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BP Hearing Happening Today; BP's CEO Tony Hayward Testifies

Aired June 17, 2010 - 09:59   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

JOHN KING, CNN ANCHOR: This is in a hearing room here in Washington D.C. What Mr. Hayward says though that will be watched and listened to closely across the country and in financial markets across the world and mostly especially along Gulf Coast.

That's where we find our Ali Velshi this morning to see more of those protest signs in the room.

And Ali, we were together along the coast just the other day. We both visited small towns where Bayou le Batre where the fishermen, the shrimpers, the oystermen, they look out at those waters and they personalize it.

They think that Mr. Hayward and his company not only sent millions of gallons of oil into the Gulf of Mexico but perhaps destroyed their way of life.

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Yes. It's their livelihood. I mean we go out, we see an ocean. When you go out there, what you see is a very busy place for the first 50 miles or so or even further into the Gulf of Mexico.

There's a lot of activity, there are a lot of people working with the fish and oil. Those people that you and I talked to earlier this week have three concerns. One, stop the oil from coming out; two, stop the oil from getting to the shore; and three, do something to protect the wildlife -- both the wildlife that it's the marshes and the shrimp, the oysters that they have to collect.

One of the things you don't get see from shore is what I say yesterday. I went out with the Coast Guard; they're overseeing this effort to burn the oil that is gathered around the spill site. It's about 3 to 12 miles away from the site of the DeepWater Horizon. And what they are doing is collecting this oil booms and they are burning them.

This is actually, John, a relative success in this operation. They are burning on some days -- we only know this anecdotally, but possibly up to 5,000 barrels of oil an hour, maybe up to 30 or 40,000 barrels of oil a day. But, you know when you see that John, what you see on one side is a success. Burning this oil so it doesn't get on shore, so it doesn't get on pelicans and it doesn't kill shrimp and oysters. But you also see a big, big bloom of smoke going into the air. Everybody who has seen this tells me, oh my God, what are we doing to the environment that we're burning this smoke? Can you imagine, John, we are in a place that we have decided that is it less dangerous to burn this oil and have all of those particulates and pollution go into the air than to have that oil go to shore and actually continue to damage more wildlife, more seafood, and affect the livelihoods of people around here.

So this is very personal in this part of the Gulf. It's very personal. This isn't about political decisions and who to blame. This is about, stop that oil, give me my sea back.

KING: And Ali, let's stay on that point because you're dead right. It's generational. These are people who say my grandfather, my father worked these waters or some of them have worked in the oil industry. But it depends on where you are but as you watch these pictures, you're dead on a key point, and this is one of the reasons the administration has said this $20 billion escrow fund is not a cap. The fund could get bigger. The price tag for BP could go higher.

Because one of the questions we don't know - the biggest question you noted is, when, when, when will they stop the flow of oil into the gulf. But then the second question is the environmental impact here and the economic impact. And we don't know. There has been testimony about it. What does this burning do? What do all the chemical dispersants they are using to break up the oil to help it keep it from coming to shore? We don't know when those fisheries will be healthy again. We don't know the impact on the tuna or sea turtles.

VELSHI: John, often those two things are separate, right? Often commercial interests and environmental interests are in two separate areas. But here they are not. You damage the environment, you damage the fishery, and by the way when you damage the fishery, the guys who can't work or the women and men who can't work on the shrimp boats and can't get be oysters fishers go work in the oil industry.

So now they are really scared that they've got that moratorium on the oil industry, the oil industry has got a bad name. They're mad at the oil industry but guess what, if you can't get shrimp and you can't get oysters, the other job in most of these places is working for the oil industry. They are very, very concerned that they are getting hit on both sides of this, and the environment and the economy have come together as one story here in the Gulf of Mexico.

KING: Ali Velshi on the gulf in New Orleans.

A quick reset for anyone just joining us. You're looking on your screen there, on the right side of your screen, that is the House committee hearing room, and the chairman, Bart Stupak, of this sub committee has just taken his seat. We will go to that hearing when he opens it and brings it to order.

That's Bart Stupak in the middle. He is a retiring member of Congress, a Democrat who decided not to run for re-election. He is from the upper peninsula in Michigan, when he brings this hearing to order, we will get to it.

First, I want to quickly check in with our Ed Lavandera. He is down in Kenner, Louisiana, where people are furious. Ed.

ED LAVANDERA, CNN CORRESPONDENT: Hey, John, we're going to be spending the morning here in Dot's Diner, which is just outside of New Orleans. I'm getting the pulse as we're watching Tony Hayward here begin to testify, kind of get a sense of how people are reacting to it immediately. Obviously, he's got a lot of people's hearts to win over in this city and this state.

KING: Ed, I'm sorry. I need to interrupt you one second. The hearing is just getting under way. We want to take you into the House committee hearing room right now.

REP. BART STUPAK (D), MICHIGAN: This hearing of the committee of the subcommittee of the energy and commerce committee, the sub committee on oversight investigations will commence our hearing.

Today we have a hearing entitled "The Role of BP in the Deepwater Horizon explosion and oil spill." We have a lot of members present for this hearing, who are not members of the sub committee but are members of the full Energy and Commerce Committee. I welcome them and note that they will be allowed to submit written statements for the record but will not deliver verbal opening statements.

