these people -- they are human beings. they expect me to give everything to them. in their country, they will put you in jail. i have been down there. why do these folks expect civil rights? guest: i think that is a great question and perhaps is a misunderstanding of what civil rights are. civil liberties is another term. it is about having the right to enter the country illegally. when we take -- if you're going to detain someone because the government believes they are here illegally, there has to be a process that protect their privacy, that protects their right not to be abused, not to

be sexually assaulted, to get the basic medical care. we are talking about issues that are human rights. the torture because we take they are triggered because we take them into detention and liberty. civil rights i think benefits or the beneficiaries of their services are disproportionately u.s. residents and citizens, not necessarily people that are undocumented. you're talking about people who travel and there's a lot of i think the majority of people who travel on airplanes and through airports and the border are here illegally and are u.s. -- are here legally and u.s. citizens. you are talking about for example people who are being subjected to intelligence gathering by fusion centers, i don't know if you heard of these new development in the last four, five years as part of the information sharing model post-9/11 is that state and local fusion centers have arisen that essentially surveil or

gather intelligence on their specific region. and if they are not trained adequately, they may start gathering information about you because you own a gun or because you have very controversial political viewpoints. or because you don't like the president. there's -- because you practice a certain faith. that, all of that is a violation of arguably your first amendment rights because it chills dissent and chills freedom of religion. so when they give money to those fusion centers, then title 6 is triggered of the civil rights act of 1964. title 6 essentially requires that any federal funding be given in a way that -- to recipients who cannot engage in discriminatory behavior. if fusion centers cannot engage in activities that will violate

for example civil rights. if the fusion centers are doing that, then d.h.s. has an obligation and it would be to the office for civil rights to tell them, look, you can't do this. if you are, we aren't going to give you funding because we are prohibited from doing so under title 6 of the civil rights act of 164. my view is protecting civil rights of everyone in this country, human beings, helps america preserve its values and it keeps our country the way it should be and not allow, for example, post-9/11 backlash or contentious issues about immigration to erode who we are and make this a very different country, which just harms everybody here. host: we are just moments away from the senate energy and natural resources committee hearing on oil and gas development. as we finish up, what would you like to tell the viewers something about the office we have not discussed? one of the things, real quick, that the office does they may not know about.

guest: i think i've covered most of the material that i wanted to, but they do a lot of preventive work through the civil liberties impact assessments. something you can look up. that's where they are more proactive in looking at policies and practices that are about to be passed. but i think what i would just leave the viewers with is that we all have an obligation to ensure our government is spending our money wisely and effectively. and that these offices and many other offices are doing their job well. and i think that they welcome our oversight as citizens, as taxpayers. so i wouldn't completely dismiss the office, but i also wouldn't just automatically assume it's doing everything right. i think we need to be responsible citizens and engage and make sure that our money is being used wisely. host: thank you very much. guest: thank you. host: now to the senate and energy resources committee. a hearing on oil and gas development. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> senator hutchison is here right now. senator landrieu i believe is also a co-sponsor on these bills. senator begich is on his way i'm advised and will give us his views when he arrives. i have introduced the other two bills, those are s. 916 and s. 917, and i'll take just a minute to describe them. they are intended to separately address two aspects of the issue of responsible domestic production based on bipartisan consensus based work. s. 916, the oil and gas facilitation act is intended to enhance sufficient and appropriate production, domestic production of oil and gas. the last two years have been a time of real success in increasing domestic production and reducing our relines -- reliance on imported oil. we are currently the largest

producer of natural gas and the third largest producer of oil in the world. the percentage of the oil that we use that is imported has declined from 60% in 2008 to 51% in 2009 to 49% in 2010. unfortunately this is not the cure for high gas prices, or we would have seen gas prices decline consistently over these years instead of increasing. but this progress is important for many other reasons and we want to be sure that it continues. the provisions of s. 916 are drawn from a bill reported by the committee in the last congress. among other things the bill will provide for a thorough inventory of oil and gas resources on areas of the outer continental shelf, and ensure that permanent processes for oil and gas development on public lands and waters are efficient and well coordinated among the agencies.

s. 917, the outer continental shelf reform act, is identical to a bill unanimously reported by the committee last year. following the deepwater horizon accident, it would reform the management of the outer continental shelf in several ways, including agency reorganization, stronger planning, safety, and environmental requirements. enhanced research capacity, and third-party oversight, increased financial responsibility retirements for -- requirements for industry operators and more effective enforcement. i believe that starting from this consensus vehicle will be helpful in working quickly through the issue this year. this bill will need some updating. senator murkowski and i spent krnl time working together to do that. our work will continue. i hope to be able to consider both bills in the committee before the memorial day recess. i would note that i have introduced these bills as separate bills for a reason.

i want to give our work the best possible chance of being enacted into law. i believe we do that by dealing with these issues in parallel. there is not much disagreement in the senate about the need for responsible domestic production, but there is considerable disagreement about how best to address that issue. and we will work hard to find productive areas for consensus. however ensuring the safety and viability of our operations on the outer continental shelf is a separate matter that deserves attention on its own. the question of how we undertake oil and gas development appropriately stands apart from questions of where. we undertake those activities. congress should set an appropriate level of safety and environmental compliance regardless of where oil and gas exploration is occurring, and our commitment to responsible offshore operations and protection of our citizens and communities is widely shared. the fact that oil is no longer gushing into the gulf as it was

last year does not diminish the importance of this work. tate's hearing -- today's hearing is the next step on these parallel tracks that i have described. i look forward to hearing the testimony and to continuing our efforts on these important issues. let me call on senator murkowski for her opening comments. >> thank you, mr. chairman. good morning. today's hearing comes at an opportune time based on the announcements that the president made over the weekend. i commend his decision to increase leasing and to extend the leases that have been delayed. i certainly welcome his attention to my home state of alaska because we have of course tremendous untapped oil and gas resources. but our problems have not only been related to leasing but to the permitting side as well. i'm hopeful this is just a start and that the administration will also quickly issue permits to projects that are stalled all across the country right now. likewise i believe the work of our committee can simultaneously

increase energy production and the safety of those operations. i think we all recognize that certain events and perhaps certain nonevents should lead us to alter last summer's spill response bill significantly, rather that means removing the provision for a new bipartisan spill commission or reacting to litigation that the interior department and specifically bomer has been in over its moratorium and so-called perfect mi tore yum. we also see the associate lands act really does houses some teeth, very real teeth. whether those actions are legal is still under review. but as a practical matter it provided sufficient authority to implement a moratorium and even after that to hold off on drilling permits until there was a much, much greater degree of comfort with safety and spill prevention systems. as we consider these bills on oil and gas, i'm grateful to you, mr. chairman, for advancing this legislation in an open and

transparent committee process. so i'll also reiterate my comments from a year ago that the senate should follow the example that you set here. should we pass another bill from our committee it will still be a work in progress subject to further refinement on the senate floor, but if like last year our committee's bill is ultimately attached to a handful of unworkable liability provisions or any other poison pills, my prediction is that it will again fail. likewise if the bill goes to the floor and is closed off to amendment, again my prediction is that it will fail. given some of the findings and the sense of the senate provisions we saw in the bill to raise taxes on five energy companies, it should be no surprise that many of us are weary about what could be -- wary about what could be tacked on to what otherwise is a reasonable bill. i enif a size our oil and gas policy requires us to walk and chew gum at the same time. it should be our goal to ensure our offshore industry is working

safely, but that requires that it be working. we are still only about a third of the way to the premoratorium levels of operation and the e.i.a. continues to prrkt serious production shortfalls as a result. meanwhile, oil prices are hovering near $100 a barrel. we are importing 50% of our supply. and the headlines over the past few months have been advertising to all of us why a stable domestic oil supply is so very important. there should be no doubt and today it seems that there is little disagreement, that supply really does matter. yet offshore projects in alaska have been delayed a minimum of two additional years. this kind of delay is economically unsustainable and simply unacceptable. i know that members on both sides of the committee have similar stories to relate about delays in all sorts of energy projects. i'd like to close, mr. chairman, by suggesting that we should pass legislation that simultaneously advances safety,

production, and a fair return of revenue to coastal states. and i mention these priorities in the same sentence because i believe that they can and must be part of the same policy. i think we need to address them together and if we don't, i'm concerned that they will fail to reach the president's specific. mr. president, i look forward to working with you and the rest of the committee on the policies that will accomplish these goals. i thank the witnesses for their testimony this morning. >> thank you very much. senator hutchison and senator begich have joined us to make statements on their bills. we welcome both of you to the committee. senator hutchison, give us your views, and then senator begich. >> thank you very much, mr. chairman. i want to thank you and the ranking minority members, senator murkowski and the members of this committee for pushing legislation that will hopefully open up our ability to get our energy resources from our own country to alleviate the

high prices of gasoline at the pump right now. thank you for having this hearing. i'm here today to speak on behalf of my bill with senator landrieu, senate bill 516, we call it the lease act, because it extends the leases that have really had the delays of the moratorium while they have maintained their expenses. senator landrieu and i drew up this bill because we know the financial commitments that are made and how expensive it is. the lease act fairly restores time lost as a result of the offshore moratoria by extending the impacted leases by one year. so everyone who has had a lease approved, has gone through all of the effort to do that, would have their leases extended for the period of the moratorium.

so that they would be able to come back and continue to explore. the commonsense legislation does have bipartisan support. recently president obama stated that his administration is extending drilling leases in areas of the gulf that were impacted by the temporary moratorium. i'm pleased the president recognizes that these energy producers need relief. however, the administration has not said that he will make them whole. the president's statements leaves a lot of questions unanswered. which leases will be extended? that wasn't in his statement at all. how long will the selected leases be extended? senator landrieu's and my bill makes it very clear, answers those questions, and leaves no room for confusion. by passing this legislation, we will assure that all moratorium impacted leases are extended. the gulf of mexico is one of the most important regions in the

country for exploration and development. it accounts for 30% of the oil produced in america and 13% of the gas produced in our country. just over a year ago the president imposed a sweeping offshore moratorium. when the moratorium was put in place, thousands of leases sat idle in the gulf while the lessees continue -- continued to pay the expenses of the leases and payroll. since the moratorium was lifted in october, operators have seen a very slow permit process for approval to go back and to exploration. the department of the intearor has issued 5 shallow water and 14 deepwater permits since last october. the monthly approval rate before the moratorium was approximately 10 shallow water and eight deepwater every month. this year alone over 350

offshore leases are due to expire. many of which have not had the opportunity to be developed because of the moratorium. i received a letter from steven heightsman, the president and c.e.o. of phoenix exploration, a small houston-based exploration company, he wrote, the lease act is vital to phoenix exploration and other small offshore oil and gas companies that were prevented by the administration's de facto drilling moratorium from fully evaluating many of its gulf of mexico leases acquired and fully paid through the federal o.c.s. competitive bidding process. he says, it's very difficult for shallow water independent operators to put together the required business partnerships and attract sufficient capital resources needed to develop leases when the moratorium is in place and you can't use it but

you're still paying for it. the lease act of course will give these offshore energy producers the certainty they did. let me give you another example of how this can impact the economy. the case of houston-based seahawk drilling, this is another smaller company that had leases. seahawk used to be the second largest shallow water drilling contractor in the united states. the company provided high-paying jobs to men and women in texas and across the gulf of mexico. the moratorium and the delays in shallow water permitting forced seahawk drilling to declare bankruptcy. this bankruptcy not only destroyed a texas company, it destroyed 1,000 high-paying jobs. this is one example of the economic devastation the moratorium has caused. the moratorium was a

one-size-fits-all shutdown. i have to say even though the bill was in deep water, the shallow water has never been an issue for spill, and yet shallow water was also put under the moratorium. that's one of the problems that we have faced. it was a one-size-fits-all shutdown. our legislation, senator andrew's and mine, is a one-size-fits-all resolution. it says that no one will have to pay for those leases without getting the full term of that lease by having this lease extension. the house passed a version of our bill last week. i hope that this committee will insert our legislation into the bills that will go to the floor so that we can assure these companies that they can get the capital resources and the partnerships to continue the explorations and try to bring down the cost of gasoline at the pump for all of our citizens. thank you.

