implications for the presidential succession. let me begin with james madison. let me go back. james madison in the early congress participated in the conversation. . .

article wasn't, as section 6 says knows senator or representative shall be appointed to any civil office. no person holding any office shall be a member of either house during this.

this is not the kind of officer we had in mind only envisioned a congress passing a statutory succession aha -- secession. his wisdom was redeemed upon it. there is no way of filling the vacancy when johnson lessons to the press since he couldn't -- to the presidency.

the next it line is been weighed from ohio. he already has picked out his cabinet approved . he is making a senator rather than a cabinet officer. american sees that and it changes the secession. her re propel that has changed in 1947 herve i think that is wrong. it warps the whole impeachment process.

it has other defects to. what does this have to do it the 25th amendment? actually, it gives us additional reasons but the. the 25th amendment says philippe presidency and vice pregnancy are vacated sequentially, -- presidency and vice presidency are vacated sequentially, you

get the party you voted for. you get nixon. if we do not give nixon, you get agnu dhunna. if you do not give him come to give ford -- him, you get ford.

when these positions are vacated simultaneously, you get something very different. that is in the attention. do we voted for obama/biden and we might hit john boehner. what goes around, comes around. you vote for george to of the fish and you get -- george w. bush and you get nancy pelosi. you both for martin sheen and

yet john goodman. television moment. that is after the 1948 seventh statute. you vote republican coming you get republican. that is what you deserve for four years and then you vote democrat, uk democrat. -- you get democrat. it embodies a personal link between the top two executives and officials. when it becomes vacant, there is a confirmation process. that handpicking idea is a party

practice. before the 1930's, i do not know if a ruling can pick them. presidents dinh not handpick their teammate's predictably until the '40's or so. in the 60s amendment, we have a codification of this hand-picked succession idea. it is inconsistent with the been the speaker to the house. this is a constitutional codification of the practice that has not emerged in 1947.

the statue has been overtaken by the constitutional implications. even the thought the 47 cent to what goes ok -- even if he thought the 47 the statute was ok. the secretary of state is not elected. focus on the 25th amendment. who elected board? he gave this the answer. he said that the confirmation that the confirmation process functions as a kind of election.

that is a legitimacy that gerald ford had. my parents did not. this is his election equivalent. same with rockefeller he was handpicked by ford and nixon. it that is your vision, it is in answer to this. it clearly puts her or him next in line when it is confirmed, it is a vote of confidence.

if you want a separate office, you can have a vice-president whose only job confirmed the senate confirmation. the only job is to be in the line of secession. you are the left-handed strike out. you do not do anything except boost both of the people we've voted for. maybe it is the former president to can do that.

he said he wanted a seamless transfer of power. he did not one thing still miss a beat. he thought to is undergoing a medical procedure. the hand of power to cheney. it is important when the soviet union has weapons. that does not until 1949. just a few minutes to be a lifetime. he cannot have that easily in a disability situation with the speaker of the house next in line. there will have to give up the position and sort of take over presidential power. if the president recovers, the

person has no office to go back to. and does not work seamlessly. it does not work because of the cause i just read you. she cannot be speaker of the house in president simultaneously that is the ideal. it to congress 121 days to confirm rockefeller. why? is something happened to ford,

who is going to be president? it to be a democrat. maybe the democrats were slow in confirming. these were issues that did not exist in 47. howfthere were deep implication. >> thank you very much. i have to say, this has been pretty interesting. this is amazing. what are your comment? >> you ought to get credit for

taking this course. i certainly have learned a lot from those who study the specific area specifically in carefully. the question is a panel of doctors that came up. there was a case in single lewis who is very active in the american bar association about the only way you could have real determination as to have a panel of docks.

we chased the guy all over north america. we want to keep them from keeps them off in the city to his idea. prd pointed out the difficulty in it. most can put on a good face when they are presented with good stocks. it seems to me and another thing you might think about, suppose you had a panel of ducks and they vote for-3 that the president is competent. i think it panel of that has no

place in this at all. hamathis is the best way to deal with this. the need to see people that have the action black cabinet people are in a good position to know he is tree. he is responding. it is impressive. there also frightening. some peoples and not be involved in society in general.

it has to be handled carefully. getting troops of the mexico is the first one i ever heard. he made a passionate plea for changing the statute. i think there is a lot better reasons to get them out of there.

he testifies about the fixation per them -- fixation. i think it is important to understand the 25th amendment is designed not pawlenty fill a vacancy but has some degree of continuity of policy. out is the first one to testify in the house in support of gerald ford. i thought they would followed nixon's policy. they are entitled to get it.

i found myself in an unusual position of supporting gerald ford on the florida senate in opposing rockefeller. alibi rockefeller's idea in the white house. i do not think it is continuity policy. you are putting someone in the vice presidency that has a history of investment in involvement. it is moving the party farther to the left of them i led the charge.

and just some random thoughts. thank you so much for the contributions you made. >> those are more than random thoughts. those were great thoughts. >> he was very successful in being able to deceive not only the people that came in to investigate but he actually had his doctor as a member of the group that was keeping the deception alive. i think doctors can be coopted as well.

i think it stands as a good example. >> moving from a physical with flash and disability in to the kind of policy whiplashed the center by been mentioned, another world to be avoided is regime change. they did it in their head to affect their regime change by simultaneously attacking the president and vice president. it shifts executive power from

the folks we did elect. expected the exact opposite. when garfield is shot, the guy who is shooting says i am a stalwart. are there will be president. some think john will change -- john wilkes booth was trying to evoke a freezing change. it is not science fiction. i agree with you. who had a bit technical point about officers. there are many other reasons to be very nervous about the current system.

it really is a constitutional aspect to wait for. we can fix it pretty fix it. it is the model of the 25th amendment. this is what we should have been doing after 911. does the opportunity to make sure it does not happen here. >> what are the prospects of that happening? i wrote from atlantic city where i have addressed and surprises

visitor. the president gave me a ride back and a helicopter of th it is pretty impressive step. i thought i would take advantage of capturing that tempered to ask and to support the resolution 139 of the disability. he said, you are never going to kick back past until hubert humphrey gets elected vice president. we are not taking it away from speaker of the house. that is very difficult to do right now. the only way to get that done is if he can convince the speaker

that the likelihood of this happening and you put together a panel and to come up with something like this that can convince the speaker of the house. it has to be an organization that is not only reputable but has a special appeal to the speaker. i do not think she goes to work every day and says if something happens i and plenty presence of the united states. i think she probably has the best job in town. harry truman said lee need

someone who is elected. behal>> the vice president is gg to be one of the nominee is comfortable with in campaigning. why should that be any different than in the secretary of state for somebody like that? hi think it is a great idea. it is a practical reality that you have to deal with. >> professor gilbert had it coming. >> i spoke about a proposal that

has been a very vigorously from time to time. the number of physicians have made this proposal. i would like to add something to the discussion. when he hears something like that, the most logical reaction to it is to say it makes good sense. who can determine whether a president is well are not loven a group of doctors? let's go back to eisenhower. president is near -- eisenhower had an interesting medical history. when you part of it when he is in the white house. renown a much more.

-- we now know much more. physicians have talked about it. he became president in 1953 provoke -- 1953. in 1954, he likely had a heart attack while he is in the white house. the white house never disclosed it. one of the cardiologists said he reviewed eisenhower's electrocardiogram readings in symptoms. it was his decision that president eisenhower had action suffered a heart attack. in 1955, he suffered a massive heart attack. it was too serious to be concealed. he had the hospitalized. it to be interesting to do go back to that time.

the republican party wanted them to run. he would win. they were hoping and pushing him to n.y. the third physician he consulted with was a general practice and a third of your day practitioner. the definition not run again. your heart has been weakened. do not be candid again. his principal cardiologists ahead also told eisenhower not to run again. he said, i'm telling you something the and not gone

public with. your heart has developed an aneurysm. the a aneurism if it does not burst will likely cause the series difficult. it he was an old political ally. eisenhower ran again. hugh is reelected. he outlived the vice president ial did you ever run against him

in the 1956 election. back should the have step down? should he have stepped aside because the experts told and that he would not survive? what purpose of that panel had served? it would have driven eisenhower out of office. there would of been a different president. it could have been an erroneous prognosis. this is an illustration of the problem. doctors are not god.

>> we have some kind of personal experiences some of them. so much of what we have been talking about has been trying to keep this wonderful country of ours stable in a time of great turmoil. that is what he is our whole civilization to get there. also, we talked about having experts.

do not we as americans have the right to to elect incompetence? isn't that part of the right of electing in this country? >> it has a thing to do with one's health. >> that is true, too. i want to make a couple of other operations. one of the important steps toward getting the amended ratified was the luncheon that is called by the american bar association. the president was eisenhower. i was impressed. he was going to give the speech.

no one knew what he was going to say. he came out with guns blazing. he had been under the oxygen tank. probably the most effective witness we had was the last one. it was richard dixon. he spoke for an hour without a note chronicling what happened. there renault's governing -- there were no rules governing. the more we utilize it, who relies presidents are ill.

the experts of the press cleaned all over them. there were all sorts of criticisms about how it was setting up a night on a white horse to charge in. it is terrible. as a result, the miller center

had a commission which i cochaired. i got the report out and read it before coming here. interestingly enough, they came to the conclusion that we did. we had talked about an airplane diving into the capitol building back in 1963. they came to the same conclusion that we did that the 25th

amendment is not perfect. every time you tried to improve it, you are only going to make it worse for them. i understand vice-president are only supposed to sit there in a certain sense. it is absolutely essential for every president, no matter what his age, to have a tendency -- contingency plan in terms of what he once to have done when

he is no longer capable of making the decision. that decision should include all of the players that might influence the process, the spouse, and the chief of staff, a doctor or two. in the vice president says here is what i want to have happen in the event of these things. you do not have to imagine what the president would want to do to have what he said in advance. the obama administration has a

very comprehensive contingency plan. hopefully, we will never have to use it. if we are recommending to any future president went to get elected, no matter how young york, -- you are, a contingency plan so those around you will have an idea in advance for their . >> do you have questions? >> regarding section 4, my question basically is this. has it ever been contemplated to that it was to be used? president reagan was shot and was going to go for emergency surgery. who knows if he would have made

it or not. was a section for contemplated at that time? how would there be a transfer of power? >> they couldn't save the president's life. the president was clearly disabled in the 25th amendment should have been used. if we know more about it now, here is a man who is within a millimeter of being dead. he was able to sign his name to a letter to the speaker of the house saying he was turning the powers over to his eyes president to act until he recovered.

