<DOC>
[108 Senate Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:92386.wais]
S. Hrg. 108-364
REVIEW OF THE GENERAL ACCOUNTING OFFICE REPORT ON FEMA'S ACTIVITIES
AFTER THE TERRORIST ATTACKS ON SEPTEMBER 11, 2001
=======================================================================
HEARING
before the
SUBCOMMITTEE ON CLEAN AIR, CLIMATE CHANGE, AND NUCLEAR SAFETY
and the
COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
UNITED STATES SENATE
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
__________
SEPTEMBER 24, 2003
__________
Printed for the use of the Committee on Environment and Public Works
U.S. GOVERNMENT PRINTING OFFICE
92-386 PDF WASHINGTON : 2005
_____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512-1800
Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001
COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
one hundred eighth congress
first session
JAMES M. INHOFE, Oklahoma, Chairman
JOHN W. WARNER, Virginia JAMES M. JEFFORDS, Vermont
CHRISTOPHER S. BOND, Missouri MAX BAUCUS, Montana
GEORGE V. VOINOVICH, Ohio HARRY REID, Nevada
MICHAEL D. CRAPO, Idaho BOB GRAHAM, Florida
LINCOLN CHAFEE, Rhode Island JOSEPH I. LIEBERMAN, Connecticut
JOHN CORNYN, Texas BARBARA BOXER, California
LISA MURKOWSKI, Alaska RON WYDEN, Oregon
CRAIG THOMAS, Wyoming THOMAS R. CARPER, Delaware
WAYNE ALLARD, Colorado HILLARY RODHAM CLINTON, New York
Andrew Wheeler, Majority Staff Director
Ken Connolly, Minority Staff Director
------
Subcommittee on Clean Air, Climate Change, and Nuclear Safety
GEORGE V. VOINOVICH, Ohio, Chairman
MICHAEL D. CRAPO, Idaho THOMAS R. CARPER, Delaware
CHRISTOPHER S. BOND, Missouri JOSEPH I. LIEBERMAN, Connecticut
JOHN CORNYN, Texas HARRY REID, Nevada
CRAIG THOMAS, Wyoming HILLARY RODHAM CLINTON, New York
(ii)
C O N T E N T S
----------
Page
SEPTEMBER 24, 2003
OPENING STATEMENTS
Carper, Hon. Thomas R., U.S. Senator from the State of Delaware.. 23
Clinton, Hon. Hillary Rodham, U.S. Senator from the State of New
York........................................................... 15
Jeffords, Hon. James M., U.S. Senator from the State of Vermont.. 8
Voinovich, Hon. George V., U.S. Senator from the State of Ohio... 1
Letter to The President...................................... 11
WITNESSES
Brown, Michael D., Under Secretary of Emergency Preparedness and
Response, Department of Homeland Security...................... 5
Prepared statement........................................... 155
Response to additional question Senator Jeffords............. 160
Hecker, JayEtta, Director of Physical Infrastructure Issues,
General Accounting Office...................................... 25
Prepared statement..........................................161-193
Responses to additional questions from:
Senator Jeffords......................................... 201
Senator Voinovich........................................ 203
Larson, Bud, associate director, New York City Office of
Management and Budget.......................................... 147
Prepared statement........................................... 310
Responses to additional questions from Senator Jeffords...... 312
Shipley, Dale, executive director, Ohio Emergency Management
Agency, on behalf of the National Emergency Management
Association.................................................... 145
Application Packet for the State Disaster Relief Program,
September 2001............................................275-307
NEMA, Issues and recommendations for possible amendments to
the Stafford Act to better address catastrophic disasters.. 308
Prepared statement........................................... 269
Skinner, Rick, Deputy Inspector General, Department of Homeland
Security....................................................... 28
Prepared statement........................................... 252
Responses to additional questions from Senator Jeffords...... 268
ADDITIONAL MATERIAL
Charts:
Compensation of Losses....................................... 197
Differences in this Public Assistance Approach............... 200
Economic Revitalization...................................... 199
Federal Assistance to the New York City Area (FEMA, HUD, DOT,
and Liberty Zone Tax Benfits).............................. 195
Infrastructure Restoration................................... 198
Initial Response............................................. 196
Ohio Infrastructure Impact for Federal FY 2003............... 273
Reports:
Federal Emergency Management Agency, FEMA's Delivery of
Individual Assistance Programs: New York--September 11,
2001.......................................................36-105
General Accounting Office:
Major Management Challenges and Program Risks, Federal
Emergency Management Agency (FEMA)....................106-144
Disaster Assistance, Information on FEMA's Post 9/11
Public Assistance to the New York Area................204-251
REVIEW OF THE GENERAL ACCOUNTING OFFICE REPORT ON FEMA'S ACTIVITIES
AFTER THE TERRORIST ATTACKS ON SEPTEMBER 11, 2001
----------
WEDNESDAY, SEPTEMBER 24, 2003
U.S. Senate,
Committee on Environment and Public Works,
Subcommittee on Clean Air, Climate Change, and Nuclear
Safety,
Washington, DC.
The subcommittee met, pursuant to notice, at 9:02 a.m. in
room 406, Senate Dirksen Building, the Hon. George V. Voinovich
(chairman of the subcommittee) presiding.
Present: Senators Voinovich, Jeffords, Clinton, and Carper.
OPENING STATEMENT OF HON. GEORGE V. VOINOVICH, U.S. SENATOR
FROM THE STATE OF OHIO
Senator Voinovich. The subcommittee will come to order.
Good morning all. Today's hearing continues our ongoing
oversight of the Federal Emergency Management Agency. This
oversight has long been a priority for the Environment and
Public Works Committee. It is my intention as chairman of this
subcommittee to continue this strong oversight.
Today's hearing is also the first FEMA oversight hearing we
have held since the Agency was transferred into the Department
of Homeland Security. The attacks of September 11 were
unprecedented in scope and have served as a catalyst for major
reform within the Federal Government in its ability to prevent
and respond to such events in the future.
Also unprecedented was our Nation's response to the
attacks. Thousands of workers and volunteers from around the
country responded to those in need at the World Trade Center
and the Pentagon, including 74 Ohioans who arrived in New York
City within 24 hours of the attacks as part of Ohio Task Force
One, one of FEMA's urban search and rescue teams.
The attacks of September 11 were the most costly disaster
in U.S. history. President Bush pledged $20 billion in aid, and
approximately $7.4 billion of it is being distributed through
FEMA's Public Assistance Program. The Public Assistance Program
is used throughout the country to provide grants to State and
local governments to respond and to recover from disasters.
In order to ensure that FEMA was properly carrying out its
obligations in response to the attacks, Chairman Inhofe,
Senator Jeffords, Senator Clinton, and I requested that GAO
look into the three aspects of FEMA's response:
No. 1, what activities the Agency supported in New York
through its Public Assistance Program; No. 2, how this response
differed from their approach to providing public assistance in
past disasters; and, No. 3, what implications this approach may
have on the delivery of public assistance should other major
terrorist attacks occur.
I understand that GAO has completed its review and analysis
of FEMA's actions. I look forward to hearing from GAO about
what they found. Also, in response to the attack, members of
the committee on both sides of the aisle, including myself,
worked with the Administration to create the Department of
Homeland Security and move several administrative agencies,
including FEMA, into that department.
Members of this committee have also worked with the
Administration to ensure that they have all the tools necessary
to prevent events of this magnitude from happening again. To
this date, this has not been an issue where we have kept
partisanship in check. There is no questioning the fact that we
must be able to prevent a repeat of that terrible day and hope
that we will be able to keep politics away from this issue as
we look back at those events and our response to them.
As members of this subcommittee know, the Homeland Security
Act of 2002 created the Department of Homeland Security,
established a directorate of emergency preparedness and
response, and transferred the functions, personnel, assets, and
liabilities of FEMA, along with several other administration
systems and offices, into that directorate. The Act also
defined the homeland security role of FEMA, maintains FEMA as
the lead agency for Federal response established by Executive
Order, and requires that the FEMA Director revise the plans to
reflect the establishment of the Department of Homeland
Security.
The creation of the Department of Homeland Security is the
largest reorganization of Federal agencies and activities since
the creation of the Department of Defense back in 1947. I have
commented that it was much more difficult because of the
connectivity of the departments than the 1947 reorganization.
We are pretty clear. Some of these agencies that thread was
rather thin.
Any reorganization will need more time to be fully
implemented and will take even longer before all of the
structural stresses in the new department can be identified,
let alone resolved. I can tell you that as a former mayor and
Governor who undertook reorganizations, they are not done
overnight. It takes a long time in order to get them done
properly.
We are interested, though, that in the process of going
through this reorganization that FEMA continues to perform its
duties adequately during the transition period. In other words,
it is not good enough to just have a reorganization. Everybody
is in limbo. The agencies within Homeland Security that were
functioning before should continue to function so that they
provide the services that they are supposed to perform.
During the debate on the Homeland Security Act, I included
the first government-wide workforce reform since the Civil
Service Reform Act of 1978, 25 years ago. I am hopeful that
these new flexibilities which all Federal agencies now will use
will complement the specific human capital authorities granted
to the department which is still in the process of establishing
its personnel system.
I have been very pleased to hear from union leadership that
the work of the Department of Homeland Security personnel
system design team has been inclusive and collaborative. They
have taken their time. They have not rushed this thing through.
I would be interested in hearing any observations the
witnesses may have on how these workforce flexibilities are
helping FEMA manage its critically important part of the
Homeland Security team. I think when Joe Allbaugh was here
testifying before us he talked about the human capital crisis
that they were experiencing in FEMA where many of the people
who participated in 9/11 afterwards reevaluated their
relationship with their families and decided that those
eligible retire.
Finally, at a hearing conducted by the subcommittee on the
attacks last year, I learned that members of the FEMA teams
that responded to the call for assistance to Ground Zero have
been denied health coverage. In response, I sent letters to
former FEMA Director, Joe Allbaugh and Secretary of Labor
Elaine Chao asking them to develop a process for providing
these workers the health care coverage they need and deserve. I
would like to know what process has been put in place to
prevent such denials of coverage and eliminate any confusion
surrounding the filing process if it happens again.
It is extremely important that we take care of these
individuals. Whether people want to be first responders in the
future depends on how first responders from the World Trade
Center are treated. In order to ensure that those brave souls
that respond to, as well as those who live and work in the area
of a disaster, are protected, monitored, and informed of risks.
Senator Clinton and I have introduced the Disaster Area
Health and Environmental Monitoring Act of 2003. This important
legislation was reported out of committee on July 30. I would
like to hear any comments that our witnesses may have in regard
to that legislation.
Our first witness today is the Under Secretary of Emergency
Preparedness and Response, Department of Homeland Security,
Michael D. Brown.
On the second panel we have JayEtta Hecker, Director of
Physical Infrastructure Issues, General Accounting Office; and
Rick Skinner, Deputy Inspector General, Department of Homeland
Security.
The third panel consists of Dale Shipley, executive
director, Ohio Emergency Management Agency, on behalf of the
National Emergency Management Association. I worked with Dale
while I was Governor of Ohio. He has done an outstanding job
for our State. We also have Bud Larson, associate director, New
York City Office of Management and Budget.
I thank each of our witnesses for coming here to discuss
these issues today. I look forward to their testimony.
Mr. Brown, we are looking forward to your testimony this
morning. You may begin.
[The prepared statement of Senator Voinovich follows:]
Statement of Hon. George V. Voinovich, U.S. Senator from
the State of Ohio
The Hearing will come to order. Good morning.
Today's hearing continues our ongoing oversight of the Federal
Emergency Management Agency (FEMA). This oversight has long been a
priority for the Environment and Public Works Committee, and it is my
intention as chairman of this subcommittee to continue this strong
oversight. Today's hearing is also the first FEMA oversight hearing we
have held since the Agency was transferred into the Department of
Homeland Security.
The attacks of September 11 were unprecedented in scope and have
served as a catalyst for major reform within the Federal Government and
its ability to prevent and respond to such events in the future.
Also unprecedented was our nation's response to the attacks.
Thousands of workers and volunteers from around the country responded
to those in need at the World Trade Center and the Pentagon, including
74 Ohioans, who arrived in New York City within 24 hours of the attacks
as part of Ohio Task Force One one of FEMA's Urban Search and Rescue
Teams.
The attacks of September 11 were the most costly disaster in U.S.
history. President Bush pledged $20 billion in aid and approximately
$7.4 billion of it is being distributed through FEMA's public
assistance program. The public assistance program is used throughout
the country to provide grants to State and local governments to respond
to and recover from disasters.