In addition, after all subcommittee members complete their questioning, full committee members will be allowed to ask questions. Members who are not on the committee or on the Energy and Commerce Committee are welcome to observe but they will be permitted to provide opening statements or ask questions due to time constraints. The chairman, ranking member and chairman emeritus will be recognized for five-minute opening statements.

Other members of the committee will be recognized for three- minute opening statements. I will yield to the chairman of the full committee, Mr. Waxman, for the first opening statement.

REP. HENRY WAXMAN (D), CHMN, ENERGY & COMMERCE CMTE.: Thank you very much, Mr. Chairman. Thank you for holding this important hearing. And Mr. Hayward, thank you for being here today. Yesterday, BP pledged to establish a $20 billion escrow account and to suspend its dividend payments for the rest of the year.

I'm sure these were not easy decisions for you but they were the right ones and I commend you for them. Congress has multiple committees examining the gulf oil spill. Some are evaluating the impact of the spill, some are working on the reorganization of the regulatory agencies, and some, including Chairman Markey's subcommittee are drafting legislation to reform our oil exploration laws.

You are testifying today before the oversight and investigation subcommittee and this subcommittee has a special role, to examine the facts and determine what went wrong and to make recommendations to prevent future spills. When it's time for questioning, I and other members of the subcommittee will ask you about a series of internal BP documents. They appear to show that BP repeatedly took shortcuts that endangered lives and increased the risks of a catastrophic blowout and I sent you a letter in advance indicating that we're going to question you about those issues. But what is equally important is what is missing from the documents. When you became CEO of BP you promised to focus like a laser on safe and reliable operations.

We wanted to know what you had done to keep this promise, so we asked what e-mails you had received, what documents you had reviewed about the Deepwater Horizon rig or the Macondo Well before the blowout.

Deepwater drilling is inherently dangerous as the entire country now knows an uncontrolled blowout can kill rig workers and cause an environmental disaster. We want to know whether you were briefed about the risks and were monitoring the safety of the drilling operation.

We could find no evidence that you paid any attention to the tremendous risks BP was taking. We've reviewed 30,000 pages of documents from BP, including your e-mails. There is not a single e- mail or document that shows you paid even the slightest attention to the dangers at this well. You are the CEO, so we consider the possibility that you may have delegated the oversight responsibility to someone else.

We reviewed the e-mails and briefing documents received by Andy Inglis, the chief executive for exploration and production and Doug Suttles, the chief operating officer for exploration and production, and the person now leading BP's response to the spill.

According to BP, these are the senior officials who are responsible for the Macondo Well, but they, too, were apparently oblivious to what was happening. We could find no evidence that either of them received any e-mails or briefings about the Deepwater Horizon rig or drilling activities at the well.

BP's corporate complacency is astonishing. The drilling engineer for the rig called Macondo a nightmare well. Other BP employees predicted that the cement job would fail. Halliburton warned of a severe gas flow problem. These warnings fell on deaf ears. BP's corporate attitude may best be summed up in an e-mail from its operations drilling engineer who oversaw BP's team of drilling engineers after learning of the risks and BP's decision to ignore them, he wrote, "who cares, it's done. End of story, we'll probably be fined."

There is a complete contradiction between BP's words and deeds. You were brought in to make safety the top priority of BP, but under your leadership BP has taken the most extreme risks. BP cut corner after corner to save a million dollars here, a few hours or days there, and now the whole gulf coast is paying the price.

Today's hearing will focus on BP's actions, but we learned from our hearing earlier this week that the other oil companies are just as unprepared to deal with a massive spill as BP. We are seeing in the oil industry the same corporate indifference to risk that caused the collapse on Wall Street.

And that is why reform is so urgently needed. Part of this reform must be legislation to put teeth into our regulatory system. The part must also be a transition to a clean energy economy. We're addicted to oil. This addiction is fouling our beaches, polluting our atmosphere and undermining our national security.

We can't snap our fingers or transform our energy economy overnight but we need to start down a path to a clean energy future. Mr. Chairman, I look forward to today's hearing, and Mr. Hayward, I hank you for appearing and cooperating with our investigation.

STUPAK: Thank you, Mr. Chairman. Next go to the ranking member of the full committee, Mr. Barton of Texas. Mr. Burgess and I will do our opening after the chair and (INAUDIBLE) Mr. Barton, please.

BARTON: Thank you, Mr. Chairman and thank you, Mr. Hayward, for appearing before us. We have kind of a dual track under way, in my opinion. We obviously are trying to gather the facts of what happened in the oil spill in the Gulf of Mexico, a month and a half ago, trying to find out the causes of that spill, what can be done to prevent it in the future.

We are obviously very concerned about the mitigation and the cleanup. We have a system in America built up based on the British tradition over 200 years of due process and fairness where people that do bad things, in this case, a corporation that's responsible for a bad accident, we want to hold them responsible, do what we can to make the liable parties pay for the damages.

Mr. Stupak and Mr. Waxman are doing an excellent job working with Dr. Burgess and myself in conducting, I think, a very fair oversight investigation, and we're going to get into a number of those issues in this hearing, and we're going to ask you some pretty tough questions.