>> maybe he as the surgeon if he was a republican before he operated. >> this is a section for provision. it had it on the decision of the vice president. if the vice president is not willing to put himself forward, a section for really cannot be triggered. one possible weakness is what happens when the vice president is in existence, but it is disabled. section four really does put it

on the vice president. the >> one interesting story suggested an aide to him. this is revealing of the typical response to a likely come from the vice president who does not want appeared to be too anxious and ambitious. some of vice president bush's aide suggested he should helicopter onto the white house lawn to send a message to the world that someone was in charge.

president bush wisely peace to do this. he said there is only one person who helicopters on the white house lawn. that person is the president of the united states. it is not me. i think is to be a problem for any vice-president to appear to be seen by the public as being too anxious to supplant the president. if anything, vice president are likely to be more reticent and over anxious for them. president inchespresident reagar surgery in 1985. president reagan in 1985 passed on his powers and duties did

vice president bush. in the letter he wrote, he said he did not think the 25th amendment was applicable to that particular set of circumstances. the providence did indicate that he was doing it. he did not need the amendment really applied. in his memoirs, as a reagan now writes that he in fact invoked the 25th amendment. between the time it was done in the time when he wrote his book, it change. >> the unfortunate thing about that was the reason he gave in the letter said the net not want to establish the president -- a precedent that would bind other president the s

is the first opportunity to show that i can turn this over and claim it again and the country continues to flourish. >> i like to thank my panel of professors. i would like to thank senator. we are going to take a break now. there is much more to come. [applause] [captioning performed by national captioning institute]

[captions copyright national cable satellite corp. 2010] >> coming up in a moment, joe barton talked to constituents about the economy and immigration and a town hall meeting for them after that, and conversation on the latest economic numbers on wall street. then a hearing on the deepwater horizon oil rig explosion. during our conversation on the american revolution and the importance of historical study next sunday with gordon would 3 jing wood. -- gordon wood. >> texas congressman joe barton taste questions from his constituents at a town hall meeting greta:

this is one hour. we do have c-span covering this today. that is what is all about. i did the normally travel when my own mobile television operation. everything i say is on the

record. record. when we get to the question and answers, i will try to give as many of you an opportunity to make a comment as we wish to. if someone says something you agree with, you can applaud, tell them that they are great. this is not a public debate society. if you care not to speak in public, that is what these cards are for. you just need to write it where we can read it and you need to

give as a way to give effect to you. i will take as many questions as i can. if you decide to place template congressman, if i have to say i don't know, i have a record for that and i can research the answer for that. that is basically it. the first and no one to comment on, america speaking out, that

is a website that the republicans are using in the house of representatives to try to get your ideas. you have to give out your name. we try to use those on the floor of the house of representatives. if we win the vote, your idea might be brought up for a vote. there is no web tracking or anything like that. we just want to be a part of the process. we are getting a lot of good feedback.

the first one is about to the budget situation. you can have two years of the balanced budget deficit. president obama took office, for you can see that his budget which does include the stimulus funding for, the budget deficits have just exploded. last year was 1.5 trillion dollars. we cannot sustain our way of

life indefinitely with these budget deficits. we cannot tax our way out of it, we must cut spending. i have a bill and this says the current. >> programs, you get your social security benefits. if this is not been earned entitlement, we cut this across the board until we get the budget balanced.

we treat everyone the same. i treat his program the same as i treat her program or his program. we can get a 60% vote to exclude your program from that budget reduction. there is a fail-safe mechanism. we simply must start making those types of choices. under the current budget situation, every program has increased. every now and then we will try to cut one program. i think that i can count on one hand the number of federal programs we have cut unless 546 years. the pressure is to increase

spending more you would have an automatic way to reduce spending unless there was some special act. the next thing is the new health care law. you really cannot see this from where you are but that is ok. the main thing that you need to know is that hot the changes health care as we know it today.

this is to the government mandated system, a government controlled system, i think this is unsustainable. there is an employer mandate him that every employer has to make. there is a low-cost option and the high cost option. that is good in principle. within that, the government puts minimum benefit levels for each of these options and they also can regulate if not dictate and oversee the prices that are paid.

but the alternative is a health government benefit exchange. some of these options will be privately run. if the employer provisions, since it mandates about what to the employer must pay, in most cases that will be like a lot bronze plan that is like 10,000. this cost $10,000 a year per employee and the employer has to pay 70% of that. we already have data for some of the big corporations that are looking at this. they have said that it makes sense to drop the employer

sponsored plans and go with the public option because we saved a lot of money. if you are a family that has your health-insurance through a private employer sponsored plan, when this kicks in, your employer will drop that and put you in these public health benefit changes. you will not get a subsidy here unless you are a low income americans.

the health choices the minister is dictating what we put into these plans. there also depicted in with the plan's cost. you're going from a situation that is a private based plan. how many of you think you will like that? you will not.

there things that we need to do in health care. we do need to make sure that if you have a pre-existing condition, you have the option to be in some plan that we get coverage.

>> "washington journal" continues. host: let us introduce you to roben farzad, senior writer for "bloomberg business week." i will start by engaging in any discussion we had with our

audience this morning. about, given all of the stories we have this summer but the economy and the situation there, with don going on with much of the world, we discussed the theory called rational optimism, whether or not there is a case for having a long view to be optimistic about where society is going in the long run. what do you think of that. given all you are seeing in the markets and the economy today? are you optimistic? guest: i was listening in and what immediately came to mind is some of the best investors of the world, including warren buffett, saying that they are greedy when other people are fearful and fearful when other people are greedy. it does pay historically to be contrarian. in times of peak fear and rational pessimism, as it were, just as we have a rational exuberance 12 years ago, it pays to be contrarian when investing

and protecting your money is concerned. host: this week we have seen a number of indicators and the market has acted volatile -- it has gone up after going down with the housing statistics. so many numbers thrown at us. what are the best indicators to really get a handle on the state of themerican economy right now? guest: right now it is bifurcated between joblessness -- which initial jobless claims shot up warningly, i think the number was close to 500,000, which was far above estimates. two, obviously the housing market. at overhang of the epic bubble we are coming off of. housing is shoveling it really is not hitting a bottom any time soon. new-home sales are in the gutter. bankruptcy's, a bank owned properties, foreclosures, really

we have not seen the bottom of it yet. so much of that was systemically connected. this is the opposite of what we were feeling six or seven years ago when your house was such a store of wealth and was going so well. now it is the exact in verse. host: this week will close with an annual speech by the fed chairman on economic policy. the daily newspapers -- "financial times" and oths, all suggesting this is a pivotal moment for the fed chairman. then you give us some of the observations about the fed's handling of the economy so far and what kind of tools it needs -- may still have left in the chest? guest: blunt instrument the fed -- controls is short-term interest rates and brought it close to zero. it has shown a willingness to create powers, i think, after that. this series of financial reforms

we gotntailed much strength and federal reserve. largely he has carved the launch to do what he has to do but the question is after his main instrument, monetary easing, is exhausted, what else is out there? theyan by toxic mortgage securities, threw everything but the kitchen sink at the problem and increasingly you hear people whisper about the paradigm of japan and its lost two decades, actually. japan had a bubble economy in the 1980's and -- when it all crashed and burned, the central bank of japan was very quick to to go in and try to stan the problem but low rates became a belated way of addressing that and the rates have been at emergency low levels for japan for as long as you can remember, and that does not help. now people are wondering, my colleagues are wondering if the fed is pushing on a string. that is what terrifies the

market because how many air rose you have in your quiver, how many different things, how much can you expand the powers and bailiwick of the federal reserve? that remains to be seen. host: our guest watches in the economy and economic indicators and policy moves from washington and the market's reaction. we would like to invite you to join our conversation. all numbers are on thecreen beneath me. we will also give the twitter an e-mail address. one aspect that i would like you to expin the effect on society, for many years we heard the big problems with americans is we live on credit, not saving enough. contrasting with the japanese who are a nation of savers. now in the past year and have it seems statistically americans are in fact saving more. we are being told that that has a negative impact on the

economy. help understand the american savings rate and how it plays into where we are? guest: the savings rate shot up from something like zero in the bubble years up to the mid single-digits now. a necessity. so many over extended and were up to their chins and mortgage debt and credit card debt. they lost a lot in the stock market. pulled money from the market and put it into savings. they used it to pay off medical expenses. the problem with it, it isery wise to do on an individual person by person level but when an entire country does it and you have everybody saving, it causes kind of a self- fulfilling prophecy. you have to have people spending or else shopkeepers have no incentive to keep people hired. you could imagine kind of the perverse multiplier effect of people ratcheting in spending, ratcheting down spending, and you get more joblessness and that causes even less spending

and the vicious cycle that the fed and treasury and everybody right now is trying to undo. so, that's the problem. by the way, to talk about the contrarian in polls, it would have made a lot of sense to say back when everybody was spending because if you husband that cash, you are now sitting in the catbird seat. you could name your price for houses, can buy assets really you would not get the time of day for five or six years ago. it is completely a buyer's market right now. just walked to the studio down stare -- downstairs. nk next to a man's wearhouse, begging people to buy sued to -- by one and we will give you two or three. and a lot of people are too scared to buy. they are in the process of rebuilding their personal balance sheets. it behooves you to espouse the contrarian in polls. when everybody else is spending

you might want to be saving. host: our guest is a graduate from princeton university, mba om harvard business school, started out on wall street then writing about. reporting fellow at "the new york times" and w a "business week" market senior writer in 2007 and you can find him regularly on twitter. let us get from calls beginning with this call from jacksonville, florida. angie, democrats line. go ahead. caller: i am and economist and i am more interested -- hello? host: we are interesting -- listening. caller: earlier in this crisis i wrote a letter to the president, wrote a letter to congress and a lot of democrats and i was asking them to concentrate on the propensity of the economy to consume because that it is what

is going to help the multiplier. there is no way you can keep giving money -- making efforts toward recovery by supporting groups that are more sabres then the groups that are more consumers. at this point, given the state and anticipation and the economy, the best way to stop the problem that is going on is only to support csumption. because you do give money to groups that save more, they will keep saving the money. thank you. host: thank you. guest: here is the bottle -- who is giving money to people who are saving? it is historical awful time in terms of what you get on a 10- year treasury, 30-year, two-year note.

