away from the shore, we from the marshes and the rivers and other things to be

potter, so some of the conclusions you've come to based on that chart our fault so long to make those comments and mr. chairman i hope that on the subcommittee or this committee will continue to look at the policies that are in place that pushed it too deep water and continue to look in your short, onshore and other resources coming forward. a couple of questions for you based on your report on a different line of thinking. you have the efforts in response to the disaster and i want to commend the guys that went out on the rescue effort with coast guard and others, and the line of questioning has no bearing on their efforts, but the lack of attention to this critical part of the disaster has left many of us confused and in the report tuesday others are going to study this issue more completely. can you tell me first, and there are going to be three questions, can you tell me first in your opinion if you believe that the

efforts were probably coordinated, that's number one, the second thing believe that firefighting contributed to the thinking of the rig and was there a possibility of saving and what did have permitted the blowout that we saw? was there a possibility to let the oil continue to burn and were gone shutting off the flow of oil that was attributing and that was the source of fuel for the fire were the structural integrity of the rig in jeopardy any way. so if you could answer those in either one. >> i said that one of the lessons learned is that we were very ill prepared to grace pond particularly in the critical first hours and days, and i would suggest that be included in the ability to restrain fire under these circumstances. if i could, i would like to go back to your first comments.

if you have to look at the issue of depletion. we have been heavily mining for oil and gas since 1938. to continue to do so today. i believe that these charts are as much a function of the reality that most of where the oil is today, the so-called elephants of offshore oil are not in the thousands, they're likely to be five or 10,000 feet in that is where the industry is moving. but that might be a question that your subcommittee could examine. what are the factors -- >> we will pursue that at a later time. let's go to the firefighting efforts and would be attributed to the good that's a lot of questions in my district and south carolina and the land that i have heard so do you think the firefighting efforts were coordinated and do you think they could set their and berne to show off the flow of water

and the integrity of the rig? was it in jeopardy? you have any input on that? >> the only thing i would say without wanting to characterize a lot of activities that occurred in the chaos of the fire and the response and there were moments at various times when the control could still possibly have been established. even the gas is rising federal pike could have been diverted over the side and perhaps not come into contact with the source and not caught fire, but that once the fire began when we look at the transcripts of the reports of what was like and how it seemed like a jet airplane or fast-moving train had just come out of control pike i'm not sure there was a great deal that

could have been done that would have averted a disaster it does occur that the degree to which the response to the emergency immediately was characterized by a lot of chaos one of the rescue boats leaving a number of people still on rig who jumped into the water and did survive people that made that choice and then discovered those who were in the evacuation but they couldn't get away as it looked like it was going to topple and they were tendered by a rope and no one was allowed to have a knife on the rigged so they had to look for means of severing the rope. it didn't appear in the documentation supports this that there had been the kind of drills simulations from practices that would have been appropriate and i think will be insisted upon in the industry in the future and that is one more

change that needs to occur that we've learned a lesson from. >> do you think that would continue running? thank you, mr. chairman. >> the time has expired. mr. landrieu. stat thank you, mr. chairman. just for the record, i did raise the commission's credentials on my campaign to get here. maybe they were not raising it in june but i sure was in louisianan. considering the industry's performance in the gulf of mexico where over 42,000 wells have been drilled in addition to 2500 deepwater without any significant incidents in my opinion reflected the successful risk-management worthies safety factors, and these are yes or no questions, were these facts the success in history of all of the wells that had been drilled out in the gulf of mexico, were they taken into account when you did

this report? >> yes, sir. >> okay. >> was there any economic analysis done during the course of this report in terms of the impact of not only the gulf economy but the national economy as well taking into account? >> we know tens of billions or damage to the environment primarily of the gulf as a result of the bill. so the answer is yes. >> the president's commission to determine a cause of the disaster to improve the country's ability to respond and recommend reforms that the offshore energy production safer. prior to the accident there existed multiple layers of environmental reviews including multiple eis that the dui uses in the environmental impact

assessments. these included a eis during the peak of the month of the five-year review, and again prior to the lease sales. where do they receive the conclusion that the review warrants any additional changes as i find that in no conclusion it contributed to the impact of the queen of? >> will let and the increasing emphasis on the coast guard, other agencies that represent the best science and the government and our proposal to reduce best science from outside the government all go to our interest in enhanced safety including understanding what are the risks at the individual sites being suggested and what are the potential lenders effect of the safety of those who will

be operating in that area and the environmental quality of the gulf? the answer to your question is yes, we took those into account as part of our overall assessment. we are aware of the fact that the industry in particular certain companies within the industry have had a very strong safety record. we are not saying that everybody was the same but we are saying that we think that the overall record in the gulf is stunningly below what it is in the standard of the world. if our aviation industry had a record that would buy three to five to one ratio we were killing people on airplanes than for instance great britain was we would be upset about why this was happening.

