now is his turn. this is going to the very end. it is the kind of momentum- changer she needed. she has not gotten much traction lately. if she can gain women voters who might have been turned off by his comments, then maybe she has a chance. >> thank you. if you want to watch more of that california debate or others we are covering, go to our website, c-span.org/politics. >> our coverage continues tonight with live coverage of the first televised debate of the senate race in delaware. then, california governor candidates. there will be followed by discussion on the midterm elections with a campaign reporter.

the obama administration lifted the moratorium on deepwater drilling yesterday. it is one of the issues being considered by the national commission on the bp deepwater horizon oil spill and offshore drilling. the panel is meeting today to discuss offshore drilling and possible changes in regulatory oversight. president obama has asked the commission to present their findings in early november. this is just getting underway, live coverage on c-span.

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>> i am the designated official for the national commission on the bp deepwater horizon oil spill and offshore drilling. the act calls for a very high level of transparency and openness. we are holding this public deliberation in this public forum and it is being fed live by webcast.

i will go over the agenda for this afternoon. we are going to be hearing it deliberation pont on two of the subcommittees, which are handling portions of the report for the committee. the first will be the offshore drilling committee and deliberating on the report of potential findings regarding offshore drilling from 1:15 until 2:30. we will reconvene at 2:45 and we'll be hearing deliberations on regulatory oversight committee regarding the regulation of offshore oil drilling. after a short break, there will be a public comment period from 4:15 until 4:45 that it. if any individual should desire to send in a written comment, the commission receives written

comments on the web site which is www.oilspillcommission.gov. with that, i will hand it over to william reilly. >> welcome to this session of the oil spill commission. i should say that as we have these episodic, public conversations, it sometimes it may not be apparent how much goes on behind the scenes, how many interviews conducted, and how much research done to prepare for them, but i will begin by turning this over to senator bob gramm, co-chairman, and then take it back to me. >> thank you, mr. riley. this commission stem from the bp

deepwater horizon oil spill this year. it was formed as a nonpartisan independent group to examine the relevant facts and circumstances concerning the causes of the deepwater horizon explosion and the developed options to guard against potential offshore oil spills in the future. we should not forget that this tragic accident took the lives of 11 men. the the golf was flooded with boil for almost three months. the economy was badly impacted once again just five years after the destruction of hurricane katrina. the work of this commission has now arrived at its halfway point. we began with their first public hearing in new orleans on july 12. before that, my fellow commissioners and died wind -- and i went on trips to meet with a variety of people in the

region, listening to stories how this catastrophe affected them and their families and their communities. after that, our investigators in our hearings explore topics that included how we regulate and oversee offshore drilling, how we can improve the culture of drilling industry, a look at the effectiveness of the response and how best to restore the damaged ecosystems. we have held five days of public hearings and have heard from federal, state, local officials, environmental leaders, scientists, energy experts, historians, citizens, and listen to those comments inside and outside the hearings from scores of citizens. today, this meeting is the first opportunity for the commissioners to have had a sit- down together as a group and discussed are possible findings. today, we take in important step

in developing these important recommendations, which will be the core of our final report. i am especially glad that this meeting is being taken place in a way that allows the public to view our discussions. we are doing this in an open forum consistent with our commitment to transparency, a commitment that has guided us from the beginning could today's hearing will have a portion devoted to public comments. if you cannot make it in person, we can also give your comments fought through our web site, oilspillcommission.gov. we've received hundreds of messages that many excellent suggestions and ideas through this source. chairman riley will now go over where we go from here. >> thank you. as the senator just said, which

are subject to law which has not permitted us thus far to meet as a group of seven without full public conversation, which we will undertake to date. this is the first time the commissioners have come together to discuss the preliminary findings that he will shortly here described. a lot of work has been done thanks to the good efforts of the commissioners and the staff. today, we begin our discussion about what our final report should say. on the agenda is a set of candidate findings from the commission's offshore drilling subcommittee and from the regulatory oversight subcommittee. by way of background, our subcommittee's provide the organizing structure for the commission's work and help to

set our agenda, identified panelists for our meetings, overseas staff research efforts, and most importantly, it developed a set of candidate findings and recommendations for consideration by the full commission. we have a total of six subcommittees besides those we are considering today, they include the oil disaster, damages from the incident and on restoration. the offshore drilling regulatory oversight committees have played a strong role in shaping our august 25 hearing, which we heard from experts on offshore drilling and industry safety as well as from current and past government officials, notably three former directors of the minerals and management service. much of what we heard in those

meetings is reflected in the findings that we will be discussing shortly. i have my own thoughts about how well we as a country and our government regulators have overseen this complex and occasionally dangerous but vitally important activity, namely offshore drilling in deep waters, and a look forward to hearing my fellow commissioners abuse i expect along the way we will find some areas of consensus, many areas of general agreement, and perhaps a few areas that we don't yet have full agreement. they are intended to help clarify where we are as a commission that what we need to do to bring closure to the president assignment. as for the road ahead, our chief counsel will present the findings of the investigative team on november 8 and 9. this will, i believe, be the

clearest and moaccount of what happened on the deepwater horizon oil rig. we will then present our first final report to the president and early january just a little under three months from today. having been involved in many reports in my career, i can say that this timetable, six months from our initial hearings to the end, has presented us a daunting challenge to finish the work and to stay on schedule. it is really a great credit to the fine staff and to a number of other people associated with us that have appeared before us and talk to us either in public hearings or in meetings in private that we have come so far, so fast. we expect to deliver the report

to the president on time and with solid content to advise him on the future of offshore drilling in united states waters. now we begin a very important step toward that finish line. i will turn it over now to begin the discussion on the findings of the subcommittee on offshore drilling, the three members of that committee senator gramm, and senator graham will ead off with finding number one. >> we have divided the recommendations into three groups. i will lead the discussion of the first group, which is recommendations one through four. dean murray, the second group, 728. and the chancellor, the final group, nine to 11.

chris, if you would keep your always attentive clock running on this. group a talks about the issues of the importance of offshore drilling to our nation. i will start by saying it seems to me that the kinds of questions that are raised under the category group a one through four require a context to be the effectively addressed. what is our national energy policy and how does this set of recommendations as to be a subset of our offshore energy policy relate to that? i don't think it would be feasible, and certainly beyond our charter, for us to try to

describe what that national energy policy should do, but i think we could make a contribution if we were to suggest what some of the important elements of that national energy policy should be. i guess, the first question is, do we believe that we can focus exclusively on issues relating to offshore oil? or do we need some context of a broader energy policy in which to have the offshore oil discussion? i opened it to comment. >> i will agree with that. i think the offer program has operated in many decades not in the context of a national energy plan. that still has not happened, and that think all of us have a different view of what that consists of. i think it is important for the

report to put offshore oil in the context of where it is expected to go and how can change. oil goes largely into the transportation sector -- putting it in the context of those other approaches to transportation would be very important for the report. >> let me ask a question. are the recommendations -- are they being presented to our audience that is it viewing this? bill suggested that by a lead the four recommendation so that those that do not have access to it in hard copy -- >> [inaudible]

it is a minor point, but it may turn out to be a major point. these are findings that come out of the various hearings. for the listening or viewing audience, we are not at the recommendation phase yet. this is where we have evolved from with the research that has been done and testimony is heard it. >> we are fortunate enough to have a strong and disciplined academic administrator with a right nomenclature. we are discussing potential general findings. the four findings that relate to this topic. one, the nation is currently and will be in the foreseeable future highly dependent on offshore drilling on the outer continental shelf, including the deep waters. two, the oil and gas industry

develop advanced technologies to export oil and gas reserves increasingly deeper and further offshore. 3, offshore production has helped offset declines in production elsewhere in the u.s. thereby contributing to national security and reduction of the trade deficit. after you are, offshore oil production is part of a broader picture that includes managing demand, the role of alternative futures, and the availability of domestic reserves for future generations. do you believe that number four adequately capture is the concept of doing this within the our findingsaking relative to offshore oil or within a broader context?

>> i would almost recommend reversing the order of the findings, that number four should be number one. that helps to set the context. i expect in the report itself, a little more of what francis was talking about could go into the first point about how this fits together as a whole with other sources of energy, other strategies for increasing efficiency, and for getting to a future which is not just what are we doing today, but what we doing 10 or 20 years out. did you get to be more specific, how offshore production has helped to offset. s, they have developed new technologies, but then you get to a group b. technology is not the only piece of the puzzle. it is a re-ordering helps you

achieve what you were talking about. we are responsible for devising an energy policy but to look at this outside of the whole would be perhaps misleading. >> picking up on what she said, i certainly agree that is the context in which the other findings need to be placed, that we need to look at this in the context of our evolving national energy policy. specifically, although i don't think it needs to be a short one sentence-finding, it needs to be stated that our nation, our president representing our nation has, with other nations in the world, both developed and developing nations, has agreed to this copenhagen accord which sets us on a path for reducing

our carbon emissions. there are going to be some 2020.fic targets by a 2020 we will have to reduce our emissions by 50% by 2015. a finding number one talks about the dependence on offshore oil for the foreseeable future. i think it depends on what the definition of "foreseeable" is. we have evidence before us gathered by our staff mainly from the u.s. energy information agency which gives figures of production, imported and exported from now until the year 2035. these projections basically assume level consumption rate,

but if we are on a path that leads to a dramatic reductions by 2015, we will have had to put in place policy that reduces our consumption of oil as a nation in that timeframe. i think we need to be more specific in that regard about what foreseeable is. when the president formed this commission, he made it clear that this was in the context of national energy policy. in the near term at least, we would be heavily dependent on oil production, domestic oil production, largely offshore. i would like to think that we could make this finding number four and move it up to the front and put some context in it.

decisions made about the oil and gas resources and the offshore environment of the united states will have to be made in that context moving forward, and that might change some of the foreseeable demand in that same time frame. >> in reading these findings, i am wondering if we are getting insufficient amount of emphasis to the fact that there has been a steady progression in offshore drilling. the challenges will then increase accordingly. i don't get the sense of reading -- from reading these two points that that is clear. >> the research we have certainly makes it clear that we are heading to a time when offshore will constitute them vast majority of domestic oil

and gas production. we can certainly be morris does affect -- >> [unintelligible] does have consequences for safety and environmental protection. >> you would include -- >> we just need to somehow reference that this is a significant development. we don't really say that there is a steady progression into all tried deep waters. >> we can do that. >> to follow up on that, i think the public would be interested to know that deep water horizon is only half as deep as some of the new operations are going now.

it is a very important aspect of that. >> the hazards of all truck deepwater need to be spelled out a little more in these findings -- the hazards of all deep water need to be spelled out a little more in these findings. it all depends on cost, and technology can lower the cost dramatically. it depends on the cost of oil as well. >> you have had a sense that we were over assuming offshore development versus what might be available? >> i got a sense that we need to point out other technologies. we are right now extrapolating

what we have been seeing instead of saying, which a minute, if oil prices go up way higher, which are going to go back to land and pullout 50% of the oil that is still there. we just need to be a little more careful with short extrapolation. >> i would also raise the question, are there factors other than market-driven that would affect the sequencing of where we get our petroleum. if we are concerned about the availability of domestic reserves for future generations, do we want to leave them only with those forms that are the most difficult and potentially

represent an even greater risk than offshore oil drilling? >> the technology is really so important. if you look at what we are told about how much natural gas we can expect in the future, five years ago, those numbers would have been totally different. that technology has developed so fast. the same could happen to the oil that is still on the ground on shore and it could be a new source of energy. >> ok. >> our national security does depend on us having readily available energy supply, and do easily to leave that achievable? how big do we want our petroleum reserve to be?

that is part of the national energy strategy that we need as a context for this. >> you are not referring to the storage. >> nationwide. >> i think there is an interesting historical example of what happened to germany at the end of world war ii. germany depended first on north africa as a petroleum source. they lost that in 1943. then they were depending on the oil fields in romania which they lost in 1945. then they were down to try to create petroleum out of their domestic reserves. they could not maintain an effective military without editorializing on that, i think those are the facts of the matter. i would not like to leave to our children and grandchildren and

america which is the threat of not being able to defend itself and continue to assume all of the international responsibilities with our set of values for the world represented not being able to carry out our security for our own people and our mission to the world. >> that intention is captured in the availability of domestic reserves for future generations. >> i think there needs to be -- we could say we are fulfilling that commitment to our future generations by leaving them with other items, but is that the corporate legacy that we want to leave to our children?

