[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

NORTH AMERICAN OFFSHORE
ENERGY: MEXICO AND CANADA
BOUNDARY TREATIES AND NEW
DRILLING BY CUBA AND BAHAMAS

=======================================================================

OVERSIGHT HEARING

before the

SUBCOMMITTEE ON ENERGY AND
MINERAL RESOURCES

of the

COMMITTEE ON NATURAL RESOURCES
U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

__________

Wednesday, November 2, 2011

__________

Serial No. 112-78

__________

Printed for the use of the Committee on Natural Resources

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COMMITTEE ON NATURAL RESOURCES

DOC HASTINGS, WA, Chairman
EDWARD J. MARKEY, MA, Ranking Democrat Member

Don Young, AK Dale E. Kildee, MI
John J. Duncan, Jr., TN Peter A. DeFazio, OR
Louie Gohmert, TX Eni F.H. Faleomavaega, AS
Rob Bishop, UT Frank Pallone, Jr., NJ
Doug Lamborn, CO Grace F. Napolitano, CA
Robert J. Wittman, VA Rush D. Holt, NJ
Paul C. Broun, GA Raul M. Grijalva, AZ
John Fleming, LA Madeleine Z. Bordallo, GU
Mike Coffman, CO Jim Costa, CA
Tom McClintock, CA Dan Boren, OK
Glenn Thompson, PA Gregorio Kilili Camacho Sablan,
Jeff Denham, CA CNMI
Dan Benishek, MI Martin Heinrich, NM
David Rivera, FL Ben Ray Lujan, NM
Jeff Duncan, SC John P. Sarbanes, MD
Scott R. Tipton, CO Betty Sutton, OH
Paul A. Gosar, AZ Niki Tsongas, MA
Raul R. Labrador, ID Pedro R. Pierluisi, PR
Kristi L. Noem, SD John Garamendi, CA
Steve Southerland II, FL Colleen W. Hanabusa, HI
Bill Flores, TX Vacancy
Andy Harris, MD
Jeffrey M. Landry, LA
Jon Runyan, NJ
Bill Johnson, OH
Mark Amodei, NV

Todd Young, Chief of Staff
Lisa Pittman, Chief Counsel
Jeffrey Duncan, Democrat Staff Director
David Watkins, Democrat Chief Counsel
------

SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES

DOUG LAMBORN, CO, Chairman
RUSH D. HOLT, NJ, Ranking Democrat Member

Louie Gohmert, TX Peter A. DeFazio, OR
Paul C. Broun, GA Madeleine Z. Bordallo, GU
John Fleming, LA Jim Costa, CA
Mike Coffman, CO Dan Boren, OK
Glenn Thompson, PA Gregorio Kilili Camacho Sablan,
Dan Benishek, MI CNMI
David Rivera, FL Martin Heinrich, NM
Jeff Duncan, SC John P. Sarbanes, MD
Paul A. Gosar, AZ Betty Sutton, OH
Bill Flores, TX Niki Tsongas, MA
Jeffrey M. Landry, LA Vacancy
Bill Johnson, OH Edward J. Markey, MA, ex officio
Doc Hastings, WA, ex officio

------
CONTENTS

----------
Page

Hearing held on Wednesday, November 2, 2011...................... 1

Statement of Members:
Holt, Hon. Rush D., a Representative in Congress from the
State of New Jersey........................................ 4
Prepared statement of.................................... 5
Lamborn, Hon. Doug, a Representative in Congress from the
State of Colorado.......................................... 1
Prepared statement of.................................... 3
Markey, Hon. Edward J., a Representative in Congress from the
State of Massachusetts..................................... 16
Prepared statement of.................................... 17

Statement of Witnesses:
Antrim, Caitlyn, Executive Director, Rule of Law Committee
for the Oceans............................................. 42
Prepared statement of.................................... 44
Bromwich, Hon. Michael R., Director, Bureau of Safety and
Environmental Enforcement, U.S. Department of the Interior. 6
Prepared statement of.................................... 8
Claver-Carone, Mauricio, Executive Director, Cuba Democracy
Advocates.................................................. 26
Prepared statement of.................................... 29
Pinon, Jorge R., Visiting Research Fellow, Florida
International University Latin American and Caribbean
Center, Cuban Research Institute........................... 31
Prepared statement of.................................... 33
Salerno, Vice Admiral Brian, Deputy Commandant for
Operations, U.S. Coast Guard............................... 12
Prepared statement of.................................... 13
Statement before the Senate Energy and Natural Resources
Committee dated October 18, 2011, submitted for the
record................................................. 15
Whittle, Daniel J., Senior Attorney and Cuba Program
Director, Environmental Defense Fund....................... 37
Prepared statement of.................................... 38

Additional materials supplied:
Council of the Americas, Washington, D.C., Statement
submitted for the record................................... 62
Rivera, Hon. David, a Representative in Congress from the
State of Florida, Statement by Jorge Pinon before the House
Oversight and Government Reform Committee's Subcommittee on
National Security and Foreign Affairs dated April 29, 2009. 53
Ros-Lehtinen, Hon. Ileana, Hon. Albio Sires, Hon. Mario Diaz-
Balart, and Hon. David Rivera, Members of the U.S. House of
Representatives, Letter to President Barack Obama submitted
for the record............................................. 24

OVERSIGHT HEARING ON ``NORTH AMERICAN OFFSHORE ENERGY: MEXICO AND
CANADA BOUNDARY TREATIES AND NEW DRILLING BY CUBA AND BAHAMAS.''

----------

Wednesday, November 2, 2011

U.S. House of Representatives

Subcommittee on Energy and Mineral Resources

Committee on Natural Resources

Washington, D.C.

----------

The Subcommittee met, pursuant to call, at 10:06 a.m. in
Room 1324, Longworth House Office Building, Hon. Doug Lamborn
[Chairman of the Subcommittee] presiding.
Present: Representatives Lamborn, Broun, Rivera, Duncan of
South Carolina, Holt, and Markey [ex officio].
Mr. Lamborn. The Committee will come to order. The Chairman
notes the presence of a quorum, which under Committee Rule 3[e]
is two Members.
The Subcommittee on Energy and Mineral Resources is meeting
today to hear testimony on an oversight hearing on the North
American Offshore Energy: Mexico and Canada Boundary Treaties
and New Drilling by Cuba and Bahamas.
Under Committee Rule 4[f], opening statements are limited
to the Chairman and Ranking Member of the Subcommittee.
However, I ask unanimous consent to include any other Members'
opening statements in the hearing record if submitted to the
clerk by close of business today. Hearing no objection, so
ordered.
I recognize myself for five minutes.

STATEMENT OF HON. DOUG LAMBORN, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF COLORADO

Mr. Lamborn. At a time when world demand for energy is
increasing, businesses that provide us with the oil and
electricity that we use every day will continue to seek out new
places around the world to develop these resources. We want to
be attracting this energy development to our shores here in the
United States. That way, the American people can compete for
the jobs that come from energy development and our nation can
reap the economic and national security benefits of increased
U.S. energy development.
Unfortunately, as previous hearings we have conducted this
year have so clearly pointed out, uncertainty is forcing
companies to look elsewhere in globally competitive markets. As
you can see from today's hearing, you don't have to venture too
far to find new areas for oil and natural gas development.
Cuba's lease blocks are only miles from our shores.
This is the subject of today's hearing. We will cover two
boundary disputes that are hindering U.S. energy development,
one with Mexico and one with Canada. It is my hope that an
expeditious and fair agreement between the U.S. and the other
countries will give the certainty necessary to move forward
with energy development along the U.S.-Mexico boundary and open
the western gap in the Gulf of Mexico and in the disputed areas
of the Beaufort Sea in Alaska.
Additionally, we will be discussing Cuba and the Bahamas'
new pursuit of offshore resources development and what that
development means to the United States. It is my hope that we
can hear from BSEE and the U.S. Coast Guard today on the
implications of this drilling in waters adjacent to the U.S.
and how the inspection of Cuba's drilling rig announced at the
Senate hearing on this issue will be conducted and what will
happen afterwards.
It was my hope that the Committee would hear from all U.S.
Government entities involved in issuing licenses and engaged in
U.S.-Cuba drilling issues. However, the Departments of State,
Treasury and Commerce all declined to participate in today's
hearing.
There has been growing concern that companies will be
allowed to expand their engagement with Cuba and that this
Administration is weakening the U.S. embargo on Cuba, a state
sponsor of terrorism. A recent trip to Cuba by the President's
own chairman of the Oil Spill Commission and licenses and
waivers for companies to sell technology to Cuba raise many
concerns about this Administration's willingness to support the
drilling efforts of the Cuban regime.
Companies that are interested in engaging in support of
Cuba's efforts should be aware that they are under the greatest
of scrutiny, and efforts to circumvent U.S. law will be closely
monitored and appropriate actions taken. Like dealings with
Iran, engagement with a Cuban dictatorship that sponsors
terrorism is a road fraught with danger.
Our second panel will answer more philosophical questions
about the laws of our nation and how we can work within the
legality of these laws as we look toward the implications of
Cuba's desire to pursue offshore drilling.
Offshore energy development in the U.S. is conducted with
great transparency and extensive regulatory oversight. There is
an entirely different story in Cuba where very little is
considered transparent, especially with a brutal regime that
has a huge list of human rights violations. A public hearing
such as we are conducting today would not be allowed to occur
under the Castro regime.
It is in the interest of this Committee to find out exactly
how our nation is preparing to mitigate any problems that may
occur as a result of Cuba's untested pursuit of offshore
drilling. The Bahamas, Mexico and Canada are completely
different examples of those nations pursuing offshore drilling
in waters adjacent to the United States in a transparent and
open manner that shows how our nations can work together to
ensure the utmost safety.
Given the importance of these issues, I greatly look
forward to the testimony we will hear today, and I thank all
our witnesses today for answering questions on these diverse
issues, all of which significantly impact our nation.
Now I would like to recognize the Ranking Member of the
Subcommittee, Representative Holt of New Jersey, for five
minutes.
[The prepared statement of Mr. Lamborn follows:]

Statement of The Honorable Doug Lamborn, Chairman,
Subcommittee on Energy and Mineral Resources

At a time when world demand for energy is increasing, businesses
that provide us with the oil and electricity that we use every day will
continue to seek out new places around the world to develop these
resources. We want to be attracting this energy development to OUR
SHORES here in the United States. That way, the American people can
compete for the jobs that come from energy development--and our nation
can reap the economic and national security benefits of increased U.S.
energy development.
Unfortunately, as previous hearings we have conducted this year
have so clearly pointed out: UNCERTAINTY is forcing companies to look
elsewhere in a globally competitive market. As you can see from today's
hearing--you don't have to venture too far to find new areas for oil
and natural gas development. Cuba's lease blocks are only miles from
our shores.
This is the subject of today's hearing--we will cover two boundary
disputes that are hindering U.S. energy development, one with Mexico
and one with Canada. It is the hope that an expeditious and fair
agreement between the US and the other countries will give the
certainty necessary to move forward with energy development along the
U.S.--Mexico boundary and open the ``western gap'' in the Gulf of
Mexico and in the disputed areas of the Beaufort Sea in Alaska.
Additionally, we will be discussing Cuba and the Bahamas' new
pursuit of offshore resources and development- and what that
development means to the United States. It is my hope that we can hear
from BSEE and the U.S. Coast Guard today on the implications of this
drilling in waters adjacent to the U.S. and how the inspection of
Cuba's drilling rig announced at the Senate hearing on this issue will
be conducted and what will happen afterwards.
It was my hope that the Committee would hear from all US government
entities involved in issuing licenses and engaged in U.S.--Cuba
drilling issues. However, the Departments of State, Treasury and
Commerce all declined to participate in today's hearing. There has been
growing concern that companies will be allowed to expand their
engagement with Cuba and that this administration will weaken the U.S.
embargo on Cuba, a state sponsor of terrorism. A recent trip to Cuba by
the President's own Chairman of the Oil Spill Commission and licenses
and waivers for companies to sell technology to Cuba raise many
concerns about this Administration's willingness to support the
drilling efforts of the Cuban regime. Companies that are interested in
engaging in support of Cuba's efforts should be aware that they are
under the greatest of scrutiny and efforts to circumvent US law will be
closely monitored and appropriate actions taken. Like dealings with
Iran, engagement with a Cuban dictatorship that sponsors terrorism is a
dangerous road.
Our second panel will answer more philosophical questions about the
laws of our nation--and how we can work within the legality of these
laws as we look towards the implications of Cuba's desire to pursue
offshore drilling.
Offshore energy development in the U.S. is conducted with great
transparency and extensive regulatory oversight. This is an entirely
different story in Cuba where very little is considered
``transparent''--especially with a brutal regime that has a laundry
list of human rights violations. A public hearing such as we are
conducting today on this subject would not be allowed to occur under
the Castro regime. It is in the interest of this Committee to find out
exactly how our nation is preparing to mitigate any problems that may
occur as a result of Cuba's untested pursuit in offshore drilling. The
Bahamas, Mexico and Canada are completely different examples of a
nation's pursuing offshore drilling in waters adjacent to the United
States in a transparent open manner that shows our nation's can work
together to ensure the utmost safety.
Given the importance of these issues, I greatly look forward to the
testimony we will hear today and I thank all of our witnesses today for
answering questions on these diverse issues--all of which significantly
impact our nation.
______

STATEMENT OF HON. RUSH D. HOLT, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF NEW JERSEY

Mr. Holt. Thank you, Mr. Chairman, and I thank the
witnesses for coming.
In 2008, Vice President Dick Cheney asserted that China was
drilling off Cuba. He said that with words dripping with
import--as close as 60 miles to the Florida Keys--as a way to
push for expanded drilling off of U.S. beaches on the East
Coast and the eastern Gulf of Mexico. However, China was not
actually drilling off Cuba, and Mr. Cheney's claims were
unfounded.
Now a Spanish company, along with Norwegian and Indian
partners, has announced plans to begin exploratory drilling off
Cuba, roughly 80 miles from Florida, next January. Because of
the embargo on Cuba, the Chinese-built drill rig will be used
to conduct the exploration. However, I feel that rather than
having a real discussion today about the ways we should engage
Cuba to ensure that drilling takes place safely, we will be
hearing about, well, the case for expanded drilling in the
United States.
The independent blue ribbon BP Oil Spill Commission
concluded that it is in our country's national interest to
negotiate now with these near neighbor--meaning Mexico and
Cuba--to agree on a common, rigorous set of standards and a
system for regulatory oversight. The same operator adherence to
effective safety culture called for in this report, along with
protocols to cooperate on containment and response strategies
and preparedness in case of a spill.
We should develop the strongest possible safety standards
for offshore drilling here in the United States and work with
countries with whom we share a maritime boundary to see that
they adhere to such standards. Oil spills don't recognize
international boundaries. In fact, the Obama Administration is
already working to develop a protocol to establish a common set
of safety and environmental standards with Mexico for the Gulf
of Mexico. These negotiations are ongoing I believe.
In addition, the Administration is working with Repsol to
ensure that the United States Coast Guard and Interior
Departments can inspect any rig, such as the Chinese rig, prior
to entering Cuban waters. The Administration should also
consider issuing a general license to allow U.S. companies and
personnel to provide assistance in the event of a spill.
In addition, the United States is working to negotiate
maritime boundaries with countries like Canada in the Arctic
Ocean, and I am sorry to say Republicans in the Senate are
weakening our negotiating position. Republican Senators have
blocked the ratification of the Law of the Sea Treaty, which
would improve our ability to submit international claims to the
Continental Shelf beyond 200 miles in places like the Arctic.
As a result, we are at a disadvantage in working to ensure
that the United States and U.S. companies can claim those
resources that are rightfully ours. In fact, what we are seeing
in the Arctic Ocean as countries move to claim the seabed and
the minerals below it could only be described as a black gold
rush, and the United States is sitting on the sidelines because
Senate Republicans refuse to ratify the Law of the Sea Treaty.
I expect today that people, some here, will be expressing
their fears rather than expressing facts and rather than
looking to solve actual problems. We will hear that Cuba is
drilling and we are not. We will likely hear these claims
despite the fact that U.S. oil production is at its highest
level in nearly a decade and oil production from the Gulf of
Mexico is higher than it was during the final year of the
previous Administration.
In a symbolic move, Russia placed a flag on the sea floor
at the North Pole in 2007, and both Russia and Canada intend to
submit claims to the United Nations to extend their Continental
Shelf in the coming years. If Republicans were serious about
ensuring that U.S. interests and resources were protected in
the Arctic, then they would end their opposition to
ratification of the Law of the Sea Treaty.
I hope we will be dealing with the facts today. This is
really not the Committee to be discussing embargoes. It is the
Committee to discuss the environment and the protection of our
environment, jobs, and resources. I yield back my time.
[The prepared statement of Mr. Holt follows:]

Statement of The Honorable Rush D. Holt, Ranking Member,
Subcommittee on Energy and Mineral Resources

Thank you Mr. Chairman,
In 2008, Vice President Dick Cheney asserted that China was
drilling off of Cuba, as close as 60 miles from the Florida Keys, as a
way to push for expanded drilling off U.S. beaches on the East Coast
and in the Eastern Gulf of Mexico. However, China was not actually
drilling off of Cuba and Mr. Cheney's claims were unfounded.
Now, a Spanish company, Repsol, has announced plans to begin
exploratory drilling off of Cuba roughly 80 miles from Florida in
January of next year. Because of the embargo on Cuba, a Chinese-built
drill rig will be used to conduct the exploration. However, I fear that
rather than having a real discussion today about the ways that we
should engage Cuba to ensure that this drilling takes place safely, the
majority will use this pending action to once again try to make the
case for expanded drilling off the United States.
The independent, blue-ribbon BP Oil Spill Commission concluded that
``it is in our country's national interest to negotiate now with these
near neighbors [Mexico and Cuba] to agree on a common, rigorous set of
standards, a system for regulatory oversight, and the same operator
adherence to the effective safety culture called for in this report,
along with protocols to cooperate on containment and response
strategies and preparedness in case of a spill.'' We should develop the
strongest possible safety standards for offshore drilling here in the
United States and work with countries with whom we share a maritime
boundary to see that they adhere to these standards. Oil spills don't
recognize international boundaries.
In fact, the Obama Administration is already working to develop a
protocol to establish a common set of safety and environmental
standards with Mexico for the Gulf. Those negotiations are ongoing.
In addition, the Administration is working with Repsol to ensure
that the U.S. Coast Guard and Interior Department inspectors can
inspect the Chinese rig prior to it entering Cuban waters. The
Administration should also consider issuing a general license to allow
U.S. companies and personnel to swiftly provide assistance in the event
of a spill.
In addition, as we are working to negotiate maritime boundaries
with countries like Canada in the Arctic Ocean, Republicans in the
Senate are weakening our negotiating position.
Republican Senators have blocked ratification of the Law of the Sea
Treaty, which would improve our ability to submit international claims
to our continental shelf beyond 200 miles in places like the Arctic. As
a result, we are at a disadvantage in working to ensure that the United
States and U.S. companies can claim those resources that are rightfully
ours. In fact, what we are seeing in the Arctic Ocean, as countries
move to claim the seabed and the minerals below it, could only be
described as a black gold rush. And the United States is sitting on the
sidelines because Senate Republicans refuse to ratify the Law of the
Sea Treaty.
I expect that we are likely going to hear a lot of the same fear
mongering today that we heard in 2008. That Cuba is drilling and we are
not. We will likely hear these claims despite the fact that U.S. oil
production is at its highest level in nearly a decade and oil
production from the Gulf of Mexico is higher than it was during the
final year of the Bush Administration.
In a symbolic move, Russia placed a flag on the sea floor at the
North Pole in 2007. And both Russia and Canada intend to submit claims
to the United Nations to extend their continental shelf in the coming
years.
If Republicans were serious about ensuring that U.S. interests and
resources were protected in the Arctic, they would end their opposition
to ratification of the Law of the Sea Treaty.
I yield back.
______

Mr. Lamborn. OK. Thank you. Before I invite the witnesses
forward, I ask unanimous consent that the gentleman from
Florida, Mr. Bilirakis, and the gentleman from Nevada, Mr.
Amodei, who is a member of the Committee but not this
Subcommittee, be allowed to join the Members of this
Subcommittee on the dais and participate in the hearing. These
Members do not count for a quorum and cannot vote. Without
objection, so ordered.
I now invite forward The Honorable Michael Bromwich,
Director of Bureau of Safety and Environmental Enforcement,
BSEE, and Vice Admiral Brian Salerno, Deputy Commandant for
Operations, U.S. Coast Guard.
Like all our witnesses, your written testimony will appear
in full in the hearing record, so I ask that you keep your oral
statements to five minutes as outlined in the invitation letter
to you and under Committee Rule 4[a]. Our microphones are not
automatic, so you need to turn them on when you are ready to
begin.
I will also explain how our timing lights work. When you
begin to speak, our clerk will start the timer and a green
light will appear. After four minutes a yellow light appears,
and at that time you should begin to conclude your statement.
At five minutes the red light will come on.
Director Bromwich, thank you for being here, and you may
begin.