>> thank you very much. senator begich, go right ahead. >> thank you very much, chairman bingaman, and ranking member murkowski. appreciate this opportunity to appear before you to talk about the outer continental shelf permit processing coordination act. articles, coordinator language has been used before, including in the s. 1462 which passed this committee unanimously before. i thought it was a good idea and i wanted to do what can i to advance this legislation with a few changes. the past year has been evidence that it's needed now more than ever. i was glad to hear the president talk about on saturday the need for coordinating work between the many different federal agencies. i know later in your next panel secretary salazar will probably speak more about the president's comments on saturday. as you know, shell has been trying to develop its leases since 2005. in addition to shell, conoco phillips purchased leases in february of 2008.

six years later no exploration wells have been drilled due to delay and litigation. best case scenario the production of chuck kyi is post 2020. beauford sooner. there are six federal agencies that govern the development and administer 10 major acts of legislation. bomar estimates that chuck deholds 27 billion barrels of oil and nearly 100 t.c.f. of clean burning natural gas. the bow ford resources are closer to shored and existing infrastructure. the lion's share is thought to the chuck cheesy. we have to decide if this is a national priority, if it is as i believe it is, we need to get serious about the work ahead of us. the transalaska pipeline, or taps as it's called, through put is about 650,000 barrels a day at this point. between 12% and 13% of domestic

production. declining at a rate of 6% to 7% a year. it will reach a point where it's technically and economically impractical to operate the line. at that point is half of today's production, its switch will be flipped and the u.s. will lose 6% of its production and dramatically increase cost to access future alaska resources. there are some resources available to slow the decline onshore but the best chances are in the o.c.s., offshore. critical to the economy of my state and energy security of this nation, we see we can develop this resource responsibly and produce this resource for our country's needs. the bill requires the secretary of interior to enter into cooperative arrangement with the federal agencies, governor of alaska, and the burrow -- burro governments to the adjacent areas. it forces agencies to actually work together. oil and gas industries have

grown up in the gulf. industry and government relations evolved along with it. all federal agencies exist and work together in alaska, they are not necessarily have the resources or the relationships or the experience as described by senator hutchison in the gulf. e.p.a. for example, air permits are the clearest example. they bill the program from scratch with minimal resources. the bill would also create coordinators in the atlantic and pacific when and if the lease sales happen in these regions. finally, we all recognize these are contentious issues. plenty of fights in our alaska family and outside groups, lots of litigation to date. there will probably be more down the road. litigation, prioritizes and speeds resolution of these differences, but doesn't deny access to courts. the short drilling seasons, complicated logistics, and long lead times easy to see why our

seasons slipway. we have watched 2010 season, 2011 season, just do that, disappear from the ability for us to explore. i want to thank the committee for allowing the hearing on the bill and again the goal here is to speed up the process but not deny anyone their rights of litigation and appeals as they see fit but get the process corded -- coordinated and moving. >> thank you both for your excellent testimony and leadership with these particular bills and these issues. as senator begich i indicated, i think senator salazar is our -- also a witness today and we will have a chance to ask him his reaction on some of these very items you are advocating for. thank you all. we will dismiss you at this point unless some member had a particular question they wanted to pose. senator landrieu, did you want to make -- >> just a brief word. i want to associate myself with the remarks of senator

hutchison. i'm proud to co-sponsor the lease act with her and will be looking forward to getting more detail from secretary salazar about the details of the president's proposal. and senator begich, i can most certainly appreciate and thank you for your leadership because it's very important, even if you open up drilling in areas torques have a coordinated so permits can be issued. we know that some of the federal agencies in charge of this have been under resourced and undersupported. i do want to submit for the record to bolster senator hutchison's fine testimony the actual numbers of permits, mr. chairman, because it's quite alarming that to date not one single new deepwater well permit for drilling in the gulf has been issued. the shallow water is off by 50%. and as senator hutchison said, it shouldn't have been -- it wasn't under, technically it wasn't under the moratorium, but

it found itself under a moratorium. i want to submit that for the record. then finally, to also submit for the record the billions of dollars that are outstanding today in bonuses and annual rental payments on leases that are unusable as we speak. i don't know if people realize how significant these numbers are, mr. chairman, but, for instance, in one of the lease sales, a few years ago, 3.8 billion -- $3.8 billion was paid in bonuses to secure leases that are going unused. now, those numbers will range from a low of 48 million to a high of 3.8 billion. the annual payments by these -- this industry can go from a low of a few hundred thousand to it looks like $28 million to $32

million a year. so there's a tremendous amount of money, mr. chairman, being invested by companies. there's oil and gas in the ground. we need to find a way as soon as possible to get it out. and i hope that both senators will also express if not now, later, their views on revenue sharing for alaska and for texas. and i just want to thank them for their testimony and submit this to the record. if there is no opposition. >> we are glad to include that in the record. >> thank you very much, senator landrieu. >> it might not be directly what you are talking about. i know the time you would be much more involved in the timing process of getting the permit. can you -- do you have any comments on that? proper period of time? 90 days? should the federal government say yea or nay? are you getting pushback from your companies the time period is so long that -- >> yes. oh, yes.

>> even if you opened it up -- >> we are talking nine months. >> or years. >> what would be a timetable? do you all have one? >> you know, it used to be -- it used to be basically you submitted your permit and within 30 or 60 days you got a yes or a not. the problem is now that not only do you -- are you not able to submit your permits, and i'm hoping senator salazar can explain this better, but when you even ask how many permits are pending right now, we are not able to really get that number because permits are presented and then they are rejected. we don't know if they are in the permitting or rejection pile. so a lot of this has become a lot less transparent, mr. chairman, and i thank you for your latitude here, but the senator from virginia is right to try to press for what is the real number that we are looking for. >> senator begich. >> i can't give you a specific

time, i will tell you this that the years that we have delayed the process is way too long. we recognize the arctic is different territory than the gulf. it has a long history. but what's critical for us and i think the ranking member would echo this, there are companies that want certainty. they want to know here's when the timetable occurs. here's when the review will occur. yea or nay, what mitigation they have to do and respond. but this ongoing year after year or in some cases not even knowing when a decision might be forthcoming because as senator landrieu said, we are not sure which pile we are on is the biggest problem. one of the reasons the legislation brought forward is coordinating these agencies so they are talking to each other and maybe we can set time schedules they have to respond. but right now it's so uncertainty that we are talking now for alaska, our seasonal activities, 2012 cycle because we can't even talk about 2011

because that's kind of over for us. our season is now is the way it works in the arctic. we want some certainty, some time schedules. i think we would be happy to work with interior department to figure this out, but right now they submit and then we just wait. and we wait. and then something kind of comes out and then we say, oh, you need more information because you believe we didn't have it, why didn't you ask that at the beginning? >> i think the interest thing, too, to point out is that to get the lease you have already gone through all of the environmental concerns and the safety, and you have gotten the permit. a lease lasts about 10 years because there's so much you have to do to explore the whole area to do the seismic testing and see what looks the best. and then you have 20 go -- to go to the bottom of the gulf and that is a hugely expensive process. you are paying people and the

lease as senator landrieu pointed out, billions in collective amounts and you're doing all this over a 10-year period with no return and then you make it a dry well. so we do need the certainty in the permitting process, but for sure once you have gone through all of the lease requirements and you have been approved, you ought to have the full extent of that lease so that you can get the return on that huge investment. that's why seahawk went bankrupt. >> if i can say one -- keep in mind, we are just talking about alaska to explore. we are not even drilling yet. we can't even get to the table to figure out as senator hutchison just described, how to map out what we have there. we have hundreds and hundreds of thousands of acres. we can't even get to it because they won't allow us to explore to determine what's there. >> we thank you both for your testimony. >> mr. chairman, could i ask a quick question.

i'm going to ask the secretary the same question, i just wanted to give both of you a chance. why is it taking so long? in your opinion, why is it taking so long? what's the fix? what needs to happen? secretary same thing, i just want to give you a chance to address that if you wanted to. >> i can't tell you why it's taking so long, but i do think that there was not enough common sense put into the equation to say shallow water has never been a problem. and if you had a spill in the shallow water, which we haven't, you could do it -- you could clean it up quickly. deep water was a bigger issue. putting shallow water in the effective moratorium has cost jobs, it has cost economy, and it's cost the production that would allow these prices in gasoline to be lower. where i would fault the

administration the most is putting shallow water ever in a de facto moratorium. because there has never been a problem. and yet we are losing hundreds of capabilities of adding to the amount of gasoline that we produce because they put shallow water in the moratorium. >> alaska's kind of different because the arctic is new area for development, but it's a multifacet. one of the pieces of legislation that i know is somewhat controversial is judicial review. we -- you think about oil and gas in alaska, you get sued. you don't even spend the time to start, you just get sued. you end up going through this whole process that at the end of the day we know it's going to end up in a higher court. what we tried to do in this legislation, giving everyone a right to appeal, you get a window of opportunity. you get 60 days to appeal for whatever reason, move forward. at the end of the day you end up

at the district of columbia circuit court for final decision because we think it's a national issue. not denying anyone the right, anyone the right to appeal and to have their say in court. that's one side. i think senator murkowski would echo this. we have groups that visit alaska and have their views how alaska should be run. we have a lot as alaskans, we are both born and raised in skea, we have a lot of concern to make sure development is done right. we have tribal issues, regional issues. at the end of the day from the bureaucratic side, is this lack of one agency moves forward, does some things, another agency comes along says well we are going to have our own process, which may be similar to what we went through. that's why this coordination is critical and how judicial review is done in a proper way. that's kind of the alaska experience.

that helps you a little bit. >> that's the objective of your legislation is to try to bring them together. >> yes. not denying anyone opportunities on either side if they disagree with the decision of an agency to appeal that process, but really have some boxes around it, some certainty, and coordination so everyone's talking to everyone rather than we talk through litigation and never get anything done and that's why for years we can't even touch the area to explore. >> thank you, mr. chairman. >> again thank you. we appreciate your testimony. let me invite secretary salazar to come ahead. he is our next panel. we appreciate his willingness to testify today.

