value to them. the short answer is they're working hello. i am from nbc news. you keep reference saying this collegial working relationship between the u.s. in the pakistani military. have any of your pakistan the counterparts expressed any frustration at the lack of additional international date beyond just the united states? that other countries around the world are not coming forward with money, resources, any kind of relief efforts to the extent the united states has? >> thanks for the question. i must say that the pace of operations here is a very, very high. the days are very long, things are very hectic. because there is so much to do chinese aviation operations in

the swat valley, and they're very time consuming. i have not had an opportunity, nor has anyone approached me, from any echelon of the pakistan military leadership here on the question you're asking me. i can tell you that when we do have a time to reflect and discuss what is happening in this country, be it the conversation has been exclusively about how much work we still have to do together, how proud we are and what we have accomplished so far, and from my pakistani counterparts, and i think this is true that every echelon of this task force, it continually expressed to us how grateful they are that we came here so quickly and are assisting them in partnering with them as they try to get to the people in need. >> are you at all personally frustrated that there has not been more international assistance when you look at the size and scope of this humanitarian disaster you are facing? >> i did not catch the substance of that.

>> are you at all personally frustrated that as you look at the scope of this disaster, there's none more international assistance they're helping? -- and there is not more international assistance that are helping? >> i think you're asking my personal view about this same question. my personal view is that this is a terrible tragedy. this is a historical bad natural disaster for the country of pakistan that i would argue is going to take months to years to recover from, and there are many people in need here and the government and nation of pakistan, the u.s., and the rest of the international community are providing as much assistance as each of these individual actors can at the moment. there is simply much more yet to be done. >> do you know if any decision has been made as to how long the

group will be working on this mission together with the locals or will they leave when they arrive? >> i think you're asking if, as the assets come into pakistan, whether the assets there will be part. i am not aware of any such plans at the moment. as far as i can tell, the assets i currently have to remain here in pakistan. the additional helicopters will be here. we will simply continue flying as many days as we can. >> general, over 30 countries have announced to help pakistan in this crisis of floods, including india. are the working with you or the government of pakistan?

>> i just cannot understand the question, if somebody could repeat it. >> the question had to do with 30 countries providing assistance to include india and whether in the of those countries' militaries are working with your forces there. >> thanks for the question in clarification. the only nation helicopter assets that are operating from the air base our u.s. military and pakistani military, rotary wing assets and their crews and support personnel. i am aware that other nations have been contributing helicopter support. we discussed the contributions of the government of japan, but none of them are here and operating with us in gaza. they're operating elsewhere.

>> do you think you're in the worst to hit area? if not, why not? >> could somebody please repeated? >> do you believe that you are operating in the worst hit areas, and if not, why not? >> i cannot make that judgment. i have not seen all the flood affected areas in pakistan. i have only seen what is in the aftermath of the flood in much of the swat river valley and parts of the cost on area. i cannot speak to how it compares with other places in the country in terms of severity. >> yesterday, the commandant said there was an offer to fly ospreys aheadge's together before the ship, and

that offer was turned down. do you know what that was it you have such a great need there? >> i will have to ask the question to be repeated again. >> the, but the marine corps was here yesterday and mentioned that there was an offer made for the v-22 ospreys from the kearsarge to be flown directly into the country ahead of the ships and if you have any insight as to what that decision was made considering the need. >> again, i think the only answer i can give is what i know, and that is that there are ongoing discussions between u.s. military and pakistani military leaders about other aviation assets that might be brought to bear here in pakistan above and beyond what i have here. but the direction and not come up the conversation, i do not believe our settled yet. >> is there any lack of

recognition or reluctance to ask for help on the part of the pakistanis? i mean, lack of recognition of the seriousness of the problem are reluctant to ask for more help that is perhaps delaying some of these discussions about an additional u.s. assets that could be brought to bear? >> the assessments being made by the government of pakistan are a question for the government of pakistan, obviously. i cannot speak for how they view, how they assess, or how they measure the enormity of this disaster. i can tell you from everything i see here, the military authorities that i deal with are clearly focused on the fact that this is a historic we difficult time for them and that they must get to as many people in need as they possibly can on any given day. the nationwide assessment is

something that is far beyond the scope of what we're focused on here, and that is something the government of pakistan can only do. >> ok, general. it looks like we have exhausted the questions on this end. i will send it back to you if you would like to make any closing remarks. >> thank you, and i apologize for how difficult this must have been with the audio difficulty. i would like to say one thing in closing. i want to but acknowledged and express my profound respect for the efforts of the pakistan military partners that we're working with here at gazi. it is only one small part of an effort by the country to address a countrywide problem. but here at gazi in our operations, is what the valley, and in colistan, the cooperation, support,

protection, and the french ship, and i use that were deliberately, the french iendship from our pakistani partners has been nothing but impressive. there's much to do here. this is significant, and it will take a very long time to deal with effectively, but i must say and i will say that the partnership we are enjoying here is one of the best examples of combined collaboration between military partners that i have ever seen. thank you very much. >> general michael nagata, thank you for giving us your time. >> a live picture from the ronald reagan building here in washington where we are showing you a hearing on regulation and oversight of offshore drilling. surely, panel members will return after lunch for a discussion on how to meet

regulatory challenges. it will be about five to 10 minutes from now. about 1:15 p.m. to 1:20 p.m. eastern. life richer and c-span. these hearing got underway this morning at 9:00 a.m., and we joined it after "washington journal" at 10:00 a.m. while we wait, we will show you some of the discussion from earlier today. >> good morning, everybody, and welcome to the second meeting of the national commission on the bp deepwater horizon oil spill and offshore drilling. i am here by calling this meeting to order. i will be helping to guide us through a busy day of hearings today. before we proceed, i would like to familiarize everybody with the safety features of this building. to your laughter my left, you're

right, into the back of the room, you'll see two exits. those are the emergency exits we will be using in the case of emergency. so if there is an emergency, please file in colorado into one of these exits. a holly goes back to the back and there's a stairway that will take you outside of the building to safety. again, that is in the case of an emergency. the president established this bipartisan commission to examine the root causes of the bp bought horizon oil disaster and provide recommendations on how to prevent future accidents in the offshore and mitigate their impact should they occur. the president appointed two cochairs to lead this commission. the former senator, bob gramm, from the state of florida. the honorable william reilly who led the environmental protection agency under president george h. w. bush. the commission is rounded out by five other distinguished americans who are selected based on their extensive scientific, legal, and engineering and

environmental expertise and their knowledge of issues pertaining to offshore operations. they include the president of the natural resources defense council. the president of the university of maryland's center for environmental science. the executive vice president of the national geographic society. the doctor that is dean of the harvard school of engineering and applied sciences. and the chancellor of the university of alaska anchorage. this commission is conducting its work in compliance with the federal advisory committee act, which sets a high standard for openness and transparency. as such, these hearings are being held in this public forum and are being broadcast live by video feed. before in the event over to the cochairs, i would like to provide a quick summary of today's agenda. the first panel will cover the history and expansion of

offshore drilling, and we will hear from panelists from txu energy, shall, and the world wildlife fund. our panel after that will cover existing regulatory structure and consulting in just the rolls with panelists from stanford university, from the council on environmental equality, and the national oceanic and atmospheric association. we will break for lunch it will 3:00 p.m. and will reconvene at 1:30 p.m. for a panel on meetings and regulatory challenge. it will feature panelists from the university of houston and two former directors from the materials management service. our final panel will cover industry culture and managing risk and will feature panelists from the institute for nuclear power operations and the allied industrial and service workers international union. we will conclude with public comment at 4:30 p.m. and will stop at 5:25 p.m.

any member of the public would be wishing to submit written comment to the commission may do so by the web site, and the website is www.oilspillcommissions.gov. we do have a very busy day today, and we have a lot of panelists that the commission is interested in hearing from. we will ask all the panelists to please keep your time limits. there will be a timekeeper right here in front of you who will help keep you on track. and we wanted to make sure we dedicated as much time as possible and appropriate to questioning during the question and answer time which will be run by our two co-chairmen. at this point, i would like to handed over to the two co- chairmen. >> thank you very much. last month, we began our journey in new orleans. we learned firsthand from the

people about the impact this bill was taking on their lives. this week, we're seeking to understand the root causes of the april 20 deepwater horizon explosion and the critical question of whether our regulatory systems and business practices are adequate. we will be hearing from a distinguished group of past, present government officials as well as experts from private industry, academia, a nonprofit organizations. deepwater drilling is a new frontier for energy exploration. some statistics tell the story. in 1990, wells deeper than 1,000 feet accounted for just 4% of total gulf of mexico oil production. in 2009, that figure was 80%. and we're going deeper. in the past five years, the share of the gulf's production from old to read deep wells,

well as deeper than 5,000 feet -- fromultra deep wells climbed to 32%. but it creates a special risk including that which appears to have been the primary cause of the deepwater horizon tragedy. an uncontrolled blowout. these risks were there to be seen but were largely unprepared or ignored by both government and industry. we want to know why. it is clear that to move to deepwater represents an enormous change in u.s. energy exploration. unfortunately, our government and industry did not undergo a similar transformation in its regulatory, safety, and response focus. we need such a shift now, and today we will be hearing information to guide our thinking about what it should be. many of the causes of this

disaster go back decades and are attributable across the spectrum to government, industry, white house, congress, republicans, to democrats. we should be clear, this disaster represents an enormous and shared it fell year of public policy. we are holding all responsible parties to account, not so that we can play a blame game but because we must diagnose what happened. what was the course of progress before policy collapse we can credibly describe new directions for the future? i look forward to hearing from today's speakers and thank them in advance for taking the time and contributing in our efforts to understand what went wrong in what we can learn from it. my colleague and co-chair, mr. bill reilly. >> thank you. good morning.

since our last meeting in new orleans, the gusher has been tapped. we can be grateful for that. we are, but it is hardly cause for celebration. the lesson from other spills and other disasters is that the consequences play out over a long time, often in unexpected ways. some issues will turn out to be less severe than we had feared and others, maybe worse than we had imagined. even if it is too soon to spell out the full impact on the golf, we do recognize the immense human and economic costs that have already been experienced. 11 lives were lost and many more were injured. billions have been lost in tourism, fishing, oil revenues, and other elements of the gulf economy. crux discussion from her earlier today in the hearing of regulation and oversight of

offshore drilling. we will leave this and go live now to an afternoon panel on how to meet regulations. live coverage from the ronald reagan building here in washington. >> -- university of houston. a former acting director of minerals management service. the former director of mineral management service. and the former director of the mineral management service. we'll hear from each of you sequentially and hold our comments and questions for your conclusion. we're very pleased that you are here and appreciate your coming to present to us and responding to our questions. we will begin with tyler. >> i would like to thank the commissioners for inviting me to appear before you today. i would like to think the former mms directors for sharing this panel with me.

my name is tyler. i am the university of houston. i am also a member of the ocs scientific advisory committee for the boem. my remarks today however did not reflect the opinions of my fellow members of the committee or the committee itself. the federal ocs program administered by the minerals management service since 1982 has long been the steward of the nation's increasing offshore oil and gas resources and the public revenues generated from them. it oversees 1.7 billion acres on the ocs. it is the nation's largest landlord. in that role, the program has navigated through many controversies. more recent revelations of ethics scandals and revenue mismanagement and regulatory lapses have deep and the oppression of the mms as an

agency captured by the oil and gas industry. although we have had problems in reforms to the agency's organization, the concept of agency capture does not do justice to the complexities of the modern ocs bureaucracy and offers little insight into the inherent properties managing ocs plans. a brief review of the program's history may help us appreciate those challenges. during early history in 1954, the federal ocs program was a weak partner is not a captive to offshore operators. a small norland staff and the bureau of land management issued leases. and people from the u.s. geological survey conservation division monitored revenues. both agencies focused on making

petroleum resources available, expeditious, and orderly development as the ocs instructed. from day one, the mission was to promote development. with no prior experience in industry regulation and little knowledge of the vast changes in offshore technology, federal officials to develop in the 1950's copied the leasing practices of the state of texas and louisiana and relied on industry to draft new regulations and orders. environmental said guards were treated as an afterthought and light rain forest. in 1969, the goals regions li's management office had 12 inspectors overseeing 1500 platforms. and those inspectors depended on operators for transportation to those platforms. thehe late 1960's, however, relationship between industry and the ocs organization was

transformed. first, pressures and the bureau of the budget began animation was filling -- getting fair market value and it forced the bureau of land management and ust is to promote more money and manpower to resource evaluation, independent researchers evaluation, before. though sometimes led to the projection of things it does not meet? the criteria. an even bigger change came in the wake of the 1969 blowout in santa barbara channel which set the stage for the national environmental policy. it forever tied the environmental movement to the ocs program. the department of interior quickly issued a stringent set of new regulations which were in forest by standard and professionalize inspection programs using a prescriptive list of potential incidence of noncompliance. the ocs organization also

developed its own technology, research program, and monitor change in technologies and in response to this new political and regulatory climate, of breeders developed the equipment and operating practices needed to ensure safer operations. however, as these new regulations are implemented to bring more caution to development, a countervailing pressure emerged in the form of the opec oil embargo of 1973. one official response, president nixon's project, independence, was to accelerate offshore development by offering more sales and placing new emphasis on research evaluation. and inherent contradiction between stronger regulation and accelerated development was built into the program in the 1970's and has bedeviled it ever since. the ocs lands act amendments of

1978 intended to resolve this contradiction and a related problem exposed by the santa barbara blowout, and that is the benefits of ocs development are distributed nationally while the costs are often concentrated locally. the 1970 amendments introduced five-year lease schedule, provided for phased decision making under environmental impact studies, and at each stage of the development process, amendments great it new environmental studies program. for assessment, and it opened up avenues for state and local participation in ocs decision making. the efforts failed to resolve the tensions between an environmental assessment and resource evaluation. environmental assessment slows down the process and sometimes halted altogether. by contrast, resource evaluation and the service of domestic energy production is biased toward expedited

development. it is no secret that the development bias has permeated mms and the department of interior. watchdog groups see this as a result of a revolving door in the industry, but it also stems from the professional orientation of many parts of the ocs program. this bias was strengthened when the bom and the u.s. conservation offices are merged to create mms. the area wide leasing system introduced. in their early years of the reagan presidency further reinforced this by opening up larger areas of choice, industry, and shifting environmental and resource assessment with the face. it is seamless to explore first and ask questions later. there were compelling to logical and economic reasons to proceed this way in the gulf of mexico

at the time. but antagonized constituencies elsewhere, leading to gridlock is about everywhere outside the gulf. during the last 25 years, the gulf of mexico and become one of the most dynamic oil and gas producing regions in the world, providing tremendous economic benefits to the region and nation. but industry and mms, to the credit of bringing in valuable resources and supply and doing it safely, at least until april 20 of this year. however, their success in the gulf as lead to a collective and attention. inside and outside government to the risks of deepwater drilling there. as domestic oil production declined elsewhere and its other coastal areas came under leasing moratorium, politicians in both parties eagerly encouraged development of the deepwater gulf, and there was not a lot of environmental opposition to that development.