is that what we want as our ultimate resources in a time of national emergency? some discussion on where does the exploration and extraction of the gulf, one source of energy put into a long-term time horizon of wanting access over many decades, where does it fit? should we take it now? should we take some of it now but have a conscious national policy for holding in the future? i think those are the questions we should have on our list. >> the finding and out -- we need to move forward in this field but not to the point of risking depletion of the researchers in future

generations. >> i think this is an extremely important point, and i am glad you raised it. i think it is something that tends to get lost in that debate over whether we need to drill more today for our national security or whether we think about national security in the context of multi generations. one of the charts i would like to think about trying to include that would help put some context around this issue was something i have not seen yet. and look at the percentage of the united states consumption today, the percentage of the united states production today, and the percentage of u.s. proved reserves. if i look at the statistical review of world energy, what they see in there is that the u.s. is at 22% consumption of

oil, 7.8% production of oil, and only 2.4% of proved reserves in the world. we talk about national security being energy independent, but when you look at the numbers of what the united states reserves are, and there is always the possibility of technology chanting that number, but if you look at it today, you get a very different picture of what national security means, both today and in the future. i think some charting around that would help put in perspective the notion of how much we are consuming, how much we are producing, and how much we think is in the ground to produce today and in the future. >> independence -- we are hugely dependent.

there will always be trading back and forth. if that is the measure, we are not going to come close. >> exactly pretty quick i do think though that putting it in the context -- why we need to look at not only with our current production is about what their future transportation policies are, because this is largely focused on transportation. more fuel efficient vehicles, the recommendations that are currently being considered that would decrease our oil use significantly as those get infected overtime -- enacted overtime. the other transportation strategies that are under discussion because the extent to which they were adopted will over time of fact what our --

sffect what our oil needs are. not that we are going to have the answers for that, but for the reader, that they look at what the trade-offs are for this program compared to other strategies under consideration. >> could i ask everybody to talk closer into the microphones? >> are there other comments on these first four general findings? >> just to be a bit of a devil's advocate, i think we need to be careful of how far we take that discussion on national energy policy. we have a lot on our plate. it is good to put it into

context and good to note that this is what is driving offshore drilling, but at the end of the day, we are looking at how to prevent or mitigate future incidents. i think we need to keep that in mind. our audience needs to keep that in mind. >> this was commissioner terry garcia. >> certainly the president had it in mind. >> if there are no other comments on these four items that constitute a group a, -- >> that was a perfect segue to the next set of four potential general findings, which are talking about industry, technology, and management systems. let me read them. potential finding number five.

i call them potential because they are not wordsmithed. we just want to get the general ideas. despite the impressive technology developed for offshore drilling, there were not comparable developments in the technology that provide safety and the challenging new environment in which the industry operated. number six, shore rigs have complex management problems because of the combination of operators, subcontractors, and corporate manufacturers needed to make them work. number seven, some companies in the gulf of mexico failed to apply safety measures to provide unified coordination of the range of complex technical tasks on large oil rigs and that diversity of companies working on them.

finally, number eight, the entire or land gas industry failed to provide adequate contingency plans, including the availability of adequate containment systems for a major well blowout in the gulf of mexico or to advanced technologies for oil recovery should a blowout occurred. we have heard a number of and talk to a number of people and heard a number of testimony from the companies themselves as well as formally the mms of the regulator. and in particular, it was quite evident to at least our subcommittee that there were

incredible developments in the topology to -- technology to extract oil in it deeper and deeper waters for reasons that we could go into in great dep th. the technologies that provide safety were not as far- developed as we saw int eh case of the deepwater horizon as bp and the rest of the industry had to develop containment systems that were not anticipated. they actually did a reasonable job. we would have liked to have those ahead of time. so, part of the issue here is

what is the safety culture of the entire industry? what is it that we need to expect from the entire industry? i will open it up for discussion and questions. >> i think these findings are particularly important. much of the focus of the work of the commission will be dealing with government and the government's responsibilities and management of resources and butlations and the like, i think these four findings are important. those are going to be fundamentally industry responsibilities to implement, so i think all four 0.2 some

failings that not only individual companies but the industry as a whole needs to take stock of and develop solutions for. i think these are quite appropriate findings. >> i would say, they also point to opportunity for the industry, which we are going to come to later, but there are many opportunities to take a new look at the safety culture and what we need to have in the future. >> one thing we'll have to deal with, not only in these potential general findings, but elsewhere, the correlation of what will be the text in our report and the findings. i think these reflect a desire for the findings to be fairly sparse and not very elaborate.

in the text, we need to surround these findings with things that catch the public's attention and imagination. the comment that co-chair bill reilly who was the epa administrator during the exxon valdez -- a quotations that captures the spirit of what we are talking about in these findings. >> it is probably a good point to include it in so far as we can that skimmer's don't work in the open ocean, the booms all

break, technology invested is negligible. that's really got to change. we are not there now and we certainly were not there on april 20. >> the other thing to point out, the containment systems that eventually killed the oil well where they're at [unintelligible] we did not learn from 20 years earlier well blowout in the gulf of mexico. >> was that sombrero? >> it was sombrero. >> to put some of those dates particularly because of the exon bill does over the 20-share.

there has not been identified in this cleanup technology. you said many times that that has come to all of us something as a surprise, and one of our challenges is how to incentivize a system with continual improvement, which we clearly did not have in that case. since the last big accident, things have not advanced. >> commissioner terry garcia. >> we have gone to an exercise now dealing with the oil well at 5,000 feet. maybe this is an assignment for later on with staff. but to get some additional information on what would be the challenges -- how much would -- how much more difficult would it be to address that? we have gone 5,000 feet down

now. it is probably going to be deeper. >> we are 12,000 feet down now. the debt of the water is of course important -- depth of the water is of course, important but also of the geological formation. it turns out, the challenges of the geological formation in the deepest waters are quite challenging. in fact, the balance between the weight of the mud and the hydrostatic pressure and the formation pressures -- they are becoming very close so it makes it harder to do oil well

controlled. that depends on the etiology and not just the depth -- that depends on the geology and not water.e death of the watpth ofe the gas comes out very hot, which we saw happening in the first containment effort. there is also hydrogen sulfide, which is highly toxic. there are many hazards here that need to be mitigated. the risks do not go away. they are there. >> i wonder if it will be appropriate to have either an expansion of one of these five points or a new general finding that we need to be more site-

specific. we have rules that say if you're more than 5,000 feet -- the fact is, we are dealing with different ideologies and other factors. frankly, we are dealing with different levels of competency is it of companies. some have said that a company with a very spotty safety record ended up leasing what could be defined as one of the more dangerous sites in the gulf of mexico, linking the specific site, the safety, the risks that it poses, who are we going to give the responsibility for exploring and extracting at that site and the safety requirements in doing so on a much more

specific basis than we have in the past, i think would be an appropriate area to explore. >> that is certainly a good point. even of the containment in the arctic, where it is much colder with sea ice, it is very different than the gulf of mexico, and that needs to be site specific. >> we have had discussions of practices in it norway at least, possibly other places, where companies are actually certified to undertake particularly complex deep sea drilling based upon their previous history in that area. if they don't have a history, they have to partner with someone who has.

we have certainly consider that in one of the subcommittees. if it is not in this block, i think we ought to provide for it because i think we all agree on it. >> that is in the regulation. >> one other item that we touched on it is the fact that this is a global industry. their work experiences as close as mexico that could have provided us with a valuable information upon which we could have acted upon and avoided this tragedy. the industry seems to be surprisingly given the fact that is so global. ways that we could encourage a better sharing of past practices on an expedited basis

on a worldwide stage might be another finding that would be appropriate. >> i would also like to suggest that as we finalize the wording of these findings, we make sure as appropriate that it makes reference to production facilities. especially in deep water environments, we would be putting in place new technologies, and we have an expectation that they are going to perform for decades as we produce oil. we ought to make sure that we are paying people attention to production the '70s as well as the drilling, both exploratory and production well drilling. >> we have now reached the time, unless there are further

comment, on the five recommendations that constitute group b of potential general findings. we will now move onto group c. >> thank you, mr. chairman. the national interest requires the continuation of a strong and safe offshore drilling program, one with a better balancing of risk and with greater safety protections for human lives, the environment, and the economy. now i am going to go to no. 11 a read it as no. 10. by forming a marine will contain a company cannot summon the industry are beginning to address the absence of a readily available containment system for the gulf of mexico many key decisions that will help determine the long-term viability and success of the organization have yet to be made. finally, the oil and gas industry is planning for exploration and development in

frontier areas outside of the gulf of mexico, including the arctic, which could introduce new safety challenges, many of which have not been fully analyzed. these three are increasing the reality that we will be continuing this activity, but this new activity and particularly new areas might require doing things differently. for example, they contain the company approach for the gulf of mexico, but both for regulatory and industry activities in procurement areas. the gulf of mexico and the arctic sea are wildly different places. to imagine the same kind of approach from the standpoint of the industry and the scrutiny of

the government cannot but perhaps from the standpoint of whether we choose to require some additional protections given the nature of this special place. those are on the table for discussion. >> comments? >> mine is certainly a no- brainer. we have so much research and background that supports these findings, i think they are fine. >> i have a comment on 11. your new 11, chancellor. the arctic -- it seems to me that not all the new safety challenges are introduced but also new operating challenges.

operating in those conditions it is very different than operating in the gulf of mexico. i think we should add that provision there. also, that fighting indicates that the oil and gas industry are planning for development in frontier areas -- in frontier areas. dick and only plan for that if the federal government proceeds in drilling in this area. i wonder if the finding should be the federal government is evaluating. right now, they are currently evaluating exploration in frontier areas. >> there is a suspension now of any activity from the federal government so it is not even an ongoing plan at the moment. >> is under re-evaluation -- it is under re-evaluation now.

it is not the industry's decision. i think we should make that finding. >> i think the industry knows that. as a narrative, we need to be more specific. exploratory drilling has been suspended, and final government determinations have not yet been made. >> we want to keep these findings as simple one sentences, but from the executive level, i might want to see a few examples of what we mean as these risks not analyzed. >> i completely agree with that. i would say we ought to do it

because coming to this without having the background that we have, i think that would have a lot of questions about what this commission is saying. >> i have a point. maybe it is implicit when we speak of new safety and challenges, but we discovered with respect to the gulf of mexico that we don't know enough about these systems at this point to be able to of whate the baseline we were dealing with when this occurred. we don't know enough about these systems at this stage in addition to the safety and environmental challenges. more signs will be necessary so we have the full understanding of what we are doing and where we are going. the skunk want to be

at the picnic party, but the first line of no. 9 -- the national interest requires the continuation and expansion of a strong offshore drilling program i am not prepared to accept that as a biblical statement of proof. it seems to me that goes back to what we talked about in group a where we said we ought to have some sense of what is the national energy policy and then how does offshore fit into that policy as opposed to declaring a national duty policy that the nation is required to continue to expand its offshore drilling? >> it seems to me that if you are now getting 30% of your

domestic supply from offshore, the prospects are that that will increase very significantly in the years ahead, you have to have some alternative available before you clampdown and say no more expansion. >> what we heard earlier today was that a dominant reason for the decline in in onshore and increase in offshore is economics. at $9 or $10 a barrel, people were willing to invest in offshore oil. >> are we going to say that our national policy is totally market driven? are there no other considerations like national security that ought to be part of that mix of where we go to get our oil? >> or environmental protection

as another national policy. >> i read that differently. i read the continuation of a strong and safe offshore drilling program, which was reflecting of my sentiments, and i believe it reflects many people sentiment, that just because something is today does not necessarily mean that it will be tomorrow. we tend to think clearly -- we linearly.ink congress passing a law that forgave royalties in deep water, incentivizing additional, so public policy can influence whether ec additional investment in the technology onshore or offshore.

that is a strategic choice. it is not necessarily a given it. >> could you read fighting no. 9 again? >> it continuation of a strong and safe offshore drilling program it. >> right. again, we are not supposed to wordsmith, i think this is an important conversation of how much we are doing here. >> i recognize that what i am suggesting is that we insert some non-market consider rations into this matter. i don't think it is in the nation's interest to have the judgments on a product that is so central to our economy, our

lifestyle, as well as our security to be made totally on market demand basis. we have to be able to insert other considerations. >> just to reflect on the data presented by the staff from the u.s. energy information >> this would assume that auteur production continues to dominate offshore production. it grows more slowly than offshore production. the assumptions of protecting offshore protection from 2008- 200035 would require almost doubling of that offshore production to comport to these projections. >> i confess, i assume based on

all of the energy analysis i have seen that through at least the 2020's. , the hydrocarbons not referring to coal will be essential to the u.s. commonwealth. i don't think that is disputable based on anything we have seen. technology could transform i suppose that but certainly not based on what we know. it seems unlikely that that would happen. bottommost that brought mobile's take a lot of time to turnover. i think we should be realistic about that. i think the president ought not to suggest something that is inconsistent with the mainstream assumptions about projected supply and demand and have not -- and technology that he

couldn't take it seriously. >> agree with that mr. chairman. it would be useful that the eia crafted not show what the anticipated charges would be from the new fuel efficiency standards for cars and in the ones that are being contemplated post-2016. the staff could supply graf as to what those changes resulting, i'd think it would help us in our determination of what we think the demands would be. >> i think it would help us but we are still expecting to be imported more than 60%. >> i know but it would be interesting. >> in addition to the reality of how much more production you would have to get from the offshore in order to meet these projections, the other reality in terms of their reserves is that many americans believe that if we were more aggressive in producing oil all sure we could substantially reduce our imports. i don't think any of the data we

have seen supports that all. >> right. that is sort of the gap could trim the public perception perhaps encouraged by those of us who would like to imagine that reality versus reality guard. that gap cannot be filled no matter how much we drop. somebody has to level with the american people. >> even with alaska? >> there is a certain amount of reality therapy that an independent commission is capable of that perhaps elected officials are not capable of in confronting these commonly held misperceptions based on the hope of more than numbers that we can somehow be independent and we can reduce imports. it is not possible.