I'm speaking now totally for myself. I'm not speaking for the Republican Party. I'm not speaking for anybody in the House of Representatives but myself. But I'm ashamed of what happened in the White House yesterday. 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, $20 billion shakedown with the attorney general of the United States who is legitimately conducting a criminal investigation and has every right to do so to protect the interests of the American people, participating in what amounts to a $20 billion slush fund. That's unprecedented in our nation's history. That's got no legal standing and which sets, I think, a terrible precedent for the future.

If I called you into my office and I had the subcommittee chairman, Mr. Stupak, with me, who was legitimately conducting an oversight investigation on your company and said, if you put so many millions of dollars in a project in my congressional district, I could go to jail. And should go to jail.

Now, there is no question that British Petroleum owns this lease. There is no question that BP - I'm sorry, it's not British Petroleum anymore - that BP made decisions that objective people think compromise safety. There is no question that BP is liable for the damages. But we have a due process system where we go through hearings and in some cases court cases and litigation and determine what those damages are and when those damages should be paid.

So I'm only speaking for myself and not speaking for anybody else, but I apologize. I do not want to live in a country where anytime a citizen or a corporation does something that is legitimately wrong is subject to some sort of political pressure that is, again in my words amounts to a shakedown.

So I apologize. But on this hearing today I am with Mr. Waxman, with Mr. Stupak. There are answers that need to be - questions that need to be asked that are legitimate because we don't want another oil spill of this magnitude or of any magnitude in the Gulf of Mexico, and if this sub committee can do things that make it much more difficult for this type of an incident to occur in the future, then we have done our work for the American people.

With that Mr. Chairman, I yield back.

STUPAK: Thank you, Mr. Barton.

KING: Watching continuing coverage of this house committee hearing in Washington, D.C.. You just had your first wow of the day.

STUPAK: ... 11 men lost their lives the day the Deepwater Horizon drilling rig exploded and in the 59 days that have followed countless people have lost their livelihood as the oil spill closes fishing grounds and pollutes the shores of the three states.

This is the third hearing of the oversight investigation subcommittee has held and the fifth hearing overall in the Energy and Commerce Committee. Our first hearing exposed problems that's covered with the blowout preventer and several other factors that have contributed to the disaster.

Our second hearing was a field hearing that contributed to - our second hearing was a field hearing in New Orleans where we heard from the widows of two men who died in the Deepwater Horizon explosion as well as shrimpers and other small business owners who have suffered from the environmental catastrophe that followed.

Our staff has spent weeks combing through hundreds of thousands of pages of documents and sitting through more than 50 hours of briefings by corporate, governmental and academic experts in an attempt to piece together what went wrong with BP exploration of the Macondo Well.

We have reviewed several questionable decisions made by BP in the days and hours leading up to the explosion. And what we learned so far is alarming. We learned that time after time, BP had warning signs that this was as one employee put it "a nightmare well." BP made choices that set safety aside in exchange for cost cutting and time saving decisions. For example, BP disregarded questionable results from pressure test after cementing in the well. BP selected the riskier of two options for their well design. They could have hung a liner from the lower end of the casing already in the well and installed a tie back on the top of the liner, which would have provided additional barriers to the release of hydrocarbons instead they lowered a full string of the new casing which took less time and costs less but did not provide the same protection against escaping hydrocarbons.

BP was warned by their cement contractor, Halliburton, that the well could have a severe gas flow problem if BP lowered the final string of casing with only six centralizers instead of the 21 that Halliburton recommended. BP rejected Halliburton's advice to use additional centralizers in an e-mail on April 16th. A BP official involved in the decision explained and I "it will take 10 hours to install them. I don't like this."

BP chose not to fully circulate the mud in the well from the bottom to the top which was an industry recommended best practice that would have allowed them to test for gas in the mud. BP chose not to use a casing hanger lockdown sleeve which would have provided extra protection against a blowout from below. These are just a few of the issues that led to the disaster. Once Deepwater Horizon exploded and sank to the bottom of the sea, BP's response to contain the leak and clean up the spilled oil was equally as poor.

They issued low-ball estimates of the amount of oil flowing from the well which may have led to a scaled-back response. We discovered that BP's oil spill response plan was virtually identical to other oil companies' plans. In a hearing Tuesday, Exxon Mobil CEO Rex Tillerson admitted that once the spills occur, he says, "we are not well equipped to handle them."

All the other oil companies testified at Tuesday's hearings that they would not have drilled the well as BP did. Our witness today, Mr. Tony Hayward, is the chief executive officer of BP. Shortly after Mr. Hayward took over as the CEO in 2007, he held a town hall meeting with employees in Houston. At this meeting, he discussed the need for BP to be a leader with fewer people in decision making process.

This article and I ask that you put up the "Guardian" article. An article from September 27, 2007, "The Guardian" newspaper in London, titled, "Hayward says oil company has become too cautious" reads, and I quote, "assurance is killing us." Mr. Hayward told U.S. staff, noting that too many people were engaged in decision making, leading to excessive cautiousness, something that critics of its safety performance in the U.S. might question.

Let me put up these other notes from the same meeting. We received notes from BP and from employees and their note taking from this meeting. The employee notes summarize Mr. Hayward's statements as follows, "I don't think having all these layers of assurance reduces risk and it can actually increase it. The best way to reduce risk is to have deep technical competence where we need it. Individuals need to be accountable for risk and to manage it." I find this cavalier attitude towards risk as assessing risks unbelievable, given the fact that at the time of these statements, BP had just been responsible for the largest oil leak in Alaska, history on the north slope as well as the 2005 Texas refinery explosion, which killed 15 workers and injured another 170.

