[Senate Hearing 111-1172] [From the U.S. Government Publishing Office] S. Hrg. 111-1172 THE DEEPWATER DRILLING MORATORIUM: A REVIEW OF THE OBAMA ADMINISTRATION'S ECONOMIC IMPACT ANALYSIS ON U.S. SMALL BUSINESSES ======================================================================= HEARING BEFORE THE COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP UNITED STATES SENATE ONE HUNDRED ELEVENTH CONGRESS SECOND SESSION __________ SEPTEMBER 16, 2010 __________ Printed for the Committee on Small Business and Entrepreneurship Available via the World Wide Web: http://www.fdsys.gov ______ U.S. GOVERNMENT PRINTING OFFICE 86-868 WASHINGTON : 2014 ____________________________________________________________________________ For sale by the Superintendent of Documents, U.S. Government Printing Office, http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Printing Office. Phone 202�09512�091800, or 866�09512�091800 (toll-free). E-mail, [email protected]. COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP ONE HUNDRED ELEVENTH CONGRESS ---------- MARY L. LANDRIEU, Louisiana, Chair OLYMPIA J. SNOWE, Maine, Ranking Member JOHN F. KERRY, Massachusetts CHRISTOPHER S. BOND, Missouri CARL LEVIN, Michigan DAVID VITTER, Louisiana TOM HARKIN, Iowa JOHN THUNE, South Dakota JOSEPH I. LIEBERMAN, Connecticut MICHAEL B. ENZI, Wyoming MARIA CANTWELL, Washington JOHNNY ISAKSON, Georgia EVAN BAYH, Indiana ROGER F. WICKER, Mississippi MARK L. PRYOR, Arkansas JAMES E. RISCH, Idaho BENJAMIN L. CARDIN, Maryland JEANNE SHAHEEN, New Hampshire KAY R. HAGAN, North Carolina Donald R. Cravins, Jr., Democratic Staff Director and Chief Counsel Wallace K. Hsueh, Republican Staff Director C O N T E N T S ---------- Opening Statements Page Landrieu, Hon. Mary L., Chair, and a U.S. Senator from Louisiana. 1 Vitter, Hon. David, a U.S. Senator from Louisiana................ 12 Witnesses Blank, Hon. Rebecca M., Under Secretary for Economic Affairs, U.S. Department of Commerce.................................... 13 Fernandez, Hon. John, Assistant Secretary of Commerce for Economic Development, Economic Development Administration, U.S. Department of Commerce......................................... 44 Alphabetical Listing and Appendix Material Submitted Blank, Hon. Rebecca M. Testimony.................................................... 13 Prepared statement........................................... 16 Fernandez, Hon. John Testimony.................................................... 44 Prepared statement........................................... 46 Responses to post-hearing questions from Chair Landrieu...... 58 Harbert, Karen A. Prepared statement........................................... 35 Landrieu, Hon. Mary L. Opening statement............................................ 1 Chart titled ``Department of Interior Study: Job Loss Caused by the Moratorium''........................................ 3 Chart titled ``LSU Study: Job Loss Caused by the Moratorium'' 4 Chart titled ``Total Number of New Wells Approved in Water Depth Less Than 400 Feet''................................. 5 Chart titled ``Total Number of New Wells Approved''.......... 6 Chart titled ``New Wells Approved in Water Depth Less Than 400 Feet''................................................. 7 Chart titled ``Total Number of New Wells Approved''.......... 8 Vitter, Hon. David Opening statement............................................ 12 THE DEEPWATER DRILLING MORATORIUM: A REVIEW OF THE OBAMA ADMINISTRATION'S ECONOMIC IMPACT ANALYSIS ON U.S. SMALL BUSINESSES ---------- THURSDAY, SEPTEMBER 16, 2010 United States Senate, Committee on Small Business and Entrepreneurship, Washington, DC. The committee met, pursuant to notice, at 10:05 a.m., in Room 428-A, Russell Senate Office Building, Hon. Mary L. Landrieu, Chair of the Committee, presiding. Present: Senators Landrieu and Vitter. OPENING STATEMENT OF HON. MARY L. LANDRIEU, CHAIR, AND A U.S. SENATOR FROM LOUISIANA Chair Landrieu. I would like to call the Small Business Committee meeting to order. We will start with opening statements and go for a round of questioning after we hear from our witnesses. Unfortunately last night the Senate schedule changed and we will have a vote at 10:45 I understand, and then a final vote on the small business package at noon. So we are going to break at 10:45 to go to the votes, come back, and finish up the hearing. I thank you all for joining us this morning as this Committee holds its third in a series of hearings on the current deepwater drilling moratorium and the impact on its effects to the Gulf Coast economy. Today's hearing is quite possibly the most important. Today, the Administration will present its analysis of the moratorium. We have had two previous hearings on this subject where we heard from dozens of small business owners, the Chamber of Commerce, Dun and Bradstreet, LSU economic analysts, and others along the Gulf Coast to try to point out the impact to the economy along the Gulf Coast based on this decision. Some 150 days ago the Deepwater Horizon explosion took the lives of 11 men and sent an estimated five million barrels of oil spewing into the Gulf, onto our shores, and into our marshes. This accident has injured our environment, our economy, and our way of life. The Macondo well may be capped but the crippling economic impacts caused by this disaster and ensuing moratorium continue to impact communities in Louisiana and many communities throughout the Gulf Coast. Louisiana families and businesses are getting hit on two fronts. First, our seafood industry, which accounts for roughly 40 percent of the Lower-48's production, is suffering from both actual impacts from the spill, and perhaps more damaging, the perception that our seafood may not be safe to consume. It is. But we are having a long battle to convince people otherwise. Secondly, our offshore energy exploration industry and the hundreds of businesses that support it have been put in jeopardy, in my opinion, by the heavy hand of the Federal Government. Regrettably, the Administration reacted to the Deepwater Horizon tragedy by halting all deepwater explorations in the Gulf and canceled the scheduled Western Gulf lease sale that would have occurred in August. They halted all deepwater exploration, but in fact, which I will show you today on the charts that I have, there is a de facto moratoria on shallow water as well. Before the BP spill, the Mineral Management Service approved an average of three to six shallow water permits per week which averages about 12 to 24 permits per month. In contrast, since May, the Bureau of Ocean Energy Management has issued only five shallow water permits for new wells, roughly one per month. Another way to say this, which I am going to submit to the record, is in the five months prior to the official deepwater moratoria there were 29 deepwater rigs, drills in the Gulf or new wells approved. Of course after the moratoria, there was one in May. Basically zero. That is a problem. But the shallow is also a problem. In the five months prior to the deepwater moratorium, there were 49 permits issued; and since the five months following, there have been seven. That is a precipitous drop in permitting in the shallow water. And the charts will show that. [The information follows:] [GRAPHIC] [TIFF OMITTED] T6868.028 [GRAPHIC] [TIFF OMITTED] T6868.029 [GRAPHIC] [TIFF OMITTED] T6868.030 [GRAPHIC] [TIFF OMITTED] T6868.031 [GRAPHIC] [TIFF OMITTED] T6868.032 [GRAPHIC] [TIFF OMITTED] T6868.033 I noted as recently on July 10, two days before the issuance of the second moratorium, the Department of the Interior estimated that a six-month moratorium would cost 9,000 direct jobs, 13,797 indirect jobs; and that a freeze would capture about $10 billion in industry spending. I find it stunning that the Administration was aware that their actions might eliminate nearly 23,000 jobs in an already faltering economy and proceeded anyway. However, that is precisely what it seems like they did. We will get updated figures from you all today. Early indications are there may not be 23,000. We do not know. We are going to analyze your data pretty carefully but nonetheless it is fairly significant. The decision to stop virtually all new energy exploration in the