given that, of course we will have continued oil and gas industry, absolutely, but to tell people that we can get to some imaginary goal of completely eliminating imports is so out of balance from reality. somebody has to say that. >> that is because alternative energy sources have greater efficiency? >> this is a hypothetical situation obviously and it will take decades. however, if you went to all electric cars, 70% of our oil usage would go away. >> i would suggest, and i will leave this with richard as to how we can do this, we need to have a very data-driven discussion on this matter. look back at number 3. the last phrase there is " thereby contributing to national

security and reduction of the trade deficit." that implies that we are in a position to be able to significantly change the equation of domestic forces for an oil in the united states. i don't think that as reality under any circumstance. again, i think before we make statements like that, we need to be sure that we have the numbers that will support that, i read that as a pre -- referring to the past. offshore production has helped. in arguably, it has helped reduce the trade deficit in the past because if we did not have it, we would have made up with imports. that seems to make a fair statement of where we have been. >> well, i read it as a future statement that projecting into the future is not clear abou. >> we have offset production

elsewhere >> i would argue that those are economic. because we have on short oil production, we want to import some of the most expensive. people cannot raise the gas prices as much. to nationally. -- international because we will come up with our own. >> i don't know if i would agree with that. i think our international oil economy is something in which we are embedded. we have very little price power. the prices are set by an international market that given our production, i don't think we can substantially alter. >> i think that is true now but i don't think that was true in the past. the point being is that is this forward-looking or backwards looking? we should make it very clear. >> i think also even

retrospectively if you look at this graph, you would hard- pressed to say it has reduced the trade deficit it has kept the trade deficit from growing. >> true. >> where we on finding number 9? >> my own feeling is to be comfortable with that, we will need a series of the data-driven discussions. >> i think there is a time frame. we cannot change our energy sources quickly. it takes 30-50 years to change over to a new energy economy. and so the natural interest -- the national interest requires

this in the short term because we will not just flip off. that does not mean that this will be the case 100 years from now. >> maybe we can put that in a time frame. >> that time frame could be defined. >> it may be a decade or whatever until this fuel efficiencies kicked in. >> to me, the timeframe is not any number of years but rather in the achievement of an objective which is that we have become significantly less dependence on traditional carbon forms of energy. eneand that when we have done that, we will be dependent on foreign oil until we have made that transition which is probably at least one or two generations. >> although you could say that if we go to an electric fleet

powered by coal, that would include garden theme how well long will it take to do that? >> it will take the time it will take to switch over to a completely electric fleet. that is on this 30-50 year, maybe 20-year-50 year time frame. >> that requires carbon-capture technology variant >> i know. the point is, that is certainly true but not completely. >> the point we are agreeing on -- i -- everyone is a realistic that for the near term and measured in certainly a decade and arguably two decades, we will be heavily dependent on oil for our transportation capabilities in particular.

beyond that, the nation and the world envisions some sort of transition to other energy sources in that horizon. that horizon is not so far out in terms of the decisions that the nation is making in terms of development of offshore resources. >> that's true. >> we would have to be a little bit more precise than saying foreseeable future and these kinds of things and maybe more -- may be more specific about the role of oil from the offshore environments. >> i think we are invested in the transition and very much want to see a move forward to de-carbonize the society. my own history is very committed to that. to create to close a connection

between policy toward offshore gas development and that transition mate be stretching it a bit farther it is not clear to me, certainly want to constrain offshore oil and gas development for reasons of overriding safety and environmental concerns. we really do. we are prepared to curtail development to constrain it with new regulations and be much more careful than we have been and require more safety practices by industry and better regulatory capabilities by the government. but it does not seem that that is directly going to play a significant role in moving us toward the transition. as a commission, for us to overemphasize the importance of the transition is a little bit of a distraction. it is more than i suspect we can contribute as we look at offshore drilling. >> maybe then on finding number 9 -- it seems to me that the key point as far as this commission

is concerned that the continuation and expansion of strong offshore drilling requires a better balance the of risk with greater safety protections for human life, in barman, and the economy without getting into the discussion of whether the national interest requires the continuation. the continuation and expansion will require a better balancing of a risk. >> yes, if we do that, we have to focus on the continuation because continuation -- it will be up to which administration decides whether that incorporates expansion. i don't think that is a decision we have to make. we have to make sure that any offshore program has better standards that are better for environment. i would eliminate the expansion parts. that is not a decision we would make ensure that whatever the program is is operated to the highest standard. >> there is a headline that says

offshore drilling commission responded to the block in the gulf recommends an expansion of offshore drilling. [laughter] >> let's not do that. >> are there any other further comments on a group c? not, that completes the review of the potential general findings under offshore drilling. >> alright, thank you. they stood up pretty well. committee work, congratulations committee. >> we have to see what the revisions look-alike. [laughter] >> let's look at the changes. i am not so sure we don't have more work to do. >> alright, with that, we will now take up the subcommittee on regulatory oversight of which the members are chancellor

elmer and myself and groups a, 1-3, 3b 1-6, and group c, 7-10. i will discuss the last group and we will begin you might begin by reading so that everybody has an idea. >> group a has two findings. number one is roles and responsibilities and number two is regulatory coordination. number one, roles and responsibilities --mms had four distinct responsibilities requiring different skill sets and cultures. first of all, offshore leasing, secondly revenue collection, and thirdly permitting an operational safety. finally, environmental protection. the language of the outer

continental shelf lands act which we will refer to as osla, has been interpreted as expeditious development above the requirement of safety and environmental protection. every former mms director for the past 15 years has stated that the royalty issues have taken most of directors time at the expense of other components of the offshore program. second fighting -- regulatory coordination. the regulation of high-risk activities on the outer continental shelf has been divided among a number of regulators, doi, dot, osha for producing platforms, pipelines, and a different drilling rigs. and the negotiation of multiple and sequential memorandum of understanding to coordinate and carry out these federal responsibilities has led to inefficiencies and gaps in oversight affecting worker

safety and environmental protection. that is a lot of words. the bottom line here is that there are three fundamental problems. first of all, the ambiguity of osla, the outer continental shelf lands act. osla has built into it the ambiguity of how best to balance between the development and the safety of the informant and the safety of workers. in that ambiguity, in that gap has come from different administrations and different administrators different levels of interpreting how to strike that balance. over time, particularly over the last 30 years, there has been an increasing balancing toward let's do as much as we can as fast as we can partially driven by the desire for royalties and partially driven by the desire and political pressure to simply get those leases out the door.

the second major issue under roles and responsibilities in regulatory coordination is the lack of consultation, effective consultation with the other agencies that have some statutory responsibilities and some considerable expertise that could be brought to bear in how mms regulates offshore drilling. the classic example of that, and again i think it is best that we do include these kind of examples, is that you would think the coast guard would play an active role in reviewing and making recommendations on oil spill response plans for drilling rigs. yet, they don't care if there is no requirement they do so. the coastguard is often in a situation having to clean up without having participated in reviewing and making recommendations and helping to formulate how those oil spill

response plans should be structured. that failure of effective consultation added to the ambiguity theosla and the balancing of how quickly you do the safety protection and so forth, that is problem number one and number two. i would say the third issue is one and i think we will get into this letter and the chairman will talk about that is when those two things are happening at the same time that you have an under-resources agency, an agency that cannot compete on the stand for it of knowledge, number of inspectors, capacity to interact with the industry and other agencies, you add all that up and you get to where we are today. that is a sense that the government has not been able to effectively regulate this industry in a way that protect either worker safety or th environment in the way in which

we would like we like to take pride in the fact that we do things right in this country and do things well. as a look at how other nations and i will use norway as an example has engaged in both the identification and of the roles and responsibilities and how they regulate them. we are not the best in the world even though we would like to date. be. perhaps from this accident we can learn how to improve the law, how to improve the regulation, how to equip the regulators with the kind of political capital and financial wherewithal to do a better job. >> how many questions on group a? roles and responsibilities? >> the last sentence is an interesting observation garnered from abuse by former mms directors about their preoccupation with royalty

issues. those issues have been there and have demanded attention. asking the question as to why they did not direct more attention to the leasing development risks management issues i think is an important point. we have findings related to that. why weren't they paying as much attention to those responsibilities as well as the royal to responsibility? >> i strongly suspect it was $18 billion. that was a number of revenues. it is hard to imagine people overlooking that. >> i am not suggesting they should overlook that but they have other responsibilities as well fred >> is mixing those responsibilities that was a mistake. that amount of money is just a stunning number. that is the second-largest revenue generator after the irs in the united states government. >> i wonder if the first

paragraph of general finding number 1 just states a fact, that there are four distinct responsibilities. do we want to make some fighting as to what the significance of those four distinct responsibilities? are we applauding that as a good model of public administration or are there issues that relate to what we are concerned about, primarily safety and environmental protection and that flow from that division? and then the second paragraph seems to me that the second sentence would more properly, after the first paragraph since it refers not to a provision that is in the outer continental shelf act but rather it refers to an internal mms issue, that

is that their attention was so focused on the one issue of royalties that the others did not get much attention. as a matter of clarity -- >> the broader point is that they are competing and inconsistent. >> one might consider that last sentence belongs with the first paragraph but one might consider as a finding what other nations have done as a result of major catastrophes. for example, permitting the offshore leasing, the revenue collecting, safety and environmental protection are not all in the same agency. >> do we not say that somewhere in the findings? i thought we did them not i don't see that.

surely, enough. >> we have not made recommendations yet. [unintelligible] >> i think we all agree that a finding with respect to the experiences of other countries that have experience catastrophes like norway and the u.k. has led them to distinguish and separate regulation, finance, revenue reception and enhancement, leasing from safety and environmental regulation. >> you like to develop that more fully in the findings? >> yes. >> we can do that. >> thank you. other comments on number two? >> one small observation.

chairman riley might know better than i. but it seems to me that upa has a role in water discharges and other discharges. >> it does. permits are required for all of that. thereis surprising to me de has been such a concentration of authorities even among these agencies which statutory have a responsibility that it is defuse authority, defacto, we know that based on what we have seen and partly because it is in some cases 100 miles out in the gulf. secondly, i guess i was very surprised that osha does not read exercise authority on these oil rigs. i still have not had an adequate explanation as to why they do not.

it seems that what we have learned just this morning that the accident rate is four times -- five times what it is the fatality rate on american oil rigs verses north sea or uk experience. who is paying attention to the safety as a primary concern? i guess it is delegated, we learned, to the coast guard which delegated it further or not? >>to mms. >> i thought they delegated further to mms. >> yes. >> we are not happy with that. we have athink finding year. [laughter] >> we think we can do better. >> one could say that in the u.k. there osha equivalent does have regulatory --

>> yes, in the second sentence of # 2, we point to the negotiation and re-negotiation of multiple mou's has been the problem. i think the problem is that we have not aligned agency with confidence to test to be informed. kosher clearly knows more about how to do --osha clearly knows more added to safety than the coast guard or mss. >> as a former regulator, i never thought i had the authority to delegate responsibility. i am surprised that all of this is legitimate. that seems to me to be bad policy. >> i agree, but it seems to me that we have understated the issue by just making it a paper shuffling. the real problem is we don't have the right mission assigned to the right agency.

>> >ulmer made this point, should we add a finding to the lack of effective consultation? that is a question to the region clacks we do get to that parent >> when you get to the science, it is not yet completed. we haven't actually have the findings yet which articulate that. that is an issue we have to deal with. >> hold that thought that i ask that we address that. [laughter] >> to the point of the regulatory coordination finding number 2, it is not regulatory coordination so much by mission of each regulator and an expertise.

