government panels look into the gulf of mexico oil spill. the white house appointed national commission will hear on oil drilling in the gulf. then the coast guard question a bp executive about the drilling operation. later, a pentagon update on u.s. military operations in pakistan and response to the flooding. president obama created a commission on how the spill happened. this is 1.5 hours. >> good morning, everybody, and welcome to the second meeting of the national committing on the bp deepwater horizon oil spill.

i am calling this meeting to order. i am the designated federal officials for this commission. also serve as the deputies secretary -- assistant secretary of the department of energy. i will be helping to guide us through the hearing today. before we proceed, i like to familiarize everyone but the safety features of this building. to your left or my left in your right in the back of the room you will see exits, emergency exits that we will be using in case of emergency. if there is an emergency, please file, only to one of these as is. there is all all way to a stairway that will take you outside the building and to safety. that is in case of an emergency. the president establish this bipartisan commission to examine the root causes of that bp deepwater horizon oil disaster and provide recommendations on how we can mitigate their

impact should they occur. ohe president appointed tw commissioners. do the president of the natural resources council, the president of the university of maryland's center for environmental science, terrett garcia, ed ed sent -- executive vice president at the national geographic sat rigid society. and the chancellor of the university of alaska anchorage.

this commission is conducting its work with the advisory committee act which sets a high standard for openness and transparency. today's hearings are being held in this public forum and are being broadcast live by studio feet. before i handed over to our distinguished cochairs, i would like to buy a quick summary of today's events. our first panelists will cover the history and an expansion of offshore drilling and we will hear from panelists from shell exploration and production and the world wide like -- the world wildlife fund. then we will cover existing regulatory structure and consulting roles but panelist from stanford university, from the council on in our mental quality, and the national oceanic and atmospheric association. will break for lunch and then we will reconvene with the panel on meeting the regulatory challenges. it will feature panels from the university of houston and

directors from the former minerals management service. our final panel will cover culture and managing risk and will feature panels from the institute for nuclear power operations and the allied industrial and service workers international union. we will conclude with public comments at 4:30 p.m. that will stop at 5:25 p.m. in the members of the public wishing to submit a written comment to the commission may do so by the website. again that is at a website. we have a very busy day today and we have got lots of panelists that the commission is interested in hearing from. we will last all the panelists to please keep your time limits. there will be a timekeeper right here in front of you who will help to keep you on track. and did we dedicate as much time

as possible and appropriate to questioning -- the question and answer period which will be run by our cochairs. at this point man, a light hand this over to our cochairs, bob graham and william reilly. >> thank you very much, chris. last month we began our journey in new orleans. there we learned firsthand from the people of the call about the impact the spill was taking on their lives. this week we are seeking to understand the root causes of the april 20 at deepwater horizon explosion and the critical question of whether our regulatory system and business practices are adequate. we will be hearing from a distinguished group from past, and present government officials as well as experts from private industry, academia, and nonprofit organizations. deep water 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 gold production from altered deep wells, well's deeper than 5,000 feet, climbed from 1% to 32%. but altman played deep water drilling has 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 for or ignored by both government and industry. we want to know why. it is clear that the move could

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, to industry, to the white house, congress, to republicans, to democrats. we should be clear -- this disaster represents an enormous and shared failure of public policy. we are holding all responsible polyps -- 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 of this policy collapse before

we incredibly prescribe new direction for the future? i think our speakers in advance for taking the time to contribute to our effort to understand what went wrong and what can we learn from it. my colleague and co-chair, mr. bill reilly. >> good morning. the consequences play out over a long time, often in unexpected ways. some issues undoubtably will turn out to be less severe than we had feared, and others may be worse than we had imagined. even if it is too soon to spell out the full impact on the gulf, 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 and tourism, fishing, oil revenues, and other elements of the gulf and economy. the psychological impact on the people in the region already traumatized by katrina and other pressures has been notable, as we saw and heard in our visits to the gulf. the continuing moratorium on deepwater drilling is taking its toll as we heard repeatedly in new orleans. before april, many of us were under the impression that the risk of an accident like this were small. that view has been shattered. what we do not yet know is whether the accident was the result of one company's missteps, bad judgment and human

error in management of complex drilling technology, or whether it was caused by something more systemic in the way that the country and industry has sought to cap -- tap these deep water oil well reserves. these impacts have been profound. we do know that we must seriously rethink how we regulate offshore drilling and how the industry meets its safety responsibilities. it would seem in everyone's interest when dealing -- when drilling that every operation is run in accordance with world- class standards with agreed upon best practices. the government has to take a leak in ensuring this. the industry has a critical part to play as well. today we will hear about an industry sponsored approach that has been used effectively with great success in the nuclear power industry, an important

safely complement to, not a substitute for, if government oversight and regulation. a kind of defense in depth. the president has charts are commission with determining the rig causes of this accident -- has charged our commission with determining the root causes of this accident. the industry and its culture, the technology and its adequacy, and other factors. we're talking to extract the message from this spill and develop policies to guide the long-term future of offshore drilling, not just in the gulf, but elsewhere in u.s. waters. as one of the staff papers we are releasing today makes clear, the future of significant oil recovery is in the deep waters. we have all better figure out how to do it, because that is where the hydrocarbons are and that is where the industry is headed.

will make recommendations to the president and the american people that will make a disaster like this one are less likely to occur again. and should something happen for whatever reason, that we're better prepared and have a greatly improved containment and response capability. it is also vital to looked at the region's environment. the gulf has suffered over tickets for policies -- for decades. the result along with the channels made for oil and gas development has been an alarming loss of wetlands to protect shorelines, but for the effect of storms, serve as nurseries for economically important fisheries, and provide recommendations -- recreation and enjoyment for residents and visitors alike. they are as important to the gulf shore recovery, the

economy included, as the region's other resources, and this commission will consider restoration's priority for the first time in my career in conservation. there is a realistic prospect of serious funding for restoration of the marshes of the gulf. i hope that we can be helpful in ensuring that they are protected. the commission will be taking up all these topics here and in subsequent hearings. today our focus is primarily on the policies cover regulatory and otherwise, if needed to prevent future disasters. we thank you. >> thank you, mr. riley. our first panel is on the history and expansion of offshore drilling. we're fortunate to have three distinguished witnesses. our first presentation will be by mr. j. robinson west, ceo of

pfc energy. >> good morning. we advised many of the world's leading oil and gas companies on strategy and market solutions for the industry. we have been retained by bp on certain matters relating to the macondo spill and therefore i cannot comment on that at all. the 1981-1983, i served as the assistant secretary of the interior with responsibility for u.s. offshore oil leasing and policy. i developed a schedule and manage the $14 billion per year program which was the largest nonfinancial auction on earth that that point. during my time in interior, the program was surrounded by bitter controversy. i was confronted by an unloving critics and uncritical lovers. it critical lubbers urged to step open up all federal waters to leasing and virtually give

the leases to the industry with little or no regulation. that struck me then and now as a very bad as illegal idea. likewise the unloving critics demanded that we prove a negative, that there was no risk of any possible damage from offshore oil and gas operations. if the only way to satisfy them would have been to shut the program down. that struck me as a really bad idea. the challenge then as now was to define constructed compromises. on national governments including the u.s. have a responsibility to review their offshore hydrocarbon resources in a number of different ways that require compromise. they must consider the amount of oil and gas to provide the nation's energy security, the terms under which they can open up these resources, how to decide which companies can participate based on nationality, if technical capability, and other criteria, the potential revenues to the state from least bonuses and other sharing, appropriate safety and operating standards including worker and

environmental safety, and the employment and economic development impact to the domestic economy as a whole. many do not appreciate the scale of the industry in the u.s. millions of high paying export- generating jobs are at stake. one small example is the offshore oil oil and gas industry which uses helicopters after the pentagon. these helicopters are now built in louisiana or mississippi, if but in states like pennsylvania and connecticut. there are hundreds of such examples. in total, it provides directly and indirectly 9 million full- time jobs. every country faced with these various policy issues -- the net benefits are simply too large to be discounted. this is true even in countries we think of us have a higher levels of informal awareness and being less pro-business than the

united states. for example, denmark, famous for its bicycles and windmills, produces the equivalent of 127% of its domestic energy needs by aggressively developing offshore oil and gas. if brazil, with the repetition of running sugar cane at all, produces at the equivalent of 45% of its energy needs and is planning a dramatic increases from the deep water. offshore oil and gas includes proximity to shore as well as near active fishing grounds. before this, they had an exemplary safety record. between 1971-2010, a total of 24.7 billion barrels of oil were produced from u.s. waters. at the same time, oil spills were 1,715 barrels. this is an average of 44 barrels per year, one at every 14 million barrels produced.