the governme in no way is consenting saving. that is what bringing interest rates to zero and all of fiscal stimulus is to do, to get you to spend. there are people out there, criticthat would espouse the opposite position. in that we have been too fixated on consumption for too long and that really this is that our huge this interest in the long term. everybody is going to max out on credit-card debt and the over- leveraged and the government cannot keep printing money for it. almost mortgaging the fiscal stability of your children's lives and order to prop up spending today. is it sustainable? yes, and the short term, if everybody is ratcheting down the spending. it could lead to deflationary down the road. but i would really take issue with the idea that the government is in sding saving right now. you could make an argument that those who have been on their

best behavior during the credit to bubble and the subprime both are really getting very little vacation right now. host: annapolis. rosie, independent line. caller: thank you so much for taking my call. my comment has to do with -- i used to be a democrat for 20 years and then this crisis struck and it is just such an eye opening of experience to really understand and see what it's going on and how things to work in this country. one of the issues i have is obviously the comment that you made about, that america is a consumer society. how can you create an economy based on consumerism? that is the first point. the other thing is, my issue has to do with the federal reserve. because i never paid attention to that, how banking truly works. but i find it rather disturbing

because when you look at the history of the federal reserve and how they managed the money in this country, what you can see over almost the last 100 years is the cycle of cost and boom and bust are getting bigger, more destructive, the american consumer and society is ultimately paying a price by less wages, flat wages. there is less prosperity. i truly believe that this country is still at the beginning stages of a depression. and the onlyeople, the only people that have benefited from this so far are the private bankers that pull the string behind the closed doors because there is absolutely nothing federal about the federal reserve and there are no reserves, either, you know? host: let me jump in and get a response from our guests. thank you for your call. guest: a very valid criticism. there is almost a neo-classical argument that there. a lot of this goes back to the

time of alexander hamilton when there was opposition to a strong central bank. with the creation of a federal reserve and what we saw an early 20th-century, these were some of the ideological dercurrents. yes, indeed, you see that. the crises get in -- ever bigger. you keep hearing that this is the worst economic backdrop since the great depression. the federal reserve had to get its hands of rounds really rampant inflation in the late 1970's and early 1980's and the savings and loan crisis in the end of the 1980's, long term capital management's decline and the russian currency crisis in the late 1990's and it all sms like small peanuts compared to what is happening. this is the cost of the brand of capitalism you could argue, there are a lot of people who believe the federal reserve should be

weakened and banks should be allowed to fail. we are paying for the - -- regulatory neglect of the past decades. they enjoy a preferred tier of citizenship to individual businesses, home owners, who are allowed to fail. whether or not you have people out there electing the lis of ron paul to take down the system, i think that is doubtful. there is largely in in the right now th we need to prop up spending of some sport. -- unanimity right now that we need to prop up spending of some sort.

and as i said before,.p. morgan chase, there stearns, everything washington mutual bought over the years. bank of america. rrill lynch, first republic. it is all wrapped up into that. these are far bigger things that the government has to control. this is a particular brand of creative construction that u.s. capitalism goes on. you've effectively have to have national champions, the government. this is not pking winners felt right, and designating firms that it will not allow to get too big to fail. in the past, this was not, fine, just left out there until we had a crisis big enough to contest that. host: if institutions are bigger

still, what does this mean for the loss that would prevent the types of meltdown that we saw two years ago? >> all it does -- guest: all it does is to codify the federal reserve to intervene in provide for the orderly demolition of one of these hydrous. it is a potentially saying we think it is important right now that we are going to put it in this legislation. how that is done in the real time process, i think, a beggar belief. i do not know how they do it. host: next phone call. scott on the independent line. caller: when i was in grammar school, and unearned and

interesting point. to really affect change, you have to do something radically different. when we were in a boom and everyone was working, we made a radical change and turn them into the wild west, both now and the 1920's. we are not in the persian now but we are headed that way. -- depression right now but we are headed that way. people need to get honest, quit stealing millions of dollars. if not, we will not get out of this situation. host: your response? guest: this is what historians call the ones in a generation

opportunity for everything to be cleared out there. things that we never imagined the federal government would be of their underwriting. to a much broader extent, the system was allowed to fail back then, and was rebuilt from ashes, and that memory is pungent in a lot of people's minds. many people cannot fathom the sense of conservation, frugality, and these other fine virtues that were to be discovered in the great depression. the system has become much bigger now. the treasury and federal the serbs have become much bigger. we have the entitlement programs like social security, medicare,

medicaid, bigger government bureaucracies, much more in the way of obligations and an interconnected legislative system. it is so much harder to say let the system burned down and we will rebuild it from scratch in how many years, let the depression take place. there are some that an't you that instead of -- argue that instead of throwing trillions of dollars at the problem, we should have taken our lumps of from to. host: speak to that, if you will. what suggestions will begin to turn the situation around? people need jobs in order to consume, pay mortgages, etcetera. what is the view of those you talk to about what will start e momentum? jobs, but they do not

appear out of nowhere. internet90's, the spanned this huge productivity. we do not know what this will be yet. these tens -- these things tend to happen in silicon valley, labs of innovation. peoplere suggesting that it ca be clean technology.

suggesting that it can be clean technology.

commercial property defaults, increased joblessness and people getting the wages cut and employers, back saying if you want a job you are going to have to take a haircut. you can imagine how then that leads to a further decline in spending. that is far harder for the federal reserve to forestall.

inflation is it a known villain. paul volcker fought it and defeated it successfully in the early 1980's and alan greenspan was vigilant about it. but deflationary, that is actually quite terrifying. it is the idea that the fed will just keep pushing on a string and things will keep falling in price. it visited japan several times over the past 20 years and it is really where we sum for an economy our size -- especially after this epic intervention by the fed reserve. host: a tweet -- we are talking about the economy. next is a call from sacramento. this is bill, independent line. good morning, you are on the air. caller: sorry, my minutes went out and my btery went down. i am right on top of what is

going on. i and a statistician. not an economist. i deal with analysts' and i -- vetting of projects. what i am following in the media, when you bridge the gap between the old ways and what they need to be, what the new ways are, that is where jobs are not being found. i am content -- contacting a gentleman again who is in a very good position to change waste. if you take waste management and turn it around and put it in use instead of storing it, if you take alternative energy and transit and housing and construction and you make it with the new technology,ou have to bridge the gap. the people in our universities are to consolidated. they need to be able to open their minds and realize people who have been out of it -- in the field and researching, the people who are two generations ago, coming out of the woodwork and will not retire and will be

there like children and grow up like teenagers again because they refuse to dry up and blow away. these people are going to bng out the knowledge and bring it to the fore. they have purified what they are doing in their lives and on a bit -- in a position. the government has to recognize that the people who are in the growth industries that are assimilating what the large corporations are refusing to chains -- and i've got a gentleman on the line and it is amazing what i am able to accomplish because of being the statistician and haven't opportunities because of our way of government and supporting me and my family supporting me, i'd like a millionaire. alligator shoes, a wardrobe, tried on five italian suits the other day. helping the people who are helping people. the people claiming the ongoing out of business -- would close. when it does happen i have my people lined up. i have been researching the last 35 years.

i eat better than anybody i know. i do most anything better than anybody i know -- host: have to interrupt as i did not know what we are going to do with your story. guest: i need a transtor. host: anything to say to him? guest: there is an important point. he talked we can throw billions at clean technology instead of bailing out the general motors or chrysl, it would not fit well politically in parts of the midwest. he would see all of these auto parts suppliers going bankrupt. there would be a daisy chain it is this bold american industry versus new american industry. silicon valley is begging for money. clean technology is begging for the government to get out there and throw money at alternative energy. bill gates just from an essay on

this. there are political vagaries in the near term. the need to prop up the economy d not just dump thousands of auto workers back into the system. it shows you, in theory, it is wanting to write these things down, and they make for great talking points, eminently reasonable to allow the old economies to blow away and spend on the new, but in practice, it is vexing lead difficult for a government to do these types of things in a recession. host: as we await the jobless numbers, these numbers will be closely watched. last week's an anticipated report took the markets by surprise. what would be the market's reaction, depending on which windows? guest: the market is your -- it is still a huge number relative

to jobless claims. the fact that they are down there trying to slice and dice numbers, hopefully you see a moderation in the growth of unemployment, growth in jobless claims might be good news. it shows you how low we have been laid. in the past, you were just looking for these numbers to beat them in a mess, with unemployment naturally supposedly around 5%. host: elizabethtown, pennsylvania. harry, republican line. caller: we have been practicing only one side of ee trade. until we change it and go back to the tariff system, we probably will never have a recovery. the japanese living standards past nine of the united states

in the 1990's. there is a real decline here. until we change our trade policy and build a manufacturing base, we may never had a real recovery. guest: this is a tough thing to comment on. there is a walmart effect in this country. they are doing well politically because people can go in and buy clothes that were manufactured for pennies abroad. people can afford a digital camera for $150. these are the fruits of the trade. unfortunately, we have the eviscerated manufacturing in this country. you cannot susta the industry that are used tpaying people $25, 30 fund dollars an hour, when the chinese equivalent can

be manufactured at a fraction of that. there are beneficiaries of free trade. by the millions. anyone that has experienced discounts at a target, walmart, costco, things th you can do, efforts and we can get in the country, but there is a phrase -- there is a price to pay. the question is, do we want to be helping these people be replaced in industries whe the united states is competitive? maybe in medical devices, semiconductors, a corridor of clean technology can be billed out. that is where there is some debate between free trade and protectionism. host: in the "new york times" business section. steven greenhouse's story.