the opposition to area wide leasing was mostly focused on the project it and real revenue reductions that came from area wide leasing. the dramatic expansion of deepwater drilling and production in the gulf of mexico since the 1990's has occurred during a time of deregulatory fervor and fiscal restraint that i believe is handicapped the mms. for 1984 to 2009, mms went from about 2,000 to 1600 total full- time employees, a 20% production -- reduction. and there was a decline of about 10% in real terms of production. the part of the agency as the most familiar with, the meron mittlestet is program, spent $20 million on environmental studies in 2009, and this was less than half in nominal terms of what was spent by the program in 1975

when it was created. it is 10% in real terms of what environmental studies was in 1975. and this contraction, especially in more recent years, has happened during a significant expansion of mms' mandate to evaluate new areas and analyze the environmental questions surrounding alternative energy technologies such as offshore wind which brings different challenges and assessing the risk and technologies of oil and gas. meanwhile, during the same time, 1984 to 2009, 3000 four hundred 87 production facilities were installed on federal ocs in the gulf. double the number installed in the previous years of the program, going back to 1953. and there were hundreds of removals' of haute -- of all platforms. add to this the increasing complexity and expense of the water technology and the time constraints, as we heard about

on the previous panel, placed on environmental assessment is not difficult to conclude that the mms was underfunded and understaffed in carrying out their responsibilities to up this, you can see it often allowed industry to draft regulations. then moved to performance based regulation and transferred more responsibilities to operators for safety or at least tried to. and a wide use of categorical exclusion is to environmental assessments. we all share in some of the failures the cost this disaster. we all consume the energy produced in the gulf, but we have not all been mindful of the costs and risks borne by that region in securing with domestic oil and what we're able to produce. we accepted the plan to explore first and ask questions later, and then we stopped asking. many of us are hopeful, however, that the work of this commission

will it is just the right questions going forward. i think the commission again for inviting me to present my views. if you have questions, i will attempt to respond today or later in writing. >> thank you. >> 34 years ago, almost to the day, an event occurred on the floor of the house of representatives, which at first and seemed connected to the broader horizon tragedy, which i think upon reflection says a lot about the relationship between government and the regulatory agency. chairman riley, chairman gramm, i am pleased to be invited to testify today, and i came to the conclusion after seeing a couple of newspaper stories and watching most of your hearings and looking at the throat testimony that has been presented about the ocs process that i would not duplicate that by -- duplicate that but provide some reflections about my involvement over number of years in this process.

on september 28, 1976, the select committee on the outer conned into a shelf in the house brought to the floor a conference report that contained a provision which said, among other things, the federal government is authorized and directed to carry out an exploratory drilling program. as prior authorization under the 1953 law provided similar authority, although it did not direct it, but most the work done by the interior secretary at that time was off structure stenographic testing. not unstructured. because the industry did not want the department to do it, and the department did not do that. the opposition to the provision directing the possibility of a federal exploratory program was

fought with interesting debate, but on the record and on the floor of the house of the microphone and near the cloak rooms. and as an unspeakably young staff person who was there, it was very interesting to me, and it has all come back to haunt me to some extent as we saw what happened with the horizon oil spill. the opponent to this provision was the honorable pete dupont, who was a representative from delaware at the time, a republican presidential candidate, and a very articulate spokesperson on behalf of his position that you did not want the government to be heavily involved in on structure exploratory drilling. the whole idea behind the provision had nothing to do with the question of deepwater development. it had nothing to do with environmental safety issues. it had to do with the concept

that the committee was roasting with about separating exploration from development. the concept was, how can the government offer leases for sale to oil companies if they really do not know how much resources may be out there? seismic testing was in its infancy and that point, and we do not really know until you put a drill in the ground how much oil was going to be there. therefore, the notion was have the government set up some kind of program in conjunction with industry or perhaps on its own. and congressman dupont made the case that you do not want government getting involved heavily in the question of exploration drilling on the ocs. yes, they should regulate, but no, this should not be overly involved. this certainly done on what the government to be hiring people

or to engage in its own kind of drilling technology. now remember, toward the end of the debate, as it was quite lively, he turned toward the majority side of the house and said, my colleagues cause of the to this effect, if you like the way the united states postal service's operating, you'll love the federal oil and gas companies. and the air canada and out of the room, and congressman hamilton from new york, the ranking minority member, move to recommit the report back to committee, in effect, killing it. because it was toward the end of the session. and the vote was a motion to recommit, and it was a successful vote, and the conference report was killed by four votes. 198-194. a point that out because in the 1994 congress when those amendments were being considered, the democrats had

just come off a post-watergate election of enormous proportions, and the democrats control the house by 291 of votes to 144 for the republicans. a margin of 147 votes. ocs cuts across party lines. we have seen it time and time again. i am and suggesting that the provision would have been a good idea or bad idea, but as far as i know, and i've been away from this practice for quite awhile, that is the last time and perhaps the only time that the direct issue of should the government be more involved in the exploration drilling activities on the ocs was directly confronted by congress, and the decision was no. and it took two more years of work on the select committee, the election of president carter, and the dropping of the provision to get the conference report past which led to the

1978 amendments. i do think that the process that we have under the 1978 amendments, although it is sending out criticism, nothing much of it is justified criticism, it is time to change what we did back then. 23, 25 years before. it has been even blonder since the amendment. i think the time has come for that because we find out about the deepwater horizon oil spill. but the 1978 amendments served us well at that time, but they need revision. clearly, we have a process-rich set up in mms, but mistakes were made. clearly, we need to professionalize our inspectors as they increase the budget for that, and the and ministration is talking about that. obviously, you have heard many

witnesses said that part of the problem here with the bp blowout was that we had a pretty good safety record in deep water, and that is true. that tends to lead to letting decisions go that perhaps need greater scrutiny. we have had to look at the environment. i want to point out that the group was relatively new in the amendments were passed. and our provisions -- there are provisions requiring that be done. in other areas, it would be silent. that is because there was an internal debate going on in congress at that time about if you mentioned nepa, that might mean the robie interpretations that the absence of nepa, does it apply. others thought that nepa stands on its own and it is up to the federal manager to make a

decision on whether there is an activity that significantly affects the quality of the human environment. there was this debate in which sometimes the members of congress advocating and mentioning nepa won. and other times, advocates of nepa said and not mention it to many times because pretty soon, you'll wipe it off the books for seven stages of the process. that is why the ocs has sort of a mixed record. i have not been that mms since 2001. it has been nine years, and i was there during the 1990's, which is really a type of transition. if more companies make greater find deepwater, clearly, that is where the resources are. but we did put forward deepwater operation plans and call for existing prescriptive regulations to be supplemented

to require operators about safety and environmental management plans. it did not make it through the process. i would note that during our time, there is a deboarded subcommittee added to the ocs science committee. i will not look at the risks and scientific requirements in the water development, so there was an awareness that the time that we were moving into deeper water. we were not quite there yet. perhaps they needed more scientific knowledge and technical knowledge then we left, and i am not sure exactly what happened after that. i went off to the u.s. commission on ocean policy, and we took a broader look at ocean issues. i am champion on offshore energy. when i was there, we spent a lot of time fighting about

royalties and offshore issues, fighting about what is the value of the barrel of oil, and we got into a big fight with the oil industry about how to process that. and i have seen statements made that that was being stimulated by omb looking for additional revenues. that was not my sense being at the agency at the time. my sense was there was a recognition that there was some gaming going on that potentially was going on in that would reduce the price of the barrel of oil a which royalties would be calculated. it has nothing to do with it the broader horizon. it is the kind of issue that just dominates your time when you're at the agency. in congress has paid a lot of attention to it, including moving toward the royalty program which has its own problems in lakewood, colorado. you lose your attention on

issues that probably are more important. it is sort of part of the history of what we experienced in the 1990's. let me conclude by saying i will not use all my time. i yield to my college, and maybe there will be more time for questions and answers. i think it is quite obvious that the agency, the federal government in general, need to adopt better safety requirements and develop a stronger safety culture. that is so easy to say and so difficult to do. i would also add that i believe the industry has its own responsibility for developing the safety culture. you cannot just depend on the government to do it. i do worry about the question of technology. what can government agencies know and what the industry needs to develop? it is a very difficult issue.

and i want to note that if you do nothing else, i think you should make a recommendation that the 30-day requirement and plan of exploration be changed, pending legislation. that does not work. one of those compromises made in the 1978 amendments. i appreciate the opportunity to be here and will be happy to answer any questions. thank you. >> next. >> thank you very much. good afternoon, co-chairman and other distinguished members of the commission. thank you for the invitation opportunity to be here today. first, i want to wish you the very best in your investigation concerning this terrible accident. none of our actions can ever compensate for the loss of 11 lives. together, we're working to identify the means to prevent such an accident from ever occurring again. you have asked me to talk a little but in general terms

about my tenure as director of the minerals management service. i understand are seeking an understanding of the kinds of issue and challenges that often face the director. it is my privilege to be the director of mms from july 2007 to mid january 2009. i am honored to share the table today with the former director and long term acting director. the former and acting directors represent a wide range of interest, experience, and we served in many republican and democratic administrations. our jobs were never boring, and they were never not challenge. since its inception in 1982, the dedicated employees of mms have been instrumental in developing reliability of the nation's daughter, michelle. they connected billions of dollars unfunded federal, state programs in the land and water conservation fund. under current rules of energy development provides about one-

third of our nation's oil and approximately little more than 11% of our natural gas. we also made great strides in establishing the renewable energy program. following my departure, the director and rarely received and continue to make mms the leader of offshore energy production. despite our varied backgrounds and interests, i believe you'll find we have several common beliefs. one of the beliefs is that what the people of mms have done with it will continue to do under which ever name you call it, it is a vitally important to our nation because we are considered -- consumers of energy. one thing has been the vilification of the great people of mms. i have never worked with a more dedicated sincere, ethical, and let's do the right thing group of people. it has personally pained me to

see the entire agency paid to and -- painted with a broad plot -- a broad brush of blame. i would trust mms with my safety, my money, and my reputation. these are people that gave up countless must review and improve our ability to accurately determine and enforce the correct royalties. these of the people on the front lines when hurricanes three cabinet, death, and destruction. i recall that in 2008, four hurricanes across the gulf of mexico, causing a time or nearly 100% of the gas and oil production was shut-in. many offshore structures or badly damaged or destroyed, but there was no loss of life and no appreciable spill of oil or gas in the outer continental shelf. those who oversaw those operations crofton hundreds of miles away from their families and loved ones. -- there were often hundreds of

miles away from their families and loved ones. not all employees are perfect, and not all behave in the manner expected by leadership. however, let me confirm that the inspector general reports have shown inappropriate behavior at mms, while very well publicized, was in frequent and involved a minority of employees. i mention the reports today because it illustrates how the directors focus is pulled in many directions. as with all agencies, it includes hundreds of people spread over thousands of miles. directors not necessarily aware of every day to day activity. and i believe those are at the table today would agree that it is not what you know that comes up to bite you. it is what you do not know. the director provides a broad policy guidelines with goals and outlines, and some are involved in this routine daily activity. that is left up to the

professional managers of the agency. however, and i would say rightly so, the director is ultimately responsible. inspector general investigations and reports are an example of situations that require the directors time. over the years, mms has certainly had its share of those investigation reports. when those resurfaced during my tenure, we cooperated fully with the gao or inspector general. when the reports were released, and i point out that often the reports are released years after the event actually occurred, we discipline and those involved, and we implemented the recommendations and changes recommended. during my tenure, considerable attention, and consequently much of my time was devoted to that determination in collection process, but i know that is not your focus today. the exact cause of the april 20 loss of well control and explosion has not yet been verified, but it is my hunch,

and as you know from my background, not an engineer, not an expert in this area, but it is my hunch that you're going to find a series of court judgments and a series of human errors. an investigation such as the one you are doing will fill in those holes that either the regulations did not require the correct testing or the well- designed procedures were not followed, and once the picture is clear, industry and federal regulators must take corrective action if they have not already done so. we must never have a repeat of this occurrence again. this event has often been referred to as a black swan, and even that was not adequately inspected and will forever change exploration. this deadly accident also changes how we view the past. a missed inspection, a quick approval or procedure, which in the grand scale of things may or may not be significant, but

suddenly it looms large. we look differently at the past now. as you know, all offshore energy has some risks. until april 20, it appears that the safety mechanism and the safeguards in place actually worked. the hurricane season of 2008, which i mentioned, is a good example. but much of the good news about 2008 was based upon the lessons learned after hurricanes rita and katrina. for example, additional morning requirements were put in place following 2005. regulators and industry learned hard lessons from disasters and no doubt will do so now. during my tenure, many leases were sold, many wells are drilled in deeper and deeper water, and certainly at deeper and deeper depths. well it did not get the public attention of the royalty program, safety, both in terms of the environment and human safety, was very much discussed. i think everyone involved in the

leasing and save the program knew that just one accident, it just one accident, which changed everything. and how true that has ended up being. through the well, it appears the technology to explore has outpaced the technology to respond. but at the time, the track record of safety procedures, the blowout preventers seemed well within the reasonable risks parameters. however, then and now, one of the best ways to ensure cities to have the best qualified and trained personnel involved in the permitting inspection areas. while i was at mms, the oil field was absolutely booming, and we spent hours evaluating how to retain and attract quality employees. these efforts included creating retention bonuses, recruitment techniques, imploring the office of personnel management to approve a higher salary

structure. while i think we were fairly successful in that area of bonuses, in particular, there was always a challenge to our financial and technical resources, which you have heard in today's discussion. it is industry and not government that developed deep water technology and equipment. therefore, it is not only necessary, but i would say highly beneficial, to develop and maintain connections with industry in order to keep abreast and regulate the latest technology safety issues. i was never under the impression that industry was calling the shots. but certainly saw their input, which i believe is rightfully so. and as you are acutely aware, this nation is at a crossroads in its energy development. your recommendations will help steer our energy and environment. while the deepwater horizon changes are perception, and has not change the fact that would depend upon a reliable, secure

energy source that there reasonable cost. it has not changed the fact that we import approximately 60%. it has none change the forecast that was greatly increased emphasis on renewals, and fossil fuels will still likely provide three-quarters of our energy portfolio for at least the next generation. link the exploration moratoriums, the fact moratoriums, additional reviews will eventually cost jobs, will eventually cost energy reliability, and will eventually cost energy supply deficiencies. we have already read the prediction of job loss of 23,000 jobs in the current moratorium. decreased domestic production will eventually resolve for more imports. it will eventually result in future and higher fuel costs. the challenge as i see it to you, and i wish you the best in

this, is how far we move that needle in additional safety regulations and additional 66 cards in response to that. how far do we move that needle? yet, we do not go so far as to cripple our ability to produce domestic energy. i wish you well in finding that sweet spot. in closing, i reiterate to you, it was an absolute honor for me to serve this country and a privilege for me to work with the fine people at mms. the challenges were great. however, being a director of mms was one of the highlights of my career. as a government agency, i thought we were nimble, quick. we attempted to provide service, a timely service, both in terms of energy exploration as well as safety. but it is a very, very delicate balance and continues to remain so. and i think it is good that we

always have these kinds of discussions to remind us of the types of balance it takes. thank you for your attention. thank you for years that precise -- sacrifice in serving on the commission. i look forward to attending to answer your questions and further discussion. >> thank you. next. >> good afternoon. my name is liz burnbaum. i served as director of the minerals management service from july 2009 to may 2010. let me start by expressing my deep regret that the deepwater horizon accident occurred during the time i directed the agency charged with regulating offshore oil and gas development. in the tragedy, 11 men lost their lives. the environmental disaster for the gulf of mexico will require an unknown time of recovery. in that like, happy to help this commission in any way to help fulfil these executive order

mandates. at this time, i would like to provide several suggestions regarding regulation of offshore oil and gas drilling. the first and most obvious need with respect to regulation of offshore oil and gas drilling is to a great technical requirements for equipment and drilling practices. we reviewed the number of these technical issues during the months following the incident including requirements for blowout preventer and testing and standards. many technical recommendations were included in secretary salazar paz a report to the president. i believe it is the department of the interior that continue to consider additional technical requirements beyond those suggested i would recommend that the commission supports this ongoing review of technical standards and consider an external review of the overall regulatory scheme as well. it appears that step upgraded standards on a regular basis over time. lanoka bergen's of internal or external review of standards have been conducted in many years.