STATEMENT OF HON. MICHAEL BROMWICH, DIRECTOR, BUREAU OF SAFETY
AND ENVIRONMENTAL ENFORCEMENT

Mr. Bromwich. Thank you very much, Mr. Chairman, Mr. Holt
and Members of the Committee. I am happy to be here today to
discuss issues relating to oil and gas exploration in waters
that border the United States Outer Continental Shelf.
As you know, the blowout and oil spill from the Macondo
well last year prompted the most aggressive and comprehensive
reforms to U.S. offshore oil and gas regulation in our history.
Our reforms are designed to ensure that the exploration and
development of oil and gas resources in U.S. waters proceed
safely and with appropriate protection for ocean environments
and our coastlines.
But the risks to U.S. waters and shores posed by offshore
drilling are not limited to activities on the U.S. OCS. As a
result, we have taken steps to try to improve drilling
standards and practices as well as oil spill response
preparedness for operations in foreign waters that could have
an impact on our coastline.
We are working with key agencies across the Federal
government, including the State Department, Coast Guard, EPA,
NOAA and others, as well as with industry, oil spill response
and blowout containment companies and our international
counterparts in the Gulf of Mexico, in the Arctic and along our
maritime boundaries with Canada.
More specifically, we are working closely with other
Federal agencies to address the threat posed by offshore
drilling and a potential oil spill in neighboring parts of the
Gulf of Mexico that could affect U.S. waters, shores and
interests. Several other countries on or near the Gulf of
Mexico are expected to move forward with offshore drilling in
their exclusive economic zones in the near future.
The Spanish oil company, Repsol, as has been mentioned, has
announced its intention to drill offshore wells in Cuba's
waters using a newly constructed mobile offshore drilling unit.
In the near future, there also will likely be offshore drilling
activity in the EEZs of the Bahamas and Jamaica and continuing
offshore activity in Mexico's EEZ.
The U.S. Government is taking steps to protect our waters
and coastal resources by promoting safety through prevention
and by preparing response contingencies in the event of a
spill. These activities include communicating with Repsol to
encourage its compliance with U.S. safety and environmental
standards, cooperating with our regulatory agency counterparts
in the region, including Mexico, through bilateral and
multilateral mechanisms to develop common safety standards and
taking steps to ensure that U.S. resources are available to
respond to a spill.
The simple fact is we do not have regulatory authority over
Repsol's activities in Cuba, but beginning in February of this
year Repsol has voluntarily provided us information regarding
its drilling and oil spill response plans. We have had numerous
contacts with the company, and we have made it clear that we
expect it to adhere to the highest environmental health and
safety standards and to have adequate prevention, mitigation
and remediation systems in place in the event of an incident.
Repsol officials have stated publicly that in carrying out
its exploratory drilling plans in Cuban waters it will adhere
to U.S. regulations and the highest industry standards. Repsol
has also offered U.S. agencies an opportunity to board the
mobile offshore drilling unit that it intends to use in Cuban
waters to inspect the vessel and drilling equipment and to
review relevant documentation.
To protect U.S. interests, we have sought to gather
information on the unit's operation, technology and safety
equipment. BSEE and the Coast Guard are planning to coordinate
a joint visit to the unit that would occur shortly before the
rig is scheduled to enter Cuban waters.
In addition to keeping BSEE regularly informed of its
plans, Repsol has expressed a desire to keep U.S. regulators
and spill response planners apprised of its oil spill
preparedness activities offshore Cuba. Along with other U.S.
representatives, BSEE has already witnessed a tabletop spill
response exercise. During the exercise, Repsol's spill
management team mobilized to respond to a hypothetical spill.
Beyond our specific engagement with Repsol, BSEE has been
engaged with our regulatory counterparts in the Gulf of Mexico
in an effort to harmonize drilling safety standards in the
region. BSEE and its predecessor agencies have been
collaborating with officials from all levels of the Mexican
Government since the late 1990s, and this cooperation has
increased substantially since the creation of the new Mexican
Regulatory Commission.
The U.S. Government will immediately use all appropriate
resources and authorities to conduct response operations in the
event of an oil spill from activities in the region that
threaten U.S. waters or its coastline. The Administration has
engaged state and local governments and private parties that
might be affected by such a spill. We will continue with active
support of these efforts to ensure that appropriate plans and
resources are in place to respond promptly and effectively to
an oil spill that reaches U.S. waters.
The Gulf of Mexico is not the only area in which we are
proactively working on issues related to a potential oil spill,
and my prepared testimony discusses the ways in which DOI and
BSEE specifically are engaged in a number of multilateral and
bilateral initiatives for oil spill preparedness and response
in the Arctic and with Canada.
We view engagement with our foreign counterparts in the
areas of shared interest as a central part of our efforts to
protect U.S. environmental and economic interests. Thank you
very much, and I look forward to your questions.
[The prepared statement of Mr. Bromwich follows:]

Statement of Michael R. Bromwich, Director, Bureau of Safety and
Environmental Enforcement, United States Department of the Interior

Mr. Chairman and Members of the Committee,
I am pleased to be here today to discuss oil and gas exploration in
North American waters that border the United States Outer Continental
Shelf (OCS). As Director of the Bureau of Safety and Environmental
Enforcement, the agency in charge of enforcing safety and environmental
regulations on the U.S. OCS, I would like to share with you information
on the actions we have taken to ensure that oil and gas operations in
neighboring waters are done in as safe and environmentally responsible
manner as possible, and to ensure that the U.S. responds appropriately
to protect U.S. interests in the event of a spill originating in
foreign waters that may affect adjacent U.S. waters and shorelines.
As you know, the blowout and oil spill from the Macondo well last
year prompted the most aggressive and comprehensive reforms to offshore
oil and gas regulation and oversight in U.S. history. Our new standards
and other reforms are designed to ensure that the exploration and
development of oil and gas resources in U.S. waters proceeds safely and
with appropriate protections for ocean environments and our coastlines.
Because the risks to U.S. waters and shores posed by offshore
drilling are not limited to the activities on the U.S. OCS, the
Department of the Interior (DOI) and my agency have taken steps to
improve drilling standards and practices, as well as oil spill response
preparedness, for operations in foreign waters that could have an
impact our coastline. DOI and the Bureau of Safety and Environmental
Enforcement (BSEE) are engaged with the key agencies across the federal
government--including the State Department, United States Coast Guard
(USCG), Environmental Protection Agency (EPA), National Oceanic and
Atmospheric Administration (NOAA) and others--as well as with industry,
oil spill response and blowout containment companies, and our
international counterparts in the Gulf of Mexico, in the Arctic and
along our maritime boundaries with Canada.
Status of Response Capability and Readiness in the Gulf of Mexico
DOI and BSEE are working closely with other federal agencies to
address the threat of an oil spill in neighboring parts of the Gulf of
Mexico that could affect U.S. waters, shores and interests. Several
other countries on or near the Gulf of Mexico are expected to proceed
with offshore drilling in their exclusive economic zones (EEZ) in the
near future. As you know, the Spanish oil company Repsol has announced
its intent to drill offshore wells in Cuba's waters using a newly
constructed mobile offshore drilling unit (MODU), the Scarabeo 9. In
the near future, there also likely will be offshore drilling activity
in the EEZs of the Bahamas and Jamaica and continuing offshore activity
in Mexico's EEZ, including possible activity along the U.S.-Mexico
maritime boundary pursuant to a transboundary agreement between the two
countries, which is currently under negotiation. Formal negotiations of
the agreement, which would advance the shared commitment of Presidents
Obama and Calderon to promote the safe, efficient and equitable
development of transboundary hydrocarbon reservoirs, began in August
2011. Multiple rounds of negotiations have followed, and the parties
hope to have a final agreement by the end of the year.
The U.S. government is taking steps to protect U.S. waters and
environmental and economic resources by promoting drilling safety to
prevent spills in the first place and by preparing response
contingencies in the event of a spill. These activities include: (1)
communicating with Repsol to encourage its compliance with U.S. safety
and environmental standards; (2) cooperating with our regulatory agency
counterparts in the region, including Mexico, through bilateral and
multilateral mechanisms to develop common safety standards; and (3)
taking steps to ensure that U.S. resources are available to respond to
a spill.
1. Engagement with Repsol
While BSEE does not have regulatory authority over Repsol's
activities in Cuba, beginning in February of this year, Repsol has
voluntarily provided us information regarding its plans related to
drilling and oil spill response. In our numerous communications with
Repsol, we have made clear that we expect it to adhere to industry and
international environmental, health, and safety standards and to have
adequate prevention, mitigation, and remediation systems in place in
the event of an incident. Repsol officials have stated publicly that in
carrying out its exploratory drilling plans in Cuban waters, it will
adhere to U.S. regulations and the highest industry standards. Repsol
has offered U.S. agencies an opportunity to board the Scarabeo 9 rig
that Repsol intends to use in Cuban waters to inspect the vessel and
drilling equipment and to review relevant documentation. Given the
proximity of drilling to U.S. waters, and considering the serious
consequences a major oil spill would have on our economic and
environmental interests, we have welcomed the opportunity to gather
information on the rig's operation, technology, and safety equipment.
BSEE and the Coast Guard are coordinating a joint visit to the Scarabeo
9 that will occur shortly before the rig is scheduled to enter Cuban
waters.
In addition to keeping BSEE regularly informed of its plans, Repsol
has expressed a desire to keep U.S. regulators and spill response
planners appraised of its oil spill preparedness activities offshore
Cuba. Along with other U.S. representatives, BSEE has already witnessed
a table-top spill response exercise held at the Repsol office in
Trinidad.
During the exercise, Repsol's spill management team mobilized to
respond to a hypothetical spill and demonstrated response equipment
deployment capabilities. Repsol has subsequently invited BSEE and Coast
Guard officials to observe another emergency drill to be conducted in
Trinidad related to contingency planning for the drilling.
2. Regional Drilling Safety Initiatives in the Gulf of Mexico
In addition to our communications with Repsol and in parallel with
the negotiations of a transboundary agreement, BSEE has been engaged
with our regulatory counterparts in the Gulf of Mexico in an effort to
harmonize drilling safety standards in the region. BSEE and its
predecessor agencies have been collaborating with officials from all
levels of the Mexican government since the late 1990s on issues related
to the safe and responsible development of oil and gas resources in the
Gulf of Mexico. This cooperation has increased substantially in the
aftermath of Deepwater Horizon and after the creation of the National
Hydrocarbons Commission (CNH), the Mexican agency responsible for
regulating offshore drilling safety on Mexico's continental shelf.
BSEE and CNH are working towards a set of common safety and
environmental standards through a series of technical workshops.
Following a workshop held this summer in BSEE's Gulf of Mexico regional
office, the U.S. and Mexico developed an action plan to define subject
areas where the creation of common standards would be appropriate. CNH
officials will be returning to BSEE's offices in the near future for a
technical exchange about BSEE's Worst Case Discharge analysis.
In addition to this ongoing cooperation, Secretary of the Interior
Ken Salazar and I traveled to Mexico for a series of meetings with
Mexican officials to discuss the development of common safety and
environmental standards for offshore oil and gas exploration and
development in the Gulf of Mexico.
3. Spill Response and Preparedness
The U.S. government will immediately use all appropriate resources
and authorities to conduct response operations in the event an oil
spill from activities in Cuban waters or from activities in other
states in the region that threaten U.S. waters or its coastline. The
Administration has engaged state and local governments and private
parties that might be affected by such a spill to ensure awareness and
mutual cooperation and the adequacy of five different existing Area
Contingency Plans covering Florida where models predict varying
probabilities of U.S. shoreline impacts should a spill occur at the
planned exploratory drilling locations in Cuban waters. BSEE staff is
also engaged with District Seven USCG staff out of Miami in the
development of an International Offshore Drilling Response Plan and
will be participating in an upcoming workshop to validate the plan. We
will continue with active support of these efforts to ensure that
appropriate plans and resources are in place to respond in a rapid and
effective manner to an oil spill that reaches U.S. waters.
As part of this planning for possible oil spills from deepwater
drilling off of Cuba, NOAA, in cooperation with the Bureau of Ocean
Energy Management (BOEM), has run sophisticated trajectory models to
identify potential landfall areas along the U.S. coasts.
Using worst case discharge data provided by Repsol, coupled with
computer model results, the USCG is working with Area Committees in the
areas that potentially could be affected by such a spill to enhance
Area Contingency Plans--an effort that requires local and state
participation in the development of protection strategies and
establishing priorities for threatened resources.
The U.S. is also taking measures to ensure that the appropriate
private industry parties are able to respond quickly in the event of an
oil spill in Cuban waters. The Department of Commerce and the Treasury
Department have a long-standing practice of providing licenses to
address environmental contingencies in Cuban waters. The Department of
Commerce's Bureau of Industry and Security (BIS) has issued a number of
licenses for post-incident oil spill containment and cleanup items for
use by U.S. companies in Cuban waters. These items include booms,
skimmers, dispersants, pumps and other equipment and supplies necessary
to minimize environmental damage in the event of a spill. Several such
applications are currently under review by BIS, including applications
for a subsea well containment system and related equipment, such as
remotely operated submersible vehicles and subsea construction, dive
support, and well intervention vessels.
In consultation with the Department of State, the Treasury
Department can issue licenses to U.S. entities to prepare for and to
operate in the event of an oil spill. The Treasury Department has been
issuing such licenses for over a decade, including licenses for
environmental response, maritime salvage, and spill prevention
activities.
Finally, BSEE is working closely with other federal agencies on a
number of regional initiatives with countries in the region, including
Mexico, Cuba, the Bahamas and Jamaica. For example, planning is
underway for a Regional Oil Pollution Preparedness, Response and
Cooperation Seminar to Focus on Developing National Plans for Marine
Pollution Preparedness and Response Related to Offshore Units and
Regional Cooperation. This seminar, which is sponsored and conducted by
the International Maritime Organization, will take place in the Bahamas
later this year and officials from the Bahamas, Cuba, Mexico, Jamaica
and the United States have been invited to participate. The seminar
will provide a valuable opportunity for participating countries to
learn about other nations' plans for emergency well control and oil
spill response, which will help us improve our own response planning
for upcoming offshore drilling expected in the EEZs of participating
states. We believe a multilateral approach that involves all parties in
the region contemplating drilling activities that could affect the
United States is the most effective means of safeguarding our
interests. We therefore intend to continue to vigorously pursue
continued multilateral engagements in the Gulf of Mexico.

Status of Response Capability and Readiness in the Arctic and with
Canada
In addition to our activities in the Gulf of Mexico, DOI and BSEE
are also engaged in a number of multilateral and bilateral initiatives
for oil spill preparedness and response in the Arctic and with Canada.

1. Arctic Council
The U.S. is a member of the Arctic Council Ministerial Meeting,
which is a high-level forum of eight nations--Canada, Russia, Norway,
Denmark, Iceland, the United States, Sweden and Finland--and their
indigenous peoples.
The Arctic Council's meeting in Nuuk, Greenland this past May led
to the creation of two important initiatives to address oil spill
prevention, preparedness and response in the Arctic. The first of these
is the Oil Spill Preparedness and Response Task Force, of which BSEE is
a member and which intends to develop an international instrument on
oil pollution preparedness and response in the Arctic. The Task Force
met in Oslo, Norway last week. In addition, BSEE is participating in
the Arctic Council Emergency Prevention, Preparedness and Response
working group, which is developing recommendations on best practices in
oil spill prevention. The results of both initiatives will be presented
at the next Ministerial Meeting of the Arctic Council in the spring of
2013.

2. Bilateral Cooperation with Canada
BSEE also participates in a number of bilateral initiatives with
Canada related to oil spill preparedness and response. BSEE's
Technology Assessment and Research Program has collaborated with Canada
in over 35 joint research and development projects, many of which
relate to improving oil spill response and preparedness. For example,
the Bureau is collaborating with Canada's Department of the Environment
on a number of joint oil spill response research projects focusing on
remote sensing and measurement of spilled oil; chemical treating
agents; the properties and behavior of spilled oil; testing and
evaluation of oil spill absorbents; cleaning up oil from shorelines;
mechanical containment and cleanup of spilled oil; and examining
matters relating to dispersant use. Another project has involved
collaboration with Canada's Department of Fisheries and Oceans on a
study of dispersants.
BSEE's predecessor agencies also initiated and conducted two
meetings of the US-Canada Northern Oil and Gas Research Forum (Forum).
The first Forum took place in October 2008 in Anchorage, followed by a
second Forum in December 2010 in Calgary. The forums focused on
technical, engineering, and scientific research concerning offshore
drilling safety, oil spill prevention and management, ice engineering
and transportation issues, as well as the environmental effects of oil
and gas exploration and development in the Arctic. These
multidisciplinary conferences brought together participants from
government, industry, academia, indigenous groups, and non-governmental
organizations to discuss research issues of relevance to the management
of oil and gas activities.
BSEE has also cooperated in joint projects with the Canadian Coast
Guard at the Oil and Hazardous Materials Simulated Environmental Test
Tank (OHMSETT), which is the U.S. oil spill response and renewable
energy test facility located in New Jersey. One project evaluated
remote sensing equipment to detect spilled oil; another evaluated the
oil containment performance of five different types of fire-resistant
booms. We will continue this engagement under the leadership of BSEE's
Oil Spill Response Division.
Finally, BSEE will participate in the annual Arctic and Marine Oil
Spill Program (AMOP) Technical Seminar with Canada.The Seminar was
created in 1978 by Canada's environmental ministry to improve the
knowledge base and technology for combating Arctic and marine oil
spills. Since then, it has been a useful forum for cooperation and
information exchange, providing BSEE with the opportunity to engage
researchers from other countries who have similar Arctic response
interests, learn about emerging technologies and scientific
discoveries, inform attendees of findings from BSEE-funded research,
and identify research gaps and needs. In the last AMOP seminar
conducted in October 2011, the program included discussions on the use
of Ohmsett for research related to biofuel spill response and
dispersant operational research conducted at Ohmsett over the last ten
years, evidencing the contributions that BSEE has and will continue to
make to improving oil spill response.
BSEE is also on the Executive and Planning Committees of the
International Oil Spill Conference, which is held every three years--
the most recent Conference was held in mid-2011. The conference focuses
on new technologies and hosts exhibitors and participants from around
the globe.
As you can tell from this description of the activities of DOI and
BSEE, we view engagement with our foreign counterparts in areas of
shared interest and concern as a central part of protecting U.S.
environmental and economic interests.
Thank you and I look forward to your questions.
______

Mr. Lamborn. OK. Perfect timing. You have had a little
practice here.
Mr. Bromwich. A little bit.
Mr. Lamborn. Thank you for your statement and for being
here.
And, Vice Admiral Salerno, thank you for being here, and
please begin your statement.

STATEMENT OF VICE ADMIRAL BRIAN SALERNO,
DEPUTY COMMANDANT FOR OPERATIONS, U.S. COAST GUARD

Admiral Salerno. Good morning, Chairman Lamborn, Ranking
Member Holt, Ranking Member Markey from the full Committee and
distinguished Members of the Committee and full Committee. I am
very pleased to be here this morning to answer your questions
on the Coast Guard's response capability and readiness for oil
spills originating in foreign waters adjacent to the United
States which may affect or threaten our nation and our natural
resources.
Protecting the marine environment from oil spills is an
important Coast Guard mission. Contingency planning, training
and exercises are fundamental to our readiness to respond to
oil spills. These in turn have their foundation in the National
Oil and Hazardous Substances Pollution Contingency Plan or NCP
for short.
Contingency planning under the NCP occurs at several
levels. Local level planning is conducted by an area committee
under the guidance of the Coast Guard captain of the port, who
is also predesignated as the Federal on-scene coordinator in
coastal areas. The area committee brings together Federal,
state, local and tribal officials and commercial responders to
identify risks, sensitive areas to be protected and protection
strategies.
At the regional level, Coast Guard districts participate
with other Federal agencies and state officials through
regional response teams on such issues as dispersant use and in
situ burning preauthorizations. And finally, at the national
level, the Coast Guard serves as the vice chair of the national
response team, which is comprised of 16 Federal agencies with
environmental response responsibilities and ensures national
level capabilities are available as needed to support response
efforts.
Each of these organizational levels also has a role to play
in developing strategies and cooperative relationships with our
foreign neighbors to enhance preparedness and response to
transboundary environmental threats. In particular, we have
well-established relationships with Canada, Russia and Mexico
to achieve cooperation on potential pollution threats, the
identification of equipment and personnel resources available
to respond to incidents and procedures for notification and
incident management in the event of an actual response.
In each of these cases, cooperation in controlling the
source of the pollution is paramount in addressing the
transnational nature of the threat. Facilitating movement of
people and equipment to the source is an essential component of
the aforementioned agreements. Additionally, these agreements
include regular planning sessions, exercises and support mutual
cooperation in oil spill research and development.
Under these agreements, we have concluded a bilateral
response exercise with Mexico in San Diego just this past
August. We also successfully completed a joint Coast Guard/
Canadian Coast Guard environmental response summit last month.
Just yesterday, I hosted a Russian delegation here in
Washington and signed a bilateral memorandum of understanding
that will expand our current cooperative response agreements to
cover boundary waters between the United States and Russia.
While we can point to successes and healthy relationships
in the areas already mentioned, we do not have the same
bilateral ability to engage with all countries which are
potential sources of transboundary pollution threats. This is
particularly true in the northern Caribbean and the anticipated
deepwater drilling in the Cuban EEZ as a primary example.
However, we are taking steps to engage multilaterally in
the Caribbean. By working through the International Maritime
Organization we have garnered support to convene a multilateral
seminar this December in the Bahamas that will invite Caribbean
nations to discuss oil spill prevention and response issues.
At the same time, we are working extensively with our
domestic response partners to update our contingency plans. We
are also directly engaged with Repsol related to their response
strategies, resources and capabilities in support of their
drilling operations.
In the event that an oil spill does occur within the Cuban
EEZ, the Coast Guard would mount an immediate response under
the national contingency plan in partnership with other
Federal, state and local agencies. We would focus on combating
the spill as far offshore and as close to the source as
possible using all viable response tactics.
In preparation for such an eventuality, our Seventh
District in Miami has been working closely with the state and
local response organizations in southern Florida since March.
Our district office will conduct a response exercise later this
month.
As was highlighted by the Deepwater Horizon oil spill, any
spill of national significance, regardless of its source, will
require unity of effort across all levels of government,
industry and the private sector. Thank you, and I look forward
to answering your questions.
[The prepared statement of Vice Admiral Salerno follows:]

Statement of Vice Admiral Brian Salerno,
Deputy Commandant for Operations, United States Coast Guard

Good Morning Chairman LAMBORN, Ranking Member HOLT, and
distinguished Members of the Committee. I am pleased to have this
opportunity to answer any questions you may have on the U.S. Coast
Guard's response capability and readiness for oil spills originating in
foreign waters adjacent to the United State that may affect or threaten
our Nation and our natural resources.

SUMMARY
Protecting the marine environment from oil spills is an important
Coast Guard mission. Contingency planning, training, and exercises are
fundamental to our readiness to respond to oil spills. These in turn
have their foundation in the National Oil and Hazardous Substances
Pollution Contingency Plan (NCP).
Contingency planning under the NCP occurs at several levels:
Local level planning is conducted by an Area
Committee, under the guidance of the Coast Guard captain of the
port, who is also pre-designated as the Federal On Scene
Coordinator for the coastal zone. The area committee brings
together federal, state, local, and Tribal officials and
responders to identify risks, sensitive areas to be protected,
and protection strategies.
At the regional level, Coast Guard Districts
participate with other federal agencies and state officials,
through Regional Response Team, on such issues as dispersant
use and in-situ burning pre-authorizations;
And finally at the national level, the Coast Guard
serves as the vice chair of the National Response Team, which
is comprised of 16 federal agencies with environmental response
functions, and ensures national level capabilities are
available as needed to support response efforts.

International Partnerships
Each of these organizational levels also has a role to play in
developing strategies and cooperative relationships with foreign
neighbors to enhance preparedness and response to transboundary
environmental threats. In particular, we have well established
relationships with Canada, Russia and Mexico to achieve cooperation on:
potential pollution threats,
identification of equipment and personnel resources
available to respond to incidents, and
procedures and protocols for notification, incident
management, and coordinating a spill response.
In each of these cases, cooperation in controlling the source of
the pollution is paramount in addressing the transnational nature of
the threat. Facilitating movement of essential people and equipment to
the source is an essential component of these agreements.
Additionally, these agreements include regular joint planning
sessions and exercises; they also help sponsor and support bi-lateral
cooperation in oil spill research and development.
For example, we conducted
a major bi-lateral response exercise with Mexico in
San Diego this past August; and
we successfully completed a joint U.S. Coast Guard/
Canadian Coast Guard Environmental Response Summit last month.
Just yesterday I hosted a Russian delegation here in Washington,
and signed a Bi-lateral Memorandum of Understanding that will expand
our current cooperative response agreements to cover the entire U.S./
Russian boundary waters.

