tv Capital News Today CSPAN June 16, 2010 11:00pm-2:00am EDT
above the cap, then the stresses will be minimal. but if not, that could threaten fund liability, quite frankly. >> in your statement, you mentioned that in 2007 you identified areas which further attention to the liability limits war were warranted, to adjust periodically that would have significant increases for inflation and the appropriate use of liability limits. if it but nothing was ever done on that? >> they were adjusted for inflation. but in the coast guard recent report, very much in line with our findings, that notably tank- barge as, there were disproportionately low, but they stopped short of making recommendations as to how the
limit should be adjusted. and obviously, having the limit less cost tens of millions of dollars to the fund. and now we're dealing with the unprecedented spill on top of those additional risks. >> i think your this, but you do not know whether your company have the ability to deduct from taxable u.s. income payments resulting from civil claims? >> senator mccain, i preface my comments that i am not a tax attorney. my understanding is that there are deductions that are available to us. we will take them on to the constraints of law. >> maybe you could have your legal department provide for the record what you're corporations view is on the ability to deduct from taxable u.s. income payments that result from civil
claims. could you provide that for the record? >> i will definitely take that into advisement. >> so, obviously, even though this is the 57 or 58 day, if you still have not sorted out the liability issue of the various entities who are associated with the rig. is that a correct statement? >> what i can tell you is that what we have been focused on over the last 50 or more days is making sure that we have got a claims process up and running, making sure that we got money into the hands of folks around the gulf coast and needed it the most, the fishermen and trappers, the people worked in restaurants. >> i understand the answer is guess it -- i understand that the answer is no. mr. bennett, have you made any process in that area -- progress
in that area? >> understanding who is liable for what? no, sir, we build a mall, we get pavement, and we expect them to sort out in court if they do not agree. >> ms. fleming, do you have a view on that? [inaudible] >> which allied identify yourself? >> just our general counsel. juergen i am the assistant general counsel. >> we have been doing some investigation in this area but it is preliminary to say anything for certain. there are legal implications with the contact at mms, and we will identify the names on the lease. that will help us make some
determinations about responsible parties. it is very pulmonary to say anything at this point. >> any preliminary conclusions? >> no, i do not. it is my understanding that anadarko and the other our partners but i cannot say more at this point. >> when you do, and i hope you will provide the committee with that. >> we definitely are working on that and we will do that. >> we're talking about the extent of the costs here which as we all know are unprecedented. i think that should be sorted out fairly quickly so that we can expedite the claims for all the reasons that i do not have to explain. i thank you very much. i thank you, mr. chairman. >> you bet.
>> thank you, mr. chairman. i do not want to go back to this but whose responsibility is it to determine liability? is not jail or the coast guard? >> my staff will -- >> determine which liability apply to which company? who determines the percentage? >> we bill them all for all costs. >> but it bp says forget it, to determine percentage? >> i'd judge will. if we do not get paid, the department of justice takes them all the court. >> just for clarity point. there a couple of things i have to ask, and mr. bennett, i will ask you. thereabout 51,000 claims and 26,000 have been paid. as of june 14.
does that sound about right for mark >> that is right. >> those folks who got paid, is their legal recourse? >> no one has been as the door release for any payment or give away any right. they are primarily to fishermen and they can get interim payments in continue to get -- make other claims as it goes on. >> thank you. mr. willis, there is a whole bunch of information out there on bp and violations with kosher -- osha and previous incidents. can you tell me if there were any short cuts that were taken because this project was over budget? >> senator tester, and actually over the claims process and that has been my focus for the last 60 days. i can answer any questions
about the claims process. >> but not about this issue. mr. newman, transocean was punching a hole? >> transocean was hired to provide the drilling rig in the people. >> are you aware that the project was over budget? >> i received a copy of a letter written by congressman waxman and congressman stupak that did make reference to a concern about the financial status of the project, yes. >> so it was over budget. >> that was the inference and chairman waxman') letter. >> i am not asking about that. >> this is a bp budget so i cannot comment on what the original budget was the and i have no idea where they were with respect to the process. >> of a different issue for bp. mr. willis, can you tell me -- there's all sorts of stuff that
needs to be cleared up. for example, this would not point a finger at you guys -- well, it kind of wood but not in a bad way. there are inspectors out there, and you could pay attention to this, mr. newman, and maybe even mr. bennett, but there were inspectors out there that told -- they were on fishing trips, and going to lsu games, college football games, that were not doing their jobs. can you shed any light on that. >> senator tester, and the claims guy. >> i understand that. mr. newman, can you shed any light on that? were they doing their jobs? >> from transocean's perspective, in a mess regularly visits to our drilling rigs, but conduct inspections, they make notes, they leave notes with our people the, their results from
those inspections, and that is the nature of the relationship with transocean. jayden did the inspector drilling rig? >> they were last on the deepwater horizon on april 1. >> to delete any notes? >> i did not know about a report from the people first visit. >> who would know? >> certainly someone in our operations group and know that. we can certainly provide that information back to the committee. >> can you tell us what are on those notes? >> i cannot today. >we will make the results of those visits available. >> miss fleming, we've got $20 billion which seems like a lot of dough and an escrow account now. you talked about we do not know what the damages are, ultimately, the extent of the damages. in your expert opinion, do you
think that is going to be adequate? >> i think it is going to take months and years before we have a good sense of the total economic and environmental impact to the gulf coast. so we do not know. the devil is in the details and terms of coastal work, how will be implemented. >> as long as you're going down that line, is there third-party administrator? bp has claims processors on the ground. is it going to be bp's claims processors that deals with the $20 billion escrow account for some one >> i do not know. >> does anybody know? >> they have not agreed to tell in this. >> senator tester, this information is hot off the press. these conversations will be taken over the next days and
weeks on how the process will actually be run. >> are you going advocate for bp to have their claims processors, or is bp going to allow a third-party administrator to determine that? in all like to start by saying that the primary concern we have is making sure that the resources are available and that the people need the money get the money as quickly as they can. and we will work the details around how and who are going to do the actual on the ground management of the plan -- the claims process is going to work. >> all right. one last question because i only have 15 seconds left. you talk about an investigation. you cannot talk about it. you can talk about claims process. can you tell me where they are at in the investigation? >> i cannot. i'm 100% focus on cutting checks
for the folks of the gulf coast. >> i appreciate your commitment to that. i appreciate all the people for being here to testify today. this is one helluva mess to get our arms around and get cleaned up and get people harmless as soon as possible. i think you all for being here. >> thank you very much for being here. i like to say that you are on message. [laughter] that is not a bad thing. a question that i could for you, mr. wallace. the u.s. claims monitoring team and an integrated services team, appointed by admiral allen. this team has been working hard to oversee bp's claims process on behalf of the federal government and the american people. i was concerned to find out that bp still has not provided
admiral allen and his team the entire claims data base that they requested. in fact, i am told that the requested it over a week ago and without this information we're told that they are unable to determine the extent of the claims or what waiting period of those need assistance. mr. willis, can you share with us, if you know, why hasn't this data been provided to the government, and when can we expect it to be provided? didn't mr. chairman, i can tell you that i actually attended that meeting last wednesday with admiral allen. and i was a part of that conversation. on thursday, members from the integrated services team and from our claims team met by phone to talk about how and what data we need to make sure was captured and incorporated into the claims report. in addition, our software
engineers work over the weekend to reconfigure systems to make sure we can extract the appropriate data. some of that data we are already capturing, but in many cases, our ceo has new data that we will have to capture. on monday of this week, i was in biloxi, mississippi with members from the integrated services team and our groups got together again to finalize the details. they're working hard to get that completed and into the hands of the appropriate people asap. that work is underway in the teams are working closely together. >> you responded in the first half of the question and i appreciate that. and when can we expect it to be provided? you're saying asap. trichet if that has not happened, i would expect within the week. >> thank you. a question that i could vote for you mr. willis or mr. bennett.
are there any claims denied by bp or have not been handled in 90 ays? could they be brought to the government's oil trust fund? i believe note claims have been denied to date. i really find that hard to believe. are you telling us that no one person has tried to take advantage of this system, that no one has put forth some sort of false claim? can you provide us with some examples entellus why they have not been denied? -- and tell us why they have not been denied? >> what i can tell you is that we have not denied any claims to date. we have thousands of claims put into the system. we of paid, as i mentioned, $91 million worth of claims, and no claim has been denied.
we've gone a variety of claims in the system, everything from boat captains to a deck hand to a waitress to a long man. and we're looking at everything that we get carefully, and we're being fair and reasonable and practical and our evaluation of claims. i can also tell you, mr. chairman, you're right. we have up to 90 days to pay a claim. but so far, from the time a person calls are 1-800 number to the time they receive a check once they have provided us with documentation that substantiates their income or loss, it is running about four days on average. and for business that has declined, less than $5,000, it runs about six days. from phone call to walking out of brooklyn center with a check. we're working hard to make sure that the process is fair and expeditious. we cannot deny any claims yet, because the suspect with a number claims in our system, there will be some denials.
but nothing has been denied to date. ma>> may i? we will be doubling more specifically into the claims process. however, it is unusual when dealing with large catastrophes like hurricane katrina, that there was improper payments and claims that can occur. it is really important that you have the framework in place so that you have reasonable assurance that would identify improper payments. but you have to balance that need to have the structure with the need to try to make sure that your process -- your claims process is working effectively and efficiently. you have to have that balance but we're going to delve into that for youu >> and there is tangent to try to be responsible. >> mr. bennett, could you respond to that question? >> i will let the season denials
because i know there are 6000 claims. what have i found? we of a 1-800 number out there all server communicated to climates when they get information from bp about questions and concerns. out of 56,000 claims, we have had 256 calls in the last five weeks. 210 of those calls were not about claims. there were about people's opinion on how the response is going. the majority of declines, we contacted bp, and we follow up with the people that call. we have reach about half of them, 20 or 40 people. we work with bp to find out the situation. we find that in most cases there is an incomplete claim with not -- without all the intermission. bp is trying to give the klan and every opportunity to get the right information and understand the process before they deny it. i had a conversation with some of mr. willis'fo folks about
seeing some denials. we want to make sure that there's no waste, fraud, or abuse. i don't think it is an indication that they are not acting, they are bending over backwards to make sure before they deny, that the claimant understood and had all of their darts in a row. >> mr. willis, i'll go back to you. i had a conversation i had with the folks in the u.s. claims monitoring team earlier today. they told me of some concerns involving the reported lack of denials. we talked a little bit about this year. specifically there been no reports of any individuals that come to bp that are told up front that the claim will not be covered. and so they never filed. and some of these cases, there might be claims that are actually coverable.
