Secondly, if the P&Is are saying they will not under the circumstances as we know them today, provide the coverage, who is going to provide that other than Shoreline who has been identified here, who has been incorporated or organized since February of this year, and according to the testimony, as I read, has not gotten their reinsurance lined up. So where is the benefit to the American taxpayer if all these things collapse?

Ms. SPEER. Thank you, Mr. Laughlin. I hope I am pronouncing that correctly.

Mr. LAUGHLIN. That is good enough.

Ms. SPEER. First of all, to respond to your first question, I don't feel that I am in the position to assess what the options are for this particular company or the particular amounts that he has cited that would presumably kick in.

Mr. LAUGHLIN. Let me add, there are a lot of companies it-I don't represent Mr. Law or his State. I thought I saw something about Indiana in here. Just to clear it up, I represent Texas and I have companies

Mr. TAUZIN. And well, I might add.

Mr. LAUGHLIN. He wants something out of me, I can

tell.

Mr. TAUZIN. Yes, I do.

Mr. LAUGHLIN. But I have a lot of companies operating in my area out of the Gulf of Mexico that go to Pittsburgh and Indiana and all of those places, and they tell me the same thing that I have read Mr. Law writing here.

Ms. SPEER. Well, the Coast Guard has an implementation schedule that is designed presumably to allow these various options to come forward and get more specifically ironed out, so that the point I raised about the reinsurance contract, the implementation schedule allows time for that to be resolved.

Secondly, my understanding is that the Coast Guard has identified other options besides Shoreline that remain possibilities, including surety bonds, and at least one other company, First Line. Now, I am not in a position to be able to evaluate the adequacy of those options, but the Coast Guard appears to believe that those are viable and reasonable options that should be allowed to go forward.

Mr. LAUGHLIN. Let me take you down the coast of Texas where in my district we have a very famous wildlife refuge for the whooping crane, and the barges go through there on a daily basis and have a wonderful relationship with the Fish and Wildlife Service.

If we have an oil spill there, who is going to have the money under your scenario to clean this up if the P&Is are not going to be involved?

And I put it to you this way; with the possibilities of others being out there, when today we are dealing with the certainty of the P&I Clubs and with its track record and with the owners, and we have heard more than one, and I just rely on Mr. Law's written statement and people from my district saying that with certainty they have been there to provide the protection-and it looks to me like what we are trying to do is drive certainty out and bring possibilities in. Which again, I go to you and ask what is the benefit to the American taxpayer, and to use your word, when you talked about

the P&Is on credibility, where is the credibility for the possibilities of Shoreline?

Ms. SPEER. Well, Mr. Laughlin, I would respond in a couple of ways. First of all, the other options that have been identified, the whole project does not rest on Shoreline Mutual. There are

Mr. LAUGHLIN. Shoreline-types, with no track record in this field, isn't that true?

Ms. SPEER. I am not qualified to answer that question.

Mr. LAUGHLIN. You are here telling us that is a good deal for the taxpayers, and that is the reason I want to know where is the benefit and the good deal for the taxpayers?

Ms. SPEER. Because this rule provides assurance that money will be available to clean up an oil spill should one happen near your national wildlife refuge.

Mr. LAUGHLIN. Where is the certainty if the P&Is are gone? And they tell us they are gone under the rules as we have them today. Ms. SPEER. The Coast Guard will not accept a COFR guarantee from a company that is not capable of providing that guarantee, I would assume.

Mr. LAUGHLIN. Where is Mr. Law's and, my similar-type companies a thousand miles a way from Mr. Law's, going to get protection to stay in business in the undesirable event that they have an oil spill problem?

Ms. SPEER. I would say, let this rule go forward. Let those companies get themselves and their proposals together and allow them to provide the kind of alternatives that the Coast Guard has analyzed and put forward.

I understand that there is a lot of concern and a lot of fear out there that insurance coverage will not be available. The last thing that we want to see is no insurance coverage available, because the guarantee is the only way that we can be sure that money is available to clean up and pay for damages. We believe that

Mr. LAUGHLIN. Guarantees of insurance or making the P&Is guarantors?

Ms. SPEER. COFR guarantee is the a guarantee that makes certain that the money is available; does not use the P&I Clubs because of their policy defenses. If you were to allow the P&I Club membership to be used as an option, and the P&I Clubs exercised their policy defenses, there is no guarantee the money would be there.