do you have any comments on this case? guest: in a much better economy, it would be much more of the day pr black guy for walmart -- more of a black eye for walmart. people are trading down, people are realizing they rlly need a company like this to help them spend their overtaxed dollar. whereas walmart, in the boom

years of 20 -- you would always see magazine covers portraying it as a psychological guilt trip, providing stingy benefits, tearing apart cities, mom-and- pop businesses -- a lot of that criticism has been muted over the past two years. host: michael on the independent line. caller: a quick comment and question. i think the only thing that is saving this country is the fact that we have 16 aircraft carriers and stealth bombers. if china own to us, until they get 16 aircraft carriers, we are still the biggest stick on the block. host: that is a good promotion for our look and defense and defense spending. today, we will be looking at

military members, what their economic situation is, what their compensation is like. at the close with you here, we started by asking you if you were optimistic. what may happen this fall that may impact the way the economy is coming? guest: this time of years just so were some four markets. people come back from summer vacation. they have to come back and open up their statements again and look at the real numbers. kind of day confluence about a locker -- lackluster stock market, the atrocious housing numbers. certainly, right now, the stock

market is now on the cat's meow. thereis a record disparity between the earnings disparity offered compared to the tiniest of treasury yields, but nobody seems to care because the stock market has gone nowhere. you have to look at this as a two front of thing. it is one thing to becademic, a very staff-oriented world. it is another thing to look at the peculiar psychology of the stock market. in the past, it has shown that it has a mind of its own. i would caution people from correlating the two exceedingly. host: you can watch and read him regularly at business week.

>> mr. wells, as i've advised every witness, a false statemens potentially a crime, punishable by a fine and/or imprisonment.

woul right hand. [witness sworn in.] >> have a seat. thank you. thanks for being here, and counsel, would you state your name. >> scott lassar. >> thank you. >> questions from the board. >> mr. wells, for the record, could you ease state your full name and spell your last, sir. >> it's james kent wells. last name, wells, and i go by kent. >> thanks a lot, sir. >> by whom are you employed. >> bp. >> and what position do you currently hold with bp? >> i'm one of our senior vice-presidents for exploration and production, and my current role is i lead our north america onshore gas business. >> thank you. and holong have you held this position, sir? >> since june 2007. i've been in that role or similar role to it, the organization has evolved a little bit, but i've been

leading our onshore gas business, lower 48 states, since about -- june 2007. >> thank you. and can you please briefly describe your job responsibilities currently with bp, sir? >> yes. as the leader for our onshore gas business, i work on our strategic plan, what do we want to do with our business in the lower 48, we look for ways to expand the business, develop more, bring more natural gas to market. i'm involved in our resource allocation, which plays do we decide to allocate capital to. where do we send drilling rigs to drill additional wells. i'm involved in organizational designs and where we allocate people to, a i also set the overall expectations and ensure that our organization is adhering to our code of conduct.

>> and from my understanding, when you say organizational design, does that include organizational design of the people that work in houston? for offshore facilities? >> gentleman no, i'm only responsible for our onshore gas business. >> okay. what other oil and gas experience have you had prior to this job, sir? >> from january 2005 until john of spend, i was the general manager for atco, which is abu dahbi onshore oil company. bp has a 10% interest in this company and historically the shareholders have voted in a general manager to run that company, and i was fortunate enough to do that during that period of time. from september 2002 until january of 2005, i was the leader for our gulf of mexico shelf shallow water business.

and then prior to that, i was the business unit leader for our rocky mountains onshore gas business from june of 2000 to seember of 2002. from august 1997 up until the time i took over the rockies, i was the general manager for crescendo resources, which was a joint venture company, once again in the onshore gas business. and then prior to that, i've held various engineering and management positions, usually in the gas business, some in the oil, but always in the onshore in either canada or the u.s. >> and mr. wells, the primary purpose that we have you before the board today is to discuss some correspondence that you had ba with m.m.s. in 2003. do you recall that letter, sir? >> why yes i do. >> the response letter and the presentation that you gave? >> yes, i do. >> have you reviewed that letter

since then, since -- in the last ek or so? >> yes. when i heard that's what you wanted to talk about, i did ask to see a copy of it and i've looked at it. >> can you please tell the board what the letter dated september 24, 2003, that was addressed to you, what it was about? >> in august 2002, and this was just before i took over the role leading our shallow water, there had been an incidents where -- we were drilling the surface casing, so this is in the very shallow part of the well, before we actually have a blowout preventer put on, when they were tripping the drill pipe out, theyswapped gas in, and they subsequently had a fire. on that rig. and then in november 2002, a few months later, in the same field,

in a similar situation, it was once again a very shallow zone before we put a blowout preventer on, but at the time we were setting the surface casing and we had cemented the well in place, there was pressure buildup so it appeared like there might have been some gas flow and they shut in the diverter, we didn't have a fire or anything, but we did have pressure on the diverter, and we had out of an abundance of caution, just moved everybody off the rig becausthere was nothing more we could do until the cement set up and as a result of those two incidents, i received this letter. >> do you recall the results of the grand isle 1993c track 4 well, do you recall, as a result did you lose the rig? >> no. >> did it have significant damage? >> yes, i -- like i say, that

happened before, but i believe there was something like maybe a couple million dollars worth of damage to the equipment on the rig. >> and just so we're clear, that this second incident just a few months later was the same sand? >> i don't know if it was exactly the same sand, but i know it was clearly a -- what we call a shallow gas hazard. >> within the same block? >> yes. >> i wanted you to refer to the last centers of the first paragraph and if you could read that out loud, please. >> the circumstances surrounding these incidents have raised questions about the ability of bp to safely conduct drilling operations in the gulf of mexico. >> oy. and then i'd like you to go to the second page, and the last sentence of the third paragraph. >> this appears to indicate that bp does not regard its required

oversight of contractor operations tthe level of accountability mms desires. >> and with those two statements, what do you think the deepwater horizon shows about that, the deepwater horizon incidents, how do you feel that this letter addresses the incident that we had on apri20th? >> i don't think i can metropolitan on that. as you're aware, i never worked in the deep water. i wasn't involved with the deepwater horizon at all. i've only become involved two days after the incident happened, i was asked to come and help with our response. i think we did try to -- when we were sent this letter, we did meet with the.m.s. and we explained to them all the changes we had alrea made before we receivedthis letter, in response to those two incidents and i think we -- i thought we successfully demonstrated that we were trying to be quite proactive to learning from events and making changes.

>> okay. and in that meeting with the m.m.s., you gave a presentation and i believe we asked you to address personal competency, hazard analysis an contingency plan, is that correct? >> the -- in the meeting, what we did is we read the letter an we ld out a series of what we thought the issues were in the letter and went through and talked about what we had top for each of those. >> i want you to refer to the letter again. specifically, there was a sentence where we would like you to address the personal competency, it's the last sentence of the letter,utside of please contact. can you have read of particular imrtance on. >> of particular importance, is the system of supervision, expertise and control that bp employees in its gulf of mexico drilling operations. >> and that was our concern back then, was the expertise, the control, and the supervision that bp had in place. and that's what i want to talk to you about today. >> okay. >> let's start with supervision concerning the incident that

occurred on april 20th. who was superving the operations on board the deepwater horizon? >> i do not know. >> how do you not know that, sir, i'm just trying to figure out how someone if bp, that's been as involved in this process as you, does not know that? >> well, i've been very involved with the response, and one of the philosophies that i have and i thinkp shares, is when you're involved with a response, particularly one as significant as this, if you start wandering into all the root causes and the investigation, you'll lose your focus on the response. and it's not a good thing to do. so i have tried very hard, not to get engaged. i won't tellou i don't listen to the television from time to time, that i read the newspaper, clearly ido because i'm involved a lot in responding to the media, but who exactly was -- i've really haven't tried

to pave attention to that. >> let me clarify the question. who does bp have in a position to supervise operations on the deepwater horizon? >> we have a well site leader on all of our driing operations, who sets the expectations and makes sure that the objectives that are set out for the operation e properly communicated. >> as a supervisor, a well site leader, would you expect that person to share information to all rig personnel on any gas flow potential. >> i think it -- what we try to do, very carefully, you know, with the drilling operation where you have so many people involved operating the rig, we friday to make sure that the lines of communication are clear, and we try not to direct the employees of another company, so we have safety management systems that clearly define that, and so we expect our well site leaders to properly communicate the

objectives of the well, what the plans e, but not absolutely direct the employees on the rig on what to do. >> okay. while they do have morning meetings with theersonnel site leaders, swaco, weatherford, dril-quip, all these companies that are out there participate in the morning site meetings. would you expe a supervisor would share information about the risk associated with the potential gas flow on a cement job? >> i would expect that if one of our well site leaders had information about a risk that he would share it, yes. >> would you think a supervisor, a well site leader, on the deepwater horizon would have final say in the utilization of how many centralizers go on a well? >> tt i don't know. i don't know how the process works on how many ceralizers to use. >> were you aware of thebp

drilling and well operations policy, sir, when you were working in the gulf of mexico? >> i'm certainly aware of it now. i'm trying to recall whether it was the same one in place then, but i'm familiar with our -- well, familiar, i'm aware of our duap policy. >> i'll use the acronym because you're familiar with it. who actually supervises that this is implemented what's in is dwap? >> that's a good question. i don't think we have sort of one individual. we try to make sure all of our people in dwelling are aware it. it's meant to be as a guide. we do audits, we have technical authorities for different aspects of our business that try to help bring all the expertise we have inside the company to