that happens to be about the case in this industry between norway and great britain and the u.s.. we believe it is in the spirit of america to want to be the best. >> i'm glad you brought that up, senator. the recommendations -- i'm also confused you would make the suggestion under reporting incidents in the u.s. because the numbers are low. are you aware that the industry regard to the european standards reporting incidents fairly less reliable than the u.s.? >> i am not aware of the assessment of that by the u.s. industry. i am familiar with the fact that our fatality to accent ratio is significantly different than it is in the north sea which raises questions as to whether we are capturing the accidents that in fact are occurring. i am not aware of any evidence that would indicate that there

should be such a significant differential between fatalities and accidents in the gulf and in the north sea. >> i will be supplementing some questions to you all -- >> we are aware that there are different ways of categorizing incidents, accidents, fatalities, days lost and so on, record rebels in the north sea versus the gulf, different jurisdictions between the u.k. and norway. some of the data need to be closely scrutinized to determine that you're dealing with oranges and oranges and not apples and oranges. >> on both sides you would agree. >> yes i would. >> the less disputable number, it is harder to hide the bodies, so i think we are confident those numbers are as we found and they are disturbing. >> mr. chairman, thank you for holding today's hearing and chairman gramm, thank you for joining us today.

i know you've put in a lot of work on your report and we appreciate you being here today. i have an opening statement that i would like to give to the chairman for the record and will dispense with that for now. it has been nine months since the macondo well accident and we all grieve for the families that lost loved ones and for those that were injured and for the impact of several families along the gulf coast hit by one you to know from a personal standpoint that i lost a brother and the business and so i have as much interest in conducting this industry as safely as possible as anybody in this room. but i want to make sure that we facilitate a robust oil and gas industry because of the central to our economic security and our military security. and as a person that was actively involved in the offshore energy business for over 30 years i am aware of the -- keenly concerned about the recommendations and the

commission report. i think it's interesting you use the three mile island analogy because as you pointed out, after three mile island we haven't started and completed years.struction of a nuclear0 it appears we are headed down the same road today with offshore drilling. we had a permit moratorium, defacto and deep water and we have an incredible slowdown in the shallow water drilling and we are already seeking that show up in higher gasoline prices to and reduced economic activity along the gulf coast. here's the issue. congress legislation the department of interior is issuing new regulations, lease sales have been canceled, other areas of potential offshore activities have been put off-limits again and it's based on a report that doesn't provide

a full post mortem from what's what happened. here's the key phrase that is used because of the concern. you keep referring to systemic industrywide failure. on chapter four of the reporting to increase fixed, you have the following findings. adel well blew out because a number of separate risk factors oversights and all right mistakes, to overwhelm the safeguards meant to provide such from happening. but, most of the mistakes and oversights and macondo can be traced back to a single overarching failure, failure of management, better management to be paid, halliburton and transocean would almost certainly prevented the blowout by approving the ability of individuals to identify the risk they face and to evaluate, communicate and address them. so how do you -- how can you reconcile between what happened in the offshore energy business

today to call in a systemic failure and a systemic industrywide failure to report which just gets down to three companies and with the entire nation economy on peril by doing this. let me give an example. what if we find out after we get the bp will help prevent her fully evaluated it takes a 2 billion boulder that could cure 99.9% of the time and this accident essentially never happened. that is the ratio of accidents that we got in deepwater. we have gone overboard. so why did we use those words systemic industrywide family because that is what caused the paranoia. >> in 1963, congressman, it was a single weld as i understand that sank the submarine and the system was developed and we've

not lost the submarine since we lost one every third year on average in peace time before that. the reason that we conclude its systemic and we didn't come in or i didn't believe it was a systemic problem it was a single up company that had been was because of the very large presence of those three companies throughout the oil and gas industry and the deep water and shallow water throughout the world. bp is the largest exporter of offshore oil and gas development. transocean is the largest operator and halliburton is the largest supplier of resources such as cement. it is no longer possible for most companies to test the cement for example the are provided by halliburton. they no wonder of the research capacity. chevron does and maybe one or two but most decided in the 80's and 90's to contract that out.