>> mr. secretary, we welcome you back to the committee. you used to serve on. we always are grad to see you here. your written testimony will be placed in the record in full. we'd like you to take whatever time you need here to summarize that for us, make the main points that we need to understand, and i'm sure there will be questions. why don't you go right ahead and introduce your colleagues if you'd like. we are familiar with most of them, we always like to have them introduced. >> thank you very much, senator bingaman. as chairman of the committee, it's always been an honor working with you and also working with ranking member,

senator murkowski, and the great work that we have done in the years past out of this committee. thank you for giving us the opportunity to come and present in front of all of you today. joining me here today are david haste, deputy second -- david hayes, department secretary of the interior. he's been working on the subject of your legislation here for the last several years. to my left is mike bump-and-runwich, he's the director of the bureau of owe shin energy management and regulation, he's overseen the reforms now m.m.s., over the last year and has been working very closely as we move forward with oil and gas production in the oceans of america. from the president's point of view and the administration's offensive -- point of view we have been working hard for now over two years to move forward with developing a secure energy future for merg. we have enjoyed the work -- for

america. we have enjoyed the work we have been able to do with congress as we have made strides in what we believe is the right direction for that future. when you hear the president or you hear me or any of my colleagues on the cabinet speak to that secure energy future, we really are talking about a secure energy future that is based in three buckets. the first is moving forward with a robust production of oil and gas resources and other resources in our country. i think when you look back at the last 2 1/2 years, you will see there has been a robust level of oil and gas production in our country. in fact, more oil being produced now than in past times in our history and record levels of natural gas. siggedly moving forward with alternative -- secondly, moving forward with alternate -- alternative fuels. we have put significant time and energy and resources behind trying to develop the world of

alternative fuels and renewable energy. and thirdly, efficiency. how we can power our economy using less energy resources. so it's around those three buckets that the president's energy blueprint has created the framework for us moving forward with america's energy future. the president recently made an announcement about some maker -- major initiatives we have under way and i want to quickly review them. first with respect to alaska, at the conversations with senator murkowski and others who are very interested in what we are doing in alaska all of the time, we are moving forward with the holding of annual lease sales and the national petroleum reserve in alaska. we are trying to deal with some of the difficult permitting issues there and the deputy secretary and myself and others have personally been involved in dealing with issues at npra. secondly, the president

announced we'll hold three lease sales in the gulf of mexico by mid -- by june 30 of thecks year. -- next year. that's when the 2007-2012 plan expires. we expect to have one of those lease sales completed by the end of this year and moving forward with two addition alleys sales in the gulf of mexico in the following year. we want to create new incentives to move forward with oil and gas production. we look forward to working with this committee on ideas that we have, ideas you have, for example, under the mineral leasing act today on the john shore areas of gas production, those leases are given out under a mandatory 10-year term. we believe with flexibility and the way we have the flexibility in the outer continental shelf that we could reduce lease terms and therefore incentivize a more rapid development of oil and gas in the johnshore. fourth, lease exsenses, we recognize there were impacts to

the oil and gas leasees both in the gulf of mexico as well as in alaska as we have moved forward to develop safe oil and gas regulations and oversight in the government. the president voices his support for a lease extension. we respect the gulf of mexico wells that were directly impacted by events of the deep water horizon last year. fifth we are of the belief that there is a need to do better coordination in terms of what we deal with. in terms of alaska oil and gas resources. and we are taking those actions within our administrative authority at this point in time. let me move quickly to just review a few things from the lessons of the deepwater horizon, and the oil spill was a national crisis. in my view those of us who were here in washington, d.c., and who were working on the issues

in the gulf must not forget the lessons from the deepwater horizon. in some ways the national crisis which for some of us had us working on an emergency basis for over 140 days dealing with that particular issue, doesn't seem like it was that long ago. april 20, now it was only not even 13 months ago. so as we move forward and the events of the mucando well oil spill and approximately five million barrels of oil that were spilled out into the gulf of mexico ought to be a stark reminder to all of us that weigh need to move forward with safe oil and gas production in america's oceans. and that is exactly what we have been doing in the department of interior with the reform efforts that we have been leading with the support of the president initiate the safe oil and gas drilling that is necessary. given as we have gone forward and dealt with all of the reform

efforts in america's oceans, oil and gas drilling, it is important to recognize that our policy in terms of supporting oil and gas development including in the deep water is a policy that has not changed. we move forward with development and authorization of oil and gas drilling in the deep waters of the gulf of mexico. and are looking at other places where we can develop oil and gas resources safely in america's oceans. the reforms that we have made have been simply led by one star, that is we want to make sure that the lessons of the deepwater horizon lead us to develop a regulatory regime in the united states that does everything possible to prevent another deepwater horizon oil spill like last year. in that vain deputy secretary hayes and director bump-and-runwich have led the effort. new rules and regime on drilling safety, and workplace safety, and the creation of a new

organization to oversee oil and gas drilling in america's oceans. we also are cognizant of the fact what we do here in the united states and the lessons of the gulf of mexico will have an impact around the world. in the gulf of mexico for example, it is one pond and we largely share that with the nation of mexico. so we work very hard to put together what hopefully will become one standard, one set of protocols with the gulf of mexico and the development of oil and gas in the gulf and hopefully reach some agreements with respect to boundary issues that are important for the united states as well as for mexico as we deal with the gulf. the respect to the arctic as senator murkowski wvensed last week in nuke greenland, we have taken initiative to take sure that all of the arctic nations, including russia, canada, norway, and the united states and other countries that share the arctic are sharing the best practices and resources and the best science.

as opportunities arise with respect to oil and gas that we are doing the best as the world to deal with opportunities in the arctic. finally, in other places around the world, i have been in brazil where we are working with the brazilians to learn from their experiences in terms of moving into their reserves where they expect to have some of the most significant findings in the western hemisphere. we already have some of the most significant findings in the western hemisphere and hope to be able to develop those oil and gas resources in the future. that's all part of an effort to make sure that we are diverse filing the sources for oil and gas that we have here in this country. we hosted an international forum where we had 11 countries and european union participated, the department of interior now about two months ago. what what we were doing is begin a dialogue with other countries around the world to make sure

they are moving forward with the development of gold standard with respect to oil and gas development. the oil and gas industry is a global industry. the same companies that operate in the gulf of mexico operate in places like angola and russia and the whole host of other places. so our effort has been to take the lessons of the deep water horizon, make sure we are sharing those with the rest of the world. in our testimony today we have outlined in the written testimony some legislative 7 -- principles on behalf of the administration i want to quickly review. the first is that we ask the support and help of the congress with respect to incentivizing more prompt development for oil and gas. there are several examples that are laid out in the testimony, one that i will just quickly note is the mineral leasing act now requires a 10-year term for all leases. we have the different flexibility with respect to offshore leases.

that 10-year term has been in place since the 19 -- the mintral leasing act was passed. we believe it's time to revisit that and shorten the lease terms to further incentivize the prompt development of oil and gas resources so those lands are simply not being leased and not developed. secondly we need the tools to continue to push forward with respect to the reform efforts that we worked so hard over the last year. those tools include creation of organic legislation by the united states congress for this agency, senator widen and others have spoken -- wyden and others have spoken about. an agency that has this herculean mission on behalf of the united states of america should not have existed just by virtue of secretary of order. but having organic legislation essentially codifies the important missions of this particular agency is something we are very much in support of.

in addition tools we need include the creation of an institute for ocean energy safety. we have created an ocean energy safety advisory committee led by dr. tom hunter, former director of sand view labs. we have a good effort under way, but it exists by virtue of a committee not by virtue of legislation. we request the congress also to act in the creation of that institute for ocean energy safety. and finally, i know there has been debate here about the timelines for the exploration plans and requirements now the bomre has. frankly 30 days is too short. it does not give the agency the time to develop the environmental information and analysis and assessment to make sound decisions. our request is one of the tools we need is to extend that time as the president articulated last year and reiterated again. third, we ask the congress to work with us and continue to

look at ways of making sure that there's a fair return to the american taxpayer from these oil and gas resources that are owned by the american public. we do not, believe, for example, that the royalty relief programs that we currently have for offshore drilling are necessary in the context of oil and gas prices at $100 a barrel and oil and gas company making the record profits that they have been making. it's not an incentive that is actually needed. there are other needs that we have, including deficit reduction which are important for us as we deal with those particular subsidies. and lastly, with respect to the fair return to the american taxpayer and protection of the american taxpayers as well, we hope to be able to work with all of you to address the liability limitations concerning oil spills. in conclusion, mr. chairman, and ranking member and members of the committee, simply state to all of you that we still have a

lot of work ahead of us. there is no doubt that the deepwater horizon awakened the country and the congress to do things differently in the oceans of america and how we deal with oil and gas. i'm proud of the work that we have done. i know there are critics of how fast we have moved and critics that would want us to do different things, but for us to be at a point where we have issued 14 deepwater permits in the gulf of mexico, where we have more than 50 now in the shallow waters where the industry is working and where we essentially have dealt with a national crisis and yet continue to produce oil and gas and to move forward with the robust program is something that i'm very proud of and could not have done that if we did not have the support of this committee and the leadership within the department of interior. thank you, mr. chairman. >> thank you very much. let me start with five minutes of questions.

we'll just go around the dais here. let me just ask for a little more elaboration, mr. secretary, from you or director brohmwich about the current status of permitting in the outer continental shelf. i know this is a subject that many people have expressed criticism about. how slow the department has been. to issue permits. and how there is a great desire to get additional permits issued more quickly. if you could elaborate on what the circumstance is as you see it and what the prospects are for additional permits in the coming weeks and months, that would be useful. >> thank you, mr. chairman. let me make a quick comment and turn it over to director brohmwich. it was not until the last

several months that both helix corporation and the marine well containment corporation had their subsea containment caps in place and had been tested for us to have a level of assurance that they could move forward in the deep water and do it in a safer way than had been done before april 20. director brohmwich and myself and other leaders of the department actually went to houston to inspect and review the subsea containment mechanisms that had been built by those two corporations. and what we have done is based on those assurances we have moved forward with the issuance of permits and i will have director brohmwich give you a status report on that as well as with respect to where we intend to go. >> thank you, senator bingaman. we have approved given permits to 14 unique wells in deep water. there may be multiple permits for each well. for example when b.o.p. is

inspected, it gets an additional permit. i think everyone is interested in new drilling that's done in unique wells. the number on that is 14. as the secretary points out we couldn't grant deepwater drilling permits until there is containment capabilities. that didn't happen until the latter part of february. if you do the math we have actually given -- we have permitted unique deepwater wells on the average of about once every four to five business days. since containment capabilities were available. that's not a significantly slower pace than has historically been the case. so the notion it's taken us a very long time to permit deep water applications is really not true. there are currently 14 deepwater permit applications that are pending.

there are 25 that have been returned for various reasons. usually quite incomplete applications. they may not have certified they met all the safety requirements. that are now required. they may not have submitted any information relating to containment. those are among the main reasons why permit applications may be returned. in terms of shallow water, 53 have been approved since last june when tougher requirements were put into effect. there are only five shallow water permits that are currently pending. there are six that have been returned. so since october when our new tougher safety rules went into effect, the pace of shallow water permitting has been roughly six per month. historical level has been roughly eight per month. so that's not a huge difference and if you think about the additional safety requirements that are required of the operators and the additional reviews that are required of our people, it's not a major discrepancy.

>> let me just -- be clear that you say there are five applications in the shallow waters that are currently pending? >> correct. >> and there are 14 applications in the deep water that are currently pending? >> correct. >> there are others that have been returned to the companies asking them to provide additional assurances or information? >> that's right. >> ok. all right. let me ask about a.p.i.'s role in this. as i understand it they develop consensus safety rules or standard setting body that does that, to what extent are we -- is your department and your agency relying on those, on those consensus standards?

is it appropriate that we do it that way? maybe you could elaborate on that. let me -- chairman bingaman, let me first say that we have a constructive relationship and a very good relationship with industry and with a. pirks i. -- a.p.i. as well. but that does not mean that we should be dictated at the department of interior and bomre with respect to what the standards are. that's why we obviously there is tremendous expertise there that we listen to, but at the end of the day it is our independent judgment that has to come to bear on the regulations. and i'll ask director bromwich to elaborate. >> historically we have relied on a significant degree to consensess recommendation that is have been developed by a.p.i. in a different world, perfect world where we had our own resources, we would not do that.

we haven't been in that position. we have in fact as the secretary suggests look at the consensus recommendations that a.p.i. has put together and selectively incorporated those by reference. i think that's the best and maybe the only way to proceed at this time. >> senator murkowski. >> thank you, mr. chairman. secretary, thank you for being here. mr. bromwich, mr. hayes, thank you. i thank you for the efforts that you have made. i think the president's announcement this week as it related to alaska and the efforts on the annual lease sales up in npra, the permitting, i think these are positive signals. obviously we want to make sure they translate into action and reality so we will be working with you on that. but mr. hayes, i want to simply -- single you out here and thank you for your efforts to try to reach a resolve on cd-5 in the npra. i think we recognize this is

critically important and it speaks to some of what senator hutchison and senator begich were discussing earlier about the coordination within agencies. i think we recognize we have a lot to do, but we have to find a path forward there. i want to continue working with you on that. secretary, i want to ask you for a little bit of claire if i -- clarification here. because you have discussed the various incentives that you wish to put in place to advance increased oil and gas production. and when i think of incentives, i think of positive things that would encourage you. and in your comments you suggest appending the mineral leasing act to allow -- amending the mineral leasing act to allow for basically a shorter period of time than the 10 years in order to prompt -- and prompt the producers to move more quickly. well, as we have discussed in

alaska, we've got some pretty specific issues there that don't allow for prompt -- prompting is not going to get us any further or faster. we have on average about a 60-day exploration period per year. 60 days is it. so if what this does is it restricts the ability of the producers in terms of gaining any certainty, in terms of what their lease might be that concerns me. i understand that what your proposal is you want the discretion, the secretary wants the discretion to shorten that lease period. i guess the question would be, would you also seek to give the secretary discretion to lengthen that in a situation as we are talking in alaska where you have not only the environment that limits your opportunities to get in there and explore and produce, but you also have regulatory issues as we have been dealing with with shell's

permit, for instance. so can you speak just very quickly to whether the incentives could go to lengthen that proposed lease as well as what you are seeking to do which is to shorten it? >> thank you, senator murkowski. first of all with respect to the o.c.s., we already have those authorities and have been implementing those authorities in terms of shorter lease terms as well as graduated royalty rates within the o.c.s. . >> we have 41 million acres of your land, america's land that only 12 million of those acres are currently producing.