we're not getting an accurate picture of the clans that are be accepted or denied. if they hear that their claim is not covered, they do not make the claim. to what extent do you think this might be happening or not happening? and mr. bennett, i appreciate your timing and on this as well. >> i have not heard any reports like that but i can tell you that, given the fact that we have gone from 0 to 33 claims offices, and from zero checks cut to thousands of checks cut, that the process put in place is not perfect. we have taken some steps to make sure people are aware in our offices that fraud is not going to be tolerated. we posted signs in the office in english, vietnamese, spanish, and other languages. the process is not perfect but i have not heard of any instances. how process is an open claims
process. anyone who feels like they have been damaged, their property has been damaged, or they have lost income or wages as a role sold of -- as a result of this spill , they should call our 1-800 number nation not been denied that right. >> one thing i would add in addition to my earlier comment it that when we started out thinking about the number of the clans, it is relief cases opened. you see that there has only been 27,000 that had been paid. the question that just your mind, there must be a number that have not been at them. they do not have a number. we're working with bp to get moreetransparency. we're finding is from the people that call us. some have not even provided a dollar amount for their damages.
you have to say what the dollar amount was and document what the loss was. a certain number, i do not know the percentage of those open claims, are tickets that someone took and a good example is a hotel early on, if you have to get an early. so they took a ticket, they called the claim center, submitted a claim. they have not suffered any loss yet but they are holding it in case the response winds down and later in the season they do so have a loss. that ticket is open on the books. that is why we're working hard to get better transparency on what is happening with those claims and those tickets. >> thanks. a question if i could vote for ms. fleming and for mr. bennett. in your testimony today, the testimony of one of you, you stated that bp may choose to pay a claim with less documentation and the government would require them to obtain.
a lot like for you to but take a moment and explore that comment further. if that statement is true, that bp is providing payment for claims that the government would not pay, what will that mean for the independent trust fund? could this third party process actually be less liberal in its payments standard than bp? >> mr. chairman, i can first address that. we know that bp is paying for things that are not necessarily defendable. they are entertaining personal injury claims that are specifically precluded. and as a private entity, they are not bound by the same federal laws. they are leaning toward very hard. if people are on from the event, whether strictly opa or not, bp is being liberal and in some cases, i am sure some people are not happy, but they're getting paid. we know that there are claims
that we could not pay under opa. >> miss fleming, d one comment on that in any way? >> he has certainly more insight into the claims process. it is my understanding that it is certainly within the p's prerogative to pay beyond opa compensable costs. bp has said that they will pay for all legitimate claims, but it for some reason that changes in the cannot or will not, then the trust fund is threatened because we do not know at this point the trip cost. we will not -- we will know for many months or years to come. it may not still be contained. the number keeps growing each day, each week, in terms of the volume that is being spilled. this is obviously an unprecedented spill, and the costs could be in the billions,
i think. >> another question, it just for you, miss fleming. how does the deepwater horizon spill compared to other spills in terms of its special magnitude? >> i highlighted a couple. it is my understanding that more oil -- this has been the worst offshore platforms built in u.s. history. it still has not been contained. the exxon fell days, for comparison, spilled about 11 million gallons. it took over $2.2 billion just to clean up. bp is that when 0.6 billion in terms of recovery as well as damage claims. -- is at $1.6 billion in terms of recovery as well as damage claims. it will take years to know the true cost of this spill. and the impact to the environment and the economy in those areas. i don't think we have a good
grasp. but it is definitely unprecedented in magnitude will drive these costs. and as i said earlier, there are so many factors besides the magnitude that are coming into play. the location of so many species affected in terms of the wild life, and it is the time of year when they migrate to and the breed. it is the type of oil that is very toxic and creates long-term contamination to the shore. all of these factors will influence and drive the cost of this bill. >> i could give you a statement on cost factors and effective cost of cleaning up an oil spill. how did these factors come into play in the deepwater horizon spill? >> again, i think it is the location, the gulf coast community, an area that is in
proximity to the 36 wildlife refuges. it is a time when many birds migrate. also the location and the time of year is already impacting the fishing and tourism communities. and in that type of oil that is being spilled his of light sweet crude oil which is very highly toxic and has long term contamination effects. and on top of it, you have unprecedented magnitude of oil and the fact that it is still not been contained. all these factors will interplay and will ultimately impact and lead to the final cost of this bill, which again, it is going to take a long time to get there. >> how much do you think was built in the valdez accident? >> my understanding is 11 million gallons. in does that sound right, mr. bennett?
>> that sounds right. >> how much money was ultimately paid out? >> we have a better handle on that -- about $2.2 billion for cleanup costs. i am not sure what it claims amount is. mr. bennett may have a better handle, and i don't think it is fully settled, quite frankly. >> exxon has reported $5.3 billion on the response and claims in damages. and we would not know the details, since they pay the bill and did not submit a claim for any kind of limit, all we know is what the report. -- what they report. treating you said 11 million gallons and how much do we believe has actually been leaked to date? the league has grown over time. now looks pretty small. in the first days, but now is
grown to be enormous. despite bp and other efforts. somebody help me out in terms of comparing this to the valdez? 11 million gallons -- where are we today? does anybody know? all right. was that everything all in? >> that has been reported from exxon. >> and they pay debt. >> they pay debt. exxon reimburse the federal government for their costs. >> it was 20 years ago. 20 years later with a different amount of oil, most people are saying more this time, and maybe more fragile areas of our country. ms. fleming and others are welcome to respond that they
like, but do you find comfort in the $20 billion fund? it seems like a lot of money. is your first reaction to that that it might be enough? you have any thoughts? >> when we are dealing with such an unprecedented spills and catastrophic consequences, all options need to be considered. i think that anything that will both make the community's whole and at the same time tried to preserve the viability of the trust fund, it is certainly a step in the right direction. .
i think these are questions the need to be explored and address. >> i would like to say that over the last 19 years since national police has been over 11,000 spills. in every single one of those, there was a defined amount. a container ship can hold so much oil. there was a spill and we had a clinic. this was unprecedented because we're in the middle of this bill. it is still spilling. this is a campaign. this is what makes it so different and hard to anticipate and measure and forecast. it is unprecedented. the $20 billion the president got in agreement with bp last night, it is a good assurance to the american people that bp intends to stay in this for the duration. >> thank you. bp has promised that the $75
million liability cap would be irrelevant. with discussions and negotiations at the white house -- do we know they did not do any contractual agreement? >> we do not know. >> a question fo. last month you filed under the limitation of liability acted to limit your liability for the deepwater horizon accident to $27 billion. as the honor, -- owner, shouldn't you bear responsibility for the cleanup that has been caused by this bill?