In order to ensure that FEMA was properly carrying out its
obligations in response to the attacks, Chairman Inhofe, Senator
Jeffords, Senator Clinton, and I requested that the GAO look into three
aspects of FEMA's response:
<bullet> What activities the Agency supported in New York through
its public assistance program;
<bullet> How this response differed from the approach to providing
public assistance in past disasters; and
<bullet> What implications this approach may have on the delivery
of public assistance should other major terrorist attacks occur.
I understand that GAO has completed its review and analysis of
FEMA's actions and I look forward to hearing from GAO about what they
have found.
Also in response to the attacks, members of this committee on both
sides of the aisle including myself worked with the Administration to
create the Department of Homeland Security and move several
Administration agencies including FEMA into the Department.
Members of this committee have also worked with the Administration
to ensure that they have all of the tools necessary to prevent events
of this magnitude from ever happening again. To date, this has been an
issue where partisanship has been kept in check because there is no
questioning the fact that we must be able to prevent a repeat of that
terrible day. I hope that we will be able to keep politics away from
this issue as we look back at those events and our response to them.
As members of this subcommittee know, the Homeland Security Act of
2002 created the Department of Homeland Security, established a
Directorate of Emergency Preparedness and Response, and transferred the
functions, personnel, assets and liabilities of FEMA (along with
several other Administration Systems and Offices) into that
Directorate. The Act also defined the homeland security role of FEMA,
maintains FEMA as the lead agency for the Federal Response Plan
established by Executive Order, and requires the FEMA director to
revise the Plan to reflect the establishment of DHS.
The creation of the Department of Homeland Security is the largest
reorganization of Federal agencies and activities since the creation of
the Department of Defense in 1947. Any reorganization of this magnitude
will need some time to be fully implemented and will take even longer
before all of the structural stresses in the new Department can be
identified, let alone resolved. I along with my colleagues on the
committee am interested in making sure that FEMA continues to perform
its duties adequately during this lengthy transition period.
During debate on the Homeland Security Act, I included the first
government-wide workforce reforms since the Civil Service Reform Act of
1978 25 years ago. I am hopeful that these new flexibilities, which all
Federal agencies now may use, will complement the specific human
capital authorities granted to the Department, which is still in the
process of establishing its personnel system. I have been pleased to
hear from union leadership that the work of the DHS personnel system
design team has been inclusive and collaborative. I would be interested
in hearing any observations the witnesses might have on how these
workforce flexibilities are helping FEMA manage its critically
important part of the Department of Homeland Security team.
Finally, at a hearing conducted by this committee on the attacks
last year, I learned that members of the FEMA teams that responded to
the call for assistance at Ground Zero had been denied health coverage.
In response, I sent letters to former FEMA Director Joe Allbaugh and
Secretary of Labor Elaine Chao asking them to develop a process for
providing these workers the health coverage they need and deserve. I
would like to know what process has been put in place to prevent such
denials of coverage and eliminate any confusion surrounding the filing
process from happening again.
It is extremely important that we take care of these individuals
because whether people want to be first responders in the future
depends on how first responders from the World Trade Center are
treated. In order to ensure that those brave souls that respond to as
well as those that live and work in the area of a disaster are
protected, monitored, and informed of risks, Senator Clinton and I have
introduced the Disaster Area Health and Environmental Monitoring Act of
2003 (S. 1279). This important legislation was reported out of the
committee on July 30, and I would like to hear any comments that our
witnesses have on it.
Our first witness today is the Under Secretary for the Emergency
and Response Directorate in the Department of Homeland Security,
Michael Brown.
On the second panel, we have JayEtta Hecker from the General
Accounting Office and Rick Skinner who is the Deputy Inspector General
of the Department of Homeland Security.
On the final panel, we will hear from Bud Larson from New York City
and the executive director of the Ohio Emergency Management Agency,
Dale Shipley.
I thank each of our witnesses for coming here to discuss these
issues today, and I look forward to their testimony.
STATEMENT OF MICHAEL D. BROWN, UNDER SECRETARY OF EMERGENCY
PREPAREDNESS AND RESPONSE, DEPARTMENT OF HOMELAND SECURITY
Mr. Brown. Thank you, Mr. Chairman. Thank you for having me
here today. I certainly appreciate your comments about having
gone through the reorganization in Cleveland and all the things
you had to do to do that. I know you appreciate some of the
challenges that we have as we put this together.
Since becoming a part of the Department of Homeland
Security, the Federal Emergency Management Agency has continued
its traditional role of leading the Nation to prepare for,
respond to, recover from, and mitigate against disasters of all
types and of all hazards.
Over the last 2 weeks, we have worked closely with the
State and our Federal partners to effectively prepare for and
respond to Hurricane Isabel--all within the structure of the
Department of Homeland Security. DHS brought its resources to
bear in response to Hurricane Isabel in order to protect the
public. We deployed two new assets, including the National
Disaster Medical Systems teams, in response to Hurricane
Isabel. The U.S. Coast Guard also deployed its assets to assist
us in the response effort. All of our response efforts have
been coordinated department-wide through Homeland Security and
through its Emergency Operations Center.
Prior to joining Homeland Security, the focus of our
disaster programs at FEMA was that of an all-hazards approach.
This focus remains today. It fact, it benefits more from a
global perspective of the Department of Homeland Security and
its related components. I am proud of our response to Hurricane
Isabel because it clearly demonstrates our steady improvement
in coordinating and leading Federal, State, and local response
efforts to protect life and property in times of disasters.
There was a seamless collaboration of different response
elements in the Department, as well as those in other Federal
departments and agencies, which allowed for an effective and
rapid pre-positioning of disaster assets and capabilities
throughout the Eastern United States to quickly provide any
assistance needed by States and communities to protect the life
and property of those citizens.
At FEMA, we are proud to be a part of the Department of
Homeland Security in doing our part to secure the homeland. I
am proud to lead this organization. On behalf of the Secretary
and President Bush, it is made up of so many really good
individuals, such as, the urban search and rescue teams and
others, who put their lives on the line daily to protect this
country and to make it more secure.
FEMA's greatest asset is, indeed, our people. As we have
transitioned into Homeland Security, we have continued our
efforts to ensure that our workforce remains one of the finest
in the Federal Government through the development of a
comprehensive strategic Human Capital Plan.
We have also continued to work to integrate the new
missions into FEMA's existing structure. The good work that
FEMA continues to do after being incorporated into Homeland
Security is a commentary on how well the transition has gone to
date. Since the March 1 transition into Homeland Security, FEMA
has provided disaster relief in over 50 presidentially declared
disasters and emergencies in 32 different States and two
Territories, ranging from Alaska to New York to American Samoa.
When I have traveled to disaster areas, I have had the
opportunity to meet some of the victims. Secretary Ridge, the
President, and I just did that over the past 3 or 4 days. The
victims' lives have been totally devastated. They have lost
family members. They have lost things that they will never be
able to replace. They have lost their homes. I truly cannot
adequately describe in words the impact of looking into the
eyes of people who have simply lost everything.
But when things are at their absolute worst, I believe that
our people in FEMA and the Homeland Security Department are at
their best. I am extremely proud to be a part of this
organization. I am constantly impressed with the Agency's
ability to quickly and efficiently put individuals on the
ground, to provide assistance to those in need, and to get the
process of disaster recovery underway immediately.
But we cannot rest on our past achievements. The key to our
continued improvement is to take these lessons and incorporate
them into our planning, our doctrine, and our procedures so
that we do even better the next time. The transition into
Homeland Security offers new opportunities to make such
improvements. FEMA is actively participating in the effort to
develop the National Response Plan and the framework for the
National Incident Management System.
As directed by the President, the goal is to establish a
single comprehensive National Incident Management System that
provides for the integration of separate Federal response plans
into a single all-discipline, all-hazards, national response
plan.
We are also consolidating and integrating our existing and
our new disaster response assets, our new teams, our current
systems, new programs, and responsibilities to create a more
unified and comprehensive all-hazards disaster response
capacity. We are looking into new approaches that can result in
greater efficiencies and effectiveness in our disaster response
activities.
I am really confident that over time we will be able to
introduce a new response culture, one that will enable us to
elevate our operational response capabilities to a higher level
of proficiency and ensure better protection of and service to
the American people.
Homeland Security also remains committed to helping
firefighters improve their effectiveness and to stay safe. The
responsibilities of the fire service have increased since 9/11,
and as you know very well, Senator, include planning for and
responding to possible terrorist attacks. So far, just this
year, Homeland Security has awarded over $250 million of $745
million appropriated by Congress to fire departments through
the Assistance to Firefighters Grant Program.
I will digress for just a second. As I met with some of
those firefighters, and as we have given those grants out, it
is absolutely incredible how important the grants are to those
firefighters and those fire departments. In some places they
actually have to borrow boots and personal protective gear from
other departments to do their job. To me, that is just not
acceptable.
When we have to respond to a terrorist attack or a natural
disaster, and people start backfilling from department-to-
department, it is absolutely essential that all departments in
this country be equipped to respond to anything. That program
helps us do that. I just want to thank you, Senator, for
helping us in that regard.
With the formation of Homeland Security, we have the
opportunity to better serve our State and local governments and
our first responders by bringing together the various terrorism
and emergency preparedness grant programs that were scattered
throughout the Federal Government.
The Secretary has announced plans to centralize these
programs within a single office in Homeland Security to make
them even more accessible to its customers. State and local
authorities will now have a single point of contact for both
terrorism and emergency preparedness efforts, one access point
to obtain critical grant funding.
With regard to today's hearing, the committee has expressed
interest in the GAO report on the public assistance program as
implemented in New York following the September 11 attacks.
While the GAO report does not address FEMA's performance or
provide specific recommendations, it does note some differences
in the delivery of assistance that I would like to take this
opportunity to emphasize.
FEMA implemented the Public Assistance Program, which
provides State and local governments reimbursement for debris
removal, emergency protective measures, or the repair or
replacement of damaged public facilities. However, the
Consolidated Appropriations Resolution of 2003 provided some
additional flexibility that allowed recovery operations to move
more quickly.
The Resolution directed FEMA to fund non-Stafford Act
related projects with any remaining funds from the
appropriation they received for the September 11 terrorist
attacks after all eligible projects have been funded. But this
flexibility did not forfeit the accountability or detract from
the effectiveness of the programs.
In summary, as part of the Department of Homeland Security,
FEMA has continued to carry out its mission to prepare for,
respond to, recover from, and mitigate against disasters and
emergencies caused by all hazards. We will continue to do so.
Again, Senator, I appreciate the opportunity to testify
before your subcommittee today. I would be happy to answer any
questions that you or Senator Jeffords might have. I would ask
that my written statement be placed in the record in its
entirety.
Senator Voinovich. Thank you.
We have been joined by Senator Jeffords, the ranking member
of this committee. Senator Jeffords, do you have any remarks
that you would like to make?
OPENING STATEMENT OF HON. JAMES M. JEFFORDS, U.S. SENATOR FROM
THE STATE OF VERMONT
Senator Jeffords. No, I do not want to interfere with the
proceedings. I would just as soon have them made a part of the
record.
Senator Voinovich. Thank you.
Without objection, so ordered.
[The prepared statement of Senator Jeffords follows:]
Statement of Hon. James M. Jeffords, U.S. Senator from
the State of Vermont
Mr. Chairman, thank you for holding this hearing today.
It is a little disturbing for me to see the words ``General
Accounting Office Report'', which often precede what some might
consider to be a mundane financial disclosure statement, preceding the
words ``September 11th'' which was such an emotional, traumatic moment
in our nation's history for everyone in our country, and particularly
for the people directly affected by it.
I will never forget my visit to Ground Zero.
I hope that September 11 is an event that will never be repeated,
on any scale, in our country. However, I believe that it is critical
for us to be prepared, should such an event occur. I want to do
everything I can to ensure that our level of preparedness goes up, not
down, as we move into the future.
One of the best ways is to evaluate our performance on September
11, and find ways that we can improve.
That is why I asked for this GAO report with my colleagues, Senator
Smith of New Hampshire, Senator Clinton of New York, and Senator
Voinovich.
Since Senator Inhofe became Chairman of this committee, we have
continued working on this issue with the same bi-partisan rapport I
enjoyed with Senator Smith, and I appreciate that.