Gulf of Mexico was unwise, and in my view, borders on reckless. Today thousands of Gulf Coast businesses are fighting their way out of this government-imposed economic disaster that not only threatens jobs and businesses, including oil and gas field service, transportation, fabrication companies, but also a way of life just as surely as the massive oil spill did and perhaps even more. The Administration's decision to halt drilling activity did more than threaten the livelihoods of thousands of rig workers and oil service crews, it substantially reduced the total amount of economic activity taking place along the Gulf of Mexico in Texas. As I have said before, this moratorium and the analysis shows this is not hurting big oil. Those rig workers, many of them, are still employed doing other jobs, not drilling or exploring but cleaning up. Your data will show that. They will survive. But the problem is it is hurting Big Al's, the restaurants, the sandwich shops, the hotels, the motels, the salons. The corner grocery stores in South Louisiana have seen their sales decline precipitously since this moratorium went into effect. At our first hearing in July, we heard testimony from Louisiana State University Professor Joseph Mason whose study echoed the findings of the Administration's own economists. He stated that under the current moratorium the Gulf Coast region will lose more than 8,000 jobs, nearly $500 million in wages and over 2.1 billion in economic activity as well a hundred million in state and local taxes. The moratorium spill over effect could mean 12,000 jobs and nearly three billion nationwide, et cetera. He found that the moratorium if it lasts longer than six months 25,000 jobs could be lost, a finding directly in line with the Administration's earlier records. You all seem to indicate this morning that that job loss is lower and that you are fairly confident all these jobs will come back. We shall see. Another expert from a research firm, Dun and Bradstreet, testified that in Lafayette Parish alone 780 businesses employing close to 10,500 people could be negatively affected. Businesses in Lafayette Parish, which is one of our larger parishes in Southwest Louisiana, are some of the hardest hit by the moratorium which is why I chose to have the second hearing--this is the third hearing--the second hearing on this issue in Lafayette at the LITE Center. We heard from a number of local small businesses impacted. In particular we heard from Charlie Goodson, the owner of Charlie G's restaurant, a very well known and famous and popular restaurant in our state. Charlie G's, which just celebrated their 25th anniversary as a family-owned business with 44 employee. He testified that similar to the oil bust of 1980, if the moratorium continues, their bottom line which they carefully project because it is a small family-run business, which was projected to have a four or five percent net income before taxes could run into the red for this year. As with the oil bust, Charley G testified his first response was to institute a hiring freeze which he has already done, a salary freeze which he has already done, and to halt all leasehold improvements which has already done. If that does not work, he said he will be forced to discontinue lunch service which will eliminate 11 staff positions. That equates to a 25 percent reduction in one business. While eleven jobs lost in Layafette, Louisiana, may not make the front pages of the New York Times or the Washington Post, I am aware of the many similar situations described by Gulf Coast small business owners worried about the uncertainty surrounding this ill-conceived moratorium. Small business owners have to make quick and tough business choices every day based on local economic conditions, not macroeconomic policy. In a difficult economic time nationally, I must remind the Administration that our Gulf businesses are also dealing with lingering effects from the 2005/2008 storm season which is some of the worst years on record, the Deepwater Horizon disaster itself, and now this moratorium. Everyday that this moratorium remains in place, it is another challenge that our Gulf Coast small businesses must deal with on their road to recovery. I think it is noteworthy that the Administration was forced to revise its ban in July after a federal court decision ruled that the Administration's action was arbitrary and capricious. Yet even the Administration's revised drilling ban was struck down again in the federal court in a decision that was handed down on September 1. The court found ``no rational nexus exists between the fact of the tragic Deepwater Horizon blowout and placing an attainder of universal culpability on every other deepwater rig operator in the Gulf of Mexico.'' I could not agree more. But let me be clear as one of the first senators to call for a full investigation into the accident and request more effective safeguards against future spills, I share the Administration's goal of a safer oil and gas industry. But the blanket moratorium on all deepwater drilling does nothing to advance that goal, and in fact the de facto shallow water moratorium has even less of a nexus to the original problem. The drilling is not a risk-free proposition. Never has and never will be. In general, I believe that we can and do drill safely both on shore and off. But the BP spill did occur. It was terrible. There have been other spills nearly as bad but the record is clear. They are few and far between. But accidents do happen and sometimes they are quite terrible like this one. But we should ensure that we enforce rigorous regulations to reduce the chances that accidents will happen, of course. But when an accident does happen, I cannot think of another situation where we brought an entire industry to a screeching halt. I want you to consider the following. On April 5 of this year, 29 miners were killed when an explosion rocked the Massey Energy-owned mine in West Virginia. Although investigators were unable to enter the mine for more than two months due to the concentration of poisonous gases in the mine, other coal mines continued to work unabated. In February 2008 a sugar refinery in Georgia exploded, killing 29 people. No one suggested shutting all sugar refineries or plowing under the sugar cane fields across the United States. According to data from the Aircraft Crashes Records Office, there has been an average of 1,200 deaths every year for the past 11 years resulting from aircraft accidents. But as our Lieutenant Governor Scott Angelle has noted, airline service resumed four days after the tragedy of September 11 and since then airline safety records show a marked improvement and airlines continued to fly every day. The industry goes on although 1,200 people lose their lives every year. I recite these statistics not to single out any of these industries but to highlight them to illustrate how radical and unprecedented, in my view, a blanket moratorium on deepwater drilling appears in comparison to the reactions that have typically accompanied industrial disasters. The fact is, regardless of how it is reported, the fact is that Louisiana's coast line is a working coast that brings this country an abundance of seafood, energy, and navigation assets unmatched by any coast in the United States and unmatched by any in the world. The Mississippi Delta is our home. There is no one who wants to do drilling safer than we do. No one wants the water to be cleaner than we do. No one wants the seafood to be the fresher than we do. We have balanced these industries safely for four decades and I am confident that we can strengthen the record of safety as we move forward while promoting a balanced and diversified economic future. But we also know that any hope for a prosperous future will have to involve the prompt resumption of off-shore exploration activities both in the shallow and the deepwater. We know full well what a prolonged suspension of deepwater drilling will mean for hundreds of oil service companies and more importantly or equally importantly other businesses that support that industry in a variety of different ways. It will mean economic disaster not just for the rigs themselves but for the many grocery stores, restaurants, real