Preparedness in the Northern Caribbean
While we can point to successes and healthy relationships in the
areas already mentioned, we do not have the same bi-lateral ability to
engage with all countries which are potential sources of transboundary
pollution threats. This is particularly true in the northern Caribbean,
and the anticipated deepwater drilling in the Cuban EEZ is the salient
example. However, we are taking steps to engage multi-laterally in the
Caribbean. By working through the IMO we have garnered support to
convene a multilateral seminar this December in the Bahamas that will
invite Caribbean nations to discuss oil spill prevention and response
issues.
Consequently, we are working extensively with our domestic response
partners to update our contingency plans. We are also engaged directly
with REPSOL, the Spanish-owned company which plans to drill the first
well in the Cuban offshore starting in January 2012, related to their
response strategies, resources, and capabilities in support of their
drilling operations.
In the event that an oil spill does occur within the Cuban EEZ, the
Coast Guard would mount an immediate response under the NCP, in
partnership with other Federal, State and local agencies. And we would
focus on combating the spill as far offshore and as close to the source
as possible, using all viable response tactics. In preparation for such
an eventuality, our Seventh District in Miami has been working closely
with state, local and response organizations in Southern Florida since
March. Our District Office will conduct a response exercise this month.
Conclusion
As was highlighted by the Deepwater Horizon Oil Spill, any spill of
national significance, regardless of its source, will require unity of
effort across all levels of government, industry, and the private
sector.
Thank you and I look forward to answering any questions you may
have.
______

Senate Energy and Natural Resources Committee Hearing on Outer
Continental Shelf Oil Spill Response Capabilities, Panel 1, October 18,
2011

SALERNO:
Good morning, Mr. Chairman, Ranking Member Murkowski, distinguished
members of the committee. I'm pleased to have this opportunity to
answer any questions you may have on response capability and readiness
for oil spills originating in foreign waters adjacent to the United
States that may affect or threaten our nation or our natural resources.
Protecting the marine environment from oil spills is an important
Coast Guard mission. Contingency planning, training and exercises are
fundamental to our readiness to respond to oil spills. These, in turn,
have their foundation in the National Oil and Hazardous Substances
Pollution Contingency Plan, now simply as the NCP. That's a long title.
Contingency planning under the NCP occurs at several levels. Local
level planning is conducted by an area committee, under the guidance of
a Coast Guard captain of the port, who is also pre-designated as the
federal on-scene coordinator for the coastal zone.
The area committee brings together federal, state, local and tribal
officials and responders to identify risks, sensitive areas to be
protected and protection strategies.
At the regional level, Coast Guard districts participate with other
federal agencies and state officials through the regional response
team. And they consider such issues as dispersant use and in-situ
burning pre-authorizations.
And finally at the national level, the Coast Guard serves as the
vice chair of the National Response Team, which is comprised of 16
federal agencies with environmental response functions, and ensures
national level capabilities are available, as needed, to support
response efforts.
Each of these organizational levels also has a role to play in
developing strategies and cooperative relationships with foreign
neighbors to enhance preparedness and response to trans-boundary
environmental threats.
In particular, we have well established relationships with Canada,
Russia and Mexico to achieve cooperation on potential pollution
threats, the identification of equipment and personnel needed to
respond to actual incidents, and procedures and protocols for
notification, incident management and coordinated spill response.
Each of these cases involves cooperation in controlling the source
of the pollution as--as paramount in addressing the trans-national
nature of the threat. Without controlling the source, you cannot get
ahead of the problem. So the facilitated movement of people and
equipment to the source is an essential component of these agreements.
Additionally, these agreements include regular joint planning
sessions and exercises. They also help sponsor bilateral cooperation in
oil spill research and development. Under these agreements, we've
recently completed a major bilateral exercise with Mexico, held in San
Diego this past August.
We also held a joint U.S. Coast Guard/Canadian Coast Guard
environmental summit this past month. And next month, I plan to meet
with the Russian delegation here in Washington to sign a bilateral
memorandum of understanding that will expand our parent cooperative
agreements to cover the entire U.S./Russian boundary waters.
We are also working with Russia, Canada and the six other Arctic
nations through the Arctic Council, to produce an arctic-wide pollution
preparedness and response instrument that will build on our existing
bilateral agreements to enhance preparedness throughout the Arctic
region.
In light of the growing interest in oil exploration in the northern
Caribbean, we are also working hard to improve regional cooperation
there. The anticipated drilling in--off Cuban waters is a salient
example, but others, like the Bahamas, are also considering deepwater
drilling operations.
By working through the International Maritime Organization, we've
garnered support for a regional, multilateral seminar to be held, to
which other Caribbean nations will be invited, including the Bahamas,
Jamaica, Cuba and Mexico, for the purpose of discussing oil spill
prevention and response issues.
Meanwhile, we're working extensively with all of our domestic
response partners to update our contingency plans. We're also engaged
directly with Repsol, the Spanish company which plans to drill the
first well off Cuba, starting in January of 2012, to better understand
their response strategies, their resources and their capabilities.
In the event an oil spill does occur within Cuban waters, the Coast
Guard would mount an immediate response under the NCP and partnership
with other federal, state and local agencies. We would focus on
combating the spill offshore, using all available response tactics.
As was highlighted by the Deepwater Horizon spill, any spill of
national significance, regardless of its source, will require a unity
of effort across all levels of government, industry and the private
sector.
Thank you, and I look forward to answering your questions.
______

Mr. Lamborn. Thank you, Vice Admiral, for your statement
and for being here today.
Before we begin our questions, I would like to recognize as
a courtesy to the Minority the Ranking Member of the full
Committee, Representative Markey, for five minutes.

STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MASSACHUSETTS

Mr. Markey. I thank you. I thank you, Mr. Chairman, very
much, and I thank our witnesses for being here.
A few months from now the Spanish oil company, Repsol, will
begin the first exploratory deepwater drilling in the waters
off of Cuba, and other companies are now also lining up to
drill off of Cuba.
When you think of the oil companies that would be the
logical candidates to do the first drilling in a new area, most
people would think of companies like Exxon Mobil, Chevron and
ConocoPhillips, but which are the companies that are planning
to drill in the waters off of Cuba a mere 80 miles from
Florida? They are the state-owned oil companies of Malaysia,
Vietnam, Venezuela and China.
Because of a relic of the Cold War, the Cuban embargo,
American oil companies cannot drill in this area that could
contain as much as five billion barrels of oil. The Majority
has been so focused on a make believe moratorium on drilling in
the Gulf that they have apparently missed the actual decades
long moratorium on American companies drilling off of Cuba that
is the result of the embargo.
Republicans like to claim that U.S. rigs are disappearing
from the Gulf. Well, there are rigs that are going to be
flocking to the waters off of Cuba, but they are going to be
drilling for China and Venezuela because of the embargo. I
would think that my Republican colleagues would rather have
this drilling done by Chevron than by Chavez.
We are fortunate that the Administration has persuaded
Repsol to agree to allow a single inspection of their drilling
rig by Coast Guard and Interior Department inspectors before it
enters Cuban waters. But once the rig crosses the maritime
boundary with Cuba, our inspectors will not be permitted to
ever review it again. Once it crosses that line, it will be as
if it has crossed into a Bermuda Triangle of safety, forever
disappearing from the site of our inspectors and our
regulators.
We should be able to work with Cuba as the independent BP
Spill Commission has recommended to create the strongest
possible safety standards and ensure that there can be
cooperation in the event of a spill. We shouldn't be forced to
hope that oil spills so close to our shores can be prevented by
a Cuban Government that has no experience, no experience, in
regulating the oil industry.
We should end the Cuban embargo so that American companies
and American workers can reap the benefits of drilling so near
to our own shores. I would hope that the Majority's opposition
to lifting the embargo against Fidel does not outweigh their
fidelity to creating more jobs for American businesses and
American workers in our own country.
I would urge my Republican colleagues to drop their
opposition to all of the mythical moratoriums and all pretend
permitoriums and instead join with Mr. Holt and I in supporting
the repeal of an actual embargo that prevents our American oil
companies from even competing for these Cuban leases. Thank
you, Mr. Chairman.
[The prepared statement of Mr. Markey follows:]

Statement of The Honorable Edward J. Markey, Ranking Member,
Committee on Natural Resources

Thank you.
A few months from now, the Spanish oil company Repsol will begin
the first exploratory deep-water drilling in the waters off of Cuba.
And other companies are now also lining up to drill off of Cuba.
When you think of the oil companies that would be the logical
candidates to do the first drilling in a new area, most people would
think of companies like ExxonMobil, Chevron and ConocoPhillips.
But who are the companies that are planning to drill in the waters
off of Cuba, a mere 80 miles from Florida? They are the state-owned oil
companies of Malaysia, Vietnam, Venezuela, and China.
Because of a relic of the cold war, the Cuban embargo, American oil
companies cannot drill in this area that could contain as much as 5
billion barrels of oil.
The Majority has been so focused on a make-believe moratorium on
drilling in the Gulf, that they've apparently missed the actual
decades-long moratorium on American companies drilling off of Cuba that
is the result of the embargo.
Republicans like to claim that U.S. rigs are disappearing from the
Gulf. Well, there are rigs that are going to be flocking to the waters
off Cuba but they are going to be drilling for China and Venezuela
because of the embargo.
I would think that my Republican colleagues would rather have this
drilling done by Chevron than by Chavez.
We are fortunate that the Administration has persuaded Repsol to
agree to allow a single inspection of their drilling rig by Coast Guard
and Interior Department inspectors before it enters Cuban waters. But
once the rig crosses the maritime boundary with Cuba our inspectors
will not be permitted to review it again. Once it crosses that line, it
will be as if it has crossed into a Bermuda Triangle of safety, forever
disappearing from the sight of our inspectors and regulators.
We should be able to work with Cuba, as the independent BP Spill
Commission has recommended, to create the strongest possible safety
standards and ensure that there can be cooperation in the event of a
spill. We shouldn't be forced to hope that oil spills so close to our
shores can be prevented by a Cuban government that has no experience in
regulating this industry.
We should end the Cuban embargo so that American companies and
American workers can reap the benefits of drilling so near our shores.
I would hope that the Majority's opposition to lifting the embargo
against Fidel does not outweigh their ``fidel-ity'' to creating more
jobs for American businesses and workers.
I would urge my Republican colleagues to drop their opposition to
all mythical moratoriums and all pretend permit-oriums and instead join
me in supporting the repeal of an actual embargo that prevents our
American oil companies from even competing for these Cuban leases.
______

Mr. Lamborn. Thank you. We will now begin our questioning.
Members are limited to five minutes for their questions, but we
may have additional rounds. I now recognize myself for five
minutes.
Director Bromwich, I think one of the predominant questions
that we need to address today is about Cuba moving forward with
offshore drilling. I know that your agency has been engaging
directly with Repsol, as you referred to, but from what I
understand you do not have in your possession their detailed
exploration plan. Is that true? Have you seen with your own
eyes Repsol's drilling plans for drilling in Cuban waters?
Mr. Bromwich. Mr. Chairman, no, we don't have Repsol's
exploration plan. There are confidentiality agreements that we
have been advised they have with the Cuban Government.
We are in the process of discussions with Repsol, and I am
hopeful that in the near future we will be able to surmount
their concerns and be able to obtain those materials. So right
now we don't have it, but we are hopeful we will get it and
related materials.
Mr. Lamborn. OK. If you haven't seen their plans for how
they are going to conduct drilling, how can you say that you
expect Repsol and the other involved parties to adhere to our
nation's standards?
Mr. Bromwich. Well, we have met, as I mentioned in my
opening statement, we have met with Repsol on a number of
occasions and have had a number of telephone discussions with
them in which we have discussed these issues.
They have pledged to us repeatedly that they will in fact
adhere to and observe all of the U.S. standards that apply both
to the submission of exploration plans as well as to the
submission of permits. They have an interest in backing up that
pledge with actually doing it because they have interests in
U.S. waters.
I think that is certainly one of the reasons that they
approached us. We didn't approach them. They approached us last
February telling us of their plans to drill in Cuba, and they
have been quite cooperative at every stage of the process.
Mr. Lamborn. But it remains true that we are going strictly
by their good faith, which I hope is unimpeached. But we have
absolutely no enforcement capability whatsoever?
Mr. Bromwich. We will have no enforcement capability no
matter what, whether we get the exploration plans or other
geological and geophysical material. That will help us to
provide feedback to Repsol, which I think they are genuinely
eager to have, but we have no enforcement authority in Cuban
waters. No.
Mr. Lamborn. OK. Just to clarify, and also, Vice Admiral
Salerno, I would like to ask you a question. I have read a lot
of press accounts of plans by BSEE and the U.S. Coast Guard to
inspect Repsol's drilling rig before it enters Cuban waters.
What happens if you go onto the rig and there are areas
where your inspectors are not allowed to go? Or what happens if
you inspect the rig and have serious concerns about what you
find? It seems to me that with no enforcement capability we
won't be able to do anything.
Admiral Salerno. Well, you are correct about the lack of
enforcement capability. The visit will be consensual on the
part of the owner of the rig and Repsol. However, Repsol has
indicated to us that they have every intention of complying
with U.S. standards.
So essentially we have their word that they would match our
standards as if they were operating in the Gulf of Mexico, but
again this is consensual. We do not have any way to compel them
to make changes on that rig. It was strictly their goodwill.
Mr. Lamborn. So what do we do if you are not allowed to go
into certain areas or you have major concerns?
Admiral Salerno. Well, again we would communicate that with
Repsol. We would also communicate that with the flag authority
of the rig, which has the legal oversight of the rig, as well
as with the owner and the Classification Society. The
Classification Society is the recognized organization that
performs inspection services on behalf of the government, the
flag under which the vessel is registered.
Mr. Bromwich. Mr. Lamborn, if I may add I completely agree
with everything that Admiral Salerno has said, but if Repsol
was to declare certain parts of the rig off limits, I would
view that as a breach of what they pledged to us to do. So
again, we don't have enforcement authority over them, but that
would be contrary to everything that they have told us. They
have not attempted to cordon off any aspect of the rig from the
inspection that the Coast Guard and BSEE will be doing, and a
last-minute attempt to do that would not be received well.
Mr. Lamborn. OK. Thank you. Vice Admiral, for
clarification, who is the flag authority again?
Admiral Salerno. The flag authority is Bahamas.
Mr. Lamborn. All right. Thank you.
I would now like to recognize the Ranking Member for five
minutes of questions.
Mr. Holt. Thank you. Thank you, Mr. Chairman.
It is worrisome, of real concern to some of us that we have
in place a system to get blowout containment systems, other
containment and cleanup systems to any Gulf disaster. Help me
understand how much confidence we have that we could or that
Repsol would get to their site whatever they need.
And then let me also ask how much time do we have to get in
place whatever agreements would be necessary to give us the
confidence that those would get there? And this is really a
question for both the Admiral and the Director.
Mr. Bromwich. Mr. Holt, I have a high level of confidence
that the necessary licenses will be in place. That is an
ongoing process that involves Treasury Department and the
Commerce Department, and both as a result of historical
licenses as well as some recently granted licenses, there is a
range of both equipment and services that right now could be
provided, and those include vessels, other kinds of equipment,
the capping stack and containment system, which, as you know,
is an extremely important element of a response.
One of the things that the Coast Guard and we and the rest
of the Administration have been involved in over the last
several months is trying to work to make sure that all of the
relevant preparations are made and so this has had high-level
attention for many months, and I think we are in a pretty good
place right now in terms of getting everything that is needed
in place.
Mr. Holt. And before I let the Admiral give his part of the
answer to this, let me understand clearly. This is because of
our agreement with Repsol, not because of any agreement with
Cuba?
Mr. Bromwich. There is no agreement with Cuba, so these are
understandings that we have with Repsol, but the licenses are
really separate and are sought after by other companies that
are in a position to provide such services.
Mr. Holt. But is it not true that Repsol's rig will be
flagged in the Bahamas just like Deepwater Horizon and that all
safety inspections will be conducted by a third party, so the
same applies for cleanup? I mean for containment and disaster
response. Isn't that true? The rig would be inspected by the
Norwegian company, the same company that BP used in the
Deepwater case?
Mr. Bromwich. Yes.
Mr. Holt. OK. Admiral?
Admiral Salerno. The only thing I would add, sir, is Repsol
does have agreements, preexisting agreements, with spill
response organizations that do have the capabilities that Mr.
Bromwich mentioned.
From a Coast Guard perspective, we would mount a response
as aggressively as possible as close to the source as possible.
There is really no prohibition for the Coast Guard moving into
the Cuban EEZ, but there is a problem with commercial pollution
responders operating in the Cuban EEZ. That is the reason why
the issue of licenses is so critical and why we are working so
closely with State Department, Treasury and Commerce on that
issue. So that is actively being managed.
So the Coast Guard would not have enough pollution response
capability in its own inventory to mount a large-scale
response. We rely very heavily on commercial capabilities to
work with us in a response.
Mr. Holt. Admiral, you spoke about a recently signed
bilateral agreement with Russia. Does that provide for oil
disaster response?
Admiral Salerno. Yes, sir, it does. Actually we have a
longstanding joint contingency plan with the Russian Federation
for oil spill response in the Bering Sea and in the Chukchi
Sea. We updated that based on some lessons learned from
Deepwater Horizon.
Plus we just signed yesterday a memorandum of understanding
which expands our levels of cooperation in oil spill R&D,
mutual cooperation as additional drilling takes place in the
Arctic and the rest.
Mr. Holt. And you felt that agreement was useful or
necessary beyond any licensing agreements, isn't that right,
and so wouldn't we want an agreement like that with Cuba if we
could get it?
Admiral Salerno. Sir, the way we are approaching that is
multilaterally under the auspices of the Cartagena Convention,
which covers most of the Caribbean, including Cuba, but also
the Bahamas, Jamaica, Mexico, the other countries that are
planning to engage in drilling activity.
That is the forum for coming to some agreement on mutual
cooperation, sharing of resources, notifications and joint
response activity.
Mr. Lamborn. All right. I now recognize the gentleman from
Florida for five minutes.
Mr. Rivera. Thank you, Mr. Chairman. My question is for Mr.
Bromwich to start off.
Regarding the inspection that is going to take place on the
Repsol rig, do we have a more exact timetable of when that is
going to occur?
Mr. Bromwich. We don't have an exact timetable because it
depends on the speed of the vessel coming from foreign waters.
Our best estimate is sometime in the first half of December,
but that could slide.
Mr. Rivera. First half of December?
Mr. Bromwich. Correct.
Mr. Rivera. And tell me a little bit about how that
inspection will take place and how we will know or become aware
of the results of that inspection.
Mr. Bromwich. We will have a small team of inspectors,
together with Coast Guard inspectors, that will actually board
the vessel and go through the full set of the inspection regime
that it would conduct on a rig in U.S. waters and go through
all of that. We will receive the information from that
inspection. We will also provide feedback to Repsol, pointing
out any deficiencies that we have observed.
Mr. Rivera. And when you point out, hypothetically
speaking, any deficiencies there will be time to address
deficiencies before it actually enters Cuban waters?
Mr. Bromwich. Well, it depends on the deficiencies. I think
for most the answer is yes, but for some, depending on what we
find, that may take more time. We won't know until we actually
identify deficiencies if there are any.
Mr. Rivera. Now we mentioned earlier about enforcement
capabilities. Going past the inspections, let us say we have
given them our concerns as to their deficiencies and it enters
Cuban waters. In terms of enforcement capabilities in national
waters of other nations, does the United States have any
enforcement capabilities on rigs in the waters of other nations
right now: Mexico, Canada, other nations?
Mr. Bromwich. No.
Mr. Rivera. So even if Cuba were our best neighbor and Cuba
was not a state sponsor of terrorism and Cuba was not a nation
that holds American citizens hostage, as is occurring right
now, even if all that were not to be true, the United States
would still not have enforcement capabilities. Is that correct?
Mr. Bromwich. That is correct. And let me follow up a
little bit about the inspection. I want to make clear that the
completeness and the thoroughness of the inspection will not
match what we are able to do in U.S. waters.
There are certain aspects of the inspection that you do,
including, for example, what is called an on-bottom test of the
blowout preventer that can only be done at the site where the
rig will actually be doing its work. And since our inspection
will be many, many miles from where the rig will be drilling
there are certain things, about a dozen things, that we will
not be able to do because we are not doing the inspection where
the drilling will already take place.
Mr. Rivera. No, I understand.
Mr. Bromwich. So I want to be clear that in our judgment it
is a lot better than nothing, but I don't want you or anyone
else to think it is equivalent to----
Mr. Rivera. No, I understand that. I am only making the
point once it enters Cuban waters, because I know some have
tried to make the argument that if you lift the embargo, for
example, that somehow that is a panacea in terms of enforcing
what could happen in Cuban waters.
And that is just not the case because we do not have
enforcement capabilities, as you have said, in other nations'
waters, correct?
Mr. Bromwich. That is correct, yes.
Mr. Rivera. Yes? Did you want to add something?
Admiral Salerno. If I could offer just one caveat to that?
Mr. Rivera. Yes.
Admiral Salerno. I agree with everything Mr. Bromwich said.
However, there is one distinction. If U.S. flag drilling rigs
are operating in foreign waters, the U.S. does have
jurisdiction over the rig itself.
Mr. Rivera. And the flag on this particular rig?
Admiral Salerno. The flag on this rig is Bahamas.
Mr. Rivera. OK.
Admiral Salerno. But if a U.S. flag----
Mr. Rivera. So we would not have enforcement capabilities?
Admiral Salerno. Not on this one, no.
Mr. Rivera.--on this rig irrespective of the current
relations?
Admiral Salerno. Correct. That is correct.
Mr. Rivera. Mr. Bromwich, let me ask you, any assurances
from Repsol as to this rig's compliance with existing economic
sanctions against the Castro dictatorship?
Mr. Bromwich. Yes. My understanding is that they have
complied with the rules that govern----
Mr. Rivera. How did you reach that understanding?
Mr. Bromwich. Based on information supplied by Repsol.
Mr. Rivera. Repsol has given information regarding the rig
not being in violation of any U.S. law in terms of the parts on
the rig?
Mr. Bromwich. Correct.
Mr. Rivera. Thank you. Thank you, Mr. Chairman.
Mr. Lamborn. OK. And with the indulgence of the witnesses,
let us have a second round, but a truncated second round, two
and a half minutes per Member. And if the clerk could keep
track of that? I will begin.
Mr. Bromwich or I guess Mr. Salerno also, will any other
agencies be assisting with the inspection that we have been
talking about? For example, will you be using Commerce or
Treasury agents to review the equipment and parts of the rig?
Admiral Salerno. Not to my knowledge, sir. This would be a
technical exam, and we have the technical expertise within our
cadre to perform that inspection, as does BSEE from their
aspect.
Mr. Bromwich. I agree with that. We have had no
conversations that I am aware of that Treasury and Commerce
personnel would be boarding the rig. I am not sure any of them
has ever done an inspection.
Mr. Lamborn. OK. Just wanted to clarify that. That is all
that I have for this hearing, and I would like to now recognize
the Ranking Member.
Mr. Holt. Director Bromwich, you said earlier you wouldn't
be able to conduct an inspection of the rig, so what sorts of
things would not be covered, and have you been able to talk
with your counterparts in Cuba say to get some assurance that
those inspections that you would have conducted perhaps would
be conducted?
Mr. Bromwich. There is a list of 12 or 13 items that I got
from our personnel.
Mr. Holt. Give us a sense. Do you have a sense?
Mr. Bromwich. One is the on-bottom test that I mentioned
before, which is actually an important test. One is we
generally inspect how the well has been secured. We obviously
can't do that. There are specific diverter system requirements
we are not going to be able to check, specific well control
drill requirements we are not going to be able to check,
specific drilling fluid program requirements we are not going
to be able to check and specific casing program requirements
that relate to the implementation of the drilling program that
we are not going to be able to check.
Mr. Holt. And have you been able to talk with counterparts
in Cuba to see that those are being done?
Mr. Bromwich. No, we have not.
Mr. Holt. If there were a bilateral agreement, would you
expect to have those conversations or even that inspection
authority?
Mr. Bromwich. Well, I think it would be likely we would
have such instructions. I am not sure if we had those kinds of
discussions around and available and we had confidence in the
Cuban regulatory regime, I am not sure that we would even be
doing this inspection.
Mr. Holt. Director Bromwich, one last thing. This Committee
has invited the CEOs of BP and other companies involved in the
Deepwater Horizon disaster to testify this afternoon. The CEOs
from these four companies have all refused to appear.
Do you believe that these CEOs should testify before
Congress on the government's joint investigation report on the
spill so that the American people can hear from them what
actions the companies are taking to improve the safety of their
drilling operations?
Mr. Bromwich. Well, with the litigation and enforcement
proceedings going on, I understand their decision, but I am
quite disappointed by their decision. It is obviously an issue
of great public importance. I know that Members on both sides
would like to hear from the CEOs of those companies.
Mr. Holt. We are disappointed in those decisions too and
feel the public deserve and really need to hear. Thank you.
Mr. Lamborn. Thank you. And I am also disappointed that the
Departments of State, Commerce and Treasury refused to be here
this morning. I am very disappointed in them.
I would now like to recognize the gentleman from Florida if
he has any followup questions.
Mr. Rivera. Thank you very much. First, before I proceed
with my question, which will be for the Coast Guard, Mr.
Chairman, I would like to ask unanimous consent that a letter
which was sent to President Obama yesterday and signed by my
colleagues, the Chairman of the Foreign Affairs Committee,
Ileana Ros-Lehtinen, Congressman Mario Diaz-Balart, Congressman
Albio Sires, regarding this very issue expressing our concerns
as to the inspections of the rig and the lack of conformity
with U.S. law, if that could be entered into the record with
your permission.
Mr. Lamborn. If there is no objection, that will be entered
into the record.
Mr. Rivera. Thank you very much.
[The letter submitted for the record by Mr. Rivera
follows:]