-- the spill? bp and the other owners of the well would be assuming, and the company has suggested or liability is limited to $27 million. >> if i could offer a couple of comments. the filing of the limited liability was initiated by two things. direct instruction to file that action. in terms of the company's ability to meet our obligations, the preservation of our insurance program is a vital asset of the company. we responded and complied with our insurance underwriter's directive. the second reason we filed the action was to consolidate all o3 all of the numerous personal injury lawsuits that are being lodged against the company in multiple the news, a different
states -- different states and federal court. the action seeks to consolidate all those claims into one venue. the two recently filed that. the number the chairman referred to is a calculation according to the statute. we applied the statute and a methodology in the statute to calculate the number. that is an outcome of that calculation. >> i am not quick enough on my feet to figure out what per cent that will be but that has to be a small percentage. >> the limitation of liability applies to known environmental claims. it is in response to personal injury claims. the environmental claims are handled under the oath of process. >> mr. bennett, another one for you. your office is in charge of the
government will spill liability. any claims made to that fund? you have been in contact with bp claims officials since the process began. what instructions has the white has given you about this newly independently created trust fund, with the claims process being led by bp? >> we are working out the details so we do not have a thing to say about that. it was done at a high level in the next day or two. we will be meeting and working out the details. >> would you expect that process to start right away? >> i cannot say. >> thank you. if i could for you. transoeacean has claimed force
majure. could you go back and explain why they made this claim and transocean rejected? >> i believe that anadarko's claim with be in response to the administration's moratorium on deepwater drilling activity in the gulf of mexico. because those are ongoing discussions between transocean and anadarko, i would prefer to let those conversations carry through to their conclusion before i comment too freely on the currency of those conversations. >> all right. another question for you and for mr. fleming. one question i would ask before
we leave. you have heard your colleagues at this panel give testimony and heard them respond to the questions that have been asked of them. i would ask each of you to give an opening statement and give a brief closing statement and any additional comments you would like to bring, particularly in response to what you have heard others say or not say. be thinking about that, please. i understand that state lawmakers in the louisiana and mississippi have invited officials from transocean to participate in hearings they are holding to examine the spill's effects on residents in those states. transocean has declined to send any representatives to those hearings. i understand busy you must be right now. i appreciate your participation
today. why is transocean deciding not to send representatives to those hearings and could you commit for us to work with local lawmakers to provide the answers that they are seeking from transocean? >> we were unable to participate in the mississippi hearing. despite our inability to participate, we have been responsive to the mississippi lawmakers' request for information. we provided documentation to the federal administration and to congress. we have a representative who is attending the louisiana during which a believe is taking place tomorrow. we're able to participate in the louisiana hearing. we were not able to participate in mississippi. >> we appreciate of your being here today. you have someone at the gliese and hearing? >> we will. i am sure they will appreciate that. i would urge you to continue to talk to the local folks to
provide the answers they're seeking. a question for mr. fleming. how does the deepwater horizon spill -- we have beaten that enough. the question i will close with and i will ask you -- reflect on thewhat we have said today. some closing thoughts before i close it out. >> i think we have covered the fact that we're dealing with -- >> maybe a question that should have been asked that we did not. if you can think of that before we adjourn, that would be good. >> i think we have covered the fact that we're dealing with
this bill that is unprecedented in nature. it is clear it will take many years until we have a good sense of the costs. we already have determined it will be a greater magnitude than we have seen in history. the fund is in place, the trust fund is in place to cover liability costs. the concern is that while we have heard and bp continues to say they will honor and pay legitimate claims, the escrow account is a step that can be a vehicle for that to try to make the community's whole. if for some reason the cost gets to be the point where they cannot or will not, the trust fund is threatened or could be threatened and that comes into play in terms of future spills or claims that we're seeing from
the 2007 san francisco spilled and others -- spill and others. >> any closing thoughts? >> the coast guard and our federal partners and herridge partners is unrelenting. -the work is phenomenal. the american people are not happy and not everyone feels they have been treated right. admiral allen is moving heaven and earth to respond to these things to get answers to questions they have. >> thank you. closing thoughts? >> the closing thought it would like to leave is the way business is conducted on the outer continental shelf is pretty fundamental. it is a result of the statutory framework that congress has establiihed. a result of historic industry practice and a result of contractual relationships
between the parties. if you think about the process that the well owner goes through in identifying and securing the least through an arrangement with the federal government in developing an exploration program for the lease in designing the well orwell's to carry out that exploration program in hiring a number of sub contractors in executing the design and benefiting from the assessing the commercial quantity of hydrocarbons in those wells and benefiting from the production of those hydrocarbons, all that creates a process of ownership and control for the well owner. the well owner derives the benefits from that ownership and control. in terms of establishing the framework as it applies to liability, i think it is appropriate for the well owner who derives benefit from the production to also bear the risk if those hydrocarbons are
released into the environment inadvertently. >> thank you. >> what i would say is i am here as a representative of bp and the gulf coast. as much as bp is counting on me, that members and citizens of the gulf coast are counting on me. we will do the right thing and i am confident we will. we have an obligation to pay for the damage that has been caused by the spill and we will. we are serious and we have to demonstrate the seriousness to the response we have underway. hopefully, the things like the block grants that were given to the states, $475,000,000.75000000 dollars for tourism and $90 million for claims paid and the escrow fund, we are demonstrating our willingness to do the right thing.
we will do the right thing not only because it is the right thing to do but the folks at the gulf coast are counting on us to do the right thing. we realize our company will be judged by how we respond to that e spill. >> i expect your right. -- you are right. the core values i have tried to instill in any organization, whether it is that united states navy or government, figure of the right thing to do and do it. number two is to treat others the way we would want to be treated. the third is to focus on excellence. it is not perfect, make it better. do not give up. i think those are four pretty good core values to bring to bear to this catastrophe that we are facing and dealing with in the gulf of mexico today. we have, sadly, in this
country, an enormous dependence on foreign oil. we have 60% of our oil that we consume in this country comes from other places around the world. some of it from unstable nations. as we fill up our cars and vans we send money to places like iran and venezuela and i am convinced the use our money to heard is. some of the low hanging fruit and the easy oil, we have extracted that. a lot of the oil is in hard to reach places as we have found out all too dearly. places where we invite just not
-- not just danger but calamity. we have to be smarter than this. i realize we will be depended on petroleum for some time. -- dependent on petroleum for some time. i hope we will use this awful experience to do what einstein encouraged when he said in a diversity lies opportunity. to find the opportunity. not just to stand up and meet your obligations which you are attempting to do on behalf of bp. we will find a way to move away from our dependence on fossil fuels and petroleum, especially the stuff by an unstable countries around the world and places that are hard to extract and we will find opportunity to move our economy in a new direction. i think there is that opportunity and we have to be smart enough -- we need to seize the day. we have to get through this day. through these days in these
weeks and months in a way that gives not just the people in the gulf of mexico but the people in this country satisfaction that our best has been done and will becontinue to be done. we have to make sure this does not happen again. thanks to each of you for joining us. and your responses. some members of the committee will want to ask questions for the record. they will have that opportunity. they have two weeks to submit those questions and we ask the useask you respond promptly. this hearing is adjourned.
>> the ceo of bp is on capitol hill to testify about his company's response. he will be at the house subcommittee on oversight and investigations. you can watch that live on c- span3 and c-span.org at 10:00 a.m. eastern. for more information about the gulf of mexico of spill, you can watch any of the video on the topic. visit our special oil spill hub website where you will find dozens of congressional hearings and on video from the gulf coast. it is available now from c- span.org/oilspill. >> president obama and bp executives discuss their meeting. an update on the government's response to the gulf oil spill from today's white house briefing. and the senate hearing looks into the oil spill's impact on
the local economy. robert gates testifies on capitol hill about the defense budget and operations in iraq and afghanistan. >> on "washington journal", a look at afghanistan with rep. joe wilson. and david michaels on protecting the safety of those involved in the cleanup effort. blog starting at 7:00 a.m. eastern on c-span. -- live starting at 7:00 a.m. eastern on c-span. >> our public affairs content is available on radio, television, and online. you can connect with us on twitter, facebook, and - span.org. >> president obama met with bp executives at the white house. bp agreed to put $20 billion in
an escrow account to pay damages resulting from the oil spill. now, statements following the meeting from the president and the executives. this is 15 minutes. >> good afternoon, everybody. i just concluded a constructive meeting with bp's chairman. and i raised two issues at the meeting. first was the containment of the oil that is still spewing into the gulf. as i mentioned llst night, my administration has directed bp to mobilize additional equipment and technology and in the coming days and weeks, these efforts should capture of to 90% of the oil that is leaking out of the well. that is not good enough. we will continue to press and drop on our best mines and
resources to capture the rest of the oil until the company finishes drilling a relief well that is expected to stop the leak completely. the second topic recalled to run the issue of claims. i heard growing frustration at the pace of which claims have been paid. i heard concerns about whether bp will make resources available to cover legitimate claims resulting from this disaster. this discussion today was essential. currently, under federal law, there's a 75 million-dollar cap on how much oil companies could be required to pay for economic damages resulting from this bill such as this. that amount would be insufficient. that is why i am pleased to announce that has agreed to set aside $20 billion to pay claims
for damages resulting from this spill. this $20 billion will provide substantial insurance to claims people and businesses have will be honored. it is important to emphasize this is not a cap. the people of the gulf have my commitment that bp will meet its obligations to them. bp has pledged to make good on the claims it goes. the agreement we reached sets up a financial and legal framework to do it. another important element is that this $20 billion fund will not be controlled by either bp or the government. it will be put in an escrow account, administered by an impartial independent third party. if you or your business have suffered an economic loss as a result of this spill, you'll be eligible to file a claim for
part of this $20 billion. this fund does not supersede either individual rights are state's rights to present claims in court. bp will continue to be liable for the environmental disaster it has caused and will make sure the address it. bp agreed to establish a $100 million fund to compensate unemployed oil rig workers affected by the closure of the deepwater rigs. we agreed that ken feinberg will run the independent process and there will be a three-person panel to adjudicate claims that were turned down. every effort will be made to expedite these claims. ken has long experience in these matters including running the department that compensated victims of 9/11. i am confident that he will administer claims as quickly,
fairly, and transparently as possible. 'bp's liabilities are significant. we will continue to hold bp and all responsible parties accountable. i am confident bp will be able to meet its obligations to the gulf coast and the american peoplee bp is a strong and viable company and it is in our interests that it remain so. what this is about is accountability. that is what every american wants and expects. the structure we are establishing today is an important step towards making the people of the gulf coast whole again but it will not turn things around overnight. i want all americans to know that i will continue to fight each and every day until the oil was contained, until businesses recover, and until the gulf coast bounces back from this tragedy as i know it will. one last point.
during a private conversation with the chairman, i emphasized to him that for the families i met with down in the gulf, or the small business owners, or the businessman, or the shrimpers, this is not a matter of dollars and cents. that a lot of these folks do not have a cushion. there were coming off rita and katrina, coming off the worst economy this country has seen since the great depression, and this season was going to be this season where they would be bouncing back. this happen from their perspective at the worst possible time -- happened to from their perspective that the worst possible time. they're making their entire income in the three or four months during which folks can
take their boats out and people are coming down for tourism. i emphasized to the chairman that when he is talking to shareholders, when he is in meetings in his board room, to keep in mind those individuals. they are desperate. some of them, if they do not get relief quickly, they may lose businesses that have been in their families for two or three generations. and the chairman assured me he would keep them in mind. if that is going to be the standard by which i measure bp's responsiveness, that was a good start and it should provide insurance to the small business owners and individuals that bp will meet its responsibilities. i indicated that through this process as we worke to make sure
that the gulf is made whole, the standard i will be applying is whether or not those individuals i met with, their family members, those communities that are vulnerable, whether they are uppermost in the minds of all concerned, that is who we are doing this work for. thank you very much, everybody. >> we have had a very constructive meeting today with the president. we appreciate his deep concern and we appreciate the deep
concern that he feels for the people in the region and you can hear on his speech today how his frustration. i trust also that we threw the meeting that the president sends the sadness and the sorrow that we feel for this tragic accident that should never have happened. bp, we have always met our obligations and responsibilities. we have made clear from the first moment of this tragedy that we will live up to all our legitimate responsibilities. we have agreed today with the president a framework that should assure the american people that we mean what we say.