most oil spills in the u.s. and global waters come from accidents involving tankers, pipelines, and loading facilities. you might say the challenges are even greater sense that humans can walk on the moon but not at 5,000 feet of water. neither are offshore regulations or cleaning up after accidents have kept pace with our ability to find and produce oil and gas. we have gone from exploiting and water depths of 1,500 feet to over 5,000 feet and in some cases over 10,000 feet by 2010. drilling may go an additional 20,000 feet below the mundelein. this is an extraordinary accomplishments, requiring some of the largest commitments of capital and technology of any industry on earth. each is a massive undertaking. cleanup technologies did not

claim -- keep up. the industry did not invest in them because they were not commercial. government did not sufficiently to imagine the potential risk to make it necessary investment or require the industry to invest. the macondo blowout has been a significant and expensive learning experience to begin to improve our containment and clean-up capabilities. the deepwater coll holds the largest and most productive oil resources in the u.s., producing about 1.8 billion barrels of oil from the gulf of mexico, about 30% of our domestic production. in comparison, we import about 1 million barrels of oil from saudi arabia. we produce more oil in the gulf of mexico than we import from all persian gulf sources combined. in the short term, ever barrel of oil we do not produce domestically must be imported. it is quite likely that the marginal would be producing

countries like mexico or others. the economic, political, and moral conclusion is that we must use the resources of the gulf of mexico and use them responsibly. this means the extreme caution for stopping is not an option. on that second-hand -- on the other hand, this is not good enough. i repeat that the incident is absolutely unacceptable. never again can we allow such a powerful flow to flow for so long. we must prevent the accidents and contain them and clean up after them. at and specifically been asked to comment on the comparisons between u.s. and air national regulatory regimes. this is punctuated by track to it -- tragic accident beyond the imagination of the industry is regulated. each is followed by a commission and a report, and then they

introduce better rules and practices. the macondo blowout has been history's largest such event in terms of the volume of oil spill, the level of media attention, the scale of the cleanup effort, and the financial responsibilities assumed by the operating company. this is not the first tragic offshore accident. . three defining events. the first in the north sea, blowout preventers were mandated on all well. in 1980, of fire in the norwegian sector killed 123 people. in 1988, one platform explosion in the u.k. sector killed 167 people and triggered what were until the end record insurance claims. in canada, 84 deaths, 84 people died.

most recently in 2009, an australian -- it took five tribes more than 72 days to kill the well. no country chose to stop offshore activity and neither should the u.s.. just last week, the canadian senate committee concluded there was no cause to halt offshore drilling in canada. the fundamental challenge all regulators faces the potential mismatch between paris dynamic business process these and static regulatory. there is a trade-off between production and safety. the offshore industry progresses and meets the growing global command for oil off by constantly advancing the barriers of what is possible and said. a static regulatory system cannot keep up in this dynamic environment. static thomas prescriptive regulations resulting static, perspective safety practices. what we need is the same

dynamic. i'm the best companies use to ensure quality. if some key features of this are everyone responsible for safe operation. safety is cultural, a way of thinking through and anticipating potential problems that affect all activity. safety is about active performance rather than defensive compliance. responsibility lies in operators and their contractors, supervised and audited rather than inspected and improve. the goal is not good enough but zero failures. no accidents, and the fatalities, and a spills. safety is encompasses not only personal but the entire process, including in formal safety. with design, implement, and all that a four-man management systems read and then the rules. there is active collaboration, trucks, and sharing between operators, contractors, employers, and regulators. was the mistakes and near misses as opportunities to learn

rather than an occasion to think of a guilty or even cover up systemic weaknesses. we have greater transparency between different operators, contractors, and regulators to accelerate that kind of warning. organizational structures and motivations promotes safety rather than undermining it. we have seamless unified system that covers operators and contractors, not marine systems for votes -- for boats and different ones for platforms, and not a patchwork of rules that can be played off of each other. these are purchased of flexibly and accommodate changing situation. and the process of continuing improvement addressing new risks which always arise from new technology and from adapting older installations to new things that were not imagined when they were first to sign. i am not advocating self regulation. making operators actively

responsible under the vigilance supervision of a well-designed, while resourced regulatory system is not the same thing as just letting the industry regulate itself. if a worker was confident in time to supervision by regulators to understand the risks of the operation and can properly evaluate the mitigation the operators proposed. you have received the report describing offshore safety regulation in 12 foreign countries. the differences are arrive from different goals and constraints. how efficient the contras want to be, how capable the regulators, how much capacity did they have to write regulations and enforce regulations, how what tended to they want to be on the oil industry -- different countries all into three groups. prescriptive, which is how we would characterize the u.s. system, self regulation in which countries -- companies largely regulate themselves, an approach

is based on the safeties first introduced in the u.k. and norway and canada. i would like to focus on the united kingdom. i chose them for a number of reasons. the north sea is a major offshore place of critical importance to that nation's economy. the u.k. used to have a primarily prescriptive system like ours but 20 years ago in response to the accident, radically transformed it to incorporate the kind of principles i have let out. the british system had been successful in controlling major offshore accidents and you case system is widely admired in many countries, modeling their approach after it. some history before the accident. the approach of the government agencies was the micromanages the specifics and design procedures, new look -- removing

responsibility for the lack of safety from the operating oil company as long as they comply with government specifications. this policy simplify the task of the offshore operators who simply had to show that they have sat if -- they had satisfied the requirement. everything is permitted unless explicitly forbidden. it was not on the actual level of safety but unsatisfying regulation without seriously considering the resulting risk. these regulations were often incomplete because the reagan letter cannot always keep up with developments and expansions in the production area. therefore this process was even stifling safety innovation itself. after the inquire into the 1988 disaster, the u.k. introduce the offshore installations for safety based regulation. if before beginning operations on a project and every five years thereafter, u.k. offshore operators must file a comprehensive safety case with the board.

it must demonstrate that they have anticipated every possible accident and have emergency responses to them. they must address the role of contractors and subcontractors and consider how to keep accidents from escalating if the management systems do not work. i urge you will look seriously at this approach and consider what our regulatory system could learn from it. it is our rigorous but not adversarial system under which the industry, government, and other stakeholders have all were off successfully for close to 20 years. is essential that our government keep people of the highest quality to oversee this industry. as the former government officials, i would say that these bureaucratic responses would be a false economy. adding a more effective regulatory system or reduce the risk of a major accident but we must also plan for the worse which means reducing in -- reducing impact of any accidents should dispel up occur. if macondo taught us that we're not prepared to based -- except

a worst-case -- accept a worst- case. we must upgrade our capacity for containment and clean-up. as part -- i will move briskly. as part of the responsibility to manage our offshore resources, the federal government must ensure that we have the necessary technology to catch leaking wells quickly, and clinton containment -- contaminated water and land. this cost should be borne by the industry of which means all the valid by the consumer. we must build insurance into the cost of oil would produce offshore. we have the makings of a response system that would dramatically reduce the risk. the macondo spell has triggered extraordinary cooperation between different operator service companies and government agencies. they have learned a great deal.

we can build on this experience to create a technology if response systems that we need. >> if you could please summarize. >> the industry has made a great deal of progress on containment. much of the depredations of the gulf did not take place because of the oil industry in state waters. this is some you alluded to earlier we should be considered. and the gulf of mexico is part of global tech assistant. what we learned in the united states should be shared worldwide. operations and safety can constantly improving everywhere. >> and bank you very much. >> it is a pleasure to be here today and a pleasure to give you an overview of offshore drilling

in the gulf of mexico, and also provide an overview to you or were the challenges are and what we see is the solutions to those challenges as we go forward in deep water drilling. what i like to take away is that there is an operating environment and an arena within which we can operate and build these will safely. it is enabled by a framework of standards and procedures. it is assisted by a great faking management system and a great safety culture. it will help manage the top risk. the third thing is that there are risks of a physical nature when we look at the forces unloads involved, but they can be managed as we drill these wells. we cannot really talk about the challenges in deep water without having an understanding of what the processes involved.

we drill bit from one of three structures, to shift, semi submersibles, and then platforms where you have a combination of drilling and production from the same facility. a drillship is just a ship with a drill rig included. semi submersible is commonly rectangular or triangular. it is a mergers -- submerged for stability to the right level. and then there are production systems where you have a platform -- these of the largest in the gulf of mexico, pretty much the world, they handle production in the field below. all of these have the same common components. they all require staying put. there is a mooring system to settle drill the well. they all require a blowout prevention system to connect the will from the floor.

enables it to sets contain the pressure and -- on the pike and also the rig is installing the riser that drills the wells and cements the casing in the place. to briefly go to the process of what it takes to draw these deep water wells, it is important maintain de concept of size. this is our platform in 3,000 feet of water. the bulb attached to it is a 280 ft service bessel, approximately the size of a football field. to give you a concept of size, the more and would include the entire metropolitan area of your lens. these are large stretches. the challenge of building includes keeping the rig on location, the riser and gop

control systems, the well design itself, and then the raid. it by halftime and i probably will not, i will cover the rig and the casing, but i won a focus in on the riser and the b o p system and the well designed. you get on location, you put your begins on the seafloor to establish position, and you'd dynamically reference off of satellites for redundancy. the first thing you will pick up this 36 inch diameter pipe, at 3 feet across, and you put that assembly about 300 feet long, yellow or that to the seafloor, and you ease into this segment. inside the drill pipe is a bit with a motor to turn it. you will create a large water. and ease that down into the settlement. you want this to happen with friction to keep a hold from caving in and provide support later ron. and then you will drill.