[GRAPHIC] [TIFF OMITTED] T1116.005

[GRAPHIC] [TIFF OMITTED] T1116.006

Mr. Rivera. And my question for the Coast Guard. In the
case of a foreign sourced spill, whether it comes from Mexico,
the Bahamas or Cuba, and that oil reaches American waters and
beaches, who would pay for that cleanup?
Admiral Salerno. Two answers on that, sir. One is we
immediately would open the Oil Spill Liability Trust Fund, so
we have a source of funding to manage the Coast Guard and
private contractor response in our EEZ, in our waters and our
coasts. We would also seek legal avenues to obtain compensation
from the source.
When it occurs in a foreign EEZ it becomes very complicated
legally, very fact-dependent. However, I do know that
Department of Justice as well as the legal branches of many of
the involved agencies are working with those issues now and
running through various scenarios as to how that would be
applied.
Mr. Rivera. Now, in terms of the Oil Liability Trust Fund
that you mentioned, there is a cap on that?
Admiral Salerno. That is correct. The fund is broken up
into two parts. There is an emergency fund and a principal
fund.
Mr. Rivera. What are the caps?
Admiral Salerno. There is a $1 billion cap per incident.
The initial authorization is for $50 million. It can be
advanced by $100 million and then beyond that requires
congressional approval, but the overall cap is $1 billion.
Mr. Rivera. And is there a cap within that $1 billion for
response?
Admiral Salerno. That is the response portion of the fund.
The overall fund is a $2 billion plus fund.
Mr. Rivera. So there is not a $125 million cap on response?
Admiral Salerno. Well, the initial authorization is $50
million. It can be enhanced by $100 million, so that is $150
million, and then beyond that requires congressional approval.
Mr. Rivera. I only have a few seconds left, but let me just
ask you, what was the ultimate cost of the response on the
Deepwater Horizon?
Admiral Salerno. The cost to the fund--sorry, I would have
to get you an exact amount. I don't believe we--we did not
reach the $1 billion mark.
BP of course paid about roughly $20 billion in response
plus another $20 billion for the Gulf Coast restoration, so
about $40 billion total paid.
Mr. Rivera. Thank you.
Mr. Lamborn. All right. I want to thank the panel for their
testimony, for each of them being here. Members of the
Committee may have additional questions for the record, and I
would ask that you respond to these in writing. We appreciate
your attendance today.
Mr. Bromwich. Thank you very much, Mr. Chairman.
Mr. Lamborn. You are welcome.
Admiral Salerno. Thank you, sir.
Mr. Lamborn. You are welcome.
I would now like to invite forward the second panel
consisting of Mr. Mauricio Claver-Carone, Executive Director of
the Cuba Democracy Advocates; Mr. Jorge Pinon, Visiting
Research Fellow, Latin American and Caribbean Center of Cuban
Research Institute; Mr. Daniel Whittle, Senior Attorney and
Cuba Program Director, the Environmental Defense Fund; and Ms.
Caitlyn Antrim, Executive Director of the Rule of Law Committee
for the Oceans.
[Pause.]
Mr. Lamborn. OK. Thank you for being here today. Like all
our witnesses, your written testimony will appear in full in
the hearing record, so I ask that you keep your oral statements
to five minutes as outlined in the invitation letter to you.
Our microphones are not automatic. Like I was saying
earlier, you have to turn them on to begin speaking. The way
our timing lights work is that when you begin to speak the
clerk will start the timer and a green light comes on. After
four minutes a yellow light comes on, and after five minutes
the red light comes on.
Mr. Claver-Carone, you may begin.

STATEMENT OF MAURICIO CLAVER-CARONE,
EXECUTIVE DIRECTOR, CUBA DEMOCRACY ADVOCATES

Mr. Claver-Carone. Thank you, Mr. Chairman. It is truly a
privilege to be here with all of you today. My name is Mauricio
Claver-Carone, and I am the Executive Director of Cuba
Democracy Advocates, a nonprofit, nonpartisan organization
dedicated to the promotion of human rights, democracy and the
rule of law in Cuba.
I have held this position for seven years, and throughout
this time I have been closely monitoring the plans,
developments and geopolitical motivations behind the Cuban
regime's efforts to pursue offshore oil exploration.
However, it is important to note that despite the broad
media attention given to the Cuban regime's most recent plans,
which we are discussing here today, its efforts to conduct
offshore oil exploration date back almost 20 years now, and
ultimately all of them have been unsuccessful.
Please allow me to begin with some broader observations.
Cuba is a totalitarian dictatorship. It is the sole remaining
dictatorship in the Western Hemisphere. Therefore, it should
not be viewed through the same lens as its democratic
neighbors, the Bahamas and Mexico, nor should it be treated in
the same manner.
The Bahamas and Mexico are allies of the United States. We
share a relationship of trust and cooperation with these two
friendly nations. Meanwhile, the Cuban regime remains under
U.S. sanctions, which Congress codified into law under the 1996
Cuban Liberty and Democratic Solidarity Act, due to three
fundamental reasons: 1] The brutal violations of the Cuban
people's human, civil, political and economic rights; 2] Its
hostile anti-American policies; and 3] The illegal
expropriation of properties belonging to U.S. nationals.
Moreover, Cuba remains one of four countries designated by
the U.S. Government as a state sponsor of terrorism based on
its harboring of fugitives, including the murderers of U.S. law
enforcement officials, its unwillingness to cooperate with U.S.
antiterrorism efforts, its intelligence gathering and sharing
with other rogue regimes and its support for foreign terrorist
organizations. The other three countries on the state sponsors
of terrorism list are Iran, Sudan and Syria.
Considering the background of Cuba's regime, a strong case
can be made that it is not in our national interest to lift
sanctions and assist yet another anti-American dictatorship,
particularly a state sponsor of terrorism, in its ambitions for
oil exploration. To do so would not ease domestic fuel costs or
enhance energy independence here at home, which should be the
goal of U.S. energy policy.
To the contrary, it would add to the extortionate practices
that other oil-producing dictatorships have exploited for the
last half a century. Furthermore, considering that the same
Cuban regime has already expropriated U.S. oil assets in the
past, it would send a dangerous message to other hostile
governments that, in this region alone, would like to do the
same.
Now allow me to focus on some of the specifics of the Cuban
regime's offshore exploration plans, which unfortunately tend
to get overlooked. Despite the Cuban regime's highly publicized
efforts over the last 20 years, there have been no commercially
viable discoveries or extraction of oil in waters off Cuba's
shores. Moreover, there is currently no drilling taking place
in waters off Cuba's shores.
The Cuban regime first began using offshore drilling rights
to extract political concessions from various nations of the
world soon after the 1991 collapse of the Soviet Union, which
ended that country's hefty subsidies to Cuba. According to
recently declassified documents by Brazilian Foreign Ministry,
in 1993 the Cuban regime first offered the government of then-
President Itamar Franco the most promising blocks for oil
exploration to Brazil's national oil company, Petrobras, in
exchange for their shunning of Cuban dissidents on the island
and canceling a meeting with Cuban exiles at the Brazilian
Embassy in Washington, D.C. The Brazilian Government happily
complied with both, only to exit from Cuba empty-handed years
later.
The Cuban regime found a new partner when Hugo Chavez rose
to the presidency of oil-rich Venezuela in 1998. With the
backing of Chavez and Venezuela's state oil company, the Cuban
regime resumed its diplomatic offensive, signing highly
publicized oil leases with Spain's Repsol, Norway's Statoil,
Russia's Gazprom, India's ONGC, Malaysia's Petronas, Canada's
Sherritt, Angola's Sonangol, Vietnam's PetroVietnam and China's
CNPC.
However, only one company has actually conducted any
exploratory drilling, Spain's Repsol in 2004. It found some oil
but not in any commercially viable quantities. It then pulled
out of Cuba.
Similarly, after much initial fanfare, Canada's Sherritt
and Brazil's Petrobras, perhaps the most credible and respected
of the region's oil companies outside the United States,
publicly abandoned their efforts in 2008 and 2011 respectively,
stating that Cuba offshore drilling was not commercially viable
and citing poor prospects.
Much of this can be attributed to U.S. sanctions, which
dramatically drive up cost of production. The Cuban regime has
itself admitted that U.S. sanctions make it commercially
impractical to produce oil in its territorial waters. As long
as U.S. trade sanctions against Cuba remain in place, producing
or refining any oil found in Cuban waters isn't an option.
That leads to the question, if offshore drilling in Cuban
waters is not commercially viable for the most respectable
regional oil companies which are located relatively close to
Cuba and have the most experience in dealing with the Cubans,
is such drilling really viable for the Angolans, the Malaysians
or the Chinese? The answer is no.
Initially, as the Ranking Member noted, we learned this in
2006 when the Cuban regime had seemingly convinced public
policy-makers in Washington and many here in Congress that the
Chinese were ready to drill off Cuba's shores. That threat
never materialized, but it served the Cuban regime's political
interests.
Last year's oil spill in the Gulf of Mexico by BP and the
justifiable public outrage that ensued has given the regime a
new and strategic opportunity to use the threat of offshore
drilling as a means of forcing the U.S. to unilaterally ease
sanctions.
Despite the fact that Repsol still faces exploratory
hurdles, the U.S. is erring on the side of caution. While such
precautions are necessary, efforts should also be made to
prevent the Cuban regime from engaging in offshore exploration
altogether. Precaution might bring us temporary peace of mind,
but prevention would better serve our long-term national
interest, and there is legislation filed in Congress to do so.
Mr. Chairman, this concludes my testimony. Again, I truly
appreciate the invitation and the opportunity to speak before
you and the Committee. I will be pleased to respond to any
questions.
[The prepared statement of Mr. Claver-Carone follows:]

Statement of Mauricio Claver-Carone, Executive Director,
Cuba Democracy Advocates

Thank you, Mr. Chairman.
It's truly a privilege to be here with all of you today.
My name is Mauricio Claver-Carone and I'm the Executive Director of
Cuba Democracy Advocates, a non-profit, non-partisan organization
dedicated to the promotion of human rights, democracy and the rule of
law in Cuba.
I have held this position for seven years and throughout this time,
I have been closely monitoring the plans, developments and geo-
political motivations behind the Cuban regime's efforts to pursue
offshore oil exploration.
However, it's important to note that despite the broad media
attention given to the Cuban regime's most recent plans, which we are
discussing here today, its efforts to conduct offshore oil exploration
date back almost 20 years. And ultimately--all of them have been
unsuccessful.
Please allow me to begin with some broader observations.
Cuba is a totalitarian dictatorship. It is the sole remaining
dictatorship in the Western Hemisphere. Therefore, it should not be
viewed through the same lens as its democratic neighbors, the Bahamas
and Mexico--nor should it be treated in the same manner.
The Bahamas and Mexico are allies of the United States. We share a
relationship of trust and cooperation with these two friendly nations.
Meanwhile, the Cuban regime remains under U.S. sanctions, which
Congress codified into law under the 1996 Cuban Liberty and Democratic
Solidarity Act, due to three fundamental reasons: 1. the brutal
violations of the Cuban people's human, civil, political and economic
rights. 2. its hostile anti-American policies. 3. the illegal
expropriation of properties belonging to U.S. nationals.
Moreover, Cuba remains one of four countries designated by the U.S.
Government as a state-sponsor of terrorism based on its harboring of
fugitives (including the murderers of U.S. law enforcement officials);
its unwillingness to cooperate with U.S. anti-terrorism efforts; its
intelligence gathering and sharing with other rogue regimes; and its
support for foreign terrorist organizations. The other three countries
on the state-sponsors of terrorism list are Iran, Sudan and Syria.
Considering the background of Cuba's regime, a strong case can be
made that it is not in our national interest to lift sanctions and
assist yet another anti-American dictatorship--and state-sponsor of
terrorism--in its ambitions for oil exploration. To do so would not
ease domestic fuel costs or enhance energy independence here at home,
which should be the goals of U.S. energy policy. To the contrary, it
would add to the extortionate practices that other oil-producing
dictatorships have exploited for the last half-a-century.
Furthermore, considering that this same Cuban regime has already
expropriated U.S. oil assets in the past (Esso and Texaco), it would
send a dangerous message to other hostile governments that--in this
region alone (e.g. Hugo Chavez in Venezuela)--would like to do the
same.
Now, allow me to focus on some of the specifics of the Cuban
regime's offshore exploration plans, which unfortunately tend to get
overlooked.
Despite the Cuban regime's highly publicized efforts over the last
20 years, there have been no commercially viable discoveries or
extraction of oil in waters off Cuba's shores. Moreover, there is
currently no drilling taking place in waters off Cuba's shores.
The Cuban regime first began using offshore-drilling rights to
extract political concessions from various nations of the world soon
after the 1991 collapse of the Soviet Union, which ended that country's
hefty subsidies to Cuba.
According to recently declassified documents by the Brazilian
Foreign Ministry, in 1993 the Cuban regime first offered the government
of then President Itamar Franco the ``most promising'' blocks for oil
exploration to Brazil's national oil company, Petrobras, in exchange
for their shunning of Cuban dissidents on the island and cancelling a
meeting with Cuban exiles at the Brazilian Embassy in Washington, D.C.
The Brazilian government complied with both, only to exit from Cuba
empty-handed years later.
The Cuban regime found a new ``partner'' when Hugo Chavez rose to
the presidency of oil-rich Venezuela in 1998. With the backing of
Chavez and Venezuela's state-oil company PdVSA, the Cuban regime
resumed its diplomatic offensive signing highly publicized oil-leases
with Spain's Repsol, Norway's Statoil, Russia's Gazprom, India's ONGC
Videsh, Malaysia's Petronas, Canada's Sherritt, Angola's Sonangol,
Vietnam's PetroVietnam and China's CNPC.
Only one company, however, has actually conducted any exploratory
drilling--Spain's Repsol in 2004. It found some oil, but not in any
commercially viable quantities. It then pulled out of Cuba.
Similarly, after much initial fanfare, Canada's Sherritt and
Brazil's Petrobras--perhaps the most credible and respected of the
region's oil companies outside the United States--publicly abandoned
their efforts in 2008 and 2011, respectively, stating that Cuba
offshore drilling was ``not commercially viable'' and citing ``poor
prospects.''
Much of this can be attributed to U.S. sanctions, which
dramatically drive up costs of production. The Cuban regime has itself
admitted that U.S. sanctions make it commercially impractical to
produce oil in its territorial waters. Keep in mind that even the
largest neighboring foreign oil companies, Mexico's Pemex and
Venezuela's PdVSA, refine the majority of their oil in the U.S. and
then repatriate it, for they lack the domestic infrastructure to
process their own heavy crude and the U.S.'s geographical proximity
enhances profitability. As long as U.S. trade sanctions against Cuba's
regime are in place, producing and refining any oil found in Cuban
waters in the United States isn't an option.
That leads to a question: If off-shore drilling in Cuban waters is
not commercially viable for the most respectable regional oil
companies, which are located relatively close to Cuba and have the most
experience in dealing with Cubans, is such drilling really viable for
the Angolans, Malaysians or the Chinese? The answer is no.
Initially, we learned this in 2006, when the Cuban regime seemingly
had convinced public policymakers in Washington--including many here in
Congress--that the Chinese were ready to drill off Cuba's shores. The
threat never materialized, but it served the Cuban regime's political
interests. As Reuters reported from Cuba at the time: ``Havana is eager
to see American oil companies join forces with the anti-embargo lobby
led by U.S. farmers who have been selling food to Cuba for four
years.''
Last year's oil spill in the Gulf of Mexico by BP and the
justifiable public outrage that ensued has given the Cuban regime a new
and strategic opportunity to use the threat of offshore drilling as a
means of forcing the U.S. to unilaterally ease sanctions. Cuban Foreign
Minister Bruno Rodriguez has confirmed this on various occasions and
relayed as much to former New Mexico Gov. Bill Richardson, who recently
traveled to Havana in an unsuccessful effort to secure the release of
American hostage Alan Gross; Gross has been held for nearly two years
in a Cuban prison for helping the island's Jewish community connect to
the Internet.
In a flashback to 2004, Spain's Repsol is back in Cuba preparing to
drill another exploratory well early next year. This time, the Cuban
regime is ``threatening'' that if Repsol is pressured into abandoning
drilling, India's ONGC Videsh or Malaysia's Petronas will step forward.
Curiously, this peculiar corporate trio was granted extensive oil-
rights last year by Hugo Chavez to develop a block with 235 billion
barrels of reserves in Venezuela's oil-rich Orinoco belt. Reserves in
that one Venezuelan block alone are believed to be 50 times greater
than the best estimates in all of Cuba's territorial waters. Some geo-
political foul play can surely be deduced from the particularity and
timing of this arrangement.
Despite the fact that Repsol still faces exploratory hurdles (and
gargantuan production costs if oil is ever found), the United States is
erring on the side of caution and licensing specialty oil spill
mitigation firms to respond quickly in the case of an accident. This is
also not a new phenomenon. The U.S. has been licensing such firms since
at least 2001. Moreover, current U.S. law provides all of the necessary
flexibility to do so.
While such precautions are necessary, efforts should also be made
to prevent the Cuban regime from engaging in offshore exploration
altogether. The anti-American nature of the Cuban regime will simply
not provide the necessary safeguards regardless of the level of U.S.
engagement on this issue. Thus, there is currently legislation filed
with this goal in mind, including H.R. 2047, the Caribbean Coral Reef
Protection Act, which targets U.S. visas and loans to the Cuban
regime's foreign business partners, and H.R. 373, which amends the
Outer Continental Shelf Lands Act to deny U.S. leases to foreign
companies that engage in oil exploration with countries under U.S.
sanctions, such as Iran and Cuba. Precaution might bring us temporary
peace of mind, but prevention would better serve our long-term national
interests.
Mr. Chairman, this concludes my testimony. Again, I truly
appreciate the invitation and the opportunity to speak before you and
the committee. I will be pleased to respond to any questions.
______

Mr. Lamborn. All right. Thank you.
Mr. Pinon, you may begin.