so the cement that is provided is the cement that gets used and was provided by the test halliburton conducted and the commission conducted was faulty. it is simply inconceivable to us that this was a problem so exclusive, so especially circumstance with respect to one rig especially since we know in australia it failed just a year and a half or so ago. also, this is something that caused us to believe, and again, most of the people were transocean employees. the people responsible for responding to the emergency as i just described that is the largest operator and owner in the world. it operates for everybody. everybody hauliers transocean and they also are implicated in a significantly failing to detect gas rising in the pike.

we concluded from that that all companies are at risk if they are using these contractors or bp itself is at risk and other places. we did here and we ask the norwegian regulators are you taking actions against bp? the answer is somewhat surprising now we are not because we do not see issues in the north sea with respect to the dp operations and therefore be taken no action to discourage their continuing cooperation. that poses the question to less well, what is it about the north sea and the gulf that has our companies operating safely and protectively in the north sea subject to a different set of regulators and not in the gulf? that caused us to look closely at the degree of oversight, the quality of regulation and the capacity of the regulators will also follow. estimate the time of the gentleman has expired.

>> mr. rivera from florida. >> thank you, mr. chairman, gentlemen, for being here today. commissioner gramm, senator gramm has a floridian and are you still living in the leaks, miami lakes? west of palmetto? i'm right there with you down the road, so as my distinguished constituent -- [laughter] as my distinguished constituent, i know we share a great concern for the economy and the environment of the state of florida. one of the recommendations that you make in your report addresses the need for greater international scrutiny, international standards. as a representative from four south florida i'm concerned about the development of the coast of florida on the oil development off the coast of florida and off the coast of cuba in particular.

as you know there are a number of companies including what saw interest in drilling in the waters off cuba. i want to ask you do you believe that this cubin which rolling in the coast of florida and cuba will be done safely and what could the u.s. do to ensure that any lack of cubin oversight doesn't threaten florida and the southeastern united states? >> i am concerned about the safety of the relative lack of experience of the cubans and terms of being able to oversee this activity. the companies that are being brought in to do this work isn't comforting. i believe something analogous to what mr. reilly has said that we need to have gulf of mexico 18 set safety standards that would apply to any country touching

the gulf is the best assurance the united states have inappropriate, unsafe practices in our backyard, and i believe there is a sufficient interest between the united states and mexico to move forward in the direction commandos' mr. reilly has indicated, the mexicans have suggested they might need interlocutory to cuba to get involved. to me it also underscores the importance of the united states having the highest standards. if you go to in the negotiations and are urging the other parties to take their game up a notch and you have not already done that your persuasiveness is limited. for our own protection and of devotee to raise those standards in the gulf that we need to

adopt policies such as those we suggested. >> to that end do you believe that responsible domestic development in the eastern gulf of mexico would result in additional oil spill response capabilities being staged in florida that could be used to respond to a potential spill off florida from the cuban dictatorship, we'll drilling efforts? >> the u.s. waters. >> i don't know what the ultimate treaty might say, but i would be surprised if it did not make it the sovereign responsibility of each of the country's to provide that kind of capability for those wells within their own area and i certainly don't think the united states ought to be depending upon mexico providing them containment and response

capabilities. we ought to do that. the mexicans ought to do that and the cubans proceed with their plans they ought to do it. so the answer would be no. >> thank you >> the time of the gentleman has expired. another gentleman from florida, mr. sutherland. >> thank you very much, mr. chairman and four-door report, for appearing before us today. i am from panama city florida, i -- my district is the second district of florida. i took my baby steps on the beaches of panama city, and i love our environment and in a day when my family and my children on the island is a little piece of heaven for me. my community, friends of mine were deeply affected by this

disaster. one of the things i want to ask you and i just want to ask some brief questions knowing how much responsibility in light of this disaster, and responsibility do you believe that the government bears after having cited 790 violations how much responsibility do they bear? also by refusing to waive the jones act and bringing in oil ships that have the ability to clean up that oil by leaders around the world that produce those ships how much responsibility is baird by this government? >> we did inquire into the application of the act and the allegations made particularly by the europeans and other commissioners the european union that we were keeping out belgian and dutch responsibility and the