the drill ahead with a combination of water and mud. you are anywhere around 2,000 feet at this point. once we get that drug, you will keep it open and then run the surface pipe. attached that will be a high pressure wellhead which will buy -- which will provide support. with cement that in place. we will pump some and until we see cement come out on the seafloor. we observe it through the remote operated vehicle cannons. we will then switch the water, at this place to water, and a check housetops the cement from coming in. at this point we are ready to drill so we connect to the rig. we run a marine riser 21 inches in diameter. he can truly only handle the weight of the mud, not the high pressures of the water, so there are lines and the side of it.

they are rated to the full pressure of the wellhead. we run the blowout preventers and now we're ready to drill. we will test the blowout preventers. you have a good sound foundation for that. drilling had really is the same process repeated to reach your objective to what you like to investigate. to do that, you have to determine what iraq is below. -- what rock is below. in this case, it is a hydraulic factor. we will set a much weight below that for safety and we will drill until we get pressure close to that level. we will drill until we have a 9.8.

you must run another string of pipe otherwise. you have to ensure that the pressure from your much exceeds the pressure of the oil and gas in the reservoir. at the fundamentals of primary well control. achieve that and you have the most reliable barrier in existence. we do that to determine how far we will drill ahead. if we drill hole. we pull the drill at a hole and we run and with the surface and conductor pipes, and once again the same sequence, which pumps and meant until we see it in the bottom. we have that full cemented into place. we will repeat the process as often as necessary until i reach my objective. in the gulf of mexico, the margin between the strength of the rock and the fluid pressure is at the beginning, so we have to run a lot of street. it is not uncommon to start the whole that is 3 feet in diameter and end up with the production hold that goes

through a 7 inch pipe. there is a man on the bottom of the deck for scale. they have to be held and supported, and there is the riser that attaches to the top. you have to hold it all intention. you have to hold it up so that it stay straight to drill. you have to manage the way. the riser is encased in four feet of fun. how you create phone that countermand -- standard did. the deep pressures. they operate over range of water debts and essentially build or riser system in 12,000 feet of water, but when it is in the water, it is neutral wait.

subsea access is an issue for function testing and maintenance. i'm sure you've seen the capability that they have in the macondo recovery effort. the other challenge is blowout preventer control. you cannot simply took a line and pressure up on it. the response time is tuzla. this is a system that consists of fiber optics sending a signal down to the stack. electricity control the valves which releases the pressure on the system. the whole system is capable of response to go from operations totaled disconnect system -- sequence in two minutes or less. and then the status disconnected so it is in a tremendous amount of capability. the systems are well designed. i've already mentioned that challenges between fluid pressures.

at its origin, the goal of mexico is similar to the great salt lake. tremendous deposits of salt were laid at the bottom. 40,000 feet of salmon -- a sad and i was laid on top of it by the gulf of met -- by the mississippi river and other rivers. -- 40,000 feet of sediment was laid on top of it by the mississippi river and other rivers. here well-designed has to account for that. there are temperature changes. it is cold down there and we drill into production ranges that maybe 200 degrees or hotter. in your well-designed, you have to account for what is going to happen to the well when it goes into production. be a systems that did that very well. and then there is the transition from drilling to production. in a subsea wells in deep water, q have to remove your blow up

for dinner stacked. you have to make sure that you have adequate barriers installed at that point in the process to settle a manage the transition. the solutions that address one more those challenges are high- capacity well headings. we employ expanding casing systems in the initial design. this is a system that may run -- expanded and physically cold forced to steal to the prior casing street. you can apply service pressure in addition to the pressure from your mind as additional control to give you a greater flexibility. ofre one of the pioneers deep water. we certainly have the oldest. my field is responsible for depleted feel that dream. -- drilling. to do that, it enables me to do

that with a high group -- a high degree of safety. we deploy a real-time operating centers with a second set of eyes. would deploy rotary spherical systems that allow you to steer the bet. and then we measure all the various parameters in iraq. within minutes after drilling, a computer directly located above the system and we have information that comes back to the real-time operating system that tells you whether there is oil and gas, the process of the raw, all the various parameters for you have the capability of stopping the drill strength, to insert a probe. we have a high degree of control and a high degree of information that we can use to safely drill the well. all that has to operate within the right design parameters.

one of the fundamentals is having a good robust system of barriers and control in your operations. it is one of the most fundamental components. we have been operating since 2002 in the gulf. they require the drilling contractor that demonstrate that they have manage the risk and identify the top risk and then use a analysis to demonstrate that hazard is manage with proper barriers that are in place so that top of and does not occur. if that does not occur, we have controls that stop the escalation of that event and mitigate the consequences that are realized. barriers and designs to stop the top of events in the analysis from happening. the well control allows the fluid to stay in place until we're ready to produce that. and control is used to mitigate the impact if a top event occurs. in terms of primary well

control, the blowout preventer as a control and not a barrier. the blowout preventer could become a control as well as being a barrier earlier in the process. the best practice in designing your well with sufficient barrier to include your means of control. when you move from -- to production, if you have adequate barriers for putting barriers and the whole you just a minute. you must always have at least independent very viable barriers. other tools -- i know my time is getting short. we use automated pipe handling systems which essentially is hands free for the handling of the drill pipe. the less well we drilled was up

31,000 feet of water down 6 miles, total depth. 6 miles down, we hit a target of 50 feet. the real-time operating center, we have one and houston and new orleans that maintains a second set of eyes overseeing the operation to provide real-time storage of the data all site. is all offshore drilling the sam? no, it is not. in alaska, comparing that work in 130 feet to the gulf of mexico, the pressures are different, the rocks street is different, and it is not as challenging. if you look at a typical deepwater well-planned, you see the complexity. you drill in shallower water in alaska and a great -- a much greater margin between the mud required and the strength of the rock resulting in a different

well planned. but you need to put it altogether. indeed a great drilling contractor. the must all have a sufficient safety management system demonstrating they can manage the risk. we have our own safety management system. how well executed planned and critical risk identified. we bring that together with a bridging document. it made sure that everyone understands the roles and responsibilities and that changes are managed and total operation. >> if you could please wrapup. >> that denigrate job of keeping that concept and including it in the specifics for the well from design to barriers to what other specifics you need for the well. that document is ready for release. i encourage you to take a look at that. it is a great piece of work to help manage the rest from the

total systems base. at the end, it all comes down to health, safety, and environment. in this current environment, we as an industry have an obligation and duty to communicate the total capability we possess, and when we put everything together and we were very constructively with our contractors and regulators, it can be done safely. it enabled by tremendous technology and sustained by production, and that is the importance of that. >> thank you very much, sir. the president and ceo of the world wildlife fund. mr. roberts. >> thank you chairman, and members of the commission, and staff for the oil spill for allowing me the opportunity to talk to you today. i am president and ceo of world wildlife fund which for 50

years has sought to build a future in which people live in harmony with nature. what that means is we work on creating parks, studying species, creating smart policies, but also all around the world working with industry on sustainable practices on the extraction of commodities. we now enjoy the support of 1.3 million members in the united states, 5 million members globally, and we're the largest multinational global conservation organization in the world. we have met the needs of humanity without destroying the planet, and that is why i am so glad to be here today, to talk about what we learn from what is one of the world's great environmental disasters. the question is -- how do we -- and how we regulate and plan for oil and gas development without

destroying the places where it occurs? we support all the efforts that have gone into the response to the gulf, and as chairman reilly mentioned, the restoration of the all-important marshes all the gulf, and understand that future hearings will deal with that topic. the question that concerns us, and i think that concerns the public, -- what will change in the future as a result of the efforts of this commission? what would change so that we do not repeat this kind of disaster again? it is obvious over the long term that we will need to move away from fossil fuel-based economy, and you could not help but notice that the electric cars that decorated the lobby on the way into this hearing. in the meantime, as we continue to depend on fossil fuels in that transition, we need to make sure decisions about the

extraction of fossil fuels do not destroy the basis of our current and future economies as well. i propose two specific recommendations to the commission. one is to bring science back to the table, and the second is to implement the present executive order establishing a national policy to incorporate science, not just about oil, but also about the natural resources of the ocean and the use marie so spatial planning to balance the need of extraction with conservation act, and define those areas where we move ahead and those areas where we do not, to manage risk more honestly to avoid disasters in the future. amid talk about science for a second. i work with colleagues all

