doubling and tripling the debt over the next 10 years and the stimulus bill puts us well on our way to that. so we simply have a large difference of opinion which is not likely to be settled until november about taxes, spending, debt, and whether we oug to be focusing on government jobs or cree airporting an environment in which we can have more private sector jobs. >> let me just, i think it's always good to have the president come up and speak to our conference and certainly we had a lavely discussion today. i think what's really important is not so much the symbolism of bipartisanship as the action of bipartisanship and what we've seen consistently since in this last year at least is a nearly partisan stimulus bill passed, we saw an entirely partisan health care bill passed and a nearly partisan financial services regulatory reform bill passed. so what we haven't seen is the sort of matchup between the

rhetoric and the actions to follow through. obviously, we are very interested, as we were in the financial services reform bill in offering amendments that are constructive and that have bipartisan support and whenever we try to do that with that legislation and previous efforts on previous pieces of legislation, it's been met with partisanship from the other side and from the white house. we appreciate the opportunity to interact with the president but at the end of the day, it comes down not to so much the rhetoric as the actions that back it up and at least so far, we haven't seen those. >> clearly one of the topics that is on everyone's mind is that of energy and the subject of energy came up in today's luncheon with the president. the suggestion has been that energy legislation that the president would support is comprehensive energy legislation. how are we defining comprehensive energy legislation? i would suggest that we have a

comprehensive energy bill that passed out of the energy committee last year, it's bipartisan, it is wide in its scope, it works to reduce emissions, it moves us toward an energy security that we desperately need in this country. it has all those component pieces. the only thing it doesn't have is, it doesn't have the kerry-lieberman label on it. i would suggest if we're looking for that bipartisan energy bill that we can advance we need to move to a bill that is ready to go, a bill that has that bipartisan support, and a bill that can really work to move this nation further toward the energy security that we're looking for. >> one topic discussed is the need for immigration reform. -- reform.

yesterday a current student and former student at the university of texas at el paso were murdered in ciudad juarez, just across the river from el paso, texas. you add that to approximately 23,000 people killed in the cartel wars, there since 2006, and you can see why, because of the spillover effects, because of the fact it's impacting americans and american families that border security is even more an important issue than perhaps it's been at any other time. and i think as we discussed the issue of immigration reform, which we all agree is a very important issue we need to talk about credible, credible immigration reform. .

>> harry reid also spoke with reporters about the senate schedule meeting up to the

memorial day recess. he was asked about the pennsylvania candidate. this is five minutes. >> i am happy the president visited with republican said. i supported that. we need more dialogue between white house and congress. we have many challenges to address. we represent a lot of families all over this country. families deserve more peace of mind than they have now. the only way to help is with

bipartisan cooperation. that is a mathematical reality. there is no reason with the oil spill that we see poisoning our wa ters -- there is no reason that should be a partisan battle. it is more than dealing with the envoronment. the new law in arizona is the result of inaction at the federal level. need to come in togeher. it is something each of our state's needs and something both

parties could be proud. blocking funding would be a worse message we can send to our troops as memorial day approaches. scores of nominees have been waiting for months to go to work. it is time these partisan games end. some questions. >> [inaudible] do you want more information? >> >> he appeared before the caucus today. a wonderful presentation. there were no questions raised other than a lot of support. he spent 31 years and the navy doing a lot of things.

we are proud of the work he has done. with data --we will work until we complete the bill. we need a way forward on both of those. we had an extremely good discussion on those issues. >> the senator said -- >> he is a distraction -- is it a distraction? i know nothing about the conversation. >> [inaudible]

[inaudible] court iceboat to the senator about that race. -- i spoke to the senator about that race. they did not want him to be in the house. >> [inaudible] >> the first week i came back -- i will get all five of the chairman together and we will talk about how we weill proceed. everything is on the table. >> the house has not taken up the measure, so the house cannot get to that immediately.

prepared to wait for that action to be completed? >> i spoke to congressman hoyer. they will take that to rules today. we should have the jobs bill tomorrow. >> [inaudible] >> more about the gulf of mexico oil spill from the common dawn of the coast guard. the head of the american medical association will take questions about the new health-care law. we will focus on the deficit with a newspaper columnist. "washington journal" is live every day at 7:00 a.m. the committee continues the

investigation into the gulf of mexico oil spill tomorrow. this includes interior secretary can salazar -- ken salazar. >> you can connect with us on twitter, facebook and youtube. >> house financial services' chairman says there are parts of the senate's financial bill that he supports but other parts he opposes. the house and senate are preparing for a committee. he spoke for a half-hour at an event hosted by any conference for compliance officers.

>> good morning everyone. he spoken today two of compliance week. -- welcome to day two. we are running behind, so i will dispense with any housekeeping details and introduce our first keynote speaker. he does not need much introduction, congressman barney frank. he has been representing boston since 1981 and chairman of the financial services commitiee from 2007. most notably, would be reform of the regulation of the housing

secotr. the senate passed one last week. they will start reconciling those two bills. it should have profound inplications for everyone in this room. we will open and up to questions. congressman frank. [applause]

-- k's by have one regret how i have one regret. i would like to be introduced with further ado because i have a desire to see what it looksl ike. it is important for the financial industry that we get stability. we should be moving quickly. we were held up by the health care bill. the senate was delayed by the bill. for those who think only big money works -- this is a defining example. last year when we were doing the bill in the house we were overshadowed by the health care

bill. the deliberations were an inside game. there were some issues i hoped public might come into play. the media and he would not focus on it. when the bill went to the senate the assumption was his colleague was going to have to compromise to get 60 votes to break the filibuster. we assumed the senate would water down some aspects of the bill. useppa has turned its bell in the full focus of his national attention. it is clear the results in the senate were different and more

regulatory. i think it went beyond what is reasonable. i lost a couple of votes i was involved with in the area of trying to toughen up a derivatives that i would have one this year. the bills are still very close. it is rare two bills come out on a similar piece his close. it means we should be able to get the president to do this before they fourth of july and recess. it is important for businesses to know what the rules are. i was not surprised to see a story where they said it was not as bad as we thought.

it is a very low bar, but i will take it. if you want to see the outlines his of the bill go back to march 2008 with henry paulson. we have a good method for putting failing banks to death. the institutions that are regulated. we have not had a method of putting out of everyone's misery non-financial institutions. you can let it go bankrupt or you could step in and the government would try to ease the

pain but it would pay everyone. we need to take the method we have. some banks failed in 2008. wachovia fell but it did not cause disruptions. there is no more killing to be too vague to fail. -- too big to fail. no effort to alleviate those will be consequences until there is failure. governor palin was right on one point when she said the

government was enacting tax panels, she had them in the wrong bill. we will put to death [unintelligible] the principle is there. it is not enough to prepare for failure. aig was selling credit defaults swaps. you are required by state regulators to have a combination of deserves so you can pay off claims. they were on categorized. aig sold more defaults swaps than they knew they were selling. when ben bernanke said kile will

lend $80 billion to aig because we have to pay off their debts -- lehman brothers failed over a weekend and they thought they ready to takebnk over. the financial system was about to grind to a halt. one of the consequences of our computerization is the economy is much more intertwined. we did not do anything. they thought a major depression was coming.

they said if we do not do something to alleviate the consequences of this, the economy stops. we said we are going to give you -- they paid no money and paid everyone. after this bill passes that will not be the case. they will be able to step in and abolish all the equity of the shareholders and use money to pay off some of the necessary debt to keep it from spiraling out of control. how do you keep this from spiraling out of control?

there will be no entity that does not her to report to a regulator. that regulator will make sure the entity does nine console -- does not get so indebted. they counsel of regulators will tell the fed please impose restraints. there was no prior designation. if the entity should become problematic we impose limits on them. when it is not large entities, subprime mortgages.

we make specific rules for derivatives. no contract will be allowed on the ice in it is reported to the appropriate entity. then has the advantage of price discovering . aig was able to sell with no restraint. they were insuring against a drop in house prices. they have no capacity to pay off. they assumed house prices could never stop to that extent.

you don't have to build that much reserves, but when they die you can be in big trouble. we will know what kind of insurance they are being sold for. regulators will be able to impose capital requirements. that is the essential. to try and imposing capital requirements. one other important thing, 30 years ago almost all loans were made by banks.

most loand were made by regulated entities. we got into two things. because of middle easter oil there was money lenat outside the banking system. that meant there were no regulations. because of various things that were developed in terms of the physical situation, people could make loans and sell. people who sell loans don't have to the same ability to pay back. you will have to retain 5%.

>> he may $20 billion to buy a property. he asked banks to let him out if they could participate. the answer was, we only had

to ask one question. they felt no need to check and see. make one last point. rigidly.islate too leave us flexibility the response is we were not prohibited from doing it. they argue that yo ucan com

plain. if there is not a willingness to comply and then you have to write the letter. i don't think our problem was deregulation, it was non regulations . we did not have rules for credit defaults swaps courant -- that produces a lot of benefit but there were no rules. our job is putting rules in place for new phenomenon that have value.

they have benefits but don't have rules. in 1891 america was transformed you had problems. theodore roosevelt's job was to put in anti-trust. he did not destroy the market, he put in new rules. we see our job as doing the same thing. i will decline to do his response to any questions. -- and glad -- be glad to respond. [applause] >> we have people running with mics in the audience. you talked about the treasury

department had a plan to salvage lehman brothers. i hope there are no british people in the audience. for all that we are doing,, schroer does it depend on a regulatory regime? >> a british bank was going to by lehman brothers. this was not the burning of the white house. financial-services said you cannot do that. nothing in the world as more global. it would be unwise to try to do that. i spent more time with corn policy than ever before. -- foreign-policy. ther was an ongoing effort to

have similar legislation with canada and japan. we have in our bill a madate if any small entity decides to be a haven for regulation that country's institutions will be excluded from the system. .