The GAO report finds that there were multiple activities performed
by FEMA at the World Trade Center that were outside of the norm.
Congress explicitly authorized many of these activities.
The GAO report also finds that due to the departure from standard
emergency response and recovery operations, there is some uncertainty
about what the Federal response to another terrorist attack would be,
should one occur.
It is imperative that this committee, with jurisdiction over the
nation's emergency preparedness and response activities, consider
whether any changes to FEMA's legislative authorities are required to
ensure that the nation's ability to respond to a terrorist attack
improves after September 11th.
I look forward to hearing more detail on the conclusions of the
GAO.
The EPA Inspector General raising questions about the government's
response to the World Trade Center collapse.
In addition to troubling revelations about the White House's
Council on Environmental Quality influencing EPA's public
communications, the report questions the extent and adequacy of the
post-September 11 indoor air cleanup program.
This program was funded, in part, by FEMA, and I believe that we
need to examine whether there are additional steps that FEMA, in
conjunction with other governmental agencies, should take today to
protect the health of all New Yorkers.
In reviewing the activities of FEMA in September 2001, we will be
reviewing the activities of a robust agency, with extensive experience
in all-hazards planning, preparing, response, and recovery, and with a
tradition of providing quick response to people in immediate need.
Vermont has a long history with emergency management my colleague
and friend, Senator Bob Stafford of Vermont, served as chairman of this
committee for many years and ushered the Stafford Act through this
committee and the legislative process in 1974.
The Stafford Act gave structure to an emergency response process
where virtually none existed in the past.
As Chairman of this committee during the 107th Congress, I
expressed grave concerns since the proposal to incorporate FEMA into
the Department of Homeland Security first came to my attention.
I was concerned at that time that the robust agency we saw jumping
every hurdle after September 11, 2001 to provide assistance to World
Trade Center and the Pentagon, and to hundreds of natural disasters
each year, would give way under the pressure of the enormous
bureaucracy of the Department of Homeland Security and lose its ability
to respond quickly and effectively to disasters.
I remain concerned today.
However, the Administration prevailed in this situation and
incorporated FEMA in DHS with the enactment of the Homeland Security
Act of 2002.
Since the formation of DHS, FEMA has administered aid for 50 major
disasters, 16 emergency declarations, and 33 fire management assistance
declarations all natural disasters.
That is 109 communities, in less than 1 year, that have received
emergency assistance from the Federal Government.
One would think that this type of mission would deserve significant
focus from the Administration.
However, while FEMA performed all of this activity, the
Administration managed to allow the Disaster Relief Fund to dip
dangerously low, with FEMA cutting off benefits for all but two of the
seven categories of public assistance in declared disaster areas.
On July 9, the Administration finally asked Congress for $1.5
billion in emergency funding to refill the Disaster Relief Fund.
This week, the Congress may consider the conference report for the
legislative branch appropriations, which contains just $441.7 million
for the Disaster Relief Fund.
We are still in the early days of this disaster, and I have heard
some concerns raised by local communities about FEMA's responsiveness.
I hope that as we work our way through the effects of this
disaster, we find that even with FEMA's insertion into DHS and the lack
of focus the Agency has received, it has lived up to its reputation of
a quick responder that provides critical assistance.
I have two goals for today's hearing.
First, I want to hear what lessons can be learned from FEMA's
activities in New York following September 11th, and what changes, if
any, you believe this committee should consider to ensure that our
nation's emergency response capabilities improve, not degrade into the
future.
Second, I want to hear from each of our witnesses how things have
changed since FEMA became part of DHS specifically, if being a part of
the Department of Homeland Security is improving or degrading FEMA's
ability to respond to disasters of all types, whether manmade or
natural.
It is imperative that in seeking to improve our capability to
respond to terrorism, we do not lose our capability to respond to
natural disasters, which, thankfully, happen much more frequently.
Thank you, Mr. Chairman.
Senator Voinovich. Mr. Brown, in your testimony you seem to
indicate that being placed into the new Department of Homeland
Security has actually helped response to disasters.
I would like for you, as carefully as you can, outline how
going into the Department of Homeland Security has been
enhanced. I think in your testimony you mentioned something
about the Coast Guard. Could you give us a little bit more on
that?
Mr. Brown. Hurricane Isabel unfortunately has given us a
grand opportunity to really test some of the new equipment and
some of the new resources that we have at our disposal.
Commandant Collins was absolutely insistent that they provide
whatever assistance they could to FEMA and DHS as we responded
to the hurricane. They were just outstanding.
There is nothing better than being able to sit at a table
where you have your partners right there with you at the table
and to be able to say, ``Well, what is it that you can offer?''
They can explain to us, and as we understand our response
efforts we can say, ``Oh, yes, we can use that equipment.''
Commandant Collins and I spoke yesterday after an Under
Secretary's meeting. What we intend to do now, following the
hurricane, and once our recovery is finished, is to go through
and to actually formulate MOUs and understandings of how we are
going to operate together. But being that close together in the
Department with those kinds of assets just gives us the
capability to respond that we never had before.
I would actually take it one step further.
Senator Voinovich. In other words, the Coast Guard had
never been part of the consideration when you had other events?
Mr. Brown. They would be part of the consideration, but it
would be almost after the fact. It would be looking around the
room saying, ``We need to do `x.' Who could help us do that?
Oh, let us reach out to the Coast Guard.''
Now the Coast Guard is actually reaching out to us and
saying,
``By the way, because we are going to be doing x,y,z, moving
certain assets because of the approach of the hurricane, we can
make these things available to you. Will that help you respond
more quickly?''
So, we were able to tie our missions together, then
protecting our assets by getting them out of the way, with us
having to move certain materials and supplies into the affected
area. It worked out great.
I think it is the willingness of the team, too, to sit down
and say, ``We are all part of the Department now. What do you
bring to the table? How can we make them work better
together?''
I think someone actually coined a phrase for it, but it is
``FEMA on steroids''. It gives us the chance to reach out to
partners within the Department and say, ``We want you now to be
a part of our response mechanism.''
Senator Voinovich. Mr. Brown, I have a question that is
specifically rated to my home State of Ohio. As you know, the
Northeast and Midwest, including Ohio, experienced massive
electrical power outages beginning on August 14. Governor Taft
requested Federal assistance to deal with the aftermath of this
situation. I wrote a letter to the Administration in support of
a major disaster declaration for the State of Ohio. I am going
to insert this letter to the President in the record.
Without objection, so ordered.
[The referenced letter follows:]
[GRAPHIC] [TIFF OMITTED] T2386.001
Senator Voinovich. While I understand that New York also
requested Federal assistance and has received it, if you pardon
the reference, Ohio remains in the dark about its request.
First, why has it taken so long? Can we expect a response
soon? Second, what is the reason for the delay? Is it a result
of being transferred into the Department or is it some other
factor?
Mr. Brown. I will tell you it is not because of the
transfer into the Department. That request crossed my desk
yesterday. We have made the recommendation to the President. So
that has been moved.
I will tell you what part of the delay was. As we work very
closely with our State and local partners to make the
assessments--and this is not to pick on Ohio or anyone else--
but sometimes we have to go and really dig to get information
about the damage sustained, what the needs are, and how can we
help.
Although I think Dale Shipley does an incredibly good job,
in some States--not Ohio--but in some States it takes longer to
get that kind of information. I do not know why Ohio took
longer. I am going to try to find out, Senator.
Senator Voinovich. I would like to know it because your
response to New York was swift.
Mr. Brown, I would like to give you an opportunity to
respond to the GAO report that we released today on FEMA's
actions and financial allocations in New York after the
September 11 attacks.
The first question is: The report states that both FEMA and
New York City officials agreed that FEMA's public assistance
approach to the New York City area creates uncertainties
regarding the delivery of public assistance in the event of
another major terrorist event. What are some of those specific
uncertainties?
Second, the report states that FEMA officials claim that
the Public Assistance Program worked well. New York City
officials argue that major revisions are needed. FEMA said,
``We did it.'' New York said, ``no.'' Can you elaborate on the
Agency's position on this issue?
Mr. Brown. I think, Senator, that generally the response to
New York was incredibly good. The President authorized and
asked us to spend $8.8 billion in assistance in New York. We
have done that, and we have done it with incredible
flexibility. There is no doubt that we have a learning curve on
some of those issues--mortgage and rental assistance, for
example. How far out do we take that in terms of economic
damage as opposed to physical damage?
FEMA has traditionally dealt with physical damage. There is
something that you can point to that you can say is broken, and
because that is broken, you can no longer do your job. You no
longer have a job to go to because it does not exist. We were
always accustomed to dealing with economic damage where the
thing which your job was tied to, the location was still there,
but the job was no longer there. The airlines were shut down,
or they cut back, or something. We had to deal with that.
For example, in terms of dealing with mortgage and rental
assistance, how far out do we go? Do we draw a geographic line?
Do we figure out if there is some economic line by which we
draw those boundaries?
It was a challenge for us. It truly was a challenge. But I
think we worked very closely with the State and with the city
to figure out how to draw those lines, and upon what basis we
drew the lines. At the end, I would say that we had agreement
on the drawing of the lines. So I think we did pretty good in
that regard.
We still have some outstanding issues, for example, on
debris removal and the liability insurance. We have allocated
the $1 billion for that. As we like to say in Washington, we
are really down in the weeds trying to figure out exactly what
liabilities that $1 billion will cover.
Congress was good to us and gave us flexibilities on the
money that was left over after the $8.8 billion had been
allocated to meet the unmet budget needs in New York City. We
actually turned to the city and the State and said,
``You tell us what your priorities are. Tell us how you want
to spend those moneys. Once we do all the eligible costs,
whatever money is left over, we will let you figure out where
that needs to go and give you the maximum flexibility to use
that where you need it.''
So I think in that regard it worked very well also.
There are flexibilities in terms of FEMA figuring out what
its primary role is. For example, rebuilding some of the
subways or some of the highways. I do not believe that FEMA has
that expertise. FEMA, instead, turns to the Federal Transit
Administration and says, ``If you will take over this project
for us, we will fund that.'' It is clearly an eligible funding
for us to do, but we do not have the expertise within FEMA to
deal with the environmental issues, to deal with the
engineering issues. That is for the FTA to do. I think that
worked very well also.
Senator Voinovich. One of the things that I would be
interested in, and I am sure somebody is working on it, if it
is not already done, is lessons learned.
Mr. Brown. Absolutely.
Senator Voinovich. You are right. This is a brand new deal.
You had some things I do not think the Agency was ever
confronted with in the past in terms of standards of how far do
you go in reimbursing people, for example. When I was Governor,
I went through several floods. Sometimes it is not as clear as
it should be. But I think in your case it would be interesting
to say, if we had one of these, what kind of standards would we
be using so that you have something. You would have learned
from your experience there. I would be interested in seeing
that information.
Mr. Brown. We will share that with you. We are in the
process of doing that now.
Senator Voinovich. Senator Jeffords.
Senator Jeffords. This is an issue I have raised before,
but one that I am concerned about. Since I witnessed some of
the challenges faced by the first responders after September
11, in inter-operable communications, I am aware of some of the
actions taken by the Department of Homeland Security to improve
inter-operability, but I am not satisfied with the progress. I
do not seem to have any evidence of what has changed on the
ability for communications.
I was at the Pentagon. I talked with the first responders
there. I asked them, ``What was your main problem?'' They
answered, ``Well, we all arrived from Nebraska and every place
else, but nobody could talk to anybody.''
Is there any improvement?
Mr. Brown. I think there is significant improvement. We are
on the track to continue to make improvements, Senator. There
are two things I would offer. First and foremost is that we
have started defining what inter-operability means. It meant
different things to different people. Some thought that it
meant that everyone should be able to talk with everyone else.
If you did that, we would get nowhere.
We have defined inter-operability as a command and control
in a national incident management system whereby we define who
is going to talk with the one in charge, and who takes orders
from whom. That is No. 1.
The second thing that we have done is that Congress
allocated approximately $25 million for us to do what we call
demonstration projects. We are actually making the distribution
of those grants on a competitive basis. We just started doing
those grants this week. We have, on a competitive basis, said
to the States,
``Come to us with some of your best practices. We will give
you planning and money to put those projects together in your
States. We will take the best practices and try to use those
nationwide.''
Those grants are going out this week to actually start
doing those projects.
Senator Jeffords. Thank you.
I understand that in response to the low balance in the
Disaster Relief Fund that you have adopted a policy of funding
only Categories A and B of public assistance for federally
declared disasters. Can you explain this policy, why it was
adopted, and what types of and how many requests for assistance
are being delayed?