So if you had an oil spill off your coast in that national wildlife refuge, you would not have the money. The money would not be there to clean up the spill, and that contradicts the fundamental premise of OPA, that the spiller should pay.

Mr. TAUZIN. Mr. Laughlin, we have about three minutes.
Mr. Gilchrest wants to get in a couple of questions.

Mr. LAUGHLIN. I yield back.

Mr. TAUZIN. Mr. Gilchrest.

Mr. GILCHREST. Mr. Aspland, you made a comment that-and then I am going to ask you to make a quick statement, because this question is actually for Ms. Speers.

You made a comment that the oil tanker or the shipowners make up 10 percent of the P&I Clubs.

Mr. ASPLAND. Correct.

Mr. GILCHREST. And premiums from the U.S. are 15 percent of what P&I gets on a global scale.

Mr. ASPLAND. That is approximately correct.

Mr. GILCHREST. But 90 percent of the claims are directed from the United States.

Mr. ASPLAND. That is my understanding.

Mr. GILCHREST. And Ms. Speer, you made a comment that P&I Clubs are controlled by the member shipowners and operators who elect their directors, and the notion that vessel owners and operators are powerless to influence the position of the Clubs is not credible. Based on the fact that 10 percent of the P&I Clubs are made up of shipowners

Mr. ASPLAND. Tanker owners.

Mr. GILCHREST. Tanker owners, you say it is not credible to say that the tanker owners don't have influence over P&I. Based on this statistic from Mr. Aspland, could you tell us how that is still true?

Ms. SPEER. Well, it seems to me, first of all, that a 10 percent ownership is a substantial ownership, and I would just ask does that figure include all of the vessels that would be subject to OPA? 10 percent?

Mr. ASPLAND. The number then would probably go down, because that is a worldwide number. It would go down. Got to remember that all P&I Clubs is worldwide coverage, so you have people from all different nationalities in that and national flags, and they do not necessarily come here. So when you have a call, then that applies to everyone.

Very quickly, our insurance rate at my company went up about two years ago. It has absolutely nothing to do with tankers. It had to do with bulk carriers. And because of the losses, we had to make up the difference. And it doesn't have anything to do with us. And my point is that it is in these kinds of regimes, you have to look at the whole picture. And to make a statement that we can control the Clubs, is an inaccurate statement, we cannot.

Mr. GILCHREST. Ms. Speer, do you disagree.

Ms. SPEER. Well, I would say that certainly the shipowners have a substantial say in the operation of the P&I Clubs, and furthermore, the P&I Club option is again not the only option out there. There are other options that are available.

Mr. GILCHREST. Thank you, Mr. Chairman.

Mr. TAUZIN. I would point out to you, Mr. Gilchrest, that the Republicans operate with more than 10 percent of the House. I don't think you are satisfied with your control of the House at this point. Mr. Laughlin.

Mr. LAUGHLIN. I wanted to say to Ms. Speer, I don't care personally if the P&I Clubs disappear, if we have someone to substitute at greater benefit to the American people, at the kind of coverage that they are protecting, at the prices rather than the reverse.

And I don't mean to pick on Shoreline. I don't care if it is the Texas Farm Bureau providing the insurance, if we are getting maximum coverage and at lower cost for the operator, who in time, if we have a catastrophic event, it is we, the citizens, that need the coverage.

And I don't see the benefit to we, the citizens, if we have double the premium costs and substantially reduced coverage amounts. And that is where I am coming from.

And if you want to be a part and we need to be a part of running off the P&I Club operations, so be it; if we have a substitute to put in there that will provide the same insurance protection at a lower cost.

Mr. TAUZIN. That is going to have to be the last word. We have three minutes for a vote.

I do want to thank you for your participation and all of you for your contributions today. We will be submitting written questions to all of you.

Mr. Bryant, I will want to know the specific reinsurers who have indicated interest and their intent to participate. We will also take those considerations under advisement, Mr. Aspland, as far as your suggestions to the committee.

[The information may be found at end of hearing.]

Mr. TAUZIN. Thank you all very much.

I again apologize. Thanks for your patience. This has been a good set of hearings today.

We appreciate your involvement.

The hearing stands adjourned.

[Whereupon, at 3:55 p.m., the Subcommittee was adjourned; and the following was submitted for the record:]