some improvements have been recommended by staff during the bush administration but never made it through the process to be finalized as regulations. for example, staff had proposed a regulation or curly -- regarding a secondary trigger--- a mechanism for. it never made it into regulation. and-development moved into deeper and deeper water and deeper formations, mms never conducted a comprehensive overhaul of regulation to address the novel risks posed by these activities. any technical standard can only serve as a first step in regulating. equipment failure may have contributed to deepwater horizon incident, but it also appears that human error and the natural tendency to overlook other things when a high priority is placed on oil and gas production, this has been reported with the immediate congressional investigations and hearings. this brings me to my second

recommendation. the commission should support the development of a body of regulations for oil and gas exploration and development processes. it would be quite distinct from the technical standards generally adopted by mms in the past. there are requirements for communicating internally, establishing written protocols and living by them. double and triple checking activities. and for providing incentives to internal sector reported in two i understand there is a body of literature and academic investigation in support of process 64 industrial activity. mms had only begun to address the issue when i left. when the deepwater horizon incident occurred, we were in the process of finalizing safety and environmental management systems regulations. but staff had developed the record of accidents and regulatory violations over the last several years. staff analysis determine the subsidies systems would dress failures involving more than two-thirds of the incidents. secretary settled -- salazar's

report mentioned the regulations. i would suggest that the commission considered not only insisting the regulations be finalized but also ordering a broader review process regulations for our shores or oil and gas. another area of deficiency that has become apparent is a lack of adequate oil spill response capacity. despite what was adopted in the oil pollution act of 1990, the nation's only not resolved adequate oil spill response planning and basic research and development for oil spill response technology. as the house energy investigation has shown, oil spill response plans prepared by industry, and a review of those plans by the mms, were lacking. in addition, while the u.s. coast guard is responsible for implementing the plans, the coast guard has never acted on our offer to allow the coast guard to review the plans before they were approved. the commission wished to reconsider the terms of the executive order, implementing

that act which splits the responsibilities between the two agencies. to the extent the responsibility for oil spill response is share, all responsible agencies should review industry plans and standards. the second issue in oil spill response as the development of adequate clean-up technology. it is a challenge to maintain sufficient research funding >> the oil pollution act attempted to meet this challenge. it would support oil cleanup. we have received funds from the trust fund. it would support oil response training grid clearly the level of investment has been and that quebec -- inadequate for this commission should address the issue and determine an adequate funding level and recommend direct spending from the trust fund to support r &d under the

supervision of the coast guard or whoever succeeds mms. finally, like to address the most difficult issue in oil and gas regulations which is inspection of all of shell drilling rigs and -- oh offshore drilling rigs. the most telling aspect has been under reported. inspectors who had accepted gifts from industry employees had extensive social and community connections including family relationship with those employees. simply put, they all live in the same temperature this is not a point of criticism. offshore inspectors have to live along the texas-louisiana coast. those are dominated by two industries, oil and gas and trembling. there were inspectors with no

prior connections with those industries but the inspectors would still have to live there. following this incident, i heard recommendations that mms should have -- should have had inspectors on the oil rigs at all times. this is possible, it would require the inspectors to live on the regs along with the drilling crews. mms inspectors could not fly back and forth on ships. the weather would make this impossible even if funding allowed it. having the inspectors live on the platforms would tie them more closely to the industry and the drilling crews. another factor contributes to the close relationship between inspectors and and history. it is the training necessary. it is like being an auto mechanic. you have to spend some time under the hood. people in the industry have been those with the necessary knowledge to inspect. the only way to eliminate this

is to provide extensive on-the- job training for a novice inspectors. there would still be no way to eliminate the close connection between inspectors and the industry they regulate. they would still live in the same community agree when helpful suggestion made by an interior inspector general would be that penalties be imposed for those who would receive inappropriate gifts. you could require regular rotation of inspectors, setting fire walls between inspectors and facilities where their relatives work,itoring the ns, impose a moratorium on inspectors visiting facilities operated by companies that previously employed them. a combination of these centers combined with close oversight would be necessary to include -- adequate inspection. we asked the national academy of scientists to conduct a review of the offshore safety inspection and that report is

due out this fall and may provide additional input on this issue. i want to thank the commission for the opportunity to present these spots on regulation. i do not envy you your mission. in order to provide recommendations that will ensure safety and in marmot the protection, the commission will need to go well beyond the technical standards to review all aspects of offshore industry practices and enforcement. i will be happy to answer any questions. >> thank you very much. you all have introduced information here that supplements new and detailed concerns that we have. we appreciate it. we will have as our lead chairman gramm and grammelmer. i will turn to chancellor gramm. >> dr. priest, we heard from mr.

joe lindculer of shell and he was asked about his evaluation of the of the drilling that took place on the deep water horizon. he had a number of technical comments as to how he thought it should or should not have been done. that raised in my mind the question -- is there some effort to have a determination of best practice and uniform application of best practice where there is an activity that is relatively repetitive and if not, why not? how is it that we can have one company do something as standard as drilling which is a complex activity at this depth with a

variance as to what another sister company would have done? >> i think the industry makes a good-faith effort at trying to develop and apply best practices. it does this in many different ways. primarily through the american petroleum institute recommended practice documents. operators are encouraged to follow and contractors are encouraged to follow. there is extensive technological information sharing in forms like the offshore technology conference and the society of petroleum engineering. , as at think the industry whole, is negligent about these issues. they don't want to see blowout grid they don't want to see platforms and exploding into flames. i think there is a good-faith effort especially among the active operators to establish and follow best practices.

>> this incident of bp, assuming that the criticism we heard was appropriate, was an out liar, an aberration? >> i am a historian. i look at these things in historical perspective and i hesitate to make judgments on the industry as the way it operates now or speculate on what it should be doing. i do know there is a long history of the industry getting better. they are communicating what the best practices are. >> there have been a series of events in the last 10 years that have had some effect on the context for what happened on april 20. given the range of service of

the three mms directors who are here, you covered both of these events. i would like to raise them and ask a question or two about each. mr. keatos, you were the acting director during most of the year 2001. this was the time when a new administration had come to washington and had announced they would have a new energy policy. a vice president was put in charge of developing that policy. to what extent or you as the acting director of mms consulted on issues of energy policy by the vice president's task force? >> i was consulted about the status of the program and what the offshore program looked like it all the different procedures. i was really not ask any

questions about policy. senator gramm, i was a career civil service person. i took over when the prior director left because of the change in administrations. i was there subject to the newer administration selecting somebody. it turns out i left before they actually selected somebody to work at the ocean commission. the vice president's energy task force got started late in my time there. it was just getting off the ground so there were some preliminary questions about what this program is all about. i dealt with the staff on that, primarily people at the interior department but by the time i left, the task force had gone out and was making policy decisions. i was not there. >> do you know if the task

force asked any of your staff or successors questions such as what would be the implications in terms of personnel or agency budget in order to carry out various new energy policies the task force might be suggesting? >> no, i never received any questions about budget matters as i can recall. the direction they were headed was not something they shared with me. >> the next event wanted to discuss was the establishment of the department of homeland security which resulted in a considerable amount of reshuffling of agency responsibilities and one of the most affected agencies was the coast guard which had been variously in the department of the treasury, then in the department transportation, and was moved to the department of

home unsecured with the priority assignment being counter- terrorism. i think this occurred between mr. ketos and mr leuthos . when there was previous coast guard responsibilities transferred to mms. is that a correct statement? >> mr. chairman, it sounds correct to me. >> it did mms get some additional resources in order to take over the responsibilities that previously had been coastguard obligations? >> mr. chairman, i cannot answer that. that was probably done during the 2004-2005 budget hearings. the budgets i participated in at

the end of the 2008 budget -- the 2009 budget and the beginning of 2010. i really have no recollection one way or another. >> dr. priest talked about some of the declines of the budget where there was a reduction in headcount from roughly 2000-1600 and an inflation-adjusted decline of your budget of approximately 10%. how did the agency during your tenure go about managing those reductions and resources, particularly as this was also a time of accelerated level of activity, particularly in deep water? >> what you do is you do your best to do the best with less. those were times when it was a very tight budget. i mentioned to you that we tried to figure out ways to keep and

retain quality employees. we used to sources we have available to give out retention bonuses. we had discussions about how to make that money stretch out as far as we possibly could. my recollection may be a little fuzzy on that because of my timing and terms of the budget process when you come in at the end of administration. i came in knowing there was probably about an 18-month window regardless of how the election turned out. to findrobably going another job after that time. will i focus on how to make the energy work with what it has ordered to spend time trying to change it? frankly, i tried to make the agency worked with what tools i was given. >> what were some of the areas that you had to eliminate or

reduce such as number of inspections of oil well sites? >> i do not recall a necessity to reduce the number of inspections. the inspection process is fascinating. others can tell you, it is probably as weather dependent as any. we were limited and the number of inspectors. i have the opportunity to meet with many of the inspectors. i got an idea of what kind of job they have to do and i am very grateful for the job they do. when you are faced with -- you need to go out on a helicopter and you are more than 100 miles away from shore at any kind of weather event, you don't want your inspectors out there. i do not recall having to reduce the number of inspections. i do recall that before i

arrived there, there was a bit of discussion about making sure we had helicopters so we could get them to and from the oil rigs which is vital. we have to be able to get on the oil rigs to inspected effectively. >> ms. birnbaum, another event which occurred which is some of the discussion of panel to was the decision to open up more offshore areas for oil and gas exploration. were you consulted by the administration in terms of the policy of opening up more and what would be the consequences of that on your agency such as on personal demands? >> certainly we had extensive discussion about the fact that if we went into new areas there

would be requirements for additional environmental studies and staff. the first requirement would be additional investment. the decision of what goes into the five-year plant does not go to the mms director. the information that the interior secretary primarily came from the mms. >> what was your level of contribution to the decision to expand the area where offshore oil and gas exploration which was announced in march of 2010? >> i provided the secretary of the interior with every piece of information i could. >> in addition to providing information, were you asked your judgment and opinion? >> yes. >> what was your judgment and opinion? >> i cannot tell you the number of meetings and conversations we had about different aspects of it. in the end, i supported the administration's decision.

>> i think that's all. >> chancellor elmer. >> back to each and every one of you for being here today. i would like you to address the question of the reorganization from mms into boem and other pieces of responsibility. i was very, very interested in 's perspectives'est as to how mms got to where it is spread by a light his -- i liked his view on the perspective of anti-regulation. that creates an environment in which it is difficult for mms to move forward just by reorganizing. it requires statutory changes and resources and expertise.

to the extent that a reorganization might actually assessed the people who are working in the agency to make good decisions and to be more objective and perhaps not quite as close in their relationship as you were describing living in the same community, would you reorganize mms the way the administration has proposed or would you make some other changes? >> i think the leasing commission of mms needs to be separated from those that have the responsibility for safety and environmental regulation and enforcement that part of the proposal of the administration seems to make good sense. i am not clear about what is being proposed should remain in the new bureau or whether they should be separate bureaus. in any event, i think that is an important separation in that you

have a professional causation of your inspectors ensure environmental people on one side and the other side those who engage in developing the five-year leasing program. however, there has to be some cross-fertilization. you cannot develop a program without the environmental people being involved in that would require either mou. you have to have some cross fertilization. i think the separation of safety and environment in the leasing part is critical. >> anybody else want to comment? >> i want to second that. there's a reason why environmental assessment and studies is in the leasing part of the agency. they need to be involved at the early stages. environmental studies does work with other sister agencies in government. a contract with noah and other

agencies. there was a sentiment expressed that there needs to be more consultation. it happens early but perhaps it needs to be more statutory. there is a reason why environmental studies and assessment is in the leasing part. >> as mr. priest said earlier, there is an inherent conflict there. an environmental review may have been an afterthought. the number of environmental laws don't always apply there is a constant tension between the two. i agree with tom that it is important that the environmental review thought be given a level of independence that perhaps they have not had in the past. whether that is in a separate agency or not, there is a lot of

communication that needs to go back and forth on the environmental study and the resource evaluation creating some independence for the environmental view and the safety permitting and the inspections is very important. you also need to develop some sort of structure that allows for continued communication on a whole variety of issues that affect the oil and gas program. >> mr. birnbaum, you spoke to process safety and the complex systems have process safety. i am sure all of the companies involved in the gulf of mexico would say that they do something along those lines. obviously, different companies have very different approaches to it para the question of standardization at least in some way, the proposed regulations which did not get adopted, why is there so much resistance do you think from the

industry to regulations like that that would set certain standards for safety when they all have a vested interest in having a safer record? i am particularly confused in this particular industry where you have so many different players, the operators, the drillers, the contractors, the subcontractors, the owners, and each and every one of them have slightly different approaches. it raises all kinds of questions about consistency and help a contractor or subcontractor can move from one company to another and know what the standards and practices are and what kind of safety procedures apply. it seems a bit confusing. it is almost as if some order of people would seek the advantage of having some consistency so that people have some predictability. why is there so much push back? >> you make a very good point. when you have drilling

contractors to work with a number of operators, the operator might be bp or shall and they are the ones ultimately who are responsible but drilling contractors like trans ocean work with them and have the largest number of drilling operations in offshore u.s. waters. you would think they would want to have consistency among the people they work with. it is my experience that virtually any industry universally opposes regulation generally. they are no different. there are some standards. api as a standard that mms looked at. this was for process systems, best practices, suggestions for the industry. everybody likes to think they have the best idea and they don't want to be told how to do it. that is a more generous way of saying the industry resist

regulation partly because they think they know better than anyone else care to comment to? >> i can give you history on this bridge in july, 1991, the mms published a proposal for an integrated safety management program that they intended to make mandatory on the industry. this was based on recommendations from a marine board committee of the national research council. it also was coming in the aftermath of bopal. after bopal, osha had done a recommendation and the epa and its own risk assessment program. in response to the mms proposal, the industry preferred to drop a api recommended practice number