>> question out there? >> could you comment on the flash crash and whether you believe that the s.e.c. at this time is likely to be able to truly identify what caused it and to remedy it? >> a very important question, and i want to give you one of my rules of politics. try to avoid telling people more

than you know. [laughter] i think a lot of people have done that. by the way, for all the other problems of the rating agencies. when you're on entities doing literally millions of originations and selling them, there's no way anybody could have told you how valuable they were. one of the things we've done, very important, one of the best things in our ability is we repeal every statue and repeal every regulation that requires people to rely on the rating agencies. we don't want people getting a false sense of security and underrating their undue diligence. they've got a constitutional right to do that, but we do not mandate that people have to abide by that. we think that will help in the overall degree of healthy skepticism, in the financial world. clearly, they are looking. there is a debate. obviously people in the stock exchange think this argues for more human intervention. at the very least, i think

there's a consensus that there has to be a coordination of the shutdowns, that when one exchange shuts down and others don't, you get an imbalance. beyond that, whether or not there needs to be some greater degree of human intervention so that not everything is automatic, so i think it's a good idea. which is every trading platform, if a halt is ordered, it has to be the coordinator's way, because clearly, the fact that the new york stock exchange shut down and others didn't, added to the distortion. beyond that, still looking for the final conclusion. >> we have another question here from the audience about the financial reform bills in the house and the senate. in the house bill, there is an exemption for small public companies from compliance with section 404 that is not in the senate bill.

many small here -- >> i believe it will be in the final bill. it's got a heavy vote. i believe that the votes are there, whether i like it or not, for that to be maintained. it's the 70 million capitalization and i think that will be in the final bill. >> ok. i hear we have a question in the back somewhere. >> there have been a number of sessions at the conference talking about collaboration in ways that companies could be proactively involved with both government and overtyizations. it was suggested that companies should definitely be proactive in their relationships. could you make some suggestions about how companies can be involved with the government, with the congress, with n.g.o. organizations that you respect to show that activity and support for what's going on, and also make sure it's molded in a way that can be helpful from

their point of view? >> well, if i were to urge companies to be more proactive with congress, my scheduler would shoot me. i spend a lot of time doing that. i would say this. there is, i think, a great degree of engagement with the congress. and i think with the regulators. the piece that i would encourage is with the non-governmental organization, the n.g.o.'s. it's very constructive and very thoughtful. and i do think that we hear parallels from them, and they don't talk to each other. and i think on issues like corporate govern nance, that would be a very good idea. so i would urge you -- not every n.g.o. is going to be one that people will feel reasonable. obviously, there's no point in dealing with all the n.g.o.'s with whom you agree, but there are very capable n.g.o.'s there that have a somewhat different perspective. in some case, it may be

adversarial. i would urge -- i do think the interaction with congress is pretty focused. but with the n.g.o., i would encourage you to just -- if i'm a company, think of all those that are active in the field that i'm in and start meeting with them. >> question over there? >> yes, the senate bill has provisions to require majority voting and uncontested elections. do you expect that will make it into the final bill? ome proxy access. what we do in the house bill is to leave the s.e.c. in charge of that. the s.e.c., as you know, has got a rule making process to deal with that. there will be a move in that direction, but it may well be -- i think we are at least going to empower the s.e.c. to do it. beyond that, i am not sure. we will keep say on pay in the

area of proxy access of shareholder participation. and at this point, there will -- it's still up in the air as to whether or not there will be specific rules in the final bill, or what we had in the house bill, which is removing any doubt that the s.e.c. has the ability to do that. >> congressman, what about self-funding for the s.e.c.? that's in the senate bill? >> it is. well, here's the problem. the prorkses committee gets -- appropriations committee gets very upset about that. what i'm hoping gets worked out, and this will be with their major participation, is a way to do some self-funding, but which leaves the appropriations committee with a role. and that one -- i have to say, it hasn't made a lot of difference. if you looked at the performance of -- it's kind of what i think about separating the colorado from the -- the c.e.o. from the

chairman of the board. if you threw up a list of major companies and didn't tell people which was which, there'd be no way to differentiate by any kind of results analysis. and similarly, i don't think you see a great deal of difference there. but the appropriators are going to push hard to maintain some role, and i think they will be successful. >> can you talk a little about how derivatives oversight might play out? >> it's very important. it does not distinguish between derivatives and other activity. there are two things about derivatives. first of all, derivatives in general. derivatives are the great example of a phenomenon that's grown up with no regulation. it was an effort to get the regulators -- it's failed burke they were never deregulated. and they're clearly proliferated. and they've gone beyond the original use, obviously the

basic -- you're in the business of producing as good of a service and you want to be able to control the cost that makes pricing decisions based on that. and you want to control for volatility and give up the possibility of a wind fall, if you can prevent against the bottom dropping out. here's what is clear. all derivative trades will have to be reported. and i think that's in everybody's interest, including those -- i don't see why they would object to have prices discovery and knowing what the price was. in many cases, they may wind up paying less once they see what the price is. where we're talking about trades between financial institutions, and i'm skeptical on this. the role of the financial industry is to be the means to the end, to help people accumulate capital and make it irrelevant to people who use it for productive purposes.

much of what's going on now has become an end to itself. it's not an unintended consequence. we're perfectly happy. if you have two financial institutions, they will be allowed to do their derivative trades, but they will have to be sent to a clearinghouse. if the clearinghouse believes that it can accept them, they are sufficiently understandable. they will have to be cleared by the clearinghouse, and if the clearinghouse feels this is appropriate, sent to an exchange. those that cannot be -- i hope that the regulators will be allowed to put margin requirements in there or collateral requirements, although we will allow for in kind collateral where that is required, so people don't have to cash out. and if you are someone who is not doing derivatives as a major line of business, but you're only hedging your own risk, then you will have to report them, and you'll have the option of

going to a clearinghouse if you want to. then there's a question about what about banks. well, the volcker rule says banks should be doing things for their customers. banks should not be running in the financial area -- profit centers in the financial area for their own account. i think that can be adopted. there was a special rule by senator lincoln that said, and no derivatives at all. well, that goes too far. certainly banks ought to be able to hedge their own commercial risks for derivatives and hedge for customers. this is what paul volcker said, with regard to banks, there's a separate set of rules for derivatives in term of price discovery and putting them into an exchange if possible. with regard to what banks do, i don't see the need for a separate rule regarding derivatives, because the restriction on banks engaging in proprietary activity would apply the derivatives. so banks will be able to do derivatives under the rules we have for derivatives for their own commercial risk of their

customers, but they will not be able to run separate profit centers where they trade with each other. >> we have another question from the audience. neither the house nor senate bill really addresses the big four accounting firms and how other firms may have allowed financial crisis to happen. is this because we only have four big firms left and we're afraid to hold them accountable? >> well, what we hope is that what we do with regard to the regular underlying transactions -- i guess i put it this way. we are not the back ward-looking entity. that's not to say they shouldn't be one. if people had done something wrong, they could be prosecuted through -- i grew up in the area of joseph mccarthy. i remember watching the army and mccarthy hearings in high school. i have a fear of congressional inquisition. i don't think that's what we should do. there are prosecutors, both civil and criminal, and i would

let them do that. and the other thing, going forward, we believe we've regulated -- given the people the authority to regulate transactions. there is one area where i do have some differences with the accounting firms, and we may get to this, although maybe not in this bill. that's to reverse the supreme court's decision. many of us filed an am cuss brief on the side of the plaintiff, and that's the one change that accounting agencies may see going forward. i think it's a little too hash, because it's almost an absolute liability. i do think that we at some point hope to say that where a -- an abetting party was clearly negligent or worse, that they should be sued. so you may get that reversal. >> in that vein, the supreme court is going to give its views on the constitutionality -- do you have an opinion -- >> if they make it

unconstitutional, i don't think they will, but if they do, we will come up with a structure that meets their decision. but we can't decide that until we've seen the decision. but it will be a pcaob. if it has to be restructured. it will be the way with compliance. two more questions. >> what are your thoughts on regulating the auto financing industry? >> i was for treating automobile loans the same as any other. that's this way. if you are a merchant and you are extending credit yourself, you're not covered by the consumer agency. but if you are a merchant and you extend credit in a way that relies on the financial industry and you securityize that loan, then you should be covered. merchants in general are exempt. i voted against that, i was outvoted. it came up at a time when the auto dealers were objects of

great sympathy because they were doing, i think, treated unfairly by the big auto companies. people had just been removed. congress did make them back down a little from that. i would treat auto dealers a little different than everybody else. the basic action which you finance, that's not regulated. if you arrange financing through a third party, that should be covered the same way. >> one last question, maybe the hardest one here. why have these bills become so big? >> because the economy got so big. i reject the notion -- first of all, if you read 1,300-page bills, get a page of the bill and read it. it takes about four or five of those pages to make a real page. if you look at the pages, seriously -- >> all the margins. >> we leave room, because these bills are going to be marked up. that's why they are numbered.

it's three, four, five pages to a bill, because in the committee that i chair, we had committee sanctions -- we had, i think, eight separate committee mark-ups on separate segments. and it is dealing with the whole economy. and the reason we're doing it all at once is things are interrelated, and if people want to tell me, oh, you can deal with derivatives, but don't deal with what has to fail institutions, or deal with failed institutions, but don't deal with capital ratios, or ignore securitization. i don't think that works. i think the basic answer is, in the words of the great piece of music, are the ankle bones connected to the shoulder bones? >> thank you very much for your time. we've covered a lot of ground. appreciate it. [applause]

we will break for coffee now, and session will resume at 10:00, and we will have lunch here back at 12 clon 30. so i will see you then. thank you very much. fund fund >> democratic conferees are chris dodd, tom harkin, tim johnson, patrick leahy, blanche lincoln, jack reed, and charles schumer. the republican nominees will be saxby chambliss, bob corker, mike crapo, judd gregg, and richard shelby. in a few moments, a house republican initiative for public input into their congressional agenda. in about 40 minutes, the hearing on the gulf of mexico oil spill

to consider raising the liability limit for those responsible. after that, senate republicans spoke with reporters about their meeting with president obama. and later, president obama at a fundraiser tonight for california senator barbara boxer. >> this holiday, non-fiction books and authors on "book tv." sebastian younger and his newest book "war," imbedded with the 173rd in afghanistan. and john hofmeister. get the whole schedule at "book tv".org. >> house republicans have began an effort to create a policy agenda of republican input. this will be led by california representative kevin mccarthy.

he the other g.o.p. leaders held a 40-minute briefing at the museum in washington. >> good morning, everyone. welcome to today's event. inscribed on this building are the words of the first amendment which guarantees americans the right to petition their government. the right to speak out. all across america, americans are speaking out. unfortunately, they don't see washington democrats listening. when you look at all the taxes, all the spending, all the debt, it's clear that washington has been doing what washington thinks is best. not what's best for america. the purpose of this project is to give the american people a megaphone to speak out, by using the best technology available.