Mr. Brown. Senator, when the DRF got down to a level of
$700 million or less, we had projects in the pipeline that were
basically public assistance projects--rebuilding of roads and
bridges, or the rebuilding of a library, or something to that
effect.
I made the critical decision at that point that we would
fund only individual needs, and make sure that individuals got
the money and the assistance they needed until we had some
resolution of where we were going to be. I was more concerned
about making sure that people were taken care of and that
buildings became secondary.
So while we did not stop any projects that were already
ongoing, those that were in the pipeline, we did put a halt on
until we got the appropriation.
Senator Jeffords. Using lessons that you have learned since
September 11, what changes, if any, to FEMA's authorities do
you believe are necessary to allow the Agency to improve your
response to terrorist attacks?
Mr. Brown. Quite honestly, Senator, I do not think there
are any at this stage. I think the Stafford Act is so well
designed and it has so well withstood the test of time, that we
have the flexibilities that we need to be able to respond.
I think the chairman is correct in that what we need to do
post-9/11 is to take our lessons learned about where those
flexibilities need to be better defined and incorporate those
into our regulations and our policies. But the act itself gives
us broad discretion and broad flexibility to do what we need to
do.
Senator Jeffords. The GAO reports that FEMA determined that
the testing of air quality and cleaning were eligible for
public assistance funding where the collapse of the World Trade
Center buildings, resulting fires, and subsequent debris
removal caused potential health issues related to air quality.
FEMA entered into an interagency agreement with EPA and
partnered with the New York Department of Environmental
Protection to execute testing and cleaning.
I have two questions in that regard. First, what role did
FEMA play in providing information to the public on the results
of the air quality testing that was connected at the site and
in the surrounding areas?
Mr. Brown. We did not really differ from what we do in a
traditional disaster. If we need expertise elsewhere, we
mission-assign another department or agency with that
expertise. In this case, it was EPA and the New York Department
of Health who came in and did that monitoring for us.
Our people on the ground continue to work with those people
day-in and day-out: ``What are you doing? How are you doing it?
What are the results? What additional assistance do you need
from us?'' We do not have that expertise in-house.
Senator Jeffords. Selecting which buildings or areas of the
city would be eligible for public assistance funding, did FEMA
include all the areas impacted by the dust cloud resulting from
the collapse of the buildings?
Mr. Brown. We attempted to. Again, that goes back to my
point earlier of where we draw the line. We always worked very
closely with the State and local officials to define where that
line should be drawn. If you take Manhattan, for example, do
you draw it at 53rd? Do you draw it at 82nd? Do you include
Staten Island? Do you not include Staten Island?
You do all those kinds of deliberations solely in concert
with State and locals to get their input. Again, they are the
experts. They are the ones on the ground who are coming to us
asking for the assistance. That is how we make those kinds of
decisions.
Senator Jeffords. Thank you.
Thank you, Mr. Chairman.
Senator Voinovich. Senator Clinton.
OPENING STATEMENT OF HON. HILLARY RODHAM CLINTON, U.S. SENATOR
FROM THE STATE OF NEW YORK
Senator Clinton. Thank you very much, Mr. Chairman.
I welcome Secretary Brown. I had the great pleasure and
privilege of working with him over the last 2 years. I thank
you for holding this hearing. I particularly appreciate all of
FEMA's staff, including Brad Gair, who has been the FEMA person
on the ground in New York. He has done a remarkable job.
I also want to acknowledge and welcome Bud Larson, the
Associate Director of New York City's Office of Management and
Budget who will be testifying on the third panel.
Mr. Chairman, I just want to briefly comment on the GAO
report that has come out just over 2 years since the horrible
attacks we suffered. I suppose for the average person going
through that report the numbers and dollars associated with
Federal assistance can seem quite large when it comes to our
needs in New York. There was over $20 billion in total,
including some $5 billion in tax incentives and about $8.8
billion in FEMA assistance alone.
I know that the support that New York received from the
Administration and the Congress has been extremely important.
There are different estimates that have come forward about what
the actual economic loss to New York was. It ranges from about
$80 billion to $110 billion. Even today, 2 years after the
event, there are those who still remain still displaced from
their homes and their jobs. Economic repercussions continue.
As I am sure Mr. Larson will testify later, we have had a
continuing reassessment of what our needs have. As the GAO
report points out, FEMA aid to New York has been capped at a
fixed amount which has required very difficult efforts to
prioritize needs and allocate dollars, even before we fully
knew what the costs were.
In the case of the horrible Oklahoma City bombing, or the
North Ridge earthquake, so many other previous disasters, as
long as the need was tied to the disaster, the dollars have
continued to flow from FEMA's Disaster Relief Fund. In fact,
sometimes it has taken 4, 5, 6 years, and even longer after the
event to take care of all of the needs that were catalogued. In
almost single case, the State where the disaster took place was
eligible for hazard mitigation grants in an amount equal to 15
percent of the dollars that FEMA sent on disaster recover.
In New York's case, FEMA disaster aid was capped at a
predetermined amount that I think we are realizing has little
connection to the actual need. I am not saying that to in any
way suggest that the amount is too low, but just that it is
probably too early to tell. I am very grateful for the support
that we have received.
In this instance where we know there is so much that needs
to be done to prepare for and prevent against a future similar
event, we have had hazard mitigation funding capped at 5
percent versus the traditional 15 percent.
One specific example I wanted to bring to the committee's
attention is with the mental health services provided under New
York's Project Liberty. FEMA allocated $132 million. When I
went to the Ground Zero Commemorative services on September 11,
a few weeks ago, a number of firefighters and the top
leadership of the fire department, including the Commissioner,
expressed very serious concerns that there is a December 31
scheduled termination of these mental health services.
We have seen counseling services provided to more than
7,000 firefighter victims. I think that we have provided
counseling not only to active members, but also to family
members, retired members, paramedics, and others.
In the original fire department proposal to FEMA, the
Counseling Unit requested 7 years of funding for Tier 1
victims. This is, in large measure, based on the experience in
Oklahoma City which showed clearly that it took a while for
these men to come forward. It was not something that they did
lightly or easily. It is only now that some of them are feeling
ready to go into counseling and to seek help. What we learned
from Oklahoma City is that it literally took years. Different
things triggered the need or the motivation to go into
counseling.
I would hope, Mr. Secretary, that we can look at a way to
try to extend these resources. They are going to run out at the
end of this year if we do not extend it. The close out date is
something that concerns me greatly. The GAO goes through
specific reasons as to why that is the case.
I think that we really have to look at these closeout dates
for these various services. It is important that we know how
well we used our dollars, but I think we have to recognize also
that there are continuing needs. Perhaps some of the priorities
that were set because of the capped amount and the deadlines
that were set are just not reflective of the human and other
needs that we continue to confront.
Mr. Secretary, could you update me on the status of the
mental health and crisis counseling services provided through
Project Liberty?
Mr. Brown. I could not agree with you more about the
importance of that program. I went to New York. We made that
$132 million announcement because it is the largest that we
have ever expended on crisis counseling. I was just absolutely
amazed at the people and the job they are doing. The dedication
is just overwhelming. As you so eloquently put it, there are
many first responders who are macho and they are not going to
do it until they crash and have to do it.
In coordination with the State, we made the decision to
keep that program open into 2004. I will continue to work very
closely with the State to do what we need to do to make it
work.
Senator Clinton. Thank you very much.
Senator Voinovich. Mr. Brown, there are a couple of issues
I would like to discuss. One is after 9/11 the members of our
team in Ohio that responded to 9/11 had a dickens of a time
getting their compensation.
No. 1, I would like to know what you have done to improve
that situation so that other first responders are not going to
go through the line as our people did in the State of Ohio to
have their claims processed through the Department of Labor for
compensation and for health care as a result of their being at
9/11.
No. 2, gets into something that both Senator Clinton and I
are interested in. I am going to quote a couple things that
were said at hearings here.
On March 12, 2002, Joe Allbaugh was here. He said,
``I, too, am deeply concerned about what everyone was exposed
to in New York City. On the first of February I put together a
task force representing all the agencies. We are working
through those issues. There was a followup yesterday that we
will be sharing information that we have gleaned from all the
agencies as quickly as possible as we can. I am trying to find
out what these people were exposed to.''
Then at another hearing in September 2002, more than a year
after the attacks, I asked more questions of EPA. Again,
Director Allbaugh went on about what people were exposed to and
if they were getting the information out. Allbaugh stated,
``We are looking for our guidance from HHS. They have been
very successful providing that leadership. Every bit of
information they share with us from a scientific standpoint we
give to every FEMA employee, every USAR employee, and those
volunteers that came to help us at Pier 94. We are sharing as
much information as we possibly can. It is all based on
science.
``EPA and ASTAR is keeping a health registry. They are
working with the city of New York on this. They are collecting
data now and will be keeping the people information through
websites. That is obviously something that they are very
dedicated to make sure that people understand what the exposure
was.''
The fact of the matter is that the evaluation of what
people were exposed to was a complete disaster among Federal
agencies. I will never forget Allbaugh being before this
committee. It was awful.
Senator Clinton and I have introduced a bill, a first
responders bill, that is going to give the President authority
after one of these things happen again--God forbid--that will
allow them to immediately go in there and get this information.
I would like for you to comment on both of these things.
They are very, very important to, first of all, for the people
that are there that are the victims, but then the first
responders. If we have other disasters like this, these people
are going to want to know that it is a different deal than it
was before.
I can tell you that the people in Dayton, OH are not going
to be exited about doing another one of these things because of
the way they have been treated. As a matter of fact, it was a
year afterwards that we finally got screening for them. In New
York City, you were able to get your screening. We opened up a
screening center in Cincinnati at the University of Cincinnati
to finally get them in there to be screened for what they were
exposed to.
I would like you to comment on both those issues.
Mr. Brown. Well, first let me go back to the Ohio team. We
talked first with Life Care. We made certain that they were
doing what they were supposed to be doing and reaching out. We
had them reach out two or three times. As I understand it,
there are no unpaid claims at this point.
But what it has taught us, Senator, is that we need to go
back and look more closely at our contracts and our
relationship with the folks who do that contracting for us and
the payment of those bills to make sure it gets done more
efficiently. That is just unacceptable to me.
Senator Voinovich. From another perspective, you might look
at whether or not they could be better done by the Agency
itself than to farm it out to somebody else. In terms of this
whole competitiveness, the thing that bothers me is that we
always talk about competing out commercial services, but we
never look at either services that maybe ought to be brought
back into those agencies. We have dedicated people that will
get the job done for the folks that need the help.
Mr. Brown. Absolutely. I could not agree more that the
primary concern should be how to get the job done most
effectively and most efficiently for the first responders. That
is my priority. To me, it is just unacceptable that we ask
these men and women to go out and put their lives on the line.
Then we dally around with getting them reimbursed or paid for
what they should be paid for. It is just unacceptable.
That is why we have looked at all the contracts. We did go
back to Life Care and talked with them to make sure it was
getting done right. I have asked my response team to go back
and look at what caused those glitches. I do not try to
presuppose how we are going to fix the glitches. I want my team
to come and tell me what the glitch is and then figure out how
we are going to fix it. That falls wherever it may fall just to
get it done.
Senator Voinovich. I would like to know the procedure that
if this happens again, how it gets done. I would also like to
have you evaluate the people that were doing the work for you.
You farmed out the work to screen the people that worked at
TSA. The people that did it, in my opinion, did a lousy job.
The rumor was that about 2,000 of them could not pass the FBI's
list.
In terms of the administration, I think that so often you
get the idea, ``Well, we will just farm it out to some firm.
They are going to get the job done.'' The question is: Do you
have the people in-house that can find out whether the firm
that it has been farmed out to are able to do the job? Really.
I think Secretary Ridge ought to start looking at some of this
stuff that you have going on all over to find out whether or
not it is working or not and whether you are better off
bringing it in-house.
Mr. Brown. That is a very legitimate point. I do not want
to repeat myself. But I think we should always look at how do
we best get the job done and let those chips fall where they
may--if that is in-house or if that is contracting. It needs to
be done efficiently to take care of the customer.
From my point of view, the customer is always either the
first responder, the people who are asking to go out and deal
with the disaster, and/or it is the disaster victim, and how we
best take care of those victims and/or the people who are doing
that job for us. That is just my philosophy.