75 and 14j added had to do with the environmental management program. there was recommended practices for hazard analysis. it was determined at that time that mms would not make semp mandatory but the industry would implemented voluntarily but ms would monitor this to make sure that companies were following these best practices. there was a pretty high degree of adoption in the late 1980's. leavese -- a idse leavemp just lost -- i believe semp just lost momentum and the industry was serious about this. they thought they could do it on

a voluntary basis. >> but didn't. my last question is about liability. congress is debating whether or not limits on liability should be raised. i am curious if you have an opinion you like to share on the question of the extent to which liability limits the safety culture and risk-taking and balancing risks? apparently not. >> that is a hard-won [laughter] . -- that is a hot one. >> thank you all for being here. i want to delve more into the issue of what the environmental review process is and the investment in baseline scientific data and the culture o mms. as far as doing the environmental review.

i am interested in mr. prius's comments. -- mr. priest's's comments. >> 20 million. i believe that is the most recent -- >> it has dropped significantly since the early days. there have been a lot of articles suggesting that within the mms culture scientists who are there and their recommendations have not received the kind of seriousness that maybe they should. we talked earlier about the consultancy with other agencies in environmental review. can you reflect on your own experience at mms and how environmental decision making is made and how you would recommend strengthening it. some have recommended there be a senior science officer at mms which would give more weight to that side of the equation or is

this something that mms should really focused much more on the development side and strengthen the other agencies that we heard about earlier? it seems we don't have as robust an environmental review program at mms that would appear necessary at this point in our a c s development program. what would be each of your recommendations and how to fix that substantively and culturally? >> i appointed a science adviser, the first one to the director. he had been the executive director to the society of conservation biology. he in fact was there in order to provide support for and sort of

focus on what ms plans were and what we might need to do to make it more robust. also how to communicate that. to some extent, ms sufferers -- mms suffers from the fact that many people don't know what they do. the science advisory board that mr. priest is on has a good collection of academics from a wide range of disciplines that are affected by ocs development. there is no question then is to be more investment in science. i believe that should be at mms. there is certainly a huge need for investment and noaa and many other places in federal government. we had a conversation about relying on outside agencies vs.

science developed inside the agency. mms science is focused on what we need if we are going to consider leasing in this area and what baseline studies we need and what noaa needs. this is verses what is necessary for the leasing question in this area or as we are moving into offshore rig noble development energy which is not in your chart. renewable energy development requires a study of a different set of issues that had not been considered before. migratory bird issues had never been examined but the agency will have to work out their needs to work out the science. there needs to be a strong focus on science at mms. >> if i might, i have read there is concern about the science that was not getting the way it should at mms and frankly i

found that surprising and disturbing. we were actually very proud of what we thought the scientists were doing. i agree with the former director, it helps to have the science tied in with the exact mission you are doing. we made a public relations effort to emphasize the types of science that mms was doing particularly a well study in the gulf a bicycle which was unprecedented at the time. the short answer is money. >> thank you. >> it is important to limit perspective on this. in 1975, there were no studies. that is one reason why the budget was so much higher then than it is now. in some cases in some areas, there is almost data indigested because there have been so many studies funded. it is important to understand it

from that perspective. other agencies are doing similar kinds of studies. the studies program has to be careful not to duplicate what other people are doing. it is a quality organization and they produce very good science. they always have to balance between funding science and the curious and tailoring it to the mission of the agency. that is a big challenge. >> 1 relationship with the diminishing science budget was the fact that during the 1990's, the offshore program was pretty limited because of more congressional and presidential moratorium withdrawals. therefore there was a decision made. i think the o was atmb -- i

think of was atomb. not enough money was being sent critic spent on the gulf which is where most of the leasing and production occurred. with so much taken off the table, besides budget was one of the first things to go. >> as you look back at the way the program has been administered and you see the huge scale where planning takes place, one argument that scientists make is that these decisions -- there are not the appropriate specificity with which they are consulted, specific plans in a timely way. they are asked to comment on very large areas in the beginning, of course and then there are the exclusions. do you have any changes to recommend in the way that leasing is conceived and planned and scientists are consulted? scientists outside mms based

upon what i have been told do not really think they have been adequately consulted or effectively involved in these decisions. some of them will say they have had insufficient resources themselves. others will say they did not have confidence that they put greater efforts into some of these, pulsations -- these consultations that they would of been considered seriously. do you have a response? >> we were in the process of reviewing the practice of area- wide releasing. that is still going on. that was about economics but not about the question of whether you could produce sufficient scientific analysis at that level. mr. priest suggested that area wide leasing had reduced the income from leasing. there is a question as to whether you restrict the number

of parcels to make available, does the industry want to make x amount of investing so they will actually be at war unpure parcels. economists had not completed their review of this question but it is a complicated question. that is one issue about area wide leasing. i am a little bit dismayed to hear that scientists have suggested that they would not comment because nobody would listen to them. i am not sure that as an area of area-wide leasing. that is an issue with the agency that the anti -- environmental review culture needs to be raised to be co-equal with the leasing program whatever way they had felt so board met and that needs to be elevated. >> with a program that generates the largest amount of treasury revenues accept the irs, it --

is it ever reasonably expected that the pope's well be equivalent with respect to the sides as on the of leasing revenues in one agency? >> i think it's possible. it is a question of what the culture is within an agency. the revenue collection was never from my perspective the guiding force for anybody involved in the offshore program accept at the moment when a lease occurred. nobody ever brought that in as an issue a policy in determining how to do or what the environmental review was. >> if you take into account civil service pay grades, hiring constraints, challenges of rapidly developing technologies and a huge amount of specialization that characterizes this industry, how you level the playing fields of

the inspectors are a match for the operators? can that be done? >> i think that is a tough question. i spent a lot of time on it in my statement. you will have the problem that they need on-the-job training to understand out drilling rigs and platforms works. they are specialized and giant pieces of equipment you will still have the problem that they need to live along the coast to do it. some of the ideas i suggested -- there were some other questions raised about pay. the inspectors have not been the folks who had a pay limit problem so much. if you brought and engineers, you would pay more anyway. the big problem of pay has been in headquarters in the new orleans --. >> we referenced the most --

most recent idea report. this dealt with the inspectors and frankly, i would recommend that report as well as the one deal in with therik question be mandatory reading for all federal managers as well as anybody in the industry. one of the telling things as you got down into the details was an e-mail or correspondence between an inspector that was actually, ron alisa, inspecting a platform at the same time he was negotiating employment. one thing we talked about is that you can actually get paid $64,000. that is what caught my attention paren.

i am not sure how that relates to the economy in the gulf but that was an issue for that inspector. pay is a question. >> some of you may have heard the testimony we had from robinson west on the safety case that characterizes the uk system. are you familiar with that? >> i know a little bit about it. i was not here for the earlier testimony. >> could you comment later for the record? he certainly extolled as a superior system in many respects. whose idea it was it to expand offshore oil and gas? did it originally within mms? >> extending offshore oil and gas production had been put on the table from a l mr.ucie before he left office. >> the proposal by president

obama. >> the proposal for increasing the areas of exploration was much faster and have been presented by the last administration on the last day of the last administration. this administration cut back on that proposal. >> the idea was a bush idea? that president obama supported? >> yes. >> there was a press conference. what about the moratorium? >> which moratorium? >> there have been two moratoriums on leasing deepwater in the gulf? >> i was not there for the second one. the first one there was substantial discussion back and forth between the department at the white house. i cannot say who resented that. it was above my pay grade. >> mr. kitsos, you are unique

because you have been involved in congress and the authorization of language. you had mms execute it and you had to step back and look at the picture with government. one thing we have been pursuing in our research is the issue of how we expanded into deep water without paying real attention to new risks and issues associated with it. dr. prius gave us a summary and you commented on it as well. you were around when the royalty relief was put in place and it

gave an opportunity for doing deep water drilling with less payment of royalties and later, you mentioned in your testimony, ms had been working on a planned evaluation of issues associated with deep water and in 2001, you said you did not know how that worked out. could you give us a perspective on the importance of both of those and how they affected moving into deeper and deeper water without thinking through all of the issues? >> the energy security act was a major law passed by congress. during that discussion at the end of bush 41 administration, there were is a big ocs titled that included revenue sharing, some moratorium, some promotion

of production areas and senator bennett johnston of louisiana and then i came in and proposed deep water drilling relief. i was working for the committee of fisheries. two congressmen strongly oppose that. the entireocs title dropped out of that. in 1995, i was at the interior department' wind that legislation was dusted off and passed. it was part of a larger alaska export restriction bill. the relief that had a major impact on companies willing to make more capital investments in deep water. i think they would have done so in any event without the oil but we will never know. it seemed that the amount of

acreage released was large and got larger and i think it was a major event. the studies that i referred to were a series of different environmental assessments one report was associate with a shell proposal and another was a generic report. quite frankly, i cannot remember all the details of who did what. within the agency, we were anticipating going into deeper water and that is something different than what we were used to in shallow water and there were a number of unanswered questions. we started to raise some of those questions. i don't know what happened. >> dr. priest, do you have a sense of that as a historian? >> deepwater royalty relief was something that was under discussion at the ms in the early 1990's.

it did not pass until 1995. it was a victim of poor timing. i believe it was not necessary when it was passed for the boom was already on in deep water. probably had an effect on some companies. the decision to make larger investments, but it is hard to know cause and effect that you say it was or was not necessary? >> i believe the boom would have happened anyway. that is because of the demonstration that shell had with a itsaugur platform in 1994 which came before. the industry was excited about the deep water when shall demonstrate the flow rate that could come from oil wells. my understanding is that one of

the original proposals for deep water roiled to relieve is that it be based on a field basis, field by field. the weight came out of congress was on a lease basis, leased by lease. >> we were involved in determining what the royalty in practiimpact would be. it provided tens of millions of dollars for deepwater development. the leases are still not paying royalties but it is worth tens of billions of dollars. we have reached the conclusion of our time. this has been very helpful and i am grateful to you all for the presentations you have made and your responsiveness to our questions. we have more questions that we would like to pose. i think we would love to explore other questions you may have brought up.

if you could respond to questions we center, we would appreciate it. thank you very much for being with us. >> we will add a short break to the agenda. we will break until 2:55. at that point, we will start the next panel. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] [no audio]

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[no audio] [no audio] [no audio] >> a short break and our live coverage looking at regulatory oversight of offshore drilling in the wake of new drilling rules and regulations applied by the obama administration. this is about a 5-10 minute break. let's take a look at the alaska's primary race that took

place last night. let's look at some of the results of that race. >> we have ballots coming in from remote parts of the state. people can only get there by boat or airplane. we're waiting for results to come in and we are waiting for absentee ballots to be counted and that could take up until two weeks. there is a difference of about 2000 balls between rep mark caskey and joe miller. joe miller is leading by 2000 votes. the number of absentee ballots

which is somewhere between 7000 and 16,000 and that might make up the difference for murkowski. host: no one saw this coming. not a single poll showed that joe miller was within striking distance to lease a murkowski, what happened? >> there were two public polls that came out throughout this primary campaign. one of them showed joe miller within 11 points of murkowski and some people raise their eyebrows. this came out of nowhere. people are trying to read the tea leaves to figure out what happened. a huge factor was probably a ballot measure which drove major turn out. 130,000 voters voted for this

ballot measure which is a parental measure for teen abortions. more people voted for or against this measure than voted in the senate race. host: in addition to the ballot measure, what about the monetary support of the tea party? how much of a difference was that? >> i think it was instrumental for joe miller's campaign. he raised about $285,000 including a $100,000 loan from himself. he does not have a lot of money. >> assuming there is an upset

and joe miller wins the senate race in alaska, what -- what implications does it have for the tea party? >> i think it's ups their profile. murkowski has no name alaska. that boosts the tea party profile again. we are looking at the fourth or fifth candidate that has won a primary with major tea party action. >> we are not there yet. there are 2000 votes separating the two candidates. the latest of that 99% of the votes are in. what can you tell us of how the recount would happen if indeed they had one. >> for a recount to happen, it would have to be within half a percentage point if the state pays for it. murkowski is within one

percentage point of joe miller, she can ask for a recount. it will be a while until you can get to that point very it will take two weeks for all the final absentee ballots and military balance to comment. host: you can read in part article today. she is on politico.com. >> it could be one week before that race and alaska is decided. we will keep you updated with any developments. four states have primaries yesterday and some races are not decided. you can check our website, c- span.org/ primary night for the latest on those races. we're back live at the ronald reagan building for live coverage looking at the regulatory oversight of offshore drilling after implementation of new drilling rules and regulations applied by the

obama administration for the next panel look at industry culture and managing risk. we expect this to last through much of the afternoon. this is live coverage on c-span. [no audio] [no audio] [no audio]

[no audio] [no audio] [no audio] >> this is panel member for. we have a couple of minor changes to the panel. glen irwin will not be attending today's hearing. the order of the panelists will be the retired admiral james ellis, president and ceo of the

institute for power operations. the second will be dr. zak, chairman of the world operations. the third will be eric militoe? director of industry operations for the american petroleum institute for the fourth ballot will be the director of global [inaudible] good. >> thank you. thank you to -- welcome to this session of the committee and the final panel for today. admiral ellis first? >> thank you co-chairman graham. i am the chief executive officer of the institute of nuclear power operations, known as inpo.

also i have my staff assistant. we're pleased to be here to provide remarks to this panel describing the organization, our programs and activities, and i will not review the comments today. i am here today to address health regulation in a high technology industry. i will talk briefly of the founding of inpo and i will discuss the factors that have allowed self regulation to improve safety and a commercial power industry. before proceeding, i want to pledge my regard to the 11 crew members who died during the

accident and express mired regret to their families, friends, and colleagues. it is vital that the lessons learned and the actions to be taken as a result of this committee and other investigations help prevent a repeat of such an incident. the founding of self regulation in the nuclear power industry after the interests suffered its most serious accident, a partial meltdown of the three mile island unit 2 reactor core in march of 1979. the event became widely known as tmi and the image of the plant's cooling towers is one that has remained even today. while there were no deaths, injuries, or metal damage caused by tmi, it generated concern similar to those being addressed in the aftermath of the deep water horizon accident. . .

the event showed weaknesses in the industry and operational standards to the sharing and use

of an industry getting experience and emergency response. the record for prompt action in the commercial nuclear power industry moved quickly to inpo. the industry was incorporated by the time the report of the president's commission on the accident was issued in october, 1979, seven months after the event.