as republicans, we know our principles, and we're going to use them to build a new governing agenda, rooted in our principles of smaller, more cannable government. we want the american people to engage with us in the process, and that's what america speaking out is all about. to explain america speaking out, i'm pleased to introduce my colleague, whose vision has been the driving force behind this project. the chief deputy whip, the gentleman from california, kevin mccarthy. >> thank you, mr. leader. you know, there is nothing more powerful or inspirational than the common voice and the common man. the town meeting in the public square symbolized accountability at its finest. where ordinary people could question and challenge their leaders. and the leaders could learn what really mattered to those they

served. but over time, something went wrong. elected leaders drifted away from the people they represented. and the people themselves grew cynical about the democratic process. people stopped attending town hall meetings, and many even stopped voting, thinking their votes didn't matter anymore, and neither did their voices. then something happened last summer. in every corner of this country, people started to gather. first in small groups, and then in larger and larger crowds. they acted individually and independently. but their message was all the same -- listen. and now finally, we want america to know, we are listening. that's why we're introducing america speaking out, a 21st century innovation, that will revolutionize the relationship people have with congress. this is our effort, a republican effort, to change the course of history and the policies in washington, to return to 300 millions of americans their

voice, and the way that they are governed. we recognize that americans don't want an agenda imposed on them from washington. they know the best ideas don't come from washington. they come from the people. america speak out will return them their voice, and we're ready to listen. what we do here matters. and it will matter even more if we commit ourselves to being ambitious and in our goals and determined in pursuit of them. the conversation will address the issues that matter most to the people. jobs, spending, national security, and whatever is on the minds of the people. but instead of debates behind closed doors, which has happened far too often in the last 18 months, we're throwing open the doors and letting in a little sunshine. we're giving americans the opportunity to have their voices back. the initial phase of the engagement that we're launching today will take place through the web, mobile aups, --

autopsy, and other media, as well as town halls over the coming weeks. we will gather ideas and engage in a discussion about our nation's challenges. we want to empower every american to provide these ideas as easy as texting on your phone, going on facebook, and in person. the central part of america speaking out is a new innovative web form where all citizens can submit their ideas, for a new agenda regardless of party affiliation or whether or not we agree with them. .

after this conversation and debate, we will introduce these ideas. this will be our public commitment -- to set of principles and priorities that will make up for a governing agenda. the american people have committed themselves to playing an active role in their future. and in return, we will commence creating a government faced a run the fundamental principles of accountability and whose primary mission will be to ensure that every american will have the opportunity to achieve financial security and leave for their children of better life than their own. so here it is -- america

speaking out at americaspeakingout.com. we're ready to hear your voice and we are ready to listen. i like to introduce my partner in this project, the vice chairman of america speaking out who will walk you through the site. >> thank you, kevin. there is a bright ness to this season that we are in, a season where americans are being asked to come back and participate robustly in their democracy. the software itself is impressive. let me turn your attention over to the screen to your left and this cutting edge technology, a win some design that is easy for people to interact with. let's go to the next slide. there is a series of categories that have been chosen to

organize -- you can say american prosperity, national security, and then an open mike section. on that front page is an articulation of republican principles. this is within the context of trying to drive solutions that are consistent with the themes and the principles that the republican party has articulated for quite some time. let's go to the next slide. there is an easy registration program, and what is going to happen there is disclosure of information, it will help to ensure i civil debate and probably in the question and answer session, we will go through how we keep the debate simple. let's go to the next slide. this is the part that is intriguing, because there is an ability for people to make substantive suggestions on proposals that they have come up to vote up and down on them, and then have a dialogue about them.

ultimately this is a threaded conversation that is very intuitive. they can come back and and let's say they were on subject a to begin with, the system itself will prompt you. there is another subject going on on this topic here, do you want to go there? in the same way that other online sources have done that in the past. you will see there that there is an ability for facebook, to communicate with twitter, and all of these things are going to create an opportunity to deploy the social media networks that are really powerful today, and oftentimes under utilized. let's go to the next slide. the system itself will create a points system, and the points are all competitive and we have an interest in gathering point. people will be incentivized to

participate. the more they participate, the more points that they earn, and so forth. let's go to the last one. finally, there are going to be apps available as early this week on the typical platforms that you think that people can interact with. it is an opportunity for people to pull out their blackberry, their iphone, and so forth and engage from their pockets into this national conversation. all like to welcome to the podium now eric cantor, -- eric cantor, the republican whip. >> good morning. the american people are speaking out, and washington in the democratic majority are just not listening. the trouble began back almost a year-and-a-half ago when the democratic majority jammed through nearly $800 billion stimulus bill, reaching far into

the future and imposing debt on our kids and theirs. next came the attempt to try and reformulate energy policy in this country with the prospect for national energy taxes while this economy continued to struggle to try to regain its footing. then we saw an attempt to try to put government smack dab in the middle of health care in this country, taking away from people the ability to determine their health care choices and at the same time spending well over $1 trillion in the future. lately we have heard that appointees of this administration at the sec are attempting to take over the internet. we have seen the democratic majority but the final nail in the coffin of the student loan industry as well, taking 30,000

jobs away from our economy. appleby's -- as we have seen this week, the senate concluded its work on the regulatory reform bill, another step of washington to place itself in the middle of the capital markets and take over our banking industry. all of these policy proposals and moves have brought this country to a critical crossroads. the decisions that we make will have lasting impact. this project, america speaking out, is about trying to enlist the voices and help of the american people so that we can begin by listening and turning around the equation in this town to produce an economy and then america that meets with the approval of the american people. next up, i want to introduce the vice chairman of our conference.

>> all across america, and new media technology, the online videos, social networking sites have greatly and prove communication both personally and professionally. now what is time for new media to have the same impact on its government. i believe that this project, america speaking out, is going revolutionize the use of new media to engage our constituents as well as develop positive agenda items for america's future. new media is an area for house republicans have already made a great deal of progress and have come to take the lead. since january 2009, the percentage of house republicans on facebook has grown some 37% the numbers on twitter have grown from 28% to 64%. and the number who are on youtube have grown from 56% to

89%. we are bigger than the democrats and all of these categories by wide margins. leader boehner has almost five times as many facebook fans as this policy. -- ms. pelosi. house republicans have been writing to see that skype be included under rules. we can track some stimulus spending by every member of congress. when it comes to new media, house republicans have gone from making progress to taking the lead. and now america speaking out, we're going to take our full leadership to a whole new level. and now like to introduce candice miller from the great

state of michigan. >> good morning. i am candice miller. i am proud to come from michigan, the home of the reagan democrats. that is where it had its genesis for our county. it is truly a reflection of middle america and i will tell you in my 30 years, i have never seen people so absolutely agitated and frustrated with what is happening with their federal government. folks fill the we're going in the wrong direction. they think that spending is totally out of control, that washington is not focusing on priorities like economy and jobs. now we have a deficit that has gotten so enormous, so huge you cannot even get your mind around the number anymore. and the number one thing that i hear over and over and over again everywhere i go is, why isn't washington listening to us?

americans are engaged and following the debate. we have heard them discussing their opposition to it to these 2000-plus page bills developed in secrecy in the back rooms. they know that they will have to pay for them. sometimes in washington, d.c. we forget because we look at all of the enormous is challenges that are facing our nation. we forget the real strength of america, quite simply, the american people. they are the strength of america. they are optimistic, they are determined, they are brave, they are committed, and they keep an eye for the future and strengthening america for future generations, and that is why i'm so excited about this project. it is very descriptive. the u.s. house of representatives is often referred to as the people's house. and house republicans want to tap into the inherent good common sense of the american people.

and people have seen the governance style of the democrats. this is an agenda and not supported by the majority of americans. they have not engaged america, and not only that, they have done it without even engaging not only republicans but even members of their own conference. and apparently they have developed their agenda in the back room with secrecy with just a handful of leaders in a room somewhere. and if we look forward to the rest of this year, there is work yet to be dooe, abundant. every appropriation bill. sweeping immigration reform and who knows what else. all of those issues, americans will have the republicans opinion and house republicans intend to listen to those opinions. this project is about a government agenda for today, for today, because of urgency is required and we can use the input from the american people to develop it. people have talked a lot and

continue to talk about the constitution and the bill of rights and appropriately so. the first amendment, adopted in 1791, which states, congress shall make no law respecting the establishment of religion or prohibiting the free exercise thereof, or abridging the freedom of speech or of the press or of the right of the people to peaceably to assemble and petition the government for redress of their grievances. this will be an american agenda with direct involvement from the american people. thank god they still wanted redress their -- petition their government for redress of their grievances. this is another venue for them to do so. and now like to introduce the chairman of our congress. -- a bar conference. -- of our conference.

>> thank you all for being here. the american citizens who are joining us, touring the capitol building, those who are looking on around the country, and the members of the media who have joined us from capitol hill for this field trip. we welcome you. thank you for your attention to america speaking out -- americaspeakingout.com. this is a very serious time in the life of this country. there is great anxiety across this land. this economy is strongly, families are hurting, americans are concerned about jobs and runaway federal spending. the american people are looking for answers. and after years of being shut out of the debate here in capitol hill, seeing massive legislation formulated behind closed doors, the american people finally have a way yen = = = -- a way in, and unambiguous

see that the americaspeakingout.com table. -- an unambiguous seat at the table at americaspeakingout.com. this is the continuation of dialogue with the american people, and it is designed to build a governing agenda for this congress. we're looking for ideas today to face the challenges of today. that is what this is. let me say definitively what it is not -- this is not a political party in search of principle, it is not a listening tour. house republicans know what we believe. at americaspeakingout.com, we state those openly on the front

page. more accountable government, economic freedom, lower taxes, fiscal responsibility, protecting life, american values, and the constitution, and providing a strong national defense. the house republicans note that while our principles are fixed, as senator mccarthy said, the best ideas in america come from america. and house republicans know that the american people know better than elected officials and politicians of about what is putting those principles into practice really looks like. we welcome our countrymen to join us at americaspeakingout.com, it uses cutting aid technology to to participate in this technology as we build a governing majority to face the challenges that our nation faces today. "we're not afraid to discuss the american people with a limp philosophies and competitive

values, for a nation that can judge the truth in an open market it is a nation afraid of its people." oamericaspeakingout.com stance for the principle that house republicans trust the american people. we're not afraid of competitive values. we urge all of our countrymen, whatever politics or philosophy, and join us on line. [inaudible] >> in the next couple of weeks, you will see town hall meetings and engaging with every different avenue that we talked about social networks, some in person, and over the next couple of months, they're going to introduce the legislation. [inaudible]