>> i think we got the point. we will have to consider how in fact one mighty fish in realigned these responsibilities and how one might allocate them. the current alignment just doesn't look satisfactory to address the problem we have identified. is everybody okay with that? >> there could the complexity of that because a broader lines of jurisdiction. for example, the coast guard problem has responsibility because the coast guard has responsibilities for maritime operations on vessels and osha doesn't. a mobil drilling rig is a vessel. who has the responsibility? we have to look at that. >> there are complexities. >> and even further on that?

you are suggesting a break? >> if we take a break now, will be on schedule to come back sooner. >> is everybody -- everybody be prepared to take a break and address group b when we come back pretty much time? 15 minutes? >> 15 minutes. >> 2:45. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010]

>> live coverage of the discussion on offshore drilling and regulatory oversight taking place here in the nation's capital. the story from the associated press today, bp is not say whether it will try to get new permits to drill in deep water in the gulf of mexico for the government did announce yesterday that the moratorium that was put into effect after the huge bp oil's bill is being lifted. other companies have said they will begin drilling as soon as the government lets them. that could be days or weeks away. under the policies yesterday, companies that resume drilling will have to meet new state standards. the next battle will discuss regulatory oversight and we will bring that to you in about 15 minutes with live coverage here on c-span. while we wait for the next session, i look at the decision yesterday by the president to let that regulatory ban on drilling from today's [captioning performed by national captioning institute] "washington journal [captioning performed by national captioning institute] ." more about "don't ask, don't tell" and the latest,

let's go to john schwartz who is with "the new york times" covering this issue. thank you for joining us this early hour. nationally correspondent john schwartz. give us the details of what happened yesterday. what did the judge decide and what are the implications? guest: the judge already decided it was unconstitutional. he said that a month ago in a decision. now it is time to say, what do you do about this. and the judge actually opened up. said, i will issue some kind of the injunction. what do you recommend? log cabin republicans who brought the case said just knock it down worldwide. nationwide with global implications. and the administration says it really has to be narrower. maybe you should restricted to membership of log cabin republicans, but what you don't do is completely flipped a switch for the entire military

with a single judge in a single district. host: what about the report that the of ministration has decided to appeal? we had heard that they would wait. guest: i think there might be a touch of confusion. what the government decided to do was to appeal the defense of marriage act ruling in massachusetts. and do that they said, ok, in very similar circumstance, president obama does not like the law but the department of justice is obligated in almost all circumstances, the department says, to defend laws passed by congress that are not blatantly unconstitutional. so they announced late yesterday they will file an appeal on the the defense of marriage act decision which was earlier this year. you can predict that the government will take a similar

stance on a don't ask, don't tell, very similar circumstance. the president campaigned against it. he said repeatedly, putting it in the state of the union, that he wants to see it repealed, but it is the role of congress to repeal the law. it was passed by congress. he has said it is not up to him to simply repeal a policy that was passed by congress. and he asked congress to move ahead and repeal the slot as soon as possible. the house did vote for repeal, the senate got blocked on a -- on it at recess, and harry reid says he hopes to try again in the lame-duck issue. two separate issues, don't ask don't tell, and obama administration appealing the game marriage ruling. guest: but if you look at the defense of marriage act, which is a massachusetts challenge to a federal law that prohibits

government from recognizing gay marriages for purposes like federal benefits, for example, in a state board a marriage is recognized, that is why it is in massachusetts. the same language could show up in the press releases and filings if the government decides to appeal the "don't ask, don't tell" decision. the department of justice would say look, it is traditional to defend laws passed by congress and it is up to the courts to declare them unconstitutional or congress to appeal the. host: you reported that the ruling represents a significant milestones for gay rights in the united states. tell us about the reaction. guest: as you can reaction -- my e-mail this morning, the reaction among the people who wanted "don't ask, don't tell" repealed and overturned is just totally jubilant -- with people

from log cabin republicans, and especially the named plaintiffs on the phone with me yesterday say it looks like we hit the jackpot. we struck the lottery with this decision because it gave them almost everything they wanted. on the other side, speaking with folks like family research council, who don't want openly gay people serving in the military, the reaction was very fierce, very angry, and politically tinge. host: do you think this will motivated the senate anymore to active during a lame-duck session or advance this issue so that congress has control over it rather than letting the courts take the process? guest: if congress had a unified purpose moving forward, then they would probably want to move to keep the courts from doing it

but congress has not moved forward on this issue. the senate was deadlocked. some people -- left and right -- democrat and republicans -- in the senate said they would like to see the military complete the study of attitudes and effects of "don't ask, don't tell" repealed before they vote for it. they want to see their process all the way through. that report is not until >> our prime-time coverage of the midterm elections will continue tonight with the delaware in debate between republican christine o'donnell

and republican chris coons. then we will have jerry brown and mike whitman from california. >> cspan's local content vehicles are traveling the country as well as some of the most closely contested house races leading up to this november's midterm elections. >> in florida congressional district to, the candidate is alan boyd who has been in congress for 14 years. he is running against steven sutherland, the republican who won a five way primary in august to face alan boyd. the national congressional committee has targeted boyd in this cycle and i already has spent a lot of money with television ads aligning rep blade with speaker policy and president obama.

i think it is what we are seeing nationally with the unhappiness with the obama administration and the economy particularly with all the debate that went on with the health care voted that was very big and congressman boyd's congressional district. he held town halls that happened very loud. we know how that went down. that was a precursor to what this race will be like. >there will be one overriding issue and that will be congressman boyd's vote in favor of the obama health care legislation. he voted against the legislation but then he voted for it as a key swing vote in the second round when it was passed. congressman boyd had a tough primary fight against a state legislator in the big bend. he won that 51%-49% which was

closer than many people thought. congressman boyd did not go with an obama endorsement in that race which probably would have helped him in the democratic primary. looking to the general election, he did not want to have that around his neck. the health care about is emblematic of the larger issue which is a referendum on the obama administration in this race. his background is as a blue dog democrat, fiscally conservative and he has run in this district with that fiscal conservatism as the base of his political philosophy. he has a strong defense with military presence in part of the district. he has run conservative and that vote for health care runs counter to that in the minds of what the republicans will paint him as. steve sutherland is a funeral director in panama city.

he won a five-way republican race in the primary. he has raised a considerable amount of money but not compared to congressman boyd. he will get a lot of help from the outside party florida congressional district has a majority of democratic registered voters. in this 16-county district that runs along the panhandle. we are in the state capital which is highly democratic, the more liberal center of the district. many of the registered democrats are still old line dixiecrats. they are very conservative and have no compunctions against crossing over and voted for a republican candidate. president obama did not carry the congressional district in 2008 although he did in florida, obviously. this is certainly a bellwether of how the democrats will do in this cycle and whether it will

be an off-year election and how many seats they will lose in the house. holding onto congressman boyd's seat will be key to a hope of doing that or limit losses that will be felt elsewhere. >> the cspan local content vehicles are traveling the country, visiting communities and congressional districts as we look at some of the most closely contested house races leading after this november's midterm elections. for more information on what the local content vehicles are up to, visit our website, c- span.org/lcv. and looking at more of campaign news, a new poll showing that florida voters are favoring republican senate candidate marco review by a wide margin over independent governor charlie crist and kendrick made. mr. rubio is favored by 44% to 33% to charlie crist. congressman meek has trailed

throughout the contest at 22%. the washington post is reporting the congressional democrat joesestak has called into a tie with the former republican candidate in pennsylvania perry the democratic senatorial campaign committee called shows mr. sestak has a 2% lead. in wisconsin, democratic senator russ feingold is trailing his republican opponent in a reuters poll. a 49% said that ron johnson is the best person to generate jobs and wisconsin while 36% said the same of senator russ feingold. mr. johnson is the founder of the oshkosh-based plastics company. the two debated on monday. live coverage once again from the west in the grand hotel here in the nation's capital where we have been the coverage of a discussion of offshore oil drilling and regulatory oversight being

hosted by the national commission to investigate the deepwater oil spill and offshore drilling. this next battle is expected to discuss regulatory oversight. this is live coverage of cspan are we expected to start at any moment. >> the subcommittee and from the subcommittee. by way of background, our subcommittees provides the structure for the committee's work. they help to set our agenda, identified panelists for our meetings, overseas staff, research efforts, and most importantly, developed the seventh candidate findings and recommendations for consideration by the full commission. we have a total of six subcommittees. besides those, they include ones on the macondo well disaster,

and responding to oil spills, on damages from the incident, and on restoration. the offshore drilling and regulatory oversight committees played a strong role in shaping our august 25 hearing where we heard from experts on offshore drilling and industry safety. [no audio] [no audio] >> and we are standing by for the next panel in this

discussion on offshore oil drilling and regulatory oversight hosted by the national commission set up to explore the deep water horizon oil spill and offshore drilling. this is on the heels of the lifting of the moratorium on offshore drilling yesterday by president obama. this next panel is set to discuss regulatory oversight. bp is not saying whether they will try to get new permits to drill in deep water in the gulf of mexico. if the government announced yet say that the moratorium was put into effect after the huge bp oil spill was being lifted. other companies said they will begin drilling as soon as the government will let them very bad luck -- that stories from the ap this afternoon. >> check 1, 1, 12. test one, 1-2. check 1, 1-2.

1-2. one, one. check one. [no audio] >> what about direct feed? [no audio]

[no audio] check one, subject to "protect the direct feed. -- check the direct feed. check, check, check one, check your microphone. [no audio]

[no audio] >> we are standing by for the start of this next palle on this discussion on oil drilling and regulatory oversight. one of the cochairs is back in the room. they will discuss regulatory oversight at about 4:15, we expect comments from the public and the meeting is expected to come to an end around 4: 45 eastern. we are bringing you live coverage here on c-span. >> thank you, mr. chairman. this is the findings from the committee on regulatory oversight. there are four findings in this area and i will read them and we can discuss the very first as on technology and operational complexities. the federal approach to management on oversight of the leasing and development of offshore resources has not kept up with rapid changes in

technology, practices, and risks in different geological and ocean environment for the safety board reports the lack of training for a inspectors. number four is under risk management. mms failed to embrace a proactive risk-management approach to the oversight and regulation of offshore and firemen. neither mms for the industry could track the data for leading indicators and transfer it the regulatory review and approval process for access blair expiration plans -- for exploration plans an oil spill response did not require risk evaluation and management planning. number 5 on oil spill planning --mms of proved oil spill response plant and mms developed analyses into accredited to the

environmental review and consultation process of all stages. underestimation of the worst case scenario for oil discharge in the gulf of mexico oil spill risk analyses distorted the estimations of potential environmental impacts and subsequent environmental reviews for the oil spill response plans were problematic because they were included in some of the environmental reviews as a mitigation measures to address the threat of oil discharge. although the bp oil spill response plan for the gulf of mexico met the mms requirements for such a plan, it lacked specificity. the approval process lacks transparency and fails to include either a process for interagency consultations or public review. the final one in this section is science for decision making, number 6. although there is a significant amount of sciences of the research that has been conducted, there is a need to

continue strengthening and expanding the science as well as ensuring it is relevant to decision making and environmental review of oil and gas activities. attached to this funding is a note -- after ongoing staff research is completed, additional findings will be proposed. to begin the discussion, i think here the subcommittee has been looking at both the structure of mms and the procedures they followed and the analysis they undertake in overseeing the offshore oil and gas leasing program. we will make an assessment whether those are adequate hundred the current challenges that the ocs program is facing either in the deep water or potentially in the arctic where there is some interest.

we have done a lot of analysis of what the current systems are. one thing for the commission to evaluate is whether our findings are focused specifically on how the agency was structured on april 20 and how it was operating or how to take into consideration in the changes that are currently being undertaken and we will propose additional recommendations for changes in the future. it is a moving platform of oversight. so, um, comments on any of these? as far as item three goes, it seems to me that we have had extensive than persuasive

evidence with respect to the breathtaking advances in the technology of oil exploration and development and they are repeated reminders that the capability to contain and respond to oil spills as well as to regulate and understand some of those technical as it did not developed apace. >> i would also point out that it is important to have that kind of either reach back or better, that kind of expertise. for example, cementing. in the agency that is doing the regulatory -- the regulation. in discussing these regimes with other nations, that is what has happened.

in the north sea it was going forward. the expertise and training needs to be in the regulator. >> i would say also that on number three where the observation is the federal approach has not kept up with rapid changes. the challenge is not only how you get to the point of what the technology changes are but you continue to have a system that of balls that keeps abreast of where the technology is going and how you incentivize that. both to keep the industry pressing ahead but also to insure that the regulator is on top of what those changes are and be equipped to deal with them. >> those last comments were by the commissioner. i would like to ask for a question. what would you say is an example

of an area that has kept pace with rapid changes in technology practices? >> well, i am not sure i am the best person to actually provide observations on that. earlier today when we heard from professor levenson, she gave some examples of industries that had kept up. i think the aviation industry, she identified where she has looked in great detail at different industries. this is one where she did not think that had happened. >> it would suggest that we have been using the nuclear power industry as a good example of where an industry has come together collectively. it seems to me if we could find some examples of industries like commercial aviation which have

been able to keep up on the safety side with changes on the actual delivery of the air service or activities side and why the difference between offshore oil and commercial aviation and what lessons can we learn from the comparison. >> mr. chairman, i think that is a good idea. we also look at examples where the regular had kept up not only the industry. for a variety of resources, we need to equip them to do that. that is very important. this is a lucrative program to the federal government and it is important yet the agency charged with creating overside did not have the capacity to undertake what the public

certainly expected them to be doing them . >> i wonder if the last sentence of paragraph 3 is actually strong enough. based on my reading of material, it was not just ongoing training. there was a serious lack of training and a lot of on-the-job training. this goes to your earlier point. i would expand on that. or just drop ongoing. >> the interviews only rebuild on the job training which is extraordinary and two or three days of it. ok, don? we are still on number 3. moving on from #three, moving on to number 4, risk-management.