response we received from the coast guard is offers or looked at largely not taken into account i guess most we not taken into account because they were not considered necessary at that time were useful for the particular task. in mississippi there were from france a series of skimmers, six or eight that were brought in and used so it is possible in other words to get out help from other countries. the coastguard was sufficiently crowded with its own response that vetting applications from other companies and other technologies was probably something that in real time they didn't have an awful lot of time to give. >> this goes back to a theme of today and that this you don't do

basic research while five year is out of control and if you haven't done it before the fire it's not likely to be very effective. i think things like -- >> i understand that when you have a neighbor that is willing to bring a boat load of hoses you accept those hoses and say you know what, my first party, my first priority is to put out the fire. i get angry when i think of the pain we have experienced a long that gulf coast and i think of my dear friends who are no longer in business. it interests me and yet today we want to talk about the response of devotee of bp and how they should solve regulate their industry. when 790 violations were noted that is incompetent, yet we have the idea we are going to have ceo's stand up and sign a letter of certification certify leinwand devotee. i want secretaries of interior

and regulatory department heads to sign the same documents. the american people are tired of sending their money to washington, d.c. and washington being the problem. all i am incurred by the response of this government in light of this disaster. i am anchored by the government that failed in their response to katrina and until we start looking inward and to get personal responsibility to the lives we are destroying instead of incessant blame it's got to be somebody else's fault. the responsibilities here. the buck stops here, and i'm bothered that this commission, decisions, there should be ten down here and the bottom i wrote the government's decisions to aid and abet was less likely alternative available? yes. less time than alternative? yes, the seedtime. a decision maker, the federal government on shore, and i am

bothered we are going to add to the bureaucracy when the bureaucracy was the problem in many ways. >> you've raised an important question that we address with respect to safety personal safety, occupational safety and health rigs themselves. presently, under when a rig is under seal or in motion it is the responsibility of the coast guard to ensure safety. we recommend that the boemre has a full responsibility on the rig for safety personnel and that it understand and have the capability to enforce that so there's not a division of responsibility or confusion about whether this is a delegated responsibility to the coast guard and the role of ms and that it be amalgamated in one agency.

on the jones act the key issue in my view is to have procedures go in place ahead of time so that the extensive permitting reviews and approvals by the state department are not necessary once the catastrophe may have occurred. >> that is what i was going to say that you need to anticipate and i would suggest this committee could make a significant contribution in doing some serious thinking about what are the questions, what are the resources, what are the potential impediments when we have the next disaster it won't be exactly like this one but we will have more disasters. how can we by anticipating take actions that will avoid the hoses not being delivered. >> the time of the gentleman is expired. >> thank you.

mr. thompson. >> someone had offered in our sg of airline and now what she earlier, and as i have looked up and read through and tried to synthesize the commission's recommendation if i apply the recommendations to the airline industry is essentially with one plane crashed we would shut down all airplanes and frankly all airports. i apologize for being late. i was in the work force hearing and i had an opportunity to question governor mcdonald of virginia, and specifically my question is what the impact of the administration's response of shutting down offshore as a result of this and here are some of the statistics i will be quick and then my questions. he indicated that this industry created more than 1900 new jobs in virginia, increased the state's gross domestic product by to under $50 million annually

in janaria park simply 19.4 in federal, state and local revenues. senator graham, secretary riley, page two of your testimony states most of the mistakes and oversights of macondo can be traced back to a single overarching failure. a failure of management by bp, halliburton and transocean, and under the key facts, you also stated that the investigation team identified several human errors, engineering mystics and management failures. a person concluded it wasn't a lack of adequate science and engineering but the problem application of science and engineering by those on the radar the resulting in the deepwater horizon macondo tragedy. yes or no do you agree with that conclusion? >> well, i think it was part of the responsibility of its effective management is to understand the risks and take steps to mitigate the risk. the fact is there was no

effective plan in place and capability to implement a plan before this accident occurred. >> so it's not that you agree, it is management. >> it is a failure of management to do the risk analysis and take steps to mitigate the risks. >> i would support that come in just sir. >> on page seven of your testimony you state under the headline of reforming industry safety practices, quote, governor oversight must be accompanied by oil and gas industry's internal reinvention, sweeping reforms to accomplish less than a fundamental transportation. internal reinventions sweeping reforms and fundamental transformations frankly have an entire industry is what the implications of the result of the implications. the words of the alarming castoff wide net. i assume they are based on the thorough review of the hundreds of companies involved in u.s. energy production and not just