>> can you explain how much all of this cost and how it is not campaign? >> this is all paid to our ordinary budget. there are no additional funds required. american people require -- the today. the american people do not want to wait until next year. they do not want to wait until next year to get their arms around this government. they want to do it today. i would expect that to come out of this web site any involvement of our members will lead to ideas that weaken attempts to implement today. -- we can attempt to implement today. >> this does not cost much more than an average website. in washington, if you get in trouble for letting people have

choice in their government. [inaudible] >> are you going to be tracking what they say? or targeting them politically? >> there will be no targeting them publicly. we will continue to engage them about a certain topic, and if there is legislation coming forward, you want to get their input in debate. this is an open community. you submit the idea and debate the idea and put it into your network and you continue that have that dialogue. i will have members that will continue to have the discussion with you. >> you want to keep the conversation civil. how are you going to screen comments that you consider out of bounds? >> the website itself will take care of foul language and so forth and that will make sure that ad hominem attacks are not permissible. there will be monitoring from a

common sense point of view that you would expect. but in terms of someone who wants to come on and make suggestions on how to raise taxes, for example, they are welcome to do is that. it is not something that we're going to take up. you will go on and you'll see that twitter and the facebook sign. you can police yourself. if you find something there that you do not think is proper, you can push it forward. we will expand it all away. up in the back. [inaudible] >> why is this a dot com instead of a dot gov? >> we requested the dot gov but there is a problem. that technology inside the house is not up to speed as much

prefer security purposes, this protect more. the republican leadership. next question. >> you had said that other folks can also police the site? does that mean that they can take things down? >> note, you can advise. this is an open community of debate. if people find something of this said, they can send it off to us and give us a warning and let us know. did and i guess that danger is that this is a close circle. it doesn't seem like you will hear from anyone except those who agree with you. is there any kind of way that you're going to try to reach out to people who are not already a part of the conservative republican fold? >> by definition, this event and

a whole host of other events that are scheduled are for planning and very much and invitation posture. it is very much an open system, and in talking to members, they are going to be doing town halls and rolling out over these next several months. >> we never ask party affiliation. we find a lot of organizations out there looking for sunshine and government and they are very excited about this. >> a suggestion such as raising taxes were to be coming through the system, you would correct -- rejected off hand. is there anything else you would project offhand? >> the key is to remember that we're focusing in on principles that are settled principle like smaller government, more accountability, more transparency and so forth. that is not new to was necessarily. -- what is new is for the

invitation -- is the invitation to submit answers within that framework and have a conversation in the debate on probably the most dynamic technology that we have seen clearly in a generation. >> what kind of discussion are you actually having? >> a robust discussion insofar as your soliciting input on how the balance the budget, what priority should -- what should americans role in the world be? those are things that there is a dynamic interplay that i think is very helpful. and over period of time, what will happen is that the best ideas are going to rise to the top. >> to make a careful distinction here, americaspeakingout.com is a dialogue, a discussion at of which the republican leadership and the republicans will build a governing agenda for this congress. he spoke about the issues that would be brought to the filter

of what our country was built on, clearly stated principles of limited government, but those discussions will not be limited other than by rules of decency and decorum. [inaudible] >> we will introduce them. that will take time. you'll not have to wait until september. you may find an amendment or two that gets offered in the next week. the power of the idea should win and that is what we're after. everyone across america -- is not a republican, but america speaking out. >> were virtually at the end of this session of congress. you do not have enough votes to pass anything. how can you say with a straight face that this has nothing to do with the campaign? it's right before midterm elections. >> where do not have 2183 what happens when you have the

american people across this country put the power of ideas so strong that you can trust them? that is the fundamental difference. we have been producing ideas. we need to engage the american people and that is exactly what this is. this is revolutionary and one toe. the technology that we use today has fundamentally changed every part of your life. the way i pay my bill or even buy movie tickets for my children. it has not changed the way that we converse with congress. this will not go away. this gives us greater strength to the individual in taking back their congress. yes. right in the front. >> just to be clear, you do not see this leading some sort of signing statement on the capital among other two before the capitol hill like 1994? >> this is not about candidate or an election. this is about today. what is the american people need to wait to solve that problem?

einstein said that there was only one miracle in this world, compound interest. we do not have the opportunity to wait to solve america's problems. that is why we are engaging them. >> it back in just clarify that -- apart from this, will there be something from the republicans saying, this is our agenda for the next congress? will there be something corresponding to what we saw in 1994? >> apart from this, republicans have discussed coming forward with our plans for the future. and over the course of the next three months, we're going to continue to work with the american people, work with those who are interested in terms of developing and, and that is said. we do not know what is going to be. not at this point. when we did, we will make sure

that you are aware of it. >> why now in terms of building a web site and getting ideas? and are there any other issues like amnesty or pro-choice that you might not want to discuss on the web site? >> i will remind you that i handed nancy pelosi the gavel, that if we had to disagree with our democratic colleagues are our new president, it is our obligation to put forward a better solution, and how we would address the challenge. and over the course of the last 18 months, we of but ford a lot of better solutions -- eric outline some of those solutions. they're covering a half a dozen

major areas. what this is an effort to do is to more rain gauge the american people in the development of the solutions to the challenges that are facing our country. and we all know that the best ideas come from americans. i see this as an evolution of our solutions group that we have had over the last 18 months, to take it to the next level. [inaudible] >> people can come to this site and give us their ideas. they can debate other ideas that are already there. they can vote on these ideas. but i believe it was made clear -- we know what our principles are. what we're asking the american people to do is to participate with us in al do we apply those principles for tomorrow and the day after.

>> have you going to decide what ideas make it into legislation? he was going to be monitoring the site? -- who is going to be monitoring the site? but it collaborative effort? >> ill will be a collaborative effort. you will find a whole host of people that are going to be watching this. it may be that eric cantor at one of the next possibilities for his new program, that initiative could unfold some of the suggestion. we're only limited by our imagination. and that is what is going to be exciting about it. >> there is always a lot of criticism of the republican party being the party of no or

no ideas. do you worry that this campaign, by asking americans to basically help you draft an agenda, that you're enhancing this image of the party of no ideas? >> we spent the last 18 months being the party of better solutions. many of you have written about the better solutions. we are going to continue to offer better solutions to address the problems that america is facing. and we see this as a giant step forward, directly engaging the american people in the development of those solutions. yes. >> [inaudible] >> this has to do with listening to the american people and addressing their concerns today.

>> the field, since you're using taxpayer money to fund this, that you will have to respond to any inflammatory ideas? one of the more popular ideas calls on not allowing any muslims to enter the usa, changing the rules for how people become citizens. when you need to respond to things like that? >> people are going to have an open debate and an open discussion. the strongest idea is going to be able to move forward. people can have ideas that we will not agree with them on, but the difference being that this is open and this is sunshine. yes, we will have some ideas that we will not agree with. >> the idea is the partly collect ideas for introducing -- ideas for legislation to introduce in the fall. will this goldway? >> i don't know if there is any discussion about waiting for the fall. as i said earlier, i would expect in the coming weeks we

will see some ideas generated from this site that can be implemented today. and i expect that that will happen. [inaudible] >> 63% of americans want the health care law repealed -- a high number. that is an issue that is likely to be brought up on this web site. if the gop does take back a majority, are they committed to getting and pushing for the health-care lot to be repealed? >> we are committed to repealing the health care law and replacing it with common sense reforms that will lower the cost of health insurance and held get american jobs. [inaudible] >> that is for a new congress to make a decision about that.

>> last question. >> why are you announcing it here rather than the capital? this is a way for government. >> i picked it because of what is written on the front of the building. the right for citizens to petition their government. this is about getting the government -- the word out to all americans that we want your ideas and we're listening. it is the symbolism that the best ideas are not in that capital, and that is what we're going after. >> thank you all very much. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010]

>> a in a few moments, a hearing on the gulf of mexico oil spill about liability. in a little more than two hours, senate republican speak with reporters after meeting with president obama. after that, president obama at a fundraiser tonight for california senator barbara boxer. and then we will hear a briefing by house republicans on input into their congressional agenda. the house financial resources committee continues the congressional investigation into the oil spill tomorrow morning.

witnesses will include ken salazar and head of the mineral management services 3 live it c- span3 at 10:00 p.m. eastern. >> when you return here, when for you the shadows or longer, i have no law -- no doubt that you will be adding your name to the book of history. >> memorial day weekend on c- span. watch commencements from leaders of the arts, sports, and sciences, and right now watch past year speeches on line at the c-span video library. the speeches your weight with every program since 1987 available free on one. >> federal officials urged congress today to eliminate the liability cap that oil companies must pay for oil spills. bp is committed to paying for the oil leak, but the senate is

considering legislation to raise the liability cap from $75 million to $10 billion. this is a little more than two hours. >> the hearing will come to order. today is the third hearing of this committee on issues related to did deeep -- to the deepwater horizon disaster in the gulf of mexico. all we will focus on liability issues, we continue to have the human component of this accident in mind, the workers who lost their lives, their families, the people of the gulf experiencing this catastrophic situation firsthand. mr. de -- yesterday i was up for it -- i was fortunate enough

to a accomplish -- a company others -- a company others observing the consequences of this accident and a joint response of our government agencies, and bp, and the many volunteers. it is a sobering reality to see it will beginning to impact the shorelines and no -- know that this was not under control. i saw many people working night and day for weeks to fight this bill and to protect the gulf, and i think we all express our gratitude to them for their extraordinary effort. today we examine the liability, financial, and penalty provisions of the law related to this accident. there is urgency and our efforts and we need to ensure that those on by the as and are

fully compensated and a system in place that probably allocate risks and losses. based on what i've learned so far, i believe that we have a system in dire need of repair. current law caps the responsible parties damages other than the cleanup costs at $75 million, which clearly is nowhere near the damages their results -- that have resulted from this disaster. equally as troubling, the law requires the secretary of interior to adjust the amount of these caps at least every three years to reflect significant increases in it to improve our price index, yet the limit on damages for offshore facilities has not been increased cents the law was passed in 1990, 20 years of inflation ignored. victims of the disaster will certainly wonder why there should be any cap on their damages, and why those responsible should not simply be required to pay the full amount of the harm that they caused.