>> as soon as the three mile island commission was formed, we initiated a senior staff on the commission and a naval officer named ronald atchison was named to that position. captain atchison kept the admiral and the others fully informed throughout the proceedings of the commission and because of the softment the naval reactor was able to keep

abreast of the proceedings and have input. -- at m.i.t. a decade earlier was on reactor safety. the accident at three mile island was an accident [inaudible] needless to say -- as the study was unfolded to leave the navy and join the organization recommended commission the organization became the institute of nuclear -- the first c.e.o. of inpo as jim has mentioned, admiral dennis wilkinson, took the recommendations of the commission very seriously. and o soon began those that were within our scope. by the mid 1980's we had a staff of about 400. we had acquired capable people from the industry and from the

navy. by 1986, for example, we had 78 employees who had previously served as officers in the navy nuclear program. people brought with them the very high standards expected of everyone in admiral rickover's program. and most of them brought a passion for nuclear safety and excellence. by the 10th anniversary of t.m.i., we were able to say that inpo and its member utilities had made considerable progress in improving safety and reliability and in responding to the commission's recommendations. in 1989, 10 years after the accident, we prepared a comprehensive report that described progress on every applicable recommendation the commission made. and we sent a copy of this report to each member of the t.m.i. commission and to a wide range of government officials.

within a few weeks we received an advanced copy of a press release from professor john kimini, chairman of the commission, and key excerpts from his march 1989 release include, and i quote "a decade ago i had the privilege of chairing the president's commission on the accident at t.m.i. nuclear operations has issued a report of nuclear utility responses to kimini commission recommendations. the report takes up our recommendations one by one and summarizes in a way they were implemented. the improvements over the past decade have been impressive and are very reassuring. we felt that what we wrote was important. we now know the presidential commission has made a difference "end of the quote of professor

kimini. without that history and brief history and plenty of challenge after 10 years, plenty of challenge remaining for inpo and its member utilities i turn back now to admiral jim ellis. >> thank you, zach. though both inpo and the industry that it serves have evolved over the years since, the primary recommendations from the president's t.m.i. panel, as zach noted, known as the kimini commission, formed the basis for inpo's cornerstone programs which remain in place today. the four-cornerstone programs, evaluations, training, analysis, and assistance, are described in detail in the materials i provided to your staff in advance. inpo is a nongovernmental corporation that operates on a not for profit basis. we operate independently of the industry, and we avoid any conflicts of interest. we specifically, legally, and philosophically, cannot act as

an advocate for the nuclear power industry. that is not our role. our role is to help the nuclear power industry set and achieve the highest standards of safety and excellence in operational performance. since our inception, all organizations that have direct responsibility for the operation or construction of commercial nuclear power plants in the united states have maintained continuous membership in inpo. currently we have 26 members that operate 104 nuclear reactors in 31 states. in addition, many international groups and supplier organizations are voluntary participants in inpo. we have a staff of about 400 nuclear power professionals which includes 60 employees on loan to us from member utilities. our annual budget is $99 million, most of which comes from member and participant dues. i'll now move on to discuss what

we believe are the five key factors that have enabled inpo to be effective in fostering the highest standards of nuclear power safety at our nation's commercial nuclear plants. the five key factors are chief skiff officer or c.e.o. engagement, second a nuclear power safety focus, third, support from the nuclear power industry, fourth, accountability, and finally, independents. c.e.o. engagement, gaining the support and personal involvement of the member company chief executive officers was a fundamental element in the founding of inpo. from the beginning, inpo's board of directors has been comprised of member c.e.o.s and other senior utility executives. mayo shad dick, chairman and c.e.o. of constellation enaur group is our current chairman, and all our other board members

are so's or officers of the founding company. we have found that working with c.e.o.s is violate to maintaining industry support and responsiveness to our safety mission and initiatives. for example, we provide c.e.o.s personally, in the presence of their line management, with detailed briefings of every evaluation conducted at their nuclear power plants. we also communicate with and send requests for action to on operational matters directly to the industry c.e.o.s. earlier this summer, for example, i sent every c.e.o. a letter that described a dissatisfying trend in recent nuclear power plant operational events, and i asked them to coordinate with their management team and provide me personally with specific actions and response. every c.e.o. also participates personally in the inpo annual conference, which focuses solely

on nuclear safety. and during which operational events and nuclear power plant ratings assigned by inpo are discussed candidly and personally with them. the second key factor i will discuss is maintaining a nuclear safety focus. inpo's mission, which has not wavered since its founding, is to promote the highest levels of safety and reliability to promote excellence in the operation of commercial nuclear power plants. that's it. it the distinction of promoting excellence rather than regulatory compliance is fundamental to inpo's role in raising nuclear power plant safety performance. over the years there have been many suggestions and requests for inpo to become involved in a variety of new issues or with different stake holders. and although each such endeavor may have provided some benefit to the nuclear power industry, they also would have diluted the

attention and resources placed on our mission of excellence in nuclear power safety. in the end, nuclear power safety is why we exist. and it is always through the lens of improving nuclear power safety that we examine any potential new activities or changes in the scope of current efforts. the third key factor in effective self-regulation and improving nuclear power plant safety is cooperation from the industry. the nuclear power power industry has send that a key part of its regulation is subjecting its plants to on-site peer reviews which we call plant evaluations. the evaluations are intrusive, comprehensive and performance-based, and their performance cannot be overstated. since 1980 we have conducted nearly 1200 plant evaluations, an average of more than 16 at every operating nuclear power plant in the country, inspecting them on average once every two

years. the nuclear power industry participated in developing standards of excellence and then committed to meeting those standards. the strong industry participation has continued and it has played a key role in the numerous advance standards and guidelines developed over the years, but the leadership of inpo, supported by our board of directors, makes the final decision on expected levels of performance. although inpo programs today are part of the fabric of the nuclear power industry, gaining wide acceptance in the early years was not easy. some nuclear power plants weaponed the reliability of the evaluation teams and were skeptical about the value of inpo evaluations themselves. we addressed these issues and overcame the challenges by continuing to hire competent and operationally experienced staff as zach had noted had valuable experience and managers of commercial or navy nuclear power

plants. we continue to provide evaluation reports that identifieded important safety and relight issues that when corrected improved safety and reliability, thereby improving performance. in addition to its acceptance and welcoming of inpo activities and programs, the nuclear power industry supports and participates in self-regulation through inpo with involvement in advisory groups, industry task forces and working groups, and by loans employees to inpo to serve in a variety of functions, including as those inspectors or peer evaluators. this support provides benefits to the individual organizations as well as to the entire nuclear power industry. by serving as peer evaluators, for example, professionals from individual utilities not only provide added and current experience to the inpo evaluation team, they also gain insight into nuclear power industry best practices and take that knowledge back to their own

companies. through their participation, peer evaluators also acquire a first-hand understanding of inpo's role and the importance of industry self-regulation. over the years more than 13,000 industry peer evaluators have served on inpo evaluation teams. the fourth key factor is accountability. self-regulation cannot be effective without an effective means of enforcement. during inpo's first five years we completed a few rounds of evaluations at every nuclear power plant and it was clear that not all members were responsive to inpo's findings. to improve our -- led by lee sillin led by -- to assess a broad inpo activities. their recommendations included toughening the language in inpo evaluation supports, establishing a formal process for assessing the evaluation results and assign agnew marital

performance rating based on that assessment. doing that enabled us to assert more authority and demand another accountability. it helped to build our credibility with the nuclear power industry and indeed with the regulator. -- we made the evaluation reports confidential, distributed only to the utility where the nuclear power plant was evaluated. this change from our initial policy of distributing all evaluation reports industrywide provided for more open and candid interactions and discussions of problems or areas for improvement. the confidentiality of reports has proven to be an important aspect of performance improvement and nuclear safety. sanctions can come in various forms, and although inpo does not have the statutory standing to shut down an operating unit, we on several occasions over our first 15 years exerted pressure that influenced nuclear power

plant operators to shut down or delay starting up until specific safety issues we had raised were properly addressed. we also take formal followup actions. when a plant plant exhibits a lack of performance. in one notable experience, a company made changes in its executive leadership in response to our escalating concerns about their corporate management's lack of responsiveness. there have been other situations where companies have been unsuccessful in improving chronic low performance at their nuclear power plants and through porn escalation and pressure changes were made from the top down. in all these cases our actions were taken with the full support of the inpo board and our broader industry. it is this peer pressure that is perhaps inpo's most effective tool for driving real change. another incentive for nuclear power plants to perform well comes from the industry's collective insurance company, known as nuclear electric insurance limited or neil.

after the t.m.i. accident, all nuclear power plants were required to carry insurance through neil. neil in turn requires inpo membership as a condition of insure ability. and it uses inpo plant evaluation ratings as a factor in setting insurance premiums. the fifth key factor is independence. for inpo to be successful as a self-regulation role, we must be a part of the nuclear power industry and an useful resource. but at the same time, we must remain independent and work to high standards. in particular we need to be independent from any one company or nuclear power plant. we accomplish this in the institutionized ways in which we select team members and distinguish clearly between our evaluative role and the many other collaborative interactions and activities we have with our members. our mission is largely independent from the regulator, the nuclear regulatory commission, but it is also

complementary as both organizations focus on nuclear safety. over the years. n.r.c. has selectively enforced inpo programs as a satisfy means for nuclear power plant operators to meet certain regulatory requirements. and porn has provided the n.r.c. with regular updates and topics of mutual interest related to improving performance in the industry. through its 30 plus year history, inpo has continued to raise the power for nuclear power plant safety and performance and has been a catalyst. since the starting of self-regulation in the nuclear power industry, there have been significant performance improvements in nearly every measure of safety and reliability. we are careful at inpo not to take credit for that success. that belongs to those that operate safely and effectively 24 horse a day, seven days a week, those commercial nuclear enterprises. however, we do believe that we have contributed in significant ways to their success. for example, in the early 1980's

a typical nuclear power plant had a capacity factor of 63%. capacity factor is the actual amount of electricity generated by a plant divided by the amount it could have generated if it was operating continually at full capacity. the typical plant also experienced seven automatic shutdowns per year. and it had a collective radiation exposure that although it met regulatory and health requirements, we felt could be significantly reduced. today and throughout the past decade, the typical nuclear power plant now has a capacity factor above 91% with zero automatic shutdowns per year and occupational radiation exposure about six times lower than they experienced in the 1980's. in addition, the number and severity of operational events at nuclear power plants has dramatically improved since then. self-regulation, however, is not a perfect process. over the last 30 years we occasionally find even with high industry standard, regulatory oversight, self-regulation and

yes, inpo a series of errors or emissions can align to produce an unexpected major operational event or declining trend in industry performance. >> and admiral, we're going to have to ask you to move towards wrapping up, please. >> this reality demands constant vigilance. in summary we believe that self-regulation and inpo represent a substantial and successful effort undertaken by a high technology industry to raise its safety standards and performance levels. we believe self-regulation has proven effective in the nuclear power industry and we believe the key factorses in successful self-regulation have been and continue to be -- industry support, accountability and independence. thank you for allowing me to speak before the commission. and we would be happy to take questions at the appropriate time. >> thank you very much, admiral ellis, and dr. pate, for a very impressive report. >> mr. eric molito of the

director of upstream and industry operations at a.p.i. and john modean, director of global industry services for a.p.i. >> good afternoon, chairman riley, chairman graham, members of the commission. thank you for the opportunity to address safety in the oil and natural gas industry. my name is eric molito and -- a.p.i. has about 400 member companies which represent all sectors of america's oil and natural gas industry. our industry supports 9.2 million american jobs, including 170,000 in the gulf of mexico related to the deep water drilling business. and our industry provides most of the enaur our nation needs to power our economy and way of life. our industry's top priority has always been to provide enaur in a say, technologically sound and environmentally responsible manner. we support the commission's work, we will do all that we can to reduce the risks of an accident like this from ever happening again. our thoughts and prayers go out

to those families who have lost loved ones, those who have been injured, and all those in the gulf who have been affected by this unprecedented and tragic event. the men and women of the oil and gas industry recognize our responsibility to understand what happened and why and to work in cooperation with the government and to come up with ways to improve industry equipment, procedures and operations. the fact that such a terrible accident happened has led some to think that safe operations and equipment were unimportant to the industry. and that risks of more disasters were and are high. i do not believe a fair look at the facts supports that conclusion. the safety culture in this industry is strong. our offshore companies work cooperatively among themselves and with regulators to minimize risks, including through their participation in a.p.i. standards programs. the safety records supports this. the incident and volumes spilled trend line have generally gone steadily down. as we consider ways to enhance

safety oversight, we need to recognize the existing foundation within which any such program would be created. my colleague john modean will provide that background. >> since the accident it's important to recognize that industry has looked at every aspect of safety and taken significant steps to improve operations. we have assembled the world's leading experts to conduct a top to bottom review of offshore drilling procedures from operations to emergency response. two industry task forces that are addressing short-term and long-term issues related to offshore equipment and offshore operating procedures delivered recommendations to the interior department in may just a few weeks after the accident. while the task forces are not involved in the review of the incident, they brought together industry experts to identify best practices and offshore drilling equipment and operations. their objective was to immediately move industry standards to a higher level of safety and operational performance. the final report from the interior department dated may 27

and submitted to the president incorporated many of these recommendations. one of the primary recommendations of the task forces is the development and integration of safety systems and critical documents from the lease operator and the drilling contractor. the commission i believe this morning you've heard -- from shell talk about this on the segment after offshore drilling. the task force has recommended the adoption of a safety case which is a comprehensive and structured set of safety documents to ensure the safety of a specific vessel or piece of equipment. the safety case will be integrated or bridged with a lease operator safety management system through a well construction interfacing document or wcid. the task forces have developed the draft wcid for consideration by the bureau of ocean enaur management, and i believe the commission has received a copy as well. most operators already have a safety management system in place, and the safety case is

already used around the world by the drilling community. interior has agreed to mandate these programs, and we expect them to release new rules to implement them. the integration or bridging of these programs addresses several critical factors involving all aspects of well design and management. and working with other trade associations, a.p.i. has also assembled experts for two additional task forces to review oil spill and blow out response capabilities. one task force is focusing on stopping and containing an oil leak at the well head, the other is focusing on oil spill response at the surface and shoreline. we expect the recommendations of those task forces to be issued within a week or two. another example of the industry's ongoing leadership and commitment to safe operations is a soon-to-be formed marine well containment company. through this $1 billion effort, engineers will design, develop and implement state-of-the-art containment systems that go beyond the capabilities employed during the deepwater horizon incident. the system will consist of a new

containment assembly which will prevent oil from escaping into the water in the event of future deep water accidents. it will be deemployable within 24 hours. furthermore, the industry has been working with b.p. and other industries that have been involved in the response related to the macondo incident, and we believe that we will be able to have the capabilities that have been in use to stop that well blowout in the weeks and months to come for all the industry to benefit from and for the public to know that we have systems in place to address this kind of blowout. our industry's commitment to learn from this experience and to make offshore oil and natural gas exploration and production safer continues. in the long-term we intend to use any findings from the investigations to improve the technologies and practices that will elevate safe and environmentally sound operations. as part of this process we will continue to develop new a.p.i. standard and revise and adapt existing standards to raise the bar of safety performance.

finally, we are currently studying the potential for enhancing safety through the creation of a new industry safety oversight program, which includes the consideration of programs employed by other industries such as the nuclear industry, the chemical industry, and the u.k.-based safety program for oil and gas. these programs have helped elevate safety and environmental performance, and they may suggest approaches for our own industry. however, aprogram for the u.s. offshore industry would have to take into account its unique characteristics. compared to the nuclear industry, it involves a large number of tremendously diverse businesses, far smaller doing very different kinds of work and types of gelogic conditions. the offshore industry also operates under a wide range of existing industry safety programs and many federal agencies monitor and regulate its activities. all this would have to be considered in evaluating the viability of a new industry oversight program. all of what i discussed, of

course, will be affectedded by what the root cause analysis of this incident tells us and by changes in the regulatory framework that ultimately are made. we still have not seen the final results of the investigations and we're not sure at this point exactly what the regulations are going to look like. those are some key components of what have to be looked at in terms of looking at any kind of safety program. we are striving to improve because we all wish to protect human life and the environment. there's no higher objective. initial safety and operational response has made us safer and we intend to built on that. but we must also continue the business of supplying the nation with the energy it need to stay strong, secure and competitive including energy from the rich resources in the gulf. that will put people back to work now affected bay the moratorium and creating jobs for americans and providing our government with other needed tax and other revenues. this concludes my statement. my colleague john modean will outline existing programs the industry has had in place for decades.