around the world and they continued to be amazed at the level of science we have in this country and argues for technology to guide decisions to look at trade offs and invent new ways of solving the problems in the world. when you compare our ability to do that with our management of the oil and gas development, it makes our management of oil and gas look antiquated at best. it is utterly dependent on what the industry tells us of what will be gained with very little knowledge of what we stand to lose. it is time to bring balance back to that equation in understanding how weak they can can meet the needs of humanity without destroying the planet. our first recommendation is to create a director of informal science shielded from the pressures of a leasing and fees that can collect data with other agencies to apply that data against environmental standards and permit regulations,

explicit and possible, and other regulations. this calls for minimizing and far more harm, allowing activity unless effective containment is possible in real- world conditions. second, we need to make sure the science we use is reliable. a small snapshot of the conditions in many of these places is insufficient and we're calling for three years of baseline data to guide decisions in these places. noaa would be the logical place to collect this data. we need to make sure science actually guys decisions across all phases of oil and glass planning, leasing, and production. noaa in consultation should outline important ecological

areas for oil and gas development prohibited or where higher protection levels should be required. we saw an example in bristol bay this past winter when the administration actually set aside bristol bay in alaska from any oil and gas development because of the value of the fisheries there. agencies like noaa and the coast guard should set a permanent restrictions and a requirement should be set to follow the recommendations followed by these agencies. the bottom line is that we need signs, we need independent science, and weaknesses -- we need science that can be applied against these permit regulations in a rigorous way. my second recommendation and central regulation --

recommendation is to make smart decisions about our future using coastal and marine special planning. it is a mouthful for saying we should map what is in the ocean and make smart decisions based on that information. if you look at the goal of the last 90 years, oil and gas development had been allowed to proceed with insufficient consideration of the many benefits the goal provides. and with obvious negative consequences, and it is time to put in place at 21st century approach, an approach that will make us let -- let us make smarter decisions about areas already developed and areas where we had a chance to get it right from the very beginning like the arctic, which is still relatively untouched. these concepts are at the heart of the president's july 19 executive order which sets the nation on a path toward establishing a more integrated approach to the ocean

integration and management. it establishes the first ocean policy and identifies coastal and marine spatial planning is the key tool to get us there. we strongly believe that oil and gas development must proceed only to its consistency with a national policy. this is not about saying, yes or no, to drilling. this is about making smart choices based on great available science and information and using the best available tools. plans developed to govern federal activities offshore should to a number thing. they should collect ecosystem data on the use and value of ecosystems, and they should at identify important ecological areas, sensitive environmental havoc that's, that should be off-limits for leasing.

we should identify areas where seasons most important for activities such as fisheries or renewable energy development to reduce conflict. and last but not least, we should bring the public in to deliver process, science-driven process, about how our oceans are managed and times that that process reveals. fortunately we are not starting from scratch. the executive order already lays the groundwork for making this happen. what does it look like and how it should be implemented. we can also learn lessons from how other countries manage their oil. there are very few countries that know as much about oil and norway, they have a plan that maps their ocean, maps the resources in their absence, and then make smart decisions based on that. that plan to raise were oil and

gas development occurs, it directs where it should not occur. that plant closes certain areas for fisheries. that plan has rerouted shipping lanes. that plan is the smart way to approach our oceans. i want to bring up some slides at this point man. i think there is a clicker there. i would give you a brief example of what this will look like in alaska. alaska has many resources and we do not know about the arctic and alaska is so vast. it is amazing that think it is part of the united states. it is one of the most spectacular places on planet earth with incredible resources and a lot of places that we still do not know what about them. on marine spatial plan alaska could map polar bear range,

whale migration, the ability to map areas where the administration has recently opened up for lease sales without knowing enough about the region in the ability to match some of the proposed oil and gas drilling in the region. there many data letters that should be part of this on minerals, but this kind of approach gives you the tools to make smart choices. not just based on one sector of oil and gas using all the great information we have already heard, but based on many sectors and many values that the ocean presents to us. i was fascinated by the previous speaker in listening about the incredible technology in drilling and how that technology is applied. this is about having the same level of sophistication about

the natural world and the things that are important to us so that we're not driving this decision is based on what the oil industry tells us can be gained. if you look at the gulf and the number of platforms and pipelines in the gulf, you can see that the call is one of those places where the ability to respond is far greater than in the arctic. when you read the news reports about the number of personnel and the number of ships, the number of resources that can be brought to bear in that response, it is a far, far different scenario then in the arctic. the arctic is one of those places for when you used marine special planning and you wonder and hand the true dynamics, what we call our response is much more present in the gulf. there are very few air strips,

the coast guard has very little presence in the arctic, and your ability to respond to any disaster is far different. it is also a place that does not have those wonderful microbes that began to consume oil in the gulf. today you can go to the >> you can pull up oil that is still there 20 years some later. for the commission's kidder -- consideration , there are a few rocks with the wheels still present. the impact from that region is still being felt. the workout population is on its way to extinction. -- the orca population is on its way to extinction.

this hearing is about making changes that the public demands in how we approach the oceans, for all the wives in the ocean. we want to ensure -- all the ocean life. the right information so we can guide gas development and protect resources that are fundamental to our economy. you have a wonderful opportunity to bring the way we approach the ocean into the 21st century. thank you very much. >> thank you. this commission has used its practice of having lead questioners who are responsible for developing questions the commission feels will bring out the necessary information. for this panel the lead?

for mr. west will be bill reilly. the lead questioner for mr. roberts will be chancellor ulmer. >> thank you. this is a question for robinson west. i attempted to go deeply into your principles and to ask you to explain the degree to which you think practices conform to your ideals. i am not sure we have been enough time. we will spend some time drilling down into mms. you were present at the creation. there were proposals to remove or distinguish more completely

the leasing and revenue collection functions by creating a new agency, like the nuclear regulatory council. do you have any he is on that? >> it makes sense for the regulatory function and safety function to be kept apart. it is a different imperatives. viewof the government's the offshore program, countries such as norway and brazil -- this is a huge part of their economy. they have highly skilled experts to look at the legal issues. they have people looking at

environmental issues. in brazil and norway there has been a tremendous focus on creating local content and the industries. the severing of these functions makes a lot of sense. >> severing them within the department of interior? >> as long as they don't get lost in the bureaucracy, you could put them in a number of places. whether they stay in the department or not is critical. there ought to be a clinical delineation. the leasing and fiscal aspect is a different world. it should be recognized as such. >> we have heard repeatedly and

there is a story about the use of the terms "my clients" been customary, which makes one wonder whether alamance would continue -- elements would continue. is that culture going to change? >> i think the whole point of the safety case is it shifts the burden and creates a challenge to the industry to demonstrate they have to think through the implications of all their actions and anticipate. the other thing they have to do is -- a vast network of companies that supports these activities. they have to be brought in as

well. i think having a constructive relationship -- the relationship did not have to be adversarial. >> with all of the complexity of technology, how can we anticipate there will be adequate trained inspectors in the federal government to oversee that? ijaz >> industry to do more than its prescribed to do. >> it shifts the burden to the company is to think it through. they have to come back to the government to explain what it is. you have to recognize this is a

world-class industry. this is one of the most sophisticated employers of technology on the earth. this is a state of the art. the level of sophistication of the industry and mms was not comparable. unless they are comparable it will be difficult to be successful. >> you heard mr. roberts. i would be interested to know whether you have reconsidered your own safety containment planning for the proposals you have made in alaska. and going beyond the current

proposal in the arctic, you consider the technology is adequate to move forward based upon what we learned? >> i feel it is. we have started to develop a system to complement the containment systems. the operating environment is different. i think is adequate to proceed. we were very concerned to -- after the exxon valdez. we wanted to make sure adequate skimmers were available in the presence where there might be spills. are they present in the arctic. >> they are managed by an oil

delivery manager. i understand our strategy. our program would bring the response with the program. it is a flotilla of vessels. it is remote. you cannot not respond using these facilities. it has to be part of your initial operation. >> what do you think of marine at spatial planning? >> >> it sounds like a good idea. >> we have heard frequently one of the principles mentioned was the need to have content communication among various players. we have heard it is anything but transparent.

ofin public or even to other companies. >> it is human nature to hope for -- don't make a comment until you understand all sides of the story. when you speculate and make an opinion, it is human nature to defend it. wait until you have all the facts. >> if you had a laggard company there is not much you could do about it. >> the way we run our business, we do an assessment of our joint venture partners. how do they manage their risk?

>> i see you would do that with joint venture partners, but you were shut down from a lease applications because of something that did not concern you. had you been concerned about the practices that led to that what would you have done? >> on a personal level, we do our best to communicate. we have joint safety meetings with other operators. we realize this would impact all of us. it is hard to distinguish one operator from another. >> these were rich presentations. we would like to ask more questions and hope you continue to cooperate. i appreciate your presentations.