three companies despite how large they are they are mentioned in the report. did the commission conduct such a review? >> we conducted a review of the incident itself of accident data -- >> if you answer my question of the review was three companies out of perhaps thousands. >> it is 79 losses of control in the last whatever 20 years or so affecting a very large number of companies operating in the gulf coast. >> i understand. so, so the review is 3500, the number look at 3500 of offshore production and thousands of companies engaged in the production, but the conclusion was based on looking at three companies. >> welcome the inference is strong for the likelihood of the antioch risk with those three companies largely rest upon what we learn from the experience of

those three companies, but we had a significant data about many other companies and their experiences that cause us to use the term systemic. >> i appreciate that your taking that inference from their but especially the inference drawn from the company's but frankly casting a pretty wide net with your recommendations of packing thousands of companies. but -- >> if i could add to that, you made the illusion, and i had suggested if the united states had a four fatalities to one ratio in airline accidents, let's say norway or the united kingdom, i believe the american public would be outraged. that is the situation between the north sea and the gulf of mexico and i don't think that one company -- >> if i could reclaim my time.

.. not for a minute. >> the time of the gentleman has expired. that completes the first time, but several members have expressed an interest in a loop on first question that senator graham, i didn't ask you. i asked mr. reilly in the

assault the time of the proceeds going to have to answer to you is that you want to work that. when they start. mr. grijalva had a follow-up. >> thank you very much. to me at the outset thank the gentleman for your presence here and for a compelling report. i would -- the only question on page 142 to 1432 with the issue of the jones act became a comment that it was not indeed an impediment to getting foreign assistance or outside assistance to come to be a defense bill. also this comment they are. i'm sure the government insisted that they probably created more problems than they solved. but the question i see a do over some of my good friends found is amended the issue of systemic. we have here anything to report is compelling because it deals with the role of government and

the lack of oversight on the part of the federal government and a contributing or to what we found it deals very directly systemic issues that occur within the management and operation of the industry. i think the report is compelling. we might -- insofar as some he needs to be done. and if we want to raise the standard of oil production offshore, where it saves both for life and for the environment, then this would work needs to be responded to. the recommendations it made for legislative action are sound. i don't agree with all your recommendations, nor do i assumed every member agrees with everything in there. it is a sound framework. this principal senate it that we must deal with. i went to thank you for that, for the time you took a notice of the seriousness of which we are going to take this report.

so thank you for your time to thank you the report as i said compelling, necessary and timely. >> thank you, sir. >> i thank the gentleman. when you go to mr. landry of louisiana. >> thank you, mr. chairman. i'm having trouble understanding how y'all can come to the conclusion of the systemic failures by using those three companies are claiming that because those three companies do such a large percentage of the work in the gulf of mexico, that every time they go on a job, they are using the same protocol and engineering for the different customers that they are doing business with. that simply is not true. there are different well-designed that are in different oil and gas companies. some of those well-designed, i might add has been around since

the inception of deepwater trilling. and so, i don't understand how you came to this decision of the systemic failure. why not look at those oil and gas companies who have drilled successfully without incident, looking at the well design and save this type of well designed seems to be a safe face. it certainly would save the taxpayers a lot of iraq receipt if y'all took a look at those different designs. she will take a look at the different designs? and did you take in mind that when those contractors work for different oil and gas companies, they don't follow the same protocol as an engineering specs? >> we did look at the design of this particular well in at least two companies made clear to us that they would not have chosen the design that bp did for that formation in that place. >> for mr. reilly, i apologize for cutting you off, but she

told me earlier you took into account the 3200 with a 2500 wells that were chilled and deepwater. he told me it took into account their history and their success, but yet now you're telling me that he only took into account the well designs on bp. >> conclusion of the well-designed use by bp at macondo was not an appropriate one for when the created more risk than necessary and as the two companies which is the basement of a two alternatives of the sort you suggest. >> i'm asking. i'm trying to clarify your answer. as you look at the other well designs and take into account when you issued your report telling us there is a systemic failure in the industry and we have to create these additional levels of yurok receipt, costing taxpayers hundreds of millions of dollars when he made that

recommendation. did you or did you not look at the history of the other deepwater wells, 2500 or so that i've been drilled in the gulf of mexico when he took into account issuing this report? >> yes, sir, we did. let me say from the point of view of someone who considers one and 2500, not so impressive frankly if it's going to cost 40 or $50 billion should the economy of the area and the company involved. i think were trying to different conclusions from the success rate. i regulated the environmental protection agency to respect the number of one in a million, which was the maximum acceptable impact on mortality premature death associated with a certain decision, pesticide decision, for example. when a 2500 doesn't impress me as a positive record frankly.