I must ask Mr. Hayward whether it was wise to adopt this leaner decision making process with input from fewer people and a new approach to managing risk. Under the leadership of Bob Malone, the former president and chairman of BP America, BP created an independent office of the ombudsman headed by Judge Stanley Sporkin.

The ombudsman office was established because line members report it, fearing retaliation if they reported safety concerns to management. When the current chairman and president Lamar McKay took over, I met with him and he suggested that he hoped to improve the culture enough to make the ombudsman office unnecessary so he could shut it down.

I urged him not to eliminate the office because it serves a significant role in investigating employee complaints. I'm more concerned now about, than ever about BP's safety and the role they take in assuming risk. I'm concerned that the corporate culture from BP's CEO Tony Hayward down to Chairman and president of BP America Lamar McKay and chief operating officer Doug Suttles, that there is a willingness to cut cost and take greater risk.

I look forward to hearing from Mr. Hayward answer the many hard- hitting questions from our committee members that we'll ask today. I hope we will hear honest, contrite and substantive answers. Mr. Hayward, you owe it to all Americans. We are not small people. But we wish to get our lives back. We're the Americans who live and work in the gulf coast. It may be years before they get their lives back.

For the Americans who lost their lives on the rigs, their families may never get their lives back. Mr. Hayward, I'm sure you will get your life back and with a golden parachute back to England. But we in America are left with the terrible consequences of BP's reckless disregard for safety. I yield back my time to the gentleman from Texas, Mr. Burgess for an opening statement.

REP. MICHAEL BURGESS (R), RANKING MEMBER, OVERSIGHT & INVEST. SUBCMTE.: Thank you, Chairman Stupak. Today does open our third hearing and a very critical hearing into this subcommittee's on-going investigation into the tragic accident of the Deepwater Horizon explosion and oil spill, which continues 24 hours a day to reek economic and environmental havoc on our gulf coast.

This hearing provides the subcommittee with an important opportunity to directly question the man who ultimately leads BP, Mr. Tony Hayward, the company's chief executive officer. And BP's role has been central to the causes of the incident and to the response. Over the course of our inquiry to date, committee investigators working in a bipartisan fashion have conducted numerous interviews and briefings and reviewed tens of thousands of pages of documents. Our sub-committee staff has done an excellent job and this subcommittee has been focused on gathering the facts rather than rushing to judgment. And from this intensive effort, we begun to identify a number of serious questions about BP's decision making that led up to the disaster. Exploring these and related questions today will help us identify -

KING: You are watching our special coverage of the House Oversight and Investigative subcommittee hearing. The BP CEO Tony Hayward on the top right of your screen, and the ranking Republican member giving his opening statement on the bottom of your screen and, of course, to the left of your screen why we're here, the continuing leaking and spewing of millions of gallons of oil into the Gulf of Mexico.

Our first wow of this hearing came up just a short time ago. Joe Barton, Republican of Texas, from the Houston area said that he owed - must he apologized to Tony Hayward. He said he thought the Obama administration was involved in what he call the political shakedown, for forcing BP to put up $20 billion in an escrow account before, in Mr. Barton's view, we knew the answers of what had gone wrong and what should be done to deal with it. Most of what you will hear today is harsh sharp criticism of the BP CEO.

And you heard that from committee chairman just minutes ago. Bart Stupak saying that he had e-mails and memos saying that he believes under Mr. Hayward's leadership, BP was more interested in cutting costs and not worrying so much about safety.

As we watch the drama of this hearing unfold, I want to bring you to the conversation first here in Washington, our national political correspondent, Jessica Yellin. I said at the beginning, I did not expect Mr. Hayward to get any kind words, I was wrong. He got an apology.

JESSICA YELLIN, NATIONAL POLITICAL CORRESPONDENT: That was a pretty remarkable moment and it's fascinating to me because this really goes to the fundamental dispute conservatives in the country have with President Obama about the proper role of government.

There is a sense in the conservative movement that government should be muscular and aggressive when there's a crisis and able to come in and, for example, clean up a spill which is the one thing that government isn't able to handle right now very effectively well, but stay out of the way when it comes to corporate matters, come stay out of the way in all other things, that between private citizens and businesses, that's not the proper role for the federal government.

So no bailouts, for example, and no escrow accounts. And that's why he's calling this escrow account a shakedown. I wouldn't be surprised if this becomes a huge rallying cry in the tea party movement, another example for them of the way that government is being too involved in private industry telling them what to do.

KING: We also have, helping us get through the day, John Hofmeister, he is the former president of Shell Oil. He is in Houston this morning. Sir, a shakedown? A government shakedown? Or is the Obama administration doing the right thing here in trying to guarantee that there is an account of money set aside to not only help the workers who can't go to work today because of this but to help the environment that could take years if not decades to restore?

JOHN HOFMEISTER, FMR. SHELL OIL PRESIDENT: Well, the executive branch is responsible under the laws and regulations for granting the permits and the licenses to operate, and for BP to be able to operate, they have to be in a position to negotiate, to settle, to resolve differences of opinion with the executive branch.

I don't see it as a shakedown. I see it as a negotiated solution so that work can go forward. So I don't completely agree with Congressman Barton, although I do question the legality of what happened. But it's a negotiation. So if you have cooperative agreement between two parties, I don't think there's anything wrong with that.