>> thank you, erik. and good afternoon, chairman graham, chairman riley, and members of the commission. my name is john modean. among my other responsibilities i manage a.p.i.'s certification and training programs, which contribute to a better informed and more safety-conscious industry workforce. i'd like to address regulatory oversight of offshore drilling, the industry safety standards and certification programs, and other industry initiatives that enhance safe operations in offshore development of oil and natural gas. as my colleague erik molito said, this is the context or starting point for our that we will take the best of what we have and make constructive, practical changes. so we take full advantage of what's already in place. over the decades, a an enormous

amount of effort on both the part of the regulators and operators has gone into staying safe offshore. offshore natural gas development has been conducted for nearly 60 years in the gulf of mexico. since then, more than 42,000 wells have been drilled, including more than 2,000 deep water wells. in that time, safety has been given an increasing emphasis. well-entrenched part of the offshore culture, and never out of the minds of the men and women who work on the rigs. and as erik has stated, the record in terms of spills a has steadily improved. the gulf action casts a shadow over that achievement, and it necessitate a look at all that has been done to look for ways to improve. we welcome that and we've been conducting that review as erik also described. but what has been done, what is already in place to increase safety is considerable, and we need to shine a light on that in

bringing the best of it forward. federal regulation of oil and natural gas operators on the outer continental shelf is extensive. as secretary salazar testified earlier this year, the offshore oil and natural gas industry is a very highly-regulated industry. the golf regulation is not enough. -- government regulation is not enough. as an industry we have worked for many years collectively to establish safer equipment standards and operating practices. the huge vestment in human capital and technology and the challenges of operating the offshore environment require this. we understand the risks, and safety is our top priority. the a.p.i. standards program is a critical part of how the industry has been advancing safety and strengthening environmental stewardship. since 1924, a.p.i. has been developing industry standards and practices that promote reliability and safety through the use of proven engineering

practices. the a.p.i. standards program is accredited by the american national standards institute, the authority on u.s. standards setting, and the same organization that accredits programs at several national laboratories. our program undergoes regular audits to ensure it meets a.n.c.'s essential requirements for openness, balance, consensus, and due process. a.p.i.'s standards are developed collectively and collaboratively by industry experts, technical experts from government, and other interested stake holders. in fact, there are currently close to 80 different government representatives serving as either members or observers on a.p.i.'s standards committees, representing 10 federal agencies, eight state organizations, and three national labs. working together we have helped create more than 500 different standards, including some 240 exploration and production standards that address offshore

operations. 78 of those regulations have been referenced in the bureau of ocean energy management regulation enforcement regs. government chooses to reference these standards because they are a product of the industry's best technical thinking, and have a proven track record of promoting safe operations. earlier this week we greatly expanded free public access to our safety standards and all of those referenced in the federal regulations. standards related to offshore cover a range of areas, everything from blowout preventers to comprehensive guidelines for offshore safety programs. these standards provide all operators with solid engineering guidance in operational best practices. and standards are reviewed and improved periodically or in the light of circumstances calling for immediate action such as the incident in the gulf. we are now reviewing all relevant offshore standards and have initiated work on a new one covering design of deepwater

wells. the industry also runs certification programs and conducts frequent workshops than hans offshore safety. a.p.i.'s mon gram program, which has also been -- was established in 1924, provide for the consistent and reliable manufacture of equipment and materials used in the deep water offshore and across the industry. the mon gram program draws on the expertise of the wide range of technical experts, including those from the government, ack deem yeah and other interested stakeholder groups in addition to those from the industry. reliable, well-built equipment is obviously critical to safe operations. a.p.i. will conduct nearly 2,500 audits this year alone to verify compliance and verify that the manufacturers are complying with a.p.i.'s quality and manufacturing standards. in fact, the b.o.yem itself has reck niced the efficacy of

a.p.i.'s certification programs. a.p.i. also provides the training provider certification program which certificate fight schools globally that deliver training in accordance with industry standards and government regulations. this includes safety courses for offshore workers. an a.p.i. certification is issued only after course-related documentation is completed and an on-site audit system is passed. and of course, there are many other examples of industry safety training initiatives which are referenced in my submitted testimony. finally, in the necessary and understandable effort to get to the bottom of what has happened in the gulf accident, we are all looking to find and rectify every possible safety short coming. this is as it should be. but it is also important to recognize the strength of a system that has helped avoid incidents. this system expanded and improved in many ways over the years provides what we think is

a solid foundation to build on for all of us who want to enhance safety. thank you. >> thank you very much, gentlemen. our lead questioners for the inpo panelists will be cochairman riley, and for the a.p.i. panelist, jerry murray and terry garcia. >> thank you, mr. chairman. aim very interested, admiral ellis, in some of the details surrounding a number of the points that you made. i'm interested in the quality and training of your staff, your profession am staff. you said you have 400 of them, 60 of them are lent from companies. i have been under the impression that it's very hard to find quality nuclear engineers today in any quantity, that we kind of stopped turning them out or

people who might have gone into that profession went into other lines of work given that we haven't had any reactors approved for 30 years as you mentioned. so i'd be interested whether you train them yourselves or where you get them, what kinds of compensation levels you're able to offer. and one issue that has been brought up in this field is conflicts. and if you have 60 people that you have borrowed from industry who are part of these evaluation teams, how are they not conflicted from time to time as presumably they're not allowed to look at their own company's reactors? but and i wonder also are there any trade secrets. and the point that was just made by mr. mulito, how do you how do you deal with the supplies and transporters of fuels and providers of reinforcing steel and cement? and there must be a whole set of ancillary supportive industries that have to be part of your

evaluations in looking at a reactor or looking at a reactor operator. and if you could just shed some light on that and let us understand a little bit more practically how it actually works that you have the quality people you have who you're able to retain and continue to keep in that obviously very productive role. >> well, thank you, mr. riley. as you might expect, the answer is probably all of the above in many ways. while our earlier days as dr. pate noted we had a predominance of folks that may have come from the nuclear navy, largely because of the relatively young character of the nuclear industry over the last 30 years that industry has grown and ma turd and grown its own capable technicians and senior executives. so we draw heavily on that. and we believe and i think many in the industry believe that service at inpo, a, it's a service to the industry, but certainly it's a developmental opportunity for up wardly mobile

employees in that they get to see the best of the industry. they get to travel a great deal and see how others do the job that they'll ultimately be doing when they return to their industry. so the tendency is for them to send us qualified and capable people along the way. we have begun, because of the issue that you addressed to for the first time in our history over the last four or five years hire young nuclear professionals just out of college and train them ourselves, give them the initial qualifications, reactor operator qualifications and familiarity with the industry, and grow that capability. because i do believe that that's an effective way for us to meet our own demographic and diversity challenges within the industry. and so we needed to take more of that on ourselves. but to your point, factually the enrollment in the nuclear courses in our nation's college is actually up at record levels. and many of those schools at the better universities are in fact

full in acknowledgement of the potential here for a rebirth in that industry as we look at construction for the first time being underway at at least three sites within the u.s. so that's how we address the broader issues of training. we still draw some from the nuclear navy but it's not nearly as large a source. the navy itself is much smaller than it was in years past. and so we also have continuing training of our own to make sure that our folks remain current and invested and understanding in the nuclear enterprise. if we hire somebody and they serve 25 years at inpo, probably on three different occasions they will leave the company and go into the industry to act in a line management role for a year and a half to two years to keep current on the practices and have a better understanding and appreciation for the context in which they are evaluating this industry. it would not be helpful for us to live in an ivory tower in atlanta and have our experience be dated and no longer relevant

to an industry that has emerged. so through all those mechanisms we're able to sustain and develop a capable workforce. compensation in broad terms we have a metric that links us to graded positions within a commercial nuclear enterprise. in other words, vice-president of my company might be equivalent to a plant manager or site vice-president in the industry, and there are evaluators in my company are linked to mid level or managers or technicians in the industry. and so we kind of compare ourselves to that. and while as a nonprofit we don't even have stock, much less stock options, there are some variabilities in our ability to compensate with the private sector. on balance we attract folks that are really interested in giving back or at a phase in their career in the industry where they're looking for a bit more stability than the intensity that they see. so it's a win-win proposition for us.

the 60 people that you talk about obviously we do not assign any of them to evaluate plants in the fleet or the plant from which they came. that would certainly be a conflict of interest. but they come and have been raised in an industry where they understand the value of what this is all about. and the value they bring is not just helping people connect the dots but many times reck nicing what is a do the which is more of a chang so that we portray an act rat picture of what exists at the site. i assure you in our industry there are no shrinking vile et cetera. when they get out on those evaluations teams they act -- you cannot see the difference between them and the peers that join us for that one evaluation. suppliers we do have a relationship with the suppliers. they cannot be members. our members are only the 26 folks that operate nuclear power reactors in this country. we think that's appropriate. but we have affiliation relationships with suppliers and

those in the international arena that are committed to the same standards to which we aspire. the suppliers, they don't get evaluations, but they get assist visits from us. we visit their commercial enter prize whether it's a fuel manufacturer or others and look for the same types of things we do when we visit the plants to address safety and reliability issues. so we do understand that. but the accountability model is that our license holders, our members, are responsible for what happens at that site. it can be done by a contractor, it can be done by a vendor, but they are the ones that are ultimately responsible for the safe and effective operation of that plant. and that accountability cannot be transferred. >> zach, do you have any questions? >> i think you fully answered the question. i might emphasize one point and that is that the peer evaluators are on every team.

and that's people borrowed from other plants, other than the the one that will be evaluated. so i don't know what the numbers are today, but three or four people who come from the industry add to the strength and the independence of that team. >> how do you relate to n.r.c.? n.r.c. has how many inspectors does n.r.c. have? how often are they visiting? i understand there's somebody always in a reactor from the n.r.c. >> yes, sir. they have resident inspectors that are full time resident inspectors from the site as you might infer from their name. that's their job. they're there for a period of assignment, normally years, to provide the continuity and perspective that regulator values. they have other mechanisms and teams that they can deploy when needed. and they see a need on the part of the industry and as is appropriate for the regulator. and we are very, very clear that we believe that an intrusive and effective regulator is an important element of oversight of the nuclear industry. we view our role as complementary, as i said at the

outset, we compare our plants' operations to standards of excellence. and the regulators as you might expect deals with the legal requirements and the regulatory requirements that must be met. and so we aspire to the same thing. nuclear safety. we perhaps go at it a bit differently. theirs is the technique that's proven to be effective for them. we believe that our approach of objects racials, when we do these evaluations this is not a one-day visit. it's about a five week process with two weeks resident on-site with specific observations of maintenance and operation and the like. it's not just a check of records or qualifications or training records. all those things are important. but we actually go out and observe what's happening at the site. and not only that, in anticipation of a visit if something happens at the site the unexpectedly have to come down and power something, we'll deploy a team early to watch them operate this plant so we get a better sense of what's really happening rather than just watch them for two weeks when things are steaming at 100%

power with no significant evolutions underway. so we have a different approach than the n.r.c. does in many ways, but our objective i think in all candor is the same. and we think that several -- a couple of layers or different processes that pursue nuclear safety have served the nuclear industry well. >> i don't think i've ever heard anyone use "intrusive" with as enthusiastic and positive a tone as you have quite today. are you aware of anything like this in other industries? >> i am not, mr. chairman. by have been visited on occasion by a number of other industries, including might not surprise you the medical industry for example, and financial industry. zach has some experience in the hospital side. and occasionally even the chemical industry, refinery industry. but i know of no self-regulatory model that has been implemented that comes close to what we do on behalf of the nuclear industry. i'm not implying that it's bad,

it's just that they have chosen not to pursue that or find that their unique circumstances in their view make it difficult. the shared challenge that that watershed event in the u.s. industry where literally they were not -- the industry was not focusing on its success, it was focusing on its survival was a catalytic event it. brought the leadership of these companies together in very powerful ways. not everyone was in agreement, but enough powerful agreements were in agreement that decided the inpo model was going to be essential if this source of energy, this emissions-free, lowman cost, reliability source of generation as they say was going to be available to the american people going forward. so they committed themselves to that and obviously cekded some significant authorities and influence to our organization in order to make that work. >> great safety cultures often date to a large crisis or

disaster, i notice, in any number of the companies. dr. pate, the description that admiral ellis provided of the culture of independence, maintained through all of those years while you're actually involved so intimately with the industry, must have been difficult to establish. that's a cultural kind of commitment that obviously runs very deep at inpo. >> i think that was one of the big challenges early on. because inpo is fund by the industry. and so we have this question that's put on the table a number of times, how can you be truly independent if your resources all come from the industry? and the way we address that is saying that we have to be totally independent, adequately independent of any one member. but we can't be totally independent of the whole industry. and our members and our boards supported that concept from early on. so when we took up an issue with

an individual member, one thing that helped when we started we had 54 utilities. they've consolidated to the point now that it's 26, i believe. but in the early days we had 54 and 40 and 30 and so on. but when you have that large number of members and you have an issue with one individual member, you can take that up strongly, and as jim said intrucively, and your board and your other members back you because they know it's in their long-term best interests. and then in addition, as jim explained. after several years we had a close partnership with the insurer for the industry, and we cult hate vatted that partnership and our board encouraged us to cultivate that partnership. so we had the leverage of the insurance industry that would adjust rates based on performance. and it had a heavy threat over an utility that didn't measure up to performance.