estate companies, local banks, and other small businesses that comprise our economy. Our Federal Government has a responsibility particularly in these difficult economic times to make sure these paychecks do not turn into pink slips. Our Committee has received testimony from Louisiana State University, Dun and Bradstreet, the Chamber of Commerce, we have heard from elected officials, small business owners, testifying about the important local impacts of this moratorium. The purpose of this hearing today is to now hear from the Administration. We are really looking forward to hearing your testimony today about the impacts of this moratorium. I believe we cannot continue to support a policy that will close the doors of our small businesses. We need to keep Main Street open for businesses in Louisiana, Mississippi, and Texas across the country. There are several questions that I am very interested in getting your answers to. I have reviewed carefully all of your testimony and I will now acknowledge Senator Vitter, who is representing Senator Snowe. OPENING STATEMENT HON. DAVID VITTER, A U.S. SENATOR FROM LOUISIANA Senator Vitter. Thank you very much, Chairman Landrieu. Thanks for holding this additional hearing. Thanks to our witnesses today. As Senator Landrieu said, this is the third hearing on this subject in the Small Business Committee and the third time we on both sides of this Committee have explicitly invited and asked the Administration to testify and justify their Draconian action. I am glad you all are finally here to do that. The Administration sent absolutely no one to offer any testimony the first hearing here in this room. The Administration sent absolutely no one to offer testimony and explanation at our field hearing in Lafayette. So while it is long overdue, we welcome you. We want that explanation to be very detailed and very explicit. For that reason two days ago I sent both of you a letter outlining nine very clear, specific questions; and I would like either in your opening statements or in your answers for you to fully respond to those nine questions and take as long as you want before we leave to fully answer those nine questions in detail. And again I sent those all to you in advance to make sure we could get to the bottom of the clear issues. I can tell you from the Louisiana perspective, from the Gulf perspective, as Mary has said, the perception and I think the correct perception is that all we have heard is knee jerk reactions and excuses, not anything based on sound science or economics. Let me mention a few of the facts that back this up. We know that the Interior Department's Inspector General is currently investigating the Administration's initial 30-day review done by the National Academy of Engineers for inappropriate behavior at the department, basically changing those recommendations in terms of the public document. We know that only five new well permits for shallow water drilling have been issued since May when rigs need about 20 per month to continue operations and just maintain current production. We know that crude oil production in the Gulf currently makes up about 30 percent of total US production and yet the moratorium is endangering all of that and forcing rigs out of the Gulf to overseas. We know that since 2001 the GMO outer continental shelf has reported federal royalty revenue of nearly 60 billion dollars. When there is enormous focus up here on deficits and debt and revenue, we are very curious why the Administration would adopt a policy that is just throwing that revenue away. We know that from recent economic analysis that if the Administration shuts independent oil companies out of the Gulf medium to long term, it will not be the few thousand jobs you all have identified. It will be more than 300,000 jobs and $147 billion in tax revenue. So again from the Louisiana and the Gulf perspective, we have heard nothing but knee jerk reaction and excuses. We are very eager to hear something more substantive and I am very eager to hear specific answers to the nine questions outlined in my September 14th letter. Thank you. Chair Landrieu. Just to clear the record, Senator Vitter is correct. We did request the Administration on all three occasions but they said they were not prepared to come to the first hearing. They did send a representative from the Department of Commerce which we were grateful for who sat in the hearing at the LITE Center and took copious notes and actually got to visit with some of the small business people. So people were grateful for him being there. But today, as I tried to explain to this Committee, is the time for the Administration to testify and give you all an opportunity to present the economic data you all have used, if you used it at all, to make this decision, if it had any bearing on the decisions that the Administration has made. Does it have any bearings on their continued review of the situation? So that is what this hearing is about. We heard from small business owners that are extremely concerned. We have heard from organizations like the Chamber of Commerce representing businesses. We have heard from independent analysis done by our universities of great standing. We have not heard from the Administration. Mrs. Blank, that is what we hoped to hear from you and Mr. Fernandez today so why do we not begin. STATEMENT OF REBECCA M. BLANK, UNDER SECRETARY FOR ECONOMIC AFFAIRS, U.S. DEPARTMENT OF COMMERCE Ms. Blank. Chairwoman, Senator Vitter, thank you for inviting me here today to discuss the Administration's report that we are releasing this morning on the economic impact of the drilling moratorium on the Gulf Coast. I request that this interagency report be included in the record in its entirety. Recent changes in the labor market in those Gulf Coast areas that rely heavily on deepwater drilling can provide an initial sense of the possible impact of the moratorium. We looked at changes in unemployment, employment, and unemployment insurance claims in five Louisiana parishes reported to be heavily dependent on the deepwater drilling industry. Figure 1 shows employment in these five parishes since March 2009. Employment is at about the same level as in July of this year, the last month for which we have data as in March 2009. Employment in these five parishes actually increased from April to July by 0.7 percent, similar to the change in the Nation and the State of Louisiana. We also looked at unemployment insurance claims in our report and find they had been trending down in absolute numbers and as a share of all state claims. These data do not indicate that there had been no employment impacts associated with the drilling moratorium but they do suggest losses have not been large to date since significant losses would have shown up in the employment, unemployment, and UI claim activity data. Our analysis of the economic impact of this moratorium is based on data from a variety of publicly available industry and government sources. Our staff also spoke at length with a number of companies that work in the Gulf including drilling contractors, operators, and well service firms. Taken together, the firms we spoke with had direct knowledge of over 50 percent of the deepwater rigs in the Gulf of Mexico at the time the moratorium began. Earlier studies assumed that many of these rigs would leave the Gulf Coast as a result of the moratorium and that virtually all of the 9,700 workers employed before the moratorium would become unemployed. This did not happen. Of the 46 rigs located in the Gulf of Mexico in April 2010, 41 of them are still there as of September 13. Even for rigs that are idled, drilling contractors and rig operators have to date held on to most of their employees. Primary reason for this is that these employees are highly skilled and it would be expensive to recruit and rehire them again in the near future. In addition, these highly skilled workers are able to conduct some backlogged rig maintenance and improvement work. Some rig workers have been employed to work outside the Gulf. We estimate that fewer than 2,000, about 30 percent of the 9,700 rig workers have been laid off or have left the Gulf to work elsewhere. While deepwater rig employment has not fallen substantially, rig