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In Waxman, BP execs face a master interrogator at Gulf oil spill hearing

WASHINGTON — For Rep. Henry Waxman (D) of California, today’s congressional hearing with BP Chief Executive Officer Tony Hayward offers an opportunity to do that which he does best – ask tough questions.

WASHINGTON — For Rep. Henry Waxman (D) of California, today’s congressional hearing with BP Chief Executive Officer Tony Hayward offers an opportunity to do that which he does best – ask tough questions.

Best known for his 1994 hearings exposing the tobacco industry’s claims that nicotine is not addictive, Representative Waxman was thwarted in confronting Big Oil during Republican control in the Bush years. Now, Congress’s top watchdog is laying the groundwork for historic hearings that he hopes will change the political climate for energy legislation on Capitol Hill.

In an era when congressional hearings often do little more than vet competing views, Waxman questions corporate witnesses the old-fashioned way – with massive documentation. As chairman of the House Energy and Commerce committee, Waxman released a 14-page letter to the BP chief executive Monday laying out the results of the panel’s initial investigation.

“Time after time, it appears that BP made decisions that increased the risk of a blowout to save the company time or expense,” he wrote. “If this is what happened, BPs carelessness and complacency have inflicted a heavy toll on the Gulf, its inhabitants, and the workers on the rig.”

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The hearings will focus on decisions made by BP just days before the Deepwater Horizon explosion on issues ranging from well design to a missed check on the integrity of the cement seal on the morning of the April 20 blowout.

By mid-April, BP had dismissed multiple warnings of “severe gas flow problems” on the Deepwater Horizon rig, according to the Waxman letter. Contractor Halliburton had recommended using 21 centralizers in installing a final section of steel tubing in the well. BP opted for six. “It will take 10 hours to install them. … I do not like this,” said a BP official involved in the decision in an April 16 e-mail obtained by the committee. Another BP official recognized the risks but commented: “who cares, it’s done, end of story, will probably be fine.”

Blowout all about money?
In testimony under oath, BP CEO Hayward will have an opportunity to put such communications in context. Meanwhile, Waxman and committee staff are laying out their own context for the events leading up to the blowout.

One key factor is the cost of further delay. BP had anticipated that drilling the Macondo well would take 51 days and cost about $96 million. An initial rig used to drill the well was damaged in a hurricane and replaced with the Deepwater Horizon. But the well took longer than planned to complete, and the Deepwater Horizon rig had been due at a new location.

By the morning of the blowout, the rig was 43 days late, costing BP as much as $21 million in leasing fees alone. Such costs “may have set the context for the series of decisions that BP made in the days and hours before the blowout,” Waxman wrote.

At a White House meeting on Wednesday, Hayward agreed to fund a $20 billion compensation fund to pay claims for damages for the Gulf oil spill. To meet this obligation, BP announced that it will suspend dividends for the year.

“This $20 billion will provide substantial assurance that the claims people and businesses have will be honored,” said President Obama in a statement after the meeting. “It’s also important to emphasize this is not a cap. The people of the Gulf have my commitment that BP will meet its obligations to them.”

The independent escrow account will be managed by Kenneth Feinberg, who managed the compensation fund for families of victims of the 9/11 attacks.

In advance of today’s hearings, BP released excerpts of Hayward’s prepared statement: “I fully grasp the terrible reality of the situation,” he is expected to say. “I understand people want a simple answer about why this happened and who is to blame. The truth, however, is that this is a complex accident, caused by an unprecedented combination of failures.”

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On Tuesday, BP America President Lamar McKay testified under oath before a congressional panel that BP would not insist on the $75 million liability limits for economic damages stemming from an oil spill prescribed in a 1990 law. “We’re going to pay all legitimate claims and the whole company is standing behind that,” he told the Energy and Environment subcommittee of the House Energy and Commerce committee.

Meanwhile, Democratic lawmakers want to use hearings to build a case documenting instances of negligence or willful misconduct that, according to the 1990 law, lift the $75 million liability cap.

A push for green energy
With the American public cool to global warming legislation, this week’s hearings are a chance for Democrats to build on the message from President Obama’s Oval Office speech and argue that a stronger government role is needed to regulate the oil industry and to make a transition to greener technologies.

“Congress needs to review the evidence and pass new laws that put teeth into our regulatory system. But we cannot stop there. Our national energy policy is broken, we’re addicted to oil, and this addiction is fouling our beaches, polluting our atmosphere, and undermining our national security,” said Waxman in comments at Tuesday’s subcommittee hearing with oil executives.

Senate Democrats hope to use the Gulf oil spill and its fallout to break a deadlock over energy legislation. Anticipating a new push for energy legislation, Republicans shot back that the Obama administration should be focused on capping the well, not building a case for more big-government legislation.

“Americans are pleading with the administration to fix the immediate problem in the Gulf, and the White House want to give us a new national energy tax instead,” said Senate Republican leader Mitch McConnell on the floor of the Senate on Wednesday.

“Every time we face a crisis, it seems, this administration takes us on another ideological tour of the far-left to-do list, when all the American people want from it are some straightforward practical solutions,” he added.

With Senate Democrats short one seat to break a filibuster, the Senate is gridlocked on most major issues, says Julian Zelizer, a historian and congressional expert at Princeton University. “Waxman can’t change the dysfunctional Senate. But what Waxman can do is bring out damaging information about what the companies have done or government has not done to help put issues on the agenda and try to build political momentum,” he says.