and we have more planned for 2012. if we are able to shorten this from 10 years to a lesser amount of time, some of this area that is just being held out there is leased. there would be a greater incentive from the companies and they would only have to move forward and exploration and development. >> but would you agree that the facts on the ground in alaska are somewhat different than we have for the 48? >> i think alaska, as you and i have often spoken is a world unto itself and we need to recognize its realities, whether it is in the arctic or

elsewhere. >> very briefly, there has been discussion about the length of time and why it takes as long as it does for the permit. your proposal in s917 is to allow additional time for the drilling permits. from 30 days to 90 days with the ability of the secretary to expand. in view of the length of time it takes to issue these permits by allowing additional time, does this not just add to the uncertainty and a continuation in the delay of advancing the permits?

i am over my time and i would like you to address that. >> i know you are moving down into the exploration plan that could be part of that. the reality is that the agency did not have the capacity, the resources, or the time to the effect of drug that it should be doing. " -- effective at time that it should be doing. it seems to me that we need the time to require that the safety measures and science be brought.

>> thank you. it is good to have my old seatmate from this committee year. i will ask you about offshore practices, but i want to start with a matter that involves energy production on shore. there is enormous interest today in more natural gas production, and certainly, the events in japan, and a host of issues have generated interest there. clearly, what we face in these kinds of issues is how we go about striking a balance between natural gas production. and as you know, there is enormous and growing concern about the amount -- environmental practice of tracking.

-- fracking. you would have a real opportunity using the blm and development process to work through these kinds of issues and help us come up with some very sensible models, models that can allow us to strike a balance between producing more natural gas and dealing with these legitimate environmental concerns. and i have come to the conclusion that they are legitimate. and you all would have us come up with a model and perhaps get up -- out in front of what would otherwise be years and years of litigation. in this committee that is what we deal with all the time, polarizing kind of debates. here we have something exciting, natural gas production. where are you doing at the department of interior, and particularly with the plmn development process, to get out

from of this issue to strike the balance i am talking about? >> you are spot on with the issue of the president's energy future, natural gas being a significant part of what we do. i have often said that unless we deal with the fragging issue -- fracking issue in the right way, it could become the achilles heel. i would ask that the deputy secretary, david tase to respond very briefly on what is we are doing at this point. >> mr. hayes, and do it briefly and you can do additional comments in writing. your thoughts on the lead development process. >> within the last two weeks we had three different forms on the fracking issue and how blm should address it. we are scheduled to be meeting

ith secretary tchu's subcommittee. we will be in dialogue with them and under the president's plan will be coming out with recommendations in the short term. we are fully engaged. >> i hope that you will do more than work just with the president's task force. i think that is constructive. i think you all have an opportunity because we know that public lands, that there is activity going on there. it is a perfect place for us to see if we can get some real models. i would like us to go further where we are literally going to the real world where we are going to see production and we have a chance to see production.

as you know, bp has largely been the public face in the world's bill, but as the joint interior coast guard investigation and the spill commission investigation made clear, there were certain problems with the bp contractors. we are talking about trans ocean and halliburton. halliburton had faulty machinery even as it was being pumped into the well. trans ocean gave themselves bonuses. what are your recommendations? i think, starting tomorrow and later this week, what are your recommendations for the drilling contractors, not just the leaseholders responsible so that we do not get into another one of these fingerpointing routines. and what would be your recommendations with respect to

hold in the drilling contractors responsible? >> the director and i have had a series of meetings and we will have director brown which deal with the contractor accountability issue. >> traditionally, we have held the operator responsible and not the contractors for clarity and simplicity. it has not worked as well as it should have. the secretary announced recently that we would extend our regulatory authority to include contractors, the trans oceans and halliburtons of this world. it has been a dormant power that we have had. i'm not saying we will exercise it in every case. there is a virtue to the clarity of going against the operator. >> the alternative, and i'm not prepared to go there yet, but if

we do not have a way to hold the contractors accountable, clearly, people will start talking about separate federal certification and bonding requirements and the like. the ball is in your court to do this in a hurry. thank you, mr. chairman. >> senator holguin. good to see you again. my first question relates to -- how do you explain the difference in terms of the perception that the, companies that are drilling have, as far as the regulatory process and their ability -- their ability to get permited going forward, and the perception that the agency relative to expediting these permits and getting them done? maybe address the shallow water purses deep water. senator hutchinson address this. i think you were here for comment.

and secondly, is there any defect or timeline on this process -- any defacto timeline on this process for getting approval? >> senator, thank you very much for the question. first, on the perception, you know, washington and these -- washington is an interesting place. of gasupportive exploration in the gulf of mexico and other places we have said that we will not retrench this position. we will do it in a way that the save and protect the environment. but the directors statistics, in terms of how we move forward with shallow water and with the quarter will indicate to you -- with shallow water and with deep

water will indicate to you that we are not just talking the talk, but walking the walk. in multiple meetings with oil and gas executives, including those at the very top companies, they understand what we are doing. they understand that we did not have the subsequent capability until this last year. and there is -- it is a dynamic issue in terms of getting us to the safe position that we want to be in with respect to oil and gas drilling. i understand the noise that goes around this issue with respect to the shallow water and the time line from 30 to 90 days, i do not think that is a significant time extension

because we do need to have that kind decision to make sure that is, in fact, sound. >> is there another piece to the equation as far as the approval process is 90 -- up to 90 days, but you can reject the application. is there another piece to this to make sure is done in a timely and fair manner? and if so, what else would we be doing? what is your recommendation? >> i think that there may be -- we will be happy to work with you on the language. it seems to me that one of the things that you do not want to have a company do is to enter into an endless process that does not get anywhere. time lines are important. many of the times when permits are returned it is because they are incomplete.

having a time line as set forth the legislation on 90 days is correct. having the requirements is important. that is the work that the director has been doing. but i understand the desire to avoid endless extensions. >> i think it is important to say, ok, how do we do this in a way where perhaps you have a certain time frame -- and obviously, you have the opportunity to reject an incomplete application, but we need to have a reasonable time line for these permits. a lot of them are getting rejected so that they do not sit in the queue, but this process goes on for a lengthy time frame. that is what we are trying to get at, so that it is a fair

process and protect the environment. but that also empowers more energy production. >> i agree with you. i think right now the time frame does not work to advance that particular objective because applications expiration times and of getting returned because there are not -- is not enough time to work through them. we need to streamline the process and have a better product coming out of the industry. one of the things that happened over the last year is that templates are being developed. yes, there are now 14 deepwater droll's been drilled encourage -- drills being drilled, and 15th shallow water. what is happening is that industry, as well as our agency, is understanding what the new template is going forward. we will always be looking for

ways to improve. >> i understand my time is up, but by and that is for senator baggage -- that is where senator baggich's legislation is trying to go. i hope that we develop that. i understand i'm out of time. >> thank you. >> the house passed a bill last week and we are considering a bill with a similar vision that would set a 60-day limit. for processing of shourd jirau permitting approvals. after that, the permit would -- for offshore drilling permit approvals. after that, the permit would be deemed approved. first, it completely ignores the number-one lesson from the gulf oil spill, that you cannot

assume the drilling operations have adequate safety measures in place. also, if you cannot get it done in 60 days, then instead of automatically being approved, then you just say no, that is probably also a bad idea. can you talk about your agency's ability to ensure safety of offshore drilling operations? >> i think what it with you, senator frank in, is to basically pulled out the rug of what we are trying to do here. and that is, to have safe development of oil and gas in america. if you cannot do that, you are put in a position where you are forced to approve a 60-day time work -- tie line. i think it would be good for the director to address that 60-day process. the cards i agree -- >> i agree.

it would be a profoundly bad idea in which to have time limits for those things to be approved. an operator could simply submit a permit that they knew was a division, that did not have containments the specified and did not meet the requirements we put in place. and then they could judge run out the clock. and have their permit application -- they could just run out the clock. and have their permit application approved. it would not satisfy variant of the requirements we put in place and we would all be at greater risk. >> the purpose of the measure, supposedly, is to expedite your permitting process. but we have the numbers you issued, 66 deepwater moratorium was lifted in 2010.

what approvals and would you process in order to ensure safety? >> we are looking at are permitting process to make sure there is clarity and transparency. one of the things we do with operators from time to time is that they do not know where their permits it's in the system. we're working for ways to communicate to them where their permanent sits in this is an accurate and clear also looking at templates and checklists. employers know exactly what is expected of them and we eliminate some of those questions up front and we are working on templates and checklist -- checklists and forms to expedite this process. those are ways that we can do that. one of our historical problems is a lack of resources, which includes not only like an adequate work force to do inspections, but also due process and free permits.

we are reallocating money that will bring on more personnel and some of those will be for the permitting process. we hope that will hurt -- helped the process as well. >> one thing from the report is that some "operators will shop around" for someone in the interior department to approve the process. i know that there was dire need for reform and we are glad to see the reforms that the administration has taken in response to the oil spill.

in evaluating these applications, how will this office balance these two priory's, environmental concerns verses keeping costs down? -- two priorities, and armenta concerns versus keeping costs down? >> ghosh environmental concerns versus keeping costs down. >> we are working on specific structural steps to make sure there is balance between development of resource and environmental concerns. we are creating a chief environmental officer in the agency to make sure that the voices over on environmental personnel are heard and factored into the leasing decisions and planning decisions. " thank you. my time is up. >> senator portman. >> it is good to have you back before the committee again and

we appreciate your testimony today. you were here on march 2, a couple of months ago. we talked about the same issues and at that time you and i had a conversation about my concern that these claims were up there -- out there and routes were leaving the gulf and had left the moratorium to go -- rigs were leaving the gulf and head of the moratorium to go to other countries. we have since followed up with your office twice and have yet to see that data. i would like to reiterate my request that you provide us an update on the rigs. it is important to have it, at least historically now, to see what the impact is on the moratorium.

in rural testimony today you said we are producing more oil. -- in your oral testimony today you said we are producing more oil. what data do you have to tell us about where this has occurred since 2003? >> i will direct my department to get that information to you on the number of rigs. in terms of where we are with increased production, the last two years, just from the outer continental shelf, the increase has been up to 600 million barrels, an increase of about one-third from the outer continental shelf. from the onshore, about 41 acres increase.