we will look after the people affected, and we will repair the damage to this region, the environmental damage to this reason and -- region and the economy. we are announcing today as you heard from the president and $20 billion commitment to make sure that all proper claims are handled swiftly and fairly. we have also announced an independent adjudicator that makes sure that the right people will get the right money at the right time. the bp board has today decided that we will not pay any further dividends this year. we made it clear to the
legitimate payments? >> this meeting influenced many different points. the determination and the ambition to get through this was clear from the beginning. >> the large oil companies are greedy companies who don't care, i hear this all of the time. we care about all of the small people. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010]
>> carol was involved in the meeting that was had today. she and i can answer questions about that. >> the questions about the oil spill fund, was bp ordered to do this or did they do this on their own? >> we reached an agreement that they will establish an independent claims facility and an escrow account and this was in the course of the
discussions that they agreed to do this. >> today do this on their own? >> no. this was driven by the white house. they will agree to set up this facility where it claims can be expeditiously reviewed and decisions made on how to proceed. they will provide assets to back that up. >> obviously the white house and other agencies of the government have been working on this and we heard the president at speak about this. there would be an escrow account that would be independently
administrator -- administrative. >> what about those that have an interest in the well or the rick? >> bp is the responsible party. they will be working with the companies in whatever way it is corporate to secure the funds. what we have is aa agreement for $20 billion. what gives us is the assurance said that we can make sure the people of the small businesses that have been impacted can get the claims in a timely manner. this sets up a process. there will be a review panel. the and dividual -- the individual claims it will be met. if the individuals are not happy, they will reclaim all of their individual rights.
they can grant an appeal if this has been allowable. >> why a 20 billion? >> this is not a floor or a ceiling. we wanted to make sure that there was adequate resources there so people would know that they could have their claims met. local governments might have claims. we wanted to have this with a fund that would meet all of the expectations. >> this does not limit or capped the economic damages that bp might be responsible for. this does not limit in any way their responsibility. >> does the president have anything specific to say? >> the president spent 20 or so minutes at the beginning of
these meetings for several hours. our group was in discussing the details of the agreement. the president spent 25 minutes with the chair alone in the oval office. these comments were directed at the tire economy. -- at the the entire company. >> can you bring us behind the scenes of the meeting? it was supposed to last a short time and it lasted several hours. can you tell me about how it played out and whether the ecology was something that you suggested?
>> they began with an apology from the chairman. we talked about the containment. every time he goes down to the gulf, he visits with individuals and small businesses feeling the impact. we need to get that addressed. the best way to move forward would be an independent process not run by the government or this petroleum -- or british petroleum. bp remains liable for everything they were liable from the beginning. they are liable for the cleanup costs. we have a fund to honor the
economic costs. >> is the dividend something that you pressed them on? >> they have said they understood that they have legal obligations. they agreed today not to proceed with those final pieces. >> why did it go on longer? there must have been sticking points. >> we did have to take breaks. there were six people representing british petroleum and we had six or seven and a times each side wanted to talk among themselves. we did take a break at 1.2.
there were breaks for each of the party salon. >> did the president to accept the apology? >> i assume so, yes. >> can you tell me what were the sticking points? >> i think we will be happy to get into what was agreed to. >> we have reached an agreement. this is a really important agreement for the people of the call of mexico. their claims will be expedited in a positive manner. is it $100 million? was that suggested by the white3 >> that was suggested by the white house. we welcome the fact that they are making a voluntary
contribution, hundred million dollars for the foundation for the unemployed oil rig workers. we continued to pursue some legislative fixes that would allow individuals to apply for unemployment insurance. >> as these things were being brought up, $100 million, $20 billion, what were they doing? where they pushing back? >> negotiations are negotiations. people discuss them and they proceed. what we needed was some kind of independent claims process.
>> when was the $20 billion fund agreed to? >> that was agreed to today. >> going forward, do you expect continued meetings at this level? >> the president will meet with whoever he needs to meet with. admiral allen is in touch with bp. >> at this level, do you expect this to happen again? >> if more meetings are needed, they will be had. >> the president said that if something isn't working, we need to hear about it.
are you confident that authorities have the ability to commit date with the government? we have been reporting a good deal for the gulf and many officials are having to take steps on their own. >> i talked to the president about this yesterday. we have established a different deputies and this guaranteed that we had a group of these individuals into the command centers in florida, in mississippi. we have to increase the ability to respond.
quarks that it sounds like these are not being put into a category. could this have applied it best at 20 billion? >> we want to make sure that there were mechanisms to address that the contribution by pete t bp. >> the president understands the economic impact of the moratorium. we do not know what has caused the accident. because of that, the president believes it was important to stop additional drilling.
the national commission that will look into the regulatory framework, we must have this going forward to insure that drilling is safe and they can and should look at the framework of round deepwater drilling first and report back to him as soon as they can. >> it sounds like they are in a separate -- >> the taxpayers will pay for some portion. >> some of the workers were qualified under existing law, some were seeking to make sure that they are qualified and now there is the additional funds. >> he has set standards. there is a lot of bureaucracy.
>> this will be a seamless transition. there is a claims process. this is not working the way we >> what they are getting is a drop in the bucket. >> that is why we did this. >> i think picking him and someone who has done this before understands that you have to take place. if you were to file a claim, you still fall within the window to have that claim adjudicated and that will continue to be the case. we believe that this will be handed off in a seamless way. claims are not just heard
independently but the appeals process their lead and the federal. >> these are people with mortgage payments, it didn't get his money in a week or two, they could be looking at problems. "we are working as quickly as we can. "there are plans that are being honored. we can get you the number of claims that have been responded to. people should go into that process and they will be moved over most important to understand. people will be able to apply
over and over again as necessary. >> if you are a fishin \erman,m- fishermen, you can ile a claim now. you don't have to extrapolate 12 months or 24 months from now. you can refile until you are made whole. courts will i get it or is this out of the question? >> you will have your claims heard under the process i think that this gives the certainty of the funding. >> this is the overall summary.
we can give you more details. as of this morning, there was over 66,000 claims filed. the checks that were cut are 26,000. >> are there people that receive money. >> let's have a look at how the current system works and how it will work. right now, if you file a claim and you are dissatisfied, you have the right to go to the federal trust fund or to go to court. what this sets up, you can file a claim. mr. feinberg will determine how
if you are not working, you can file another planet it it you did not. you can file another. if you do not like it, you can have it reviewed. at the end of that panel, you can take that. if you are still dissatisfied, you can go to the federal trust fund or you can go into court. you get a quicker answered and you can file over and over.
>> the 90 day process is within this. >> what is the procedure to go to this bertran and say that 20 billion is not enough hel? >> bp retains all of their liability. if there was no money available, you can go straight at bp. all of the rights of the claimants have been preserved. this new claims facility will stand in his place. if for some reason there was not money, you could ask for the payment.
the only people have limited their rights here is bp. >> if you accept the money, you have limited funds. >> can you walk us through this? >> you have heard the president for three and a half years talk about his approach to comprehensive energy reform. i don't think that that has been unclear. he reiterated a call last night and said that the greatest price we pay is the price of inaction. this morning, the president
spoke with senator kerrey and senator lugar, each of whom has the energy legislation that the senate is likely to take up the next several weeks. we announced that next wednesday we will have a bipartisan group in the white house to discuss the process that the senate will use moving forward. it is safe to say that the president's direction on energy is very similar to the direction that is in the carried lieberman bill. -- kerry lieberman bill. there are a number of proposals, that is why senator lugar and carry both got calls. there have been ideas about increasing energy standards.
the president met with business executives last week and whether questions was outcome money is not spent on research and development? the president will have a meeting next week here to work through that process going forward. >> the president supported the public option but he got 20% of+ what he wanted. >> i don't know why it would be pertinent to get into hypothetical at this point. go back to what he said and pittsburg a week and a half ago or in 2006 as a u.s. senator. his position on how to approach
our energy policy comprehensively is fairly well known. >> what is bp getting as a result of the agreement? are they getting any agreement that they will not be found negligent? you said that they would use this with u.s. asset. >> they will provide assurances by setting aside 20 billion in u.s. assets. >> they have committed to 20 but they will provide insurance by setting aside assets that could tel.
-- by setting aside assets. >> what are they getting out of the agreement? >> you can ask them. there might be a way for them to explain what they did why they did this. this provides certainty and peace of mind. if there is any wonder were concerned that they would not be made whole for the disaster that dathey caused. the president ask the chair when they were talking about what is happening in the gulf and they were discussing these parameters in the board, it is the people
that he has met in his trips who for four generations have fished on its waters to make a living. those are the people that the president has been focused on and he believes that that is two pp should be focused on. -- and that is what it bp should be focused on. >> is he being disingenuous when he says that people will be made whole? >> the response will party has
committed today through an escrow account that starts at $20 billion to make them whole. if you are a fisherman or a shrimper and your livelihood has been changed. this provides independence from the company that caused the disaster. that is important. in terms of gulf coast restoration, the president was concerned about the region in are mentally long before this disaster. whether it was a man-made or natural disaster, katrina coming to mind. we have seen the wetlands nd the marsh become degraded.
this president believes that we have an obligation to return the at the system and an impairment better than it was before this accident happened. the pe is liable for the degradation. -- bp is liable for the degradation. i believe the basis of that will help restore the environmental vitality of that region. >> president obama said that no asking was required at today's sessions. >> i think the president was clear about what he thought bp was responsible for and obligated to do.
we came with that in mind and be left with an agreement that is substantive providing the insurance, the independents, the funding. they will go to sleep tonight and people will be doing this independently and transparently. they will sleep quietly. >> was this confrontational? >> this was a business meeting. we did what we thought was appropriate. >> has see expressed his
frustration? what the parts of the meeting -- >> the parts of the meeting that i a worwas in work as they were described. we have seen the president over the past weeks. the livelihood of generations interrupted. there was one place such s dauphin island to that was going to recover after katrina. they thought that the economy was getting better. they have rebuilt after watching
a hurricane. one of the reasons that you take the ferry is that is two islands. this is to be the season for tourism and for fishing. i think the president discussed those stories. i don't think that anyone from bp can walk away from the last 58 days of the meeting here not knowing that the president, all of those involved in the response and recovery have been frustrated. >> the executives and the
companies made the decisions and this resulted in the knowledge that the people in the gulf will be made whole . >> bonds were trading at a distrust level. there is about a 40% chance of default. what was said by the company about the [inaudible] >> we did not discuss what was happening in the market. we have said analyst look at this situation and we believe
that they have a lot of strong assets. they will continue to operate and be a viable company. >> did they make any suggestions? >> no. >> have you removed the possibility of punitive damages? >> nothing was taken off the table. that was made clear. >> even if everything works optimally, 10% of the oil will be leaking into the water.