Senator Voinovich. How about the issue of letting people
know immediately what they are exposed to? Let the
Administration explain it. It happened. There was stuff there.
Senator Clinton has made an issue of the fact. The word on the
street was to go back. I am sure they were trying to get the
stock exchange going. They were trying to get the country
moving. We were in an awful situation.
But the fact is that we did not know what we were talking
about at the time that we made those comments. What are you
going to do to make sure that does not happen again?
Mr. Brown. Well, I think one of the good things is this.
Again, going back to the transition of FEMA into the Department
of Homeland Security, I intend to fully utilize the Science and
Technology Group that we have at the Department. I have gone to
Under Secretary McQueary and said, ``Chuck, listen. I do not
even understand some of the questions I should be asking you.''
FEMA has never really had what I would call a Research and
Development Department. We now have that within Homeland
Security.
I want to work closely with them. We have actually assigned
some of his folks into FEMA to watch all of our response
activities and tell us where they can provide us the kind of
expertise, whether it is technological expertise or human
capital expertise, to answer these kinds of questions.
Again, I think it is one of the grand benefits of the
creation of the Department that a small organization like FEMA
now has that kind of talent that we can turn to and say,
``Our first responders are facing these kinds of things. What
can you develop for us? Where can you lead us to give us the
technology or the human capital to provide them with the
protection they need.''
Senator Voinovich. Again, I would like to have you come in
and specify exactly how you are getting it done. Allbaugh was
saying, ``I am looking for EPA. EPA was looking at HHS.'' Who
knows who is on first base. It was just awful.
Hopefully we are going to get this legislation passed by
Congress. I would like to know if it is passed what entity you
are going to put in place so that we know that if it does
happen we are ready to go. We would expect also that the Agency
would anticipate possibly something that could happen. What are
all of the options out there in terms of what people could be
exposed to? Then start anticipating possibly what kind of
equipment individuals would need if they were going to go in
there to deal with the issue.
Mr. Brown. I will do.
Senator Voinovich. Senator Clinton.
Senator Clinton. I want to thank the chairman for his
incredible attention to this issue. He has long been a champion
of making sure that we have the right work for us and they know
what their mission is. I think we all learned some very
difficult lessons coming out of 9/11 about what our first
responders needed and they information they could or should
have had. It is equivalent to a military after action review.
We have to know the right questions. We have to be unafraid to
ask them. We have to be unafraid of getting the answers.
I just had a few more issues. In following up on what the
chairman said, the GAO report refers to FEMA providing funding
to cities from the Department of Environmental Protection for
the exterior cleaning of buildings, and the interior cleaning
of residences. The EPA, through interagency agreements, would
sample and test the air quality in the New York City area.
One of the things we learned is that the city just did not
have the expertise to do this assignment. There was a lot of
confusion initially about who is responsible for indoor air.
Some of us believed that EPA should have been responsible for
indoor air. They went to the city. The city accepted the
responsibility, but by February when I held a hearing in lower
Manhattan, I asked the representative from the city Department
of Environmental Protection, ``How did you get this
responsibility? What are you doing with it?'' He was very
honest. He said, ``You know, we know about water. We do not
know about air.''
This was something that the ball fell in the cracks. I
think the legislation that Senator Voinovich and I are putting
forward is to try to get everybody on the same page. Who has
responsibility? What is the chain of command? Who is held
accountable? We hope that the Administration will really
strongly support this legislation. We think it is needed.
But as you know, there has been a lot of scrutiny in recent
days over the information that EPA provided to citizens and
workers in lower Manhattan. Can you give me some more
information on what specifically EPA was provided resources
for, and the level of accountability required under the
interagency agreement?
Mr. Brown. No, Senator, I cannot right today. But I will
get that to you. I just know when our Emergency Support Team
mission tasks an agency to do something, they will spell out in
that mission assignment exactly what it is that they want the
Agency to do and the requirements. I will get that mission
assignment and provide it to you.
Senator Clinton. That would be very helpful.
Let me also ask you two other questions. On the issue of
hazard mitigation funding, and again you probably cannot do it
sitting here, but as soon as possible can you provide me with a
history of what disasters in the past have received 15 percent
versus 5 percent caps.
Also, has Governor Pataki submitted his request for hazard
mitigation grants? If so, where is FEMA in the process of
funding them?
Mr. Brown. We will get you the background on who has
received what in terms of the 15 and 5 percent. We will provide
you that completely.
The Governor has requested some mitigation projects which
we have funded, some of which went to the Indian Point Nuclear
Power Plant. But he has not expended all of those funds. He has
used part of it for that program.
Senator Clinton. Thank you.
Finally, Mr. Secretary, there is a new issue that has come
to light which has very serious implications. As you know,
earlier this year Congress specifically directed that $1
billion of the 9/11 related FEMA funds be used to create a
captive insurance company to cover claims arising from the
debris removal and cleanup of Ground Zero.
The accompanying conference report said that this captive
insurance company should not cover, and I quote, ``claims
arising from the terrorist-related aircraft crashes of
September 11, 2001.'' The conference report said that because
Congress had taken care of liability for those attacks in
Section 408 of the Air Transportation Safety and System
Stabilization Act.
Section 408 is in the title concerning the Victim
Compensation Fund. It provides that if someone is injured by
terrorist attacks and does not seek compensation under the
Victims Compensation Fund, they can sue the airlines or the
city of New York. But the liability of the airlines and the
city would be limited. There was a specific provision for that
limitation. In the case of New York City, the limitation was
$350 million.
I think the clear language of Section 408 makes it
absolutely crystal clear that it was not meant to cover
litigation arising out of the cleanup. That was a post-
terrorist event. The terrorists attacked. If the people do not
want to go to the Victims Compensation Fund, they have a right
to sue. But then we had the aftermath--the cleanup of the
debris.
The cleanup was completed in August 2002. I think that we
have a problem here because of a recent court decision in a
case called ``In Re: World Trade Center Disaster Site
Litigation: Hickey v. City of New York.''
I would ask unanimous consent, Mr. Chairman, to put in the
record the specifics about this question. I think this raises
an issue that the committee will have to address.
This judge recently determined that Section 408, which the
Congress specifically said was related to terrorist attacks,
capped liability for airlines and for the city, will apply to
debris removal cases that stem from the period when the
contractors and the workers were on the pile.
I know that FEMA is recently considering concluding that
all debris removal cases would be handled under Section 408
rather than under this Captive Insurance Company. I hope that
is not the case. I think the explicit legislative purpose of
the Captive Insurance Company was to deal with these debris
removal cases.
I know this is complicated. I know you are currently
negotiating with contractors and the city of New York about the
specifics about the Captive Insurance Company, but this is a
very important issue. It would be just unbelievable if we had
set money aside, allocated this Captive Insurance Company's
responsibility, and all of a sudden we throw them into Section
408 which I think would be a nightmare for everybody.
The city of New York has told me there are over 1,000
debris removal cases that were filed, with the vast majority of
them going after the contractors. Everybody remembers what it
was like there in those first weeks and months. Everybody knows
people were just working as hard as they could, literally,
around the clock. The debris cleanup was done before the
scheduled deadline and under budget. It was a great tribute to
the contractors and the workers, the city, and others who were
involved.
This is a very significant issue. I just do not think that
we want to go outside the clear intention of Congress because
one judge somewhere misreads the statute and end up using that
as an excuse for dumping all these cases into that Section. I
hope we can resolve this in line with what the congressional
intent was, and the clear language of the statute intended.
Mr. Brown. I am happy to say, Senator, that issue has not
crossed my desk yet. I am sad to say it is about to cross my
desk. Now I know. I will certainly take that into
consideration. I do understand the issue.
Senator Clinton. My office was intimately involved in
drafting these sections along with the city. We stand ready to
work with you and to try to resolve this in a way that we think
reflects the language and the intent of the two different
provisions.
Mr. Brown. It is frustrating because it has taken so long.
We have finally gotten to this final point now. Captive is
ready. We have all that ready to go. We just need to resolve
this.
Senator Clinton. It would make no sense. I look forward to
resolving this with you.
Thank you, Mr. Chairman.
Senator Voinovich. We have had a couple of rounds of
questions. We have been joined by Senator Carper.
Senator Carper, before we excuse Mr. Brown from his work
here this morning, do you have any questions or a statement?
OPENING STATEMENT OF HON. THOMAS R. CARPER, U.S. SENATOR FROM
THE STATE OF DELAWARE
Senator Carper. Yes, I do. Thank you very much.
Mr. Brown, it is good to see you. I appreciate very much
the chance to talk with you last week.
Mr. Chairman, and my colleagues, this obviously is a very
important hearing. FEMA's responses in New York after 9/11 were
unprecedented. We hope that your Agency is never going to have
to do anything like that again.
I think we would not be doing our jobs, however, if we did
not take some time to look back over the last 2 years and see
what went well and what did not, what we can learn, and what we
might want to change.
I really want to applaud FEMA for starting this process on
your own through the Public Assistance Program. We designed the
project. We look forward to working with you and others on this
committee to see what kind of reforms ought to be carried out.
Mr. Chairman, I spoke with Mr. Brown last week on the heels
of Hurricane Isabel, a freak storm that visited us several days
earlier as the remnants of tropical storm Henri, called by some
as Henry. The storm caused heavy rains not so much in northern
Delaware, but more in Southeastern Pennsylvania of anywhere
from 8 to 10 inches within about a 3-hour period.
It led to flooding, not so much in Pennsylvania, but in
Northern Delaware because of the confluence of the Red Clay and
White Clay Creeks. It washed out a community of about 200 homes
called Glenville, which you were good enough to talk with me
about. It is almost 4 years to the day that they were washed
out by Hurricane Floyd. It is the third time in about a dozen
years that this community has been devastated. Each time they
have come back, they have rebuilt and people have gone back
into their homes. They have put a lot of blood, sweat, tears,
and money into doing that. I think their spirits are broken
this time.
Through our own local agencies, we have helped them. FEMA
has been right there. We appreciate them being there and
working with our team to help people get into shelters and go
in and do preliminary damage assessments and that sort of
thing.
The question I would have is this. If you can answer it
today, then terrific. But if you would like have a little more
time to give you answer then you can send it to me later this
week, if possible.
One of the people who live in Glenville do not want to go
back. They have been through this two or three times. Their
spirits are broken. They are interested in our congressional
delegation finding out how they go forward with a buy-out
program. Could you just take a moment and explain to us how it
works. Our Governor has submitted to President Bush a request
for Federal emergency designation, a disaster designation,
because of the most recent hurricane. She has also submitted a
separate request for this community and the surrounding area
because of the damage from tropical storm Henri.
How does the buy-out program work?
Mr. Brown. Well, let me first address the request for
declarations. The Henri request came in. We were looking at it.
What we do often times is that we go back to the State and
local officials and really work with them to try to define the
numbers, to see if we are close. Are we clearly over the
threshold? Are we under the threshold? How close are we? What
additional information do we need that might help us get to
that point? We do all those things.
We were actually in the process of doing that for
Glenville. Then Isabel hits. We have already expedited, at the
Governor's request, the Isabel declaration. That is done. It
will include Glenville. The entire State will be included based
on this latest declaration. The prior declaration is still
pending and still out there.
What I need to figure out, Senator, is there anything
additional we can do in terms of buy-outs? I do not know how
many people had flood insurance and how many did not have
insurance. It is something that I am going to have to come back
to you and tell you that this is exactly what we will or will
not be able to do or here are the flexibilities we have.
I do want to assure you that under the expedited
declaration we did for Isabel, that the entire State will be
covered. I have told my folks to extend an incident period to
make sure we get that covered.
Senator Carper. All right. Thank you. In the next day or
two, that would help us.
The kind of things we are interested in resolving from FEMA
is how does this program work in some other places? I am sure
we are not the only community and we are not the only State
this has happened in.
Mr. Brown. That is why I want to be sure that I give you
good accurate information. We will get something together and
sit down with you.
Senator Carper. Thank you. The questions will include: What
can the community consider before they decide to try to pursue
buy-outs? What is expected in terms of State and local
participation in funding these. Are buy-outs even feasible or
desirable for a community like Glenville?
Those are the kind of questions we would like to resolve.
If you can put us in touch with the right person, we would be
grateful.
Mr. Brown. We will do that.
Senator Carper. I want to express a special thanks for the
quick turnaround with response to the disaster declaration.
That was much appreciated. Thank you.
Thank you, Mr. Chairman.
Senator Voinovich. Senator Jeffords, do you have any other
questions?