STATEMENT OF JORGE R. PINON, VISITING RESEARCH FELLOW, LATIN
AMERICAN AND CARIBBEAN CENTER, CUBAN RESEARCH INSTITUTE

Mr. Pinon. Thank you, Mr. Chairman and Members of the
Committee.
The 1982 Third United Nations Convention on the Law of the
Sea defines the rights and responsibilities of nations in their
use of the world's oceans, establishing guidelines for
businesses, the environment and the management of their marine
natural resources.
The United States has signed maritime boundary agreements
with most of its neighbors--Russia [Alaska], Canada [ex Arctic
Ocean], Cuba and Mexico--delineating an economic exclusive zone
under which each state has sovereign rights on the exploration
and exploitation of its water, seabed and subsurface marine
resources.
As the United States, Mexico, Cuba and the Bahamas embark
in developing their respective deepwater hydrocarbon resources
within their EEZs and after the catastrophic experience of the
Ixtoc and Macondo well blowouts, the establishment of a working
relation between all four countries and marine environmental
protection would assist in the contingency planning and
cooperation necessary to an early and truly effective response
to an accidental oil spill.
The United States has already in place agreements of
cooperation with Mexico and Canada that set protocols to follow
in case of an oil spill which would pose a threat to their
shared marine environment. A similar bilateral agreement is
urgently needed with Cuba and the Bahamas.
The Bahamas, Cuba and the United States are signatories of
multilateral agreements that commit the parties to prepare for
and cooperate on potential oil spills. As was mentioned here,
this includes the International Convention on Oil Pollution
Preparedness Response and Cooperation, which was adopted in
1990 under the auspices of the International Maritime
Organization. Under the Convention, parties are required to
establish measures for dealing with pollution incidents either
nationally or in cooperation with other countries.
To respond effectively to an oil-related marine accident,
all four countries would also require immediate access to each
other's oil services and equipment resources that can provide
the needed instant technology and know-how that will be needed
to prevent, limit and hold the damage of their shared marine
environment.
We are very naive to think that in the case of Cuba a
handful of licenses would prevent and contain a deepwater oil
exploratory well blowout. A general license to export and
supply equipment, personnel and services to international oil
companies operating in Cuba in the case of an emergency is
urgently needed.
Deepwater Horizon response resources needed to assist in
containment and cleanup efforts were unprecedented: over 48,000
responders, more than 5,050 vessels, over 10 billion feet of
containment boom, two million gallons of dispersant and also
two ultra deepwater semi-submersibles that were needed to drill
relief wells to permanently seal the reservoir.
Over the last few months we have seen a number of
congressional concerns questioning the experience in deepwater
drilling of the international oil companies, the standards and
regulations under which they will operate, the technology and
quality of the drilling equipment and the lack of a
multilateral disaster preparedness and coordination agreement
in the event of an oil spill.
Most noticeable, Mr. Chairman, throughout this debate, it
has been singularly focused on Spain's publicly held oil
company, Repsol, while ignoring all other exploratory oil
drilling activities in Cuba, Mexico and the Bahamas by a number
of state-owned national oil companies, such as Malaysia's
Petronas, Russia's Gazprom and Mexico's Pemex, among others.
Mexico, Cuba and the Bahamas are in the process of
implementing the most up-to-date drilling regulations and
standards, but do they have the resources, capabilities,
assets, personnel and experience to enforce them? Can these
countries' regulatory agencies appropriately police the
operators?
The United States not only needs to reach out and share
lessons learned and best practices with all companies operating
in the region for the benefit and protection of our common
economic and environmental interests but most importantly with
the regulatory agencies such as Mexico's Comision Nacional de
Hidrocarburos, Cuba's Oficina de Regulacion Ambiental y
Seguridad Nuclear and the Bahamas' Ministry on the Environment.
Having said this, the recent unprecedented international
role played by the Department of the Interior's Bureau of
Safety and Environmental Enforcement appears to me, Mr.
Chairman, to be outside of its constitutional mandate to take
charge of the nation's internal affairs and therefore merits
further review and consideration as it establishes precedents
which are not in the best interests of the United States'
national security and could impact negatively in your efforts
of hydrocarbon development in the Perdido Fault of Mexico and
in the Chukchi Sea.
The economic and environmental consequences from an
accidental oil spill for all 19 million Florida residents
demands proactive joint planning by Cuba, Mexico and the
Bahamas and the United States. In order to prevent such a
disaster, this planning should be done in the spirit of
cooperation and not confrontation.
The editorial position of Florida's three largest
newspapers, Mr. Chairman, underscores this view. The St.
Petersburg Times, and I quote, ``Florida lawmakers' hope of
thwarting Cuba's offshore drilling ambitions by isolating it
from oil companies that do business in the United States is
shortsighted political posturing that won't work.''
The Fort Lauderdale Sun Sentinel, ``Cuba's oil drilling
ought to be put above the diplomatic and political fray.''
And The Orlando Sentinel, ``Politics instead of wise policy
continues to undermine the U.S. approach to oil drilling in
Cuban waters.''
Thank you, Mr. Chairman.
[The prepared statement of Mr. Pinon follows:]

Statement of Jorge R. Pinon, Visiting Research Fellow, Florida
International University Latin American and Caribbean Center, Cuban
Research Institute

Thank you Mr. Chairman and members of the committee, for the
privilege and honor to be here today testifying and sharing with you
what I consider to be an issue of national security.
My name is Jorge Pinon, I am a Visiting Research Fellow with
Florida International University, Latin American and Caribbean Center's
Cuban Research Institute. I am also the former president of Amoco Oil
de Mexico and president of Amoco Oil Latin America.
The 1982 Third United Nations Convention on the Law of the Sea
(UNCLOS III) defines the rights and responsibilities of nations in
their use of the world's oceans, establishing guidelines for
businesses, the environment, and the management of the marine natural
resources.
The United States has signed maritime boundary agreements with most
of its neighbors; Russia (Alaska), Canada (ex Arctic Ocean), Cuba, and
Mexico; delineating an economic exclusive zone--EEZ--over which each
state has sovereign rights on the exploration and exploitation of its
water, seabed, and subsurface marine resources.
As The United States, Mexico, Cuba and The Bahamas embark in
developing their respective deepwater hydrocarbon resources within
their EEZs, and after the catastrophic experience of the Ixtoc and
Macundo wells blowouts, the establishment of working relations between
all four countries in marine environmental protection would assist in
the contingency planning and cooperation necessary to an early and
truly effective response to an accidental oil spill.
The United States have already in place agreements of cooperation
with Mexico and Canada which set protocols to follow in case of an oil
spill which would pose a threat to their shared marine environment. A
similar bilateral agreement is urgently needed with Cuba and The
Bahamas.
Cuba, The Bahamas and the United States are signatories of
multilateral agreements that commit the parties to prepare for and
cooperate on potential oil spills. This includes the International
Convention on Oil Pollution Preparedness, Response, and Cooperation
(OPRC), which was adopted in 1990 under the auspices of the
International Maritime Organization (IMO). Under the convention,
parties are required to establish measures for dealing with pollution
incidents, either nationally or in cooperation with other countries.
To respond effectively to an oil-related marine accident, all four
countries would also require immediate access to each others' oil
services and equipment resources that can provide the near-instant
technology and know-how that will be needed to prevent, limit, and halt
damage to their shared marine environment.
We are very naive to think that in the case of Cuba, a handful of
individual export licenses could prevent and contain a deepwater oil
exploratory well blowout. A general license to export and supply
equipment, personnel and services to international oil companies
operating in Cuba in the case of an emergency is urgently needed.
The Deepwater Horizon response resources needed to assist in
containment and cleanup efforts were unprecedented; over 48,000
responders, more than 5,050 vessels including skimmers, tugs, barges,
tankers, and recovery vessels; hundreds of aircrafts, remotely operated
vehicles, and multiple mobile offshore drilling units and support
equipment, 2.93 million feet of containment boom, 8.35 million feet of
sorbent boom and nearly 2 million gallons of dispersant. Also, 2 ultra-
deepwater semi-submersibles were needed to drill relief wells to
permanently seal the reservoir.
Over the last few months, we have seen a number of congressional
concerns questioning the experience in deepwater drilling of the
international oil companies, the standards and regulations under which
they will operate, the technology and quality of the drilling
equipment, and the lack of a multi-lateral disaster preparedness and
coordination agreement in the event of an oil spill.
Most noticeable throughout this debate has been the singularly
focus on Spain's publicly held oil company Repsol, while ignoring all
other exploratory oil drilling activities in Cuba, Mexico and The
Bahamas by a number of state-owned national oil companies such as;
Malaysia's Petronas, Russia's Gazprom, India's ONGC, Angola's Sonangol,
and Mexico's Pemex among others.
Mexico, Cuba and The Bahamas are in the process of implementing the
most up to date drilling regulations and standards; but do they have
the resources, capabilities, assets, personnel, and experience to
enforce them? Can these countries' regulatory agencies appropriately
police the operators?
The United States not only needs to reach out and shared lessons
learned and best practices with all companies operating in the region
for the benefit and protection of our common economic and environmental
interests; but most importantly with the regulatory agencies such as
Mexico's Comision Nacional de Hidrocarburos, Cuba's Oficina de
Regulacion Ambiental y Seguridad Nuclear, and The Bahamas Ministry of
the Environment.
Having said this, the recent unprecedented international role
played by the Department of Interior's Bureau of Safety and
Environmental Enforcement appears to be outside of its constitutional
mandate to ``take charge of the Nation's internal affairs'' and
therefore, merits further review and consideration as it establishes
precedents which are not in the best interest of the United States
national security; and could impact negatively in our efforts of
hydrocarbon development in the Perdido Fault (Mexico) and in the
Chukchi Sea (Russia).
The economic and environmental consequences from an accidental oil
spill for all 19 million Florida residents, demands proactive joint
planning by Mexico, Cuba, The Bahamas and the United States in order to
prevent such a disaster. This planning should be done in a spirit of
cooperation, and not confrontation.
The editorial position of Florida's three largest newspapers Mr.
Chairman underscores this view:
The St Petersburg Times; ``Florida lawmakers' hopes of
thwarting Cuba's offshore drilling ambitions by isolating it
from oil companies that do business in the United States is
shortsighted political posturing that won't work.'' (February
7, 2011)

The Fort Lauderdale Sun Sentinel; ``Cuba's oil drilling ought
to be put above the diplomatic and political fray.'' (October
23, 2011)

And the Orlando Sentinel; ``Politics instead of wise policy
continues to undermine the U.S. approach to oil drilling in
Cuba's waters.'' (October 19, 2011)
Thank you Mr. Chairman.
Jorge R. Pinon began his thirty year career in the energy sector
when he joined Shell Oil Company. He was president and CEO of
Transworld Oil USA prior to joining Amoco Corporation in 1991 as
president of Amoco Corporate Development Company Latin America. In this
position Mr. Pinon represented the business development and joint
venture efforts in the region between Amoco Corporation and state oil
companies.
In 1994 he was transferred to the downstream oil sector to serve as
president of Amoco Oil de Mexico and president of Amoco Oil Latin
America, based in Mexico City. After the 1999 merger between Amoco and
BP, Mr. Pinon was transferred to Madrid, Spain, to manage BP Europe's
western Mediterranean petroleum supply and logistics operations. He
retired from BP in 2003.
In 1997, when vice-president and member of the board of directors
of the American Chamber of Commerce of Mexico--AMCHAM--Mr. Pinon
received the ``Yiacatecutli'' award for distinguished service in the
promotion of U.S.-Mexico business relations.
Mr. Pinon is today an international energy consultant, as well as a
visiting research fellow with Florida International University's Latin
American and Caribbean Center--Cuban Research Institute. With
international experience in emerging markets and a network of senior
energy contacts in Latin America, he is an independent analyst of
regional energy issues, as well as the politics of oil and natural gas
in Latin America.
He is also recognized as an expert on Cuba's energy sector, as well
as on the island's future economic transition challenges and
opportunities. He is an advisor and a member of the Cuba task forces at
The Brookings Institution and The Council of the Americas, and a member
of the board of directors of the Association for the Study of the Cuban
Economy--ASCE--; and a co-author of Cuba's Energy Future: Strategic
Approaches to Cooperation (Brookings, 2010), a monograph addressing the
major challenges facing Cuba's access to energy resources that are
environmentally sustainable and sufficient to meet the nation's
revitalization and development goals.
Mr. Pinon holds a degree in Economics and a certificate in Latin
American Studies from the University of Florida.

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Mr. Lamborn. All right. Thank you.
Mr. Whittle?

STATEMENT OF DANIEL WHITTLE, SENIOR ATTORNEY/
CUBA PROGRAM DIRECTOR, ENVIRONMENTAL DEFENSE FUND

Mr. Whittle. Thank you, Mr. Chairman and Members of the
Committee. It is an honor to be here today.
The Environmental Defense Fund has been working for years
to rebuild fisheries and conserve coastal ecosystems in the
Gulf of Mexico and along the Atlantic coast. We started working
in Cuba in the year 2000 because the health of marine life,
coral reefs and fisheries in the U.S. depends in part upon how
well these resources are managed in Cuba.
The BP disaster was a wakeup call and a costly reminder
that deepwater drilling is inherently risky. Lessons from the
massive spill are still being learned, and it falls to
Congress, the Administration and industry to adopt reforms to
ensure that nothing like it ever happens again in U.S. waters.
Congress, the Administration and industry must also take steps
now to ensure that nothing like it happens again in Mexican,
Cuban or Bahamian waters.
Following the Ixtoc spill in 1979, Mexico and the United
States entered into an agreement called MEXUS to ensure close
coordination and cooperation on planning and responding to
future transboundary spills. As Vice Admiral Salerno indicated
this morning, we also have similar agreements in place with
Canada and Russia.
Just months after the Deepwater Horizon blowout, the
Administration initiated a new round of talks with all levels
of Mexican Government designed to strengthen MEXUS. U.S. and
Mexico are also talking and meeting on the need for common
environmental and safety standards, which were not part of the
original agreement 31 years ago. The Administration does not
have a MEXUS-like agreement with Cuba, and discussions, as we
know, between the two governments are extremely limited because
of U.S. law and policy.
A major spill in Cuban waters would have devastating
environmental and economic impacts in both Cuba and the United
States. In the U.S., marine life, coastal communities and
livelihoods from Florida to North Carolina would be at risk.
Florida's multibillion dollar a year tourism and fishing
industries, especially in the Keys and along the state's East
Coast, would take a direct and costly hit. With the prospect of
oil drilling in Cuba as early as December, the Administration
should act now to minimize the possibility of oil spills in
Cuba altogether and to ensure that our national interests are
fully protected.
Dialogue and cooperation between the U.S. and Cuba on
environmental protection and safety standards is not without
precedent. Since 1963, the National Hurricane Center in Miami
has worked directly with its Cuban counterparts to track and
monitor tropical storms and hurricanes. The U.S. has provided
training to Cuban forecasters, and in turn Cuba has allowed the
U.S. Air Force C-130 hurricane hunters into its airspace. This
cooperation has saved lives and property.
In its report earlier this year, which was already quoted,
the President's Oil Spill Commission called upon the U.S.
Government to engage with both Cuba and Mexico to agree upon a
common set of standards. The Administration has done this with
Mexico, Canada and Russia but has not yet initiated such
negotiations with Cuba.
In September, I led a nine-member delegation to Havana with
William Riley, the former EPA Administrator and Co-Chair of the
Commission, and Richard Sears, the Commission's chief
scientist. Our delegation also included the International
Association of Drilling Contractors president, Lee Hunt. Though
Cuban environmental agencies have developed a strong set of
regulations, best practices and standards, our visit confirmed
that more needs to be done to ensure that Cuba is adequately
prepared to regulate and oversee offshore oil exploration.
In my written testimony, I outline some of the constructive
steps that the Department of the Interior and Coast Guard have
taken to date on this issue. Negotiations with Repsol are good,
but they are no substitute for direct negotiations with Cuban
government agencies. As a result, I believe the U.S. remains
unprepared to minimize the environmental and economic damage
that could occur from a spill in Cuban waters.
My testimony also outlines a number of specific actions the
Administration can take now. I believe the Administration
should preauthorize companies through a general license to
assist in preventing and responding to major oil spills in
Cuban waters. Most importantly, the Administration should
initiate a dialogue with Cuba, much like we have with Mexico
and Canada, to ensure that future drilling is conducted safely.
Also, dialogue is the best way to enhance transparency. It is
in fact the only way in this case to have transparency. Third,
the Administration should develop a joint contingency plan with
Cuba.
Ultimately our countries should work together much more
broadly on environmental cooperation to protect the many shared
resources, migratory fish populations, coral reefs, wetland
systems, et cetera, that we share with our neighboring country.
Thank you very much.
[The prepared statement of Mr. Whittle follows:]

Statement of Daniel J. Whittle, Senior Attorney
and Cuba Program Director, Environmental Defense Fund

Thank you Mr. Chairman and members of the subcommittee, it is an
honor to join you in a discussion of the potential environmental
implications of new offshore energy development and what measures can
to be taken to protect marine ecosystems, coastal communities, and
livelihoods against future oil spills in ocean waters we share with
Cuba, Mexico and the Bahamas.
My name is Daniel Whittle and I work for the Oceans Program at
Environmental Defense Fund (EDF) where I am the director of the Cuba
Program. EDF is a national environmental organization that searches for
solutions that maximize economic incentives for solving environmental
problems.
EDF has been working in the Gulf of Mexico for 35 years to protect
and restore coastal ecosystems and to rebuild troubled multi-billion
dollar fisheries. EDF is working now to address the economic and
environmental devastation of the BP oil disaster and to ensure that
Congress sends money where it is needed most: projects to repair Gulf
Coast communities, wildlife and the environment, including the
restoration of the delta of the Mississippi River. We support passage
of The Resources and Ecosystems Sustainability, Tourist Opportunity,
and Revived Economies of the Gulf States Act of 2011 (RESTORE Act) that
would to ensure that 80 percent of the Clean Water Act (CWA) penalties
to be paid by BP and other responsible parties will be used to restore
the communities, economies and ecosystems of the Gulf region directly.
For the past 11 years, under a specific license from the US
Department of Treasury, EDF has worked with marine biologists and other
scientists in Cuba to protect coral reefs and other important ocean and
coastal ecosystems, and to identify strategies for restoring declining
fish populations. Cuba's coral reefs remain of high quality and are
vital habitats for many fish species of importance to the United
States. The particular emphasis of our Cuba Program has been on waters
of the Atlantic Ocean, the Caribbean Sea and the Gulf of Mexico that
the United States shares with and Cuba. Therefore, over the last
several years we have closely monitored Cuba's plans to develop
offshore oil and gas resources in the Gulf of Mexico; since 2009 we
have been particularly focused on promoting bi-lateral and/or multi-
lateral dialogue and cooperation to ensure that any oil exploration and
production that does take place, proceeds in an environmentally sound
and safe manner.
Finally, my colleagues and I are also closely following Cuba's
progress in implementing country-wide energy efficiency programs and in
its investment into renewable energy, including wind, solar, biomass,
and clean ocean energy.

Current US Policy on Cuba Impedes Cooperation on Environmental
Protection
Current US policy on Cuba permits EDF and other scientific,
academic, and conservation organizations to conduct on-the-ground
research and conservation projects with Cuban partners and
institutions. Scientific and professional exchange is generally
limited, however, to non-governmental groups and academic institutions.
Most private companies are prohibited from doing business in Cuba
because of the embargo. There is a narrow exception for some private
entities, such as oil services companies, but they must first apply for
specific approval from the US Treasury and Commerce Departments to
provide services and export equipment to Cuba. This process is
complicated and time-consuming and apparently few companies in the oil
services sector have asked for or received specific licenses so far. In
the event of an oil spill in Cuban waters, this licensing process would
cost precious time.
US government agencies such as the Coast Guard, the Department of
Interior, the National Oceanic and Atmospheric Administration (NOAA),
and the Environmental Protection Agency (EPA) are extremely limited in
their ability to communicate or coordinate with their Cuban government
counterparts on environmental protection or natural resources
management. This compromises each country's ability to ensure that
shared waters and natural resources are properly managed and adequately
protected.
This lack of dialogue, cooperation, and joint planning between
government agencies leaves the United States especially vulnerable to
future oil spills in Cuban waters. Florida and other states along the
east coast as far as North Carolina would be threatened by a major oil
spill in Cuba. Therefore, as outlined below, the Administration should
take immediate steps to initiate negotiations with the Cuban government
to ensure that sufficient environmental and safety safeguards are in
place before drilling begins later this year. In addition, the
Administration should pre-approve categories of private companies to
send personnel and equipment to Cuba in the event of an oil spill that
threatens US waters.

Shared Ecosystems and Shared Resources
Because of the prevailing currents and Cuba's close proximity to
the United States, Mexico and the Bahamas, marine and terrestrial
ecosystems in all countries are tightly linked. For example, Cuba
provides important spawning grounds for snappers, groupers and other
reef fishes that are crucial to commercial and recreational fisheries
along the southeast United States and in the Gulf of Mexico. Cuba, the
Bahamas, and the United States also share a recently discovered
deepwater coral ecosystem that covers more than 25,000 square miles and
extends as far north as North Carolina. Cuba provides essential
habitats that sustain an amazing array of birds and the area around
Havana is a major launching point for most of the familiar songbirds
that nest along the east coast of the United States.
The health of the Gulf of Mexico ecosystem is inordinately
important to the ecological systems of the Gulf and the people who
depend upon it for their livelihoods and culture, but also to the
ecosystems and fishing communities of the broader western Atlantic. The
coastal wetlands and beaches of the Gulf provide essential habitats for
the vast preponderance of economically important species harvested in
the Gulf, one of America's great fishing grounds. The coral reefs,
eelgrass beds and mangrove swamps of the southern and eastern Gulf are
key habitats for a wide array of marine organisms, and are especially
vulnerable to oil pollution.
The northern Gulf also functions as a key spawning and nursery
ground for many highly migratory species from tunas to billfishes to
sharks. In fact, whale sharks from a large portion of the North
Atlantic congregate in the Gulf to feed. A large population of sperm
whales lives in the northern Gulf, feeding on abundant mid-water biota.
In addition, the Gulf plays a key role for passage of larvae from up-
current spawning grounds in the western Caribbean to and through the
Florida Straits into the broader Atlantic beyond.
Oil pollution in the Gulf threatens a wide array of essential
habitats and important fishery species, and many protected species.