give us the best result we're looking -- in hour drilling efforts. >> because we've gone through some exercises and had some conversation with other bp employees concerning a lot of the stuff that's referenced in this document and one of the things is management change and that's one of the bp golden rules, we yesterday had the discussion with mr. thierens about not only management change in procedures or designs, we also had personnel discussions come up. is there an individual that goes and that is solely responsible to ensure that the bp gold epiphany rules are actually followed, or whether they en exist? >> well, -- so our belf around safety is that we need everyone eling responsible for not only their own personal safety, but the safety of the people around them, so our policies and our procedures and our approach are sort of geared towards trying to create that safety culture, so it's not where one person is trying to do it, we try to have

everybody thinking about what are the hazards, what activity are we going on, we have a policy of stopping the job, we hopefully make sure that every single employee out there knows at any point, they can stop the job when at the believe there's a hazard that we haven't addressed or there's a risk that needs to be dealt with. >> another thing that we talked about, you mentioned audits. there's been communityless audits that we've referenced in these hearings and there's been items that weren't addressed in the timely fashion that bp had requested transocean to get them in. the first one that comes to mind, we beat it to data yesterday, was the certification ofhe bop stack and the audit that bp performed on the deepwater horizon. i think they requested transocean to have the bop stack certified, part of the oim and ami requirements by the end of 2009. april 2010 comes around, we get another audit and it's the same response. how do you explain that you have these audits with these

recommendations and they aren't fulfilled? >> >> i'm not really the best person to ask that question. i'm not involved with the deep water. i don't know the specifics about it. clearly, i've heard that there's been a lot of focus on the audits. we do use audits to try to help us identify opportunities to improve and we do look to make those improvements, but i don't know the specifics about it. >> okay. now i'm going to move on to expertise. we just went over supervision. i have want to go on now to the expertise side. who would you think by position is t expert that bp has on the deepwater horizon? >> >>ell, once again, won the specifics, but what we do is try to bring all the expertise we have to bear to any operation we have. so it's not just one person. we have people that have specialty in terms of drilling operations, casing design,

cement design, operation, so we actually usually try to have a number of experts involved in each operation, and we bring people from further outside, if we need them. >> would you expect an expert on the rig to have to rely on the beach for guidance in the performance and interpretation of such tests as negative tests? >> that would be up to the decision of the individual on what their expertise level was, what the results were of whatever test or activity you had going onnd whether they felt they needed to consult with someone else. >> do you think from your experience the rigs or platform were reld on on the beach? >> i don't kw. >> jammed how long did you work in the -- and how long did you work in the gulff mexico, sir? >> i was there from -- for a

little over two years. but that was in the shallow water business. we had a deep water business as well. >> i'm very aware of the differences between the two, but when you were in shallow water, did you have a reliance of the people opeting the rigs contact your people on the beach? >> we clearly had communications. when that individual felt they needed to be. for instance, in the incident that we were talking about, the -- when we had pressure after the cementing job, there was a call made, and that was when the decision was taken -- there's no more acvity that can be done, let's move everyone out of harm's way. it just seem like the prudent thing to do. >> why would bp have to have a meeting on the beach, to discuss their well site leaders and to encourage them to let their experience do their own job? >> i'm sorry. can you clarify. >> there was a meeting between

multiple people on the beach to address the well spi leaders and mr. john guide, mr. simms, mr. o'brien, all these gentlemen were involved in it, and it was to let the experience of the rig do their job, because there was reliance on its beach, so iyou have the experts on the beach an you have the gentlemen on the rig relying on their expertise, i mean, you've got all these communications and the people that know the best are not in a position to do the best for the rig. >> i guess i'm still a little confused. i don't know what meeting it is or -- were they talking about all of our well site leaders, or -- >> yes, sir. there was a general meeting to discuss the well spite leaders, an we're going to discuss that with mr. o'brien later today and it was to encourage the people on the rig to rely on their own experience to do their own job, instead of relying on the beach. >> okay. i'm not aware of that. i mean, i'm not sure why they uld do it. i do know we do have meetings,

trying to look at what is the capability of our work force and what can we do to improve things, and perhaps that was something they felt would be an improvement. >> >> testimony before the board indicated that the people bp had on the rig to set the lockdown sleeve had never set one before. who was the tual person that you would consider the expert if they had never done one before to be the lockdown sleeve setting expert? >> i don't know. >> >> would you expect pan expert overseeing the cement job to understand what gas flow potential? >> yes. yevment. >> would you expect an expert to stop work or interrupt it if he saw a hazard? >> i would expect any person that saw a hazard, whether they're an expert or not, to stop the job. >> to your knowledge, was work ever stopped on april 20th on board the deepwater horizon? >> i don't know.

but i do foe that we've had many, many jobs stopped. >> so we've gone over supervision and expertise and now i want to move on to control. what types of systems does bp have in place, control systems to ensure that the plans and procedures that they wants to have followed through are actually being done to bp's approval? >> we have a number of systems. dwop for one, gives us guidance. we have a system that we've bee working on for the last several years, called oms, which is our operations management system. and that's -- the purpose of th system is to sort of bring together, so we're very systemic and consistent across the whole company, the way we expect things to be done, and it sets out, we have some standds in there, and what we do is we use that to set the guidelines for

activity we might do, and then also, to work with our contractors that probably already have their own safety management systems to make sure that we believe their systems are adequate. >> okay. >> and we touched on this earlier and i just want to ask you again, how did bp have control over the maintenance of the deepwater horizon? >> i don't know that specifically. >> >> how did bp have control over thealarm systems on the deepwater horizon? >> i don't know. >> you did respond to a letter, the letter that we sent you, correct? concerning the plans that bp would have to implement to address our concerns of addressing expertise, control, and supervision. >> you're talking about the 2002 ins depths? >> yes, sir. >> yes. and i attended the meeting with

the mms as well and went through the changes that we made at that time. >> so what systems did you put in place to control such things? >> so in the situation, the two incidents that we had, they were both associated with shallow gas hazards. which i want to distinguish that from, you know, there's reservoirs that we try to produce oil and gas for, we're looking to find those. the shallow gas hazards, we're actually look to go avoid those. >> i understand. >> so the first thing we did, because we realized that while we had geophysical people that were very good at finding the bigger reservoirs, they weren't as good at finding these very, very small shallow gas hazards, so we put in place a very sophisticated team that was very good at finding those. and after those two incidents, we never had another shallow gas event again. as -- the whole time i was involved in the shelf business. so that was the first thing we

did to try to eliminate that. the second thing we did was we added some additional supervision, at the time we calledhem dwelli superintendents, -- drilling superintendents, today they're called wells team leaders, and the purpose of the drilling superintennt, they didn't sit on the rigs, but they often went out to of the rigs and they tried to bring some additional support, expertise, guidance to what was going on out at the rig, so it made it easier for the well site leaders to have someone to communicate to. they also spent more time with our contractors, and back then, we had quarterly meetings with them discussing expectations, discussing what had happened f there had been safety incidents, what were we going to do to change that, so those were some of the things that we did. we also made some specific changes to the operations, the

first incident, which was really involved with drilling, we -- we put in a procedure that made sure that any time we came out of the hole, which caused the ents, we would do what we call pump -- pump it out, which means we continue to pump mud, so you couldn't have the swabbing action that we believe caused the first incidents. we mrs. made sure the mud weight was never plo below 9.5. we used what was called a gas block cement, hopefully reduce the gas that might come out of the cement at these shallow intervals. we -- what else did we do? oh, we -- our surface casing was then always run with aasing hangar man drill, so it was just

different way to get a seal in plac sooner. so as soon as we were done cementing, before it was set up, we had that in place. and then we h a very clear decision tree on how we'd use the diverter, that if we did get pressure, we'd shut in the diverter, we'd monitor pressure, a certain pressure, well open up and divert if that was the case, and so we brought some clarity to that decision-making process. >> where i'm going, sir, is we're concerned about bp's supervision, their expertise and the control on the rigs. is it yourestimony that just because it was -- occurred in shallow water or shallow wells, you didn't carry that controls, expertise an whatever other policies you put in place into deepwater? >> well, it's difficult for me to say for sure, but we do have a very good process, inside our drilling organization, of any incidents we have, we share across, an we look at eh business looks at those, and to try to determine if that applies

to their business. now, i do know that in deep water, the drilling operation is very different and when you've got floating platforms an you have b.o.p.'s on the sea floor, versus fixed platforms and bishop'b.o.p.'s on the surface,f they took everything and applied it, i can't say for sure, but we have a process of sharing our incidents of drilling across our organization worldwide. >> i asked yesterday a bp employee if he had any control over that and he told me no, so would you agree with him that the modification that is were made without bp being aware that you had no control of that? >> well, once again, i can't speak specifically. >> i'm not speaking specifically. i'm speaking generally. >> if the equipment is owned by someone else, i guess it's possible that they could make modifications th we may or may not know about. >> a who are they working for?