did you want to, the number 4? comments on number four? >pro-active risk management. >> which is back after a three- mile island, the nuclear power industry realize they had to go into more serious risk- management and build up the expertise and probabilistic risk analysis. that incurred some input from people including the department of energy. this kind of thing could also happen in this industry. maybe i will ask chris or doe, a government official, what can the department of energy do to help mms? could they have been put on risk

assessment, for example? >> i will feel that question. >> even give an opinion, if [laughter] you] >> this is an issue that secretary chu spoke to back on the september 27 when he talked to secretary salazar about the content company. -- containment company. in those comments, he expressed that the true challenge is not fixing a problem once it occurs. he specifically said that the way is to prevent this from happening in the first place. there is a lot of research that is done within doe that has to do not only with energy but also other areas that are relevant that we have spoken about here

today dealing with nuclear, dealing with nuclear propulsion systems, dealing with nuclear reactors. the issue that you have with the deep water is that when there is an incident, you have to deal with it remotely. these are processes that have many analogies in other areas. when you look at how we deal with this but also how we quantify what risks are and how we look at technology that was developed for onshore application that has been moved to shallow water to deep water, these are the types of projects that doe manages through its system of national laboratories. there is one laboratory that is devoted specifically to fossil energy which is the national energy technology laboratory in west virginia.

in response to this tragedy, we have worked with all of that national laboratories, so there is a pretty deep set of research capability that lies within the department that could be used effectively. >> to determine flow rate and develop the technology to manage a plot -- to manage a blowout. >> one of the things to mention, as you develop this competency, you saw some research and development that went on in real-time in response to shutting off this leak and stopping it, but going forward, the approach should be this is something this is -- the approach should be this is not

something that you should be starting and stopping, starting and stopping. this is something we should maintain on an ongoing basis. >> right. >> i guess your point is that the national laboratories can have a good role in this. having come from an national laboratory, for five years, the response to any kind of national incident involved particularly around radiation or possibly a nuclear weapon incident has a national laboratory response capability. could also be utilized -- this could also be utilized. there are pretty effective

response capabilities. scientists were brought into to figure out what to do about containment of this spill. should that not be part of a response plan that? i will throw that out for the commission to think about it. >> it is a very good point to it. one question i had when looking at what we were told was whether the energy department had been consulted really at all in major decisions affecting leasing and response plans, contended the plan. i gathered from the testimony that they had not been, at which you may not wish to comment on, but it surprised me. >> the doe does comment on the leasing plan as it goes through

the process, but the department of energy does not have a regulatory responsibility in that process. >> i think that speaks in part to the earlier point we talked about that about roles and responsibilities consulting with and perhaps getting more than just advice but active engagement with agencies that have relative expertise to improve the system's. the point that would like to make on number four, i think it is missing a sentence. it is important in terms of providing the the concept [unintelligible] for at least three administrations, there have been regulations proposed to adopt --

other countries were required. in all of those years when mms proposed those changes to increase safety, the industry objected and the regulations were not adopted until this month. it in terms of expending the context of risk management, to just suggest that mms has not done anything or the federal government has not indicated this is an effective area, i think we are not telling the whole story if we don't explain that that has been on the table for over a decade. it hasn't happened. >> now it has. >> anything further on that number four? no. 5, oil spill planning. >> first of all, let me observe that this is an area that we had

a question by commissioner garcia that we park. that involves multi agency consultation, so this is an area where oil spill response plans could merit further or meaningful consultation with the agency's. the second comment i would like to make, says here in the second sentence, estimation of the worst case scenario for oil discharge in the gulf of mexico, risk analysis distorted the estimation. what we learned from the research by our staff was what we really meant was the probability that there would be a disaster, a release, and the under estimation of how long it would go on. that is an important distinction

because those are two risks that were under estimated. and then come up to put it into more elegant models to determine where the oil might go. we have had no real capability of predicting this because of basic assumptions about the probabilities were not there. and i think the other important bits of information which i was surprised the of, like the commissioner talked about the responsibility of government and industry, apparently, response plans that are to be prepared by the operator are only updated in it 2-year intervals. there was not in specific

response plan for the well drilled by bp because they had an earlier response plan, a more generic response plan. when we think about these finding being translated to a recommendation, we might want to consider some recommendations along those lines it. >> i also think that although this focuses specifically on the bp oil spill response plan, that response plan was typical of all response plans. in this instance, we should not just target that specific plan because it is the entire process and requirements that the response plan generalizes. >> i agree. >> and to our earlier warning discussion about tailoring it to the potential hazard of each

operating environment, where is, what you are doing, the response plan has to be tailored, not a generic one. >> the last sentence fails to include a process for interagency consultation or public review. >> is that the case? is it a failure to include effective interagency consultations? >> said there is no consultation. >> none at all? >> none at all. and there is no public review it. >> [inaudible] care for reflection and scrutiny that might improve the ability for the response but also local people or a local jurisdiction to see how their efforts in

responding to an oil spill might match up with what the company claims it would do in its oil spill response. it has lots of applications, that there is no scrutiny or no public input required. >> no consultation with the coast guard, right? >> right. that is stunning. >> [unintelligible] >> then we have cases where there is no consultation, but in those cases where there is consultation, we have found that that consultation is in objective terms of influencing the ultimate decision and incorporating suggestions by the consulting agencies. >> i think we have heard an

example on this and other areas where the consultation is limited to receiving a letter from another agency with no real response back to the agency about how those recommendations were incorporated into the final decisions or an explanation of why they were not incorporated. we have to keep this in mind it. >> incidentally, you mentioned the epa. the reason they were not included in the list of agencies or the responsibilities were divided among a number of regulators is because at the epa does not delegate its authority. that is why it was not listed among this. >> going back to -- to do say

that there is a requirement that every two years these plants had to be reviewed? >> the response plans prepared by the operator, but they are filed generally for the operations in the gulf of mexico and are updated at 2-year intervals. >> that is updated by bp? >> the company, the operator of the response plan. the plan did not have any specific response related to the well act or had to do specifically with any of the geography. >> what is the policy of mms terms of periodically evaluating whether the operator is in a position to deliver on their commitments of safety and

response? >> i think that is something we have to ask staff to help us with. it is a very serious question. >> i had the impression that there is not much done. we heard the blowout preventer was supposed to be tested every 'x' period of time and it had been more than twice that period of time before this was tested in. >> we heard from the research that's that has done how these response plans, which can be varied in their business, can have -- which can be very in luminous. there is precious little staff time to review these in detail. there were questions raised

because of that evidence from those individuals in the agency about the adequacy of the staffing capabilities as well as the attention to the task of reviewing that. >> other comments, questions on #5? number six, science for decision making. >> mr. chairman, let me make a comment. at this point, this is a generic finding. this will develop with much more specific findings as we go through the review and more analysis of the review process and what kind of science it is currently invested in. i don't think this will be the final finding. it is much too general. >> i agree with that, and whatever we say in respect to

scientific needs me to be very, very specific because i am concerned that simply saying we need more science is often used as a way to defer decision making and to delay exploration, which i think -- >> i think there is a number of dimensions of this finding from staff. they include house science and technical research is conceived to meet the needs, how it is executed in terms of where it should be based in government agencies, and also how it should be peer reviewed in terms of the detail of the individual projects that are on going to make sure there are of high quality and can withstand the test of a decision making process, but also the review of the whole program. we have heard background information from staff about

alternative models for that review, which would give it the attendance to provide an adequate appraisal of the science and technology behind it. >> this is an area which seems to me it makes sense to delay it somewhat. shell has spent a million dollars in the arctic. with respect to what the government should do, i would think that the difficulty in getting enough resources to do an adequate scientific job needs to be addressed. the most adequate weight to address it is to allocate a portion of leasing revenues to this purchase -- to this purpose. it seems to me that a finding --

there has not been any specific budget item out of discretionary budgets at the federal level. it needs to be confronted. >> when we went down to new orleans after our last meeting and decided with, if you recall, i believe it was secretary salazar that mentioned budget resources that he wanted to provide credit $20 million of that is going to be designated to more science and research. the question is then, in hindsight after seeing what happened with this oil spill, and all the questions about the environmental and fax, how would we rethink the scientific programs to support decision making?

this is a question we ask from staff and to be honest we did not get a very thoughtful answer, so i think we need to think about in the context of how the program should be structured and located. >> it possible finding might include a review -- a possible funding might include a review of the possible monies for the prince william sound. the resulting knowledge that we would otherwise not have. >> my comment is down in the weeds. i would ask if staff could review and validate this. my concern is that if it is done out of the payments, those payments would normally go into

the treasury. it would probably be subject to an appropriation to remove it. that gets you into the problem of every year you have a battle to get your appropriation it. we are talking about a process whose efficacy it depends on its predictability and sustainability of overtime. having said that, there might be another approach to this, and that would be to do this as part of the leasing process that has companies secure leases that there be some percentage of the least amount that would go into a separate fund for research and science. that might avoid having to go through the a nnual appropriation process. i am not sure i am correct on

that, but some way to get this out of the annual tussle of appropriations would make this a much more significant and reliable undertaking it. >> and at least for the gulf of mexico, it could come out of the settlement, i should think. >> for some period of time. >> how has it worked in prince william sound? it is the $100 million -- it is still $100 million. >> we would probably not know. how does it keep going? >> the exxon valdez trusties council still manages the fund and it makes decisions on a comprehensive research plan that

was adopted years and years ago. they have peer reviewed assessment whether or not the plan is still appropriate and whether or not the study that supports that particular objective not only determining what the current species are and what kind of impact but to the extent that they can come out looking at it in a holistic, ecosystem way. they continue to do that. it is something that would not have been possible without their resources. >> is the $100 million the consequence -- >> it is still a continuation. >> but it will finally spend it down? >> eventually. >> at what rate? >> i can't tell you that it. >> we like the example. >> just to follow up on your earlier point about it is not just necessarily more science,

it is how the science is being done. it is synthesized and then integrated into the decision making process when we were talking about what kind of studies were done whether in the gulf on in the arctic. it is how those questioned support the decision makers choice that has to be made at any particular point in the multi-step process i don't know if we have done a particularly good job of that. they have been asked to assess the research in the arctic to support decisions, and that report from usgs is due next spring. to what extent are those the right questions to answer the things that people actually have to make choices about?

i think it is that these that i hope the staff will help us as we get to this next level of detail to say something meaningful about that. >> i think as staff does this, it will be important that we keep in mind that in deciding what science should be done, you needed independent advice so you don't wind up with a lot of pet projects by either the state or federal government pushing. we have seen that happen in other cases. here is an opportunity to clearly establish how that science is going to be conducted and who is going to decide how it is done. >> a real key decision in planning the use of money in prince william sound, and quite elegantly dealt with according to the on-site day debt that we

received it from alaska. pet projects and off of the shelf ideas -- >> i think there were pet projects that got pushed. we need to be vigilant in. >> if there is a better way to structure it, we ought to think about it. anything further on that? ok, group c. political pressure, this is number seven. the industry has successfully sought intervention to prevent implementation of mms rulemakings. the 30-day requirement to approve a plan set by statute to expedite operations has limited the opportunity for critical, technical review. 8, oversight and inspection. the management systems and

philosophy has seriously lagged offshore pierre regulators and are requiring companies to have a documented safety and environmental management system, a fundamental pool for hazardous operations. 9, resources budget. an inadequate budget and management of oversight by congress and successful administrations has left mms out the resources to carry out its response. the board reported a serious lack of on-site training and work force development. reliance on the on-the-job training for inspectors was inadequate for such technical operations. it can come by transition it. a fundamental shift is necessary applicable to the offshore oil and gas industry will require additional resources and capacity, including staff hiring and training. in addition to the regulations imposed, the agency will have to propose for public comment and a

number of changes including the policies and procedures with third-parties. in the cases that we have studied in the united kingdom and norway particularly, after they experienced catastrophes in their offshore or oil and gas industry, they moved to create a safety case to the find a series of expectations that were dependent upon industry to present a comprehensive plan to anticipate risks, to propose how it would be managed, and this is subject to the consent, not necessarily the specific involvement in the approval, of the regulatory body. there were considerable prescriptive regulations that were applied. one of the major reforms that they underwent was to separate

revenue received generation from the regulation of safety and environmental performance. we have seen here, with respect to the size of the revenues it and the preoccupation admitted the by the directors we have talked to, an excessive concern with managing the revenues and even we found inspectors actually review production to keep track of whether revenue expectations are being met. we have found that industry has distorted and competed effective rulemaking. it has prevented some rules from

being made. certain plans reviews were to be undertaken but then became impossible. we uncovered in a case where a chief engineer wanted to release data on injuries in the gulf of mexico and was stopped by the head of offshore from doing that. we have seen records that i find very shocking with respect to comparison of fatalities for 100 million hours worked in europe and in the u.k. in the u.s., 4.84, almost five times more than europe. ocs-related injuries have gone from 450, a very substantial jump by the way in 2006.