Offshore Oil and Gas Development Demands Region-wide Planning and
Cooperation
As evidenced by the BP oil disaster in 2010 and the Ixtoc spill in
the Bay of Campeche, Mexico in 1979, deepwater drilling in the Gulf of
Mexico is inherently risky and can result in severe and long lasting
impacts to marine life, coastal ecosystems, and communities. These
disasters underscore that oil spills do not observe political
boundaries and that cross-border cooperation on spill prevention and
response is in the best interests of each country.
In 1980--prompted by the Ixtoc spill--Mexico and the United States
entered into an agreement (known as the MEXUS agreement) for planning
and responding to future spills that might threaten the waters of both
countries. MEXUS includes a number of mandatory provisions designed to
ensure the two countries have the readiness and capacity to prepare for
and respond to trans-boundary oil spills. Among other things, the
agreement provides for rapid incident notification, a joint response
team, on-site coordinators, communication protocols, and expedited
customs and immigration procedures to ensure that equipment and
personnel can be deployed efficiently and in a timely manner.
In its report earlier this year, President Obama's National
Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling
recommended that cooperation be extended to include Cuba as well.
``It is in our country's national interest to negotiate now
with these near neighbors [Cuba and Mexico] to agree on a
common, rigorous set of standards, a system for regulatory
oversight, and the same operator adherence to the effective
safety culture called for in this report, along with protocols
to cooperate on containment and response strategies and
preparedness in case of a spill.''
In his testimony before the Senate Energy Committee on October 18,
2011, Michael Bromwich, the Director of the Department of Interior's
Bureau of Safety and Environmental Enforcement, indicated that United
States-Mexico cooperation ``has increased substantially in the
aftermath of Deepwater Horizon and after the creation of the National
Hydrocarbons Commission (CNH), the Mexican agency responsible for
regulating offshore drilling safety on Mexico's continental shelf.'' To
their credit, Director Bromwich and Department of Interior Secretary
Ken Salazar have held a series of meetings with Mexican officials to
discuss the need for common safety and environmental standards for
future offshore oil and gas development in the Gulf of Mexico.
In contrast, the US government's engagement with Cuba on this issue
has been, for the most part, limited to the exchange of information
after Cuban officials raised concerns that Cuban waters were threatened
by the BP blowout. At that time, the two governments (through the US
State Department and the Cuban Ministry of Foreign Affairs) opened up
limited lines of communication, and US officials shared information and
data with Cuba on the movement and transport of the oil, potential
environmental impacts, and on response efforts being carried out in US
waters. The US government also sought and received permission from Cuba
to send a NOAA research vessel into Cuban waters to test for oil.
In the absence of meaningful government-to-government dialogue, the
Administration has taken some positive steps to enable private
companies and non-governmental organizations to interact with Cuban
agencies directly on this issue. For example, in the wake of BP, the US
Treasury Department authorized the International Association of
Drilling Contractors (IADC) to meet with Cuban energy officials to
discuss safety and environmental issues associated with offshore oil
and gas production in Cuban waters. The Treasury and Commerce
Departments have also signaled that they are prepared to issue more
specific licenses to private companies in the US with the capacity to
respond to, contain, and clean up oil spills. At least one US company,
Clean Caribbean and Americas, already has Treasury and Commerce
approvals to provide oil spill response services in Cuba.
The Department of Interior has also reportedly had productive
discussions with the Spanish company Repsol over its future drilling in
Cuban waters and has apparently secured the company's pledge to adhere
to US environmental and safety standards.
These positive steps, however, fall far short of those needed and
pale in comparison to those the Administration taken to strengthen and
expand cooperation with Mexico. As a result, the United States remains
unprepared to effectively assist in the prevention, containment, or
clean-up of a major oil spill in Cuban waters.

EDF Fact Finding Delegation to Cuba in September 2011
In September 2011, EDF organized and led a fact finding delegation
to Cuba on the government's plans to develop oil and gas resources in
the Gulf of Mexico. Our delegation of nine experts included William
Reilly, former Administrator of the US Environmental Protection Agency
and the co-chair of the President's National Commission on the BP
Deepwater Horizon Oil Spill and Offshore Drilling, Richard Sears, chief
scientist of the commission, and Lee Hunt, President of the
International Association of Drilling Contractors, who partnered with
EDF in planning and carrying out the delegation's activities in Cuba.
Our delegation met with a wide-range of Cuban officials and experts
involved in the operation and regulation of offshore oil and gas
exploration and development. Our goal was to get a better understanding
of Cuba's plans for offshore drilling, their approach to regulation and
oversight of offshore operations, and of their readiness and capacity
to conduct offshore activities in a safe and environmentally sound
manner. We also came prepared to make suggestions to Cuban officials on
how lessons learned from the BP oil spill should be incorporated into
their laws, regulations, oversight, and response planning.
The Cuban government made clear its determination to begin
exploratory activities this year. Cuban energy officials indicated to
us that, in partnership with Repsol and other foreign oil companies,
they expect to drill up to six exploratory wells between 2011 and 2013.
In such a short period of time, it was not possible for us to conduct a
comprehensive assessment of Cuba's oil drilling plans or of the
strength of its regulatory framework and capacity, and many questions
remain. Nonetheless, we had frank and open discussions and Cuban
officials acknowledged the challenges associated with building an
offshore oil and gas industry from scratch. They repeated their pledge
to follow the highest international environmental and safety standards
and expressed a strong willingness to cooperate with the United States
and other countries in the region on all aspects of environmental
protection and safety matters.
After all, adopting all possible measures to minimize the
likelihood of an oil spill is very much in the interest of Cuba, not
just the United States, because of the importance of its coastal-
oriented economy.

The Administration Should Take Specific Actions Now to Negotiate with
Cuba and Other Countries in the Region
First and foremost, the Administration should take steps now to
ensure that US-based companies are pre-authorized to assist in
preventing and containing major oil spills in Cuban waters.
Specifically, the US Department of Treasury should adopt a new general
license that provides authority to any qualified oil services company
in the United States to send personnel to Cuba in response to a request
from Cuba, Repsol or any other oil company conducting operations in
Cuban waters; likewise, the US Department of Commerce should pre-
approve the export of vessels, equipment, and supplies needed for
containment and response. This would allow Repsol and other foreign oil
companies to contract with US oil service companies in advance of
drilling. This is particularly important because of the proximity to
Cuba of US firms with the requisite deep water drilling and advanced
response, technical, and planning capabilities, in contrast to the
distance between Cuba and other countries, such as the UK, Norway or
Brazil, with state-of-the-art deep water oil development experience.
Second, it is in our national interest to negotiate now with Cuba,
Mexico and the Bahamas to ensure that any future drilling in waters of
the Gulf of Mexico, Atlantic, or Caribbean is conducted according to
the highest possible environmental and safety standards. In addition,
the Administration should develop a joint contingency plan with Cuba
that ensures the full participation of key US government agencies in
oil spill response, including the US Coast Guard, the Department of
Interior, NOAA and others. The MEXUS agreement discussed above can
serve as a potential model for a US-Cuba agreement or for a region-wide
agreement that includes the United States, Cuba, Mexico and the
Bahamas. We urge action on this score as soon as possible.
But the MEXUS agreement, with its emphasis on oil spill response,
should only be a first step. A comprehensive solution requires that
negotiations between the countries go beyond spill response and include
how the countries can work together on prevention and on improving
baseline scientific knowledge of shared waters and resources.
Ultimately, our two countries must collaborate on protecting resources,
such as coral reefs and coastal wetland systems that ecologically we
share, and on advancing deep water oil and gas production and spill-
prevention technologies that advance our common interests in the Gulf
of Mexico, Atlantic, and northern Caribbean ecosystems.
In conclusion, because of our shared interests in protection of
Gulf of Mexico resources, the importance of coastal resources to the
health of our citizens and visitors, and physical processes that can
disperse spilled oil far and wide, we urge the United States to engage
Cuba, as it has Mexico, to strengthen standards and areas of
cooperation that will minimize the likelihood of significant damage
from any deep water oil and gas operations.
As Cuba progresses toward extraction of oil and gas from deep water
sites, EDF looks forward to a continuing dialogue with members of
Congress as to how the marine environment of the Gulf, Atlantic and
Caribbean may be best protected in that process.
Thank you.
______

Mr. Lamborn. All right. Thank you.
Ms. Antrim, you may begin.

STATEMENT OF CAITLYN ANTRIM, EXECUTIVE DIRECTOR, RULE OF LAW
COMMITTEE FOR THE OCEANS

Ms. Antrim. Good morning, Mr. Chairman and Members of the
Committee. Thank you for the opportunity to testify before you
today.
I serve as the Executive Director of the Rule of Law
Committee for the Oceans, a bipartisan group of experts and
educators in international ocean law. Over my career I have
worked as an ocean engineer, mineral economist, industry
analyst, Federal official and diplomat, all with a focus on the
development of minerals of the ocean floor. I would like to
draw from that experience today to expand on our offshore
energy base for development by American industry.
As U.S. industry moves further seaward in search of
exploitable energy resources, we approach the limits of the
exclusive economic zone. Wide recognition of the exclusive
economic zone has assured the stable legal environment
essential for billion dollar investments in offshore oil.
Now a warming Arctic and advances in technology are drawing
attention to areas of the Continental Shelf outside the EEZ.
The seabed north of Alaska is the most promising of these
areas. Recent studies indicate that due to its unique geology
the continental margin north of Alaska may extend 600 nautical
miles or more from shore. There are reports of natural gas
releases from the seabed at nearly that distance.
The Alaskan Arctic isn't the only region with energy
resources beyond the EEZ. The continental margins off of South
Carolina and south of Alaska extend beyond the EEZ as well, and
there are also large areas of the seabed around some U.S.
Pacific Ocean island territories that may be claimed as our
extended Continental Shelf as well.
Lack of clarity of the legal status of the continental
margin beyond the Continental Shelf was of serious concern to
U.S. policymakers throughout the 1970s. In 1970, the Nixon
Administration proposed a new intermediate region between the
shelf and the abyssal plains in which the coastal state would
manage exploitation and share royalties with the international
community.
Over the course of the Law of the Sea negotiations, U.S.
diplomats quietly negotiated the extension of U.S. sovereignty
over seabed resources from the edge of the Continental Shelf to
the full extent of a new 200-mile EEZ, securing vast areas of
the seabed with potential for energy and hard mineral
resources. But as U.S. companies look to the sea floor beyond
the EEZ, investors must consider the international perspective
of conducting operations beyond the uncontested region of the
economic zone.
The Law of the Sea negotiations designed a process by which
a coastal state may submit the boundary of an extended
Continental Shelf to an international body of experts for
confirmation of conformity with the criteria of the Convention.
With such confirmation, coastal state jurisdiction over
resources of that region would be recognized by all parties of
the Convention. This part of the Convention has been accepted
by every U.S. President since Gerald Ford, Republican and
Democrat alike.
If the U.S. remains outside of the Convention, we will
still lay claim to a full continental margin off our shores,
explaining that it is a right inherent in our national
sovereignty, but other nations are not forced to agree with us.
Such disagreement could be a serious matter for multinational
companies that seek foreign investment, conduct business in
foreign nations and sell in foreign markets.
In 1981, the Reagan Administration review of the draft
Convention found that it would be possible for the United
States to exploit mineral resources of the seabed outside of a
convention, but only if all other significant producers of
minerals remained outside the Convention as well. As the only
major nonparty nation with significant energy resources beyond
the EEZ, our firms must be concerned about possible foreign
discrimination or even legal action in response to exploitation
of these resources without international recognition and
without sharing royalties as provided in the Convention.
International recognition and clear title of recovered
resources are essential to any energy firm that invests,
operates or markets beyond our shores. The provisions of the
Law of the Sea Convention related to the extended shelf and
sharing of royalties within it were negotiated with the advice,
participation and approval of American industry and continue to
be supported by individual energy companies and by the American
Petroleum Institute.
I agree with them that the Convention's provisions on the
extended Continental Shelf are in the economic interest of the
United States. I hope the consideration of U.S. policies for
this new region, including the establishment of agreed maritime
boundaries with Canada in the Beaufort Sea and with Mexico and
Cuba in the eastern gap of the Gulf of Mexico, will be designed
to conform with possible U.S. accession to the Law of the Sea
Convention and will utilize the Convention's requirements for
international sharing of information related to the impact of
seabed development on the marine environment for our own
benefit if and when the U.S. Senate gives its advice and
consent.
That concludes my statement. Thank you again for the
opportunity to appear before you today.
[The prepared statement of Ms. Antrim follows:]

Statement of Caitlyn Antrim, Executive Director,
Rule of Law Committee for the Oceans

National authority over resources of the sea floor beyond the
territorial sea rests on a combination of domestic and international
law and regulation. This is particularly true with regard to the
offshore oil and gas industry. Multinational corporations that develop
resources beyond the territorial sea are funded by domestic and foreign
investors and sell their products in international markets. The
offshore oil and gas industry has been one of the strongest supporters
of the development of international law regarding coastal state
authority over the continental shelf, and of US accession to the 1982
Convention on the Law of the Sea, and it presents a pragmatic view of
offshore oil and gas development as a domestic industry operating in an
international environment.
The United States needs to address international legal aspects of
continental shelf development in all of its coastal waters. In the
Arctic, the US has yet to establish an agreed maritime boundary with
Canada in the Beaufort Sea or an outer boundary to the continental
shelf beyond the 200 mile Exclusive Economic Zone. In the Gulf of
Mexico, there is an unresolved area of the continental shelf beyond the
EEZ that is bordered by the United States, Mexico and Cuba, and the
maritime boundary with Cuba in the Florida Strait that was negotiated
in 1977 has not been submitted to the Senate for advice and consent. It
remains a functional boundary that is provisionally applied but not a
durable, legally recognized agreement. Development of hydrocarbon
resources of the ocean floor in the region of the state of Florida,
Cuba and the Bahamas is guided by principles of international law, the
domestic laws and regulations of the coastal states and the Cartagena
Convention and its protocols. The areas around the Pacific Ocean Island
Territories are largely unexplored so far but may have mineral
resources for future development.
The majority of U.S. offshore oil and gas resources are found in
the Exclusive Economic Zone (EEZ). The 1982 United Nations Convention
on the Law of the Sea (LOS) defines the EEZ for states parties to the
Convention. Although the U.S. is not yet a party to it, the
Convention's definition of the EEZ has been applied by the United
States as proclaimed in the 1983 statement of ocean policy by President
Ronald Reagan:
Third, I am proclaiming today an Exclusive Economic Zone in
which the United States will exercise sovereign rights in
living and nonliving resources within 200 nautical miles of its
coast. This will provide United States jurisdiction for mineral
resources out to 200 nautical miles that are not on the
continental shelf. Recently discovered deposits there could be
an important future source of strategic minerals.
The Law of the Sea Convention details the internationally
negotiated statement of rights, authorities and obligations of states
within its Exclusive Economic Zone. For its parties, the Convention
also provides a mechanism through which parties may secure
international recognition of claims to the continental margin beyond
the EEZ, an area referred to as the ``extended continental shelf.'' The
US, as a non-party, does not have access to this mechanism for
obtaining international recognition of rights beyond the EEZ. Without
international recognition of US authority in the extended shelf, the
oil and gas industry sees domestic development beyond the EEZ as adding
increased significant political risk to their international financing
and trade relationships.

Initial Steps in Creating the Exclusive Economic Zone
Prior to the end of World War II, international law recognized only
two ocean zones: the territorial sea that was generally, but not
always, limited to a breadth of 3 nautical miles, and the high seas,
which encompassed all waters seaward of the territorial sea. In the
territorial sea, the coastal state had sovereign rights subject only to
the right of foreign ships to pass through the under the conditions of
``innocent passage.'' On the high seas, ships were under the authority
of the flag state, subject to foreign authority in only a few specified
cases, such as suspicion of piracy and transport of slaves.
Advances of technology and the improvement of the economics for
offshore development of living and mineral resources in the post-WWII
period led to expanding claims of jurisdiction by coastal states over
widening areas of what had previously been the high seas. In 1945,
President Truman proclaimed US authority over the resources of the
continental shelf contiguous to the lands of the United States
(approximated by the 200 meter isobath). The proclamation was limited
to seabed resources and their development and did not extend
sovereignty to other activities beyond the territorial sea.
Regardless of US intent, the Truman Proclamation opened the way for
other nations to extend claims over the high seas and its resources. In
1958, Iceland extended its claim to a fisheries zone to 12 nautical
miles (nm), out from a previous limit of 4 nm. This displaced British
fishing fleets from fisheries they had been utilizing and initiated the
first so-called ``Cod War'' with a confrontation between the Icelandic
coast guard and the Royal Navy. A subsequent extension of Iceland's
fishing zone to 50 nm in 1972 resulted in a renewed maritime
confrontation and a third confrontation came with an extension of the
zone to 200nm in 1977.
In the 1960s, Chile, Peru and Ecuador extended their territorial
sea to 200 nm, a claim that included all of the sovereign rights
associated with the territorial sea once limited to 3 nm. American flag
tuna boats were regularly impounded by Chile for fishing within the 200
mile zone. US officials protested these actions, but the seizures
continued. US flag boats were released on payment of fines and, with
the encouragement of the US government, returned to continue to
challenge the extensive Chilean claim.

Seeking the Certainty of International Law for the Seabed and its
Resources
The sudden collapse of the centuries-old regime of a narrow
territorial sea and a vast expanse of ocean subject to high seas
freedoms led to an effort to define a new legal order for the seas that
could establish clear agreement on the limits of coastal state
authority over the seas and its resources and stem the enclosure of
ocean space by coastal nations.
This effort to accommodate changes of practice into a new legal
order was undertaken in the 1950s by the International Law Commission.
This culminated in the 1958 Law of the Sea Conference in Geneva and the
adoption of a set of conventions that addressed four issues: the
Territorial Sea and Contiguous Zone, Fisheries, the Continental Shelf,
and the High Seas. While the four conventions laid out important
principles regarding activities within each of the four issue-areas, it
failed to clearly specify the geographic limits to the regions. In
particular, the territorial sea convention failed to reach agreement on
the breadth of the territorial sea, the fisheries convention failed to
recognize exclusive coastal state authority over fisheries beyond the
territorial sea and the continental shelf convention produced a vague
and self-contradictory definition of the extend of the continental
shelf. The first article of the Geneva Convention on the Continental
Shelf has this definition:
For the purpose of these articles, the term ``continental
shelf'' is used as referring (a) to the seabed and subsoil of
the submarine areas adjacent to the coast but outside the area
of the territorial sea, to a depth of 200 metres or, beyond
that limit, to where the depth of the superjacent waters admits
of the exploitation of the natural resources of the said areas;
(b) to the seabed and subsoil of similar submarine areas
adjacent to the coasts of islands.
By rejecting the more expansive phrase ``continental margin'' in
order to retain the more limited reference to the ``continental shelf''
and replacing ``contiguous,'' which had been part of the Truman
Proclamation, with ``adjacent,'' which added a vague criteria for
nearness, the definition introduced a qualitative limit on the seaward
extent of the legal continental shelf. In establishing a depth limit of
at least 200 meters but going as far as exploitation could be
conducted, the outer limit was left open to debate and disagreement.
The result was a definition that was sufficient for the near term, but
in need of revisions in order to resolve legal and political
impediments to development in the longer term.
A second attempt to define the outer limit of the territorial sea
was attempted at a second conference in 1960, but it was unsuccessful.
Clarifying the outer limit of the continental shelf would have to wait
for a more significant effort to update and clarify the law of the sea.
The Third Conference on the Law of the Sea
A decade after the completion of the four Geneva Conventions of
1958, preparations began on a new effort to define national rights,
responsibilities and limits at sea. Instead of seeking separate
agreements on different issues, it was decided to seek a comprehensive
agreement in which all essential national security interests would be
met, while creating a package deal in which nations could seek to
maximize their economic, environmental and scientific interests as a
whole with tradeoffs between issues in order to facilitate the creation
of an overall agreement attractive to all states.
The determination of the breadth of a coastal state resource zone
and the jurisdiction a state would have within the zone became a major
focus of negotiators at the Third UN Conference on the Law of the Sea
in both the preparatory discussions and the formal negotiations that
began in 1973. While the initial focus of coastal state claims to
resources in the area beyond the territorial sea had been on living
resources, the zone came to include management of resources of the
seabed within the zone regardless of whether the seabed was part of the
geological shelf or part of the deep ocean floor.

Recognizing the Continental Shelf beyond the EEZ
In 1970, during the preparations for the Third UN Conference on the
Law of the Sea, the United States introduced a draft convention that
incorporated a three-part system for management of mineral resources of
the seabed. It included a continental shelf extending to the 200 meter
isobath where minerals were under the exclusive jurisdiction of the
coastal state, the deep seabed beyond the continental margin and beyond
the jurisdiction of the coastal state where minerals would be managed
by an international authority and an intermediate area, described as a
trusteeship, in which minerals would be managed by the coastal state
for the mutual benefit of the coastal state and the international
community. As the EEZ was hammered out during the negotiations, the
seabed within 200 miles from shore was incorporated into the EEZ. The
negotiation of the provisions for the continental shelf beyond the EEZ
took on aspects of the original US proposal for the seabed trusteeship
zone.
Under the LOS Convention, coastal state may have jurisdiction over
the continental margin beyond the EEZ if it meets the geologic criteria
specified in Article 76 of the Convention that establishes conditions
and limits to the extent of coastal state jurisdiction. Just as
originally proposed by the United States, excessive or frivolous claims
are blocked by requiring that continental shelf claims that extend
beyond the EEZ be reviewed by an international panel of experts. Under
the LOS Convention, the Commission on the Limits of the Continental
Shelf serves this role. The Commission is empowered to review claims
submitted to it and make recommendations as to whether the claims are
in compliance with Article 76 or to recommend how the submissions might
be brought into compliance. If claims are found to be in compliance,
they are to be recognized by all of the parties to the Convention. The
Commission does not resolve disputes between adjacent or opposing
states as to how overlapping claims are to be decided, but it may
review a joint proposal for recognition of an outer limit to the
extended shelf by two or more states, leaving the division of the areas
for later resolution among the states that made the joint submission.
Under the definition used by the Convention, the US continental
shelf would extend beyond the EEZ in two parts of the Gulf of Mexico,
off of the US coast along the Atlantic Ocean and around some of the
Pacific Island territories and, most significantly, in the Arctic Ocean
north of Alaska. If the US were party to the LOS Convention, the
Convention's definition of the continental shelf would allow
international recognition of US claims in the Arctic Ocean that may
extend as far as 600 miles from shore. While potential claims in the
Gulf of Mexico are much more limited, they are adjacent to regions of
proven economic potential.
Following the model of the 1970 US Draft Convention, the LOS
Convention provides for sharing of revenues from oil and gas production
in the extended continental shelf. Negotiations in which
representatives of US oil companies played a central role produced a
royalty system that provided for no royalties for the first five years
of production, rising one percent per year from year six to 7% in year
12 and remaining at 7% thereafter.

Industry and the Extended Continental Shelf in the Law of the Sea
Convention
With regard to the continental shelf, the Law of the Sea Convention
represents significant benefits for industry over the preceding Geneva
Conventions. There benefits are:
establishment of a clear definition of the
outer extent of the continental shelf, providing essential
certainty for investment;
incorporation of the seabed beyond the
continental margin when within the EEZ, an area excluded by the
1958 definition;
inclusion of the continental margin far
beyond the old limits of depth and adjacency;

International Recognition of Claims to the Extended Continental Shelf
For countries whose continental shelf will be developed by private
industry, the most important feature of the LOS Convention's regime for
the continental shelf is the clear recognition of the authority of the
coastal state to license exploration and production, to make licenses
exclusive to the developer and to grant clear title to the recovered
products. Oil industry representatives on the US delegation to the LOS
negotiations made clear that benefits of the Convention's continental
shelf provisions greatly outweighed those of its predecessor, the 1958
Geneva Convention on the Continental Shelf.

Revenue Sharing in the Extended Shelf
The revenue sharing provisions for the extended continental shelf
are consistent with the US proposal in 1970. The coastal state is
authorized to collect royalties on behalf of both itself and the
international community. Production is exempt from royalties during the
first five years of production, allowing early recovery of investment
during the most productive years of a well, rising over a seven year
period to a maximum of only 7%, ensuring that coastal states will also
be able to share in the revenues of production from the continental
shelf.