so the cup ling of those two things, the independent of any one member and a partnership with the insurer gave us in totally adequate clout when a member was doing something that needed to be upgraded and needed to be strengthened. but we thought a lot about and nurtured the idea of how do we build up this adequate independence when a problem arises. >> if i were running a reactor, could i pick up your manual and copy everything or comply with everything that's in it and guarantee getting a number one rating? >> we provided i think the criteria against which we evaluate these plants. and we say very candidly, it's an open book quiz. i mean, there are no secrets here. we want them to understand it. the challenge as in any complex industry is the quality and the degree of execution and compliance. >> you look at machinery and equipment as well as human

capability training, expertise -- >> absolutely, sir. all elements of this including increasingly the culture of the organization. and we differentiate between the safety programs which are absolutely essential and important elements and the real culture of the organization. we're very careful that safety culture as we define it is is an organization's values and behaviors modeled by its leaders and internalized by its members that serve to make nuclear safety the overriding priority. it is more than a program. it is more than a checklist or standards documents. all of those things are important. but it's what people really think and the things that are really going through their mind when they're first confronted with something that's out of normal and off normal set of circumstances. do they have the courage and the confidence that they'll be backed up to stop and to ask the questions and to understand that that behavior is going to be rewarded. and so from a cultural basis,

that's part of -- we assess that to the degree that we can. certainly cultural issues are like h.r. folks call them soft skills. i think they're hard, they're not soft. >> grade on the curve? how many 1's are there? >> well, we do not grade on a curve and there is no question too. we have over 20 that are in the 1 category now. >> out of 26? >> no. no. out of 104. >> out of the 65 sites, we inspect by sites. and so some of these sites have two or in a few cases even three reactors on them. so that's how we -- >> this is very helpful to the commission. thank you both very much. >> mr. chairman? >> good. >> miss murray, mr. garcia? >> i actually wanted to follow up with admiral ellis and possibly admiral pate just

because he was at the inception of inpo. which was -- what were the largest barriers that you had to overcome? you talked a little bit about how you overcame some of the reluctance of some members of the industry to cede some power to inpo. but what were the largest barriers to creating? and what are the largest barriers now to maintain this safety culture? >> well, i'll try and answer the first part and then turn to admiral ellis for the second part. i think clearly the largest barrier in the early days was a skepticism of a lot of members. and the plant managers and people working in the plants who have a very challenging job, and as jim ellis has said, 24/7 job,

didn't want another layer of regulation or another layer of oversight. there is historically a strong regulator in the nuclear industry and as has been pointed out there's a resident inspector, sometimes more than one at each nuclear plant, each nuclear site. so the plant managers and the people in the plant, the last thing they wanted is another layer of oversight or another layer of intrusion. and the point jim ellis made about working with the c.e.o.s was critical to dealing with that. we had to win the support and keep the support of the c.e.o.s, eventually if the c.e.o. supports inpo programs the guys down in the organization come along. and then it was our challenge to make them believe that they should come along and to build a credibility so that eventually they wanted to see our teams and realize they were going to ben

early challenge, and it took years to i don't want to say overcome because i don't think you ever completely overcome it, but a key to it was working with the top management, the c.e.o., and then having teams that through having peers on the team and having loaned employees from the industry on the team, could build credibility in the plants. >> with regard to today's challenges, dr. murray, as you might expect with the industry at near record levels of performance, the complacency issue is very real. as of metrics that we chartered in the early part of this year, the top five nuclear power plants in the world and eight of the top 10 are in the united states of america. and so that's good. the median performance is exceptional. the challenge is to avoid the complacency and to increasingly make more fine the measure with which we -- the mesh with which we sift through the performance at these sites to ensure we're not trying to raise the bar because we can but to try to be

a bit more predictive, sensitive to the lower level issues so that we in engineering terms reduce the level of the oscillation and critically damp any -- from excellence before they become large challenges to the safety and operation. that's very hard in an industry that's obviously doing very, very well and knows it is. but the most thoughtful of them understand that this is incredible important. when these plants operate well and safely they are a superb business and a superb investment. they generate electricity which has a clear and inex trickable link to the prosperity not just of this country but to the world. so there's a huge demand out there. and when these are running well they really do make business sense as well as safety sense. and so our c.e.o.s tend to understand. that and their level of support allows us to continue to do the types of things that we do with their plants on a regular basis

and looking for the more predictive metrics rather than in the early days when we didn't -- as zach would tell you we didn't have to pick low-hanging fruit in the days after g.m.t.m.i. we were tripping over it. now there's much more subtle, there's much more in terms of tur and the like that we have to be sensitive. to and so that's always a challenge for us. >> so for the oil and gas industry, i was very please today hear that you were thinking of something developing standards, calling in an industry safety oversight. could you go into a little bit more detail what the industry is thinking about? how does it either look similar to or differ from what we just heard about inpo, for example? >> what we as an industry are doing is we're studying all the programs out there. we're looking at inpo, we're

looking at responsible care within the chemistry industry, we're looking at u.k. step change and safety. and we're trying to look and see what elements of these programs individually, collectively, work best for this industry. and we're looking at this in the context of everything that's going on. we have had a lot of work that's gone into improving equipment operations and safety since the incident. and so there's been a lot of movement. in addition to that we have the existing standards and certification framework. but at the same time not knowing what the ultimate investigation is going to reveal as to the root cause analysis, as well as what the regulations are going to look like in the end. so what we're doing is bringing together the companies and fostering the discussion to make sure that we're considering all the positives that are out there that could apply with an understanding of what we have already in place and what may be coming out in the future related to the incident and regulations so that we're building and crafting the best possible program possible.

that said, i can't say at this point what anything would look like. the idea is to integrate everybody across the board to elevate safety and performance and to make sure that we're not ignoring or creating redundancies based upon what's already out there. >> does that mean you're looking at various models like a separate entity that would be a nonprofit corporation similar to what inpo is, not necessarily what they're doing specifically because as you point out the industry is a little bit different. but you must admit, a.p.i. is an advocacy organization. and it was set up to do advocacy for the oil and gas industry. >> actually it was set up to do standards and certifications from the beginning, post world war i the industry saw a need to create some consistency among the members of the industry as to the way it works. so from the outset it was for standards and certification.

and there's a little bit of a divide there between a.p.i. to advocacy and these programs. we like to advocate that we have these programs in place because they show that we're doing good work. i can turn it over to john because i think he can really describe the robustness of these programs in how they have the independence not at the level that inpo does but that they are verified and audited to show that they have the independence. again the point we are studying all the options out there. and what we want to do is make sure that we're recognizing the uniqueness of this industry. we have the department of the interior, department of commerce, department of homeland security, e.p.a., coast guard, the bureau of ocean energy management, that we're under 24 different permits, 88 different regulatory parts, 27 statutes. so it's a bit of a challenge to really recognize what's in place, what's going to be in place, and shape a potential program around that. but i think john might be able to shed some more light on how wallace a.p.i. does have a

program that shows some levels of independence. ..

it would not impact our decision making. we license certified members and non-members. a large portion of the licensee base is are not members that operator around the world. we'll include our entire supplier chain. we are what -- the american national accreditation body. we are talking about the accreditation of the third part -- third-party certification bodies. when they come out and do our audits, we are audited twice a year frankly, they come out and verify that we have mechanisms in place and our decision making is third-party and

objectives. they look at the records, our decision making, are certification decisions. those are the other things. frankly, we also cancel our members all the time. we have licensees that are not doing a good job. we have to cancel because they are not performing. we go out and do an audit and they are not up to speed, we either have to cancel or suspend their license. those are the areas of how we established the independence from, let's say, the advocacy aside and this challenge to keep -- is separate and the fact of the way we operate. >> can you say a little bit more about the accountability and enforcement? you suspend licenses, what does that actually mean?

>> for example, we are talking about the manufacturers that supply. if they provide a license, we will give them a license to manufacture equipment and stamp are cert mark on the side of that equipment. that essentially tells the buyer that to this manufacturer is approved by api. when the manufacturer of is that logo on the equipment, the manufacturer has been given a licence when they determine they have manufactured in that piece of equipment in accordance with the standards. when we go back and got it and do our routine audits on an annual or every two or three years, depending on their

status, if we go through our , if we uncover that they are no longer compliant with our standards, it is the amounts -- we will then send those reports and that recommendation back to staff internally. our group of all internal experts, standard and certification experts, make a decision on whether to suspend or cancel the license from the manufacturer. based on the severity and the amounts, it may lead to either a suspension or an immediate cancellation. >> that is one thing, which is technical equipment. human performance and operational performance and safety culture is completely a different thing.

>> when we do the audits, it is a two-phase audit in most cases. it is a quality management system audits. it includes the specification and the manufacturing capability audit. they typically go into personal training, experience, education, those kinds of things. it does not necessarily address health and safety and environmental spread there are other standards for those kinds of things. we do provide those kinds of cert services as well. we are a fully accredited certification body where we do those kinds of things, the things that are compliance audits. you are right. there are differences between the various technical specification type of audit and the things that you are

discussing here as well. >> i just have one more question. one difference that i can see between these a culture of deepwater drilling rigs would complex equipment, as 20 or 40 different contractors doing different things, how do you maintain a safety culture between that and a nuclear power plants, where the nuclear power plant is in operating conditions? there are far more complex arrangements between the contractors on the platform. >> i think that was discussed earlier. in the last panel, it was mentioned. a lot of that has been done voluntarily.

most companies have safety and environmental plans in place. a lot of drillers have a safety case in a place. the joint industry task force has recommended that it be made mandatory and that is moving forward now. what we have is an expectation that the interior department's is going to release regulations. we have also recommended that they put them together. we will be looking at a document from both -- that both parties would sign that fits into all the critical factors. we're talking about well- designed, identification of hazards, court pressure, casing designed, well execution, risk assessment, management structure, responsibilities and accountabilities, management chains. personnel management,

competency, training, certification requirements. that is also going to be implemented by the interior. that is something that the industry came as a whole together and is working on the guidelines of how you -- on how you create that document. everybody working together understands what the ideological risks are, what the risks are around the well bore, the accountability process is. all that will be in place. there was also discussion earlier about the recommended practice on its safety and environmental management practices. we put that in place in 1993. my understanding is that most operators have those programs in place and are using the document as a guide. up till now, we have had the

industry following that. those types of prophecies have been in place through the standard we created. -- process these -- processes have been in place to the standard we created. we're trying to look at all this. >> thank you. >> thank you for being here. regulation with the 40 minutes. i noticed that you did not use the phrase "interests of regulation." i gather that you do think that whatever happens, stronger regulation is going to be necessary. is that right? >> i believe that we are seeing changes already by the regulators. it is already occurring. the industry supports that. we have concerns about making sure that the agencies are fully funded. it is key that we have the

inspectors and the people that can carry out the duties of the agencies. >> assuming that is the case, you support stronger oversight? >> we support effective oversight. >> as the standards and in light of the deep water rise and incident -- deepwater horizon incident, what lessons have you drawn from that for your safety standards? do you think they were not adequate? can you comment on that? >> we do have to wait to see what the ultimate root cause analysis shows. at the same time, they are looking at this through an open glen's where -- open lens where we understand that the

regulations have a certain degree of flexibility. some of those include the requirements for to barriers in the wellborn so that you have a requirement in place that you have multiple layers of redundancy so that hydrocarbons will not escape from the well bore. there are more requirements related to testing and those types of specific requirements. they have come together and said, these are the kinds of things that makes sense across the board. these recommendations are in a place -- are in place. it has provided an opportunity to really look and see where there might be? -- where there might be? gaps. >> do you believe that the response technology has failed to keep pace with the drilling

technology? >> that is another area where we're still learning a lot. a lot of the people involved in the response are still involved in it. will we get together, we really need those experts at the table to engage in a dialogue to find out what they face in the trenches in dealing with the response. i think the administration came out with some good news after the spill was capt terms of the amount that has been captured or evaporated or biodegraded. but we see that there are areas where we need to look to make improvement. we need to look at planning. we need to make sure that we have the best plan in place. the government has done a lot in terms of streamlining the way it can respond and it can deploy a lot of the public and private assets. there were some questions about that. the government is trying to look on the part -- work on the processes. the technology, we have a lot to

learn about dispersants, skimmers, boomers. the research and development has to continue. we have to look at the lessons learned as we move forward. >> if history is to be a guide, the next incident, hopefully it does not happen, but if it does, it will be very different from this one. i assume you are taking that into account and you -- and your current review of standards and regulations, of operating procedures. for example, what about the arctic? >> when these task forces get together, they are not isolated. we have been engaged in a lot of research activity in terms of spill response an arctic conditions. we have been working on it on an international level.