>> thank you for your presentations. you mentioned it research and development has not kept pace for a clean up spills response. it is because it is not commercial. the federal government has not made that investment either. we are using a lot of the same technologies after the exxon valdez oil spill. what ideas do you have about how we can improve that aspect in terms of financial commitment for that government should make so we can keep pace? >> several of the large operators stepped up with $1 billion to create a facility that would be able to move within 24 hours and contain

spills within 10,000 feet of water. the second way is that there is a per barrel fee, and for a spill response fund, there is a possibility of adding to that feed to make sure research is properly funded, but we are dealing with a state of the art industry. we do have to have state of the art technology. >> any other panelists care to comment about cleanup and spill response capacity?

>> i served on briefings with those who spoke eloquently about the degree to which you can clean up oil. it ranges between 7%-15%. in places like the gulf where the ocean front stairway to restore itself to some degree, you are in a much better situation than the arctic where the oil does not go away. part of my responses you have different standards for different places. you don't allow oil and drilling to occur until you address that. if you create that says a standard for production, the

standard must be met. you will force the industry to come to grips with this issue. there will be some places where you don't drill. >> when we talk about the total will, it is helpful to think about the rapes and the volumes. it will enable you to get on it with equipment that could cap it. the ability to respond with a capping measure impacts the volume as great as the rate that could come out of the well. it is the total william , -- total of volume.

>> i am trying to resolve leasing with marine at spatial planning. this sometimes covers vast areas. you actually understand life patterns or special ecologically important areas. who does it? how do you online important public interests in states like alaska or louisiana? based on what norway has done, would you comment on how you see that work? >> as for the conflict between them approaches, it is obvious

which one gives you the ability to make smart choices. the big lease areas are enormous and yet those decisions to leave were based on a decision on one sector in deede not looking at the entire ocean. al 8 gets done depends upon taking advantage of the expertise in the government. interior is entrusted for managing public areas. epa has its own expertise. the key is to find a process that takes advantage and against that approach enough independence so it is not crushed underneath the

imperative of delivering oil and profits and revenue. we believe the executive order establishing a national ocean policy approach gives you the opening to knit together a work of those agencies. what we need is to link that to using that to guide oil and gas exploration. >> there is a role for local stakeholders to plant. >> when we start our operations included in that is planned stoppages to allow for -- that was gained through interactions with local stakeholders.

the local stakeholders have to be engaged and have an appreciation their concerns are also being addressed. >> in terms of the leasing process, there is a consultation of process. one area was this question of state versus federal and in the gulf of mexico a lot of damage that has been done did not happen in federal waters. it happened sooner or long ago. this question of federal versus state this a serious issue, i think sometimes it is a question of this is a policy driven by

the states and not coastal communities. >> thank you very much. >> i will ask you to break your rule about speculation. would you have drilled away bp did? >> if we follow our guidelines i think the answer is no. we would have installed a stream with additional barriers. >> for mr. west, on technology, it has been described -- some made the analogy that deep water drilling his akin to the shuttle

program. we can build it but cannot fix it. if something goes wrong we don't have the technology to respond in a meaningful way in a reasonable amount of time. >> i am not a technical person. >> the industry believes they do have the capability to deal with this. they are putting $1 billion into it. i think they should be required to demonstrate they can move to deaths of 10,000 feet within 24 hours. the answer is yes.

we have the capability to respond. we understand the risks. we have the right level of controls in there. it all starts with the well- designed. is it robust enough so we can quickly get on its and close it in? that capability exists. >> i have some follow-up questions. i will defer to the chairmen. >> i have a question for mr. west. i am pleased to hear the industry -- how do you maintain it? how do you maintain the safety case culture without going into

complacency? do you have any ideas about this? >> the uk system -- they have demonstrated an ability to keep the industry on its toes. the burden is on the industry to demonstrate they can do this. every facility has to go back every five years to demonstrate it can meet new challenges. it shifts the burden. the stakes are the amount of capital is enormous. the company's understand that. >> who determines what is the

regulatory structure that determines the demonstrations are credible? >> you have to have people of sufficient competence. you are dealing with some of the most sophisticated industries on earth. you have to have people of comparable quality on the other side. they have to have the tools, too. >> it all comes down to a healthy [unintelligible] at the end of the day this process involves a tremendous forces we ask our people to operate under. when i ask them how their safety is going the one thing i don't want to hear is everything is

fine. that is the first onset of complacency. we have some areas we are looking at. the minute you think it is as good as it can be, that is when complacencies starts. some of the most riskiest operations are not the new ones. everyone is doing the best they can. disasters tend to happen during the routine. that is my biggest fear. there has to be a structure that enable still -- i like to go out there and ask people what are the barriers? operational is your hse --

operationalize your hse case. does everyone understand who is responsible? safety case enables you to have that conversation. >> this is the challenge of constant improvement. the second thing is very important. the role of the service companies. they have to be engaged in this process. it is not just the oil companies, there is a whole team in faults. what are the critical challenges to maintaining the safety culture? do you have any comments on the hardest things to overcome in maintaining the safety culture?

you said safety, york subcontractors and other companies. >> creating a safety culture is not simple undertaking with a huge organization. i had those long lists, but it has to be something constantly reinforced. this question of incentives and clarity is important. >> thank you all for appearing this morning. i have a question for mr. west. the deep water horizon spill is a major event, but the president

has issued an executive order on a new ocean policy. has the industry started addressing how bad factors into their planning moving ahead? -- how that factors in. it calls for greater balance among competing uses. how will the industry participate in balancing those uses, particularly in the arctic? are you participating in that conversation? in the gulf the industry rules what happens, but this policy

calls for a different approach. >> the industry has no choice but to be engaged. they have a lot of powerful tools that can add to this debate. something happened in this event which has engaged the body of politics. the industry has to be part of it. >> are you aware at those conversations are happening? fran raise the issue of leasing programs that go forward. is there any conversation going on about narrowing that approach or having the industry targets where there are areas of conflicting uses?

>> this is not a new issue. the industry is very sensitive to that. to what extent the industry is participating at this stage? i don't know. >> we are running to the end of our time for questioning. >> to follow up on the comments about the industry's response with the containment corp. and you said it was moving in the right direction. i have seen a presentation on this and it is very impressive with the level of financial commitment, but what assurance should be required to make sure

this capacity is up to the task before trusting this in the future >? will it be sustained and will there be constant improvement? my advice is to ask the companies. that is the challenge. >> have you been involved in these discussions? >> i have not. my role is to insure the well designs will enable full capability of that system. >> thank you very much. we appreciate a very informed that panel. thank you for your comments. it may be we will develop

questions subsequent to this hearing. if those were submitted would you be willing to continue to assist us in trying to understand this complex issue? >> certainly. >> we will take a break until 10:45 p.m.

>> there is more about the oil spill on our special web page where you will find our video related to the spill in and read government reports. it is at c-span.org. join our conversation on the american revolution and the importance of historical study next sunday with gordon wood. at noon eastern on c-span2. no more from today's hearing on the oil spill. the commission heard from former officials at the management service. it was responsible for regulating offshore oil drilling.

this is an hour and a half. >> [inaudible] this panel is concerned with [inaudible] we have tyler priest, director of global studies at the university of houston thomas kitsos, randall luthi, and elizabeth birnbaum, former director of the mineral management service. we will hear from each of you and hold our comments for your conclusion. we are pleased that you are here and appreciate you

responding to our questions. we will begin with tyler priest. >> i would like to thank the commissioners for inviting me to speak and the former mms directors. my name is tyler priest. i am a member of the scientific advisory committee. theemarks don't reflect opinions of my members on the committee. the federal program administered by the management service since 1982 has been the steward of the vital offshore oil resources and public revenue generated. it oversees 1.7 billion acres.

it is the largest landlord. the program is navigated through many controversies. regulatory lapses have deepened the impression as an agency captured by the oil industry. the concept of the agency capture does not do justice to complexities of the bureaucracy and offers little insight into managing land. during its early history of the program was a weak partner to offshore operators.

the small staff issued leases and another handful of people from the conservation division collected revenue. federal officials in the gulf, made the leasing practices of texas and louisiana. environmental safeguards were treated as an afterthought. lease management office -- 1969.

those inspectors depended upon operators for transportation. in the late 1960's the relationship was transformed. pressures from the bureau began to see the nation was receiving fair market value and forest land management to devote more money and before release sales. those led to the rejection of bits that did that meet criteria. the even bigger change came from the santa barbara channel.

the department of interior quickly issued a stringent set of regulations enforced by an inspection program using the list of incidents of noncompliance. the organization developed its own research program and the gulf of mexico operators developed equipment needed to ensure safer operations. bring more caution to development. one official response -- offering more sales and placing emphasis on resource evaluation.