>> is mostly our continental shelf. i think it was indicated that shallow drilling is off by about 50% since the moratorium. i think it was said there were not in the deep water permits producing. i think we're -- we are hearing -- what we are hearing from others who are as concerned as i am that we need to see what the impacts were to avoid, in my view, some of these steps backwards. i think the president could come for the weekend. , was somewhat encouraged by what he said about extending leases in the gulf.

i would hope that we will continue to see some of these expediting process is to get .laska moving theto senator frank ien, office should be given an appropriate amount of time, but at that point the companies that have submitted legitimate publications need to know one way or another. the burden is on the government at that point to say, why are we not moving forward? i think senator bingaman's legislation, he said there were bills today that would help.

let me switch to another -- you indicated in your opening statement that there were three buckets. legislation was introduced by senator shaheen and myself and it basically leverages deployment of energy efficiency technologies and home building space, commercial space with regard to the federal government. we would love to get your input on the legislation and your support. i wonder if you have any thoughts on the legislation today. >> i have not reviewed the legislation s1000, but i would be happy to do it along with my colleague secretary chu. energy efficiency as a huge part of that to get us into the energy future.

in fact, we are importing less than 50% of our oil from foreign countries as opposed to 60% just a few years ago because we are becoming more fuel-efficient. the energy efficiency goes beyond cars and goes to building appliances and a whole host of things. we would be happy to take the legislation and get back to you on it. >> as you say, the relationship answer to your responsibilities. we would love to get your input. -- the relationship adds that to your responsibilities. we would love to get your input. >> senator landrieu. let me begin -- >> let me begin by commending you for getting back to where were before the

deepwater horizons bill, and at least having a vision for opening of more direct ruling. i appreciate that and it was a right step to take. now it is the details and how we actually accomplish what the president has laid out. i can only say that actions speak louder than words. that is where we are right now. it is not just about saying we want to expand drilling, but actually doing it. i want to clarify a couple of things that are very important for this hearing, and i want to push forward to a couple of bills that are important for what we want to accomplish. for the short-term energy output, this is not mary landrieu's charge, not a republican or democratic chart. this is saying that production of oil is at the highest it has

been, but you can clearly see it is going down if we do not start issuing permits more quickly for war or -- for new drilling, if we do not start exploring, this is not going to be reversed. and even if we did this today, and not sure how they would look on this chart. we may be at high levels today, but we are not going up. we are going down. number two, mr. bromwich, i need to clarify for the record. you said you have 14 deepwater wells. are all of them knew or the revised? >> i believe all of them had been previously permitted. the >> that is correct. for these 14 deepwater wells, they are not new wells.

they are revised. they had been drilling prior to the deepwater horizon. and i understand that not all 14 are actually drilling. some of them are water injection. do you know how many? >> that is not correct. >> ok, they are all drilling, but they are revised permits. is that correct to? >> that is my understanding. >> there might be a lot of noise around washington, but it is necessary for this to be clear. and it is my understanding based on a charge i got from your web site -- this is not my web site -- it has 0000 for deep water in 2011. it does not say 14. it says 0. this is from your web site.

the facts are that despite our efforts, the moratorium has been lifted. there is not a deepwater drilling permit. >> there is one. >> ok, we have one out of 14. my information is that there are 100 exploration plans that are boem and before you can get a drilling permit you have to be approved. how many are pending? 100? >> it is less than that. my understanding is that there are 36 approximately, deep water plants. >> and the others might be a shallow water. i would like that for the committee. we understand how many plans are pending, how many permits are pending, but the bottom-line is

that we need to step it up or these numbers are going to get worse, not better. >> frankly, at the end of the day, i will call the shots with my secretary of the interior. what i would say with respect to your chart, the fact is we are doing a lot to try to move forward with deepwater oil and gas production as well as shallow water. and you lived through the nightmare as i have. we have 30 million acres of oil and gas in the outer continental shelf and release 6.5 -- and only 6.5 million acres are producing. we want to figure out how to increase production in these areas. we talk about 14 deep water

wells. those are rigs were you actually have the people out there on those rigs working. i was on one of those rigs visiting them as they started moving forward. we now have 14 that have been approved. >> but they were working before they got shut down. i know my time is expired, but it is very important for us to recognize that unless we get some new exploration plans approved and knew deep water s -- and you can't understand the reaction from some of us when you -- and you can understand the reaction from some of us when you talk about the 30 days. i just want to conclude, if you'll bear with me, with one charge. and then i will close because i have 100 other questions and comments. but only five minutes.

mr. secretary, this is what the gulf of mexico look-alikes -- looks like. it has floodwaters' now lapping up at these communities. these are pipelines. this is what our state does to support this industry. you can see texas, louisiana, the coast of mississippi and alabama. we do not today get one solitary penny from a lease from any of these wells accept off our shores. no matter what the law we passed, the senator will not vote for anything unless there is recognition that the -- of the platform that our state serves this energy or nobody will be getting any energy, and you will, and gas. i have questions i will submit

for the record. if i may, mr. chairman -- >> if i may, mr. chairman? >> go ahead. >> we have been working on so many issues. i have jurisdiction that takes me from sea to shining sea and out into the oceans and alaska and many other places. i have been in louisiana and the gulf of mexico more than any other single state. right, we need to focus on the gulf coast. i know there are bills that you are working on to try to get that done. here's what i want you to see. i think you raise a legitimate question, and that is, we

extract all of the oil of the gulf of mexico, about a third of a supply. and yet, we have the -- i hope we can find some common way forward to rectify the situation in the gulf of mexico. >> senator manchin. >> thank you. you can tell the frustration. i am sure you are hearing it loud and clear. we will be voting on a bill and i it will be 60 days. did i hear you say it should be

90 days instead of 60 days? >> we are talking about two different things. i think people are a bit confused. there are permits and then there are plans. plans are a broader authority that an operator seeks to do a variety of things. right now, there is a statutory 30-day limit on the time my agency has to review a plan. there's currently no time limit with respect to reviewing individual permit applications. >> but the amendment is for 60 days. >> right, and that is the question that senator franken asked. even if we fail to show an ability to contain a blowout, that is the approval on the

permit. >> and no, you have the right to act on it or not to. the frustration is that the time element is so long. they have -- people have no certainty whatsoever and they cannot plan anything. just a yea or nay would help them. i'm just trying to say, what timetable do you believe it would take to evaluate that and give it an up or down? courts with respect to the permit? >> the permit. >> i do not know if there is a specific time limit. >> it could be 12 months? courts are people have no incentive to slow down -- >> our people have no incentive to slow down the processing of permits. most of these people are in louisiana and it is their neighbors whose livelihood is at

stake. i think being given adequate resources so that we have the personnel to do it, being transparent about where we are in the process and, therefore, how long it is taking, i think those are major steps forward. and i know the house version would indicate after a certain time frame that it be approved. >> what we are asking is a development in using the coal plants. i know people have different opinions about that, but it is our most reliable of fuels. what is your opinion, mr. secretary, as far as where you are on the pipeline?

because we know that using it for oil enhancement will make us less dependent on foreign oil. >> we have always been supporters of carbon capturing and sequestration, in particular using the linney templates -- the many templates. in my home state of colorado we drill wells. i think those kinds of efforts will be moving forward on the kind of cleaned energy technology that we want to have. those kinds of concepts are ones that we all need to explore.

>> but i'm saying right now we do not have the infrastructure to deliver the co2 drilling areas that would really enhance the production. have you looked at it? >> i have not looked at it. >> because we have the existing ability to use the carbon carbinol. there has to beat the market to deliver it. >> we will -- there has to be a market to deliver it. >> we will look at that. >> the frustration is our dependency on foreign oil, a high price.

-- the high price. it was over $4.19 where was this past weekend. we need to be less dependent on foreign oil but i think they are holding us all hostage with. -- that i think they are holding us all hostage with. >> i think the issue of the pain that the average american has upon, as the president said, we can look back and see the high prices and there is no quick fix. the fact that you have a much higher price market and countries like china using more than they have in the past, it

is important to move forward as we develop the energy policy of this country. this country has tremendous opportunity. >> as you said, it has been going on for quite some time. in my lifetime, it basically came to a head in the 1970's with the will in barbara. and we have nothing. we have no energy policy -- with the oil embargo. and we have nothing. we have no energy policy. until we have an energy policy that uses energy that we can produce that has more certainty or more dependability within this nation, we are going to -- not going to do well with this. we to break that cycle. >> this is a hot topic that

people still strongly about. thank you, secretary salazar, for being here and for your patience in responding to the questions and concerns that we are raising. i have a bit different question, i think, than the ones i have heard, anyway. as we are looking at legislation to address concerns about permitting and drilling, one concern that i have is that we do not respond -- repeat the mistakes of the past. i know many of us were surprised to find out that the technology for cleaning up the spill had not changed much from the decade preceding. and for a while after the exxon valdez spill there was supposedly a process, supposedly

people in place to address oil spill are indeed, but it really had not been effective. -- oil spilled research and development, but it had not been effective. my concern is how we look forward and approved the processes for drilling in the future, that we have the ability to develop a technology. i know the president has requested and in -- increase in funding for oil spill research and polman. but it is not clear to me that we have in place a process yet for how we raise those funds on a regular basis and how it will

be spent. i wonder if you can speak to that, and whether you are comfortable that we have in place the ability to address these things. >> the fact is, when one looks back at exxon valdez, the report that came out of the presidential: -- the res presidential commission was not really one that created much change in this country. things continued much the same way without those lessons being learned. the president and his administration are committed to making sure those mistakes are not repeated in the wake of a deep water horizons bill. that is why there has been effort to move forward with the creation of the best standards and organization to oversee drilling, and actually to help

and support of calls around the world. in terms of the funding question, we do need to be able to have an agency conduct the regulation. and so, giving it additional resources to move the direction. they are not sufficient. there is more needed for a director to hire the kind of personnel to have the expertise and petroleum to have the ability to do the kind of inspections and oversight that are necessary. for the last several weeks he has spent a great deal of his time looking at the control centers, the remote data centers that industry has at of the big

companies. -- all of the big companies. we can have our agency move forward to having some of those same capabilities. unless the resources are there, and that is, how can you make sure that you are moving forward with the permit in business? a large part of that is that you need to have a in large part on board. >> a share your concern that we need to have more advances in research and development. in the last 20 years, the truth is, i do not see much going on right now that would improve things. we need more governmental involvement in research and development, but we need more private-sector involvement in the developing of technology.

one of the conclusions that people have come to as a result of the deep water rise and is that there was insufficient r&d by the private sector in every area. parenti in safety -- research and development in safety and containment, and certainly with respect to oil spill technology. that was the case then and remains the case today. >> secretary, thank you for your generous time. we do have official submissions for the record. >> we have been working on the safety advisory committee, which has been doing great work in helping us to answer the questions that have been asked here, but we also -- if you

would allow us to give a quick two-minute summary of what we are seeking. it is part of the response to the energy question. >> go ahead. >> i will be quick. thank you. this is in response to senator shaheen's question. dr. hunter, former director of lab, along with lan his agency has the task of determining what is going on with a well controlled containment response. but there is no center of excellence so that they can turn to administratively to help director bromwich and also to

have the regulatory committee keep up to speak in terms of what is going on in all of these areas, that is the genesis of the proposal. secretary chu has also suggested that in order to be a good regulator, our folks at the interior department need to have the same goal. >> thank you very much for your time and your testimony. we appreciate it very much and we wish you well. we have two additional panels. first, admiral thad allen, who was the commander with the deepwater verizon disaster. two distinguished witnesses. we would ask admiral allen to

come forward. admiral allen, it is very good to see you again and we welcome you back to the committee. we will include your full statement in the record as read, but we would like you to make any quick point that you think you need to make for us to understand. >> thank you. i will focus on a couple of issues that i think are relevant to my experience and to the experience of responding to the deep water oil spill last year. and specifically, i would like to talk about the regulation of offshore drilling units. some of that was alluded to in prior testimony. also, a response to plan review.

i would also like to talk about the doctrinal and there -- entities. k-y term.d if a geey- capitalizee need to on the ongoing process of the spill response planning. this is a very large, complex problem, but i testified before the commerce, science, and technology committee almost a year ago to the day on these issues and i took exurbs of that testimony and included them -- excerpts of that testimony and include them for your understanding. it is important to understand the safety issues moving forward. with that, i would be glad to answer any questions you have for me. >> let me ask one question, obviously.

on these offshore mobile drilling units, was the main point there? a lack of requirements that we have for a third party review for key equipment, is that the issue? >> yes, sir. first, but the deep water rise and is registered to the marshall islands. it does not touch u.s. soil, so it is not required to be regulated under the jones act. the coast guard issued it is what is called a certificate of compliance. and that is, they are in compliance with the u.s. code, or the code of that country is in compliance with international.

there are two other areas. first, how we treat cruise ships. they carry a large number of u.s. passengers. they do not go port to port, but they go out of a single port. there is concern about the safety of life. we conduct control verification exams. i think that is constructive in how you deal with offshore mobile drilling units. the second is ships carrying carrasco oral under foreign flags. -- carrying cargo for baracor or foreign flags. we can board them before they come in to make sure they are to safety standards, or we can deny entry if we think it is bad enough.

we need to significantly raise the safety standards. i know those conversations are going on inside the coast guard right now, but my recommendation would be to take those two frameworks and apply them to the mobile offshore drilling system. the second issue is on the drilling itself. i think we are all in agreement that an independent third party would inspect those. >> thank you. senator wasikowska. >> a couple of questions on the issue. as you recall, at this time last year there was a great deal of back and forth and the whole

issue of knowing how it works and having a better understanding of the surface, but making applications under the surface, it seemed like there were a lot of just back .nd forth the question to you today is knowing where we are and lessons learned, does the legislation that we have before us adequately addressed some of the concerns that were raised in terms of when, where, and how to apply dispersants'? and is it could call it -- good policy?