>> who is -- >> the operator, that's making -- that's drilling, responsible for oil and gas operations on the lease. >> well, we clearly contract with people to do work for juice. >> a you have to control over the people that you have under your own contract? >> no, actually, we -- with people that work for us, we do several things. first of all, we try to choose wise my on who we contract with in the first place. we then put contracts in place that specify certain things. and then particularly, with drilling rigs or any opetion where there's a lot of contract employees, we have learned over time and made this change a number of years back, where we try to use the management system of that contractor, because if their employees are used to that system and they happen to work for different people, you done want them constantly changing, so we friday to use their safety management system, but what we

do do is look at it to see if that meets our expectations. absenteeism then we use it and if we need something above and beyond that, we'll make that credit. -- that request. >> i'm going to move on to something that bp in my opinion shouldave total control over and that's their own well design and internal policies. we're well aware that they submitted their apd, which was approved but had not been approved internally through their own management change process, so woulyou think that bp has control of the process that they have designed in this dwop, that they submitted their apd prior to going through the formal management change? >> please appreciate, i'm just not involved with it, so it's difficult -- >> i know you're not involved with it. i'm just asking the question, where i thinkdo you think they had control, if they didn't go through the formal moc process that's clearly defined in their dwop, before they have submitted their apd to the mms, which met

the minimum regulations, did they have control over that porousness. >> i know -- pro yeast. >> i know bp expense a lot of time on -- >> i know bp spends a lot of time on their process. >> bp also has permit to modify. >> i'm not familiar with that particular pro yeast. >> do you know what an apd is? >> i know what an apd is. >> an apm, when you're doing a work over modifier completion. within that apm, you norm my submit what we call a procedure and there's a thing called a negative test that was in the procedure. the board, i've seen probably four different negative tests through an operations e-mail sent by mr. morell, i've seen some testimony from individual on the rig that did something totally different than what was in that ops manual and've seen one that was referenced in an m.i. swaco procedure and there was another one that i'v seen.

i don't know which one they did to be honest with you. do you think there w any control over theerformance of a neglect testify test on the deepwater horizon, there's four ocedures being sent out to the rig. >> i don't know how i can comment on that. >> okay. >> you touched on the drilling superintendent earlier, an we were going to ask you about that, because we asked a bp employee who was a current well site leader if he knew what that was and he responded no but i think you cleared up, it is now a well site leader. >> wells tealeader. >> wells team leader. >> was it once called the drilling superintendent and they did an organizational change to call it a wells team lead? >> when we moved -- if you look at the letters, we used to call them rig supervisor and we realized we're not supervising the rig, so that's what we changed to well site leader, that was when we changed

drilling superintendents to wells team leaders, an we changed some names to try to more accurately reflect on what we thought the people's real roles were. >> but to your knowledge, was it an organizational change that created that wells team leader? >> that occurred when i have was in the middle east and i was sorts of out, but i don't know if there was a major organizational change or it was a minor one that they changed some titles. i just don't know the specifics of it, but i know it was a conscious effort to try to improve the way we managed our drilling and completion operations. >> and my final question about control is, did bp have control of the ongoing operations on the deepwater horizon on april 20th? i don't think it's that tough of a question. i'not trying -- >> please repeat it again. >> did bp have control over the

operations that were going on board the deepwater horizon on april 20th, as a prudent operator, did you have control over the operations? >> i believe we would have set expectations, whether we actually had control, that i can't ll you. >> >> i have no further questions, sir. thank you. >> other board members. >> yes. >> mr. wells, i am like to refer back to the first page of the letter dated september 24, 2003, around i would like for you to read out of the first paragraph, or begin with the first paragraph, andead that for us, for the -- for everyone in the room. please. >> the first paragraph. >> yes, sir. >> recently, a numr of

incidents involvi bp drilling operations have occurred in the gulf of mexico. that's incidents seem to have root causes related to incomplete planning, poor communication, insufficient knowledge or traing, lack of effective supervision. the circumstances surrounding these incidents have raised questions about the ability of bp to safely couct drilling operations in the gulf of mexico. >> thank you. now, if you would, refer over to the -- to the presentation to the slide that's titled, issues and responses, issue number 3, you touched on some of this already. but the the first bullet under the response, organizational enhancements, you talk about adding drilling superintendents and you discussed that, that those are now called wells teams leader, but i would like to go down to the second bullet where it states that y'all added senior drilling advisers to provide on-site assurance. and this is for shallow water

shelf operations. was this also shad with the deep water group at that time as well, were these changes also made to the deep water group? >> i don't know if, in particular, adding the drilling advisers were. that was something where we felt we had outstanding experience in a couple people that we wanted to be panel to disseminate to all of our operations and so we created these drilling advisers that we could then send out an assist the -- at the time they were called rig supervisors, but the well site leaders, so that was something specifically we did. i don't know whether the deep water business decided to do somethg similar or not. >> who was your equivalents for the deep water at that time? >> kenny lang. >> that's lang. >> lang.

>> panned is he still currently employed with bp? >> no. he retired a few years back. >> thank you. and then the next bullet down, bp personnel changes were made. could -- and i know it's been eight years, seven years ago, could you elaborate some on what some of those changes were? >> and i did have a discussion with our wells manager, because i was trying to -- and what we recall, so what i best -- is at the time we had an asset organization, and we had some of our drilling people reporting up through the asset and what we did was bring more clarity to the reporting so that we had our expertise line from top to bottom, which is very similar to what our organization is today, so that is what we recall that was about, was makg some adjustments to reporting

relationships, to have real clarity to where we had the expertise. >> okay. and i'd like to back up. you mentioned in your testimony, to mr. matthews, that the first events that though cured onthe c4 sidetrack well in grand isle block 93, that that occurred in august, shortly before you came to work in that position. how long were any that current position? when you came to work or took that assignment in october -- september, october? >> september 2002? >> why yes, sir. >> how long had i been where? >> how long were you in that position once you game in to that position in september 2002? >> i was there fm september 2002 to january 2005. >> and in 2005, you went -- you became what? >> i became the general manager of adco in the united arab emirates. >> and how long were you in that position? >> from january 2005 until

june 2007. >> >> i have no other questions. thank you. >> good morning, mr. wells. >> just so i understand,, the superintendent is equivalent to mr. john guy's position now, for this particular incident? >> if he's a wells team leader, then the answer is yes. >> the first person they report to on land? >> yes. >> that would be what you're talking about. >> yes. >> okay. if people become depend entrepreneur on the well site leader, and the well site leader is making the decisions, is there some sort of problem there, when he's not on the rig? and where i'm going there, is

people on the rig have a vested interest, a bigger vested interest in safety because they're involved immediately in any event. >> your honor, i believe he meant to say wells team leader, they're dependent on the wells team lead he were. he said if ear fendent on the wells site leader, but he's not on the rig. the well site leader is on the rig. >> sir, are you talking about john guide as being the superintendent equivalent? >> we have a well site leader that's on the rig, in fact, we typically have one per dave and one for night. and then there's a wls -- well, i need to be careful, because i -- we've made changes in the first quarterrer of the deep water organization, which i'm not completely familiar with. but i can speak pourfully to what th-- powerfully to what the dwelling superintendent, an they weren't assigned to any one rig, like a well spite leader is assigned to a particular rig.

they were to go around and help at a number of different locations. >> okay. they were supposed to go offshore and vims it's the rigs on of -- visit the rigs on a regular basis? >> why yes. >> were the rigs supposed to be dependent on their decisions? >> no. the well site leader is bp's representative out on the site. but i thk like in any organization, you depend upon others for expertise to supplement your own experience and knowledge. and that's what we were -- we're providing when we added the dwelling superintendent, was -- drilling superintendent, was taking advantage of people that had some real expertise and providing it to others to supplement their own. >> so do you feel like this has beenarried over into the current offshore setup? >> clearly, the concept of that, yes. >> and could you explain that? >> the -- what we believis we

want to bring the best expertise of our entire organization to every operation and so we assign people, for instance, well spite leaders, who are out there as our representative, set the expectations, but they clearly have access into different people and we alsoake sure that we stay connected, so we understand what their expertise is, etc., and so they evaluate how those well site leaders are doing. >> just one final question. do you think it's a good circumstance when the person making the majority decision is on the beach for bp? >> well, so -- when i take that with your earlier qution, to me, it doesn't matter whether you're on the beach or on the rig. we're talking about people here. that this is about --we want everyone to go home, just like they came, so whether i was on a rig or i'm in the office, i care just as much about that

operation as someone that's there. >> thank you, sir. >> good morning, mr. wells. now are you talking about your responsibilities for shallow water as parts of your duties before? >> why yes. >> now we have a lot of bp's of drilling and completions come before us, and i can't -- i don't have enough fingers to count how many of them and a lot -- and a lot of -- their answer was i don't know, i' not responsible for this or that. now for the gulf of mexico, who has the total awareness and accountability for the safe operation of bp deep water operation? >> well, as i tried to say earlier, we friday not to make it one person. that's not a good outcome to have just one person worry about it. we try to have everybody focused operational plan safe operations panned so we friday to create a culture where everybody is worried about what the hazards are, what activity is going on, have we got the right plan in

place, etc. and to from a safety perspective, is not one person, it's clearly we want everyone'sead in the game on that. >> yes, sir. so if nobody is in charge, if everybody is in charge, nobody in charge, is that corct? >> i disagree when it comes to safety. i think we want to have everybody feeling like they can stop the job. >> sure. mr. james dupree would be the one in charge of the safety of bp deep water operation in the gulf of mexico? >> james dupree has the same job that -- the job that i have for onshore, james has for the deep water business and as i described my responsibilities in terms of strategy, planning, allocating presources, etc., he has the same role. >> okay. so is there one golden rule for him and one golden rule for him, or bp just have one golden rule? >> the eight golden rules that we have apply to every employee, and alsopply to all of our operatio, people coming in to our operations. >> okay.