spending has declined because rigs are no longer conducting drilling operations. In particular, spending on drilling supplies, materials, and services has fallen. Some of this reduced spending is offset by other sources. For instance, unemployed rig workers are eligible to receive up to $30,000 in rig spending through the BP rig worker wage assistance fund. I'm sorry, wage replacement spending through the rig worker assistance fund. Based on these assumptions, we estimate that over the six months of the deepwater moratorium net spending will be reduced by $1.8 billion. This direct reduction in spending reduces employment in the industries that supply the Gulf Coast drilling industry and then in all other industries affected by declines in consumer and business spending. To measure this effect we apply a multiplier that translates the direct reduction in spending into the full effect of the reduced spending in the drilling industry on employment throughout the Gulf Coast. The standard multiplier is designed to measure the impact of a long-term and permanent policy change. Our report describes at length the problems with using a full multiplier including the fact that the moratorium is temporary, and the fact that the moratorium assumes, the multiplier assumes no offsets in spending. In reality, BP has publicly stated it spent over $8 billion during the first three months of this moratorium on spill response and cleanup activities. Given this, we basically estimate a range of employment effects based on range multipliers that we think are likely to capture the possible impact of the temporary moratorium. From our analysis, we estimate that the six-month moratorium may temporarily result in up to 8,000 to 12,000 fewer jobs in the Gulf Coast. These jobs would not be permanently lost but would return following the resumption of deepwater drilling in the Gulf of Mexico. It is also important to note the deepwater drilling activities would likely have been curtailed even without a moratorium as rig operators and contractors reviewed their safety procedures. For this reason our estimate is likely to overstate the true economic impact of the moratorium. Our estimate differs from earlier studies and the earlier Department of the Interior estimate because we have information available they did not. Most of these earlier studies assumed that virtually all employees on these rigs would be let go and estimated a spending reduction based on that assumption. Our results are, therefore, lower than some of these earlier studies. Due to limited time, I will not discuss the effect of the moratorium on oil production but we do have a section on that in the report that I know you will read. In conclusion, the current evidence suggests the job impacts among workers and larger companies, particularly the companies involved with operating the drilling rigs in the Gulf of Mexico, may be relatively limited because these companies have chosen to retain their skilled labor. Most of the businesses impacted provide supplies and support to the drilling industry in the Gulf Coast. The magnitude of the spill response and clean-up spending in the Gulf is large enough, however, that some of these businesses may have been able to replace some of their lost earnings by serving other customers. While any job loss due to a moratorium, even temporary, is deeply regrettable, it is important to place these effects in the context of the economic, environmental, and safety threat including the potential loss of life that the BP Deepwater Horizon explosion created. Given uncertainty about the adequacy of existing safety regulations, the moratorium was designed to provide greater certainty that deepwater drilling in the Gold Coast is being conducted in a safe manner with effective safeguards and responses in place should problems arise. These safeguards are highly important given the expectation that Gulf Coast oil and gas will continue to provide a significant share of domestic energy production. Thank you, Madam Chairwoman. I am happy to take any questions. [The prepared statement of Ms. Blank follows:] [GRAPHIC] [TIFF OMITTED] T6868.001 [GRAPHIC] [TIFF OMITTED] T6868.002 [GRAPHIC] [TIFF OMITTED] T6868.003 [GRAPHIC] [TIFF OMITTED] T6868.004 [GRAPHIC] [TIFF OMITTED] T6868.005 [GRAPHIC] [TIFF OMITTED] T6868.006 [GRAPHIC] [TIFF OMITTED] T6868.007 [GRAPHIC] [TIFF OMITTED] T6868.008 [GRAPHIC] [TIFF OMITTED] T6868.009 [GRAPHIC] [TIFF OMITTED] T6868.010 [GRAPHIC] [TIFF OMITTED] T6868.011 [GRAPHIC] [TIFF OMITTED] T6868.012 Chair Landrieu. Thank you. I would like to do the questions now to you, Ms. Blank. And then we will take a break and come back for your testimony and do questions, Mr. Fernandez. It is very keen what you said about your analysis of the large companies and the oil service companies. As you know, this Committee is not a committee for large business. It is a committee for small business, and the whole purpose of this hearing and the whole purpose of our request of economic analysis to you and the Administration was actually to find out the data as it affected small businesses, unrelated really to some of the large oil companies. I have even said in any public speeches the large companies--there are five large ones as you know--they will weather this beautifully. It is not them that we are worried about on this Committee. We are worried about the small businesses. So specifically to Charlie G., who testified, his restaurant, (a) how many restaurant owners did you talk to or did your staff speak to, how many chambers of commerce did you talk to, and how many other businesses, not oil companies or drilling operators did you all speak to in your analysis? Ms. Blank. Thank you. That is an important question. So we have to understand what happened to the oil companies, the drillers and the contractors, in order to say something about how much their spending has been reduced because it is that reduction in spending that in turn is going to affect everybody on the shore, small businesses and large businesses that are a part of the drilling support industry. So we start with the oil companies and then go from there to describe with this multiplier analysis what the impact is in the whole area which is the 8- to 12,000 fewer jobs including the 12,000 jobs lost on the rigs. We did not speak directly, for the purposes of this report, to small business owners. We relied on the analysis that I think almost all of the earlier studies that I have read and have looked at and that you cited in your opening statements have done similar types of multiplier analysis. It is partly because of a concern to understand what is happening on the ground that I think my colleague, Mr. Fernandez, will talk about some of the assessment teams that are down there really looking at what is happening in individual communities. Chair Landrieu. So I just want to get for the record you are claiming that they were saying, not claiming but testified that there were how many do you think, 9,700, what was your figure? Ms. Blank. There are 9,700 rig workers on the rigs immediately prior to the explosion. We estimate that approximately 2,000 of those workers were either laid off or went elsewhere, left the Gulf so there is no longer spending on them in the Gulf Coast. We also made some estimates about the amount of other reduced spending on drilling supplies and things that the rigs were spending that went directly to the shore and supported all the businesses you are discussing. So our estimate is $1.8 billion in reduced spending by the rigs, and then we estimate what effect that has on employment which leads us to the negative 8,000 to 12,000 fewer jobs. Chair Landrieu. But I would say that it is 2,000 rig workers that have been laid off to date in your analysis, but there are 8,000 to 13,000. So the other loss of jobs is coming from where? Ms. Blank. This is because as I tried to say in my testimony---- Chair Landrieu. Is it coming from small businesses or other businesses? Ms. Blank. It is all the businesses in the Gulf Coast that support those rigs, and as you know for every rig worker, there are large numbers of businesses that provide supplies to the drilling operations, to the food, to the things they are doing on the rig. The