>> we have not demonstrably done in any further research and development on dispersant use other than certifying what their impact is and putting them on a national schedule to make sure the protocols are met. in putting this in the toolbox to make sure it is done by the epa, the well had proved extremely -- the well head predicts grimly effective at giving with the dispersants'.

there was not in is to begin research between the oil spill in 1990 and now. i think we need to put a focus on the interactions of dispersants in the water colony and the interactions of the in the world. there was so much concern raised that i think it behooves us and the american public to take a close look and see if we think where we are is ok. we need to take a second look at how these chemicals are tested. >> let's take this conversation of north to the arctic. it is my understanding that in alaska the use of dispersants has not been pre authorized.

is that correct? >> yes, ma'am. you know i have been in the service for a while now. there was discussion about pre approval locally, the way the law is set up. you can use of dispersants that you can burn of certain conditions are met. the team that is working on this has gained a consensus. the pre approval did not exist in alaska. i believe there were objections about some uses of the dispersant. . .

because we haven't done the background or the research that we need on this. >> let me talk about disbursements first. in relation to disbursements, we needed an affirmation that the schedule of the cam calls remains approved. it does. nothing has changed. so if that is the change, a very public affirmation would be in order so we can move on in places like alaska and form a collective consensus on

preapprovals should we need to use that. beyond that, it gets back to senator shaheen's call for r and d. it goes beyond looking at well control and capping systems. we need to look at modern technologies. there are new biodegradable agents out there. there are lots of things we need to look at with their effectiveness. we have thousands and thousands of offers, requests and suggestions that we just could not vet and bring them to market to the spill at the time. there was an interagency on r and d that was set up before 1990. i mepped establish it in the coast guard. the funding tailed off in the first two or three years. you can't do much with a couple hundred thousand dollars a year in that committee. i would submit when you move beyond the well containment and capping processes related to the drilling systems under the purview of the department of

interior, you have an interagency committee on r and d with a set of priorities that are shared by e.p.a. and the other activities that have a stake in this and then a robust schedule to go out and actually bring the questions raised during the spill, get them researched and come up with a public policy decision on how to move forward. >> i would certainly concur. one of the great disappointments after the exxon valdez tragedy and a lot of lessons learned there. we haven't made much progress in terms of the technology and advancement from the cleanup in the water from the exxon valdez 20 years ago to what we saw. it's one of those wake-up calls who is doing the research who is doing all of this. we can't be in a situation where the technologies for the cleanup have just been at a

standstill while the technologies that allow us to produce in different conditions under place placed, they're allowing to us leapfrog forward. good for us. also what has to leapfrog with that are the technologies and the advancements that give us that protection, if you l or that assurance that in the event of a disaster that we are prepared. i would like to think that when it comes to the use of dispersements or other spill contain measures, we are spending the same amount of time and energy to introduce them and to keep them current as we are facilitating the technologies to access the resource. >> in complete agreement, ma'am, i would support any legislation that does that. >> we'll work. thank you. >> senator shaheen. >> thank you, mr. chairman, i want to get back to the r and d question that senator murkowski has raised. i want to just clarify what i think i heard you say. when you were talking about

foreign flag mobile drilling units, do i understand from your comments that right now we do not inspect those foreign flag mobile drilling units? >> we do, but included in that is an audit of paperwork that demonstrates they're in compliance with international standards or substantially in compliance with the code that we would use for a u.s. flagged vessel. it does not include a more robust inspection that we would do under the two other regimes that we discussed, the regime for tankers and crargo ships and the exam for cruise ships. mobile drilling units have moved into a risk area and requires a higher legal of due diligence to ascertain they are in compliance with international standards. that's what i would recommend. >> thank you for that clarification. i want to go back to the r and d question because i think we all now have agreed that's something that's important to do and we're not doing did enough or well enough and we don't have the private sector involved. last year following the oil

spill, chairman, the senator and i introduced legislation that would set aside $25 million a year from oil and gas royalties to fund oil spill r and d activities. because one of the issues we discovered as you point out is that under the oil pollution act, while there was funding several years after the act was passed, that that funding trailed off pretty dramatically. so in your experience is a dedicated funding source one of the requirements for ensuring that we get adequate r and d done. >> ma'am, as an old budget director in the coast guard in this town, you don't make policy until you spend money. but i will say this. there is a mechanism created under the trust fund which is funded through a per barrel tax

with crude oil coming into the country, there is a mechanism -- i don't think a new source of funds has to be south. i think there is probably statutory authority right now to use the oil fund trust fund to fund it and $25 million is a modest amount given major research and development but will completely dwarf by order of magnitude the current effort. >> one of the things that amazed me when i questioned the c.e.o.'s who were part of the oil spill last year at the hearing about this issue was that none of their companies were doing any research at all around oil spill r and d. do you have any thoughts about how we could encourage those companies who are doing the drilling as senator murkowski said, to spend the same amount of money researching how to clean up as they are researching effective drilling

practices? >> well, i think ultimately there are two drivers of behaviors for the oil companies. the first one are the response plans and the requirement to identify resources and the response plans. we may have an opportunity when we go back and look at plan review which is something we need to do and have the coast guard involves because they're responsible for directing the cleanup in plan review for the oil platforms. how you create the review for the response plans and what you tell them they have to have available can drive them to create those resources. so if you want to create an incentive, my recommendation would be to take a look at how you want to structure the requirements and the response plans it that would create an incentive for them to go out and do research and development that would apply to the response organizations to get more involved in that moving forward. i think that would be one way to do it. that's a helpful suggestion. one of the other things we looked at to see how the oil

pollution agent had worked was the interagency committee that was set up to develop and direct the oil spin r and d plan had not been as effective. suggestions to us was the challenge that it wasn't clear who was in charge and that created a real issue around getting things done. do you have a perspective on that? >> i do there is an existing standing body called the national response team, it's identified under the plan in statute and regulation. it's the ultimate body that we will go to adjudicate a policy on dispersements during an actual spill. they exist, they meet regularly. they're impaneled. i see that body as a perfect mechanism to be given the oversight responsibility for the interagency r and d committee. i would say this, though, when you have a committee that only has several hundred thousand dollars a year, they're not going to be a very robust

committee to begin with. >> who chairs that committee? >> i think it rotates. i can check and answer for the record. i would take a guess it might be co-chaired by the n.p.a. as the n.r.t. is. i would have check on that, ma'am. >> thank you, thank you mr. chairman. >> admiral, thank you very much for your excellent testimony and your suggestions and we will try to take them to heart. >> thank you very much. >> and thanks for your great service to the country last year. we greatly appreciate it. >> thank you. >> our final panel today is dr. nancy levison who is a professor of aeronautics, astro naughtics and engineering systems at m.i.t. and mr. jack coleman who is managing partner and general counsel with energy north america. thank you very much for waiting and being here to testify. doctor, why don't you start and give us about five main points.

your full statement will be in the record as will mr. coleman's. again, we appreciate you being here. go right ahead. >> thank you. to improve safety in the industry will require not only creating tasks for government, but even more important, government providing incentives for the industry to take appropriate steps for themselves. so just creating an info like organization is recommended in the oil spill commission report. one of the surprises that emerged in the investigation of the accident was a lack of standards in the industry, having the a.p.i. lead standard effort is a mistake and has not been worked at all. we might consider what they do in commercial aviation. there is an independent group called the rtca which performs this role. the rtca is a private, not for

profit corporation develops recommendations and standards. it centrally functions as a federal advisory committee. it's been extremely effective in getting the industry players to work together to produce strong aviation industry standards. another recommendation i agree with in the oil spill commission report was that safety environment and negligent systems should be required as a prerequisite for issuing licenses and permits for exploration and drilling activities. it may be inappropriate or infeasible for them to get deeply involved in many of the activities needed to improve safety in this industry such as certification and training, better learning from events, compliance with maintenance and management of change procedures and real-time advice to decisionmakers as they're making critical decisions. i was personally very surprised that there was no mention of any operational safety group

advising decisionmakers on the platform as they were making the decisions on deep water horizon. these are the important functions of a company safety management system that clearly didn't have good ones. a third issue is the whole issue of third-party certification. oversight of complex activities is difficult for any regulatory agency. the f.a.a. has even a more difficult problem. they can't possibly provide detailed oversight of the design and manufacturing all the millions of parts on a commercial aircraft, just one commercial aircraft or the 10 million commercial flights in the u.s. each year. the f.a.a. solves this problem by using what are called designated engineering representatives. i believe they could consider employing a similar type of third-party certification process. now there is one recommendation in the oil spill commission report and in your legislation that i have serious reservations about and that's

the use of safety cases. the common definition of a safety case is an argument for why the system will be safe, but there is surprisingly little evidence for the effectiveness of the safety case approach to regulation. in fact, the use of safety cases has been highlighted in accident reports as a major cause of the accident. most mostly, the loss of the u.k. nimrod aircraft in afghanistan in 2006. a major problem with safety cases is what psychologists call confirmation bias. in plain language, what this means is that people look for evidence that supports the goal they're trying to achieve. when you make a safety case, you focus on the evidence that argues for the safety of the system. people don't usually look for evidence that suggests that the system is not unsafe and often even ignore such contradictory

evidence when it presents itself. the results can be a paperwork compliance-oriented culture where safety efforts focus on proving the system is safe rather than designing it and operating it to be safe. thank you. >> thank you very much, mr. coleman. >> thank you mr. chairman and ranking member murkowski and members of the committee. i appreciate the invitation to testify here today. it's good to see many people in the room who i have known a long time and including one former supervisor. i am managing partner and general counsel of energy north america as you mentioned. i have worked and next year will be 30 years that i have been working on offshore oil and gas issues. i retired from the federal government after 27 years two years ago. the last six years have been

first energy and metals council and then republican general counsel. prior to that i worked as senior attorney with my client, the minerals management service for 11 years. i'm very familiar with the offshore oil and gas program. while i was representing the minerals management service, i had the responsibility as a trial lawyer for the interior department for three major breach of contract cases including one mobile v.u.s. which went to the supreme court. i also for quite a number of years, senator murkowski was the lawyer responsible for offshore oil and gas alaska for legal issues. in that role, i was the lawyer for the north star litigation dealing with the north star development and for the mccovey litigation where we had four lawsuits dealing with one well exploration plan, four different lawsuits. this is certainly in alaska it

has been highlytygeous dealing with the offshore. i'm afraid i seen that moving to the gulf of mexico. let me just say this. i started my work in the offshore as a special assistant to the associate administrator of noaa back in 1982 for three years. i have worked it from all angles, environmental agencies and the minerals management service. i'm very concerned and i want to compliment the proponents of the bills that you're considering today. they all have very, many very fine provisions in it. the smaller bills dealing with the extension of the leases in the gulf of mexico, i think that's absolutely essential. you have heard testimony today that the interior department was not prepared to even consider permits for leases in the deep water until the end of

february of this year. unfortunately, i heard, i think i heard secretary salazar say they were going to address only extending the leases for gulf of mexico wells that were directly impacted last year. that would only be the ones that were stopped from drilling . that would not be fair, frankly because everyone was told to stop. everyone was told do not submit any permits to us, permit applications, we are not going to consider them. so every lease in the deep water was put on hold. not just those that were told to stop drilling at the time. this is a matter of fundamental equity. normally under the relations and the 11 years i was at the department, had we told someone to stop work on a lease, we would have issues a directed suspension under the regulations. that would have said you don't lose your lease time and you

don't pay rent during this time. this legislation that is before you says you don't release your lease time. it doesn't make them not pay rent. it would have been a significant amount of money, i think more than $100 million in the gulf of mexico. just for these leases. i want to address because it's been central in all of the panels that you have had. this period of time for permit proves, i think there is a lot of confusion about this. as i mentioned in my testimony, it's not really -- we'll start with the exploration plans. the continental shelf land act amendments in 1978 put a statutory 30-day time period on acting on exploration plans. that has been the law. we have followed it since 1978.