KING: And when you hear Mr. Stupak reading the e-mails and the memos and the minutes of meetings and the notes BP employees saying that in his view, Mr. Stupak's view that when Tony Hayward became the CEO, he decided BP needed to be leaner. It needed to have quicker decision making process and if you believe what Mr. Stupak is saying that he says, Mr. Hayward in his view instituted a culture in which profits in getting things done took precedence over safety.

HOFMEISTER: Well, I think he's using some selective choice of statements. When I was president, if people selected just a few words of what I said, without the entire context and the meaning, I think that it would have led to a different interpretation.

We also know that Tony Hayward made a commitment to the BP organization to institute stronger global processes that had not existed, including a safety management process which was a work in progress. I don't think it was completed yet. But like Chevron or like Exxon or like Shell, safety management systems are in place to prevent this very kind of thing from happening.

KING: Let me get to ask you this question - this was brought up at the hearing when the current CEOs of the other big oil companies testified the other day, they all said to a man they would not have done what BP did here, the way they put the casing in, the way they cemented. All of the other companies said we would not have done that. Is that a fair statement?

HOFMEISTER: I think it is. I was shocked when I learned about the design of the well, knowing what I know. I'm actually not a technical person, but I know enough from being around the technical people that you have to put more safeguards into something that is this high pressured, this large of a reservoir. You don't take chances. And I will be interested to find out the explanation of why this design was chosen.

KING: And we will hear that explanation, hopefully during the course of the testimony. So far in this testimony from the Democrats, charges that you had a culture of corporate complacency, a culture that put profits over safety and that's what led to the Deepwater Horizon rig exploding and the tragedy, the economic and environmental catastrophe we see in the Gulf of Mexico.

But from the most senior Republican to speak so far, something quite different. He said yes, BP should be held accountable but Joe Barton, Republican of Texas also said this.

(BEGIN VIDEO CLIP)

BARTON: I'm ashamed of what happened in the White House yesterday. I think it is it 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 with the attorney general of the United States who is legitimately conducting a criminal investigation and has every right to do so to protect the interest of the American people participating in what amounts to a $20 billion slush fund. That's unprecedented in our nation's history, that's got no legal standing and which set, I think, a terrible precedent for the future.

(END VIDEO CLIP)

KING: Mr. Hofmeister, Joe Barton is from where you are. You are in Texas today. I assume you have known him a long time. He's been an ally of the industry. If, as you say, BP, yes, under some political pressure, but BP sat across the table and negotiated this deal with the White House, why would Joe Barton call it a shakedown and a slush fund?

HOFMEISTER: I don't know. I know Congressman Barton has very strong views on this is a nation of laws. There is no law that provides for this. I respect the fact that he has a different opinion, but were I were in such a negotiating posture, where I was on the back foot, I'd created all this damage, I would have look for a way to work cooperatively with the White House without thinking about what laws might be on the books.

KING: Let's go back into the hearing right now. Speaking, Congressman Ed Markey of Massachusetts. He is the chairman of one of the subcommittees looking into this. He is also a lawmaker who repeatedly pressured BP to make available those pictures we now have, the live feeds of the oil spewing into the Gulf of Mexico.

Here's Congressman Markey.

(JOINED IN PROGRESS)

REP. ED MARKEY (D), MASSACHUSETTS: -- who are being harmed.

We cannot wait, as unfortunately so many citizens who were victims of the Exxon Valdez spill had to wait years in order to see those families compensated. We can't lose fact -- sight of the fact that the 1984 Bo Pall (ph) disaster and the lawsuits that were related to it were only settled last week.

We have to ensure that the citizens of the Gulf are protected. In a hearing which this subcommittee conducted in New Orleans last Monday, we heard from a fisherman who brought absolutely impeccable records, which proved that he and his family had made $27,000 last May. And after examining the documents, BP gave the family $5,000.

The families in the Gulf will be crushed financially unless this compensation fund is put into place. As each day and week and month goes by, the history of these families are going to be altered. And permanently altered unless they are given the financial capacity to take care of their loved ones, their children, their families.

That's why this compensation fund is so important. That's why it is not a slush fund. That is why it is not a shakedown. It is, in fact, President Obama ensuring that a company which has just spoiled the waters of our nation is made accountable for the harm which is done to our people. A company which said for the first week that it was only 1,000 barrels of oil per day when we now know that they knew it was at least 1,000 to 14,000 barrels. A company which continues to deny there are underwater toxic plumes, a company which has not been providing the proper protective gear for the workers in the Gulf, a company which contended it could respond to a spill of 250,000 barrels per day.

No, this is not a shakedown of that company. This is the American government, President Obama, ensuring that this company is made accountable and sending a signal to all other companies that seek to treat ordinary American families in a way that can destroy their entire family's history. This is, in my opinion, the American government working at its best. This is creating truly the kind of partnership between the public and private sector that could make sure that innocent victims are not road kill as a result of corporate plans that did not actually factor in the harm that can occur to ordinary families.

So, I just could not disagree more strongly. I think that this is, in my opinion, one of the most important hearings that this Congress will ever have because it is sending a signal to any corporations out there, including the ones that testified on Tuesday that all admitted that they had no plans, either, to respond to the harm which could be done in the Gulf in one of their rigs had the same kind of catastrophic event, that they will be made accountable.