>> and certainly would make you look in the eyes of the people who are losing their jobs in louisiana who have built this industry, was basically been doing since 1947 off of that post and tell them that. i can tell you from living down there that safety is number one. it has been for a very, very long time. >> it's been a decision to deny them their jobs and shut down every rate, the exploration reich is one that i rank as highly tendentious, excessive and hard to justify and it made that clear as has senator graham from the out. we would approach this in a more select a fashion so as not to penalize those companies that have not been specifically implicated in the disaster. after some short period of review and inspection which did in fact take place and they were cleared. so we're not here to defend the denial of jobs or against the resumption of activity and the gulf. very much we want to see a

presale safely and effectively. >> i'll put your name and as a recommendation to take ms. brown's place. [laughter] >> congressman, i half -- i have to take some exception to this statement that she made that we're recommending hundreds of millions of dollars of additional regulation. yes, we're recommending that there be an adequate, competent, politically insulated safety function within the u.s. department of the interior. i don't think those are our radical suggestions. number two, we're recommending that the industry, and other high-risk industries have done, assume more responsibility for their own evaluation of safety. that's no cost to the u.s. government and i think it's a very prudent suggestion to the industry and one which will contribute to the industry is

long-term viability. so i just -- if you see something in our report that you think is hundreds of billions dollars or millions of dollars of additional expense and an excessive addition to bureaucracy, i would like to be directed towards that he cast that was not our intention. >> the time of the gentleman has expired. >> thank you, mr. chairman. but the back drop that i introduced earlier today and that is with god the sales that have been canceled, offshore areas taken off the availability list to be killed off in the future, higher gas prices, lost jobs, i heard economy and a lot of that is because this report is being relied upon to continue more tory either divac joked, regulatory, however they want to

be described. and it goes back to the system -- the systemic industrywide failures. cochairman william reilly stated none or january 6 release, my observation of the oil industry indicate there several exemplary environmental records. tricky question from the outset of this tragedy is do we have a single company, that being bp, but under the federal consequences or a more pervasive problem of a complacent industry? given the document feelings about transocean and halliburton, both of which shared capture history of every ocean are reluctant to conclude we have a systemwide problem. that's your quote. >> based on whether you see of the consistency and the weight which this report is being given and the energy future of this country, i would respectfully ask the commission if they will

amend the report, remove the word systemwide industry failure. >> congressman, how would you defend the presence of walrus protection and polar bears and response plan? for how would you defend mr. hayward taught me there's no subsidy containment capability? or the inadequacy of the response technology and the failure to invest over the last 20 years after we experience a disaster in prince william sound. anything these week for themselves and the response plans for not complying to the three companies. all the majors we look that had the same -- literally the same response plans in the same concern for waller says it all the other things we know. and several ceos have said they found it in bears and can have a lot to do with their decision to make the while containment corporation which is a positive step on the part of the industry.

so i don't think you can infer anything other than it sure looked like complacent fee. when people say we never thought it could happen and i include myself in that. we were complacent. i think the government was, the industry was, i was. >> again, the application for a permit or place on cookie-cutter requirement of what was formally called at messiest issue. >> title make some them from the criticism. >> maybe there was a regulatory failure is part of it. i think we all agree there was. we'll agree bp at an integral part to play in this failure. unfortunately what is being condemned here is the entire industry as well as the energy security going forward. and i think it goes back to those words. industrywide systemic failure. i respectfully disagree. i don't think we have that type of a failure and i'd like to

stay for the record those were thought to be struck from the court haired >> when they say at our report is 11 days old and the degree to which there has been a delay in permits or de facto moratorium has anything to do with this report and we certainly don't expect or didn't intend we would contribute to that. we in fact we're assuming that a number of these recommendations could be implemented coterminous play with the resumption of the david and the part of the companies that weren't in any way involved in the macondo disaster. >> thank you. i yield that. >> the gentleman yields back. >> thank you, chairman. just one additional question. on page six of your testimony under the heading environmental review, you state the commission recommends quote a more robust than more formal interagency consultation process in which