frankly, until complaints of recent vintage there have not been any problems with meeting that standard. one of the reasons is because we don't take action on exploration plan and that 30-day clock doesn't start running until the administration has an opportunity to take a look at that exploration plan according to regulations up to 15 working days which is about three weeks, 20 days. 21 days they have, calendar to look at a submitted exploration plan and deem it complete. if they don't deem it complete, they send it back and tell why it's not complete, a complete review. the lessee has an opportunity to come back and fix those shortfalls, whatever the administration said should have been in there that wasn't and then if it's deemed complete, they go through that 15 working day period again. if it's deemed complete, then they have the 30 days to

review. so they have had much longer 30 days to look at this proposal, much longer. i think i heard the secretary say, well, we have got to have a longer period of time so we can do environmental assessments. frankly, number one, they have done environmental assessments within 30 days, but this is not necessarily the way that you would comply with it. there are other ways to comply. before i started working on offshore oil and gas, i was the senior attorney for environmental protection for the department for 3 1/2 years and you can bunch as the m.m.s. used to do, do grid for an whole area, do an environmental assessment for that. see what the assessment is for that group of tracts and leases. have you done it in advance. when you have a plan request, you can take action on it quickly. as i said in my testimony, written testimony, you can

either work smart or you can work hard. you can make it hard and difficult, or you can be more efficient and smarter. you have the flexibility to do that. i am also happy to here when senator manchin was using -- >> can you wrap up your comments here. we're about out of time. we have started a vote. good right ahead. >> historically, 10 days has been the time to, once you submit your permit request to when it got approved, 10 days to two weeks, the house bill says you get up to 60 days and you have to make a decision. if you don't make a decision, then it's deemed approved. that does not mandate that you say yes. it just says you have to make a decision. i think it's only fair from a contract point of view. i appreciate the opportunity to

testify and be happy to answer any questions. >> thank you very much for your testimony, doctor, thank you for your testimony. i didn't have any questions at that point. senator, good right ahead. >> mr. chairman, recognizing that the vote has started six or seven minutes ago, i think we need to wrap up here. i thank both of you for the testimony. mr. coleman, i was going to ask you whether the 30 days is sufficient. i think it's important to understand that when that 30 days begins to toll and i think that's an important part of what goes into the process. i think we're all struggling to find that right number here, the right time period within which the agency needs to do the job, but without adding to what is already a lengthy and cumbersome and very costly process so we're trying to get it right, your comments have helped. i have some additional

questions i will submit for the record. mr. chairman, i thank you for the hearing this afternoon. >> thank you both very much and particularly for waiting so long to get to testify here. that will include our hearing. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> a reminder that if you missed any of this senate energy committee hearing on offshore oil and gas drilling,

can you watch it shortly. it will be online in our video library, c-span.org/video library. well, the u.s. senate is in session today. you're looking at a live picture of the u.s. capitol. they're working on a judicial nomination, a vote is coming up shortly in the u.s. senate. the focus later today, later this afternoon will turn to a bill looking to curtail tax breaks for the oil industry. a procedural vote to move the bill forward which requires a 60-vote majority is scheduled for 6:15 p.m. eastern. this is the first of two energy-related bills to come to the floor this week. tomorrow lawmakers in the senate will consider a bill passed by the house. the aim is to increase oil and gas production. that measure, too, will have a 60-vote threshold. you can follow the senate debate on our companion network, c-span 2. here on c-span coming up this afternoon, we're going to take you to a briefing at the pentagon at 1:45. admiral michael mullen will be holding a joint news conference

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slash shop. >> the c-span networks. we provide coverage of politics, public affairs, nonfiction books and american history. it's all available to you on television, radio, online, and on social media networking sites and find our content anytime through c-span's video library. and we take c-span on the road with our digital bus and local content vehicle. it's washington your way, the c-span networks, now available in more than 100 million homes created by cable, provided as a public service. >> house budget committee chairman paul ryan said yesterday that his proposal to overhaul medicare would fight rising health care costs by "empowering senior citizens to deny business to inefficient providers." these remarks came during a speech to the economic club of chicago. democrats have argued that the plan privatizes medicare and would end the program. in addition, republican

presidential candidate recently called the ryan plan radical and called it right wing social engineers. his comments in chicago run about an hour. i just want to say one thing, as chairman of the house budget committee, i stand ready to do whatever it takes to help you re-sign jay cutler. all right? [laughter] >> now, really, what i'm here to talk about today is our economy, about the need to get four quarters of strong consistent performance. that wasn't another jay cutler

joke, i swear. it could be, but it wasn't. [laughter] >> i'll come to the point. despite talk of a recovery, the economy is badly underperforming. growth just last quarter came in at 1.8%. we're not creating enough jobs for the people entering or the for the ones that lost their jobs. the rising cost of living has become a serious problem for many americans. the fed's aggressive expansion of our money supply is clearly contributing to major increases in the cost of food and energy. an even bigger threat comes from the rapidly growing cost of health care, a problem i would argue made much worse by the health care long enacted last year. most troubling of all, the unsustainable trajectory of government spending is accelerating our nation toward a ruinous debt crisis.

this crisis has been decades in the making. republican administrations including the last one failed to control spending. democratic administrations including the present one have not been honest about the cost of the tax burden that would be required to fund their expansive vision of government. and congress controlled by both political parties have failed to confront our growing entitlement crisis. there is plenty of blame to go around both political parties. years of ignoring these drivers of our debt have left our nation's finances in dismal shape. in the coming years, our debt is projected to grow to more than three times the size of our entire economy. this trajectory is catastrophic. we see this coming. by the end of the decade, we will be spending 20% of our tax

revenue simply paying interest on our debt, and that's according to optimistic projections. if rating agencies such as s&p move from down grading our outlook to down grading our credit, then interest rates will rise even higher and the debt service will cost trillions of dollars more. this course is unsustainable. that's not an opinion, it's a mathematical certainty. if we continue down our current path, we are walking right into the most preventable crisis in our nation's history. so the question is, how do we avoid it? the answer is pretty simple. we need to make responsible choices today so our children don't have to make really painful choices tomorrow. if you look at what is driving our debt, the explosive growth in spending is a result of health care costs spiraling out of control. by the time my children are raising their families of their own, literally every dollar we raise in revenue would be

paying for three major entitlement programs. some of this is demographic. every day 10,000 baby boomers retire and start collecting medicare and social security, but a lot of it is simply due to the fact that health care costs are rising faster than the economy is growing. revenues simply can't keep up. it's basic math. we can't solve our fiscal or economic challenges until we get health care costs under control. the budget passed by the house last month takes very credible steps to controlling health care costs. it aims to do two things -- to put our budget on a path to balance and to put our economy on a path to prosperity. i'm here today to stress the point that these goals go hand in hand with one another. stable government finances are essential to a growing economy. economic growth is essential to balancing the budget. the name of the budget is the

path to prosperity. you see right now we are finally having a debate in washington about how to address our fiscal problems, but we're still not having the debate that we need to have to an alarming degree, the budget debate has degenerated into a game of green eye shade arithmetic, with many in washington, including the president demanding that we trade ephemeral spending restraints for large tax increases. this sets up a debate in which we are arguing over who to hurt and how best to manage the decline of our nation. it is a framework that accepts ever higher taxes and rationed health care as givens. i call this the shared scarcity mentality. the missing ingredient, of course, is economic growth. shared scarcity represents a deeply pessimistic vision for the future of this country, one in which we all pay more and we all get less. i believe it would lease us

with a nation that is less prosperous and less free. to begin with, chasing ever higher spending with ever higher tax rates will decrease the numbers of makers in society and increase the number of takers. able-bodied americans will be discouraged from working and lulled into lives of complacency and dependency, that's not who you are. and taxing the rich doesn't generate nearly enough revenue to cover washington's empty promises, austerity will be the only course left. a debt-filled economic crisis will more than force massive tax increases on everyone and indiscriminate costs without given them time to prepare or adjust. given the expansive growth of government, many of these critical degrees will fall to bureaucrats we never elected. shared scarcity stops growth and it ends with lost freedom.

in a recent speech he gave in response to our budget, president obama outlined a deficit reduction approach that in my view defines shared scarcity. the president's plan begins with trillions of dollars in higher taxes. it relies on a plan to control costs in medicare that would give a board of 15 unelected bureaucrats in washington the power to deeply ration our care this would disrupt the lives of those who are currently in retirement and lead to waiting lists for today's seniors. now in criticizing the president's policies, i need to emphasize and make something very clear. i am not disputing for a moment that he inherited a very difficult fiscal situation. he did. millions of american families have just seen their dreams destroyed by misguided policies and irresponsible leadership that caused the financial disaster. the crisis squandered our nation's savings and it crippled its economy. the actions taken by the

federal government in the fall of 2008 did help arrest the ensuing panic. but subsequent interventions such as the president's stimulus law and the fed's unprecedented monetary easing have done much more harm than good in our judgment. in the aftermath of the crisis, we needed government to repair the free market foundations of the market economy as it did in the reagan administration in the early 1980's, by restraining spending, keeping taxes low, enforcing regulations and protecting the value of a dollar. instead leaders in washington embarked on an unprecedented spending spree, they passed a new health care law that raised taxes by $18 billion dollars and is a sharp departure from a rules-based monetary policy which created more uncertainty in a 2010 election, the voters sent a very clear message. this isn't working. washington needs to try

something else. well, we know what that something else must be because we know what has always made growth possible in america. we need to answer that call for new economic leadership by getting back to the four foundations of economic growth. first, it's pretty simple woodpeckers got to stop spending money we don't have and we ultimately, that means getting health care costs under control. second, we have to restore common sense to the regulatory environment so that regulations are fair, transparent, and do not inflict undue uncertainty on america's employers. third, pretty simple again, we need to keep taxes low and then a year by year approach to tax rates so that job creators have incentives and certainty to invest in america. fourth, we have to refocus the federal reserve on price stability. instead of using monetary stimulus to bail out washington's fractures because businesses and families need

sound money. look, let me deal with each in order. the first foundation, real spending discipline. again, it's pretty simple. you can't get real sustainable growth by continuing to pile on to the debt. more debt means more uncertainty and more uncertainty means fewer jobs. the rating agency s&p just downgraded the outlook of u.s. debt from stable to negative. that sends a signal to job creators. if s&p is telling us that america is a bad investment, they're not going to expand and create jobs in america at least not at the rate that we need them to do so. mounting debt also threatens the poorest and the most vulnerable citizens because those who depend most on government would be hit hardest by a fiscal crisis. we have to repair our social safety net programs so that they are there for those who need them most. this starts by building on the successful bipartisan welfare reforms of the 1990's. our reforms saved the social