Senator Jeffords. No further questions.
Senator Voinovich. Mr. Brown, I want to say to you that I
really appreciate your service to this country. Your Agency has
had an enormous burden with the aftermath of 9/11 and all the
other things that just come your way. I would like to thank you
personally and to carry back to the people that work with you
our appreciation for the extraordinary work that they are doing
to try to be responsive to all the things that they are being
asked to do.
Mr. Brown. Senator, I would just like to say in closing
also that we certainly appreciate your concern about our
people. It is our people within this Agency that makes us what
we are. I really appreciate that.
Senator Voinovich. Thank you.
Our next panel is JayEtta Hecker, Director of Physical
Infrastructure Issues, General Accounting Office; and Rick
Skinner, Deputy Inspector General, Department of Homeland
Security.
Welcome. We are very happy to have you here this morning.
We will begin with Ms. Hecker.
STATEMENT OF JAYETTA HECKER, DIRECTOR OF PHYSICAL
INFRASTRUCTURE ISSUES, GENERAL ACCOUNTING OFFICE
Ms. Hecker. Thank you, Mr. Chairman.
We are very pleased to be here to present our work to both
you and Senator Jeffords. In fact, most of the work that I will
be basing my remarks on is work that either we have recently
completed for you or has been ongoing for you as well as
Senator Inhofe and Senator Clinton.
The remarks that I will focus on today will cover two
points--how much and what types of assistance the Federal
Government provided to the New York City area following 9/11,
and how the Federal Government's response differed from prior
disasters. The presentation that I have uses a number of
charts. Let me just briefly review; there is a lot of work that
we have done and I do not want to confuse you.
The report that you are releasing today is, as you stated,
on the $7.4 billion Public Assistance Program by FEMA
exclusively. That is what this report reviews in detail. In
addition, we have a report on major management risks facing
FEMA, which was another objective you had for today's hearing.
I have some remarks in my statement based on that as well.
My statement, though, and as you can see in this overview,
is about the full $20 billion, not about the $7.4 billion FEMA
program exclusively. However, I can talk about that in detail
if we want to focus on that. Basically, I will be looking at
the entirety of funding, with the focus on the distribution and
the role that FEMA played in these four broad areas.
To assist in your following this, we have made copies of
the posterboards for you if you want to take a closer look at
them. The overview is the estimated $20 billion that was
pledged and that Congress has subsequently authorized.
The major contribution that we have made to reviewing the
provision of assistance is in two areas. First is giving more
detail to it. You have seen it by agency and it has been
authorized by agency, but what we have done is to sort it into
four broad categories--initial response, compensation for
losses, infrastructure restoration, and economic
revitalization. These numbers actually exclude committed
assistance where its use has not yet been decided. There is
$1.16 billion that HUD has committed, but it has not been
determined where it is going to go. The total also excludes the
Victim's Compensation Fund.
The next four charts are going to take each of these slices
and talk about how much was provided and what was provided by
each agency. In the initial response, you have $2.5 billion
that has been provided for the initial response. We have
pictures of the debris removal, the urban search and rescue
teams. I do not know what State that team is from, but they are
similar to your teams from Ohio who came in to aid New York.
There were 20 of the 28 urban search-and-rescue teams that
actually came to New York, the biggest deployment ever.
Then on the bottom you have emergency transportation
repairs. You can see the devastation to the tunnels that
completely block them and the emergency cleanup that worked to
clean that up. Of the $2.5 billion, in initial response
funding, about $1 billion is for insurance to cover the
liability of the city for the claims from workers and city
officials who were involved in the cleanup and who may have
been affected with health claims.
That billion is not yet allocated and that agreement is not
yet finalized. That is the $2.5 billion. It certainly was a
record rate of activity. It was a pile of devastation that was
seven stories deep. It was 11 stories high. It happened in
record time and well below budget.
The second phase which covers $4.8 billion is for
compensation of specific disaster related costs. This goes to
three categories of recipients--to city and State officials and
other government organizations like the Port Authority; it goes
to individuals; and it goes to businesses. The distribution
included about $3.3 billion which went to New York City and
State, about $800 million to individuals, and $683 million to
businesses.
The pictures we have here really are just symbolic. There
are dozens of programs that are involved in serving those three
constituencies. One picture is of the replacement of emergency
vehicles. There were, of course, hundreds of emergency vehicles
destroyed. That is what I think Assistant Secretary Brown was
referring to is the traditional approach looking at vehicles,
or physical damage. That was very quickly reimbursed.
We also have a picture of the substantial number of folks
coming in looking to find out what kind of individual
assistance and compensation were available. There were dozens
of programs, not just by FEMA, but by HUD as well. The total is
$4.8 billion for compensation to the three categories of
recipients.
The next phase is for infrastructure restoration. This is
actually a very unique area. Of course, there was the
traditional damage that is always compensated under public
assistance. But in this case there was an early agreement by
FEMA and subsequently authorized by the Congress, not just for
replacement of the damaged infrastructure, but actual
enhancement and substantial improvement of the infrastructure.
What we show in this picture is actually one of the
renditions of a transportation infrastructure restoration of
the South Ferry Street subway station. What you have is the
current line, which is that yellow loop, which is very
inefficient. It only allows 5 of the 10 cars to open in the
station. The plan is to change that so that the full ten cars
can come into the station. There was no damage whatsoever to
this station. This is part of an agreement to substantially
enhance the infrastructure of lower Manhattan.
Similarly, the Fulton Street station was not damaged. There
are improvements planned there at the $750 million level. There
has been a real commitment by the Federal Government and with
the endorsement by Congress to do far more than the simple
historic replacement of the infrastructure, but a substantial
improvement.
There is also a similar commitment with HUD funding. The
amount is about $500 million for improvement of
telecommunications and communications infrastructure. That also
was an improvement. That is not simply a replacement. It is
meant to try to induce and improve the economy and make it more
attractive to businesses like the Stock Exchange to have a more
robust support and networked infrastructure so that they feel
safe being in an environment where they could be so easily
interrupted.
The fourth phase is economic revitalization. This is
estimated at a little over $5 billion. This includes a range of
initiatives on the part of HUD to promote business attraction
and retention. There is a diverse range of programs for large
businesses, small businesses, as well as the $5 billion
estimated value of the Liberty Zone Tax benefit plan that was
passed by the Congress to assist in the revitalization of New
York City.
Let me turn quickly to the last chart which tries to
summarize the major differences of this approach. Of course, it
was the biggest disaster ever. It was certainly profound in
terms of being a terrorist incident. But what I focus on is the
changes in the process and the types of assistance that were
provided.
Basically we have categorized the changes into three areas.
The first is that there was a complete waiving of State and
local match. The law requires about a 75 percent match. At
times some of the assistance has gone up to 100 percent, but
never the entire amount of assistance. The State and local
match was completely waived for all the FEMA public assistance
for the first time in history and for all of the Department of
Transportation funding. That is over $10 billion. The match
there was waived.
The second biggest area--I think this was not quite brought
out this morning, and I would like to make this point clear.
What was really unique is that it was first time in which the
amount of the disaster assistance was set very early. It
basically functioned as a funding target. Congress supported
the President's commitment to provide approximately $20 billion
to New York City.
Basically, as Senator Clinton said, that has then
functioned as a cap. So you had the various agencies who had
dedicated funds, whether it was FEMA, HUD, or DOT, looking at
how they could spend the funds allocated to them. The key thing
was that they could not spend the $20 billion under Stafford-
eligible projects. Substantial flexibility was provided to be
able to expend those funds. That actually was related to the
recent consolidated appropriations that authorized FEMA to
basically do what amounts to a cash transfer to the city of
approximately $1 billion.
This is for the type of assistance that was very
nontraditional. FEMA basically closed out, for the first time
in history, all of their assistance as of April 30. Then the
amount that was left over is what was transferred. That was
$1.1 billion that has recently been transferred to the city.
That really summarizes the work. The key things are that it
was an extraordinary Federal response. I am sorry to tell you
that the data was a mess. It took us a long time to try to get
it to tell you where the money went and how it was used. Our
report on this area will have very comprehensive reviews for
you in more detail on this, including the disbursement rate as
well. We know that has been an issue of interest.
Thank you, Mr. Chairman. I would ask that my written
statement be placed in the record in its entirety.
Senator Voinovich. Thank you very much.
Mr. Skinner.
STATEMENT OF RICK SKINNER, DEPUTY INSPECTOR GENERAL, DEPARTMENT
OF HOMELAND SECURITY
Mr. Skinner. Good morning. I would like to thank you for
having me here. I am Rick Skinner, Deputy Inspector General at
the Department of Homeland Security. I would like to briefly
summarize my remarks. I would like to discuss two issues.
One is the work of the OIG in New York City following the
9/11 terrorist attacks. Two is the OIG's perspective on FEMA's
merger into the new Department of Homeland Security.
First, let me address our work in New York. In response to
the President's declaration, FEMA applied the full range of its
authorized disaster assistance programs. The FEMA OIG, in turn,
deployed four teams of auditors, inspectors, and investigators
early in October 2001 to New York City to oversee the
management of those programs.
One team worked directly with the Federal Coordinating
Officer and monitored the general management of the disaster
field office and the disaster field operations. Another team
worked with the FEMA public assistance staff, debriefed
applicants on how to maintain records, reviewed accounting
systems, and reviewed grant applications and claims to ensure
the eligibility of costs.
The third team worked with the U.S. Attorney and the New
York City District Attorney to detect and prosecute fraudulent
claims. The fourth team, in the fall of 2002, conducted a full-
blown review of FEMA's Individual Assistance Program. I brought
extra copies of the report for those who may not have seen it.
It was issued in December 2002. I will summarize a few of our
more significant findings.
Mortgage and Rental Assistance Program. FEMA historically
has not had to implement the Mortgage and Rental Assistance
Program on a large scale because previous disasters did not
result in widespread unemployment and economic loss.
Consequently, Congress eliminated the program when it enacted
the Disaster Mitigation Act of 2000, making the program
unavailable after October 2002.
The effects of the 9/11 terrorist attack, however,
demonstrated genuine need for programs such as this. Therefore,
we have recommended in this report that Congress consider
reinstating the program under the Stafford Act.
Interagency Coordination Challenges. Responsibility shared
among FEMA, EPA, and the U.S. Department of Justice's Office
for Victims of Crime, and voluntary agencies were not defined
clearly enough to distinguish roles and establish the sequence
of delivery of assistance. Recovery from the 9/11 terrorist
attacks highlighted the need for advance agreements and
memorandums of understanding regarding shared roles,
responsibilities, and authorities among those agencies most
likely to respond to future such events.
I know that Under Secretary Brown has addressed a few of
those issues, particularly with regards to the coordination
between FEMA and EPA in the cleanup and testing that took place
there. It took place very late in the disaster because people
simply did not have experience in dealing with issues like
this.
Assistance to Aliens. The Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 requires that FEMA
public benefits be provided only to U.S. citizens, noncitizen
nations, and qualified aliens. Yet, there were 9/11 disaster
victims who do not meet this criteria, but who were lawful
residents of the United States, in this country legally.
One immigration advocacy group estimated that as many as
80,000 lawfully present individuals in New York City are not
qualified for Federal disaster assistance. This would include
aliens here on work visas or student visas.
We believe that FEMA should consider pursuing legislative
change that would exempt its programs from the Federal Public
Benefit Classification, when victims needing aid are lawfully
present in the United States.
Grants to small businesses were made on an ad hoc basis.
The 9/11 terrorist attack had a negative impact on the New York
City economy, strongly affecting businesses, both large and
small. In fact, GAO issued a report on this very subject last
year. There is, however, presently no ongoing Federal program
that provides grant support to businesses adversely affected by
terrorist attacks.
SBA is authorized to make loans, not grants, to businesses
adversely affected by disaster. The SBA is prohibited, however,
from making loans to businesses that do not meet established
eligibility criteria. SBA was unable, for example, to make
loans to businesses that did not meet the Agency size
requirements or standards.
After the 9/11 attacks, Congress enacted special
legislation allowing the State of New York to use Community
Development Block Grant funds to make business recovery grants
for those affected by the 9/11 disaster. However, this was a
one-time exception. Congress may wish to consider whether the
Federal Government should be the insurer of last resort for
terrorist-related business losses. Such a policy decision would
eliminate the need to respond on an ad hoc basis if a future
event like this should occur.
I would like to shift gears and address FEMA's transition
into the Department of Homeland Security. This will be brief.