how about safety code, you indicated there are safety codes here for onshore and safety codes for offshore? or is th the same procedure? >> we prief. -- we friday to have the same safety >> we friday to have of the same safety culture everywhere and there does need to be different focuses, whether you're onshore or offshore, the operations activities are different, so you try to get the same culture, but you want people to be concerned about different things. >> but is should be the same culture, which is safety first, correct? >> absolutelyn safety first. >> all right. >> in fact, we talk about safe and reliable operations, we talk about that everywhere if bp. >> all right. so how about safety management system, do you have one safety management system for shore approval rating one safety management system for offshore? >> what we have is in our oms or operations management system, we have one operations management system for the entire company. then for each business, we do what we call our local oms,

which is taking that overpaul system, and -- overall system and applying it to your specific business, so things that might be very important to the onshore business would not be important to the offshore business and vice versa. so you will adapt how you actually take the management system. it's consistent, if it's the same aspect, you'll look to do it the same, but itill have -- you'll have different priorities depending upon where you are. >> all right. so if you've got one incident that's a data points, if u've got two incidents, that's a line, if you got more than two, are we are trained, is that correct? so i want to see what kind of training we have here in terms of safety culture. the incident that mr. mathews raised, i guess back in 2002, some of the issues there, how about the incident back on march 23, 2005, with the fire and explosion that occurred at bp texas city refinery, are you

pay wear of that incident? >> i'm very aware o it, yes, sir. >> would you likely to talk to that? >> yes, sir. well, the chemical safety board did annvestigation, and one of their conclusions was that cost cutting, fail pure to invest in production pressure from bp group executive managers, impair process, safety performance at texas city. so some of those -- i read the report and it's very similar, elements silar to the one that mr. mathews, the incidents he cited. now -- so that's two data points. the third data pnt here is the deepwater horizon. somef the issues that mr. matthew brought up in terms of the moc process, and her items, tell me there's traini there about the safety culture of bp. now if you have one safety culture an you have this training that, you know, pains a picture of a safety culture, is it a good safety -- have you learned from these lessons, to make sure that you have a proper

safety culture in place, not just for onshore, not just for offshore, but for the entire companies that cover our operations, so that's -- >> so the texas city explosion and fire was a devastating event for us. while i have was in the middle east at the time, not even in the immediate bp organization, i was very awareof what happened. in fact, john mockford who led our investigation of it, i asked him to come over and he presented to my leadership team on what happened in that event and what bp learned from it, an we made some changes in atco as well. in bp, it's had a dramatic impact. we try very diligently to show there is not a conflict between safety and cost. never should cost get in the way of doing something safely. and i know it's my personal belief, that i think safe and efficient operations go and in hand. if you properly plan your work,

you'll do it safely, and wh you properly plan your work, you'll do it cost effectively, so they are not in conflict. they don't neeto be, they shouldn't be, and if they ever do get in conflict, safety needs to be priority one. that's my personal belief and that's shared inside of bp. clearly, texas city indicated we had some issues, which we've tried to deal with. i can speak pourfully to the changes that i've made in my own business, which might be helpful. so if you think about what happened, one of the issues clearly it was an issue of integrity of the system, we have since the time of the texas city in the onshore business, we've invested $1.4 billion just to -- to change the mechanical in tiger woods task rate of the pipelines,s of the vessels. we have 30,000 pressure vessels on shore, we've gone through and looked at each and every one of them, upgraded them where we needed to, put the proper systems in place, so those could operate differently. poable buildings.

we had people in the wrong place in texas city. we had portable buildings in a -- in harm's way. we have not only gone and removed all the portable buildings from harm's way in our onshore operations, but we've even gone and upgraded our permanent buildings, so if they're in, like, for instance, in a gas processing plant, and they're in the blast zone of something that hamed, we've even strengthened the building or in some cases, we've aually moved the buildings, and we're a long way down that journey on that. there was an issue around blow down stacks, particularly with hydrocarbons that are heavier than hair. fortunately, in our onshore business, we don't have any heavier than air blow down stacks, but what we did do is we said, well, but what about hydrocarbons that are lighter than air, so we did make some modifications to some of our blow down stacks and dryers, so i think there was a lot we

learned from texas city that we've applied and i can speak pourfully to the busy know, but i believe other parts of our business have equally responded. >> those examples you cited, those are mainly equipment improvement. i'm talking about safety culture. if you don't change the safety couple tour and safety management system for the entire company, you're going to have incidents, and if you can only correct, like to say the thunder horse, near capsizing, so you correct that, nobody died, no oil in the water, so therefore, it's maybe a chance to check the ballast system, for example, make sure you fix whatever discrepancy that was, butt does not correct the safety culture or the safety management system of the company that would prevent something like that from happening again. that's what i'm saying. it's not about equipment improvement. it's about a safety culture and a safety management system and i am like to know, you know, this incidents, whether the one that mr. mathews cited, the texas

city explosion and the deepwater horizon here, what has -- these things keep happening, and my thing is that they have not changed the safety culture or the safety management system of bp. can you tell me what have you done and the results, not just about your belief or, you know, what has been done and what the results are to ensure that there's a proper safety culture and an effective safety management system within bp. >> so met me talk first of all about culture, d i -- i understand how what i said could communicate that that wasn't about culture. my belief is there's a couple things you do to alter couple tour. one is you make surehat you set the proper expectations, which it's been very different, how from the top of bp, we've communicated particularly about process safety, we've alway had a strong communication around personal safety, but we've

dramatically changed since 2005 howe we talk about process safety. we monitor different things, there's different things that are in our performance contracts, and those are what i call expectations. *9 second piece is the actions. taking all the actions that i talked about, that does a lo to drive culture. with people see you're spending significant money to change things, that says to people, boy, they're serious about that, so i do believe that sort of commitment has a tremendous impact on culture. we always had to focus on things like stopping the job, doing what we call advance safety audits, which is looking at what people do, in a way that allows people to not react defensively to suggestions on how they could work safer, so we continue to drive those things, but te -- this commitment that we put into process safety, i think said something different about culture. that's my view, so i think there was a piece about that. and in terms of management

systems, we spent, i believe, it was almost two years studying not only our own industry, but others to come up with our design for the safety managemt system. this was a very sophisticated system, in my words, it describes wh good looks like. it sets standards, which we all each year go through and assess ourselves against and then come up with a prioritized list of what we're going to do to reduce the risks in our business. so i thinwe have done significant things to change -- i think both ofhose things influence culture, but that's my opinion. >> yes, sir. how about, i mean, the situation, back in 2002, in the texas city in 2005, and also deepwater horizon here, can you cite me any example where a senior executive in of the company was held accountable for those incidents? and i think that's a stronger message than it is to spend money to improve

the equipment. >> i don't know all the specifics around texas city, because -- but i do believe some people did leave the company during that period of time. mr. hayward, who will be leaving the company, i think our board does respond, and take actions. >> so mr. hayward would be held accountable for this ins depth, so he -- he didn't incident, so he didn't leave on his own? >> i don't know the specifics of that. he may very well have left on his own. >> besides mr. hayward, which other senior executive within bp has been held accountable for this incident? >> i don't know. >> okay. >> now you say that you have been involved in the oil field response, including the killing of the two relief wells, is that correct? >> sorry, say again. >> now you say you have since april 20th, you say you have been involved in the oil spill

response? >> ye >> including the drilling of the two relief wells, is that correct, sir. >> yes. my role in the response has been to communicate from a text calmics preexpect of to the outside world, press, public, governments, kind of what we're doing, so -- because early on, it was very confusing, people didn't understand. technical aspects and so my role has been to try to understand what we're doing and put it in a language and set of pictures that people can understand. >> yes, sir. admiral thad allen said t relief well is the permanent solution for stopping the oil flow in the gulf. would you agree, sir? >> from day one, we've always had multiple options on what we were going to do to stop the flow of oil into the gulf of mexico and ultimately kill and seal off the well and some did not work. some have worked.

so i think for instance, our top kill that we tried, we were unsuccessful in getting the well killed, because too much of it flowed out through the top. once we were able to put the capping stack on and shut the well in, well, we were panel to, with our static kill, shut off the -- shut off the flow and i think what we're trying to do now is understand have we completely isolated the reservoir from both -- we believe we've isolated it clearly from the casing. what we don't know is whether we've ice late it had from the annulus. we may have and we may have not have. so they're continuing to pursue -- we're continuing to pursue a path right now of looking to fish out some of the drill pipe and if we can, put a different blowout preventer on, and then ther complete with th relief well or find some other way to make sure the well is completed. >> yes, sir. but the relief wells, is -- the

permanent solution to stopping the oil -- based on past experience. >> i'll just keep saying, it's one of the ways. it was -- what we've always talked about, it's the ultimate backup, if everything else fails. >> all right the ultimate backup. who is paying for the drilling of the relief wells? >> bp and perhaps our partners. >> okay. which vessel -- yes, sir. and i don't need to know. anyway. which vessels are engaged in the drilling of the relief well, sir. >> say again, sir. >> which vest -- i understand that two relief wells, which vessels are engaged in those relief wells operations. >> the first relief well which we spotted on may 2, as being drilled by the dd3 and the second relief well, which we have spotd on may 16th, as being drilled by the dd2. >> who owned -- who operated for

the dd3, i guess that development driller number 3. >> transocean. >> okay. how about gsf development drill number 2? >> transocean. >> so we have the same two characters here for this relief well, which is the ultimate lution here. now, this is a question that i have for you, both you, mr. mr. sis, mr. o'bryan and other executives who may be appearing before this board to answer this question. with everything -- there are many factors between the original wells and the relief wells of the same, including the two major players. is it because of greater public scrutiny and government oversight that we have not had a well blowout with the drilling of these relief wells? >> i do not believe that's the case. >> why, why not?

>> i think we are good at putting together plans and operating drilling operations. we did have a very unfortunate event. i do not want to -- and i think we need to learn everything we can from what happened on the macondo well. we put together a good plan. we had already contracted previously to ve the dd2 and dd3 work for us. so we had gone through our inspection process, our contracting process, and then what we did was we did some additional testing of the b.o.p., when we drilled this, but those were the only changes, at least that i'm aware of. that we had done in our practices. >> okay. good plan, additional testing of the b.o.p.

now through the general public, you know, people look at this thing, you've got your -- you're drillingwo wells on the same oil formation, probably have twice the chances of a well blowout, nothing happened, the only thing that the public is seeing the difference is that the greater public scrutiny of this, and government over sight. that's the openly then that the public has so far. so i'm asking you, are you saying that' not the case? that that -- the things that -- to your knowledge, right now, that prevent another blowout with this formation is you have good plans, does that mean you had bad plansefore for the deepwater horizon? >> no, no, it does not. and i think we need to finish this investigation and every investigation to understand what really was the root cause that caused this horrific event. and then when we know that, then we need to make whatever adjustments need to be made, so that something like that doesn't happen again.

from my perspective, i don't think we actually know the root cause yet. :

that is the most critical decision maker? >> no, i don't know. i don't know that. there is -- many different decision makers on a rig and there should be. we need to take advantage of people that have the expertise for whatever piece of equipment they are responsible for. whatever. there are many decision makers. there are many important decision-makers on the rig. >> is the well site leader the person that makes the decision to go, no go decision with regard to operations on the rig? >> i think they often decide, i will call it, the what, not the how, things are done. exactly have the crew performed their tasks and actually the execution of it. is run by the contractor. >> are you aware for the well site leader was on this, the

date of this incident? >> no. i'veeard different people's names but i don't know who was actually on, on at, on the 20. [inaudible] >> the well site leader is one, just make sure of the clarity. >> yes, sir. i am referring specifically to the well site leader. would've bac management decision to remove that individual a few days before a critical event and not give him access to the person that he relieved? >> i don't know the specifics on that. we have rotations of people that we routinely do. sometimes we bring in people for certain operations. the specifics of the deepwater horizon i'm not familiar. >> would that be an important management decision, i change out other well site leader with regard to the operation and safety of the well speed?

we have a scheduling process that we do to make sure that people are there and when we need them, they have their time off, they go to training or whatever it is. and i believe that is managed. >> shod a well site leader have access to the person that he relieves so that he can contact that person to find out exactly what the concerns were with regard to the well? >> well, it's been my experience when you change up as a handover period, and that's discussed at that time. >> so there's no continuing need have contact with that individual after the relief? >> i don't know. i mean, typically it's handled through a handover. >> would it surprise you that the we site leader on board on the date of the incident didn't have access to the person that he relieved? and, in fact, that cell phone was turned off the?