Industry Statement of the Convention's Provisions on the Extended Shelf
Writing at the conclusion of the LOS negotiations in 1982, John
Norton Garrett, who represented the Gulf Oil Exploration and Production
Company on the US delegation to the LOS Conference, said:
In conclusion, I believe that the international petroleum
industry can live with a law of the sea treaty incorporating
those provisions of the Draft Convention that specifically
apply to margin delimitation and revenue sharing seaward of the
200 mile Exclusive Economic Zone as well as navigation and
pollution control.

Marine Environmental Pollution, Regional Agreements and Dispute
Resolution

Responding to Pollution from Continental Shelf Development in the LOS
Convention
The Law of the Sea Convention was negotiated just as marine
environmental issues were gaining attention in the international
community. As such, they provide a framework for action but identify
few specific activities. The provisions related to pollution from
seabed activities, listed in Article 208 of the Convention, all fall
into good-faith responsibilities of states parties that are not subject
to binding dispute settlement:

Article 208

Pollution from seabed activities subject to national jurisdiction

1. Coastal States shall adopt laws and regulations to prevent,
reduce and control pollution of the marine environment arising
from or in connection with seabed activities subject to their
jurisdiction and from artificial islands, installations and
structures under their jurisdiction, pursuant to articles 60
and 80.
2. States shall take other measures as may be necessary to
prevent, reduce and control such pollution.
3. Such laws, regulations and measures shall be no less
effective than international rules, standards and recommended
practices and procedures.
4. States shall endeavour to harmonize their policies in this
connection at the appropriate regional level.
5. States, acting especially through competent international
organizations or diplomatic conference, shall establish global
and regional rules, standards and recommended practices and
procedures to prevent, reduce and control pollution of the
marine environment referred to in paragraph l. Such rules,
standards and recommended practices and procedures shall be re-
examined from time to time as necessary.
As a non-party that shares interests in preventing or reducing
marine environmental pollution from seabed activities, the United
States seeks strong environmental protection rules for seabed mineral
development and works through the International Maritime Organization,
the Arctic Council and other international bodies to ensure effective
regulation for activities in the US EEZ and in the EEZs of other
nations. Unfortunately, having not yet joined the Convention, US
diplomats start from behind in assuring foreign states of commitment to
the Convention's principles and face difficulty in leading the
development of provisions for marine environmental protection.
The fifth paragraph of article 208 could provide the US with
leverage to engage other nations in multilateral discussions of rules,
standards and practices for continental shelf development. In the
Caribbean Sea, the United States already works through the Cartagena
Convention and its protocols to provide a regional approach to marine
environmental protection in the Caribbean.

Regional Maritime Governance
The Cartagena ``Convention for the Protection and Development of
the Marine Environment in the Wider Caribbean Region'' is the umbrella
agreement addressing the marine environment in the region of the
Caribbean Sea. The Convention was adopted in conjunction with its
protocol on oil spills in 1983.
The oil spill protocol recognizes the responsibility of states
parties to take preventative and remedial actions to avoid and respond
to oil spills, to share information, to require their nationals to
report oil spill incidents, notify other parties of spills, establish
operational measures, create subregional arrangements, and establish
institutional arrangements.
A protocol to the Cartagena Convention addressing land-based
sources of pollution came into force in 2010 and the United States,
Cuba and the Bahamas are all parties to the agreement.

Resolving International Disputes
Dispute settlement processes always pose an issue of effectiveness
versus freedom of action. The Cartagena Convention provides an arbitral
process that parties may use if they agree to do so, but it is clearly
not mandatory, though the commitment to resolve disputes peacefully is
mandated.
In the LOS Convention, marine environmental disputes related to the
continental shelf may be referred to mandatory dispute settlement, but
only as allowed by Article 297, Paragraph 1(c), which limits mandatory
settlement to cases ``when it is alleged that a coastal State has acted
in contravention of specified international rules and standards for the
protection and preservation of the marine environment which are
applicable to the coastal State and which have been established by this
Convention or through a competent international organization or
diplomatic conference in accordance with this Convention.'' As such, a
party to the Convention could only be bound to mandatory settlement
when has agreed to ``specified international rules'' and may, as part
of another agreement, establish dispute resolution procedures that
supersede those of the LOS Convention, although the default arbitration
processes of the convention may be agreeable to parties to the
Convention.

Conclusions
The UN Convention on the Law of the Sea provides the international
legal framework for a strong US offshore industry to operate in the US
extended continental shelf and for protection of US interests in the
marine environment. The provisions of the Convention related to the EEZ
have largely been accepted as customary international law unaffected by
US non-party status other than lack of access to the dispute resolution
provisions of the Convention. With regard to the continental shelf
beyond the EEZ, however, the United States lacks access to the
Commission on the Limits of the Continental Shelf for international
recognition of claims beyond the EEZ and cannot expect recognition of
claims to an extended shelf by other states as long as the US rejects
the revenue sharing provisions of article 82 of the Convention and
other provisions that form the package deal agreed to by all parties in
return for coastal state authority over mineral resources of the
continental shelf beyond the EEZ.
Provisions of the Convention related to marine environmental
pollution from activities on the continental shelf are relevant to the
United States both as a developer of the continental shelf and as a
neighbor of countries that develop their own shelves. If the US becomes
a party to the Convention, it will have greater leverage to negotiate
rules, standards and practices to protect its marine environment from
activities in foreign EEZs. However, consideration must be given to the
advantages and disadvantages of mandatory dispute settlement both under
the Convention and under regional agreements and ensure that future
agreements, treaties and conferences reflect US interests in the
balance of mandatory settlement and national autonomy of action.
Dispute resolution provisions of conventions and protocols can be
negotiated to incorporate their own dispute settlement provisions that
provide for negotiation of differences with binding arbitration as an
option subject to mutual agreement of the parties, which would resolve
any lingering US concerns over the LOS Convention's dispute settlement
provisions.
______

Mr. Lamborn. All right. I want to thank each of the
witnesses for their testimony. Members of the Committee may
have additional questions for the record, and I would ask that
you respond to those in writing.
We will now begin questioning. Members are limited to five
minutes for their questions, but we may have additional rounds.
And I now recognize myself for five minutes.
First of all, a general statement. I would like to thank
you for being here and for the varying and diverse opinions
that were expressed. Cuba's interest in pursuing offshore oil
and gas development certainly is a dangerous prospect to which
we have almost no clear understanding of their plans,
commitment or capability.
As we hear more about Cuba, we see a multitude of U.S.
agencies working to help Cuba's drilling to go forward: the
Bureau of Safety and Environmental Enforcement or BSEE, the
State Department, the U.S. Coast Guard, NOAA, the Commerce
Department and the Office of Foreign Assets Control through the
Treasury Department. As Chairman of this Subcommittee, I would
just like to say I wish there was equal effort to help our own
oil and gas resources to be produced in the Outer Continental
Shelf here in the United States.
OK. First question. Mr. Claver-Carone, you mentioned that
the Cuban Government has pushed offshore drilling for the past
20 years. Have you noticed an increase in engagement by this
particular Administration on this issue at such a level as we
have seen recently?
For instance, we know, as was stated in earlier testimony
on this panel, Mr. Riley, the Chairman of President Obama's
hand-picked Oil Spill Commission, recently went down there to
meet with Cuban officials.
Mr. Claver-Carone. Well, I think that they have been at it
for 20 years. Since 2001, frankly, there has been a licensing
process in regards to oil spill mitigation firms in order to
have some type of safety mechanism in place as there has been
now.
In regards to this particular Administration, my biggest
fear, we have seen that sanctions have worked as a deterrent
for the last 20 years in keeping this offshore exploration from
taking place. If the Administration would have taken a harder
stance from day one toward Repsol--there was an opportunity
earlier this year when actually Secretary Salazar was in Spain
and he met with Repsol. Repsol came out of that meeting
thinking that they had a green light as opposed to saying hey,
don't go there.
I believe, as we have seen in the last 20 years, if the
Administration would have taken a stronger stance, would have
strongly tried to dissuade the Spaniards from proceeding that
we really wouldn't have been seeing this right now. Absolutely.
Mr. Lamborn. All right. Thank you for that answer.
Mr Whittle, as you mentioned, you were part of a recent
group that traveled to Cuba to speak with Cuban officials.
In the past, the Environmental Defense Fund has called
offshore drilling in the U.S. a tragic sacrifice. However,
after traveling to Cuba you seem to have a more optimistic view
of drilling in Cuba waters. You were quoted as saying of Cuban
officials that ``they are taking the lessons of the BP spill
very seriously.''
Do you see any inconsistency in the more pessimistic view
that your group has expressed about U.S. offshore drilling
versus what seems to be a more optimistic view of Cubans
drilling offshore?
Mr. Whittle. Thank you, Mr. Chairman. Let me clarify our
position on offshore drilling. We have consistently opposed
offshore drilling off the coast of New Jersey, Virginia, North
Carolina and California. We have not opposed offshore drilling
in the western or central Gulf, and in fact after the BP
disaster we have worked to improve standards and have had some
measure of success.
In Cuba, we do not oppose or support offshore drilling. In
fact, we have grave concerns with the drilling in the area that
it is. It is in sensitive marine environments, and a spill
could risk Cuban marine life and ecosystems and those in the
U.S.
As far as my state of North Carolina, the way we look at it
is Cuba is determined to drill. I believe that it will begin
drilling this year or early next year. The rig is on its way. I
cannot comment on whether sanctions would work or not. We are
extremely concerned that if drilling begins anytime soon that
the U.S. simply isn't prepared to protect our environment.
Mr. Lamborn. And that is what you meant when you said you
came back and you thought that they needed to do more? I mean,
you weren't satisfied with the status of where they stood in
their oversight capabilities?
Mr. Whittle. Right. We were there for about five days, and
we had maybe two and a half to three days of intense meetings
with engineers, scientists, officials, et cetera, and so we got
a first glimpse at what steps are being taken in terms of
training, regulation, et cetera. A fair amount has been done.
There are a couple gaps.
One thing we pointed out, Cuba doesn't have an oil spill
prevention fund like we do in the United States. So if there is
a spill, how do you pay for the cleanup? It was extremely
important in responding to BP. Liability questions, capability,
independence.
Cuba is just now beginning to develop an offshore industry
and, frankly, they don't have the history of regulating. We
found out the hard way that even in the U.S. we did not have
the accountability we thought we had beforehand. So many
questions that can only be answered through continued
conversations like this.
Mr. Lamborn. OK. Thank you. I would now like to recognize
the Ranking Member.
Mr. Holt. Thank you, Mr. Chairman. I would like to continue
that line of questioning, Mr. Whittle.
We appreciate the efforts of groups like the Environmental
Defense Fund to reach out to Cuba, and I think you have
experience with let me call it the Riley delegation in the
bilateral discussions. You have said a little bit about this,
but I would like to give you more time to elaborate.
Both on inspection to prevent spills and on response in the
case of a spill, what more can we do and what more might we
wish we could do to be assured that things would be handled
well?
I was struck by what I thought was a lack of alarm from the
government witnesses a few minutes ago, and I would like to be
assured. I would like to think that everything is fine. I
wonder from your visits to Cuba whether you are comfortable
with their safety standards and, if not, what you would wish
that we as the United States could do about that.
Mr. Whittle. Thank you. I have been following Cuban
environmental law and policy for about a decade and have been
impressed how strong their basic framework, laws and policies
are. In fact, many of them have been based upon U.S.
environmental law and some are in fact a bit stronger.
In terms of ensuring that inspections are comprehensively
done and response is well done, I think the model is the
relationship we have with Mexico. In fact, as Director Bromwich
testified, following the BP spill, despite the fact that we had
an agreement in place, he indicated that we have taken many
steps to strengthen the agreement and understanding. So we have
greater confidence that inspections in Mexican waters will be
done adequately because of that agreement and that ongoing
dialogue.
In other words, there is much more transparency of what is
going on in Mexico than in Cuba to U.S. Government agencies
with the expertise.
In terms of responsiveness, the Cubans do not have the
capacity to respond to a major oil spill. They are relying upon
Repsol and other foreign countries to contract out. I am
encouraged that Treasury and Commerce have begun issuing
licenses. I think bureaucratically that it is a slow process,
and in the event of an emergency even best-case scenario it
would take several days to get everything lined up, and because
of the Florida currents that could be too late.
Mr. Holt. If the drilling is going to begin in a matter of
months I believe, should we pursue the national hurricane
agreement, a bilateral agreement, as a model for getting in
place environmental cooperation? Does the hurricane agreement,
with which I am not familiar with, provide exemptions to the
embargo or is it just exchange of information? And I would like
any of the witnesses who are prepared to talk about this to
take that on. Is this a model that we should use for
environmental protection?
Mr. Claver-Carone. If I may address that, Congressman? You
know, first of all, in regards to the observation that Cuba's
environmental laws are very impressive and things of the sort,
I would like to remind everyone Cuba is a totalitarian state.
You know, basically rulemaking in Cuba is based on a dictator
and his whim. So everything might look very pretty on paper.
You know, actually Cubans have constitutional rights, but at
the end of the day that doesn't exist.
In regards to the hurricane agreement, I actually think
that is the case in point of the dangers of this. While it
might be very pretty in theory and on paper, the reality of the
hurricane agreement in practice, pursuant to Hurricane Michelle
in 2001 and Hurricane Dennis in 2008, has been the high
politicalization of this agreement by the Castro regime.
The United States has even offered aid for hurricane relief
to Cuba and the Castro regime. It hasn't saved lives; it has
actually cost lives. Cuba has refused to accept that aid unless
the United States eases sanctions. So we see how the Cuban
Government is almost masterful at manipulating the agreement.
Mr. Holt. In the short time remaining, do other witnesses
have any comments on this matter? Thank you.
Mr. Whittle. I think in fact the hurricane cooperation does
show that there are certain issues--narcotics, migration,
hurricanes and I believe the environment--in which the two
countries can have a dialogue independent of the more
controversial issues that separate us.
Mr. Claver-Carone. May I answer that?
Mr. Holt. Well, I think my time is expired.
Mr. Claver-Carone. It will take two seconds.
Mr. Holt. Unless I get more time. Thank you.
Mr. Lamborn. OK. We will have a second round, and we could
certainly pursue that at that time.
The gentleman from Florida?
Mr. Rivera. Thank you, Mr. Chairman. My questions are to
start off for Mr. Pinon. I know you have spoken extensively on
this and have given the perception when you do speak that you
try to be a neutral observer or analyst on this matter, and I
appreciate that, but I need to ask you. You have often traveled
to Cuba and met with officials from the Cuban Interest Section
here in Washington regarding this matter. In your discussions
and your travels with Cuban officials, do you ever discuss with
them how to best approach the American Government in terms of
easing sanctions?
Mr. Pinon. No, sir, I have not.
Mr. Rivera. And when I talk about easing sanctions, I am
including in there sanctions regarding the energy sector and
oil exploration. Do you ever discuss those issues?
Mr. Pinon. No, sir, I have not.
Mr. Rivera. And the reason I ask is much of your testimony
today and previously and other remarks that you have made has
been couched around the issue of the Deepwater Horizon accident
and couched on issues related to preparing for a disaster.
But even previous to the Deepwater Horizon, in comments and
testimony that you have given, and I will point to one in
particular back in 2009, April 2009, testimony that you gave
before the House Oversight and Government Reform Subcommittee,
you spoke about the importance of Cuba achieving energy
independence. You spoke about the importance of allowing U.S.
companies to contribute in developing Cuba's hydrocarbon
reserves as well as renewable energy such as solar, wind,
sugarcane, ethanol. So even much before----
Mr. Pinon. Yes.
Mr. Rivera.--the Deepwater Horizon crisis you had been
advocating----
Mr. Pinon. Yes.
Mr. Rivera.--for increased engagement----
Mr. Pinon. Yes.
Mr. Rivera.--between U.S. companies in Cuba's energy
sector.
Mr. Pinon. Yes.
Mr. Rivera. And in fact, you have advocated for the fact
that U.S. companies should be allowed increased access to those
energy sectors.
Mr. Pinon. Yes.
Mr. Rivera. So, Mr. Chairman, with your permission and with
unanimous consent, I would like to ask that that testimony from
April 29, 2009, by Mr. Pinon be entered into the record for
this hearing as well.
Mr. Lamborn. If there are no objections, so ordered.
[The testimony of Mr. Pinon submitted for the record by Mr.
Rivera follows:]

Oral Testimony of Mr. Jorge Pinon

Energy Fellow, Center for Hemispheric Policy, The University of Miami

Before the

House Oversight and Government Reform

Subcommittee on National Security and Foreign Affairs

Hearing on ``National Security Implications of U.S. Policy toward Cuba

April 29, 2009

Thank you, Mr. Chairman.
Nearly two years ago, under the auspices of the Brookings
Institution, I was invited to be part of a group of 19 distinguished
academics, opinion leaders and international diplomats committed to
(ph) seeking a strong and effective U.S. policy toward Cuba. Under the
leadership of Ambassador Palos Pasquale (ph) and Ambassador Vicki
Huddleston, a team of well-known experts in the field of U.S.--Cuba
relations carried out a series of simulation exercises and discussions
that have served to enhance our understanding of the complex political
realities of Cuba and the United States.
By testing the responses of several strategic actors and
stakeholders a variety of scenarios, we have identified potential
catalysts and constraints to political change on the island The end
result of our effort was a road map report entitled, ``Cuba: A New
Policy of Critical And Constructive Engagement,'' which I believe the
committee has a copy of.
Two-fourths Cuba's petroleum (inaudible) currently relies on
important, and Venezuela is the single source of this import under
heavily subsidized (inaudible) returns. This petroleum dependency,
valued at over $3 billion in 2008, could be used by Venezuela as a tool
to influence a Cuban government in maintaining a political antagonistic
and belligerent position toward the United States.
Cuba has learned from past experiences and is very much aware of
the political and economic risk and consequences of depending on a
single source of imported oil. The collapse of the Soviet Union in 1991
and a 2003 Venezuelan oil strike taught Cuba very expensive lessons.
Raul Castro understands the risks. His recent visits to major oil
exporters, such as Brazil, Russia, Angola and Algeria, underscore his
concerns.
A relationship with Brazil would provide a bonus to Cuba's current
dependency, while others could (inaudible) a corrupt and unsavory
business practices. Only when Cuba diversifies suppliers and develop
its own resources, estimated by the U.S. to be at 5.5 billion barrels
of oil and 9.8 trillion cubic feet of natural gas, would have the
economic independence needed in order to consider the political and
economic evolution.
Although Cuban authorities have invited the United States oil
companies to participate in developing their offshore oil and natural
gas resources, U.S. law does not allow it. Today, international oll
companies such as Staines-Wetzell (ph), (inaudible), and Brazil's
Petrobras are active in exploration activities in Cuba's Gulf Mexico
waters.
American oil (ph) and oil and equipment service companies have the
capital, technology and operational know-how to explore, produce and
refine in a safe and responsible manner Cuba's potential oil and
natural gas reserves, with the remaining (inaudible) line, because our
almost (inaudible) five (inaudible), international (ph), political and
economic embargo.
The president can end this impasse by licensing American companies
to participate in developing Cuba's offshore oil and natural gas. In
the opinion of legal experts consulted, Mr. Chairman, no legislation
prevents the president from authorizing U.S. oil companies from
developing Cuba's oil and natural gas reserves.
A Cuban government influenced by its energy benefactors, would most
likely result in a continuation of the current political and economic
model. If Cuba's future leaders are (inaudible) to fill the power
vacuum left by the departure of the old cadre, they could become
(inaudible) of illicit business activities, drug cartels, and the
United States could face a mass illegal immigration by hundreds of
thousands of Cubans.
The Brookings Report proposes, Mr. Chairman, as part of a full (ph)
strategy, a policy that supports the allegiance (ph) of the Cuban state
where the Cuban people (inaudible) in the political and economic future
of their country to Democratic rules. And to achieve this goal, Mr.
Chairman, Cuba must achieve energy independence.
In conclusion, Mr. Chairman, if U.S. companies were allowed to
contribute in developing Cuba's hydrocarbon reserves, well as renewable
energy such as solar, wind, and sugar cane ethanol, it would reduce the
influence of autocratic and corrupt government on the island's road
toward selfdetermination. Most importantly, it would provide the United
States and other Democratic countries with a better chance of working
with Cuba's future leaders to carrying out reforms that will lead to a
more open and representative society.
Thank you, Mr. Chairman.
______

