On the 59th day of the ongoing Macondo well disaster in the Gulf of Mexico BP plc CEO Tony Hayward took a tongue lashing from House lawmakers during a subcommittee hearing that shed little if any light on what caused the nation's worst environmental catastrophe.
A number of members of the House Energy and Commerce Subcommittee on Oversight and Investigations recalled previous BP safety debacles -- a deadly explosion at the company's Texas City refinery in 2005 and an oil spill in Alaska's Prudhoe Bay in 2006 -- and the BP CEO's subsequent promise to focus "like a laser" on safety.
During opening remarks Rep. Henry Waxman (D-CA), chairman of the House Committee on Energy and Commerce said, "There is complete contradiction between BP's words and deeds...Under your leadership BP has taken the most extreme risks...and now the whole Gulf Coast is paying the price."
In his own and the company's defense Hayward said numerous process and staffing changes have been made at BP to improve safety since the incidents of 2005 and 2006. Hayward became CEO in 2007.
In his prepared testimony Hayward recounted in detail what BP, the U.S. Coast Guard and others have done to attempt to seal the Macondo well, contain the spill and clean up the mess. However, House members were more interested in getting Hayward to accept responsibility for the decision-making they believe caused the well blowout that started it all.
Rep. Bart Stupak (D-MI), chairman of the Subcommittee on Oversight and Investigation said, "Time after time" BP had warning signs that the Macondo was "a nightmare well," as it was described by one employee. He lambasted Hayward for "low-ball estimates" of the amount of oil flowing from the well following the blowout and said they may have led to a "scaled-back" response.
"I find this cavalier attitude toward risk unbelievable," Stupak said. "There's a willingness to cut costs and take risks."
When questioned about decisions related to the Macondo well specifically, Hayward repeatedly asserted that he was not involved in the decision-making process and could not answer.
"I wasn't involved in any of that decision-making," Hayward said in response to questioning by Waxman.
"It's clear to me that you don't want to answer our questions," Waxman said later in frustration.
Rep. John Dingell (D-MI) was repeatedly stymied by Hayward's professed inability to answer his questions; he asked that the CEO submit his answers for the record later. Others would go on to bemoan what they said was a lack of candor on Hayward's part, while the CEO repeatedly indicated that his company's and other investigations were still ongoing.
"I don't want to hear that. That's the same thing You've been saying all day," chided Rep. Cliff Stearns (R-FL) at the mid-point of the hearing when Hayward's responses had started to sound particularly rote.
Hayward was not, however, without at least one sympathizer among the panelists. At the beginning of the hearing Rep. Joe Barton (R-TX) "apologized" to Hayward for the "shakedown" he and his company experienced the day before at the hands of the Obama administration, which extracted the pledge of $20 billion in Gulf Coast compensation (see Daily GPI, June 17).
"I'm ashamed of what happened in the White House yesterday," Barton said. "I think it is a tragedy of the first proportion that a private corporation can be subjected to what I would characterize as a shakedown, in this case a $20 billion shakedown..."
That elicited a rebuke from Rep. Ed Markey (D-MA), who recalled how victims harmed by the Exxon Valdez oil spill in Alaska had to wait years for compensation. "This is the American government, President Obama ensuring that this company is made accountable," Markey said. "This is, in my opinion, the American government working at its best."
Proving that it isn't only BP executives who mis-speak -- Hayward's wanting his "life back," and BP Chairman Carl-Henric Svanberg's sympathy for "the small people" come to mind -- in response to a swift backlash Barton retracted his BP apology and issued one to his detractors.
"I apologize for using the term 'shakedown' with regard to yesterday's actions at the White House in my opening statement this morning, and I retract my apology to BP," said Barton, who has been a frequent beneficiary of oil industry campaign contributions. "As I told my colleagues yesterday and said again this morning, BP should bear the full financial responsibility for the accident on their lease in the Gulf of Mexico. BP should fully compensate those families and businesses that have been hurt by this accident. BP and the federal government need to stop the leak, clean up the damage, and take whatever steps necessary to prevent a similar accident in the future."
Barton's fellow Republican Rep. John Sullivan of Oklahoma did not have a problem with the $20 billion pledge elicited by President Obama. "The American taxpayer should not be on the hook for a dime," he said.
"There is mounting evidence that BP has one of the worst safety records of any major oil company operating in the United States," said Sullivan.
While acknowledging that BP employees were the key decision-makers on the ill-fated Deepwater Horizon rig, Rep. Michael Burgess (R-TX) lamented that the U.S. Minerals Management Service (MMS), which approved BP's plans for the well, was not represented at the hearing as the federal regulators contributed to the catastrophe.
MMS officials will be in for their own grilling, though, as more hearings are planned, Stupak noted.
Standard & Poor's Ratings Services (S&P) said Thursday it was cutting its long- and short-term corporate credit ratings on BP to "A/A-1" from "AA-/A-1+" and keeping them on CreditWatch negative.
"The downgrade reflects our opinion of the challenges and uncertainties that BP continues to face..." said S&P credit analyst Simon Redmond. "These challenges and uncertainties include the difficulties BP is experiencing in containing the spill as well as the ultimate extent of the pollution, the consequences for BP of ongoing official investigations, and the implications of these investigations for the magnitude and timing of further cash payments by BP.
"BP is now subject to intense political pressure in the U.S., its largest market. We see these factors as fundamental issues differentiating BP from its peers."
After spending part of the day in positive territory, BP shares closed down less than one half of a percent Thursday at $31.71 on volume that was comparatively light for recent days.
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