multiplier is the multiplier from that direct spending to the whole effect on the full economy. Chair Landrieu. We know when we see headlines like this, Drilling Ban Job Losses Smaller than Estimated, it has the effect of sort of communicating to the public that 8,000, 9,000, 10,000, 11,000 jobs to South Louisiana is not a significant loss. Let me assure you that 5,000, 8,000, 10,000, 12,000 jobs lost to this particular area is a significant impact on businesses of all sizes, and this just may be the tip of the iceberg. You are correct that only 2,000 rig workers have been laid off to date. These companies are large enough to keep some of these workers on for some months. How long this will go we do not know. But there still is a dramatic impact on employment that I think some of the headlines of this report are failing to actually capture. I am going to turn the questions over to Senate Vitter and then come back. Senator Vitter. Thank you, Madam Chair. Ms. Blank, can you thoroughly discuss the economic analysis done at Commerce and Interior and other federal agencies prior to the moratorium being issued? I know this is a new analysis. When was it done? Can you describe it in the total prior to the decision? Ms. Blank. As you know, at the time of the BP Deepwater Horizon explosion there was enormous uncertainty over the cause of that explosion and a great deal of concern over whether the correct safety provisions were in place. That was much of the focus of the conversation. Early planning efforts and analysis focused on making sure the moratorium would serve its purpose relating to safety and getting safe drilling back to business as quickly as possible. To my knowledge, though I was not directly involved with that, there was no economic analysis done prior to the issuance of the moratorium. The initial focus was on the environmental preservation and the safety of the drilling industry. Senator Vitter. So you are saying prior to this major decision to shut down activity in the Gulf, there was no economic analysis done? Ms. Blank. The focus prior to bringing on the moratorium was on the range of safety and environmental issues which the explosion immediately raised. Senator Vitter. Okay. So activity was shut down. No economic analysis went into that decision. Am I actually hearing this? No economic analysis of consequence was done prior to that dramatic decision? Ms. Blank. Given the uncertainty of the current environment, the concern for protecting the environment, for protecting the safety of the drilling industry was the paramount concern. Senator Vitter. Okay. At least it is a direct answer. It is a stunning one but it is a direct one. By the end of this month, and I know you have gone through some of this, how many rigs do you anticipate being idle? Ms. Blank. Our estimate is that at present there are 41 operating rigs and only five rigs have left the Gulf. In terms of idle rigs, some of these rigs are doing quite a bit of operations of cleanup, and looking at safety provisions and the sort of stuff that you do while you are waiting for the moratorium to come to an end. The Department of the Interior is closely tracking rig activity inside the Gulf, and I would encourage you to speak with them if you actually want projections of what is going to happen in terms of rig activity. Our estimates are based on our knowledge of what has happened to date and our conversations which suggest that between now and the end of the moratorium, which has been announced for November 30th, there is not likely to be further changes in who is drilling and who is not drilling and what rigs are present in the Gulf. Senator Vitter. So do you know how many rigs you anticipate being idled by the end of the month? That was one of the written questions I sent you. Ms. Blank. Yes, and the reaction is, our reaction is based on what we know through the 13th of September. Senator Vitter. And what is that? Ms. Blank. That at this point there are 41 rigs that are in the Gulf. Of those, many of them are doing a variety of activities. They are obviously not drilling given the moratorium but they are engaged in all sorts of cleanup and safety renovation type procedures. Senator Vitter. Remind us, and I know you testified about this, how many of those workers have been laid off to date? Ms. Blank. There were 9,700 workers we estimate on the rigs that are affected by the moratorium prior to the Deepwater Horizon explosion, and of those, 2,000 have either been laid off or have left the Gulf area so there is no spending on those workers in the Gulf. Senator Vitter. Presumably that number goes up over time, would you agree with that? Ms. Blank. Our expectation from what we have heard talking to these rig workers or talking to the contractors and drilling operators, is that they have decided to retain these workers, given their skills, given they can do things on the rigs, and it is highly unlikely that further workers are going to be laid off between now and the end of the moratorium. If they have chosen not to retain the workers through the middle of September, they are likely to keep them on waiting for the moratorium to end. Senator Vitter. So your assumption is that that number will not go up over time? Ms. Blank. That is our assumption and this is based on the conversations we have had with the drilling contractors and operators themselves. Senator Vitter. I have to tell you I talk to these people every day and it sure as heck is not what they are telling me. I would love to know about these conversations because every day I hear the exact opposite, and in particular I hear the exact opposite in the context of not just the continual formal moratorium but the fear of what will be left after the formal moratorium is lifted; and to get a sense of that, people look at shallow water and they see a de facto moratorium. So it is not as if they have any confidence that the day after the formal moratorium is lifted they are back in business. They quite frankly are pretty certain of the opposite when they look at shallow water. Ms. Blank. And yet I would note that 41 rigs have chosen to stay clearly intending to resume operations as soon as they can. Senator Vitter. Do you to know if any of those are considering leaving? Ms. Blank. I do not know if any of them are considering leaving. I do know that there are some rumors that some rigs are actually planning to come into the Gulf sometime in the near future and particularly at the time the moratorium leaves. These things are incredibly mobile as I am sure you know, Senator. They are not permanent installations. They can leave but they can also come back quite quickly. Senator Vitter. As part of your economic analysis, did you explore whether any of the 41 were actively looking at leaving any time soon? Ms. Blank. We did not talk to all of the rig operators. Of those we talked to, we covered about 50 percent of those that were operating in the Gulf prior to the explosion. Among those, the people who had stayed basically said that they stayed because they expected that they were going to be drilling again in the Gulf in the near future. Senator Vitter. What to date is the impact of the moratorium on federal revenue and the deficit, and what do you project it to be continuing into the future? Ms. Blank. I want to emphasize that in terms of the gas and oil drilling that this is not lost production. It is simply delayed production. Indeed the revenue effects depend heavily upon what the price of oil might be a year and two years from now relative to now. If the price of oil goes up, you might end up with greater revenues because of delayed production. If that goes down, you might end up with lower production. It is simply difficult to speculate about what the impact of the moratorium would be over a five- or ten-year budget horizon. We do not do that in the report and we do not do such estimates. Senator Vitter. I included that in the letter. Is anybody in the Administration looking at that? Ms. Blank. I can tell you that we are not looking at the revenue effects. Our statement is in terms of the gas and oil production that the effects are going to depend on future prices of oil. That is not something we forecast in my unit. Senator Vitter. Again I