>> we hope that we will have a new capping system. there should be minimal leakage around that will head. we should have up to about 20,000 barrels a day. it will have a harder cap on the device that will allow us to produce more oil and this will have us up to 80 by july. we will have to unbolt the flange.
we will have to do this to jump from 83,000 barrels to 50,000 barrels. >> are any foreign flag skimmer's headed to this country? >> we have foreign flag vessels operating out there. we will not turn down any offer of travel. >> these were made early on and they were turned down. >> we have an exhaustive list. >> there are foreign vessels on the way? >> there are foreign vessels. >> there are foreign vessels operating as we all speak in the gulf right now. >> they are operating outside of
state waters. bp has purchased from many countries, wherever they can get a supply. >> was there any reason that anyone had to pressure bp to do anything else or are you completely satisfied with the course of action that they have laid out in the letter? >> there has been a very significant process. there was not enough capacity, redundancy. we have some shuttle tankers not usually in the gulf of mexico. these are dynamically positioned so they don't move. they have told us how they will
do this. we need to monitor this. >> we did spend some time going through these containment plans making sure that everything was being done to expedite. they walked through the different schedules. we have to remain vigilant to ensure -- in the case of getting to something on the order of 50,000 barrels per day, they are actually manufacturing a riser. there is not one in the world that work for this particular application. >> does the fine limit bp's responsibility for any worker? >> there were significant questions about whether or not those individuals would be
eligible under the oil pollution act. that is why we have asked congress to look at changing knee unemployment compensation for a disaster situation. >> as far as the government is concerned, that settles the issue for their liability? >> there is a significant effort to protect these workers. today, we reached a very extensive framework. we covered a lot of issues.
there were many issues to further flush out with lawyers. >> during the campaign, the president said that he would let science guide his decisions. many of the scientists have said that they've never signed off on a blanket moratorium. why is he following the recommendations? >> at the time of the accident, a ask the department of the interior secretary to complete a 30-day review. they got a lot of input. some of the people that provided input -- policy decisions were made based on those recommendations. mr. salazar made a decision to
recommend a moratorium. that was a policy decision. what they were giving was their expert in vicadvice. >> the president did not think that it made sense to continue the drilling activities as we were dealing with this without knowing what was going on. you cannot sit here and tell me that you cannot trust bp to do
anything. we will take their word for it on the premise that they had drilling in deep water even as we were dealing with the disaster in the gulf. we had a long discussion because he understood that this was not a decision that did not come without any displacement. that was superseded by not knowing what had happened and what could potentially happened if this happened again. the resources that would be necessary of this happen again would be hard to describe in words. >> there is a criminal
investigation going on and the justices are looking at some of the actions of the company. mike the administration look at any of the claims that they made with respect to their own liability? >> there was no discussion of any activities by the department justice investigation. >> there was no request? >> no, there was no request for community. -- communitimmunity. >> did they want payments to be stressed out over four years?
>> this was a very focused business like discussion. >> we took a group from petroleum to look at this and make this happen. any time there is a discussion or negotiation, there are sticking points and they get work through. this is a very important achievement we have gained for the people of the gulf of mexico. >> the reason the president had this meeting was to come out with the agreement like this. his goal has been to do we have to do take care of the people of the gulf.
today, we come out with the assurance through finding an independent process. that is what has driven his actions this entire time. >> this is something that they were not going to do on their own. >> this has been happening over many days. you would have to ask them when they came to some conclusion in their mind, we have had folks looking at this for many days. >> petraeus played down the
ideas for a september review. and you give us a sense of the review. >> without having seen the question or the extent answer, it is not as though we were on going on a daily, weekly, monthly basis. that would not exist until that- december and that might be what he was pushing back on. those commanders provide the president but written weekly updates that are quite thick.
there are monthly situation remains with the relevant cabinet members. thissreview is ongoing in nature. >> what happens to the dispersant? you push this down to the bottom of the ocean where it kills and shoves the marine life. you are talking about capturing 90% of the oil. what happens to that of oil that has been pushed down?
>> the purpose is to make it go into small particles so it biodegrades quicker. we have applied these to the surface and we are applying them at the source of the leak. we have limited their particular situations to those used on the surface. the most effective application is at the leak site down at the bottom. >> that is a poison that pushes the oil down? what happens? >> this set biodegrades. all of the oil will weather and biodegrade and the dispersants accelerate of that. there is some talk city but this is far less than the oil.
about big oil verses average america. >> parts of this, yes. >> did you hear about the president's frustration? he said that we are concerned about the small people. those words rang very strong. is this the wrong terminology? i'm listening, we are the ones that had to push this forward. what did they offer? >> i will let carol talk about what was in the meeting. in the meeting with both the chair and the group of executives as the president came in, it is the people of the gulf
that the president has had in mind throughout this process. these of the people he is fighting for. those of the people that the president has had in mind. >> we began in the roosevelt room, bp representatives. when the chairman of the company's books, he began with an apology. -- when the chairmen of the company spoke. >> i would assume so, yeah.
>> you seemed to indicate that that would be the basis upon which the president will move toward. >> what i said was the principles are consistent with the principles that the president has outlined on countless occasions dating back to the campaign but likely dating back to his service in the senate. >> many people on the hill interpreted the ambiguity. >> i would focus on what the president said and has said. >> with all due respect, i understand the legislative process.
>> i don't know how i can be more clear than to look at what has been said in pittsburgh. >> the climate has to be a component of the comprehensive energy. >> this would crash your computer all the times that the president has talked about the comprehensive strategy. >> there are reports that bp was considering suspending one of their dividend payments.
was there any talk at all about the anti pp rhetoribp rhetoric? is the president concerned about losing influence allies in the media? >> no. i've said this before and i will reiterate. if the president had decided to run for president based the what the pundits were saying, he would be in the senate. i appreciate the hand of the polls of america by those that live on cable tv.
i don't think that is where all of real america lives. >> -- one of the things that the government groups have complained about is the deal that was cut to in terms of requirements. can you talk about why the president of tax to the deal? >> i would be happy to look at what was put out and give a sense of what is in that brief. thanks. i would say he is probably in there for about 45 minutes.
[no discernible body of] -- audio [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> tomorrow, the ceo of bp will be on the hill to discuss his company'')s response to the oil spill. for more information about the the oil spill and to watch any of the video on the topic, visit
our special website where you will find dozens of congressional hearings on the oil spill and the video from the gulf coast. to find out how the oil spill is affecting people in the gulf coast, we talked with a small business owner. >> i am a lifelong resident of venice, louisiana. i have been here my entire life i am bound and determined to stay. i was nine weeks until -- destroyed everything.
>> was that right here? >> that was right next door. >> can you explain the science on your restaurant? >> you wake up, you go to sleep at night and you see the news. there is no progress whatsoever. they try to say things to make you feel better. it is not working. we just want to see some progress. it does not take a rocket
it is right here in our front yard. basically. where we live, there is a levey following the mississippi river and the back bay. you can almost see that call from 100 yards behind my house. it will not be long that it will be up in those waters. all we need is a hurricane come through here right now one blow the oil into every one of these areas. there may not be a recovery process for louisiana. it is taking away our homes, our livelihoods, our cash, and anybody that comes to south louisiana or anyone along the coast, it is always, always taking you in like one of you -- like you are one of our lifelong friends. you cannot deal anywhere like
you do in south louisiana. that is our nature. that is the way we were born and raised. we welcome everyone would open in arms just like we welcome the oil. we need to be drilling. we need to be drilling because louisiana is going to need that not too far down the road to survive. >> would you think the federal government should do to help? >> let's say. where do we go from here. the federal government to help -- first they can and after katrina -- they came in after katrina. we saw what happened there. we've got so much red tape that people are still trying to figure out how to get home loans, to get money from roads. i never received very much from fema.
i did not know. the government issues are like i could sit and chu had all day long and people will look alike i am crazy. they are not living it. i invite anyone to come spend the weekend in our shoes. i've got employees that cannot keep up right now because of the stress. we have people hired on by bp or whoever working for bp or what have you, we're not getting paid. my husband has been working for over four weeks now. he is not gotten a paycheck that. our bills are piling up on the kitchen table. they want to see what is like? let me -- let them come work with me in the kitchen. a cheeseburger and a cheeseburger. bring in on.
for it -- bring it on. >> next, a searing helene on the oil spill's impact on the local economy defense secretary robert gates testifies on capitol hill about the defense budget. and later, members of the armed services -- senate armed services committee questioned david petreaus about afghanistan. on tomorrows "washington journal," a look at the war in afghanistan with congressman joe wilson. we will talk with kathy castor about the gulf oil spill. and david michaels on protecting the safety of those working in the gulf clean-up effort. "washington journal" is live starting at 7:00 a.m. eastern time on c-span. >> he was a volatile, emotional, dedicated depressive young man. and very adventurous.