the task force's immediately are looking at the gulf, but we have a lot of members who are arctic experts and deal primarily with offshore alaska. this is on the table. when you are looking our response capabilities, i am confident that we already have an enhanced system in place in the gulf. a lot of that is because we have delayed capped and we will be able to use those resources and see them deployed and available for the industry. the first leg is prevention. we are doing a lot of work on prevention. the others are response and mitigation. we are working on all three of the legs in terms of being able to prevent, intervened, and mitigate the ability of that

week to continue and responding. we are looking at them all. there is a pre tremendous some of progress on prevention. >> are you familiar with the findings of the baker commission? >> to some degree. i have not worked on the refining side. >> just generally, are there some lessons that could be drawn from the bigger commission work that would be instructive either for this commission or lessons learned that should have been taken away by the industry? >> i would have to talk to some of the folks that have been more involved than that. we have come out with standards. the process is moving in a similar fashion. fatigue standards, we came out with a document on where you place portable buildings, things like that. the process is very similar in

how we are doing an evaluation of what is in place to make improvements. that is similar, but in terms of the specifics of what happened there, i would have to get back to my staff. >> i am not an expert to -- an expert on the baker results either, but they have to go through a five-year review process that they undergo a revision or a republication of a new version of the standard because the committee saw changes that need to be made, or the standards remain valid, they reaffirmed them. if it has outlived its usefulness, -- all of these standards have to go through this process. hopefully, it is applicable to

the current operations. >> we will extend for 10 minutes. >> i have a question for both inpo and api. in your certifications of nuclear power plant or industry practices, is there any public reporting more transport care -- transparency requirements? how will the public be informed about what the performance is of either of your operations? is there an element in your programs? >> there is not in the inpo side. but there are in the regulatory side. we believe that the candor and

the openness that is required when we are dealing with the folks at operating and maintaining these plants demands that we have that level of confidentiality and we have continued to pursue that. it does work for us in our model. >> thank you. >> in terms of our monogram program, we will provide -- we have a web site that is publicly available that lists those companies that are either newly licensed or suspended or canceled. we will identify exactly to those companies are. we are looking into seeing whether we could provide more information on what the causes of those leaders suspensions are, cancellations are, but that is readily available as it stands today. the living, breathing less, because every day it changes, in

terms of looking forward for an oversight safety program for our industry, that is what you're looking at. what kind of report ability would we make? call transparent -- the transparency issue is an important element going forward for us. >> thank you. >> i would like to ask another question about the baker commission. it indicated that -- it was indicated that after three mile island, there was a commission which issued a report to and one of the things that inpo did was to do and evaluation of all the recommendations that came out of that report. >> it is even more extensive than that. the actually established presidential permission to monitor the implementation of the recommendations. there was a second commission and 10 years later, it was that

report that he referred to. yes, there was a careful monitoring for a decade after that of the implementation of the recommendations of that commission by a formally panels presidential commission. >> did api do a similar analysis of the baker commission's review of the incident at the bp texas city refinery? >> we did. we did come out with two new standards based upon that. >> can you supply s with a copy -- can you supply us with a copy of that evaluation? >> yes. >> second, did you have a follow-up process similar to the one that has been described as its three mile island to see what happened subsequently? >> i think we have -- once again, i am pleading a little

bit of ignorance here. we have committees in place to work on those issues to continue to engage in dialogue. i would have to go back and get more information on that. i am pretty sure that is true. >> we will include that in our report. >> would you include in that evaluation, i see that bp subsequently paid a fine of $50 million for failure to abate stemming from the company's failure to live up to the settlement agreement after that texas city refinery and there have been at 278 failure to update the alleged violations issued to bp. do you monitor individual industry performance against the baker commission recommendations? >> we do not. >> i would like to use a scale

of 0-10 spread on a scale of 0- 10, you said that api is studying the inpo models. where would you say you are in terms of zero been no action at to develop a plan and 10 being the full implementation? where is your study? where are you on that scale? >> can we talk about the upcoming football season or something? i would say that we are in the 5-6 range at this point. what has happened is immediately after the incident, we look to see how we can make the operational and equipment improvement. we engage in discussions among

our executives about where we might need to go with such a program. i would say about five or six grains. >> where do you think you'll be in a couple of months? that is an important time frame for us. that is what we will start putting together our final reporting recommendations. >> i think it is hard for us to give a hard deadline. we really want to seat -- a >> i am not asking for a deadline. in 60 days, do you think he will be at seven or eight? what is the pace of your progress? >> i am hopeful that we would be at about a seven or eight. >> do you think about your standard program that you are currently utilizing is a strong,

good model for a peer review system? >> i think it involves a lot of peer review. you are bringing in members and operators, you are bringing in all the players spread third- party engineering groups, consultants, classification societies. it has a high level of pure review. -- peer review. it is inherent in the system as it exists. >> get the reviewer's find some serious safety weakness during their review of a particular rate -- rig, what did they do with that information? what do you think you might be considering as additions or alternatives to what you are currently doing with the information? >> i am referring to the development of the document industry views. when the industry comes together

to create the practices and create specifications, that is where we have the peer review. we're not out there analyzing what individual operators are doing. we are not in position to regulate. we defer to the interior department and all the other agencies that are involved. >> mr. riley uses a term " defense in depth" which means that you don't just rely on one entity. you have multiple entities in the individual operator's and the industry as a whole as well as a governmental regulators. when you give yourself a rating of 5-6, were you talking about to get to the establishment of the standards? or on a scale that has as 10, implementation of a full-scale

program similar to the fact that inpo had? >> i am talking about the consideration of a program. >> you can anticipate that in about 60 days, you will get a request for a report card. >> mr. chairman, if i might -- mr. ellis, when you tell us that you have 26 members, i was going to ask how many members -- how many prospective members or people that are operating better not members? after you told me that in order to get insurance, you had to be a member. i realize that you had 100% participation among nuclear operators. that is a tremendous leverage point, shall we say. i was trying to make the jump between something like inpo to

petroleum industry to offshore drilling operators and saying -- and seeing how that might work work. you probably have all kinds of companies that insure at many different levels. the idea that you could possibly have a system where insurance was dependent upon certification by an organization, i cannot imagine how that could possibly work. if you would not have that leverage point in terms of getting people to participate voluntarily and hold themselves accountable to the standards and be willing to have the kind of intrusive evaluation, it is hard for me to imagining meaningful way to get the kind of voluntary enforcement that happens. given the nature of your

industry. given the variety of operating conditions that your companies have to operate in. am i reading reality about the same way you are? >> you are right on. that is why we are looking at all the different models out there. they have the same issues related to a large number of chemical facilities and a large number of insurers. it is a different type of program. they have shown success and evaluating the incident -- incident rates to make improvement across the industry. they are auditing against performance without having a leveraging tool like that. these programs have shown to be effective in raising the bar. we have a lot of factors and challenges ahead of us. we are looking at all of them.

there are a lot that inpo does that could work. we have to figure out what will work best for our industry. >> thank you very much, a gentleman. another excellent panel rated very informative. >> thank you, sir. >> we will take a short break for about five minutes the next period will be a public comment period. we have around 15 public commager's. individuals who will be participating, we ask you to come towards the front of the room. we have staff that will guide you to your position at the table. we will be reconvening in about five minutes.

>> this hearing by the national commission looking into the oil spill in the gulf of mexico and offshore oil drilling, expected to continue in about five minutes. this is one of several hearing so we have covered this summer. a similar hearing is also taking place in houston. it continues today and all week, live on c-span2. you can find all of our spill at c- this bill add span.org/oilspill. election results are still coming in. including alaska. here is an update from a reporter.

> >> it is tough to call. alaska is a little slower than the other states. places where people can only get there by boat or plane. we are waiting for the results to come in. we are waiting for absentee ballots to be counted. that could take up to two weeks. there are about 2000 votes between rakowski and joe miller. he is leading by about 2000 votes. somewhere between 7016 thousand, maybe that would make up the

difference. maybe it won't. >> no one saw this coming. not a single poll showed that joe miller was in striking distance. what happened? >> absolutely. no one saw this coming. there were two public polls that came out in the last -- in this campaign. one of them showed miller with 11 points. even then, people kind of raise their eyebrows. the other two polls showed miller training -- trailing her by 20 or 30 points. people are trying to read the tea leaves this morning and figure out what happens. 130,000 voters voted for this measure which is a notification

for views on abortion. a huge turnout. more people voted for or against this than in the senate race. >> outside of that, in addition to that ballot measure, what about the actual monetary support of the tea party? how much of a difference was that? >> for miller's campaign, it was instrumental. he does not have a lot of money. spentea party expresse about 580,000 and advertising on behalf of miller. i would say they held joe miller out a lot. >> does this raise -- let's move forward. assuming there is an of said here and joe miller wins this race in alaska, what sort of national implications does that have for the tea party?

-- this race's came out of nowhere. she is a known name in alaska. i think we're looking at the fourth perfect candidate that has won a primary with major t party backing. >> we are not there yet. there are 2000 votes separating the candidates. 99% or one under% of the votes are in. how would the recount happen if indeed they had a recount? >> if there was a recount -- for a recount to happen, it has to be within half a percentage point. is within half a percentage point of miller, she can ask for a recount on the

state would foot the bill. it will be a while before we can get to that point. it will take a good two weeks for the final absentee ballots, military ballads to come in. >> she is covering the alaska and republican senate race. she you can read her article today -- you can read article today. thank you for joining us. >> you can check our website for the latest updates. we are back live at this hearing and the national commission on the deep water rise an oil spill. the associated press writing that at this hearing, the head of the agency overseeing offshore or drilling at the time of the dps bill says she deeply regrets that the accident occurred when she was in charge. the comment on the first from her since she resigned under pressure from her position in may. she headed the mms for 10 months. at this meeting expected to get

underway shortly would public comment. -- which is a public comment. -- with public comment.

>> this commission meeting, the national commission looking into the oil spill in the gulf of mexico expected to begin again sharply with hearing from the public. -- shortly. we have dozens of hours on the spill, from protest, a town hall meetings, links to other related web pages. that is at it c- span.org/oilspill.

>> one minute and 30 seconds. we do want to make sure that everybody has an opportunity to speak and get their voice heard. please keep to the time period it.

>> thank you very much, chris. i am looking at the list of all the people up who are going to be -- there we are. i am not certain that this list reflects the order in which you are appearing. please give your name and organization that you represent and present your statement. thank you very much for contributing to our understanding today. >> members of the commission, i am senior staff at a national consumer advocacy organization.

we have already submitted written comments. we urge the commission to recommend the immediate shutdown of the bp atlantic facility until it is deemed safe. we would like to bring to your attention -- until its problems are fixed, it is a ticking time bomb. it is an accident waiting to happen. i want -- this is akin to the bigger commission. -- the baker commission. this is a company wide problem. i would like to discuss bp.

bait -- bp and branches, one of the world's deepest oil and gas facilities in a production without proper documentation. an internal e-mail acknowledged the system could lead to catastrophic operator errors. there was a lot talked-about -- a lot talked about research analysis. you cannot do an adequate program unless you know what your facility looks like. the bp atlantis facility is currently operating without this critical period they have known

about these problems for more than a year. 19 members of congress demanded it. 34 members of congress for the immediate shutdown of this facility until proven safe. bp and a disregard and their need to maintain proper engineering documents was a cause of texas city refinery explosions break there is also evidence that it is one of the evidence of the ndp a deepwater horizon explosion. we urge the commission to include whether bp has provided all engineering documents for the deepwater horizon as well as all of its operating facility in the gulf of mexico. there are the least 2 million

gallons in the gulf of mexico. there are at least 334 reports of health issues. we urge the commission to make the use of dispersants part of its investigation. thank you. >> thank you, sir. >> chairman, commissioners, i am when the environmental organization greenpeace. in a report released earlier this month, the administration said that the oil has been evaporated or recovered or dispersed. carol browner told us that the vast majority of the oil has gone. the head of noaa -- even this

report acknowledged that there is no more of a quarter of the oil has been recovered. a bit more had evaporated, leaving three or 4 million barrels still in the gulf. the equivalent of more than 10 exxon valdez spilled. the oil is still there. it is still causing problems, likely to be serious and persistent. we know the gulf will be feeling the effects of this long after it disappears from the human eye. the well has been capped, but we must redouble efforts.

this eat up a lot of options. the impact -- fish stock is another huge concern. of further concern is the impact of -- well has been found in plankton, which quickly moves up the food chain. cold water wreaths -- reefs -- very little exploration has been done to investigate the help of the ecosystem. many questions that still need answers. what is clear at this point, where we have offshore drilling, we have a risk of serious accident.

ecologically or economically. greenpeace urges you to recommend the ban on offshore drilling. this disaster is revealed -- in the treacherous arctic, a blowout cannot be completed in the same as drilling season can cause oil gushing at least until next spring. it is a nightmare scenario for which they lack the set capacity -- the capacity to respond. we need is since year-end comprehensive effort to shift away from fossil fuels to clean renewable energy sources as quickly as possible. thank you. >> thank you very much, sir. >> thank you, members of the commission for the opportunity

to comment at today's important hearing. i am a policy manager with ocean conservancy. many speakers today have addressed the importance improvement to regulatory and statutory regime governing offshore oil and gas development, many of which potion conservancy supports. i would like to take this opportunity to place the event of the last several months in a larger context the devastating impact shows us why healthy oceans matter. not only for fish and marine wildlife, but for coastal economies. unfortunately, it sometimes takes events like this as a wake-up call to the nation. in this case, that wake-up call is that the time has come to reform our overall approach to managing our oceans. our country does not have to devise policy to guide management and the use of oceans

and intelligently. we lacked coordination among agencies. in this effort to avoid user conflicts and ecosystem degradation, president obama signed an executive order adopting the enter agency task force report that named coastal and marine special planning one of the nine priority objection -- objectives. coastal and marine special planning will allow for better coordination between agencies, stakeholders, the state, federal governments, as well as increased public input into decision making. by planning comprehensively and involving each party, we can ensure that managers carefully consider the reduced risks of adverse impacts of quilt -- of gas and oil activities, other ocean it uses, and ecosystem resilience. having in place a plan and an established agreement on

management goals can also help in an emergency such as hurricanes and oil disasters. the process would provide a baseline scientific data that would identify future use of management problems and promote smarter, more sustainable use this. as an example, it could be useful during the aftermath of a disaster such as the bp disaster by providing initial information on ecosystems that helps identify important habitats and functions and outlining how government agencies, the scientific community, and takeovers will respond. our response to this catastrophe should be broad enough to protect, restore, and manage our oceans and post better so that such a disaster does not happen again. we strongly advocate that the commission recommends pursuing special planning in order to prevent or mitigate the adverse impact of offshore drilling. >> thank you very much.

>> my name is dan frazier and i am from the national laboratory. at the very first commission meeting, i watched and bill riley and your suggestion to bring in inpo and it was absolutely brilliant. i think you're on the right track. but there is one thing that inpo had, however, that the oil industry does not have. i want to mention that. if you go back prior to inpo, it was a very comparable to the oil industry today, in the nuclear industry, everything was fine. yes, we had problems, but we could fix them. we understand the major safety

issues and everything is working fine. about that period of time, in 1975, there was a brilliant watershed study that took place. that at the high mark for the analysis, a quantitative risk analysis, that acyl lee said the high bar. a few make -- a few years later, there was a disaster, three mile island. as a result of this disaster and a terrific steady we had in place, we were able to determine a realistic set of regulations. this is what powered the regulation industry and gave rise to inpo. one of the things we it -- that is missing is there is no such systematic study that has been done to assess the comprehensive risk from a systematic

perspective. that is what i would like to advocate for. you can see it in the discussions that took place just a few minutes ago, where some of the folks were looking for the rest. we will see what the risk, what the root cause was and we will fix that. in need to be more pro-active than that. we need a systematic study. something comparable, something that takes into account the added complexity it that the oil industry has. issues like the number of subcontractors that are being managed. what i would like to suggest is that the national laboratory have the capability to do this kind of analysis. i would hope that in your final assessment, that you'll end up recommending this type of analysis to be done to help guide whatever future

regulators, future regulating commissions come into place. this is a key element. >> i am the vice-president of policy at the institute for 21st century energy, an affiliate of the united states chamber of commerce. we are pleased to paraphrase the comments that we have already submitted. many options have been proposed in the public arena today, including legislation that would have serious collateral consequences, considering that the oil and gas industry employs more than 9 million americans. we believe there is a bright line between increasing safety, protecting public health, and safeguarding the environment and creating a regulatory environment that oil and gas

companies that operate in the united states will take their business elsewhere. on the other. ladies and gentlemen, you have been given a very broad charge from the president and we would certainly ask that you be very conscious of unintended consequences. we especially ask that you look at the potential impact on economic growth in the region of the gulf and in california and in the nation as a whole. more important, look at the impact to security. we do not want to shift further reliance on imported oil. i want to make a few notes of proposals that have been made and ask you to be especially conscious of them. we urge you to recommend against the creation of any unnecessary regulatory