a contradiction between stronger regulation and accelerated development was built into the program. the land act amendment attempted to resolve this contradiction and a related problem exposed a problem. the benefits are distributed nationally while they cost so far concentrated locally. the 1970 amendments introduced a five-year lease schedule. at each stage of the development process and amendment created a new environmental studies program. the efforts failed to resolve the tensions between

environmental assessment and resources evaluation. resource evaluation and the service of domestic energy production is biased. if it is no secret this has permeated mms and department of interior. it stems from the professional orientation of many parts of the program. this strengthened wendy conservation offices were merged. the leasing system introduced by the secretary of interior further reinforced this by s by opening up larger areas.

the logic was to explore first in and ask questions later. there were compelling reasons to proceed this way in the gulf at the time. during the last 25 years the gulf of mexico has become one of the most dynamic oil regions in the region. it is a credit of bringing new sources and doing it safely. their success in the gulf has led to a collective attention inside and outside government.

as domestic oil production declined elsewhere and other production areas came under moratorium, politicians encouraged the development of the deep water gulf. there was not a lot of opposition to that development. it was mostly focused on the revenue reductions that came from leasing. the dramatic expansion in the gulf since the 1990's has occurred during fiscal restraint that has handicapped the mms. it went from 2000 to 1600 full- time employees. its annual budget increased to $296 million. this was a decline of 10%.

this was less than half of what was spent by the program in 1975. it is 10% in real terms of what environmental studies was. this contraction happened during a significant expansion to evaluate new areas in the analyze questions surrounding alternative energy places. during this same time 3487 production facilities were installed in the gulf. double the number installed in

the previous 30 years going back to 1953. there were hundreds of removal'' that involved oversight. add to this the increasing complexity of deep water drilling and time constraints placed on environmental assessments. the mms was underfunded. you can see why is it allowed industry to drive regulations. why its use of exclusions soared after 1997. we all share in some of the failures that cost this disaster. we have not been mindful of the costs and risks borne by that region.

we accepted the plan to explore first and ask questions later and stopped asking. many of us are hopeful this will lead us to ask the right questions. if you have questions i will attempt to respond today. >> 34 years ago an event occurred on the house floor that may not seem connected to the deep water horizon tragedy, but says a lot about the relationship between government and regulatory agency. i am pleased to be invited to testify today. i came to the conclusion after watching the thorough testimony

being presented about the process that i would not duplicate it but provide some reflections on my involvement in this process. on september 28, 1976, the select committee brought to the floor a conference report that contained a provision which set the federal government that is directed to carry out an exploratory drilling program. the prior authorization provided similar authority. most of the work done was [unintelligible]

not unstructured, because the industry did not want the department to do it. the opposition to the provision directing the possibility of an exploratory program was fraught with interesting debate on the record and on the floor of the house near the cloak rooms. it was interesting to me and it has come back to haunt me. we saw what happened with the oil spill. the opponent to this position was -- to this provision was the governor of delaware and a very articulate spokesperson.

you did not want big government to be heavily involved with the exploratory drilling. this had nothing to do with the deep water development. it had to do with the concept about separating exploration from development. how can the government offer leases for sale if they don't know how much resources may be out there. seismic testing was in its infancy. we did not know how much oil was going to be there. have the government set up some kind of program. the congressman made the case that you did not want government getting involved in the question

of exploration drilling on the ocs. they should not be overly involved. you did not want the government to be hiring people or engage in its drilling technology. toward the end of the debate he turned toward the majority side of the house and said, if he liked the way the u.s. postal service's operating you will vote for the federal oil and the gas company. the congressman hamilton moved to recommit the report back to committee and killed it because it was near the end of the session.

the vote was to recommit and it was successful. it was killed by four boats. -- by four votes. the democrats had just come off a post-watergate election. the democrats controlled the house by 291 votes-144. ocs cuts across party lines. we have seen it time and time again. as far as i know, that is the last time and the only time the direct issue of should the government be more involved in the drilling activity, was

directly confronted by congress. the decision was no. it took the election of president carter and dropping of that provision to get the report passed. the process we have under the amendment subject to the criticism -- must of is it is justified. it is time to change what we did back then. there have been 23 years before this was implemented. i think the time has come given what we found out about the oil spill. the 78 amendment served us well, but they need revisions. we have a process-rich set up in

mms, but mistakes were made. we need to professionalize our inspectors and increase the budget. obviously you have heard from many witnesses this said part of the problem with bp was we had a pretty good safety record. that tends to lead to letting decisions go that need greater scrutiny. we had issues regarding the environment. [unintelligible] was relatively near when the amendments were passed. there are provisions requiring that impact statements be done and other areas would be silent about whether it would apply. there was an internal debate

about that you mentioned at, that might mean there will be interpretation the absence means it does not apply. it is up to the federal manager to make a decision whether there is an activity that affects this environment. there was this debate in which members of congress mentioned -- other times when other advocates say don't mention it to many times because you will wipe it off the books. that is one ocs has a mixed record. i have not been and at mms since 2001. it has been nine years. i was there during the 1990's.

more companies made greater finds in deep water. that is where the resources are. we did put forward deepwater operation plans and called for prescriptive regulations to be supplemented to adopt environmental management plans. that did not make it through the process. during our time there was a deep water subcommittee added to the science committee. there was an awareness that we were moving into deeper water. perhaps we needed more scientific knowledge, but we eft and i'm not sure what

happened after that. i went to the u.s. commission on ocean policy and we took a broader look at motion issues, including a chapter on offshore energy. when i was there we spent a lot of time fighting about royalties. we got into a big fight about how to process that. and i have seen the statements made that were stimulated by omb looking for additional revenue. my sense was there was a recognition there was some gaming going on that would reduce the price of oil. it has nothing to do with the deep water horizon.

it just dominates your time when you are at the agency. congress paid a lot of attention to it, including moving toward the royalty program. you lose your attention on issues that are more important. that is part of the history of what we experienced in the 1990 costs. i will not use all my time. i yield to my colleagues. i think it is quite obvious the agency, at the federal government need to adopt better safety requirements and develop a stronger cold church. that is so difficult to do, but i believe the industry has its

own responsibility for developing a safety culture. i worry about the question of technology. what can government agencies know? it is a very difficult issue. let me note that if you do nothing else, you should make a recommendation that the 30 day requirement be changed pending legislation. that does not work. it was one of those compromises made in the amendments. i would be happy to answer any questions when the time comes. >> thank you. >> good afternoon distinguished members of the commission. thank you for the opportunity to meet with you today. i want to wish you the best in your investigation concerning

this terrible accident. none of our actions can compensate for the loss of 11 lives. we are working to identify the means of preventing this from occurring again. you had asked me to talk about my tenure. i understand you are seeking an understanding of the kinds of issues and challenges that face the director. it was my privilege to be the director of mms until mid january 2009. i am honored to share the panel with elizabeth birnbaum and thomas kitsos. we represent a wide range of experience and have served in republican and democratic administrations. our jobs were never boring and never lacked 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 for technology to address the problem that only draws public attention once in a generation. to support all spill cleanup research and development. mms receive appropriations from the trust fund under that act to

conduct research into support oil spill response train. clearly the level of investment has been an adequate. this commission should address the issue. i would suggest the commission determined and adequate funding level and then recommend direct spending from the trust fund to support research and development under the supervision of the coast guard or successor agencies, whoever is responsible. finally, i would like to address what i consider the most difficult issue in oil and gas regulation, the inspection of offshore drilling rigs and production platforms. appreciate the careful job done by the inspector general and electrons inspectors in the last administration. inspectors who had accepted gifts from industry employees had extensive social and community connections, including family relationships, with those employees. simply put, they'll live in the same towns. this is not a point of

criticism. offshore inspectors have to live along the texas-louisiana coast in order to lie offshore on the inspections. even if the agency brought in a completely new cadre of inspectors, they would still have to live there. following the deepwater horizon incident, i heard recommendations that mms should have as had inspectors on the drilling rigs at all times. it would require the inspectors to live all -- live on the rigs along with the drilling crew. they 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 even more closely to the industry. another factor contributes to the close relationship between inspectors and industry. the training necessary to understand operations of the drilling rigs and platforms is

not available in schools. it is like being in of a mechanic. you have to spend some time under the hood. historically, people with experience working for the industry have and those with the knowledge necessary to inspect the platforms. the only way to eliminate the connection would be to provide extensive training. there would still be no silver bullet to eliminate the close connection between offshore inspectors and the employees of the industry they regulate. they will still live in the same communities. one suggestion made by the interior inspector general is a penalty to be established for industry for those who require -- to receive inappropriate gifts. requiring rotation and inspectors, putting firewalls in place, marking the rate of violations found by inspectors in district offices, importing -- imposing moratoriums.