when he came to america my he was 25 and decided to have an adventure. >> taking a look at his 1831 toward america. the new book on c-span's "q&a." >> we've got three new c-span books for you. "abraham lincoln," "the supreme court," and "who's buried in grant's tomb?" each with a unique contemporary perspective and perhaps something new to you about lincoln, the nation's highest court, and the gravesites and lives of america's presidents. to order, go to c- span.org/books. each one also a great gift idea for father's day. >> now was hearing here -- a senate hearing on the costs associated with the gulf oil spill. testifying are the bp vice- president in charge of the claims process, transocean ceo,
and government officials. this is an hour and 45 minutes. >> the subcommittee will come to order. i want to welcome our colleague, frank lautenberg from new jersey, and before i call on him as the first witness to addresses on the first panel, a lot like to give an opening statement. and we will be joined by other colleagues, senator mccain will be asked to be give his opening statement. will call on senator lawton byrd and other members of our panel, if they show up before our second panel, they think of other statements. otherwise, they can submit their statements for the record. welcome, one and all. for 58 days the american people have watched the tragedy unfold in slow motion before our eyes. nearly two months ago when we first heard of an explosion on
an oil rig in the gulf of mexico and the loss of american citizens. today we will be discussing the financial costs of the oil spill. there's no value than that -- that one can pass on the loss of human life in this catastrophe. these were sons, brothers, these were husbands and fathers, and for those that were left behind, our colleagues and i send out our most sincere and heartfelt prayers. while there is nothing to bring back these men to their families and friends or loved ones, we can make sure that the communities and industries survive and thrive. as we all know, the coast and wet lines of the gulf have sustained enormous damages. this bottle natural resources, like but an economy, and a way of life. they are a national treasure that must be protected and we will demand that they be fixed
by those who broke them. today this subcommittee will explore how we can insure that america's are made whole again without putting a hole in our pockets. from the beginning, president obama and senior members of his administration took this it -- took this disaster seriously. the white house deployed cabinet members to help monitor their response, dispatched a coast guard, and brought industry experts into an ongoing efforts to get the damaged well plugged as quickly as possible and to coordinate the cleanup response. as i like to say, it is not perfect, let's make it better. and it is clear that there is more the federal government can do to make things right in the gulf. there is also more the bp and others can do as well. i hope today that we would gain a better understanding of how much this spill has cost and may
continue to cause the american taxpayers and how we intend to recover the money from those responsible for the disaster. earlier we announced a trust fund. this is something that my colleagues and i called for and i look forward to exploring how the fund might work today at this hearing. it is clear that the financial mechanisms we have them place including the oil spill liability trust fund were simply not designed to handle something of this magnitude. i look forward to hearing from gao and the accountability office about the risk and vulnerabilities of the fund that they have found in the past, and how all this spill encompasses a perfect storm of factors that could easily make it the most expensive ever. in addition to this enormous financial burden is placed on
citizens in the gulf, there are other costs. to date, over $20 million has been spent on ships and personnel to respond to this incident, and much of that had been billed to bp and the other responsible party. this past friday, understand that bp wired a payment of $69 million to the federal government. i understand that the coast guard will be sending their third bill for $50 million to bp and to the other responsible parties, perhaps even today. i am sure the american taxpayers appreciate the prompt payment and i hope we continue to see similar responses as those costs mount. what we've seen several checks from bp and others, i hope to find out today how the other responsible party do themselves and one another when it comes to paying for this disaster. we're pleased to see mr. newman of transocean here today, all
the way from geneva, switzerland. i look forward to see how he views transocean's role in the ongoing efforts. we look -- we invited anadarko who won 25% and another company which owns a 10% stake in the well. the names are also on the bill from the federal government. unfortunately they declined to send witnesses today. i am disappointed that they chose not to attend. it is my hope to have all responsible parties at our table. we hope that they can find some time in the near future to come to discuss with us these issues and with the american people. the whole we are trying to plug is some 5,000 feet under the surface of the water. men and women's bollywood's and communities have been disrupted by the disaster -- men and women whose livelihoods and communities have
been disrupted by the disaster live right down the street. this bill has now lost it -- -- the spill has now lasted 58 days. the story of noah tells us anything, with faith that dedication to do what is right and hard work. i do not know that we will find the rain broke. i hope it ended the day that we will find the and. and my hope is that at the end of the day, it will be a sad chapter some house serving as a catalyst to convinces to let us change course as a nation and focus on less on recovering petroleum and more on finding ways to become independent of petroleum, foreign oil, fossil fuels, and make ourselves more energy independent and enhance our securities and may be
launched all old news series of technologies and businesses that will be able to help our country as we go forward. we're joined by our ranking member, senator john mccain, and then we will turn to frank lautenberg, and then will recognize other. >> thank you, for holding this hearing today. i don't need to repeat how outraged and saddened all of us are by the de -- deep water rise and spilled it spewed millions of gallons of oil in the gulf of mexico. i think every american is aware of that situation now in the catastrophe. as of june 14, bp estimated that the cost of the oil spill had reached $1.6 billion. including the cost of the spill response containment, relief well drilling, and federal costs.
tony hayward has said that they will fully pay all legitimate claims even aggregate claims exceed the $75 million legal liability limit. despite the government's on fortunate response at the outset of the oil spill, it has incurred substantial costs in operations. since the explosion, the federal government has sent two invoices totaling $71 million for reimbursement to responsible parties. another invoice for approximately $50 million is expected to be issued imminently. the disaster should provide many lessons for all of us including the administration and congress, including a reminder that the jones act should be repealed. within a week of the explosion,
13 countries including several european nations offered assistance from vessels and crews with experience in removing oil spill debris. however, the jones act, a protectionist law enacted in the 1920's, prevents foreign flag vessels from operating in transporting merchandise between points abroad and the united states. the administration may grant a waiver just as the previous administration did during hurricane katrina, so the international community could have assist in recovery efforts. but they have not done so. there are other concerns. eric colder also made an unprecedented announcement two weeks ago that the department of justice has opened a criminal and civil investigation on the gulf of mexico oil spill. however, if a civil settlement results, it it may receive
favorable tax treatment depending on how the settlement is drafted. effectively, the american government and the taxpayers could indirectly picked up a portion of the tab for the responsible party. obviously that is unacceptable. bp failed to prevent this catastrophic disaster from occurring all the minerals management service failed to exercise robust enforcement of safety standards. we cannot allow the cost of their failures to be pat -- placed on the backs of american taxpayers. i think you may have noted, mr. chairman, our recent wire story -- bp allocates fifth -- $20 billion escrow fund. that is certainly a step in the right region. i thank you for holding this hearing. >> i'm glad that we can be here together. we of time for our first witness, our colleague from new jersey, who is a senior member.
and we're delighted to welcome him here today for his comments and we will turn to our other college for opening statements. >> thanks, mr. chairman. senator mccain, and i express my condolences to the families who lost loved ones in this horrendous catastrophe. i thank you for giving me the opportunity to appear before the subcommittee on this critical issue. last night the president spoke to the country and he could not have been clearer. these needs must not take a back seat to bp's bottom line. i am pleased that earlier today president obamaasecured an agreement for bp to put $20 billion into an escrow account to pay for the damages from this
bill and to remove bp from deciding which claims are valid. i commend the president for his strong leadership on this disaster and i know he is determined to do everything in his power to hold bp accountable. the behavior of this company and its executives could not be more reprehensible. their greed led them in the first place to gamble with thee lives of workers on the rigs, marine life in the gulf, and the economy of the entire region. and when the inevitable happened, and the deepwater horizon exploded, burn, and sank, bp downplayed the true size of this bill -- this spill , and they lied about their ability to contain it. we have to it -- we have seen this catastrophe before. if it's been more than 20 years since the exxon valdez ran aground. i was in alaska within three
days of the exxon valdez crashed and i saw the destruction caused by the oil spill first hand. when the press coverage was intense, exxon issued a string of apologies. it promised to do the right thing by the community and it vowed to make sure that the way of lead these alaskans new was resumed. but as soon as the cameras were turned off, exxon changed its tune. it fought the communities, the families, and the fisherman of everything. instead of making those victims whole, exxon chose to make it onerous. exxon true things out for years and not down punitive claims from -- and we cannot let history repeat itself. we are reminded that a spill the size of the exxon valdez occurs
every day, every four days. we're witnessing the size of a spill that took place like the back -- like the exxon valdez. i've proposed an amendment to make it clear that companies responsible for the oil spill must reimburse the american taxpayer for every dollar the government spends on cleanup. and while the amendment was not considered on the floor, the administration made it clear that the bp -- that bp will pay the bill. americans are fed up with hollow words and broken promises. and that is why we must also pass legislation to eliminate a measly $75 million liability cap for monetary damages from these spills. big oil with their enormous profits every month can afford to pay for their recklessness. and i want thank you in the rest of the committee for inviting me to speak today, and more
importantly, for holding this critical hearing. i hope that we will hear honest and candid answers from bp and the other executives about how they are going to live up to their obligations. thank you again, mr. chairman. >> thank you for lending your voice to this hearing as well. in terms of who should -- >> i will make it easier, i will defer to the good senator from arkansas. >> mr. chairman, thank you. i do not have an opening statement. i will put one in the record. >> i think with that, we can turn to our second panel. if the witnesses will make their way to the table that would be good.