So, I thank you Mr. Chairman for holding this hearing. And I thank you, Mr. Hayward, because yesterday was the day where the page began to be turned, and we move to a new era.

KING: Massachusetts congressman Edward Markey there thanking Tony Hayward, the BP CEO for BP's commitment to that $20 billion escrow fund to help the families and the businesses affected by the BP oil spill in the Gulf of Mexico. But instead of dedicating his opening statement to the witness, Tony Hayward, Ed Markey taking his time instead to lash back at the Republican -- leading Republican in the room, Congressman Joe Barton of Texas.

Jessica Yellin is with me here in the studio. A partisan fight now breaking out. Congressman Barton saying this is a shakedown by the White House, a slush fund that it muscled out of BP. Ed Markey saying no, this is the government doing what it's supposed to do, guarentee that there's money there to protect those families and businesses.

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: It's just remarkable, speaking to the larger debate that's happening, the political debate that's happening across this country about the proper role of government. I was watching as they cut away to Hayward while Barton was making this comment. And he looked a little perplexed.

I don't know if a foreigner would understand the domestic politics of the TEA Party movement versus the Democratic party right now. He must be thinking right now, "I'm not sure why this person is apologizing to me, but I'm just going to be keeping a straight face." I will point out it brings to mind, he has hired some very top Democratic PR firms, top Democratic PR firm and top Democratic lawyer in this town to give him advice. I'm not sure they got into Tea Party politics, though.

KING: I doubt they did. One piece of advice they gave to Tony Hayward, the firms he hired, was to get himself off of television. Tony Hayward was in the initial BP ad, saying sorry to the American people and promising he could make this right. That ad was widely condemned.

Now you have a gentleman who's actually from the Gulf Coast, Darryl Willis, I believe his name is. The head of the claims process. He is the face of BP in its television advertising.

Mr. Hofmeister, John Hofmeister, the former president of Shell Oil. He is with us in Houston. As you watch this hearing so far, does anything surprise you? Is it more political than you expected?

HOFMEISTER: No. It's very typical of what I experienced over several years. You know, I think the partisanship that plays out in hearings can often times be truly disgraceful. Truly disgraceful in the sense that it gets in the way of creating sound public policy.

The American people need energy. The American people need a way forward. The partisanship we see is paralyzing the ability to do that, which is why I wrote the book I did, why we hate the oil companies, because we cannot make progress with this level of partisanship.

KING: John Hofmeister is the former president of Shell. He is with us in Houston. Jessica Yellin is with me in Washington. We have a team of reporters on Capitol Hill and across the Gulf of Mexico. We are continuing to wait for the dramatic testimony. Tony Hayward, the BP CEO. He is on the top right of your screen. He will testify and he will say that they still don't know what caused what you are seeing on the left part of your screen, the continued spewing of oil into the Gulf of Mexico. He will say they are narrowing down their investigation. He will say he is sorry as we await this dramatic testimony.

We are going to take a quick break. Stay with us. Our special coverage will continue in just a moment. (COMMERCIAL BREAK)

KING: You are watching live pictures there. At the top of your screen, the BP CEO Tony Hayward. He is listening now to opening statements from members of the House subcommittee. He will testify himself in a short bit. But first, he is listening to testimony from the key members. That is John Dingell. He is the senior Democrat, the longest serving member of the House of Representatives. Let's listen to John Dingell of Michigan.

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REP. JOHN DINGELL (D), MICHIGAN: -- of oil to spill. In each instance, we were hoping that the assurances given by BP, that this would not happen again, have been regrettably untrue. In reference to a decision on how to secure the final 1,200 feet of the well, a single casing or tieback, a BP engineer said not running the tieback saves a good deal of time and money. In reference to installing more centralizers , BP's well team leader said, "It will take ten hours to install them. I do not like this. I'm very concerned about using it." So, also, were we.

On the same matter, BP's operations drilling engineers said, "Even if the hole is perfectly straight, a straight piece of pipe even in tension will not sink the center of the hole unless it has something to centralize it." I want you to listen to this. "But who cares? It's done. End of story. It will probably be fine," and note the word probably, "and we'll get a good cement job. I would rather have to squeeze than get stuck. So guard right on the risk/reward occasion."

Mr. Chairman, the comments of our witness today reveal little sorrow for the events that have occurred. And here he said, "the Gulf of Mexico is a very big ocean. The amount of volume of oil and dispersant we are putting in is tiny in relation to the total water volume. And, then, the environmental impact of the disaster is likely to be very, very modest." I wonder if he wishes to stand on that statement today.

When Mr. Hayward responded to the claims that cleanup workers were becoming ill because of oil fumes and such, he said this: "Food poisoning is clearly a big issue." And, finally, most famously, Mr. Hayward informs us he wants his life back.

Last year, Mr. Hayward enjoyed a splendid 41 percent pay raise even as BP's profits dropped 45 percent. Now, I just happen to be a poor, Polish lawyer from Detroit. But it seems to me that this is a curious response to a drop in profits and makes me wonder what the compensation package of our witness will be this year.

Mr. Chairman again, I thank you for your diligence and hard work on this issue. I look forward to hearing from our witnesses today and look forward to working with you on this matter. Thank you.