bp has stated that it will pay all legitimate claims and that it will not insist on 75 million-dollar cap currently in law. but even accepting this is true, we have a broken system that is in need of repair predict oil spill liability trust fund financed mostly by taxes on oil is intended to cover higher levels of damages and spread that risk in excess damages among the industry as a whole. yet it is led to the paying $1 million per incident. congress over the years has been inconsistent in enacting taxes to fund this effort, and that taxes that have supported it are scheduled to expire in 2017, so we obviously need to look at that as well. the law also requires operators in the offshore environment demonstrate certain levels of financial responsibility to ensure that they can accommodate

losses that they may cause. however for facilities like this, the maximum amount required is $150 million, and the standard requirement is only $35 million. this amount has not been increased in decades. we obviously need to fix this. finally, there are civil and criminal penalties available to publish those who violate safety and other requirements. these are intended to be a deterrent to playing fast and loose with the rules and creating a safety risk, but the civil penalties were set in 1990 at $20,000 a day and have been raised only once to $35,000 a day. the law requires the secretary to adjust these penalties every three years to reflect increases in the consumer price index and that has only occurred

sporadically. so we have our work cut out for us. it is a complex area of law and policy, and a number of experts to help us think through how to fix these problems, and i look forward to their testimony. i know senator white house is here to speak briefly about his legislation in his ear for civil and criminal penalties. let me call on senator murkowski first. >> thank you, mr. chairman. i want to thank you for agreeing to hold this important hearing. as you mentioned in your statement, our visit yesterday to that all with senator whitehouse, i think, was a very important visit, a very important trip to understand the impact of the deep water rise and -- deepwater horizon spill, understanding at the spill

unfolds, as we see the impact to local residents and to the marine environment. i can assure you that what i saw yesterday's certainly has reinforced my commitment to help make things right for all those whose livelihoods are being so drastically affected by this disaster. when it comes to the issue of liability associated with major oil spills, i do not think that there is any state that is represented here on this committee that has a more direct experience and certainly a more immediate concern than the state of alaska. with the exxon valdez tragedy occurred, it was a horrible incident at that time. it was a long and very sad part of alaskas history. the litigation that followed was

years in being resolved. the litigation over punitive damages literally took two decades to resolve. that was in and of itself an absolute tragedy and i am committed to ensuring that we do not see a similar situation unfold with this cold spell. i one of our committee to hold this hearing because there's been considerable discussion about the liabilities of the deepwater horizon spill and what part of that liability is limited or not limited and i think that there has been some mischaracterization out there that bp is only going to be responsible for $75 million of this bill. mr. chairman, i read -- if i really thought that the federal government was born to protect companies that have billions of dollars of assets to pay only

$75 million regardless of the ultimate costs and damages from the spill, that the spill victims could be hung out to dry, i would be the first to introduce legislation to correct what would clearly be a flaw in the system. reality is that the $75 million figure is drawn from just one provision on strict liability in the oil pollution act. and it has nothing to do with the expressly on limited -- the on limited liability provided for cleanup costs. it is important to recognize that it has nothing to do with the large authorization for unlimited damages allowed under various state laws. and not every state has unlimited liability so we do need to take that into account. i think that we of all stated are around this table here in this committee room with the ceo of bp in front of us that we

must hold and we will hold bp accountable. chairman, if you have strutted -- you have stated the affirmation that was made by p that they will -- by bp that they will pay for and provide for all of those costs. those costs that are incurred as a result of this oil spill. we were again in the gulf yesterday with secretary napolitano and secretary salazar. they too reiterated many times throughout the course of the day that bp will be responsible for the damages or the cost associated with this bill. i think that we need to listen carefully and constructively on how we hold companies liable, how we incentivize stronger safety and normal safeguards as

it pertains to the $75 million liability cap. my own opinion is that we need to increase this liability to reflect inflation, the change in financial and risk portfolios that are associated with certain types of exploration. and i hope that as we consider some of these suggestions here today and going out into the future here, we consider how we make changes in ways that are not arbitrary. right now there is a proposal out there that the liability cap needs to be $10 billion. is that the right figure? i do not know. maybe it is. maybe it needs to be higher or run ltd., maybe it needs to be somewhere in between but i think we need to make the time -- take the time to ensure that we're building good policy on this. if congress decides to impose a

strict and direct liability of additional $10 billion on top of the unlimited cleanup and the on limited losses that can be brought against responsible parties in state court, i think we have to consider what the potential consequences might be. will there be jobs lost? particularly in the gulf coast our energy security perhaps weakened? we need to be considering these aspects and make sure that the victims of this tragic spill and god forbid that any future spills are justly compensated in a fair and expeditious manner. i think it's important how we deal with this liability cap, increasing it, but i am reserving judgment on what the appropriate figure might be until we have examined it in a way that secretary salazar just as the two last week. i welcome the witnesses that we will have the day.

i welcome senator whitehouse for his perspective and i thank you, mr. chairman, for your leadership on this issue. >> thank you very much. senator whitehouse has introduced legislation to revise the civil and criminal provisions. we welcome him to the committee to make a statement about that bill. go right ahead. >> thank you, senator bingaman. [unintelligible] first of all, thank you for holding this hearing. i encourage you to review the penalty and liability framework governing offshore drilling and enact changes to this framework so that we can prevent future disasters like the one now unfolding in the gulf. thank you all for inviting me for making a few remarks about my outer continental shelf plan bill. the bills seeks to enhance penalties for failing to meet

workers' safety and environmental hazards on offshore rigs. this is just one piece of the public. my colleague has introduced two 0 bills to raise liability caps and to eliminate birth the caps. the co-sponsor of both of these bills, and i commend his leadership on this issue through look for to working with them and all of my colleagues in the senate to forge a strong deterrent to the system to discourage irresponsible oil drilling rig just yesterday, the chairman indicated that we visited louisiana. the chairman, the ranking member, senator landrieu, senator durbin and others to inspect the disaster caused by the bp deepwater horizon oil spill. since the tragic explosion on this allred on the night of april 20, which killed 11 workers, it has been spewing uncontrollably in the deep

water of the gulf and a rate that has been likely on an estimated -- underestimated. it is another thing entirely to go see the entire massive oil slick spread across the gulf with black smoke billowing off of the water where the events taking place. tar balls are washing up on the beaches vital to louisiana, alabama, mississippi, and florida. troopers and other gold for german talk about the collapse of their industries. some of these people are second and third generation fisherman. this is truly the only light that they have ever known and they worry that it could be gone forever. there a similar economic concerns but i am sympathetic to the concerns of our fishing community and this is in community. my bill wed enhanced penalties

in the fall in three ways -- increase in civil penalties from $38,000 per violation to $70,000 per violation per day. when the violation constitutes irreparable harm to fish and other wildlife, increase penalties from $38,000 per violation per day to $150,000 per violation per day, and increase the upper bound of criminal penalties from $100,000 per violation per day to $10 million per violation per day. but goal of the outer continental shelf program is to have been formally sound wall and gas exploration. this will go a long way to deter oil companies from cutting corners on safety measures that can prevent disasters like the gulf spill. we need to take a comprehensive look at the penalty and liable to framework that covers offshore oil and gas drilling and to substitute requirements

to protect our workers, our coastline, and the marine environment from devastating oil spills. we may want to consider banning drilling at certain debts until we're satisfied. senator bingaman, i applaud your efforts and today's hearing. one thing i'm certain of is that the current civil and criminal system is inadequate. the five largest oil companies worldwide may 20 $3 billion in profits last year. the current liability penalty limits are inconsequential in the face of those record- breaking profits. i want to close by anticipating an argument we will hear from the oil and gas industry, that it dancing penalties will drive companies out of the business of offshore drilling. the way i see it, tough penalties for noncompliance with those standards help to avoid disasters like the bp deepwater horizon oil spill. not only will it save workers' lives and protect our arena and

coastal interments, it will save money because these disasters caused many more times the amount of prevention. consider these costs. in the coast of will -- and the spill off the coast of rhode island, they totaled almost $33 billion. in rhode island, another spill when up to $35 billion. suddenly $75,000 or $150,000 does not seem like such a very large number. mr. chairman, i would like to offer into the record of these proceedings a list of some of bp's violations of outer continental shelf reservations taken off their website. may i have that submitted for the record? >> we're glad to have that included.

>> i appreciate that and i appreciate the good work. >> thank you for testifying in your leadership in introducing the bill that you have put forward. we have two panels and we will excuse you at this point and we have two panels today. experts -- first from the administration, and then from the congressional research service. the first panel is thomas perrelli, the associate attorney general. second is david hayes, the deputy secretary of interior, and third is craig bennett, the director of the coast guard's national pollution funds center. if they would all come for police -- come forward please and take their seats? if there is no particular preference on your part, why don't we start with mr.

perrelli, and if you could give us your views and the first five or six minutes, and then we will include all of the statements in full in the record, and then we will have a question. mr. perella, go right ahead. >> thank you, chairman rakowski. >> be sure that you push all appropriate buttons. >> senator sessions. >> what is the role on submitting testimony? i think we got mr. perella is this morning at 6:00 a.m.. we've got a lot and our committee. what is the expected presentation of written testimony? >> what is our role? our role is 24 hours. >> i know people are busy and all of you are busy but it does help when our staff has more time to review it so that we can do -- be a little better prepared >> -- better prepared.

>> we will urge people to comply with our 24-hour rule. >> my apologies for the late arrival. >> will you pull that up or speak more directly into it so that we can all hear it. >> thank you for the opportunity to testify about liability and responsible issues related offshore oil production. before i began a lot like to echo the condolences to the families of those who lost their lives into those who were injured in the explosion and sinking of the. -- the deepwater horizon. the explosion and fire have created a potentially unprecedented environmental disaster for the people and fragile ecosystems of the gulf coast. this says created a massive response led by president obama. there numerous federal officials on same from the very beginning. the activities have been focused

on stopping the oil spill and preventing and mitigating its effect. the department of justice has been fully engaged in this response efforts. our mandate is to make sure that we recover every dime of taxpayer funds and ensure that the united states expands and recovering from this tragedy. we will ensure that the american people do not pay for any of the damages for which others are responsible. at the direction of the attorney general, we have been monitoring the situation on the ground, coordinating with the state's attorney general and working with federal partnering agencies and natural rusty's -- resources trusties to make sure that we track every cost incurred. we're looking ahead to issues of financial response ability and liability, mature -- many of which are under the oil pollution that. as you know, opa was passed in the wake of the exxon valdez disaster to provide specific legal authority would feel and what the consequences of oil

spills. all but gives federal officials the ability to designate responsible parties who are required to clean up oil spills and then pay removal costs and damages. the coast guard has designated bp and transocean as responsible parties for this bill under opa. in its current form, but contains additional caps that may limit the law -- the responsibilities. caps on the size and nature of the value -- the vessel or facility. bp has already stated in several places that it will not seek to limit its payments and that it will not look to the federal government to reimburse it for claims that it paid in excess of the applicable cap. we expect bp to uphold this commitment. the united states government is committed to making sure that all responsible parties are held fully accountable for the cost and the damages they have imposed on our people, our communities, and our natural resources. the liability provisions of the opa have not been updated and some time and it is clear the need to be revised to better

reflect the principles that polluters could bear the costs associated with the harm they caused to the natural environment. bp has recognized its obligation to fully compensate all those bearing damages in the current oil spill. for the future, we need to change the legal framework to ensure that there is no arbitrary cap on corporate responsibility for similar major oil spill three we will work with congress to develop a program proposals and a transition. thank you, mr. chairman. >> mr. hayes, we're glad to have you before the committee. go right ahead. >> thank you, members of the committee. i'll make a few oral or marker in my written testimony for the record. i have been as the focus my testimony on the authority as a companion to what mr. perrelli is talking about in terms of the oil pollution that. i am delighted to testify on the subject.