he has been with bp for 18 years and he is currently leading the claims process effort for bp. thank you for joining us. steve newman is our second witness, the president and chief executive officer of transocean ltd.. his work for transocean for 14 years and for served in his current position as president and ceo in 2008. welcome. our third witness is craig bennett. he is the director of the u.s. coast guard's national pollution funds center. it oversees the oil spill liability trust fund and tracks the direct federal cost of the oil spill. mr. bennett has served in the u.s. coast guard for over 20 years, and prior to his deployment, he served as the chief of the financial management division of the natural -- national pollution funds center. and our final witness is susan fleming, director of the physical infrastructure team at
the government accountability office, where she served as a -- and before that, she served as an analyst for general electric. your entire statements will be part of the record. try to stay fairly close to five minutes. if you run a little bit over that, that is ok. if you run a lot over that, that is not a tape. thank you all for coming. >> chairman carper, ranking member mccain, members of the subcommittee, i and carol willis. on april 29 i accept the role of overseeing bp's claims process which was established in the wake of the explosion and fire aboard the deepwater horizon rig and in suing oil spill. i'm here to share information about the claims process. this horrendous incident which killed 11 workers and injured 17 others have profoundly touched all of us. it has been tremendous shocks
that such an accident could have happened and great sorrow for the like lost and the injuries sustained. i like to make one thing very clear -- bp will not rest until the well is under control and we discover what happened and why in order to ensure that it never, ever happens again. as responsible party under the oil pollution act of 1990, we will carry out our obligations to mitigate informal damaged and the impact of this incident. i also like to underscore that the causes of the accident remained under investigation, both by the federal government and by bp itself. i am here today to answer your questions regarding the claims process and our reimbursement federal costs. i cannot however response to questions about the incident itself or the investigation. i want to emphasize that the bp
claims process is enjoyable to our commitment to do the right thing. we will be fair and expeditious in responding to plans. we've already paid out over $90 million in claims as of today and we understand how important it is to get this right for the residents and businesses as well as the state and local governments. to that end, we've established 33 walk-in claims offices operating in louisiana, mississippi, alabama, and florida. and we have a call center that is operated 24 hours a day, seven days a week. we also established an online claims filing system to further expedite our capacity to respond to potential claimants. we have 1000 people handling claims and over 660 experienced claims adjusters on the ground working to impact the communities. we'll continue adding people,
offices, and resources as required and are committing the full resources of bp to making this process work for the people of the gulf coast. our early focus was on individuals and small businesses whose livelihoods have been directly impacted by this bill and who are temporarily unable to work. these are the fishers, and the shippers with the greatest immediate financial needs. bp is providing expedited payments to those whose income have been interrupted, approximately 18,000 claims already paid, totaling $90 million today, and we have recently sent out second advance payments to individuals and businesses. we're working hard to address business loss claims. we pay debt over $16 million in business claims. -- we have paid out over $60 million in business as clams.
we are guided by the provision of open 1990 --opa 1990. i am not an attorney and cannot speak to legal interpretations. i can reiterate that bp does not intend to use a 75 million- dollar cap in that statute to limit our obligations to pay these claims. we have already exceeded it and we will not seek reimbursement from the oil spill liability trust fund. as an additional means of ensuring a fair and transparent process, today an independent medium, kenneth feinberg, has been overseen two -- has been appointed to oversee the claims process. bp has set aside $20 billion in an escrow fund to pay legitimate claims. i would also like to briefly
discuss the reimbursement of the federal government's response cost. to date, the coast guard has sent two invoices for federal government costs totaling slightly more than $70 million. bp has pay these invoices promptly by wire transfer. and in closing, i would like to add a personal note. my ties to the gulf coast monday. i was born and raised in louisiana. i would high school there, college there, and graduate school their pre-family spent many summers on the gulf coast. my grandmother lost her, 35 years in hurricane katrina. many times it was incredibly frustrating. i know firsthand that the people in this region cannot afford lengthy delays in addressing economic losses caused by this bill. i volunteered for this assignment because i am passionate about the gulf coast. it is a place i call home and i
want to be part of the solution. and with that, i welcome your questions. >> thank you for adding that to the close of your testimony. mr. newman, thank you please ppoceed. >> chairman carper, ranking member mccain, and other members of the subcommittee, i want to thank you for the opportunity to speak with you. my name is steven newman and i am the chief executive officer of transocean. we have more than 18,000 employees worldwide and more than 4500 employees in the united states. i am a petroleum engineer by training and i've spent considerable time working on and withdraw rates. i've been with transocean for more than 16 years. since april 20, the heartache i and my company feel for the 11 crew members who died, including nine transocean employees, and their families is with us constantly. the safety of our employees and crew members is of the utmost importance to us and the loss of
life on the deepwater rise in -- deepwater horizon is devastating to us into their families. i want to note the extensive response team that has worked tirelessly since the event. transocean has been actively involved in the activities since april 22 including providing support and comfort to the families of the lost men. all like to provide the subcommittee with more details about these efforts. transocean is a people-focused company. since the event of april 20, our h.r. teams have focused on providing brief counseling and a range of benefits and employee services to those directly and indirectly affected. we're currently taking a number of steps, including provided the families of the ninth transocean man who were lost, continued full pay and benefits, providing injured crew and those receiving ongoing counseling continued full pay and benefits.
compensation for personal possessions lost in the incident was offered to all crew and families and accepted by most. on may 25 we held a memorial service in honor of the men lost in the tragedy. it was attended by all 11 families, but many transocean personnel, and by people from across the industry. it was a moving an event and an opportunity for all of us to celebrate the lives of these exceptional man. our goal is to continue this support of the family and our employees as we all move forward. as i said many times in the past, we believe that we of the most advanced equipment in the offshore drilling industry, but our people are the real reason for the success of transocean. this belief has been articulated the the guiding principles of our company which goes by the acronym first. my written testimony provides additional detail, so today i will focus on the r which stands for respect for employees, customers, and suppliers, and
the s, which stands for safety. our respect for our employees and our goal to be a responsible employer guided our actions before april 20 and will continue to do so in the future. this respect is borne out in the number of ways. for example, transocean provides our employees with extensive training for all offshore and shore-based activities. we provide flexible work hours and monetary assistance for education to maintain or improve job skills, to increase competencies', and qualifications for fuel opportunity. our culture of safety as long guided our action. transocean was a key partner in developing the u.k. north sea methodology and then in developing another case guideline. but subsequently applied what we learned to our operations around the world.
even where no formal safety case was required. we also implemented an major accident hazard risk assessment across all transocean operations. our full commitment to environmental and social stewardship is demonstrated by our active participation in a range of scientific, social, and conservation research programs around the world, including the gulf of mexico. we've invested millions of dollars over the past two years in projects aimed at better understanding the environment in which we work and the communities that support our operations. one such example is our support of a global program addressing scientific and environmental issues associated with remote operated vehicles. for over seven years we have been using our rigs as places of research to allow scientists to explore the deep water environment with cutting edge technology, to better understand the largely unexplored deepwater area of the ocean. another example is our
membership in the gulf of mexico foundation, through which transocean supports a range of coastal restoration projects and educational efforts along all five coast gates, mexico, and the u.s. virgin islands. many of these projects are in collaboration with another coastal restoration program. with respect to the events of april 20, immediately after the explosion, transocean began porking with bp and the unified command in the effort to stop the flow of hydrocarbon. how operations and engineering teams have been working around the clock under bp to identify and pursue options for stopping the flow as soon as possible. our drilling rigs are actively engaged in drilling the relief well at the site, and our joe ships are involved in cooperation recovery. we will support the unified command and all of these activities. throughout this time we've also been working hard to get to the bottom of what happened on the night of april 20. they're critical questions that
need to be answered in the coming weeks and months, but we simply do not have all of the data to know the answers at this point. to understand what led to the airport 28 explosion, a move -- we must work together and a collaborative effort to collect information and to recommend any corrective measures. we remain committed to this effort. as the subcommittee members are likely aware of, the zero pollution act of 1990 makes it clear that we're responsible for fluids originating from the rate above or below the waterline. but not for fluids emanating from the well. once the extent of these liabilities or any material or substances allocated to the rig are understood, transocean will continue our cooperation with the national pollution funds center to fill any obligations connected to our operation and to process any relevant claims. to support this effort, we have conducted sampling to determine the potential presence and any potential impact that may have
been caused by diesel released from the rig. at this time, the presence of these so released from the rig has not been detected. however we will continue to work to verify this as well as to determine whether or not there is any diesel fuel contained in the tanks on the bottom of the ocean. additionally, as the national resource damage assessment has barely begun, it is too early to determine our responsibility in that process. we will cooperate and stand ready to fill any potential obligations that may be found to originate from our duty o ourpa. regardless, transocean will continue to lend our expert taste of those spill containment and relief efforts currently under way. the foundation of our company has always been the people who work at transocean. and the communities where we live and operate. our commitment to both has been regularly demonstrated over the years, and i beliive our
continued commitment throughout this incident is evident. we remain ready and willing to assist the subcommittee and all involved as the work progresses. thank you for the opportunity to speak to you today and i am happy to answer your questions. >> thank you very much for coming today. mr. bennett, please proceed. >> good afternoon, chairman copper -- carper. i'm gratified to testify about the all pollution act of 1990. as someone who graduated from high school in southern louisiana, who was married in houston, texas, and raised children in st. petersburg, florida, i have a deeper appreciation for the environment of the gulf coast. my role is the director of the national pollution fund center includes four areas. i find federal response using congress has made available in the trust fund to so-called emergency fund.