combination of these standards combined with close oversight will be necessary to insure adequate inspections. we ask the national academy of sciences to conduct a review of the offshore safety inspections. the report is due out this fall. may provide some additional input to you on this issue. i want to thank the commission for the opportunity before these thoughts. i don't envy you the daunting mission set for you by the president. in order to provide recommendations that will ensure safety and environmental 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. y'all have introduced information here that supplements -- you all have introduced information that supplements new and detailed concerns that have been raised

and we appreciate it. we will have as our lead questioners here chairman graham and the chancellor. i will turn to chairman graham. >> dr. priest, earlier today we heard from the gentleman from shell. he was asked the question about his evaluation of the drilling that took place on the deepwater 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, admittedly a complex activity at this depth, at such variance 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 them and contractors are encouraged to follow them. there is extensive technological information sharing in forums like the offshore technology conference and the society of petroleum engineering, so i think -- i don't think the industry as a whole is negligent

about these issues. they don't want to see blowouts. they don't want to see platforms exploding into flames. i think there is a good faith effort among the active operators to establish and follow best practices. >> so this incident of the peat assuming that the criticism we heard was a program it was an allied air, an aberration? >> you have to remember 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 and communicating with 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, and given the range of service of the three mms directors who are here, you covered most of these events. i would like to raise them and ask a question or two about each. your the acting director during most of the year 2001, which was the time in which the new administration had come to washington and had announced that they were going to have a new energy policy. the vice president was put in charge of developing that policy. to what extent were you, as the acting director of the mms, consulted on issues of energy

policy by the vice-president of the task force? >> i was consulted about the status of the program and what the offshore program looked like in all the different procedures. i really was not asked any questions about policy. senator graham, i was a career civil service person and i took over when the prior director left because of the change in administrations. i was subject to the new administration selecting somebody. it turns out that i left before they actually had selected somebody to go work at the ocean commission. the vice president's energy task force got started late in my time there. this was just getting off the ground. there were some early and preliminary questions about what is the program all about, and i

dealt with the staff on that. by the time i left, the task force took off and were making some policy decisions, but i was not there. >> do you know if the task force asked any of your staff or your successors question suggests, what would be the implications in terms of personnel and agency budget in order to carry out various new energy policies that the task force might be suggesting? >> no, i never received any questions about budget matters, as far as i can recall. they had the budget numbers and for a damn about what the status quo at the time was, but the direction they were headed was not shared with me. >> the next event i wanted to discuss with the establishment of the department of homeland

security which resulted in a considerable amount of reshuffling of agency responsibilities. one of the most affected agencies was the coast guard, which had been variously in the part of the treasury in the department of transportation, and i was moved to the new part of homeland security, with the priority assignment being counter-terrorism. i understand that i think this occurred between -- there was a memorandum of understanding in which some of the coast guard's previous responsibilities were transferred to mms. is that a correct statement? >> it sounds correct to me. i know it was not initiated while i was there. >> did mms get some additional resources in order to take over the responsibilities that

previously had been coast guard obligations? >> i cannot answer that. that was probably done during the 2004-2005 budget hearings. the budgets i participated in was the end of 2008, no, 2009 budget and beginning of 2010. i really have no recollection. >> in his testimony earlier, dr. priest talked about some of the declines in the budget. i believe there was a reduction in headcount from roughly 2000 to 1600, and the inflation- adjusted decline 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 an accelerated level of activity, particularly in deep

water? >> what you do is, you do your best to do your best with less. those were times when it was very tight budget times. i mentioned to you as we try to figure out ways to try to retain quality employees, we used what sources we had available to use retention bonuses. we had discussions about how to make that money stretch out as far as we possibly could. again, my recollection may be a little fuzzy on that, just because of my timing in terms of the budget process. when you come in at the end of an administration, i don't believe by many different than anyone else. i came in knowing it was probably about an 18-month window, regardless of how the elections turned out. you are going to be probably finding another job. you look at, am i going to focus

on how to make the agency work with what it has come arduous been a lot of time trying to change it. frankly, mr. chairman, i tried to make the agency work with what tools i was given. >> what are some of the areas that you had to eliminate or reduce the previous level of intensity, such as number of inspections of well sides? >> i do not recall the necessity to reduce the number of inspections. the inspection process is very fascinating, as ui am it -- as m sure other can tell you, the weather is a major factor. i had the opportunity to meet with many of the inspectors and got an idea of what kind of job they have to do. i am very grateful for the job that they do. when you are faced with b.g.e. need to go out on a helicopter,

and you are more than 100 miles away from shore most of the time. any kind of weather event, you don't want your inspectors out there. in terms of -- i do not recall having to reduce the number of inspections. i do recall before i arrive there, there was a discussion about making sure we had helicopter so we could get them to and from the rigs, which is absolutely vital. you have to be able to get on the -- you are going to be able to inspect it effectively. >> another event that occurred that was some of the discussion with panel 2 was the discussion 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 personnel demands? >> certainly we had extensive discussion about the fact that if we went into new areas, there would be were promised for additional internal studies. for step would be additional environmental and resource studies that would require significant investments. the decision of what goes into the five-year plan was never delegated to the mms director, but the informations the secretary of the interior relies on came largely from the mms. >> what would your level of contribution to the decision to expand the area for offshore oil and gas exploration which was announced in march 2010? >> i provided the secretary of the interior with every piece of information i could. >> in addition to providing a permission, were you also ask for your judgment and opinion?

>> yes. >> and what was your judgment and opinion? >> i cannot take the number of meetings we had in the number of conversations we had about different aspects of it. in the end, i supported the administration's decision. >> thanks to each and everyone of you for being here today and providing additional insight. i would like to address the question of reorganization from mms and other pieces of responsibility. i was very interested in prof. priest's description of the historical perspective that helps us understand how mms got to where is and why it makes some of the decisions it makes. i particularly appreciated his reference to the culture of deregulation, almost anti- regulation, which describes the american political environment

for the last 25 years. that creates an environment which is probably difficult for mms to move forward just by reorganizing. it requires some statutory changes and resources and expertise. to the extent that a reorganization might actually assist the people who are working in agency to make good decisions and to be more objective and perhaps not quite as close in 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 division of mms needs to be separated from those that have the responsibility for safety and environmental regulation and enforcement. that part of the administration's proposal seems

to make good sense. what i am not clear about is whether it is being proposed that they remained different divisions within the new bureau, or whether they be separate bureaus. in any event, i think that is important separation in that you really have a professionalize asian up your inspectors in your internal people on one side and the other side, those who engage in developing the five-year leasing program. there also has to be some cross fertilization. you cannot develop a by-your program without the internal people being involved. that would require either mou with two separate bureaus. you have to have some cross fertilization. i think the separation of safety and environment on the leasing part is critical. >> i think there is a reason why internal assessment and environmental studies are in the

leasing part of the agency. just as mr. kitsos explained, they need to be involved at the early stages. internal studies does work with other sister agencies -- environmental studies works with other sister agencies. the contract with noaa and other agencies. it does happen very early, perhaps there needs to be more statutory authority related to that. i don't know, but there is reason why environmental studies and assessments are in the leasing department. >> as mr. priest said earlier, there is an inherent conflict in that it requires both promotional production and environmental review. the number of environmental laws that apply -- there is a constant tension between the

two. i agree with tom that is very important that the environmental folks be elevated and given a level of independence that they have not had in the past. whether it needs to be done in a separate agency or not, there is a lot of communication that needs to go back on the resource in burke -- evaluation. you need to develop some sort of structure that allows for continued communications on a whole variety of issues that affect the oil and gas program. >> he spoke to process say, and most very complex industrial organizations and systems have process safety. i am sure all the companies who are involved in the gulf of mexico would say that they do something along those lines, but obviously as we heard this

morning, the four companies have very different approaches to it. the question of standardization, the proposed regulations, did not been adopted. why is there so much resistance from the industry to regulations like that, that would set certain standards for safety, when they obviously have a vested interest in having a safe record? i am particularly confused in this particular industry, where you have so many different players, the operators, the drillers, the contractors, subcontractors, the owners, and each and every one of them have slightly different approaches. it raises all kinds of questions about consistency and help contractors and subcontractors can move from company a to b to c.

it seems a bit confusing, almost as though some order -- people would see the advantage of having some consistency so that people have some predictability. why so much push back? >> you make a very good point. when you have drilling contractors to work with a number of operators, the operators like bp or shell are ultimately responsible, but the drilling contractor like trans ocean works with most of them and has the largest number of drilling operations in offshore u.s. waters. you'd think they would want to have consistency among the people that work with. it is my experience that virtually any industry universally opposes regulation generally, and they are no different. there are some standards for

process systems, best practices, suggestions for the industry, but everybody likes to think they have the best idea and they don't want to be told how to do it. i think that is a more generous way of saying the industry resists regulation, partly because they think they know better. >> i can put a little bit of history on this. in july 1991, the mms published a proposal for an integrated city management program that they intended to make a mandatory on the industry. this was based on recommendations from a committee of the national research council. it came in the aftermath of 1984 and 1988. osha had done a process that diminishment recommendation and

the epa had its own risk assessment program. the industry in response to the mms proposal preferred to crawl up api recommended practice -- draw up api recommended practice. it was determined at the time that mms would not make it mandatory, but the industry would implement this voluntarily, but at mms would monitor to make sure that company for following these best practices. there was a pretty high degree of adoption in the late 1980's, but it just sort of lost momentum in the 2000's.

there was a real effort in the , and industry was serious about this, too. it was not just mms. they thought they could do it on a voluntary basis through the recommended practice documents. >> but they did not. the last question is about liability. congress is debating whether or not limits on liability should be raised. do you have an opinion he would like to share on the question of the extent to which live build settlements influence the safety culture, risk-taking, balancing risk? apparently not. >> that would appear to be a hot one.