obviously our first focus right now is on the oil spill disaster and the response to it. secretary salazar set me down to the gulf the morning after an and as several of you've visited with secretary salazar yester day. there was an excellent trip and i was delighted that you're able to go. while our primary focus is on the disaster and refined into it, it is appropriate that you are obviously taking up these broad policy question 3 we are also looking at important policy questions with regarding this disaster and how to respond to it. it is for those reasons that the secretary salazar commissioned an independent cost analysis to be done by the national academy of engineering that will be folded into the new presidential commission that will examine all aspects of this disaster and, with the proposals potentially and how to ensure that it will not happen again. also, secretary salazar will be delivering to the president

later this week and interim measures report to do with safety issues associated with ongoing activity on the outer, michelle. and most notably an important, this committee is, the secretary has -- no. -- reorganize the minerals management service already to take apart the -- to take it apart. in his reorganization, he removed the revenue producing side from those two organizations prove we look forward to working with you on those issues. with regard to inspections and enforcement, this has been a very significant interest of the secretaries. .

the primary enforcement mechanism for on going approval and, if necessary, compliance for the oil and gas industry in terms of offshore activity that the department of interior has purview over. in that regard, i noted that the original penalty authority came from the 1970 land act amendment, and the original fine was done thousand dollars per day per violation, and in the pollution act, there was an amendment that increased it to $20,000 per day per violation.

plus, it established the ability to adjust that upward under the consumer price index, and in 1997, the revised the penalty amount up on the cpi to $25,000 today. in 2003, it was again raised up to $30,000, and in 2007, it was korea based -- it was revised upward to $35,000, and the cpi has not gone over the threshold to raise it further, and we are based on statutory structure that has been in place for some time, and as an administration, we are absolutely open to consider amendments of the act that consider this for civil penalties and the $100,000 criminal penalty, and we look forward to working with the committee on those issues. thank you. >> thank you very much.+

mr. bennett, go right ahead. >> good morning, german bingaman, ranking member, members of the committee -- chairman bingaman. i have been the director for two years, and i was chief of the division for four years prior to assuming my current condition. my role as the director is threefold. first, i use amounts congress has made available from the oil spill trust fund for so-called emergency funds. second, i sure these responsible party -- the response will party is dealing with damages. if claimants are not fully compensated by a responsible party, they may present claims for payment from the fund. third, i recover federal response costs and claims paid

by any and all responsible parties. with respect to the deepwater verizon response, -- horizon response, a federal response costs have totaled $72.40 million. fund costs included the direct costs of the coast guard and partners as well as funding that has been provided to 14 different state agencies for state response efforts. while we have exercised are one- time advancement authority to move money from the parent fund to the emergency funds, the emerging scale of this emerging response effort is burning through these funds. this is important, because while the responsible party may be reimbursing those costs, they go back into the parent fund, not the emergency fund. we believe we may exist the existing balance in the emergency fund as early as june 5, much earlier than previous forecast.

legislation is on the hill, and it is critical we obtain that authority as soon as possible. to date, b.p. has reportedly received over 25,000 claims and paid over $28 million. most of these claims had been for must have been, -- loss of income and wages. bp has opened 20 processing centers with over 432 personnel in the field to assist claimants and has established an 800 number as well as web-based claim capabilities. b.p. has the ability to accept 6000 claims per day and advises it can search through 15,000 claims per day. this is putting 2500 adjustors in the field if necessary. my staff has dilly conversations

regarding any concerns regarding the efforts to submit claims. the polluter pays. fedor response costs -- federal response costs. we anticipate prompt payment. going forward, they will continue the strong response we have sustained since the first day of this incident korean communities and businesses have suffered as a result of this bill. the regime is working to assure a robust response that those damaged are compensated and that the polluter pays. the department supports the legislative proposal, and we look forward to working with congress to adjust the regime appropriately. thank you for the opportunity to testify today. i look forward to your questions. >> think you all very much. i will start with a few questions.

mr. perrelli, your position, the administration's position is that we should eliminate the cap on liability that is currently in the law and not have any cap. is that correct? >> well, i think it is important to understand that it covers a wide range of activities that might have the risk of resulting in a similar major oil spill, such as we are seeing currently. we do not think there should be an arbitrary cap on responsibility. >> let me ask, mr. hayes, do you agree with that position, or is that something that interior is still assessing? >> we are totally in line with the department of justice on this, mr. chairman, and the administration.

>> there continue to be reports in the medium about permits being issued for drilling in the gulf and waivers being issued with regard to environmental requirements. we have tried to nail this down, a belief. secretary salazar -- i believe. secretary salazar was indicating there would be no further drilling permitted in the gulf until these studies and investigations had been done. could you clarify? in short terms, where we stand on this? what operations are still being permitted? which operations have been suspended or stopped? >> i would be happy to, and i appreciate the chance to clarify this, mr. chairman. first, let me say that as you would recall from last week,

there is a requirement that the minerals management service have exploration plans within 30 days under the continental shelf lands act, and that area where there is a categorical exclusion is used, and because of that statutory requirement, exploration plans continue to be approved, but those do not allow for drilling. the drilling decision is a later decision under another thing. there has to be a special affirmative act to allow for drilling. as for the drilling, the department put a stop on processing new apd permits. >> specify "apd" for those of us who are not experts? >> applications for permits to drill. >> all right. >> and there are basically two types of drilling permits, if you will. there is the initial apd, which

gives you the authority to put a new hole in the ground, and then, there can be situations where after you have started drilling, there are safety issues that arise or other circumstances that arise that require you as a driller to move that ongoing drilling operation around. those are called sidetracks, revised permits to drill. those are all for ongoing, already-started drilling activities. what the department has stopped is approving new apd's for current drilling activities where there is a need, often for safety reasons, to do a bypass or to do what is called a side track. those have been approved, but those are not new apd's. i think that is the reason for the lack of clarity, but in the deep water, there have not been any new apd's implemented since

april 20. there were two that were approved between april 20 and may 6, and they were both suspended. no apd's fisa since april 20 have been allowed to go forward and do new deepwater drilling. >> well, thank you for clarifying that. let me ask sort of the other side of the koran, when we are talking about possible liability limits. the other side of the coin seems to be requirements for financial responsibility. what are we going to require their for companies that go into the deep water and it drill? i asked, mr -- i ask, mr. hayes, what are your thoughts on that? >> it is appropriate to revisit

that financial assurance requirement. that seems anachronistic, frankly. $150 million of financial insurance certainly for a situation like this for a company like b.p.. unfortunately, it does not appear to be coming into play here, but we do think it is inappropriate, just as we look a potentially revising upwards the statutory penalties. we look at revising upwards the financial assurance requirements. >> senator jackowski. -- barbara mikulski. >> is it correct to state then that boasts -- both of you would agree that we should not have the current 7 $5 million -- liability cap -- murkowski? >> i think for the future for activities such as deep water

drilling, with is a risk of a similar major oil spill, we think there should not be that cap. >> are you differentiating between deep water and shallow water exploration? >> i think we have to work with congress and the committee on the whole range of activities. there may be shallow water drilling, deeper water drilling, but certainly in the context of any activity that could result in a major oil spill are in a position to have an arbitrary cap. >> something that plays in there? >> certainly, we should look at the risks and look at transition rules, as well. >> and, mr. hayes, i want to make sure i am not misinterpreting york -- your point. >> is always good to pay attention to your lawyer.

>> secretary salazar has made it very, very clear that b.p. as the responsible party will be paying and that b.p. will not be expect to be held to the cap. does the administration the think we need any specific legislation to make this true to ensure that this is the case? >> i think we're going to continue to work to ensure that b.p. lives up to its commitment, so they have made that commitment. they take it seriously, and we will work with them. the legislative proposal is transitioning into a new liability. >> so, basically, going forward. >> we are focused on going forward. >> let me ask about that,

because as the $75 million strict liability cap is in place right now, it only applies in places where there has been no gross negligence, misconduct, or regulatory lack of compliance, so i am assuming that there is a possibility or a likelihood that any of these three could be alleged, in which case the light cap is removed altogether? >> that is correct. >> oh, in fact, while we're talking about here with a cap may or may not, and the main not is perhaps quite likely, it may not be in place for this particular deepwater horizon incident. >> i don't want to speculate. if there is a violation of any safety, operational, or construction regulation that may have caused the spill, the caps would be removed.