specifically asked that question ahead of time. Presumably somebody in the Administration can do that sort of calculation. Can you provide that to us? Ms. Blank. I can look into that. Chair Landrieu. Let me ask to be clear on these numbers because I think it is very important to clear these numbers and we have a discrepancy here we need to clear up. You testified there were 41 rigs idling in the Gulf. Ms. Blank. There are 41 rigs that are remaining in the Gulf. Chair Landrieu. They are idling. They are not drilling right now because there is a moratorium. Of those 41, how many operate in the deep and how many operate in the shallow? Ms. Blank. We are looking only at deepwater drilling in this report. The request that came to us was to study the impact of the deepwater drilling moratorium. So that is what we looked at and we are talking about only deepwater rigs in all of this report. Chair Landrieu. Correct. But the deepwater drilling moratorium has had an immediate and dire effect on all drilling activities in the Gulf. And if your report does not cover that, then we are going to have to re-ask the question to get the kind of data that we need because it was I thought very clear that we are not asking for just the data relative to the rig workers on the 41. Our number is 33 deepwater rigs; but if you have 41, then we need to get our numbers updated. We had 31 deepwater rigs in the Gulf when the Horizon happened and another four that were being constructed. That is our data. So we have got to see how that can be meshed. But there are 45 shallow so let us just say 35 deep and 45 shallow. So we are talking 80 rigs. We are going to have to figure out which of these are operating and which ones are not. Our numbers, and this is from the website of the Interior Department. This is not Mary Landrieu's numbers. But our numbers show that prior to the oil spill, prior to the moratorium there were 49 shallow water permits issued month by month. We have it here, 11 in January, six in February, eight in December, March, and April for a total of 49 after the deepwater moratorium. But the shallow de facto moratorium there have only been seven permits issued. Of course, you can see in the deepwater there were 29 permits issued and then since the spill only one. I am not sure when that was done but in May. But there have been zero in June, zero in July, zero in August, and zero in September. So I do not want to leave this hearing, Ms. Blank, in communicating to the country that these rigs are somehow operating. You cannot operate without a permit, and there are virtually no permits being given. They could be idled on shore. Some of them can move as you know. Some of them are shut down in position and some of them are moved on shore. Some maintenance work may be going on but there is virtually no drilling of any magnitude either in deep or shallow water going on in the entire Gulf of Mexico is what we are trying to explain to people. So if you think these numbers are incorrect, maybe you could reconcile them with the Interior Department so we can actually for the record of this hearing, we may not do it in the next five minutes but for the official record figure out actually if the government even knows how many shallow rigs are in the Gulf and how many deep and where they are. We have a map that shows where they were before the spill. We know where they all are. These are on the website. You can actually count them. This is 25 deepwater rigs. The 25 that were positioned, drilling, are all idled. So their crews have left. There is not a lot of activity going on. They are doing I guess some cleanup and reviews but they are not operating, and the all shallow water that operates along here is virtually shut down. So you know it is a little difficult for us to figure out how the headline can be limited loss but the entire industry seems to be shut down. I do not know what to tell our restaurants because I am sort of the same as Senator Vitter. I mean all we hear from restaurant owners is that they are freezing, getting ready to lay off. The word ``panic'' is not really an overstatement in some of these parishes. They do not know what the future holds. Do you have a comment? Ms. Blank. I do want to note that we have focused solely on the deepwater environment here which is what the moratorium directly affects. The estimate of 8- to 12,000 fewer jobs as notes if you take out the rig workers means that there is 6- to 10,000 jobs on-shore of exactly the sort that you are talking about. And we note in the report that the larger companies are probably able to retain labor and deal with this much better than expected. The major effect of this is on small businesses. Chair Landrieu. Go ahead. Senator Vitter. Just to clarify this point, do these numbers, does your report reflect the impact on the job losses of the de facto shallow water moratorium? Ms. Blank. We were asked to look at the effect of the deepwater moratorium and we have focused only on the deepwater effects in this report. Senator Vitter. So there is a de facto shallow water moratorium. The numbers reflect that. A typical month before the explosion there were on the order of 39 to 43 shallow water permits. In the several months since the explosion, there is a total of less than ten. Let us see then. That illustrates behind the debate there is a de facto moratorium. You have not accounted for the that impact? Ms. Blank. Since June 8, I know what the Department of the Interior has received 13 shallow water drilling applications, and as of September 10, it approved five permits which the other eight are still pending, and I can simply ask that you perhaps follow up with Secretary Salazar and the Department of the Interior for details on exactly what their plans are with regard to oversight of shallow water drilling. Senator Vitter. My point is not about that permitting. That has clearly moved from 39 to 43 a month to five over many months. That is the de facto moratorium. My point is that that is a dramatic change as significant as the deepwater formal moratorium, and your economic analysis does not touch it. Ms. Blank. We were not asked to look at any issues related to shallow water. We were asked to look at the deepwater moratorium, and that is what our report focuses on only. Chair Landrieu. Can I ask this, David? One of our analysis, it is very interested how you might count a job so I want to ask this to be clear. If two people are working a 40-hour work week and both their hours are cut by 20 hours, do you in your analysis estimate that as one job because it is 40 hours lost or is it two jobs affected? Again two people working 40 hours a week, they are both cut back because their rigs are idling. So instead of working a full eight or nine hour day, they come in to do some part-time clean up. Do you count that as one job affected or do you put those lost hours together and count them as one? Ms. Blank. So this multiplier analysis that we do is based on the average relationships between reductions in spending and changes in employment. Employment includes both part-time and full-time workers. So embedded in that loss of jobs is a mix of part-time and full-time workers. When we talk about jobs lost, it is sort of the mix of jobs that are in the economy and not all of those are exactly 40 hours a week. Chair Landrieu. So would you say that is a yes or a no? Would you say that in that category there were two jobs lost or one job lost? Ms. Blank. So the multiplier would assume that you know it is looking at the numbers of jobs lost. So if there are two jobs, it would be two jobs lost. Chair Landrieu. Do you know, since you did the deepwater analysis, how long does it take a rig to come back to the Gulf once it leaves? Did you all do any calculations about that? Ms. Blank. No, we did not. Chair Landrieu. So there are three that testified have left. Do you think? Three or four? Ms. Blank. There are five that have left. Chair Landrieu. Five that have left. I would like you to answer for the Committee or submit to us in writing, how long does it take for those rigs to come back and what are the indicators whether they will or not. I do not know if it takes a month or three months or six months or two years for them to come back