noaa has a heightened role and authority is obtained by the department of interior and quote. my question and i wanted to get your rational behind it. obviously, you know, the role was of great concern to the commission. my question actually is, should the department of energy and commerce have an equal if not greater various in noaa and the rules and regulations that certainly have a great influence on our domestic energy production? >> well, let me clarify noaa is the number of the department of commerce. so assumedly through noaa it was used. >> department of commerce would be involved. but we were focusing on mayor as i mentioned in my opening statement a key fact to understand is that the relationship of the united states government to the

offshore oil industry is not just as a regulator. it's not like the relationship of the department of transportation to the bus industry of america. it is also the relationship of the owner of the property, all of that property out there in the gulf of mexico be on the safe women belongs to the people of the united states of america. we've made a decision that we will lease portions of that through oil companies under certain conditions to evaluate and they found, extract oil and gas. we have the same interest that if you owned a small shopping center, that you don't want to have a tenant in your center who was trashing it and it's going to make it impossible for other tenants to have a proximal enterprise. so i think we need to put ourselves in the possession of what should we be doing to assure that our children and

grandchildren will have a gulf of mexico and this is a quality that we be proud to hand over at her inheritance. i think these recommendations and particularly the recommendations of bringing the best science and we think the department of commerce annual represent this area to bayer in terms of what should be the conditions of our proposed tenant, the least of our property is not an improvement thing to do. >> as i came to congress two years ago, one of the things that just appalled me and this is over different administrations, different parties is the absolute lack of a national energy plan fits in this country. and we're talking about the outer continental shelf and offshore resources or onshore

resources. frankly, you know, the energy department was formed for that very purpose to achieve energy independence i guess in the 80s when it happened. it has failed miserably, but i think the proper steps obviously would be involved in this type of a process. >> i'm completely in agreement with that. in fact, it was my position and i think this is reflected in the report that you can't answer with the future of the offshore industry without answering the larger question. what is dark energy policy in the united states? i was telling bill in yesterday's newspapers there were some articles about the fact that the reincorporation had raised questions about whether the u.s. military could convert to a less fossil dependent navy, air force, army. they raised serious doubts about whether that can be done, which

to me just underscores the importance of this industry for a fundamental national security. >> thank you. thank you for your testimony. i have additional questions but i will forward those along. >> thank you, mr. kolb. >> thank you. and this shall deny swears last question. we all need to be outside enjoying the blizzard that's happening. [laughter] >> there's no place else to go. >> gentlemen, both of you have said that the resumption in full production of offshore drilling in terms of energy production is something that you want to see and that could be occurring as we make the other kinds of adjustments that we have to make to make the industry safe and our role in the government stronger. i'm one of the key recommendations that the commission made is that the

federal oil and gas regulators that has been underfunded, i think they're getting less now than 20 years ago, that we create a dedicated funding stream for oil and gas fees to fund this so it's well-trained, professional, and installation of independence. and yet as we're talking about this and the critical need to do with the production issue that is, consistently here by my colleague, we're also talking about reductions to 2006 levels, 2008 levels based on the resolution that were dealing with on the floor. so at some point, the full production restoration idea and concept you support as commissioners, with the back drop of not ever meeting the commission report in terms of

providing a robust oversight regulatory function for government that is independent, how do you reconcile that one opinion the lack of resources on the other end? any comment would be fine. >> it is our recommendation that like is the case with most other industries, industries you don't have this additional care eristic of being our tenants, we expect the airline industry, the telecommunications industry across the board virtually to pay for their own regulation. they are self-funded regulation. we did not see any compelling reason why that should not be true of this industry. so that would be our basic recommendation that would take congress action if for instance there were, as there is now, for

the oil liability fund, there's a fee attached to each barrel of oil, i believe, that's both imported as well as domestically produced, which goes into that fund. maybe we need to have a supplemental stream to go into a fund for the regulation of the industry so we can assure to the industry that we will have a competent, sustained ability. >> senator, one question if i may. you see a linkage and not an either or proposition ? >> i mean, either/or -- >> either you have the regulatory capacity and the source is to deal with the demand for full production and if that linkage doesn't occur, is it's an either/or proposition >> you can't have one without the other. >> the answer is i don't think

it's in the interest of the american people not to have adequate standard again impart because we have just seen what the consequences are too a lot of very innocent people and we have seen what the consequences are to an important piece of real estate that belongs to all the people of america. >> cat, a think the question is reducing interiors level 22,006, 2008, that directly impact your recommendation in terms of, that directly impact your recommendation in terms of the resource capacity in the overall capacity of regulators and oversight. that does, i think does not help the safety demands for offshore drilling. that's all part of the recommendations. >> we are quite clear that the