Mr. Rivera. Thank you very much. So I would think that in
terms of your testimony today being couched around the
Deepwater Horizon accident, that is really not the impetus for
your advocacy in terms of engagement for the energy sector in
Cuba. You have been for several years now advocating for that
increased engagement.
Mr. Pinon. Yes.
Mr. Rivera. Would that be accurate?
Mr. Pinon. That is correct. That is correct.
Mr. Rivera. I believe to do so, as I discussed earlier, all
those energy sectors that you mentioned in terms of increased
engagement, whether it be hydrocarbon, solar, wind or
sugarcane, ethanol, you would agree all those energy sectors in
Cuba are not controlled by any private entities but are
controlled by the Castro dictatorship?
Mr. Pinon. That is correct.
Mr. Rivera. So, if we were to engage or to follow your line
of reasoning and to allow more engagement by U.S. companies
with the Cuban energy sector, the financial windfall would fall
to the Cuban Government as well?
Mr. Pinon. Yes, but there is an issue of--may I?
Mr. Rivera. Sure.
Mr. Pinon. Yes. The testimony that you are referring to was
testimony based on the Brookings reports of which I was a
member, along with Pepe Hernandez from the Cuban National
American Foundation and a group of another 19 people, including
Ambassador Pascual and others. So my testimony that I gave to
the House in 2009 was based on the new policy of critical and
constructive engagement with Cuba out of the Brookings reports,
of which I was a member.
I would encourage the Members to read this report because
what it encourages us to do is that for the economic and
political transition of Cuba what we argued here was that we
needed not a weak Cuba where a power vacuum would be left but a
strong Cuba. We also studied in this report that the monetary
impact, the monetization of any of Cuba's resources, will take
anywhere between five to 10 years.
Mr. Rivera. I have run out of time. I have run out of time,
but I will just state the fact that any----
Mr. Pinon. The answer is yes.
Mr. Rivera. I understand that.
Mr. Pinon. Yes.
Mr. Rivera. The fact that any report that would argue to
make the Castro dictatorship stronger is flawed on its face.
Mr. Pinon. Fine.
Mr. Rivera. Thank you, Mr. Chairman.
Mr. Lamborn. OK. Thank you. Mr. Duncan of South Carolina?
Mr. Duncan. Thank you, Mr. Chairman. I apologize. Having a
markup in another committee sort of took my focus away from
this hearing, and I hate that I missed Mr. Bromwich when he was
here because we have had a lot of conversations this year on
this Committee about the safety and the de facto moratorium,
the actual moratorium and drilling in the Gulf of Mexico. The
fact is that we are drilling off the coast of Brazil and
supporting that. Our President is saying we will be your first
and best customer.
And I think about Deepwater Horizon. It was 50 miles off
the coast of Louisiana, and we had a terrible accident there
that impacted the environment. We had a hearing last week about
the true impacts of that horrific event to the shrimpers and
the oystermen and also the welders and pipefitters and other
things and the money that might be available or not.
And so I reflect back on my experience under MMS, under the
Outer Continental Shelf Five Year Planning Subcommittee, which
I was on for about 18 months in the waning years of the last
Administration. I remember when we were talking about a five-
year plan of where we were going to allow offshore drilling and
lease sales.
I think about the very limited area that we were able to
even talk about on that committee was western Gulf of Mexico,
no eastern GOM at all, a very small grid square in the Alaskan
Sea, nothing on the Outer Continental Shelf on the Atlantic
side and nothing around Florida. Yet here we are having a
conversation today with these panelists about Cuba harvesting
resources off their coast and allowing foreign companies to
come in and help them, assist them with that.
But the question I have is, OK, we are not allowing lease
sales for American companies that would be under American laws
and American regulations. The safety that we learned from
Deepwater Horizon, those mechanisms would be put in place, are
being put in place in the Western GOM and anywhere the United
States allows deepwater drilling off our Outer Continental
Shelf. Yet we have Cuba 90 miles off the coast of Florida. If
you come north to the drilling waters where they are going to
purport to be drilling, it is very, very close to, according to
the environmentalists, the very fragile waters around the coast
of Florida.
And so my question would be, and it will be in panel two
because I won't have enough time to ask this question and get
an answer and delve into it, but we will in a minute, is what
kind of safety mechanisms are in place? What sort of power does
the United States have toward a foreign government, especially
one that we have no diplomatic ties with at all?
How can we ensure that the Chinese companies that are doing
the drilling off the coast of Florida and off the coast of Cuba
are going to implement the safety requirements that our own
drillers and our own producers have to put in place in order to
get back to work?
The slow walking of the permits by this Administration of
American companies that want to produce American resources, the
slow walking of those permits to make sure, to ensure to
Americans that we won't have another Deepwater Horizon, we have
no certainty that the Cuban companies and the Cuban drilling
efforts are putting in place those safety requirements that we
won't have a Deepwater Horizon type accident off the coast of
Cuba that will impact the waters of Florida, the Keys and even
the Gulf Coast states.
And so those are the kind of questions that I want to see
answered. That is what I am interested in, and I appreciate you
giving me the time. I look forward to the second round of
questioning.
Mr. Lamborn. Did you want one of the witnesses to respond
to what you just commented on?
Mr. Pinon. If I could?
Mr. Lamborn. OK. The gentleman has yielded back, so we are
going to start our second round of questions.
Mr. Whittle, let me follow through on one other thing that
had to do with the trip we were talking about that you and
others took to Cuba recently. Were you able to talk to or about
the plight of environmental activists when you met with Cuban
officials, some of whom have been oppressed and mistreated?
Mr. Whittle. No, sir, we did not talk about that during
this particular trip.
Mr. Lamborn. OK. Mr. Carone, you note that the Cuban
Government in the past expropriated U.S. oil assets from Esso
in Texas. Do you think there is any possibility that that could
happen with their relationship with Repsol's assets?
Mr. Claver-Carone. Perhaps, and we are seeing that actually
it has happened now with a bunch of companies in other sectors
in Cuba in other industries that have actually been long-term
trade partners of the regime. You know, it is kind of always
whimsical with them and when it meets their interest.
In the case of Repsol, Petronas, and India's ONGC, I think
there is a peculiar situation there because those companies,
there is a Chavez angle. The Chavez angle is that those
companies have been given rights, extensive rights last year,
to drill in an area in the Orinoco belt which has over 235
billion barrels of oil. That is over 50 times what can be
expected in all of Cuba's offshore waters.
Therefore, there is a lot of geopolitical profiling taking
place there, and Chavez to a degree is protecting them and sort
of pushing them in that realm in order to be in this situation,
in order to be able to extract and push and have the fear
factor like we saw in 2006 with the Chinese, to basically push
the United States to unilaterally ease sanctions, which is
something that they use with all of these issues. We have seen
it.
You know, when we talk about these cooperation agreements
in regards to narcotics, yes, we cooperate with the Cuban
regime in narcotics. Yet we still have open indictments for
senior officials of the Cuban regime for narcotrafficking here
in the United States.
I mentioned the environmental. This is a long trend of
using these issues to try to unilaterally extract political
concessions from the United States, which is very worrisome.
Mr. Lamborn. OK. Thank you. I would now like to recognize
the Ranking Member.
Mr. Holt. Thanks. Ms. Antrim, a number of commercial
organizations--the American Petroleum Institute, the
International Association of Drilling Contractors, the National
Ocean Industries Association and others have called for
ratifying the Law of the Sea. It appears that industry is wary
of making investments in waters--well, in many places around
the world but also around the U.S. Do you think that
ratification of the Law of the Sea would benefit these
extraction industries? They seem to think so.
Ms. Antrim. Thank you for the question. Yes, I do agree
with that. When we were looking at this during the Reagan
Administration and preparing to go back to the final
negotiating session we had delegations go to major industries
to talk about the importance of obtaining international
recognition of mining rights, of title to secured minerals. We
were mainly looking at deep seabed minerals, but oil and gas of
the extended shelf fall into the same category.
Mr. Holt. Now would ratification or full participation in
the Law of the Sea treaty allow resolution of the kinds of
liability questions that were raised earlier about damage from
oil spills?
Ms. Antrim. It provides a channel to do that, but the Law
of the Sea Convention is very much a framework convention. Some
of that work would be pursued through regional organizations
such as the Cartagena Convention process, but as we develop
more guidelines and regulations through the International
Maritime Organization those become the minimum standards that
all nations are expected to apply to their activities. If we
reach those through a multilateral process, they become
something that we can actually use dispute resolution to
enforce. So, yes, it does strengthen our hand with regard to
protecting ourselves from activities in foreign zones.
Mr. Holt. Thanks. I would like to go back to pursue a
question I asked a few minutes ago that I am still not clear
on. I was asking about the hurricane agreement and whether that
would serve as a model.
We have heard that Cuba might not be well prepared to deal
with a major oil spill. We have heard from our own Coast Guard
that they/we are dependent on commercial organizations,
commercial entities coming in to assist with the cleanup. I
will sort of repeat the question I asked before. Could the
hurricane agreement serve as a kind of model?
Under that are there permitted general licenses? Are there
permitted exemptions of the embargo? I am concerned about what
is going to happen to the Gulf waters, to the environment, to
the U.S. Gulf Coast if there is a major oil spill relatively
close to the United States that the Cubans for whatever reason,
whatever their internal politics, are unable to deal with and
we are still confronted with an embargo.
I am not here trying to say this--let us assume the embargo
remains in place. Is there a way to deal with the environmental
problem that looms? Yes? Yes, please.
Mr. Whittle. I am happy to take that one on. The Executive
Branch has Presidential prerogative with current laws in place
to engage with the Cubans both through the licensing authority
and through diplomatic discussions.
The hurricane example is a good model for U.S. Government
dialogue and cooperation, not so much for licensing and sending
personnel. We have sent hurricane hunters in Cuban airspace. We
have trained Cubans. There is a pretty active exchange of
nongovernmental experts on hurricanes that the Center on
International Policy conducts, bringing officials from
Galveston, from Louisiana and elsewhere to Cuba to look at how
Cuba prepares, so there is some dialogue and discussion.
But there is authority. The model that the hurricane
example provides is just that. There are issues in our national
interest that can be conducted independent of these more
controversial issues, and I would just like to say that having
a dialogue and some limited cooperation in oil and gas will not
facilitate keeping the oil and gas production. I am convinced
they are moving in that direction now and that they will begin
drilling independent of whether we make that step or not.
Mr. Holt. Thank you. I guess the time has expired.
Mr. Lamborn. OK. Thank you. The gentleman from Florida?
Mr. Rivera. Thank you, Mr. Chairman.
For Mr. Whittle, a couple questions. Can you tell me a
little bit about Cuba's environmental record nonenergy sector?
Mr. Whittle. Yes, sir. Since the mid 1990s, Cuba has at
least on paper made the environment a policy priority. They
established a cabinet level ministry for the environment, and
they ushered in a new suite of environmental laws, everything
from a NEPA law, environmental impact statements, to a Coastal
Zone Management Act to protect the area law, et cetera.
Cuba has a mixed record on the environment. They have a
number of environmental problems and challenges from water
pollution to air pollution, extensive soil erosion associated
with intensive agriculture. They have also done a good job in
certain areas in protecting natural areas. They have a system
of national parks and refuges where they intend to protect up
to 25 percent of the Cuban insular shelf and up to 20 percent,
I believe, of Cuban territory. They have done a good job of
protecting coral reefs, mangrove forests, sea grasses and other
fish habitat.
They have some problems in managing fisheries, commercial
fisheries now, so it is a mixed bag like it is everywhere else,
but I have seen good progress in conserving coastal areas and
natural areas in the last 10 years as a direct result of the
laws implemented since 1995.
Mr. Rivera. Well, let me ask Mr. Claver-Carone. Mr. Whittle
says it is a mixed record, some problems. Would you agree with
that? What would be your assessment of Cuba's environmental
record?
Mr. Claver-Carone. Cuba's environmental record
historically, particularly under this regime, has actually been
quite disastrous. I mean, we have seen from 1969 when they
grazed pretty much all of Cuba's land in order to plant
sugarcane throughout. I mean, if there were environmental
crimes against humanity, that would be definitely on the top of
the list because Cuba has pretty much lost--it used to be able
to feed itself. Cuba has not been able to do so since then. So
definitely I don't think Cuba's environmental record is one to
be admired.
On this particular issue I think there is one big concern
that I think no one has really talked about in regards to the
general licenses and the hurricane cooperation. We have general
licenses for government officials, and that is how it is really
used in regards to the hurricane. I mean, NOAA officials go
there, et cetera, the general licenses for the Coast Guard to
be able to do the same and for other government officials in
regards and Interior to be able to do the same in that regard.
I really urge caution. I think since 2001 the Treasury
Department has been licensing specific disaster oil mitigation
relief efforts to the island and different specialty companies,
but I urge great caution in regards to a general license for
commercial basically response. That would create a scenario in
which there would be no control whatsoever.
And I think that the Coast Guard can tell you and I know
Mr. Pinon painted one scenario in his testimony in which he had
all the vessels that went down in regards to the Deepwater
Horizon. That would be the Coast Guard's security nightmare. To
have 5,000 vessels pretty much going down to Cuba uncontrolled,
unlicensed, et cetera, would be a security nightmare for the
Coast Guard. That would be the largest maritime traffic since
the Morielle, and we saw how the Cuban Government used that
against us when that was supposed to be just about migration
and they used that against us.
So I really urge caution, and I am sure the Coast Guard
speaks for itself in that regard, but general licensing would
be probably one of the most dangerous things we can do for a
mass commercial response and for individual response to this
drilling.
Mr. Rivera. Let me ask you in the minute that I have left
also for Mr. Claver-Carone. With respect to the comments made
earlier as to energy independence on behalf of the Castro
dictatorship or strengthening the dictatorship's energy sector,
what type of impact would that have on potential democratic
reforms or changing the nature of the regime?
Mr. Claver-Carone. It would be devastating. I mean, energy
has always been the Achilles heel of the regime. Therefore, we
have seen this. We saw the Soviet subsidies through 1991. Then
their new godfather, and that was pretty much as the Chairman's
question before had gone to, their new godfather is Chavez. So
why is Repsol and Petronas and these companies protected?
Because Chavez is their godfather. He is protecting them, and
he is protecting them with these subsidies. That wouldn't be
the case for American companies of course.
So that essentially is what has maintained the economic
livelihood of this regime. Now, even if they discovered some
offshore, which, like I said, they have been at it 20 years. In
2004, Repsol said nothing there. Petrobras said not worth it.
Sherritt has said I am out of here. You know, would it be
sufficient to maintain that regime? Maybe, maybe not.
But the one beneficiary immediately would be Chavez. That
would be less than the 100,000 barrels a day that he has to
send to the regime, and that is something that Chavez is also
looking forward to, and a strong Chavez is a strong Castro, and
a strong Castro is a strong Chavez.
Mr. Rivera. Thank you, Mr. Chairman.
Mr. Lamborn. OK. The last person asking questions is
Representative Duncan of South Carolina.
Mr. Duncan. Thank you. I would just follow back up with
some of the comments I made earlier.
Mr. Whittle, does your group, the Environmental Defense
Fund, do you all advocate drilling off the coast of Cuba?
Mr. Whittle. No, sir. As I explained maybe before you
showed up, domestically we oppose oil and gas drilling offshore
of sensitive areas off North Carolina, Virginia, New Jersey and
California. We do not oppose offshore drilling in the Gulf of
Mexico, particularly in the western and central Gulf. We do
think offshore is here to stay. We are strong advocates of an
alternative energy future, but we recognize the place of
offshore.
In terms of Cuba, we don't take a position on their
drilling. We recognize that they will drill, so our posture has
been if and when Cuba drills it is imperative that steps be
taken, that we protect our environmental and economic
interests.
Mr. Duncan. OK. Mr. Pinon, you were going to comment on
something I had said earlier. I will give you the opportunity
now if you have a question or a comment.
Mr. Pinon. Yes. I think your comment was about
environmental regulations. One of the things, I am not an
academic. I am retired after 32 years in the oil industry. I
was president of Amoco Oil-Latin America.
I can tell you that I have been to countries in which the
environmental regulations, when you and I would pull them off
the shelf, they are probably the best in the world and you and
I will be surprised. They are meaningless unless the regulators
have the resources, the expertise to enforce those regulations.
I am the first to admit that in the case of the Bahamas and
Cuba and even maybe Mexico the regulations on the shelf might
be fantastic. In fact, they might very well just copy the U.S.
regulations. But as far as the enforcement is concerned, it is
certainly lacking.
Mr. Duncan. All right, sir. You are saying that it is
safer? The practices they put in place are safer than what
Americans are doing now in the Western Gulf?
Mr. Pinon. No. What I am trying to say is that even though
Cuba might have the regulations in place, the Government of
Cuba itself, the regulatory agencies, don't have the set of
skills and/or experience to enforce them.
In this case, you do have something to protect you, and
that is Repsol. Repsol just drilled about a year ago the
prospect Buckskin, which was about 180 miles south of Houston.
It was a record-setter at a 32,000 feet depth. So here is a
company that has a U.S. interest. Here is a company that is
very well versed in know-how, in experience, following U.S.
regulations, and they are the first ones that are going to
drill in Cuba.
The second company, by the way, as soon as the excavator 09
finishes with Repsol, which will be sometime in April, it is
going over to Petronas. No one in the first panel I assure you
even has the telephone number of Petronas. They wouldn't even
know who Petronas is. So it is sad that all of the emphasis has
been put on Repsol. If we are really concerned about safety, we
should have been engaging Petronas and Gazprom, who are taking
over the excavator 09.
You are right, Representative Rivera. As soon as that rig
leaves Trinidad and Tobago, a lot of things can happen before
she gets to Cuba. When that rig leaves the hands of Repsol in
April and goes over to Petronas, we won't even have a telephone
number to call and talk to. That to me is really totally
unacceptable.
Mr. Rivera. Mr. Claver-Carone, the resources that are being
harvested, where are they going to be refined? Is Cuba building
refineries?
Mr. Claver-Carone. And that is the million dollar question.
I mean, they have talked about like the regime does a lot of
propaganda that Chavez and the Chinese are building this huge
facility for refining in Cuba, but that will take years and
years. Even the Venezuelans refine their oil here in the United
States. The Mexicans refine their oil here in the United
States.
What will they do with it? I think that part of their big
strategic bet here is that with all this that we are hearing
eventually they are going to start garnering support from
different lobbies here in the United States that are going to
push to lift sanctions, and therefore whatever we find in Cuba
we will be able to refine here in the United States and then
repatriate it back to Cuba. You know, that is one bet.
Another bet is maybe with the expansion of the Panama Canal
with tankers being able to go by will they be able to send it
to China? It is still very expensive. So that is one of the
huge impediments and has been one of the deterrents that for
the last 20 years has prevented Cuba from doing.
In regards to Petronas coming after, I guarantee you that
if Repsol once again, as they did in 2004, comes out with a
commercially unviable find that Petronas will not be following
up in any way whatsoever.
Mr. Duncan. My hope is that our refining capacity, which we
have capacity now, will be filled up with the Keystone XL
Pipeline and oil coming from Canada, a friendly country who we
will have economic relations with. My fear is that the Cuban
oil will go to Venezuela or Valero's Refinery in Aruba, which
is all part of the Venezuelan regime. So that is an interesting
concept. Thank you. I yield back.
Mr. Lamborn. All right. That concludes our questioning.
This has been a good hearing.
As I said earlier, Members may have additional questions
for the record, and I would ask that you respond to those in
writing. Thank you for being here.
If there is no further business, without objection the
Committee stands adjourned.
[Whereupon, at 11:57 a.m., the Subcommittee was adjourned.]

[Additional material submitted for the record follows:]

Council of the Americas

NORTH AMERICAN OFFSHORE ENERGY: MEXICO AND CANADA BOUNDARY TREATIES AND
NEW DRILLING BY CUBA AND BAHAMAS

The Council of the Americas (``Council'') appreciates the
opportunity to provide a statement for the record concerning North
American offshore energy, particularly deepwater drilling in the Gulf
of Mexico. The Council is a business organization representing some 190
member companies invested in and doing business throughout the Western
Hemisphere. Since our founding in 1965, the Council has been dedicated
to the promotion of open markets, social and economic development,
democracy, and the rule of law, and we are widely recognized for our
policy and commercial leadership throughout the Americas.
The Council is deeply engaged in hemispheric energy issues as well
as U.S.-Cuban relations through member working groups. The Energy
Action Group brings together the public and private sectors to develop
strategic energy policies for the Americas. The Energy Action Group
hosts forums in cities across the Americas and publishes working papers
and recommendations on key energy topics. The Cuba Working Group
includes corporate leaders from the worlds of banking, financial
services, energy, telecommunications, hospitality, pharmaceuticals, and
law. This effort has produced a series of papers on regulations and
laws affecting U.S. business activity under the U.S. embargo and in
Cuba.

Background
Spanish oil company Repsol is preparing to drill in the deep waters
of the Cuban portion of the Gulf of Mexico. While much attention has
been focused on Repsol and the arrival of its Chinese-constructed rig,
the Scarabeo 9, in Cuban waters at the end of 2011, more than a handful
of other oil companies are also engaged in exploratory activities off
the Cuban, Jamaican, and Bahamian coasts. Mexico, as well, has its
sights set on extracting deepwater oil in its stretch of the Gulf.
The Deepwater Horizon blowout in the U.S. Gulf of Mexico in 2010
was a terrible tragedy but also a wake-up call for companies and
countries about the risks inherent in deepwater drilling and the need
for a well-coordinated emergency response plan, with public and private
actors ready to deploy at a moment's notice.

The Council Applauds Private Sector Action and US-Mexico and US-Canada
Cooperation
Since the Deepwater Horizon explosion, the U.S. government has
overhauled its offshore oil and gas regulations. In February 2011,
several oil companies launched a quick-response system in case of
another spill in the U.S. Gulf. At the international level, the United
States is working with Mexico to develop shared safety and
environmental standards for the Gulf. Outside of the Gulf, the United
States and Canada are collaborating bilaterally and as part of the
Arctic Council (members also include Denmark, Finland, Iceland, Norway,
Russia, and Sweden) on oil spill prevention and response in the Arctic.
While U.S.-Cuban communication on Gulf drilling issues has thus far
been limited to updates on the Deepwater Horizon spill, U.S.-Repsol
engagement has been more active. Repsol has pledged to comply with U.S.
regulatory requirements and industry standards in the Cuban area of the
Gulf of Mexico and has shared its drilling and oil spill response plans
with the United States as well as promised to allow U.S. agencies to
inspect the Scarabeo 9.

Safety First
Repsol's transparency is to be commended, but it is no substitution
for direct U.S.-Cuban interaction on Gulf safety issues at the
technical level. An oil spill in the Cuban Gulf puts at risk the waters
and coast of the Eastern half of the United States from Florida to as
far north as North Carolina. Such a spill would require more than a
good working relationship between Repsol and the U.S. government.
Complete cooperation and open communication between the U.S. and Cuban
governments is essential for effective response management.
For its part, the United States has issued licenses that exempt
U.S. companies from the embargo and allow them to assist in the case of
a possible spill off the coast of Cuba. In addition to the licensing,
the United States has facilitated contact between some U.S. companies
and NGOs and Cuban officials on drilling safety and environmental
topics.
These measures are constructive, but the Council is concerned that
the licensing application process is too complicated and that too few
companies have applied for or received licenses. Communication between
U.S. companies and NGOs and Cuban officials is extremely important but
no substitute for direct government-to-government contact. The Council
urges the United States to grant relevant oil and oil service companies
an embargo waiver that would allow them to provide equipment and share
safety and prevention best practices now in order to avoid the need to
provide emergency assistance in response to a spill in Cuban waters
later. The Council further urges the United States to enter into direct
discussions with Cuba at a technical level, as well as with Jamaica and
the Bahamas, to ensure that safety and environmental standards for
drilling in shared waters are at the highest level, and that
communication and cooperation procedures are in place in case of a
spill.

Bottom Line: The United States Must Do Everything Possible to Protect
Its Waters and Coasts
Legitimate concerns about strengthening the Cuban regime in ways
that allow it to continue its level of political repression cannot be
overlooked but should nonetheless be considered as part of a larger
picture. With only 90 miles between the tip of Florida and the north
coast of Cuba, our aquatic ecosystems are inextricably linked. What
damages marine life and fouls beaches in Cuban waters, if not promptly
contained, will damage marine life and foul beaches in U.S. waters as
well. To the extent drilling occurs off Cuba's coast, the United States
must do everything within reason to protect its people and its
environment. We can do this by working with Cuba (as well as Jamaica
and the Bahamas) at a technical level to ensure drilling safety,
prevention, sound practices, and, in the unfortunate event of an oil
spill, quickly mobilize all necessary resources to contain it.
For further information, please contact:
Council of the Americas
1615 L Street NW, Suite 250
Washington, DC 20036
202.659.8989
www.as-coa.org