As Under Secretary Brown has already noted in his testimony,
FEMA has not missed a step in responding to disasters since
becoming part of DHS.
In May of this year, we sent a team of auditors to monitor
FEMA's response and recovery efforts in the State of Missouri.
The caliber and effectiveness of FEMA's response was the same
high standard we have seen in the past. Notwithstanding the
continued success of FEMA's response and recovery efforts, FEMA
has many problems that need to be address. Its ability to
effectively address them is compounded by its merger with DHS.
Areas of particular concern include FEMA's financial
management, the development and security of its IT systems, and
grants management. Deficiencies in these areas could most
certainly hamper the effective and efficient integration of
FEMA programs and operations into the Department of Homeland
Security.
However, the FEMA OIG has also transitioned into DHS and
the ability of that staff to provide oversight, as we have in
the past, of those activities has been diluted due to the many
high profile, non-FEMA programs and activities that the DHS'
OIG has responsibility for.
In addition, although numerous grant programs are now
consolidated within DHS, their management is divided among
various components of the Department. For example, preparedness
for terrorism is in the Border and Transportation Security
Directorate, while other preparedness efforts are in the
Emergency Preparedness and Response Directorate. This
bifurcation could create additional challenges related to
intergovernmental coordination, performance accountability, and
financial accountability.
It is our understanding that these problems are now being
addressed legislatively. Further, we just learned that
Secretary Ridge has announced plans to centralize these
programs within a single office in the Department. These
initiatives, either legislatively or through reorganization, if
implemented, could very well resolve many of our concerns.
This concludes my opening remarks. Again, I appreciate the
opportunity to testify before you today. I will be happy to
answer any questions you may have. I would ask that my written
statement be placed in the record in its entirety.
Senator Voinovich. Thank you very much for being here.
Ms. Hecker, this last chart that you showed us, the
nontraditional work funded, such as improvements to
transportation infrastructure in lower Manhattan. This is brand
new to me. This was a massive infusion of public dollars to
enhance the existing set up. In other words, this was more than
just a replacement that we are dealing with?
Ms. Hecker. Precisely.
Senator Voinovich. What is the dollar amount on how much of
this nontraditional money that was put in there? FEMA comes in
and they do their work. They help with the library and fix it
up. There may be other public buildings that may have been
damaged. This seems to have gone way beyond anything like that.
Ms. Hecker. We have not been able to identify an explicit
number that was above and beyond Stafford in part because there
was substantial flexibility that FEMA officials decided that
they had within the Stafford Act to actually improve
transportation infrastructure.
There was actually a legal opinion. There was a conclusion
that simple replacement of the infrastructure would not restore
its functionality. Therefore, they felt improvements were
necessary. There were certain types of improvements that they
said would have been Stafford covered. But then you had
congressional authorization saying that these completely
unrelated areas could also be funded as well.
It is not clean-cut of what is over and above Stafford. The
Fulton Street station, as I said, was $750 million. There was
no damage there. What they are doing is that they are
connecting lines that previously were not connected. They are
making it a complete lower Manhattan transit center where all
the lines connect. There used to be at least three areas with
more than 10 lines. There would be different stations. The
South Ferry Station that was on the chart is $400 million.
Ms. Hecker. Do you have that in your report on one page
that you can see that? The reason I am asking the question is
that this is an extraordinary commitment of infrastructure
dollars. This was part of the cap, right?
Ms. Hecker. Absolutely.
Senator Voinovich. It is all within the cap?
Ms. Hecker. Precisely.
Senator Voinovich. The point I am making is that we may get
some requests now to come in and say there are ongoing things
that we needed to do and were capped out. What I am trying to
say is it is an allocation of resources. If you put all the
money, $1.5 billion, into public improvements and then you come
back and say, ``Well, hey folks, we do not have enough money to
take care of the people.'' I think Senator Clinton mentioned
mental health.
Who decided the allocation of the funds? The same people
are coming to us to say, ``Hey, we do not have enough money for
these people. But by the way, we did have enough money to do
these public improvements to lower Manhattan.''
Ms. Hecker. It is certainly a choice that officials in New
York City and State made working with FEMA on the allocation of
the funds. There were many meetings about it. There were lots
of areas that came before the Congress where there were
concerns about coverage. One was costs--$11 million for the
rescheduling of elections, not a cost traditionally covered.
There were increased Medicaid costs by the State--not a cost
traditionally covered.
There were costs of COLA adjustments to pensions. The city
was looking for reimbursement of that. These are nontraditional
types of costs nowhere covered by the Stafford Act, but with
that expedited closeout and that transfer of additional funds,
the city and State now will be making the choices of that
remaining $1 billion and have made many choices already in
terms of dedicating funds to transportation improvements.
Senator Voinovich. I am really interested in that--all
these things that are nontraditional.
Ms. Hecker. We will try to isolate that. As I said, there
is a fuzzy line in some of them.
Senator Voinovich. Thank you.
Senator Jeffords.
Senator Jeffords. Thank you, Mr. Chairman.
Ms. Hecker, did you find any information as to why the
President capped the disaster funding for New York $20 billion?
Was there any rationale given for that?
Ms. Hecker. We have not seen much documentation on that.
Basically the press reports were that there were overtures to
him that he should come out with a very strong statement of a
commitment to provide support for New York. There is no
documentation of where the $20 billion came from. The Secretary
said, ``There was very little known in the beginning about the
buildings.''
For example, the buildings were owned by the Port
Authority. There was some concern at the beginning that perhaps
the cost of the replacement of the building might be part of
public assistance. There is not much documentation.
But as the process went on and traditional applications
came in, it was clear that the $8.8 billion that Congress set
aside for FEMA was not going to be met with eligible Stafford
Act projects.
Senator Jeffords. Is the $20 billion sufficient?
Ms. Hecker. Once you are out of the Stafford Act,
everything is a question of judgment. The Stafford Act has its
history about what is covered. What is covered by the Stafford
Act has been provided or is covered in this $1 billion
transfer. The above and beyond is a discretion of Congress to
decide what is adequate.
Senator Jeffords. This is a question for Mr. Skinner.
In your written testimony you state that FEMA should be
more proactive in requesting EPA to conduct necessary testing
and there are studies to determine that the public health or
safety threat exists in the future in future disasters.
So that cleaning efforts can begin much earlier in the
recovery phase, am I correct in understanding that had EPA
expressed their concerns about indoor air quality in lower
Manhattan earlier, FEMA could have provided emergency response
funding more quickly?
Mr. Skinner. Yes, I believe they could have. FEMA knew
early on that there was asbestos in the air as a result of
these attacks. But because FEMA's lack of experience in this
area--as well as EPA's lack of experience in this area--and the
question of whether they even had the authority to authorize
cleanup of individual residences, particularly on the inside,
was something that I think was discussed for many months before
an ultimate decision was made to test and clean residences.
What we are suggesting here is that in the future we need
to be a little bit more proactive. If there is any evidence
whatsoever, particularly after an event such as the terrorist
attacks, or any possibility that there could be some
contamination in the air, then FEMA should probably be going to
EPA early on and directing them to test the air quality to find
out exactly what hazards may exist. This needs to be done early
on.
I do not think either FEMA or EPA was prepared after 9/11
to address this issue in the early stages of the disaster.
Senator Jeffords. What complicating factors are present in
the new Department that may make it more difficult for FEMA to
conduct its work and address some of the management challenges
you describe in your testimony?
Mr. Skinner. FEMA's Financial Management System is a good
example. It is fraught with problems and if you pull one
string, the whole thing could fall apart. Now it is being
integrated into the Department of Homeland Security's Financial
Management System.
FEMA's financial management systems have several material
weaknesses that will affect the Department of Homeland
Security's ability to build a reliable department-wide
accounting system. The same holds true, for example, with the
IT systems. There were IT development efforts ongoing within
FEMA prior to the creation of DHS. Many of those development
efforts now have to take a back seat or have to compete with
other priorities within the Department of Homeland Security as
to which IT projects should be continued.
The security of FEMA's IT systems, like the security of all
the legacy agencies, are very weak. Only a handful of them may
have passed an IT security ``litmus'' test. The problem will
certainly affect DHS' ability to integrate legacy systems into
a department-wide system.
Grants management has always been a problem with FEMA. It
also has been a problem with the DOJ programs, from what I
understand. According to DOJ-OIG reports, grants to the States
are oftentimes made late. In FEMA's case, grants are timely,
but once the funds are passed out, there is no accountability.
FEMA does not obtain accurate and timely financial reports, nor
are they making onsite monitoring visits. FEMA is validating
that the funds are being spent the way they are supposed to be.
I was the Deputy Inspector General at FEMA before the
merger with DHS. We questioned over $900 million in grant
expenditures in just FEMA programs alone over the last 9 years.
These are the types of issues that the DHS must now grapple
with, now that they are merged in with DHS. These are problems
that will need to be addressed now that they have been
transferred into DHS.
Another issue, and I think it is a very serious one, DHS
needs to take a very close look at, is this: Are these grants,
in fact, enhancing the State and local's ability to respond to
and recover from disasters, whether they are caused by natural
events or terrorist events? DHS has no performance measures to
suggest that the grants that are being passed out on a yearly
basis, costing billions of dollars, are, in fact, having an
impact on the nation's ability to prepare for and respond to
disasters. I think that this issue needs to be addressed
sometime soon as these accounts get larger and larger as time
goes on.
Senator Jeffords. Thank you. I know I went well over my
time, but I think it is information well deserved to be
received.
May I continue?
Senator Voinovich. I have some other questions.
Senator Jeffords. Then you go ahead and let me rest.
Senator Voinovich. Probably what we need to do is to look
at all the various agencies that are being merged into the
Department of Homeland Security. How many of them are on GAO's
high risk area?
Ms. Hecker. The whole merger is on the high risk list.
Senator Voinovich. The issue that Mr. Skinner is getting at
is that some of these components were already weak to begin
with and now they are going into the new Agency. The issue is:
Are they going to better cured by having DHS just focusing on
that issue in other agencies and put it all in one basket? Will
they be better off just focusing on FEMA to make sure that
their financial management systems are in place? That is a
policy decision that needs to be made.
One of the points that you made--and again I would like to
capture it, is that the grants that were given to New York did
not require the match. Have you captured the cost savings in
terms of not having to come forward with a match? Traditionally
the locals have to come up with a match. In this particular
case, that was waived. Did you put a dollar amount on that?
Ms. Hecker. As I said, the law requires a maximum 75/25
percent State/local match. In prior disasters, the State/local
match has been waived for part of the disaster. In the North
Ridge earthquake, part of public assistance, the emergency or
the short-term work, the State/local match was reduced to 10
percent. In some disasters, the Federal Government has covered
100 percent for some specific expenses or time period. As such,
you cannot just estimate what is 25 percent of $8.8 billion.
Historically there is a lot of a discretion there to vary the
amount. The point is that it has never been entirely without a
State or local match for the entire value of the public
assistance, in this case $8.8 billion.
Senator Voinovich. What I would like to do would be to take
a minimum figure. In other words, if you look at other
projects, is this is worth 25 percent, 15 percent, or 10
percent? I would like to get a handle on how much money the
local communities were saved as a result of not having to come
up with the match which is a match that traditionally
communities have to come up with. We had to come up with it in
Ohio when we had our disasters.
Ms. Hecker. Particularly for the transportation
improvements. This is the first time that the transportation
match has been waived as well.
Senator Voinovich. I am really interested in that. I would
like to really capture the total cost of all of this and what
was done. All right?
Ms. Hecker. Yes.
Senator Voinovich. Mr. Skinner, I would like to talk about
the issue of information on what people are exposed to. Does
FEMA traditionally get into the issue of air quality?
Mr. Skinner. To my knowledge, no. It is somewhat unique.
Senator Voinovich. That is like an EPA's responsibility.
The issue then becomes when EPA gets involved, are they
responsible for the air quality outside and inside? You may not
have the answer to this.
Mr. Skinner. I do not know the answer to that. It was my
understanding that at the time of the World Trade Center
incident, they did not believe they had the authority or
responsibility for the air quality inside a residence.
Senator Voinovich. In other words, they felt that was up to
the local health department to determine what was the condition
inside?
Mr. Skinner. Yes; that is my understanding, but that
question could be better answered by EPA.
Senator Voinovich. One of the things that I am interested
in, as I mentioned earlier, is the legislation that Senator
Clinton and I have that was voted out of this committee that
empowers the President to move in and get all that information.