quality of regulation has been insufficient, that an industry which did not used to be high-risk industry as it has receded so heavily has become the industry itself needs to take the steps suggested by this catastrophe, but so does government. other governments have done so after their own catastrophes. he mentioned the united kingdom and norway which responded to severe accident they had by separating the revenue generating functions for the regulatory function in significantly improving the quality of the regulator. senator graham mentioned in the united kingdom, the oil and gas industry lobbies for more appropriations for the regulator because they recognize the quality and the regulator as did mr. taylor's son, the chairman of exxon mobil and the president fishel u.s.a., both of them mention the quality of regulation is essential to the quality of industrial activity.

that's all we're really suggesting. so to try to save money that bom are we having a co-of the oil and gas production in the gulf would reenter% israeli penny wise foolish. >> the time of the gentleman has expired. mr. mcclintock from california. >> i like to ask unanimous consent to search into the record the petroleum institute entitled the impact of the gulf of mexico deepwater permit on oil and natural gas david 2010, which i cited earlier tonight souvenir copies for our lucky panelist. >> without objection so ordered. vacillate to ask unanimous consent to include "the wall street journal" editorial which i reference. the mac without objection. >> mr. chairman, if i were to summarize what we've learned

today, it's his. we faced an engineering issue, it will preventer failed and it failed catastrophically because enormous environmental and economic devastation. before this commission was impaneled, we did not know why the flow of preventer failed. after the commission concluded its work and issued this report, we still don't know why that will preventer failed. we don't know why it failed because the commission never even bothered to look at the blow of preventer co. which according to "the wall street journal" is resting on a talk in the wee fianna. we have never had a failure like this one. until we find out why it failed, could happen again. it could happen at any time in the commission has not advanced our understanding of how to prevent it one bit.

the contrast between this commission's work on a larger commission after the challenger's disaster is staggering. if the rogers commission operates in the same manner, would still have no idea what caused the challenger to explode or how to prevent it in the future. we have before us a report offering bureaucratic prescriptions to an engineering problem offered by bureaucrats rather than an engineering prescription authored by engineers. i don't know exactly how the committee would've you the issue from here. i would certainly seek the chairman's guidance, but i would recommend that we take whatever action is necessary to impanel a panel of engineering expert to go down to the dock in louisiana, retrieved the low of

preventer, tear it apart piece by piece, find out what caused it to fail and do so before it happens again. >> gentleman yield? >> i would just respond to that if i might. sir, i think you can draw an analogy between the blowout preventer and a seatbelt in an automobile accident. it's obviously important to the survival of some of the 50 wasn't fastened, but it doesn't really explain where the accident occurred. we explain where the accident occurred here prefigured and identified all of the major contributors to the decisions of their technological consequence is, engineering consequences that led to the disaster, examining the blow of preventer is not going to cause the other impacts we uncovered to go away. they are there. they are distressing. they do implications for policy and we try to draw them.

>> i want to thank both your witnesses for being here today. i know you had a long day. he started at 10:00 in the senate and a very, very much appreciate your willingness to stay here. so some of our members can have another explanation or clarification of what's going on. i know there will be some other questions that numbers, probably on both sides come would like to ask you. and if he would agree to respond in writing to those questions, we very much appreciate that. >> we will do that, mr. chairman. we have a staff a thing for another five weeks, four weeks and we will use them to the very end to the extent they allow that. i would just like to say -- i would like to say we very much appreciate the attentiveness, the interest of this committee and thoroughness of the questions were received and

understand the seriousness of different kinds of the other about our report and about the conclusions we drew. we hope it's helpful to the deliberations of the committee and relatively modest proposals we made and i think they are modest in terms of cost and your perceived disruptions i mentioned are looked at seriously and perhaps implemented. >> well, i thank you for that. to me just mention again and reiterate what i said at the start of this, but the bp well broken we had to find out what went wrong. we will continue to do that as i mentioned my opening statement there's two more reports. we will look at what they have to say and draw hopefully some conclusions from that. but i also will reiterate what i also said my opening response. what we do here will send a very, very strong signal into what i think it's very, very critical long-term. and long-term is the energy security of our country.

you alluded to that, so the balance we have to make is make sure we continue to have a robust industry, especially in a down economy. so with that, i want to thank all of the members can for being here and especially for the two of you to stay for this long-time. and with that, if there's no further business, yeah, no further business. the median stands adjourned.