ocs-related fires and explosions have ranged from 80 to 150, which i have to say i had no idea. the record is in complete with unrealistic risk assessments. inadequate preparation for contained a response when it did happen, and a regulatory agency staffed by people who were under-trained, under-financed, overworked, and outgunned. that is the challenge that exists. with respect to some of those safety numbers, it is a very strong challenge to industry, which given that it is a very

sophisticated and substantial industry can rise, and i believe several companies have already risen to, and it is also a challenge for the government. we cannot get those risk assessments that we want without strengthening both parts of the enterprise and doing it with much more, i think, professionalism and also separation of responsibilities where incentives might be warped by revenue expectations. comments on no. 7, political pressure? >> i would comment that in addition to congressional intervention, we also had some cases of executive intervention , thinking most immediately

about the change task force that met in a high degree of secrecy and apparently had a considerable influence on decisions that were made subsequently. i think that the political causation of this process is pervasive in both executive and congressional branches. the >> mr. chairman, i am not going to comment on this specifically, but it seemed to me that the interior department in this case is managing the ocs program is carrying out the public interest, that offshore oil and gas is a public resource, and they are charged with managing that resource and providing oversight to the industry as they are permitted to go forth and develop them. i think we should have a finding on that issue, which if you look

at all of these, they are quite specific to an aspect of the way it has been conducted. reflecting on what the responsibility is of the interior department, the fact that it is a public resource, the fact that they are carrying out the public interest, and our aim is to ensure that they have the capacity to actually fulfill that responsibility would be a good additional funding that really has not been captured yet in the ones we have taken a look at. >> i think the chairman would not have a problem with that. >> i just think we have not captured that. >> i almost think that that should be someplace other than in number seven. >> it is more of a generic comment. >> you don't think it belongs

and political pressure? >> it would be a good idea. >> ok, other comments or questions? number eight, oversight and inspection. here we are talking about primarily the ones we have looked at in europe and in the u.k., where the safety and environmental management systems are considered a fundamental tool for hazardous operations. >> my understanding is that is not just that we are seriously lagging, but we are one of the major oil-producing countries that does not have one of these systems. perhaps we need to make that clear here as well as to provide additional information on the approach that norway or the u.k. or australia that others have taken. >> i think staff knows a great deal about several of those, so

i do not think that would be difficult. ies ince most of the company' represent by far a large segment of this industry, have we heard any blow back as to why in the united states should be and i'll liar in this area? based on these experiences in other places, what is the rationale for the united states not having similar systems? >> well, i have asked that question. for an international industry that operate in different jurisdictions, my point of a question in the beginning -- bp has been subject to safety management systems so how is it that safety performance in the united states is different. it is different.

people accommodate to the regulatory system that they confront. we even had some indication from some people in the industry that rig operators had to be retrained because they were considered to not be paying adequate attention to safety and the environment, strong suggestions that regulatory record was less in the gulf of mexico than elsewhere. >> i think it is fair to note that in the u.k. and norway, the changes to their regulatory systems followed major disasters and accidents, so they did not just wake up one day and say we are going to change our regulatory system. it took something quite catastrophic. >> also true of australia. >> and in some ways, it is true for the united states.

look at the changes after the exxon valdez disaster. the safety record shows that we made progress i think it is a very important point. an incident like this can give us the political backbone to achieve some of this safety improvements that are necessary that might catch us up with some of the other countries, frankly. >> and not just the government, but the company exxon became a leader in the field after it reformed. >> yes. >> ok, time for number nine. resources and budget. >> here i would ask the same question that we were talking about in terms of funding of the science. we learned that in australia, the funding of the regulator

comes out of leases, said that there is no year by year budget authority that has to be negotiated. so i just put out a question -- should we not have a strong regulator? do we not have a good source of funding for that? >> the statement that follows the presentence -- the first sentence of focuses immediately on one aspect of the underfunding. accepting that those are very important items. since this is titled resources and budget, it seems to me that rather than focus on one specific potential application of funds, we ought to focus on the issue that dean just talked about, which is a system that can be relied upon to provide

adequate funding overtime with as little political interference as democracy will allow. >> this is a little tricky. i find myself thinking it is very unlikely and certainly not something we can count on that there will be adequate resources to do the job that needs to be done to give us inspectors who have adequate resources in terms of formation, training and expertise, understand all the things that so many in interviews said they understood. this is where some kind of analogous entities such as the nuclear industry has with information really comes into play. it seems to me, without it, amply funded by the industry itself with people who are every bit the match with the people

regulating and overseeing and trusted by them because of their expertise, one would hope, but who are serious professionals that can amplify and support the regulatory process by informing about it and monitoring for best practice. >> i completely agree, but i also point out there is the nuclear regulatory commission. you need to balance industry and federal regulators. >> no one would recommend -- we would like to see the regulator better compensated but i tend to doubt that we are going to see enough support for federal employees. not a lot of them are going to be informed by the specialized disciplines. >> it is something like. certification, which at think is an excellent thing.

>> rather than try to squeeze past concept into nine, up to have an additional funding specific on the topic of industry collaboration. >> with the example. >> yes. >> this broader concept of [unintelligible] which is sufficient and reliable and that would involve some dedication from the revenue stream. it would be good if staff could do some research. if we had some examples within the u.s. government so that some portion of the revenues were dedicated by law, it would be could to help craft the recommendation on this. >> i just keep looking ahead to

the budget process and the financial situation that this country is in print it if there is any way we can do what you suggest and have the money is targeted directly from these revenues themselves, given that they are so substantial, that would really be much preferable. >> i would argue that it is cheaper to do things safely then it is not to. if you look at the expenditure of that will be needed over the next 30 years because of this or the expenditure is that exxon had to deal with with the exxon valdez oil spill, it is much cheaper to have an entity that is spending money on how to contain these will spills quickly and how to be actually have a safety culture then it is

to respond to something like this, which will inevitably happen because this is into physically = = = = = = = = = = = = intrinsically hazardous. ifi can't really remember that is an automatic trigger or if that actually it requires appropriation after the money is in the fund because it is another way of institutionalizing a source of revenue to do what needs to be done in order to avoid oil spills, to have the safety that everyone expects and wants, just to flag that as another mechanism. >> ok. can we take up 10?

transition. we first began to discuss this, i think i understand the need for it, and it is realistic to expect that a lot of the changes we are recommending will not happen overnight. i want to avoid giving the impression that there is no sense of urgency here. there is. somehow we need to balance it and i hope this language does that. >> i would suggest that rather than using the phrase, "the fundamental shift necessary in the regulatory regime," which requires the reader to have a significant amount of knowledge to give it any meaning to that set of words, that we say in a concise language what is the shift. what do we think are the fundamental characteristics that will distinguish the post-

transition from today? >> i agree with that, mr. chairman. dish should be a recommendation to what the transition should be -- this should be a recommendation to what the transition should be, not a finding. we should change the formulation into a transition that needs to be developed with a particular timetable and targets so by such a time, we have accomplished it. >> as a recommendation in. >> as a recommendation. >> we have an organization that has been proposed by the interior. particularly, we have what the agency is going to do with the moratoriums lifted, with staff determining how effective those functions are.

whether they come back and deal with this in a lame duck session, but we should be nimble and prepared to move forward with a report to look at the state of play and make appropriate comments and recommendations of where things are headed. >> i don't suggest that staff look into doing on this issue what we did this morning. it is very, very capable scholars that fought seriously about these issues. there are certainly people who spend their life thinking about organizational structures. if we could find one of the policy eloquence that we had this morning to talk about this because i think we are going to want to make some recommendations on how this whole regime should be

restructured to avoid what has happened and to face future challenges. >> ok. further comments, questions? well, i think we've done it then for today. i would -- i guess i would -- so the public comment would be at 4:00? >> i wonder if we could give a moment to consult with staff about what they have heard in terms of this discussion that might require additional clarification or something that might be helpful for them as they vote for the next step.

if they have any questions, something that would benefit from additional discussion -- >> is this completely crazy? [laughter] >> maybe i could tell you a little bit more about what we are doing by looking at the international regulators. we had a series of meetings with a number of them when they were in town at the request of norwegian chief regulator. we have had interaction with them since then and we have provided a paper for you. i will be going to the international conference next week and i have scheduled additional time to talk to allow them to get more clarification on a number of the issues that you raised. we hope to have the norwegian regulators here the next time you are in town so that you can

meet with him, who is the senior person in the group and has been in that role for years and can relate the experience from norway and the efforts that are under way to raise the bar internationally on the regulators. i apologize that we do not have specific information for you, but i think accuracy is important, and all of these countries have different political systems and different regulatory structures. we want to be sure that we are giving you the best information that we can. we had a conference call with the australian it energy ministry the other day because they are now is moving forward with their findings from the blowout of last year. we will have more information on that. on the issue of revenue option and possibilities, there are a number of different things we will be laying on the table for

you, both with how other regulators do it, within the united states, and also some insight into what is possible under the weight the budget act rules work and how there might be some transitions their and ways to ensure that funds are separated and made available for these explicit purpose is. there are a number of different possibilities, and we will have a detailed memo on that before you get to the point of recommendation. >> today, we have been talking about this revenue in the context of funding, the safety responsibilities of these agencies. we are going to have an even bigger issue when mr. to talk about response and restoration. as you are looking at revenue issues for today's agenda, i would urge you to start thinking about what will be our revenue

budget options for the restoration question. >> the oil spills have been targeted as a funding source. the house has proposed -- this whole consideration is in various stages, so i think they are all part of the same. it is not just the science and the regulatory oversight by the other issues. -- but the other issues involved. >> ok. well, i would just step back a little bit from the conversations we have been having and say i think that given that we are formed in the shadow of a disaster and very

concerned to try to make sure it does not happen again, we are necessarily focusing on a lot of problems and probably sounding more negative than some of lusus wish to sound. i found it interesting in the presentation this morning that in 1955, 20% of americans were willing to fly on airplanes, and 80% indicated they were not. the aviation industry got together to make it a very safe proposition, relatively. i think these challenges can be addressed, the ones that we confront, and have been in other industries. typically, they have been, as we are reminded in respect to tanker safety. there are fewer tanker accidents now. we are dealing with a very

sophisticated industry, a very vital industry that is vital to the country and vital to regions particularly where it is most active and operating. companies, i think, cannot reform themselves, and some probably don't have to. i have been on several oil rigs in the north sea and in the gulf of mexico. i have seemed very exemplary practices, so they are in the industry and they are certainly in the regulatory apparatus itself in government. there are very dedicated people. it to the extent that we have -- that we have necessarily been concerned about correcting inadequacies and problems and challenges, to the extent that we have done that, i would like

to make it clear that i think one needs to keep a perspective on all of this and recognize that we are really here because we think these problems can be solved. we think the industry can solve their problems and the government can solve theirs, and we will recommend how. >> do you have any final comments? >> i will second your eloquence. >> now we are going to get public comment. we are going to take a break. >> it will be at 4:15 print >> i thought it was 4:00. we will take a break until 4:15. we will hear two comments? ok, thank you. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010]

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>> the last brick of the day for this day-long meeting looking into the oil spill in the gulf of mexico. after the break, public comments. the associated press writing that bp is not saying whether it will try to get new permits to drill in the gulf of mexico. the government announced yesterday that the moratorium was put into effect after the huge bp oil spill has been lifted and other companies say they will begin drilling as soon as the government lets them. we will be back at about 4:15 eastern, 20 minutes from now. >> first lady michelle obama

close on the campaign trail today to support democrats for the midterm elections. she will be joined this weekend by president obama. over the next two weeks, they will stop at 17 events. more now on the first lady's campaign efforts. n 2010 update. >> reid wilson is joining us from the hot line studios, the editor in chief of "and the hot line. -- "the hotline." michelle obama, where is she going, what kind of campaigning will she be doing? >> she will be going to wisconsin to support russ feingold. then she will be going back home to illinois to support the democrat there, giannoulious.

the democrats believe they can pick up some seats this year, so michelle obama is starting this long or in which she hopes to be raising money for democratic candidates. >> on thursday, she will be doing a fundraiser luncheon for michael bennett, who is running for re-election there. he was appointed to the seat from the former interior secretary ken salazar. michelle obama's draw as a fund- raiser commonplaces how come she is -- as a fund-raiser, how come she is doing fund-raising instead of more traditional stump-style events? >> she is one of the more popular people in the country,

but she is not a politician. she is seen as outside of that. it would be unseemly, in effect, for a first way to be taking shots at republicans won the role is really more of a non- partisan role. the issues that she will take on a while in the white house will not be part of her issues. childhood nutrition, getting kids to exercise more, rather than partisan issue that will be the cause of battles on capitol hill. by fundraising, she is staying above the partisan fray. >> from reports i have read, she can bring in some big box. if you look at senator feingold's luncheon, which we are covering, but according to one report, there is expected to

be about 500 people, tickets ranging from $200 to $500. in chicago, tickets range from five under dollars to $10,000, which includes a photograph -- $500 to $10,000, which includes a photograph. >> it is funny because in some cases, it costs more to see her then president obama. >> we will have live coverage of the debate. give us a preview. >> we have one candidate who is an experienced candidate in chris coons.