>> thank you all for being here. i wanted to tell loren to issue of what the internal review process is. in the investment in baseline scientific data and a culture of mms, as far as doing the internal review. always interested in the comment that the investment has gone from $40 million to $10 million annually in basic clients. >> $20 million. >> but it has dropped significantly since the early days, and yet the expansion is considerable. there have been a lot of articles suggesting that within the ems culture, indeed mms culture, the scientific recommendations have not received the kind of seriousness that maybe they should. an earlier panel talked about the interagency process, consulting with other agencies in environmental review.

can you just reflect on your own experience at mms and how internal decision making is made, how you would recommend strengthening at? 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 focus much more on, the development side, and strengthen the other zero agencies? >> it seems as though we have not as robust an internal review program at mms that would appear necessary at this point in our zero zea's development program. " would be each of your recommendations on how to fix that culturally within the agency? >> i did look at this, and in fact appointed the first signs

adviser to the director. he had been executive director of the society for conservation biology. he in fact was there in order to provide support for an focus on what mms science was, what might need to do to make it more robust, and how to communicate that also. to some extent, mms does suffer from the pact eject from the fact that people don't know what the effect of mms scientists is. the suns the advisory board that mr. priest is on is actually very good collection of academics from a wide range of disciplines that are unaffected by a c s development. there is no question that there needs to be more investment.

i believe that should be -- there is a huge need for more science investing at noaa and many other places in the federal government. we had a conversation about relying on outside agencies baseline science vs. the signs we developed inside the agency. mms science is focused on what we need if we are going to consider leasing in this area, what baseline studies we need. as we are moving into offshore renewable energy development, renewable energy development requires the study of a whole different set of issues that had not been considered before. migratory bird issues off shore that never had been examined, but there needs to be a strong

focus on science investment at mms. >> i have read to similar reports that there are concerns that the science is not getting the same issues as mms. we were very proud of what we thought the scientists were doing, and i agree with the former director, it does help to have the science tidy and with the exact mission you were doing -- tied in with the exact mission you are doing. we made a public relations effort to emphasize the types of science at mms is doing, particularly a whale study in the gulf of mexico that was almost unprecedented at its time. in short issue is money. >> it is important to put a little perspective on this.

in 1975, there were no studies. that is one reason why the budget is so much higher then than it is now. in some cases, in some areas, there is almost data in digestion because there have been so many studies funded. it is important to understand it from that perspective. also there are other agencies doing similar kinds of studies, and i know 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 also gearing and tailoring it to the mission of the agency. that is a big challenge. >> 1 relationship with the diminishing science budget at mms was the fact that during the

1990's, the offshore program was pretty limited because of congressional and presidential moratorium with roles. therefore, there was a decision made at omb when they saw the program was contracting, that the science budget could go down a little bit. not enough money was being spent in the gulf, which is where most of the leasing and production occurred. when so much is taken off the table, but it 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 in which area wide planning takes place, the argument the scientists make is that the decisions -- first call, they are up not the appropriate specificity which they were consulted in a timely way. they are asked to comment on very large areas in the

beginning, and then there are the exclusions, categorical exclusion. you have a thing -- any changes to recommend in the way that leasing is conceived and planned and scientists are consulted? scientists outside mms, based on what i have been told, did not really think that have been adequately consulted or effectively involved in these decisions. some will say they have had insufficient resources themselves, but others will say they have not had confidence that if they had put greater efforts into these consultations, that they would have been taken seriously anyway. that was not there is true. do you have any responses to that krista mark >> -- responses to that? >> i suspect that area wide leasing is still going on. what is significant about the economics, it was not the question of whether you could do

sufficient scientific analysis at that level. mr. priest suggested that area wide leasing had actually reduced the income from leasing. there is a question as to whether if you restrict the number of parcels to make available, does the industry want to make x amount of investing so they will bid more parcels. processor i understand it is an extremely complicated economiobon the scia little bit dismayed to hear that scientists might have suggested they didn't comment because they were afraid nobody would listen to them if they did. i am not sure if that is a question of area wide leasing. that is a question of the culture of the agency, which needs to be raised to be considered to be coequal with

the leasing program, whatever way they had been viewed as aborted and needs to be elevated. >> the program that generates largest amount of treasury revenues except for the irs. is it reasonably expected that the folks would be equivalent with respect to the science as on the leasing revenues themselves in one agency? no matter how that agency is broken up. >> i think it is possible. it is a question of the culture of -- that you inculcate within an agency. the revenue was never the guiding force for anyone involved in the offshore process. nobody ever brought that in as an issue a policy in determining how to do it or what the internal review was. >> if you take into account

civil service pay grades, hiring constraints, and challenges of rapidly developing technologies , how the level the playing field so the inspectors are a matter for the operators? can you do that? >> i think it is a really tough question. that is why i spent so much time on it in my statement. you are going to have the problem of the work they need on train you to understand how drilling rigs and platforms work. there are very specialized, and giant pieces of equipment. you still have the problem that they need to live along the coast to do it. some of the ideas i suggested, rotation, -- although the

inspectors have not been the folks who had to pay limit problems, but if you brought in engineers you'd be paying them more anyway. the big problem on pay has been in the headquarters in new orleans region. >> i would add a little bit to that, on the inspection side. the most recent ig report talked about dealing with the inspectors. frankly, i would recommend that report as well as the one did in with the rik question be mandatory reading for all federal managers as well as anyone in the industry. one of the telling things as you got down into the details was -- an e-mail or correspondence between an inspector -- let me , wrongfully so, he was

inspecting a platform at the same time he was negotiating employment. i get ashley get paid $64,000 with all those bells and whistles? that is what caught my attention. i am not sure i can say how $64,000 relates to the economy in the gulf, but that was certainly an issue for that inspector. therefore, pay is a question. >> some of you may have heard the testimony this morning about the safety culture, the safety case that characterizes the uk system. are any of you familiar with that? >> i know a little bit about the uk system. >> i would be interested if you would comment later for the record and submit your views on it. he certainly extolled as a superior system in many respects. whose idea was it to expand offshore oil and gas?

he said it was one you supported. did emerge within the mms? >> expanding offshore oil and gas production had been put on the table -- substantial expansion. >> the decision president obama made to increase the area, that was on your watch. >> the proposal was much vaster and had been presented by the last administration on the last day of the last administration. what this administration did was significantly cut back on that proposal. >> so the idea was a bush idea that president obama supported? >> president obama cut back substantially on the bush proposal. >> what about the moratorium? did that originate with mms? there have been to moratoriums on leasing deep water in the gulf. >> i was not there for the

second one. for the first one, there was extensive discussion back and forth between the white house. i don't know where it originated. >> mr. kitsos, your unique among these boats because you have been involved with congress and the authorization of language, having had a hand in writing some of the language. with the ocean commission you had to step back and look at the big picture with government. one of the things we have been pursuing in our research and questioning is this issue of how we expanded in the deep water without paying real attention to the new risks and issues associated with it. i think dr. priest actually gave us a summary of that, and you

commented on it as well. i want to ask you what was your experience in congress, you were around when the royalty relief was put in place that gave opportunity for doing deep water drilling with less payment of royalties, and then later, you mentioned in your testimony now the mms had been working on a plan and evaluation of the issues associated with deep water, and then in 2001 he said you did not know how that worked out or what happened to it. can you give us some perspective on the importance of both of those, how they influenced moving into deeper and deeper water without thinking through all of these issues? >> in 1992, the energy security act was a major law passed by congress, and during that discussion, right at the end of

the bush 41 administration, there was a big o c s title that included some revenue sharing, some moratorium, some promotion of production areas, and senator bennett johnston of louisiana came in and proposed deepwater oil rally. at that time i was working for the committee of merchant fisheries and to congressman from the resources committee were the lead conferees. they strongly oppose that, and the entire zero c.s. title dropped out of that. in 1995 i was at the interior department with that legislation was dusted off and passed. it was part of a larger alaska export restriction bill.

the act had a major impact on companies willing to make war capital investments in deep water. i always thought that probably would have done so in any event, even without the royalty relief, but we will never know. it seemed that the amount of acreage leased was large, got larger, and it was a major event. the studies are referred to earlier were just a series of different environmental assessments, one report associated with eight shelf proposal, another was a generic report. i cannot remember all the details of who did them, but within agency, we were anticipating going into deeper water and it meant something different than what we were used in shallow water. there were a number of unanswered questions and we started to raise some of those questions,