safety net by giving more power to governors to create strong, flexible programs that better serve the needs of their populations. more important, we propose to make these programs solvent. as we strengthen welfare for those who need it it, we also propose to end it for those who don't. we end wasteful corporate welfare, forage gwri business, fannie mae and freddy mack, all of these detectives are necessary to get spending under control. they're not enough. as i said, we cannot avert a debt crisis unless we direct address the rising costs of health care. getting health care costs under control is critical, both for solving our fiscal mess and for promoting growth. one reason so many people aren't getting raise it is that health care costs are eating into their paychecks. the second foundation addresses the growing of what a call

crony capitalism. they pick the winners and losers in the private economy. congressional republicans continue to advance. reforms have stopped regulatory bureau crats for strangling job growth and regulation with red tape. we advanced regulation to stop the e.p.a. from from destroying caps on american businesses. we advance legislation to repeal the dodd-frank law, which emphasizes the problem of too big to tail about giving large interconnective firms advantages that small firms do not enjoy today. most important, we pro focused to repeal the new health care law and its burdensome maze of new regulations. it poses an unconditional mandate on americans. it also imposes new regulations on businesses which are stifling job creation. let me share with you one figure that serves as a devastating indictment on the new health care law. so far 1,000 businesses and

organizations have been granted waivers from the law's onerous mandates. they may stop job losses now, but not in the future. this is no way to create jobs in america. true bipartisan health care reform starts by repealing this very partisan law. the third foundation recognizes that we cannot get our economy back on track if washington tries to tax our way out of this mess. the economics profession has been really clear about this one -- higher marginal tax rates creates a drag on economic growth. as the university of chicago's john cochran recently wrote, great school, by the way, big fan. [laughter] >> "no country ever solved a debt problem by raising tax rates. countries that solve debt problems grew so that

reasonable tax rates times much higher income provides lots of tax revenue. countries that did not grow deflated or defaulted." higher taxes are not the answer. fourth, finally this foundation calls for a rules-based monetary policy to protect working families and seniors from the threat of high inflation. the fed's recent departure has increased economic uncertainty and endangered the central bank's independence. advocates kite the maximum employment aspect of the fed's dual mandate, the other mandate being price stability. congress should end the fed's dual mandate and task the central bank instead with a single goal of long-run price stability. the fed's should publish and follow a monetary rule as its means to achieving this goal. these are our four foundations

of economic growth. in the house passed budget starts the long, arduous and necessary process of restoring these foundations and building a prosperous future. we lift the crushing burden of debt by reforming those programs that are driving our debt. we reduce the deficit by 1/3 the first year and putting an end to the deficits. the house passed budget does not put the budget just on a path to balance, it actually pays off our debt over time. we can't achieve this goal by simply rubber stamping spending increases or raising the increases in the national debt limit without reducing spending in washington. our speaker john boehner made this very clear in a recent speech in the economic club of new york. if a debt ceiling has to be raised, then we have to cut spending. the house-passed budget contains $6.2 trillion in spending cuts. for every dollar that the president wants to raise the ceiling woodpeckers can show

him plenty of ways to cut more than a dollar's worth of spending. given the magnitude of the debt burden, the size of the spending cuts should exceed the size of the president's call for increase. [applause] our budget also gets health care spending under control by empowering americans to fight back against skyrocketing costs. our budget makes no changes for those in or neither retirement and it -- near retirement. it offers future generations with a strength of medicare program that they can count on, less help for the wealthy and more for the poor and the sick. there is widespread bipartisan agreement that the open-ended fee-for-service structure of medicare is a key driver of health care costs inflation. ask any hospital executive, they'll tell you the same

thing. as my friend jim capretta, a health care expert likes to say, it's not the train being pulled along by the rising costs, it is the engine and the rest of us are getting taken for a ride this disagreement isn't really about the problem. it's about the solution to controlling costs in medicare. if i could sum up the disagreement in a couple of sentences, i would say this. our plan is to give seniors the power to deny business to inefficient providers. [applause] their plan quite to the opposite is to give the government the power to deny care to seniors. we disagree also about how best to deliver the tax reform that americans have long demanded from washington. here is a quick story about tax policy. 25 years ago in this club,

g.e.'s c.e.o. said, "i represent a company that does not pay taxes. funny, i guess things just never change." what i'm trying to say is we need to broaden the tax base so corporations cannot gain the system. the house-passed budget calls for scaling back or eliminating loopholes or carveouts in the tax code that are distorting economic incentives. tax policy drives it, not good business decisions. we do this not to raise taxes, but to create space for the lower tax rates in a level playing field for innovation and investment. america's corporate tax rate is the highest in the developed world. our businesses need a tax system that is more competitive. a simpler fairer tax code is also needed for the individuals' side, too. individuals, families, and employers spend over six billion hours and over $160

billion each year trying to figure out how to pay their taxes. it's time to end the tangle of deductions and lower tax rates to promote economic growth and job creation. [applause] and so that what is we have imposed. the tax code is simpler, flatter, more globally competitive and less burdensome for working families and small businesses. by contrast, the president says he wants to eliminate deductions, but he also wants to raise rates. that includes raising the top rate, the one that all of those successful small businesses pay to 44.8%. that would amount to a $1.5 trillion tax increase on families and job creators. when we tax our ploirs and job creators more than our foreign competitors tax theirs, they win, we lose. that's not a good idea.

the president said that only the richest people in america will be affected by this plan. look, class warfare may be clever politics, but it's terrible economics. redistributing wealth never creates more of it. further, the math is really clear. the government cannot close its enormous fiscal gap by simply taxing the rich. this gap grows by trillions of dollars each year representing tens of trillions in unfounded promises of future generations that the government has no plans to keep. there is a civic side to this as well. social unrest and class envy, selling it, makes america weaker, not stronger. playing one group against another not only distracts us from the true sources of inequity in this country, crony capitalism that enrichardson the powerful and empty promises that betray the powerless. those committed to the mindset

of shared scarcity are telling future generations, sorry, you are going to have to make do with much less. your taxes are going up because washington can't get washington spending down. they're telling future generations, there is not a lot we can do about rising health care costs. government spending on health care is going to go up and up and up. when we can't borrow or tax another dollar, we give to a board of unelected bureaucrats the power to tell you the treatments you can or cannot receive. if we succumb to the view that our problems are bigger than we are, if we surrender more control of our economy over to a governing class, then we are choosing shared scarcity over renewed prosperity and managed decline over economic growth. that's the real class warfare that threatens, a class of government elites milking winners and losers and determining our destinies for us. look, we face a choice of two futures.

we can continue to go down the path towards shared scarcity or we can choose the path of renewed prosperity. the question before us is really simply. which path will our generation choose? in 1979, my mentor, jack kemp, captured the essence of why we must choose the path to prosperity. "we can't progress as a society by using government to diminish one another. the only way we can all have more is by producing more, not by bickering over how to share less. economic growth must come first, for when it does, many social problems tend to take care of themselves and the problems that remain become manageable." you know, there is a question i get a lot from people at town halls, i do lots of town halls. when you go around people that show these charts that shows

the debt is going to cripple the economy, people ask any plan can save america from a diminished future. most people think the country is deeply down the wrong track. they say congress, -- congressman ryan, is there anything we can do to stop the country from physical ruin or brace ourselves for the worst? >> it's a difficult question, it gives me pause, it's one that frankly keep me up at night. the honest answer is one i'm about to give you. no one got rich betting against the united states of america and i am not about to start. [applause] time and again, just when it looked like the era of american exceptionalism was coming to a close. we got back up. we brushed ourselves off and we

got back to work rebuilding our country, advancing our society and moving the boundaries of opportunity ever forward. we can do it again. america was knocked down by a recession. america was threatened and is threatened by a rising tide of debt, but we are not knocked out. we are america. it's time to prove the doubters wrong once more, to show them that this exceptional nation is once again up to the challenge. thank you very much for having me today. i appreciate it. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> thank you congressman. >> thank you. >> is this thing on? >> first of all, i would like

to say, i think it's pretty incredible that a green bay packer fan gets a standing ovation in chicago. i don't think we have seen that one. so, i'm going to pick up on a couple questions, thank you to all of the audience who gave a few of these. in today's "chicago tribune," despite washington coming to grips to the threat that the debt is real, they are not having the debate that americans deserve. can you expand on that comment? >> what is happening right now is we're into this sort of greene eyeshade arithmetic dance, how much should we cut and raise. let's not forget about economic growth and prosperity. we got to make sure that we keep our eye on prosperity and job creation because the way in which we go into the debt crisis and how we handle it will determine what kind of a country we are coming out of it. what we believe the right mix of policy is spending cuts and

controls along with policies to get the economy growing, economic growth. that's the mixture that works. if we try to tax our way out of problem or part of the way, we'll shut down prosperity. again, the 21st century is a very globally competitive century. we can't take it for granted that our businesses can always thrive and survive and complete even when we tax them a whole lot more than our competitors tax theirs. so we got to keep our eye on economic growth and the drivers of our debt. taxes are expected to go back to where they historically have been. the problem is spending doubles and then triples over the course of the century. when my kids are my age, instead of taking 20 every dollar, the current government is scheduled to take 40 cents out of every dollar for this government at that time. it literally gets out of our control. >> let's talk about that economic prosperity perspective for a moment. the midwest has been hit very hard industrially, your

district as well. can you talk about ideas that will make us competitive globally across the nation? >> i think you have to get to the basics. i talk about these four foundations, sound money, low and predictable competitive tax rates, spending that is under control so that our dollar is stable so that our interest rates are low and getting the regulatory machine under control. right now we have so much government activism that is producing so much uncertainty on our economy and it is putting a chilling affect on our investment. it is raising the hurdle rate that people have to clear to be successful. those basic fundamentals, those foundations, you can't replace them. there can't be some widget or some bill in congress to spend on some new program that pictures all of these things. the other thing they would say that we also embrace in our budget is you have to have a workforce that is educated and that can be there for the high skilled jobs we need in the future. we basically are saying let's

repair our social safety net. we don't want it geared to keeping people on welfare, but back on their feet. there are 49 different job training programs spread across nine different government agencies in the federal government. we don't even measure whether they work or not. we want to collapse them or consolidate them into career scholarships, we lost four auto plants in the area they represent in just the last couple of years, displaced industries. so when a person finds themselves in this situation, want a system where it makes it easy for them to do back to school to get new skills to get back into a career, lifelong learning, getting skills so we can do this. we want miles white to add jobs up in abbott park. we love it here, but we want it up in kenosha, yay, all right. that was miles, hopefully. the point i'm trying to make is we want to have a skill set, a

workforce that is there to do these kinds of jobs. so our technical colleges are primed to develop a curriculum and we want a system that works to further those kinds of goals. education is a key component of this. the federal government has a particular role to play, not a dominant role, and the four foundations of economic growth. you can't replace them. >> let's talk about education for a minute. we'll get into medicare. on education, you publicly commented that you like some of arnie duncan's comments. could you take a little bit about what you think the federal government's role is in education, a little bit more on what you just talked about and where there are some opportunities for both parties to work together collectively to get towards a solution. >> he is one of the most impressive members of the president's cabinet. he is an impressive guy. he clearly reaches across the aisle. that's noted because we don't see a lot of that these days. first of all, let's remember that most of the money is spent and raised at local and state government. the federal government is sort

of a junior partner when it comes to k-12est. the federal government imposes a lot of regulations and unfounded mandates. iea is one of the most. they have to finance the unfounded mandate so they can go toward customizing education reform needed in the local school districts. charters, school choice, all of those innovative education ideas need to be tested. we should get washington out of the way which are preventing them from doing those sorts of things. like at what mitch daniels has done down in indiana. it's really impressive. we have similar reforms in store in milwaukee and wisconsin so we want in the spirit of federalism to expand the laboratories of educational reform. at the federal level and post secondary education, i have secondary education, i have lots of