he was very calm when i interviewed him a couple of years ago. now that mike castle is out of the race, christine o'donnell having beat him, he believes he has a pretty good chance. o'donnell is a bomb thrower, believes that she can get people excited for and against their campaign. i think we will see christine o'donnell tried to take a shot at coons. coons has a very big lead in the senate race. he may play it safer, defending himself, but o'donnell has a new web advertisement out today talking about him as the big tax man. >> it seems like she is starting to go on the attack. coons has not really responded though. the thing he needs to, to you

expect him to respond tonight? >> i think he needs to defend any sort of body blows, but there is not much need for him to go on the offensive, to defend himself from a lot of these attacks, primarily because he is ahead by such a large margin. democrats are still spending money there, they are not taking it for granted, and we have seen some prominent democratic politicians scheduling events with coons, including president obama, vice-president biden, but at the end of the day, he holds a big lead because she is too conservative for delaware. host: we want to show you a bit of an exchange from the two candidates from another race. >> it is sort of like calling an

african-american the n-word. have you looked into the investigation as to who use that phrase? >> first of all, i do not agree. this was a five-month old conversation with data reception. i do not want to get into the term. the campaign apologize promptly, and i repeat that tonight. i am sorry it happened. i apologize. >> it is not just me, it is the people of california who deserve better than slurs and personal attacks. that is not what california is about. i think people know -- every californian, especially women, and know exactly what is happening here. >> can i interject? have you chastise your chairman

pete wilson who called the congress whores to the public sector union? >> that is a completely different thing. the fact you are defending your campaign. the fact you are defending your campaign for a slur, -- a personal attack on may -- it is not be fitting of california, the office you are running for. >> it is unfortunate -- private conversation. i do not even know if it is legal. again, i am sorry it happened. that does not represent anything other than thing that happened in the campaign. >> that was last night's california gubernatorial debate. reid wilson, you heard the audience reacting to the candidates. how is it playing out with the voters? >> this is exactly the wrong thing that jerry brown wants to be talking about three weeks from election day. the race is all about him now.

meg whitman was smart to turn this race into a referendum on essentially what jerry brown or one have is aides said or did not say on a phone message. it knocked him off of his message, and now this is all we are talking about. i like to call this the race of the october surprise. we already had revelations of a former employee of meg whitman who was an undocumented worker. she took heat for that. now it is brown's turn to come under the microscope. this is the kind of momentum changer that night with needed. she has not been getting a lot of traction lately. some women may have been turned off by brown's comments. , sir.nk you said

if you want to watch more of that >> c-span vehicles are traveling the country as we look at some of the most closely contested races in the midterm elections. >> he is a seven term incumbent who has been in congress for 14 years. he is running against an opponent who won a five way primary in august. the national republican congressional committee has targeted at representative boy in this cycle. -- rep boyd in this cycle, aligning him with speaker nancy

pelosi and president obama. it taps into unhappiness with the obama administration, with the economy, particularly with the health care vote. that was a very big in this congressional district. he held a lot of town halls. it got very loud, as happened in so many congressional districts. i think that was a precursor to what this race is going to be like. if there is one overriding issue, it will be the congressman's vote in favor of the health care legislation. at first he voted against it, but then he voted for it. it was a key swing vote in the second round when it was passed. he did have a tough primary fight against a long term state legislator here. he won that 51%-49%, a lot closer than many people thought.

he did not go with an obama and dorris men in that race, which would have helped him in a democrat -- an endorsement in that race, which would have helped him in a democratic primary, but looking toward the general, he did not want to have that around his neck. this is emblematic of the larger issue of this race being a referendum on obama. his opponent is running as a fiscal conservative with fiscal conservatism as the base of his philosophy. there is a strong military presence in the district. he has run conservative, but the vote for health care runs counter to that. sutherland is a funeral director in panama city. he won a five-way republican

race in the primary. he has raised a considerable amount of money, but not compared to his opponent. he is going to get a lot of help from the outside. this district has a majority of democratic registered motors in the 16 county districts that run along -- registered voters in the 16 county district run along the panhandle. however, many of those registered democrats are old- line dixiecrats. the day are very conservative and have no compunction against crossing over and voting for republican candidates. president obama did not carry this district, though he did carry florida. there is a real question as to have candidates will do in this cycle. how many seats will democrats lose in the house?

holding on to this seat will be key to any hope of doing that or to limiting the losses. >> c-span's local content vehicles are traveling the country, visiting communities and congressional districts as we look at some of the most closely contested house races leading up to this november's midterm election. for more information on what the vehicles are up to, visit our web site, c-span.org. >> prime-time coverage of the midterm elections continues tonight. it begins at 7:30 p.m. eastern with live coverage of the first televised debate in the delaware senate race between christine o'donnell and chris koontz. that is followed by discussion of the midterm elections with the campaign reporter.

the commission looking into the gulf of mexico oil spill will continue shortly. today they talked about preliminary findings in the causes of the spill. after the break, they will take public comment period that will be in about five minutes. until then, we will hear from this morning's "washington journal," some details on the obama decision to lift the moratorium on drilling in the gulf. et's look at this story in "the washington post." u.s. lifts ban on deepwater drilling. to talk about that let's go to jonathan tylove, the "times

picayune" washington correspondent. the change anything right now? guest: they lifted a moratorium they imposed back in may and reimposed after the court struck down in july. i don't think it was unexpected at this point. due to expire and of november and it became car they would try the lifted before then. the question is whether it would make any difference. you have different opinions. the industry thinks or is concerned that it will still be some time before any permits are issued and people can get back to drilling because they impose a lot of new regulations they have to now meet. and i think environmentalists are worried they will get back to work if think it is premature that we still don't know exactly what happened with the accident and it does not fully safe to start drilling today. host: you reported reaction was mixed.

industry groups saying it would actually take some time to get any drilling action off the ground. guest: michael brown which, the head of what used to be mms and now on -- and he optimistically said some might back to work by the end of the year. it is not so much to the inspections, but the permiting. because people have not been submitting permits for the last several months, they are understaffed. there are all these new regulations and the industry doesn't know quite how -- what needs to be done and when they submit their applications for permits, how they're going to receive and what they will -- what will be kicked back to them. there is a lot of concern that it has been what is considered a defect moratorium.

they are worried that it is going from a legal moratorium to one that is the same thing, just in practice and not in law. host: it was met by wary praised by members of louisiana's congressional delegation. do they see this as a step forward for their goal of getting drilling up and running? guest: it is mixed and it tends to be somewhat negative. the politics in art -- louisiana is clear. the moratorium was very unpopular. the obama administration to begin with is not popular so for the republicans in the delegation it was kind of a free shot at the administration. even the democrats -- including mary leandro, who has led the charge against the moratorium by holding up the nomination to the director of the omb -- i think they think it is progress because it is better than having it still in place but they are

pessimistic about the idea that drilling is going to be back on line immediately or any time soon. host: new report it senator landrieu has a hold on the nomination for maning director of omb. lift the moratorium and expedite permits for drilling in deep and shallow waters. what is a stand? sounds like she is not budging. guest: yes, she wants to see the actual permitting being done. i think the administration is irritated, they think it is out of line from someone of her party and not related to her responsibilities. but back home this is a very popular stance for the senator.

she took a kind of a drubbing on the health care votes back in louisiana because she was for the health care bill, which was very unpopular back me. she found here an issue where she'd pretty much has to robert bbs said yesterday the decision to lift the moratorium had nothing to do with politics. and it may not have. but certainly she put a hold on and now the moratorium is lifted. i think she can look at it and say she's got results, and she once more results. host: jonathan tilove, what will you be watching for as you port on washington and what is happening down in the gulf region to get some of the drilling rigs back in action? guest: i think it now turns to the industry.

>> we are leaving the "washington and journal" segment for more live coverage on the lifting of the moratorium on deepwater drilling. it is now time for public comment. >> in order to live with the issues involved with this spill, my remarks are really going to be focused on operational matters, a specific things that may be used to improve preparedness, prevention and response. i believe that this area may be an area that could be used for a better public understanding and improving coordination as well as collaboration. this was mentioned earlier by me by the suggestion that perhaps a focus on prevention could be made by some inter-agency

committee. currently, the inter-agency actions that take place involve preparedness and response. there is not a specific function. what i mean by that is, perhaps the national response team could carry out a function. there was an article last month to better identify the importance of collaboration among agencies in order to handle and addressed the costs involved with the budget cuts that are going to be made. two tools should be considered as a way to provide training and better understanding. it has been testified before this commission that a number of individuals, especially in the local government, the public and elsewhere will not understand works.e ncb

it is a simple proposition to develop web based tools that could also be provided to the commission. there is also confusion of that the application and the roles and responsibilities of an unseen coordinator, responsible party, etc. in the case of the on-scene coordinator, this could actually lead to a case where local government officials could feel that they have the responsibility to be able to direct federal assets. this occurred and the 1990's, and as a result of this, there is a special agreement that had to be worked out between the federal agencies and the state and local governments. this may need to be done in extreme cases where the local governments, especially those on the home rout, feel they do not

have to comply with federal regulations and also that they have the authority to direct federal assets. [unintelligible] i will wrap up by saying that a small command and control exercise should be a mechanism that is look that rather than the long term exercises that are being done now. that would promote better understanding. i suggest computer-aided management of emergency operations, and interactive mechanisms as a way to improve the work that is done in the field. changes may need to be made to bring in local governments.

california used to have a way of dealing with that by establishing a multi-agency committee, that fed information into the federal mechanism during a response. i will elaborate on these suggestions. i appreciate the opportunity for three minutes and hope to be able to be any additional help that you think you may need. >> thank you. i just read about the california institution yesterday. thank you very much. we look forward to your submission. do we have any other public, enters? -- public commenters? seeing none, this meeting is adjourned.

>> midterm elections are on november 2nd. each night on c-span, we are showing debates from a key races around the country. here is our lineup for tonight. at 7:30 p.m. eastern, the first live televised debate between the candidates in delaware. then we will reach their the debate between the candidates for governor of california. that is followed by discussion with the campaign reporter. topics at today oppose the state department briefing included secretary clinton -- today's state department briefing included secretary clinton's trip to the balkan islands. this is just over half an hour.

>> good afternoon and welcome to the department of state. secretary clinton is on her way to brussels where she will participate with secretary gates on a joint nato summit that is happening tomorrow. today in kosovo, the secretary met with the acting president, the prime minister, and the foreign minister. she then traveled to eight serve up majority principality where she met with -- a serb majority

principality where she met with leaders. she also met with several women's groups, civil society leaders and youth from all ethnic groups. she will continue to work with the serbs, the bosnians and the kosovars on moves towards greater recognition, integration and cooperation within a united europe. turning tucci leg, i think we have all been inspired -- turning to chile, i think we have all been inspired by what we have seen. we join the world in sharing in the rescue of the miners from the ground. our thoughts and prayers are with those who have not yet

safely returned. we salute to the government there which has demonstrated great leadership throughout this ordeal. we applaud the professionalism of those who have worked to engineering the rescue. the united states is proud to have played a small part through nasa and the private sector in contributing to this wonderful moment. we look forward to celebrating the return of all of the tiller and miners to the service. -- all of the chilean miners to the surface. yesterday, what mollet's -- guatemala does so court dismissed treason charges which we believe it reflects independence. this is an encouraging sign for the independence of the bond and

judiciary. it is also important in -- of gandan judiciary. with that, i will be happy to take your questions. >> yesterday you asked the palestinian authority to put proposals on the table. today, you're asking the government to provide a map of the borders they will recognize. what is your reaction? >> first of all, i think what we are seeing does represent the interest in the party is in continuing this effort.

and this is exactly the right conversation that the israelis and palestinians need to have, to be exchanging ideas on how to reach a successful conclusion. it is also a reminder of the limitation of making offers and counteroffers by long distance through the media as opposed to sitting down face to face for direct negotiation. this is why we feel it is imperative for palestinians to continue face-to-face conversations. this conversation has to take place face to face where they can address both in the core issues and the derivatives in pursuit of mutually recognized states and security for all.