once they are gone. So we have lost five of the approximately 40 so far. That is a big number because it was really 33 but there were some more on the way. So five out of 40, and you know you lose ten out of 40, five is significant but ten is very significant. I do not believe they come back very quickly. We are going to have to go vote. We will recess and go vote and come back, Mr. Fernandez, for your testimony. Senator Vitter. Right before we do, if I could ask unanimous consent to include the testimony of Karen Harbert of the chamber in the record since she could not testify today. Chair Landrieu. That will be added with the other testimony from the other committees. Thank you. [The statement of Karen Harbert follows:] [GRAPHIC] [TIFF OMITTED] T6868.013 [GRAPHIC] [TIFF OMITTED] T6868.014 [GRAPHIC] [TIFF OMITTED] T6868.015 [GRAPHIC] [TIFF OMITTED] T6868.016 [GRAPHIC] [TIFF OMITTED] T6868.017 [GRAPHIC] [TIFF OMITTED] T6868.018 [GRAPHIC] [TIFF OMITTED] T6868.019 [GRAPHIC] [TIFF OMITTED] T6868.020 [GRAPHIC] [TIFF OMITTED] T6868.021 [Recess.] Chair Landrieu. The recess will come to an end and we will again commence with our hearing. Mr. Fernandez, this would be a good time for you to present your testimony and I appreciate everyone's patience. We actually had two stack votes and will have a third in about 30 minutes but we have got time to take this testimony and to get a few more questions in. So please proceed. STATEMENT OF JOHN FERNANDEZ, ASSISTANT SECRETARY OF COMMERCE FOR ECONOMIC DEVELOPMENT, ECONOMIC DEVELOPMENT ADMINISTRATION, U.S. DEPARTMENT OF COMMERCE Mr. Fernandez. Thank you, Chairman Landrieu. I am happy to have the opportunity to testify today before the Committee on behalf of the Department of Commerce's Economic Development Administration. As you explore the economic impact of the Deepwater Horizon oil spill and the deepwater drilling moratorium, EDA along with fellow Commerce agencies has been an integral partner in the coordinated federal response to the oil spill. Since June, EDA has announced a series of grants totaling $5.6 million to help the Gulf Coast recover by using our Economic Adjustment Assistance Program. This program allows for a wide range of technical, strategic planning, gap financing, and infrastructure assistance. It is a complete toolbox of developmental tools which EDA can leverage to create customized recovery packages for the Gulf Coast region. An addition of $4.5 million in EDA investments is expected to be finalized by September 30. These grants will fund a wide range of activities aimed at promoting long-term recovery, including revolving loan fund recapitalization and technical assistance to small businesses. In addition to projects in our current pipeline, EDA is finalizing a new federal funding opportunity stemming from the additional $5 million in economic development assistance money that was provided to the EDA in the Emergency Supplemental Appropriations Act to carry out more planning and technical assistance to oil spill states. We are grateful to Congress for passing this provision which was part of the Administration's supplemental request submitted on May 12. Currently my Deputy Assistant Secretary Brian McGowan is leading the economic solutions team which is part of the national incident command. This team was established to focus on the transition from response to recovery. The EST is working to ensure that both short- and long-term economic growth and job issues are being effectively addressed. EST which includes federal agency representatives from the Department of Commerce, Small Business Administration, Department of Housing and Urban Development, Department of Labor, Department of Homeland Security, and Department of Agriculture is working with experienced economic development and disaster recovery specialists to provide vital expertise and technical assistance to local communities. Working in partnership with the International Economic Development Council, the EST visited 21 Gulf Coast counties from mid to late August. The teams were deployed to nine Louisiana parishes, three Mississippi counties, six Florida counties, two Alabama counties, and one county in Texas. The first to deploy were two pilot teams that worked with local leadership in the Terrebonne Parish and Lafourche Parish. As Under Secretary Blank has noted in her written testimony in a report that was released today, these two parishes were two of the five parishes reported to be heavily dependent on the deepwater drilling industry. The solutions teams are comprised of economic development practitioners, industry experts, and government officials who specialize in economic and workforce development, city planning, infrastructure and long-term economic recovery. Once on the ground, the teams work for the local leadership from regional governments, chambers of commerce, representatives from key industries, economic development organizations, and others to address issues ranging from infrastructure challenges to business recovery needs to concerns about credit and financing. The work of these teams is taking place on a separate track to the work that Under Secretary Blank has just described. The teams are looking at economic impacts whether from the oil spill or the moratorium. These teams are still working with local officials as they continue to accumulate qualitative data for the final report which will include a set of tailored plans for addressing some of the identified needs. I would like to thank the chairwoman again for the opportunity to be here today. EDA is ready and prepared to do our best to assist with the devastating oil spill in the Gulf Coast region. We look forward to continuing to work with Congress to strengthen the Federal Government's coordinated response. I welcome any questions you may have. [The prepared statement of Mr. Fernandez follows:] [GRAPHIC] [TIFF OMITTED] T6868.022 [GRAPHIC] [TIFF OMITTED] T6868.023 [GRAPHIC] [TIFF OMITTED] T6868.024 [GRAPHIC] [TIFF OMITTED] T6868.025 [GRAPHIC] [TIFF OMITTED] T6868.026 [GRAPHIC] [TIFF OMITTED] T6868.027 Chair Landrieu. Thank you, Mr. Fernandez. I want just to be clear for the record that report that you all submitted said there would be an impact of 1.9 billion in spending reductions. Is that what your report has? Ms. Blank. 1.8 billion. Chair Landrieu. 1.8 billion which is a significant amount of money. And you just testified that EDA has given out to date five million in grants. Of course, there are five states that are affected so that would be an average of one million per state. And you have four million in the pipeline? Mr. Fernandez. 4.5 million. Chair Landrieu. 4.5 million in the pipeline. We really do appreciate that help but it does raise to our eyes the gap that is existing. In your testimony, Madam Secretary, you said that small businesses or that you submitted that small businesses are fairing worst under this the moratorium than large businesses. The report actually states, ``small firms with less financial capital will likely experience relatively larger employment losses. This is consistent with anecdotal evidence from small businesses in the Gulf Coast.'' It goes on. Can you outline why these businesses are harder hit by the moratorium, if they face a tougher time returning? And secondly, can you elaborate on the eight to ten thousand indirect job losses? Do you think these are job losses from small businesses or medium size or large, or do you know? Ms. Blank. Thank you. So we do not have a breakdown in this report and have not done so to bring on the size of business affected. What we do note is that larger businesses like the rigs themselves are much more able to horde labor, to smooth over declines in demand. They might be able to solicit business from outside the Gulf. There are a variety of things that they can do that lets them carry through in the face of some reduction in demand due to this moratorium or due to other effects from the oil spill. Smaller businesses as you know just do not have that type of cushion. So our expectation is that of the indirect jobs, those that are created on-shore as a result of the reductions in rig spending, the indirect job loss, that a disproportionate share of those are likely to be in smaller businesses rather