>> i will not asked to speculate, but i will ask you if the department of justice is aware at this point in time of any incident, incidents either proven or alleged of the responsible parties in gauging in gross negligence, willful misconduct, or regulatory noncompliance? >> senator, i do not want to comment on any pending or contemplated investigations. there are many things yet to be developed. so i cannot give you any insight on that currently. >> let me ask you, mr. bennett, because when we were in louisiana yesterday and had an opportunity to hear from the fishing industry and the small- boat charter industry as well as the oyster fishermen, there was what was happening with the processing of claims, and there was concern that, in fact, claims were being expedited,

that there was a process that was transparent, and that worked for those who had been affected with their businesses and being able to go out and fish or charter bookings that had been canceled. the question to you is, in your office's role in overseeing this claims process, are we sure we have a sufficient number of claims offices, that we have staff that is sufficient, that we have staff that can deal with -- for instance, we have got a big vietnamese community within the shrimping industry. do we have translators there. , are we fully set up? at the interior, he was pretty adamant that there be follow-ups with the admiral as part of the

following meeting, because what we heard is that, in fact, the process that is being set up is not meeting the needs of the local people. can you comment on that? >> yes, i would be glad to. the law requires us to require the responsible party to advertise and collect claims, and bp has been very responsive, as we oversee and make sure they are complying with taking claims. we welcome any complaints or any concerns about the claim processing. we are not getting a lot of concerns sent to my office. if you care about that, we want to know about that. they say they have opened 28 offices. they have been opening capacity at a rate of about 28%, and the claims rate has grown at about 12% and is leveling off. it might change when we start

getting more damage claims, but they are set up to get about 6000 capacities' a day, and they are currently getting about 2000 a day. whether there are telling us, what it appears from the data we have, is that they are meeting the requirement. as soon as we got word about vietnamese and spanish and croatian communities, we approached b.p. and said, "we expect you to handle that," and the immediately got translator services and immediately started advertising in the media, so b.p. has been responsive to any of our requests for direction for any concerns that we have become aware of. >> thank you. >> the comment that was made that b.p. has indicated that it intends to pay all legitimate claims. obviously, the question is, what is legitimate, but aside from that, is the b.p. -- is their

representation legally binding in any way? legally binding on them they simply indicated they would pay legitimate claims. six months from now, one year from now, is that a legally binding commitment? >> i would not want to make a judgment as to how that would be used in a court of law down the road. they certainly made it publicly. also not to seek recourse against the fund, which is also a significant commitment, so we intend, whether it is in a court of law or elsewhere, we certainly intend to have them up hold that commitment. >> so you intend to represent that commitment as something that is binding? >> as i said, i cannot speak of that is something that would be biting in a court of law if that were to be litigated down the road. >> the representation today

might be very different than the actions six months or one year from now, so i appreciate the fact that b.p. has made these representations. i would feel more comfortable if there were some binding requirements or that they were legally binding. let me ask. the letter you received at the justice department. there were about 18 of us the other day. asking you to take look at an announcement by the owner of the deepwater horizon rig. it was announced in switzerland, and i think it is in switzerland where they have employees, and they have 1300 employees in texas. it reduces their tax obligation to the united states. in switzerland, they say the intent to distribute $1 billion

to their shareholders at this point in time in. is that troublesome to you? we have written a letter asking whether it is troublesome, because there may be substantial liability here for transocean, as well, and if they go ahead and distribute the potential $1 billion in the face of potential liability, would that not be a difficult circumstance for people's is live said been dramatically affected? >> senator, i do not think i've actually seen a copy of a letter, although i have been told. all of the responsible parties, regardless of whether, however transocean or another responsible party spends funds, our goal is to get back every dime for the american taxpayer. >> you will have just received this then. would you take a hard look at this? this does raise questions. we had three parties at this

table, each of which was pointing in a different direction saying, "it is not our fault. it was someone else's fault. transocean in switzerland, they want to give $1 billion back to their shareholders at a time or i think there might be very substantial liability questions that would suggest we would want them to have that money available. you also talk about having the money for offshore oil and gas development, and i think you talked about, mr. hayes, you talked about a significant increases, as well as mr. p errelli. i think you alluded just a moment ago that may have decision points with respect to whether it is a shallow or deep well, the size of the project, the size of the company, and so on. define for us, if you will, what you're thinking is going forward with respect to liability.

significant increases? because that suggests you believe there ought to be a cap, if so, what should the conditions be attached to a cap? >> it was structured requiring entities of all sizes to pay all removal costs plus some amount of damages. yet to be determined. we want to very much work with the committee and look at the different factors, look for different types of oil exploration or transport, the factors needed to ensure that companies invest sufficiently in safety, the factors needed to ensure that funds at the end of the day are sufficient to make sure that all claimants are paid out. i think we also want to look at the market impact that may affect different types of entities that may be involved in transporting small amounts of oil on the coastline versus to link -- drilling in very deep water.

those are different activities, each one requiring a different look. >> are there ways where you can take steps to make legally binding their representation by b.p., or at least ask them to make is legally binding at this point, number one, and number two, that is the one side of the potential liability, and the other side is $1 billion being dispersed to shareholders at a time when you may want to see that that is available for liability with transocean. are you interested in working on both of those to see that the folks who are affected by this oil spill are protected? >> i will take that back and give that further consideration, senator. >> senator sessions. >> thank you. mr. perrelli, walk through the statute that provides liability

coverage. it has some good things in it. i believe that it can be improved, and i have offered legislation to do that. with regard to the damages on cleanup, the cost of all of the cleanup, is there any question that the responsible party, in this case b.p. is responsible, are the cleanup costs, the marshes, the beaches, and that kind of thing? >> there is no doubt, senator, that they are responsible for all of the cleanup costs. >> the 7 $5 million category -- $75 million category, is this aulos that fishermen or shrimpers' may have -- is this a loss that fishermen or shrimpers may have? what is capped under this bill?

>> the $75 million cap applies to, if it applies, as we talked before, there are many situations where it would not, but it applies to a wide range of damages, and that includes the kind of economic damages that you're discussing, the cost of public services that may be required in response to disasters such as this, as well as damage to natural resources, the impact once oil is removed, trying to revive that habitat, and that is an area, although there have been very significant hundreds of millions of dollars of impact on natural resources. >> but under classical state law, that has not been abrogated. this is the kind of loss of one might file under federal law in federal court, i presume -- this is it the kind of lawsuit -- this is the kind of lawsuit. there are possibilities that

under classical state pollution or nuisance or trespass-type actions, you could file those lawsuits also. >> we expressly allows states to impose a greater liability or requirements. that is correct, senator. >> the legislation that i signed on to -- retroactive liability. i know that senator dorgan has said, "should we do this?" i have read some complaints, concerns, really, that this raises constitutional questions about the ability of congress to retroactively alter this situation. the department of justice, does it have an opinion about that? >> i will start first by noting that there would be many situations in which, for

example, if the cap did not apply, that there would not be a concern about retroactivity, congress legislate retroactively all of the time. while there might be arguments made under other provisions, we think we would have a pretty strong argument in response that congress can legitimately legislate in order to insure cleanup -- ensure and cleanup would not run afoul of constitutional protections. >> expect that to be contested? >> one could envision it being contested, either the constitutional matter or in a breach of contract action, which may be more likely. >> mr. perrelli, with regard to the investigations that are ongoing, i believe there are people on that team, to what extent are the fbi involved in that?

>> senator, i cannot comment on any contemplated or pending investigation. >> well, i would just suggest that if there is a possibility of a criminal investigation, and everyone is presumed innocent, but if there is, the fbi should be involved in that. my observation is that their expertise in those types of matters exceed the agency, although they have great skills in many ways. with regard to the shallow water drilling, mr. bennett, is that within your jurisdiction? we do have thousands of jobs. i understand they will soon and if all shallow water drilling is stopped -- they will soon end, because it does not take long to get those wells completed, and the ones on going arsine

wrapping up. what is your expectations -- and the ones on going are soon wrapping up. >> senator, i will take that one on behalf of the secretary of the interior. the policy statements that i described -- policy statement that i described and clarified with the chairman is in place only until the 30-day report is delivered to the president later this week, so this was essentially a time-out on the drilling of new deep water wells, in particular, after may 6, though, we also stopped approving shallow water drilling apd's as well, but that is just until the end of the week, and so, the issue has been raised appropriately as to what should happen after the safety report delivered to the president, and we are looking at that issue and

are cognizant of the fact that there are important distinctions between shallow water and deep water rigs. >> thank you. centre to approve >> thank you, mr. chairman. mr. perrelli, earlier, i laid out some horrific patterns with b.p., and today, i want to talk about the transocean company since the accident in the gulf, and let me what you very specifically through the timetable. at our hearing two weeks ago, the top management at transocean said they had nothing to do with the accident. they said it was b.p.'s fall, they were just, in fact, following b.p.'s orders. two days later, after they exalt themselves of responsibility, transocean went off to federal court in a houston. there they filed a claim under american admiralty law which

governs maritime accidents, and they said again and they are not liable, but if they are, their liability ought to be capped at $27.60 million. on the day after that, may 14 announced at their shareholder'' meeting in switzerland that they're going to distribute $1 billion in profits to shareholders. given that pattern of activity, and i have followed it since our hearing, i went out and put together this letter with 17 of our colleagues as co-signers, asking you all to investigate, and by the way, we told the administration -- not only did we send it to you, we told you that i was going to ask about it this morning. here is my question. would you agree that transocean shifting $1 billion in funds from the company to its shareholders and its federal court filing under the admiralty law could possibly be a way for

transocean to either ebay's or limit its liability? >> let me respond by focusing particularly on the limitation of liability action, which we are not a party to that action, but we have already responded to transocean, and i think we will also make a filing in that case, explaining in the strongest possible terms of what transocean is attempting to do there is inappropriate. >> you believe what transocean is doing is inappropriate? >> the finding of the limitation of liability act, seeking to limit their liability them $26 million, the statute that they are seeking to use is a statue perhaps best known for being used by the owners of the titanic in an attempt to limit their liability. it was expressly said it does not limit liability. it further said expressly does not limit the liability that

states may imposed for oil pollution activities. >> what does the department intend to do in response to the recent pattern of activity by transocean? it seems to me that what is going on here is pretty clear. for a company that said it did nothing wrong, this company is working pretty hard to insulate itself from being held responsible for an accident involving its own drill, rig, and crew, and this seems to me to be a place where the department really needs to dig in and do a thorough investigation. are you all prepared to do that? >> as i said, i cannot comment on any contemplated investigation, but on the question about whether they can limit their liability, we believe in the strongest possible terms, and we will make that clear, that they cannot. >> i certainly hope he will look into this thoroughly, because given what they said before the committee, given the fact that just in a matter of days, they

went out and took this action, then went forward and delivered, in effect, the dividend -- it seems to me this is a pattern of activity that requires the department to look into this thoroughly, because the decision to transfer this enormous amount of money out of the accounts, given all of the events that have taken place in recent weeks, suggests to me that if the government does not look into this, the government is simply not following through in an area that i think is central for the government to have credibility in terms of its response to the tragedy in the gulf. i appreciate your saying that their conduct is inappropriate. i hope you will look into it thoroughly, because this pattern of activity, and i consider it a pattern, literally, since the week that they came here, it is

unacceptable. i cannot say it is illegal at this point, but it certainly should be unacceptable, given the tragedy we have seen in the gulf. thank you, mr. chairman. >> senator? >> thank you, mr. chairman. thank you for having this hearing. yesterday, the headline in "the wall street journal," it says it all. the u.s. was not ready. gulf crews are camp -- improvising with outdated maps. outdated maps. today is day 36. oil continues gushing into the gulf's. no one is sure how much oil is leaking. we were first told it was 1,000 barrels paul the -- oil continues gushing into the gulf. no one is sure how much oil is leaking. we were told it was 1,000

barrels per day, and now we have been told it is 5000. getting tough with b.p., administration torn on getting tough with b.p., secretary salazar says they have missed a deadline after deadline. secretary salazar says that if b.p. is not doing what they are supposed to be doing, we will push them out of the way. but just yesterday, the coast guard commandant thad allen said that to push them out of the way would mean to replace them with what proved -- with what? the response seems delayed. we have tried many things from the top hat to the jump shot. in testimony just last week to this committee, secretary salazar promised that last saturday or sunday, triggers would be polled to trigger the

dynamic killed. saturday past -- triggers would be pulled. still no solution. saturday passed. sunday past. -- passed. the american people are angry, angry at b.p. and angry at the administration. it is time to use the other boot. b.p. is responsible for paying all of the cleanup, regardless of costs. .the white house administration has some responsibility. there are lapses in regulatory enforcement.