this underscores why we believe it is vitally important for both sides tuesday in these negotiations and to reach a place where we can sit down again face to face and get into a direct discussion about these central issues. >> [unintelligible] >> what they are asking for are at the essence of the negotiation. what are the borders of a future palestinian state? this is a core issue. this is something only a direct negotiation can resolve. it is perfectly legitimate for palestinians to say, what will the shape of a future palestinian state be? again, to resolve this question, and to move forward, direct

negotiations have to continue. >> what is your position of the 1967 border? >> our position is the border issues must be resolved within this negotiation. >> courses have been preparing for israelis segregation -- forces have been preparing for israeli segregation. [unintelligible] is israeli citizenship tied with the condition that you must

professor loyalty to the state? this is a religious condition that goes against every democratic principle and against the framework of the peace process. what does the united states believe and think of this? >> we talked about that somewhat yesterday. . .

citizens that would profess that israel is only for the jewish people. only four of those that live there for thousands of years. >> again, you _ what we have made the commitment to pursue a final agreement between the israelis and the palestinians. the borders of the state will be clear. the borders of the israeli state will be clear. the nature of the israeli state will be for all to see and participate in. the nature of the israeli state living in peace with neighbors will have that same right.

this is the only way to reach an agreement that ends the conflict, ending decades of suffering a loss side. >> [unintelligible] is the u.s. willing to consider one of the major conditions? [unintelligible] >> say the second part again. >> is the u.s. willing to consider one of the major withdraws from afghanistan? >> the president has made it clear, contributing to the

national force that eventually it will transition from the national forced to afghan security forces. the pace will depend on progress and training, which is ongoing. the united states and international community has every intention of transitioning to an afghan rat -- afghan led transitional force, committed to afghanistan, promoting civil society. and you will see a transition

from a process that is largely dependent on military force to a process that is increasingly dependent on civilian effort. how long that will take, who knows. for a responsible security in afghanistan, when that occurs will be hard to predict at this point. we are fully supportive of that strategy, ultimately, certainly hoping to support the efforts for the people to be committed to a stable, secure, and

peaceful afghanistan. >> is now more than 20 months. [unintelligible] >> as the special representative for afghanistan and pakistan, ambassador holbrooke is leaving the day-to-day execution of the present strategy on the civilian side of the equation. from across the american government, including significant participation from other international partners in this effort. we are enormously pleased with the effort that ambassador holbrooke is leading. he will continue, as he is at the present time, in europe

consulting with national partners. he will be with the secretary in brussels. and he will continue to work as hard as he can to see this process through. >> what is attached to it? >> i am not aware. the ambassador is not term limited. >> thank you. >> when mahmoud ahmadinejad visited lebanon, does the u.s. have a position on the lebanese government's participation in the tribunal? it seems that they are under a bit of pressure right now to withdraw from hezbollah? >> we support the tribunal, thing it should be free of political influence.

we continue to believe that everyone involved should continue to support the tribunal as it moves to adjudicate, the work being essential to the future. the lesson seemed to be clear, there can be no impunity for the political assassination we saw. >> this seems like the government there is under a lot of pressure to withdraw lebanese cooperation in the tribunal. >> last month they met with the president at the u.n., discussing the tribunal, indicating our commitment to support the tribunal and its work.

>> what is your reaction to it? >> i am fascinated by the effort at the chilean mines. >> they said that the iranian president visit marked the completion of conferring lebanon into a state under the auspices of iran under the state's proposed in the process. do you agree with this statement? >> that is why the united states is committed to lebanese security and sovereignty. we understand that there are states like iran and some drew -- some groups, like hezbollah, that are trying to undermine the

effectiveness of the national government and sovereignty of lebanon itself. we are committed to lebanese security. we continue to work directly with the government. as we said yesterday, we have strong suspicions of the motives of iran and the group said it supports that do not have their long-term interests at heart. >> there are reports that ahmadinejad will extend his stay to meet with the prime minister and that this could be an iranian turkish attempt to resolve the tribunal crisis. do you have any thoughts on turkish iranian cooperation? >> turkey is a neighbor of iran. it has been effective in

discussing with iran and encouraging with iran to play a more constructive role in the region and effectively engage the community. if such a meeting takes place at the end of the week, we would hope that the prime minister would continue to deliver that strong message. that iran, having been a less than constructive player in the region, should change directions. more broadly, should engage the international community on the range of issues that we have, not the least of which is the true nature of this program. >> what about the effort to provide lavan on with -- do you have any understanding [unintelligible]

>> i know nothing about -- the real question is if there are arms shipments into iran, will they be under the control of the national government? the essence of sovereignty for any government is having a monopoly on significant use of force. a challenge for 11 on is the fact that you have outside players who are providing military capability to some state groups. naturally we would have a concern that the provision of any arms into lebanon would not be for the benefit of the nation, but to strengthen groups

like hezbollah, which undermines the sovereignty of lebanon itself, also posing tremendous security risks to the region as a whole. we would be very concerned about that effort. which is one of the reasons why we remain committed to building up the institutions of government with 11 non, including -- within lebanon, including support. >> do you expect any escalation of tension in the region? >> we have well stated concerns about the role that iran is currently playing in the region. we will carefully watch what president ahmadinejad does. >> in one day we have not seen -- we have seen what we did not

see in 10 years. would you like to share what more you have learned? >> i was commenting on the fact that north korea opened its doors ever slows -- ever so slightly for a celebration this weekend, inviting the international news media to come to pyongyang, to observe the country and its parade and so forth. there were even media reports that the internet was working in pyongyang. for a society that is traditionally as close as north korea, we will hope that they will continue to have a bill open so that the world can learn more about what is happening. >> [unintelligible]

in touch with him? >> [unintelligible] >> sorry, start again? >> [unintelligible] expect north korea [unintelligible] nuclear weapons. >> he does not expect north korea to? abandon nuclear weapons? that is the fundamental choice for north korea. it is an either-or proposition that so far north korea has not been willing to accept. the north koreans have nuclear weapons, but they will not have normal relations with the rest of the world or the united states. if they desire normal relations with the united states and other countries in the region, they need to follow through on commitments they have made.

they have not followed through on abandoning nuclear programs. >> former chinese leaders have written a letter asking beijing to remove restrictions from [unintelligible] what are your feelings on the media censorship in china? >> we think that freedom of expression and assembly are universal rights that our fundamental freedoms that i am trying to buy an international agreements that china has exempted and signed on to, we certainly are supportive of the sentiment behind that manifesto. >> what about the accomplishment of the trip to the balkans?

what are the highlights of the accomplishments so far? >> her visit to the balkans underscores our commitment to the region and to integration in europe. her message in sarajevo and belgrade has been the same. you have to overcome historic divisions. there are opportunities that present themselves in terms of integration and membership within the european union, integration and membership down the road with nato. there are responsibilities that they have to take now, 100 steps to add these existing

divisions within the respective societies, moving to dialogue that in the case of serbia and kosovo, can ultimately, hopefully, lead to mutual recognition. we were successful working with the international community about 15 years ago, ending the conflict in the balkans. but we have not yet seen as much movement as we need to see in terms of the end of tensions within those societies in those respective countries. she was there to remind them that there are tremendous opportunities available. we have a keen and significant interest in the complete integration throughout europe. but there are steps that bosnia

herzegovina and kosovo need to take if they are to take advantage of these opportunities. >> end of one of the party is is less cooperative to the ambitions? >> what we have seen is that in each case, some progress has been made on critical issues, but more needs to be done. part of the trip was encouraging the continuance of the address in of the issues that were there. perhaps accelerating the pace of change. >> the afghanistan president issued a decree for closing the private duty forms by december. the u.s. expressed its opinion on the pithy. avi restated any working solutions on that?

>> we continue to support the afghan government's intent to regulate the activities of private security companies in afghanistan. we are working urgently with the afghan government to clarify this decree so that development and reconstruction efforts are not negatively affected. we have continued in close consultation with afghanistan in the working through of this decree. >> [unintelligible] do you see a role that syria can play in the formation? >> in the formation of the iraqi government, these are fundamental decisions that iraq itself must make. they should make these

decisions without outside interference. that said, there is an important role for other countries in the region, including the united states, to encourage iraq and its political leaders to put aside political interests and work more intensively to form an inclusive government that reflects the will of the iraqi people in recognizing the major blocks that deserve to play a role in iraq's future. that said, we are certainly supportive of the dialogue that has occurred today between syria and iraq. they should have constructive relations so that each can make

an appropriate role played by henry integrating the region. -- played in three integrating the region. thank you. >> each night on c-span we are showing the bates from key races around the country. here is the lineup for tonight. 7:30 eastern, live coverage of the first televised debate in the delaware senate race between christians and christine donatto. then the candidate for california governor, jerry brown and meg whitman. followed by a discussion of the midterm elections with a campaign reporter. also a debate between the candidates for hawaiian governor. >> "q&a," sunday, justice stephen briar. >> sometimes it is hard to avoid

your basic values. how you see the country. how you see the relationship between the lot and the average person in this country. those basic, fundamental, legal and political values are a part of you. they will, sometimes, influence and approach where the question is very open and where they admit to that kind of thing. >> steven briar and his new book. sunday night on c-span. >> all this weekend, live coverage from the texas book festival on "book tv. eugene robinson on the splintering of black america. sam harris on science and human values. plus, offers on the obama presidency. throughout the weekend, panels on medical mystery, capital

punishment, and infamous fugitives. get the entire schedule "book tv.org." >> this weekend, did it rare look at the nuremberg files, and also the first leavenworth. and how the political divisions of the early 19th century gave rise to what one professor recalls the old republicans. this treaty the every weekend on c-span 3. >> now, and look behind closed doors at the white house. our guest on this morning's "washington journal" discusses what it might take to strengthen the economy. it is 40 minutes. continues. host: michael hirsh, chief correspondent at "national

journal." thank you for being here. the book, "capital offense: how washington wiseman turned america's future over to wall street." you write that it is about how an idea that was good for big finance is good for america came to define this era and then spiraled completely out of control. guest: my basic idea is you can't explain the magnitude of what happened with the financial crisis and economic hangover that continues that we deal with in the headlines, just by writing books about wall street and what a bunch of crazy traders did. something this huge and system, something that affected the entire financial system and then the economy happens over a much longer period of time. that is what i tried to explain. a narrative of the way back to the reagan era of how an ibm that free-market always work -- an idea, that free markets always work, when completely overboard.

and particularly regarding financial markets that economists have always known be a bit differently. that was thrown overboard during this era. we'll see the period were wall street created ever more complex products. what people didn't understand what the crisis is these crazy cdo's, complex products billed out of subprime mortgage is, did not come out of nowhere. there was a long period of gestation over a decade which wall street firms were developing ever more complex products, taking assets and repackaging and selling them. this was just the culmination. i tried to explain the whole thing and a whole narrative. host: you say wall street became the master of main street rather than the handmaiden. guest: one aspect of the economy there really hasn't been addressed or fixed at all. i think after two years of debate and discussion and this giant financial reform bill, which is in that wall street continues to dominate the time

horizons of corporations, the way ceo's think -- not in the financial economy but the real economy. i think you can trace back a lot of our problems -- the hollowing out of the middle class -- to the way which wall street in its very short time horizons and the compulsion to speculate led it to a lack of concern about any other aspect of the economy. we got to the point over this three decade or so period where the help of the economy even today -- where is the dow? it is not really true. it the health of the economy has a lot more to do with social equity and other concerns that were simply thrown overboard. host: what we take for granted when you talk about financial -- a gradual change about the way we think about money market and regulation, we just take for granted. guest: that is one of the things

i tried to explain is how regulation, and oversight, not only was outpaced by where the markets were going but became kind of a fool's by occupation, and lost art. a very character driven there and tell a story of all of these individuals and one of these is a guy named jerry corrigan, president of the new york fed and early '90s, the first person in 1992 to warn about all of these off the book derivatives and what were banks doing and did they know what they were doing. he was known as a plumber in the financial industry. he knew how the inner workings of the industry were conducted. he knew about back on payments and when banks were getting in trouble or not. what is interesting is how his way of thinking about markets was lost. this idea that markets would always correct themselves. the alan greenspan, said.

you can depend on the markets to correct themselves and know what they were doing and we found that they didn't. but this regulatory art of jerry corrigan and others like him were lost. we got into this period in which regulation was ridiculed. there was no regulation at all. we only found that out at the very end, during the nadir of this crisis when all of a sudden everyone from treasury secretary hank paulson and the bush administration ben bernanke, realize the financial system was something they no longer comprehended. and the extent that this sort of shadow banking crisis, these products that or off the books and not monitored, were sinking the system. that realization came far too late to do anything about it. host: michael hirsh writes in his book -- also lost was any sense, finance, would complete a least came to dominate economy

rather than serve in this traditional role as a supplier of capital of the real economy of goods and service. talking about the serial major of the stock market versus concrete items and goods. guest: at some indefinable point things passed over -- rollicking venture capital market, which are good, which in most of the country's history, even though they occasionally go overboard that -- have been healthier than the over regulated markets around the world -- to supplying capital to companies. the silicon valley, a lot of companies and the biotech boom benefited. at some point in the 1990's and the 2000's that passed over into what became simply the desire to speculate and pure gambling. we saw that with a lot of these over-the-counter derivatives, which are really