UNIDENTIFIED MALE: Thank you, Mr. Chairman. Next, Miss Blackburn, three-minute opening statement, please. REP. MARSHA BLACKBURN (R), TENNESSEE: Thank you, Mr. Chairman, I thank you and ranking member Burgess for holding the hearing. Mr. Hayward, I thank you for your willingness to testify before this committee.

You know, when news of the BP spill began and information about the well started to circulate, it seemed that there was problems not only with BP but also with MMS bureaucracy, and that maybe the problem lay there, rather than with anything that could have gone wrong with BP. That it was there with MMS.

What we've learned and confirmed that that is not correct, that the problem does lie with BP and what went wrong. And while there are many faults with MMS and doing its job on inspection and safety oversight, most of the data now points to wrong decision making by BP's management.

And this is not the first time, and we've talked about that in several of our opening statements this morning. This is not the first time that you've been before this committee on safety problems, and certainly as recently as the Texas 2005 and Alaska '07 incidents which revealed insufficient protocols in BP's management and safety hierarchy. There was a statement from BP that you all would quote, unquote "focus like a laser on safety." And it is concerning to us that the appearance is, Mr. Hayward, that BP has not learned from previous mistakes.

So, it leaves us asking the questions of you and of BP, was this accident caused by negligence? Was it caused by risk-taking? Was it caused by cost-cutting measures by BP decision makers?

And unfortunately for citizens, beaches and wildlife all along the coastal region, they are paying a price for those misplaced decisions. BP cannot blame Mother Nature or equipment failure or even other subcontractors. Their actions have put at risk the livelihood of communities and businesses that depend on the Gulf, not only for seafood and tourism but also for energy production that this nation as a whole relies upon.

In addition, the current administration also shares a significant portion of the blame for the oil spill. I mentioned MMS earlier, and the MMS officials approved inadequate spill response plans and field inspectors, rubber-stamped inspection papers submitted by oil companies. This is another area where we as members of Congress in doing our due diligence will ask you all and MMS why.

But what is the most damaging is that the president and senior officials knew on day one the blowout preventer was not working and knew of the potential spillage. While BP shoulders much of the responsibility for the spill, the lack of effort by this administration to contain the spill has doomed the economy and wildlife of the Gulf Coast from an oil spill which could have been contained. And now recently imposed drilling moratoriums will further devastate America's energy production and destroy hundreds of thousands of jobs in the Gulf Coast region.

Thank you for being with us today, Mr. Chairman. I yield the balance of my time.

UNIDENTIFIED MALE: Thank you. I next turn to the vice chairman of the subcommittee, Mr. Braley for an opening statement. Three minutes please, sir.

REP. BRUCE BRALEY (D), IOWA: Thank you, Mr. Chairman.

Mr. Hayward, you are not going to get a lecture from me today, and you're not going to get an apology, either. Because we are here to get to the bottom of the decision-making process that BP followed, and I think, quite frankly, the people who live along the affected area of the Gulf Coast deserve those answers from you.

We were in Chalmet (ph), Louisiana last week, and we had the opportunity to hear from the variety of individuals whose lives have been devastated by this oil disaster -- and I use the word disaster specifically because I don't think spill quite captures the magnitude of what's going on. The American people are frustrated because we were first told it was a-1,000 barrel per day release, and then a week later, that was updated 5,000 and then at the end of May, it was adjusted upward 15,000 to 19,000 barrels per day, and this week, we were informed that it could be as high as 60,000 barrels per day. That works out to 2.5 million gallons today a day, 17.5 million gallons per week. And over the length of this disaster, it could be up to the level of the largest release of oil in the North American continent in history, unintended.

One of the things that I think we need to know about today is the decisions that your company made and who made them --

KING: You're listening to the continuing open statements of the House investigative and oversight subcommittee hearing today. The BP CEO, Tony Hayward, he is at the top right of your screen. He will testify shortly, but first each member of the committee gets to make an opening statement. Congressman Braley of Iowa just said he would not lecture Mr. Hayward but is going through his list of questions as they prepare from the BP CEO.

So far, we have heard Democrats, mostly scornful saying they believe under Mr. Hayward BP had a culture of profits, getting things done quickly, putting safety lower on the list. Most Republicans also say there are tough questions facing BP. But one Republican, Joe Barton of Texas said he owed Mr. Hayward an apology. He said the $20 million fund in escrow money BP agreed to set aside to compensate victims in the Gulf Coast "a slush fund" created by the Obama White House and a shakedown.

Ali Velshi is among our correspondents down in the Gulf region. Ali, as you listen to this, based on your conversations with so many people in the region, obviously they want to hear most from Mr. Hayward. What do you make of it so far?

ALI VELSHI, CNN CORRESPONDENT: When the president announced their in his primetime speech that we were involved in the other night, I was with a group of shrimpers from LaFeet (ph), Louisiana. And their first question was the president says he wants to ask BP to put this aside in an account separately administered by a third party. And the reaction was we don't trust the administration to do this. We don't trust BP to do this. Who is the third party? We want to know how the money will get to us. The feeling around here is we can have high-level conversations about escrow accounts and money. How does it get through to the people who actually need it?

You discussed it with respect to the claims process. The fact is, the frustration on the ground, as you know, John, from being around here, these are not people who live high on the hog. If you work in the fishing industry, you are a sustenance worker. If you're in shrimp or oysters, the prices have been coming down. You make a living, and it's something your father did and your kids might do after you.