officials of bypass laws. -- officials have bypass laws. >> thad allen is the national incident commander operating on behalf of the government under the laws that this congress passed. there are the cleanup responsibilities. >> can you talk about the upcoming plan, if there is one for this dynamic kill? >> the secretary is in houston as we speak.

the final preparations are being implemented for a dynamic kill attempt. if the pressure testing proves sounds, a decision will be made late tonight's -- late tonight. >> senator sanders? >> thank you, mr. chairman. i think we all understand we are looking at one of the most significant ecological disasters in the modern history of our country. we understand that nobody can fully estimate what either the economic or ecological damages would be. all of this takes place, i must

say, at a time when the american people are having significant doubts. we are looking at a multinational corporation, b.p., which earned $5.60 billion in the first quarter of this year. we are looking at a company which many americans are now believing ignored many safety factors as they proceeded rapidly in order to move that project along. we are looking at a company which tonight, refused to put information out there. we still do not know today how much oil is leaking. we were told 1,000 barrels per day. it may be 100 times that. we still do not know. we see a company which many americans think has not been aggressive to stop the flow was

a going forward with the cleanup. i want to get back earlier and asking a very, very simple question. i think you dodged it a little bit. should we eliminate the cap completely and hold b.p. 100% responsible? so that they pick up all the economic damages as well as the environmental damages? a very simple question, yes or no? >> senator, bp has said they are committed. >> i am sorry. >> i think as i indicated, our proposal to lift the cap is for the future. as indicated to senators sessions, we also think that we would have a strong argument if congress ultimately decided to -- >> what b.p. has said does not mean much. you might be the last person in america who trusts and believes what bp has said. it does not matter.

one year from now, the cameras will not be there, and some fishermen will have to go to court to get damage from b.p.. now is the moment. do we lift the cap, or do we not? what is the answer? >> as i indicated, our proposal with the cat is focused on the future. >> so that is not focusing with b.p.? your position is that we should not lift the cap on b.p. for this oil spill? >> as we indicated, we are focused on the proposals for the future. >> mr. chairman, i would hope that this committee and the senate would move aggressively to move and a very different direction than the administration is indicating. for taxpayers, it is beyond comprehension that you have an oil company taking $5 billion in profits in the first quarter and this year at the same time we have the nation with a record- breaking deficit that the taxpayers of this country should be asked to pay one nickel, one

nickel in court. just because b.p. says something, i am glad you believe them, but you may be one of the few people in america who trusts them. >> senator, i do not believe this is a question of belief. we are committed to recover in every single dime from b.p. as i said previously, there are many situations in which the cap would not apply and many other statutes that may be available to pursue damages from b.p. as well as state law, so we think we will be able to recover, regardless of b.p., every single dime that has been extended by the taxpayers. >> the best way to go forward, simply lifting the cap. that is it. thank you very much. >> senator bennett? >> thank you, mr. chairman, and thank you to the witnesses.

let's look ahead, mr. perrelli. i appreciate your comment about that, and i will leave it to the experts to try to get this spill stop and get everything under control. -- stopped and get everything under control. ok, this happened because people were lax, that is the headline that senator grasso quoted. even the company was lax or the regulators were lax, or both relax, and therefore, if we tighten up all of the procedures, nothing of this sort will ever happen again. the other view is, hey, accidents happen. we have drilled thousands and thousands of these wells without any incident, and statistically, this is a very small percentage, of difficulty, and accidents

happened with automobiles. accidents happen with airplanes. accidents are going to happen anytime you have a large number of activities of this kind. i would like reaction to that. is this just a very small percentage, that accidents happen, so we can go, statistically, as far into the future as we have in the past before we get another ooe of these? or is this, indeed, the circumstance where there were lax practices, either on behalf of the company or the regulator. i do not want to have to determine that, but was there something here that could be prevented in the future? and then the second side of that, if we do move in the direction that, by virtue of the cap, drives the non-majors out of this business so that only

the majors survive, because only the majors will be big enough to deal with the cap, what are the chances that they will be able to get sufficient insurance if the cap is set so high or the tapas listed all together so that businesses decisions made by these boards, the risk is too great, and we would drop all activities as far as drilling is concerned. look into the future and give me some responses. mr. hayes, you are probably the one who has thought about these issues the most, so i will let you go first, but anyone else who has views, i would like to get your response. >> thank you, senator. i would say that, with regard to the first point, this is an unusual accident. that is clearly the case there were two independent, serious

things that went wrong. the blood on the one hand and the failure of the blowout preventer on the other. each of those independently is extraordinarily rare. to have them both happen at the same time is even more extraordinarily rare. -- the blowout on the one hand. this is why we are committed to doing a thorough investigation and a top to bottom evaluation of whether we have the right regulatory system, whether we are state of the art, whether there is enough oversight of industry, and you will see later this week in the report that the secretary will be delivering to the president, some ideas in terms of additional interim safety measures that we might consider, that the president might consider imposing, because this type of accident, where of though it is, -- rare though it

is, is unacceptable, and it cannot be allowed to happen again, and that is our commitment to work with you and the congress to make sure we have a system in place so that we never have to deal with this again. i will defer to mr. perrelli on the second part of your question about the cap issue. >> senator, every day, we get more information about the risks of offshore drilling, and we think the liability provision is appropriate, as we learn more and more about the risks. you raised a number of questions about insurance. i would say that today, the major players in this industry are already involved in a mix of insurance, and they are today facing the prospect potentially

of unlimited liability, both because there are circumstances in which the caps would not apply, but also because of state law and other law that is out there, so i think that our fundamental starting point is the polluters pay, and where you have a risky activity that is highly lucrative in a place where the entity that is most able to ensure safety is going to be -- we think it is inappropriate weather is a prospect of a major oil spill to not have a cap on liability. >> but you are going to drive towards concentration in the industry, perhaps? >> i think we talked about -- we think there are a lot of activities covered under this group and different liability regimes as under the current law may be appropriate. i think our focus is on where there is a prospect of a similar major oil spill, and i think most of this activity, and mr.

hayes can talk about -- i think most of the deep water activity is smaller players. >> thank you, mr. chairman. >> thank you. let me just advise folks that the order that people have arrived in, and, of course, if some of our republican colleagues arrive, they will be inserted, and then we do have a second panel, so let me just advise everybody that we would like to do all of that before lunch. senator? >> i do feel compelled before asking a question to make an editorial comment, because one of the things that i can see happening in terms of where we focus accountability is the fact that we are now looking at more broadly the consequences of a

philosophy of deregulation that has gone out on -- gone on now for many years, and we see that on wall street. we see that with minerals management service's. we see that across the board. there is an inspector general report out, documented the fact that there were unscrupulous usages of government funding from 2005 to 2007, in industries that they regulate, and i raise this only because this white house is dealing with holdovers from the previous administration that believe in deregulation, backing up, not having the accountability, letting the industry basically make the decisions, even the minerals management service's chief could just step down was from the bush administration, and i mention that because i can hear where this is going in terms of pressing that somehow this is all about the obama

administration, and, mr. chairman, we have 107 nominees pending right now that the president does not even have his own team in place, so i am happy to hold them accountable, but let's get their team together first, and they do not even have their team together. i do not want to deal with olstein that was in place right now, the holdovers from my philosophy, frankly, that has caused us a lot of trouble, has caused us a lot of problems, that philosophy of deregulation and not protecting public interest. let's put the new team in place and let the president have his new team, and i am willing to be as tough as anyone on it. let me talk about b.p. and ask your comments, because when we look at the efforts of the history of b.p., it is very disturbing beyond this horrendous situation that we have right now. in march 2005, at a b.p.

facility in texas, 15 deaths, 170 injuries. after an investigation, it was determined that b.p. cut maintenance and safety controls in an effort to reduce costs. the oil spill right now does not appear to be an isolated incident. it is part of a track record of cutting corners on safety, which is, frankly, very concerned that has cost workers in their lives. b.p. failed to correct safety have birds. there was the 2005 explosion as well as news safety hindrance -- hazards found since then. they were fined for a huge oil spill in alaska in 2006 because of a frozen pipeline, and according to a recent study, b.p. refineries where responsible for 97% of flagrant violations found in the refinery

industry. and most of these citations from inspectors found that their behavior was an egregious and willful, so my question is, given their track record, at this point, is there any reason or evidence today that bp may have been grossly negligent or in violation of an applicable federal safety construction or operating regulation for any of the actions right now that would put them in a position to waive the current $75 million cap? >> senator, you correctly state that those are circumstances in which the cap would not apply. our focus now has been on cleanup, and i do not want to comment on any pending investigation on this matter. >> does anyone else want to comment? clearly, this is a record of serious concern about cutting costs and raises a lot of

questions about how we got into this situation without safety provisions put in place in case something like this happens, even though we were told this would never happen, and we do not have the answer, and this has gone on for a month because somehow this was never going to happen, but it does raise serious questions about a number of different things, and i hope we are going to focus on this in a much more direct way in the future. >> i would be happy just to reinforce the notion, senator, that we intended to absolutely look at the entire b.p. record as part of the overall investigation that is now under way. i fully expect the commission that the president announced last saturday will also look at whether there is a pattern here for this company and do some evaluation of the adequacy of the regulatory program, and in that regard, i appreciate your

comment that the inspector general report that came out today reinforced the notion that prior to the time this administration took office, there were serious problems at the minerals management service. secretary salazar, in the very first month of coming into the office, established a new ethics procedure for mms. the focus at that time was on the revenue side. we ended the in kind program. we require a special ethics training. the secretary today has asked the inspector general as a follow-up to that report to see of any ethical violations have continued in connection with the new orleans activities of the minerals management service. the report the inspector general has does not indicate that they have continued, but we want to make sure they have not continued. this is definitely a work in progress as we deal with wha