second, i am sure the responsible parties are advertising its availability to pay claims. if claimants are not fully compensated, they may present their claims to us. third, i recover federal money paid by the fund from any and all this possible party. finally, i administered the certificate of financial responsibility program which insures that vessels operating in u.s. waters have demonstrated that they are financially able to pay their obligations under opa. with respect to response, the cost of the federal response was $217 million. these costs include the funding of over 27 federal entities as well as over $12 billion given to states for their rrsponse efforts. the key element of the regime is that the polluter pays. but the taxpayer. all the cost incurred against
the fund will be billed to the responsible party. as has been mentioned, two bills have been sent to and both had been paid by pp -- by bp, both in less than five days. a third bill will be set this afternoon. the fund balance will not be impacted because all but spot costs will be reimbursed by the responsible parties. with respect to claims, the national incident commander met with bp executives at the national pollution funds center to direct progress and more transparency regarding the claims process. i've met with bp officials in louisiana last thursday and my staff has worked with the bp claims people over the past weekend to oversee the process on the expectations set forth by admiral allen to read these expectations include getting more detail, context into the reports that we receive from bp, as well accelerations of
payments for business clients. progress has been made, and bp has in the last week paid $17 million in three to 37 checks to small businesses. based on the operational concept of no wrong door, there is an integrated service team to monitor bp claims and coordinate delivery of federal programs that can provide social services and small business assistance to individuals, families, and small businesses affected by the oil spill. the team is made up of two parts -- a national level team located in washington to coordinate strategic policy level issues as well as to provide support an issue resolution for the field- based teams. field-based teams are in each gulf coast date to identify gaps in the claim process for resolution by peak, to provide residents with full streamlined access to all federal assistance
programs. each team is led by the federal resource coordinator with a state point of contact identified by the governor. many have suffered as a result of this bill. the opa regime is working to ensure of robust federal response. if there is -- that the damage is compensated and that the polluter pays. the department and the administration are working to ensure full recovery. thank you for the opportunity to testify today. i look for to your question. >> mr. bennett, thank you for your work. ms. fleming, please proceed. >> mr. chairman and members of the subcommittee, thank you for the opportunity to talk about the cost of major or spills. the recent disaster in the gulf coast not only cause the tragic loss of 11 lives but also untold economic and environmental damage to the gulf coast communities. this spill has reminded us that despite the fact that major oil
spills are infrequent, they can happen at any time across the coastal and inland waters of the u.s. it is reminded us that it vessels involved in the petroleum industry are not the only risk. cargo, fishing, and other vessels. substantial fuel reserves. mobile offshore drilling units like the deepwater horizon also represent a threat. besides the potential legal and damage to the environment, spills can be a expensive with considerable cost to the federal government and the private sector. but testimony today is three parts. all discuss the factors that affect major oil spill costs, how oil spills are paid for, and the implication of major oral skills -- will still cost on the oil spill trust fund. first there are a number of factors that combined in unique ways and affect the cost of spills. location, time of year, and typeable. although we and not evaluated the current spell, some of
these and the magnitude of the spill will drive costs. the spill occurred in the spring in an area that relies heavily on tourism as well as commercial fishing revenues. one source puts the loss of revenue from fishing at about $144 million per year. in addition, spills in proximity of tourism destination can suffer additional cleanup cost to expedite cleanups or because of stricter standards. another factor is the type of oil. the oil that continues to spill into the gulf of mexico is a light oil, specifically of light sweet crude oil, a very toxic and can create long-term contamination of the shoreline.
according to the u.s. fish and wildlife service, many species of wildlife face great risk from this spill, as well as 36 wildlife refuge that may be affected. the deputy administrator of the epa describe the deepwater horizon spill as a massive and potentially unprecedented environmental disaster. i will not turn to my second point, the oil pollution act established a polluter pay system that places the primary liability on the responsible party. under this system, the responsible party assumes a to a specified limit the burden of paying for spill costs, which can include removal costs and damage claims. the responsible party is no longer financially liable above the limit. the fund established to pay above this limit or potentially all cost that the responsible
party cannot be identified. moving on to my final point. implications of major oil spills for the trust fund. to date the fund has been able to cover the costs not paid for by responsible parties, but the future liability may be a risk. in particular, the fund is at risk from claims that significantly exceed responsible party liability limit. we reported in 2007 that the current liability limits for certain vessel types are disproportionately low relative to costs associated with such spills. there are other potential drain on resources including ongoing claims from existing spills, claims related to sunken vessels, and in the case of the deepwater horizon, a catastrophic spill. to date, the spill has not been fully contained. as a result, but gold still is
likely to eclipsed the exxon valdez, becoming the most costly offshore spill in u.s. history. the fund is currently authorized to spend $1 billion per spill. balance of $1.6 billion may not be sufficient to pay such costs for a spill that is likely to have catastrophic consequences. well bp has said and we heard today that it intends to pay all legitimate claims associated with this spill, should they company decided cannot or will not pay for cost exceeding its legal liability, the fund will have to bear these costs. this could result in a significant strain on the spun -- on the fund. the risk of such bill -- such spills exist daily. although the fund has been able
to cover non-catastrophic liabilities, the uncertainties and unprecedented nature of the currents bill and potential future spills could threaten the funds liability. mr. chairman, this concludes my statement and i look forward to our discussion and would be pleased to answer any question you in the committee put forward. >> thank you so much for coming. will be allotting each member seven minutes for questions. and we will take it from there on the second round. i want to start off with a sigh -- with a couple of questions for mr. willis and for mr. newman. and the next question will probably be for you, mr. bennett. and then miss fleming. mr. willis, as you and mr. newman know, we invited representatives from anadarko and the other company to join us. they declined. this is an invoice, of bill that
the federal government center responsible parties on june 2 asking for reimbursement of some $69 million. anadarko and the other name are right here on the front alongside bp and transocean. outyear companies do their role in paying for this disaster -- how do your company'ies view thr role in paying for the system faster? have you communicated with them? >> mr. chairman, our commitment from the very beginning of this incident was to make sure that any legitimate claim or costs associated with this bill, that we honor that obligation and our commitment to make those payments. my focus says being involved in claims process has been on
making sure that when something is submitted to us and when it is substantiated that we pay those bills quickly. but this has not been at this point on working through any issues with partners but making sure that we as bp do the right thing a link -- live up to the claims that we made, to honor our legitimate claims and to pay them quickly. >> that is commendable. let's go back to my question. how do you view their role in paying for this disaster? have you communicated with these companies to clarify what they see to be their role for short >> our view is that there will be plenty of time to sort that out. when the bills come in and we look them over and they are legitimate and associated this spill this, we are going to pay those bills. >> mr. newman. >> my understanding of the framework that congress has established would be the well owner and the well under's
partners in this case, they are in line is responsible parties for damage where salting from fluids emanating from the well bore. if i apply that framework to bp and the others, i think they are l -- all in the comparable to year -- tier. transocean is a subcontractor carried out the operation. >> i put them all as well owners or partners of the well honor. transocean is one of the many subcontractors that bp hired to carry out the well construction process. >> before it turned to mr. bennett, mr. newman, of want to ask you a follow-up.
how this transocean view itself in terms of the cost of this oil spill? i think you alluded to that in your comments. what discussions have you had with bp to discuss what transocean might or might not be liable for? >> transocean's liability under the oil pollution act relates to fluids that emanate from the rig. either above or below the surface of the water. we continue to monitor the drilling rig on the seabed, and so far there has been no indication of fluids escaping from the drilling rig. we will continue to monitor it and we stand ready to meet our obligations. >> mr. willis, diu share that view with respect to transocean's liability? >> mr. chairman, honestly, we have focused on making sure that the costs associated with this
cleanup and spill in the gulf of mexico are paid. and that people have been heard are compensated for their losses and in the federal cost are paid back to the american people. and that is what we are going to do. >> thank you. mr. bennett, next question for you. this is the invoice for the responsible parties. according to bp and the others, they all receive this invoice. how does your office you these two companies and what communications have you had with them to ensure they understand their responsibilities? and the more important question -- what is their responsibility here? >> how would be glad to answer the question. one week issue bills during response or after response for reimbursement, we send the bill to any and all of the responsible parties identified up to that point in time. as you know, there's several
liabilities. there could be different amounts of the liability that different partners might have depending on their relationship. they are responsible for the ocean floor relief which is the biggest part. that is why bp and the minority leasees would have the most liability. but we send the bill to all responsible parties. it is not uncommon in a case like this for the majority responsible party or a major insurance company to pay the bill and then work it out behind-the-scenes among themselves. we do not typically have a problem with that as long as someone is paying the bill. as long as i get repaid, that is what we care about. >> fleming, one quickly for you. the president and bp announced a
$20 billion fund out of which claims would be paid to satisfy the oil spill. we commend you for that. this fund will be administered by kenneth feinberg who oversaw the 9/11 victims compensation fund at a number of other things. this would replace the current bp claims process in which you are in charge of. what discussions have you had with your colleagues at bp and the federal government about this proposal and how your team will transition to the new process? >> as you have mentioned, this was recently announced. after conversations between our executive team and the administration. there are lots of discussions taking place over the next few days and weeks to determine how the transition will take place. at this time, i do not have those details. >> i understand. senator mccain, thank you.
>> just a follow up on the chairman's question, mr. newman, you stated that you feel that your liability is only that that may have been caused by diesel release from the rig either above or below the surface, is that correct? >> yes, sir, that is my understanding of the company's responsibility under the opa. >> miss fleming, do you have you of that? >> this is not my level of expertise. but it is our understanding that the coast guard interpret bp and transocean to be responsible party. there may be contractual relationships. but it is definitely the lawn -- beyond my level of expertise. >> mr. bennett. >> that is correct. they are all responsible party. but ultimately how much each would be liable for would be determined as -- in terms of the investigation.
they may not all be equally responsible for the damage and it is too early to know what that might be. >> since we are paying claims, if might be nice to start figuring that out pretty quick. because bp is paying all the bills right now, is that right, mr. willis? >> that is correct. jud>> there are other entities including tw other refuse to testify. that may have liabilities. what we have to do to find out the extent of their liabilities? mr. newman, if their position holds, they are not going to be liable for anything, so to speak. >> senator, under opa thereof jointly liable. if we get the payment, we do not typically look beyond that. >> who is supposed to determine that? >> i suspect the administration
and the department of justice will be following up and looking at that. >> mr. chairman, i think they all did get some redoubt of liability. if they are the only ones paying the bills and there are others involved, maybe some of them should be paying some of the bills, too. you share that view, ms. fleming, or is that about your pay grade as well? >> i think the biggest concern is we do not know what the true cost of this spill is going to be. >> that was my next question. >> and the impact in terms of the fund, how well will affect the responsibility to pay for future spills as well as ongoing climes. there is a lot of state here. >> he did not answer my question but it does not matter. the oil spill liability fund henceforth known as the fund,
that is clearly going to be exhausted, right? >> i think that this fund definitely -- catastrophic consequences could have a severe strain on to the fund. there are other forces as well. if bp honors its commitment to pay all of those costs, even those above the liability limit, then the risk to the fund could be minimal. but that they will not or cannot pay as well as other responsible parties, then that could threaten the funds liability. >> in your statement, you mentioned in 2007 identifying areas which further attention to the liability limits appeared warranted and made recommendations to the common end of the coast guard regarding adjusting limits periodically to account for significant increases in inflation and the appropriateness of