than larger businesses. Chair Landrieu. Okay. Let me ask also. The report submitted today estimates that the moratorium, of course, is a direct loss of 2,000, indirect 8 to 10, a reduction in operations of 1.8 billion in spending. The Administration has announced 100 billion set aside for rig workers but I want to clarify those are only rig workers of deepwater rigs. So shallow rig workers are not eligible. Is that your understanding? Ms. Blank. I am actually not familiar with the details of that with regard to shallow water rigs. We looked at it with regard to deepwater rigs. Chair Landrieu. Okay. That is our understanding for the record that the one hundred million set aside for rig workers idled by the moratorium is only for the deepwater rig operators, not shallow, although you can see from the Interior website they have been idled as well. I also want to ask that the $20 billion escrow account set aside by BP at the request of the Administration to cover economic losses for the spill, is it your understanding that workers put out of business or having their jobs jeopardized by the moratorium are entitled to submit claims against this 20 billion or do you know? Ms. Blank. I do not know the details of exactly what can be submitted and what cannot be submitted to that fund and under what circumstances people can do it. I do know that the Administration has been working to mitigate adverse effects of the moratorium as well as other things happening in the Gulf on workers. As you know in May, the Administration proposed legislation calling for a new program of unemployment assistance modeled on the Disaster Employment Assistance Program. Something like that, if there could be agreement around it, would certainly be of help to exactly the sort of workers you are talking about in the small businesses. Chair Landrieu. If you would check with the Administration and see if we can get a clarification on that $20 billion fund. Ms. Blank. I will do that. Chair Landrieu. We know that claims can be submitted for business-affected job loss, business loss, business interruption for the spill itself. The question is clearly the moratorium is having a direct impact on job loss, the 2- to 10,000 jobs direct and indirect and 1.8 billion in lost spending. We want to see if that $20 billion would also be eligible, and if not, do any of you know any other pots of money or programs that could be tapped to actually, besides unemployment, that either would be in any of your shops, in either Treasury or Commerce that might help small businesses besides loans, any grant programs, any direct spending programs that could help them? Mr. Fernandez. I think the primary source of support has been through Department of Labor directly to employees. We certainly do have some grant programs. As it relates to the businesses themselves, clearly the majority of the programs are in the loan portfolio, various loan programs. Many of the grants that EDA makes do work directly to support the small businesses. Some of them are in terms of capital assistance that go through intermediaries with some infrastructure investments, equipment investments, but again many of our programs work through the revolving loan funds as well. Chair Landrieu. But this money that you testified to, the five million and the 4.5 million, that was in the pipeline before the moratorium, right? Mr. Fernandez. That is correct. Chair Landrieu. So you could say that no additional money has been put into that program. You are just using what you have to address the economic fallout and job loss, fallout in the region? Mr. Fernandez. Correct prior to the moratorium. The additional $4.5 million that is in the pipeline is part of a broader, competitive grant system for the entire region, whether it is the Austin office which includes Louisiana or Atlanta office which picks up Florida, Alabama, and Mississippi. But I can tell you that there certainly has been a prioritization of projects that were reviewed and competed as part of our existing pipeline. The additional five million that the Congress approved is clearly new money and we will move very quickly once the funding opportunity is finalized to get those dollars into the marketplace. Chair Landrieu. I will say that while I think the dollar amount is too low, and that is a challenge for both the Administration and for the Congress, I do hear very positive things said about this particular program and agency and its strategic help to meet some of the economic needs in this region. In fact just yesterday I had a meeting. I met with my Jefferson Parish chamber and they particularly pointed out to me the fact that they had gotten very good response from this particular grant program and they wanted me to pass that on so I am doing that now and will be in writing to you all as well. I do not know if we have any other questions for the record. Is there anything else we want to get in? Let me see. We just have one more. There are two underlying assumptions in your report. One is that job loss as a result of the moratorium will return after drilling resumes in the Gulf, and number 2, possible job losses from the moratorium have been mitigated by oil spill clean up work. We have heard direct opposite testimony from people that work along the Gulf. While they were happy for the clean up work, it in no way compensated them fully. The work is not as meaningful obviously. So we are hearing different points from home. I am concerned about this argument as it seems to miss the point. If you are employed by these industries or have met with these impacted businesses, it is clear that it is not an apples to apples comparison. So if the Administration determined tomorrow that the moratorium is impacting the Gulf Coast economy too deeply and set about promulgating new regulations, when does your analysis assume that actual drilling will begin immediately or is it next year? Given that it takes a while for this to slow down, it is going to take a while for it to start back up. If the moratorium is in fact lifted, which we hope November 30 or well before, do you have any understanding of when the permits will start to be issued as well? Ms. Blank. So the permit issuance is obviously under the control of the Department of the Interior, and I just cannot speak to how they would handle this or are handling it. That obviously is a question that has to be addressed to them. I do not think our report is trying to say that the cleanup response and spill activities completely offset any of the effects of the moratorium. Indeed, as we noted, we do say that there is a real and substantial job loss due to the moratorium. The issue about the cleanup activities, there is some offset almost surely. BP, as they have noted, has spent $8 billion in three months in the region, that some of that is going to some of the, almost surely some of the small businesses and large businesses that have had some negative moratorium, negative impacts and that at least helps offset some of the moratorium affects. Chair Landrieu. Is there anything you all want to add because I am going to close the meeting because of the twelve o'clock vote. I have several questions additional I will submit to the record. Senator Vitter has submitted several questions that have yet to be answered. As always, the record of our Committee stays open for two weeks. Should the chamber of commerce or any other organizations that have also testified several times before our Committee want to submit any additional documentation, any non- profits, any individuals listening to this hearing and have opinions pro or con, please let us know. We are building a congressional record to try to get as many right answers as possible. Thank you so much. Meeting adjourned. [Whereupon, at 11:41 a.m., the Committee was adjourned.] APPENDIX MATERIAL SUBMITTED [GRAPHIC] [TIFF OMITTED] T6868.034 [GRAPHIC] [TIFF OMITTED] T6868.035 [GRAPHIC] [TIFF OMITTED] T6868.036 [GRAPHIC] [TIFF OMITTED] T6868.037 [GRAPHIC] [TIFF OMITTED] T6868.038 [GRAPHIC] [TIFF OMITTED] T6868.039 [GRAPHIC] [TIFF OMITTED] T6868.040 [GRAPHIC] [TIFF OMITTED] T6868.041 [GRAPHIC] [TIFF OMITTED] T6868.042 [GRAPHIC] [TIFF OMITTED] T6868.043 [GRAPHIC] [TIFF OMITTED] T6868.044 [GRAPHIC] [TIFF OMITTED] T6868.045