That's the frustration. How do we get this money and who is going to be running it?

KING: Ali Velshi for us along the Gulf Coast. One of our many correspondents here.

Let's check in back quickly with the hearing on Capitol Hill to get a sense of what is happening. Just moments ago, remember, we're watching the oil spill here -- but remember just moments ago, they played some sound from the widows. Eleven men died on the Deepwater Horizon, and as they prepare to question Mr. Hayward, they are reminding him of the stakes.

This is Congressman Phil Gingrey of Georgia. Let's listen for just a minute.

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REP. PHIL GINGREY (R), GEORGIA: To all of the hearings and legislative consideration, we must remember those lives and the lives of their families as we just saw that were forever changed on that fateful April day, and we certainly must continue to keep them in our thoughts and prayers. And further, we have an obligation not only to the families but also to everyone affected by the aftermath to get to the bottom of the causes of this accident and the failure to secure the situation and stop the devastation wrecked upon the Gulf Coast.

Mr. Chairman, we have an opportunity in this oversight hearing to ask questions that get to the facts of what happened. However, today's hearing is incomplete. We can only ascertain half of the story today because we do not have anyone representing the administration, the Mineral Management Service, to discuss their oversight role and their responsibility in assuring that an accident like this didn't happen.

Deep ocean drilling is not new. In fact, we have been doing it for decades in the Gulf Coast. Why did this happen now? I've heard some assert it was lax oversight of the previous administration that led to this accident. If that's the case, why did this not happen during the last decade? Why did this occur almost a year and a half into the current administration? We need to hear from our own Department of Interior and Mineral Management Services. Certainly, Mr. Hayward should be prepared to answer for BP's responsibility, but we will also need answers from the administration so we can demand accountability and implement prudent reforms to return us to safe drilling in our oceans. Because simply saying no is not a realistic answer.

I further realize there are some in this administration who have a penchant for not letting a crisis go to waste. But for a nation dependent on foreign oil, for a nation with unemployment hovering at 10 percent, we can't just say we can't do this. We can't take our ball and go home when the consequences mean a weaker America. Everyone depending on foreign fuels are all too inclined it seems to let jobs leave this country.

No, Mr. Chairman, we have to under what happened on and leading up to and on April the 20th. We need to answer those questions to determine if the rules or the agency oversight was insufficient, or if this was purely an act of negligence or wanton disregard for sound regulations. Now, we can try to enact the perfect reform that ensures this never happens again. But it will not change the past, nor --

KING: You are listening to Republican Congressman Phil Gingrey of Georgia. He is making a key Republican point emerging in the early hour of this hearing. The BP CEO, Tony Hayward, we are waiting to hear him testify. What Congressman Gingery and other Republicans are saying is, yes, BP has a lot to answer for but that the Obama administration has a lot to answer for. Saying it has been in charge fore15 months now, and that the Interior Department under this president is the one that granted the waivers and the licenses and the permits and the leases for BP to be out of the the Deepwater Horizon rig. An important theme to watch as we continue through this critical hearing today.

As we watch the hearing, there is a huge reaction on line to the proceedings as there has been throughout the past eight weeks of the drama. Josh Levs is tracking that for us. Josh.

JOSH LEVS, CNN CORRESPONDENT: Yes, hi there, John. We're following this all throughout the day. In fact, I'm camped out at a computer throughout the testimony. We're hearing from you, live Tweeting. We're Facebooking.

Let me show you a few of the examples we've been getting here. This is from our blog, CNN.com/josh. I want to know why he thought he would get away with this. "I really hope that the reps do in fact grill him and do it with a lot of heat." People talking about what they want to hear from Tony Hayward. Others saying things like, "This grilling serves no purpose. Tony Hayward is going to tell us what we want to hear, we are going to watch a bunch of our elected representatives looking indignant. It's a total waste of our time." That's from Butch.

Now here from Diana. "I'm interested in knowing more about the disaster plans for all BP's oil rig platforms. A lot of people are saying there is some actual information they are hoping to get out of today's proceedings. Don't know if they will. This is from Elvia. "Congress needs to look at its own regulations and the laws which permitted this disaster. Tony is not the only guilty party."

Checking over to Facebook now. "The truth would be nice for a change." That is from Beverly Joe. "Mr. Waxman told it to Mr. Hayward straight. It's about time he is held to accountability." This is from Kara.

Let's get in one more from Facebook. "It is very sad that it happened, but it was an accident. It comes with the industry." Chris said that and now, lots of people are jumping on Chris for that. They're having a debate on Facebook.

We have time to two little tweets. "He should show good faith in helping the affected communities like giving up some benefits he is receiving from BP."

And the last tweet here. "We stopped the leak! I don't think he could say anything better."

We have a screen I think, showing you how you can send us tweets and Facebook messages. Join us on the blog throughout the entire day, everything happens on Capitol Hill. And John, we will be following those and have more later today.

KING: Thanks, Josh. We will continue to listen to everything you're saying online as we watch the BP CEO. He is in the hot seat right now in Congress. He is listening now to the opening statements of the members of this committee. But Tony Hayward will be testifying in the hour ahead.

We are going to take a quick break. Our special coverage will continue in just a moment.

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