>> no. i mean, that wouldn't, wouldn't surprise me. >> thank you, sir. >> any other board questions? >> mr. wells, let's go back to 2002, 2003. as best as you can recollect, what was the exposure for deepwater operations at that time for bp? how big were the deepwater operations as far as growing operations go? was in its infancy? was a going, you know, any growin pains? >> i know we have clearly gotten, we are larger today than we were then. it wasn't a startup business. it was a fairly significant business, i just don't recall it's aptly how big it was, you know, whether we -- i know today

our deepwat business produces around 400,000 barrels a day. ather was 200 or 250 or 300, i just don't know. >> mr. mathews has a couple follow-up questions. >> earlier we were talking about cost-cutting safety, and there was an e-mail from a bt engineer that reference a risk reward equation. while you were in bp's on sure, now, or on the shelf when you're doing your drilling operations, were you ever a where of a risk reward equation? >> no. i mean, we try to be very clear that we don't jeopardize safety for costs. i'm not aware of what risk reward you're talking about, equation you're talking about so i've never used it. >> and also going back to the correspondence that you had with the mms, i believe they sent you a letter. i think november 2003 thank yo for coming to meet with them.

and they were looking for to verifying that you implemented these recommendations that you're going to put in place. do you know if you actually follow up on that? i couldn't find any correspondence to verify that. >> well, if you actually look at the response, we actually had done them before we had the meeting. >> i just want to mature, did anyone ever come back to bp to make sure they were still in place? >> i can't verify that for sure, but the fact that w were able to demonstrate that we'd already done all of these things, i think, and the letter conveys. they had confidence. >> you are aware of what the annual performance review is, correct? did you ever participate n an annual performance review in the gulf of mexico? >> we doannual performance reviews inside the pit. >> where bp comes in and discuss their performances the? i don't recall that. >> i was just wondering if they

verified it later on after 2003 that it was still in place? >> they may have and i'm not aware of the. i don't recall. >> thank you. that's all i had. >> let me ask ou here, i believe you indicated bp set expectations? >> we set expectationsfor what the objectives are for a well, how deep we are going to drill it. we set the casing plans, et cetera. we also set expectations around safety in terms we expect all of our operations to be done safely. those are the type of expectations we set. >> so if haliburton come in and recommend 21 entralizers and bp only uses six, what was your expectation for halliburton? >> i'm not sure i understd

that question. >> from a casual observer, 21 installation centralized would ct more than six of centralizers, is that correct, sir? >> i'm sure that's probably the case, but centralizers, at least -- i don't know specifically for offshore but i no centralizers are not a big cost. it's not a cost issue with centralizers. >> i don't know how much they cost but what i'm saying is i would assume 21 would cost more. >> and i would you say it's insignificant. shouldn't be a factor of. >> so your expectation for halliburton on that activity speed? activity? >> it's difficult for me to answer that question. i have heard in the press this issue about 21 and six centralizers. i don't know enough about it to

add a meaningful comment to it. >> so your expectation, for example, you install six, you have the final say on how your expectations going to be met, write? >> i don't know the specifics of how this went. i don't know if that really lives up to the expectations. that's sort of in technical design, if that's, you know, i just don't know the importance of the centralizers, where that sits. >> so in terms of setting expectations and those expectations would impact the safety of the vessel, the crew, will you agree, sir? >> well, i want to be -- i don't know if the centralizers have anything to do with the safety of the crew.

>> clearly we set expectations that we expect to conduct all operations safely. >> so you are, your expectations would have impact, would have impact because carry out on the vessel, would have impact on the safety of the vessel and crew. i would think that since you are holding the purse strings you have the final say, is that coect, sir? whether expectation or requirement, you're the one holding the purse strings, you make the final decisions, is that correct the? >> we clearly pay the bills. we clear have the safety management system that says who makes what decisions. and it's important that we follow that. >> but international safety management system for a vessel, master is responsible for the

safety of the vessel and crew and the prevention of pollution. how then, if you hold the prse string, you make the final say. what's, how is that comply with international regulation to sink the master would have the full writing authority? >> your beyond my level of expertise. i just -- i just don't feel, feel comfortable that i know enough about that. >> and that's one of the issues i have is there are so many completion of this, committee group and you say, you've got use expertise of this individual, that individual. i set expectations, leave ito the contractor. it seemed to me that, see like everybody in charge here, at the end of the day nobody in charge, nobody have good awareness of what going on and nobody making

want to step up and make the right decision here. that's what i'm seeing. you can disagree with me, but that's what i'm saying. >> yeah. i mean, i know it and i can speak more powerfully on shore. you could say we only let one person making every decision, and i just don't believe that's right. we need to count on certn expertise, and we tried to do that. >> any other board questions? marshall islands? >> thank you, your honor. good morning, mr. wells. my name is greg linsin. i represent the marshall islands, the flag state for the deepwater horizon. in your assessment of

contraors that bp engages to perform operations, you testified tha you select these contractors carefully and assess the adequacy of their safety management system before engaging them, is that correct? >> and talking to a general philosophy, that's a we try to do, yes. >> and in your assessment of their safety management system, would you agre with me that a contractor, it would be impoant for a contractor to have specific guidelines and expectations for their employees surrounding safety critical operations? >> yes. the safety management system should address safety critical -- it should address all aspects of the activity that they're going to carry out. >> and if the guidelines and expectations for those activities should be clear and

apparento the people who are going to be performing them, is that correct? >> the -- we expect that the people that work for us, that their employees are properly trained. and if required by regulations, certified out to carry out whatever activities they are going to do. >> so in your assssment of a contctor, if you observed a situation where there personnel were not clear about a safety critical operation, or where there was confusion about how to interpret the results f that operation, that would be of concern to you, is that correct? >> if we were aware that someone didn't know how to carry out the activities that they were supposedly cable -- capable of doing, yes, i would think that if we became aware of that we would stop the job and decide how best we could do that.

>> is it accurate to say, mr. wells, that in order to ensure continuity of safety management, and in order to ensure a consistency across an operation, that it is important to have mechanisms in place to know what standards people must meet? >> yeah,hat's the purpose of the safety management system. >> and would you agree that one way of achieving, one important way of achieving that, is to ensure that the people performing the operation understand what is expected of them? >> yes. >> what is he peace criteria, or

what are bp's criteria for determining whether or not there should be written guidelines and protocols in place for safety critical operations speed? i don't know that i can answer -- i don't know that i know specifically about that. >> well, can you speak in general about that? >> so your question again. >> what are bp's criteria for determining whether or not there should be written guidelines, or protocols, in place for safety critical operations? >> as a part of the safety management system, we looked to see that company has procedures written out. what i don't know is, is whether

we specifically check for procedures around safety critical equipment, whether we have an extensive list. since i'm not involved with that, i just don't know. but i do know that we at least go through a process to sort of understand if this contractor seems to be very systematic in the way they do their activity. >> and that standard very systematic in the way they do their activity, would apply to bp personnel who are in positions of authority in these operations as well, is that correct? >> well, for whatever activity, they are to do. particularly on drilling rigs, we are very adamant that our employees do not operate the equipment, do not touch the equipment. they are not certified, trained to do it. and were quite adamant that they don't do that.

so i wuld argue that i would want a bp employee touching a safety critical item on a drilling rig. >> yes. your personnel are aboard these wells for some purpose, are they not, sir? >> yes. as i said they are tre to set our expectations of what we want. the ultimate wealth to be. and -- wealth to be. and also to mature expectations are around safety. >> if your well site leader found him or herself in a situation where there was uncertainty as to how a safety critical test shld be performed, with that concern

you? >> well, you're asking me to sort of speculate about -- i mean, each individual neds to make the appropriate judgments. if there's something that they're uncertain about d they need to seek advice, they need to do so. if they understand what they are doing and feel confident in going forward, then that's what they should do. >> but if there is uncertainty, they shouldn't go forward, is that crrect? >> that's a judgment they need to make. >> and if there is uncertainty as to how to interpret the results of the safety critical test, that also signals a problem with this safety culture you're describing, does it not?

>> i don't make the same linkage that you're maki here. >> well, can you describe how you would, how you would react to that sort of uncertainty with respect to the reslts of the safety critical test? [inaudible] >> you don't need to guess or speculate. if you do have an opinion about something, then you're welcome to express it. the board would appreciate getting it, but if you don't have thexperience the knowledge with respect to particular situatio you don't want to guess or speculate. obviously, a guess or speculation wouldn't be helpful so you don't need to do that. >> and it would require -- as i said before, i've been involved in the response, i purposely avoided staying out of all the activities that came up to it. therefore, i don't really have an opinion spent but from the point of view of anyone, the board or anyone who questioned you, we are