We still have the situation where you have the EPA out there.
Allbaugh was taking about Health and Human Services being
involved.
I would like to get an answer in terms of what is the
vehicle that would be looked to if the President were to
exercise his authority under this legislation. It is easy to
have legislation. But the issue is if it happens, who is
responsible for what? Is it going to be EPA that is going to be
the one that is doing it? Is it Homeland Security that is going
to be done? Is it HHS?
Something has to be put together so that it is
comprehensive. Are they responsible for just the exterior air?
All of that, I think, really needs to be worked out. I think we
ought to get a question to the Agency and really followup on
that particular issue.
Mr. Skinner. Yes, I agree. That was our point in our
report. I think the lessons learned from 9/11 should be a
guideline for FEMA and EPA to start developing some protocols
before the next disaster, so when the next incident does occur,
they will be better equipped.
Senator Voinovich. In terms of your oversight there, did
you ever get into the issue of their processing of these claims
for the first responders in terms of their health claims? Did
you look at that at all?
Mr. Skinner. No, we did not, sir.
Senator Voinovich. It is just another area where they just
did not get the job done.
Mr. Skinner. It was just so much to do there. Again, we
focused primarily on the individual assistance programs,
knowing that GAO was going to be focusing on the public
assistance programs.
Senator Voinovich. OK. I have exhausted my time.
Senator Jeffords.
Senator Jeffords. I have no further questions.
Senator Voinovich. I would like to thank you both for being
here today. It has been really illuminating.
Mr. Skinner. Thank you. It was our pleasure.
Senator Voinovich. I am going to ask that FEMA report and
the GAO report on FEMA, ``Major Challenges and Program Risks,''
released today be entered into the record.
Without objection, so ordered.
[The referenced reports follow:]
[GRAPHIC] [TIFF OMITTED] T2386.041
[GRAPHIC] [TIFF OMITTED] T2386.042
[GRAPHIC] [TIFF OMITTED] T2386.043
[GRAPHIC] [TIFF OMITTED] T2386.044
[GRAPHIC] [TIFF OMITTED] T2386.045
[GRAPHIC] [TIFF OMITTED] T2386.046
[GRAPHIC] [TIFF OMITTED] T2386.047
[GRAPHIC] [TIFF OMITTED] T2386.048
[GRAPHIC] [TIFF OMITTED] T2386.049
[GRAPHIC] [TIFF OMITTED] T2386.050
[GRAPHIC] [TIFF OMITTED] T2386.051
[GRAPHIC] [TIFF OMITTED] T2386.052
[GRAPHIC] [TIFF OMITTED] T2386.053
[GRAPHIC] [TIFF OMITTED] T2386.054
[GRAPHIC] [TIFF OMITTED] T2386.055
[GRAPHIC] [TIFF OMITTED] T2386.056
[GRAPHIC] [TIFF OMITTED] T2386.057
[GRAPHIC] [TIFF OMITTED] T2386.058
[GRAPHIC] [TIFF OMITTED] T2386.059
[GRAPHIC] [TIFF OMITTED] T2386.060
[GRAPHIC] [TIFF OMITTED] T2386.061
[GRAPHIC] [TIFF OMITTED] T2386.062
[GRAPHIC] [TIFF OMITTED] T2386.063
[GRAPHIC] [TIFF OMITTED] T2386.064
[GRAPHIC] [TIFF OMITTED] T2386.065
[GRAPHIC] [TIFF OMITTED] T2386.066
[GRAPHIC] [TIFF OMITTED] T2386.067
[GRAPHIC] [TIFF OMITTED] T2386.068
[GRAPHIC] [TIFF OMITTED] T2386.069
[GRAPHIC] [TIFF OMITTED] T2386.070
[GRAPHIC] [TIFF OMITTED] T2386.071
[GRAPHIC] [TIFF OMITTED] T2386.072
[GRAPHIC] [TIFF OMITTED] T2386.073
[GRAPHIC] [TIFF OMITTED] T2386.074
[GRAPHIC] [TIFF OMITTED] T2386.075
[GRAPHIC] [TIFF OMITTED] T2386.076
[GRAPHIC] [TIFF OMITTED] T2386.077
[GRAPHIC] [TIFF OMITTED] T2386.078
[GRAPHIC] [TIFF OMITTED] T2386.079
[GRAPHIC] [TIFF OMITTED] T2386.080
[GRAPHIC] [TIFF OMITTED] T2386.081
[GRAPHIC] [TIFF OMITTED] T2386.082
[GRAPHIC] [TIFF OMITTED] T2386.083
[GRAPHIC] [TIFF OMITTED] T2386.084
[GRAPHIC] [TIFF OMITTED] T2386.085
[GRAPHIC] [TIFF OMITTED] T2386.086
[GRAPHIC] [TIFF OMITTED] T2386.087
[GRAPHIC] [TIFF OMITTED] T2386.088
[GRAPHIC] [TIFF OMITTED] T2386.089
[GRAPHIC] [TIFF OMITTED] T2386.090
[GRAPHIC] [TIFF OMITTED] T2386.091
[GRAPHIC] [TIFF OMITTED] T2386.092
[GRAPHIC] [TIFF OMITTED] T2386.093
[GRAPHIC] [TIFF OMITTED] T2386.094
[GRAPHIC] [TIFF OMITTED] T2386.095
[GRAPHIC] [TIFF OMITTED] T2386.096
[GRAPHIC] [TIFF OMITTED] T2386.097
[GRAPHIC] [TIFF OMITTED] T2386.098
[GRAPHIC] [TIFF OMITTED] T2386.099
[GRAPHIC] [TIFF OMITTED] T2386.100
[GRAPHIC] [TIFF OMITTED] T2386.101
[GRAPHIC] [TIFF OMITTED] T2386.102
[GRAPHIC] [TIFF OMITTED] T2386.103
[GRAPHIC] [TIFF OMITTED] T2386.104
[GRAPHIC] [TIFF OMITTED] T2386.105
[GRAPHIC] [TIFF OMITTED] T2386.106
[GRAPHIC] [TIFF OMITTED] T2386.107
[GRAPHIC] [TIFF OMITTED] T2386.108
[GRAPHIC] [TIFF OMITTED] T2386.109
[GRAPHIC] [TIFF OMITTED] T2386.110
[GRAPHIC] [TIFF OMITTED] T2386.002
[GRAPHIC] [TIFF OMITTED] T2386.003
[GRAPHIC] [TIFF OMITTED] T2386.004
[GRAPHIC] [TIFF OMITTED] T2386.005
[GRAPHIC] [TIFF OMITTED] T2386.006
[GRAPHIC] [TIFF OMITTED] T2386.007
[GRAPHIC] [TIFF OMITTED] T2386.008
[GRAPHIC] [TIFF OMITTED] T2386.009
[GRAPHIC] [TIFF OMITTED] T2386.010
[GRAPHIC] [TIFF OMITTED] T2386.011
[GRAPHIC] [TIFF OMITTED] T2386.012
[GRAPHIC] [TIFF OMITTED] T2386.013
[GRAPHIC] [TIFF OMITTED] T2386.014
[GRAPHIC] [TIFF OMITTED] T2386.015
[GRAPHIC] [TIFF OMITTED] T2386.016
[GRAPHIC] [TIFF OMITTED] T2386.017
[GRAPHIC] [TIFF OMITTED] T2386.018
[GRAPHIC] [TIFF OMITTED] T2386.019
[GRAPHIC] [TIFF OMITTED] T2386.020
[GRAPHIC] [TIFF OMITTED] T2386.021
[GRAPHIC] [TIFF OMITTED] T2386.022
[GRAPHIC] [TIFF OMITTED] T2386.023
[GRAPHIC] [TIFF OMITTED] T2386.024
[GRAPHIC] [TIFF OMITTED] T2386.025
[GRAPHIC] [TIFF OMITTED] T2386.026
[GRAPHIC] [TIFF OMITTED] T2386.027
[GRAPHIC] [TIFF OMITTED] T2386.028
[GRAPHIC] [TIFF OMITTED] T2386.029
[GRAPHIC] [TIFF OMITTED] T2386.030
[GRAPHIC] [TIFF OMITTED] T2386.031
[GRAPHIC] [TIFF OMITTED] T2386.032
[GRAPHIC] [TIFF OMITTED] T2386.033
[GRAPHIC] [TIFF OMITTED] T2386.034
[GRAPHIC] [TIFF OMITTED] T2386.035
[GRAPHIC] [TIFF OMITTED] T2386.036
[GRAPHIC] [TIFF OMITTED] T2386.037
[GRAPHIC] [TIFF OMITTED] T2386.038
[GRAPHIC] [TIFF OMITTED] T2386.039
[GRAPHIC] [TIFF OMITTED] T2386.040
Senator Voinovich. We have people here at the front lines
today. Brother Shipley and I have been through a lot together.
I think you were on a leave of absence to go over to Chicago
and work for FEMA for awhile. Now he has returned back to Ohio.
Senator Jeffords, I would like you to know that we probably
have the best emergency management facility in the United
States of America. In fact, James Lee Witt was there when we
cut the ribbon on it. Mr. Shipley is really an outstanding
individual that has served our State and country for many
years.
Senator Jeffords. Is that because you have so many
disasters out there?
Senator Voinovich. Thank God we did not have that many of
them.
[Laughter.]
Senator Voinovich. Mr. Larson, you certainly have been
through it and probably could write a book. Maybe you are
starting to do that. We are very happy to have you here with us
today.
If you could limit your comments to 5 minutes, I would
appreciate it.
I think we will begin the testimony with Mr. Shipley.
STATEMENT OF DALE SHIPLEY, EXECUTIVE DIRECTOR, OHIO EMERGENCY
MANAGEMENT AGENCY, ON BEHALF OF THE NATIONAL EMERGENCY
MANAGEMENT ASSOCIATION
Mr. Shipley. Thank you, Chairman Voinovich. I appreciate
the opportunity to be here today. Senator Jeffords, it is a
pleasure to be here with you. I am Dale Shipley, Director of
the Emergency Management Agency for Ohio, and Past President of
the National Emergency Management Association. I am here today
representing NEMA.
Certainly it is a historic time as we create the Department
of Homeland Security. Part of my focus will be to emphasize an
all-hazards approach to disasters which have been the basis for
our response to disasters for some 25 years.
NEMA supported the inclusion of the Federal Emergency
Management Agency into the Department of Homeland Security
because it was obvious that the primary focus for that
Department was to address a major new threat to the United
States, that of terrorism, which we view as one of many
threats. Hurricane Isabel recently reinforced the all-hazards
approach that the Department is built upon.
In Ohio, we have had two Federal disaster declarations
since FEMA was incorporated into the Department in March. We
have seen no change in the speed, availability, or the
flexibility of assistance from FEMA since it came into the new
Department.
Other agencies within the Department of Homeland Security,
as was mentioned by Secretary Brown, will provide even greater
assistance to us as we look to them for research and
development, new requirements we have in light of the focus on
weapons of mass destruction, and increased security against
that threat through prevention. The Department of Homeland
Security repeatedly stresses as its number one mission as
information-sharing programs and funding for increasing the
capabilities for a more effective response.
You specifically asked me to address the Public Assistance
Program. As you know, it addresses public needs, specifically
the costs of debris removal, damages to roads and bridges,
water control facilities, public buildings, public utilities,
and parks and recreation facilities.
Public assistance is particularly important for disaster
relief because communities need these vital functions restored
in order to get back on their feet. A terrorist event, such as
the World Trade Center or the anthrax attacks, cause
redefinition of programs which are based on threats experienced
during the previous 25 years.
As Secretary Brown testified, the Stafford Act allows
flexibility and continues to serve us well, although certainly
policies and procedures had to be rewritten after this
unprecedented disaster occurred.
In Ohio, we have staff that work with FEMA to assist
various applicants for public assistance in identification,
applications and accomplishing eligible projects. During this
current Federal fiscal year, we have had four Presidential
disaster declarations in Ohio with some 997 public entities--
villages, townships, counties--apply and received $49 million
in public assistance.
Ohio employees act to manage these problems and interface
all these applicants with the Federal Government, and are
charged with keeping records, handling all reporting
requirements, closing out the projects, closing out the
disasters, and managing the 25 percent non-Federal cost share.
We also manage one of the few State programs for public
assistance. Under the State law, the Ohio Governor can declare
a disaster, and if it does not warrant or is not large enough
to warrant a Presidential declaration, then we will implement a
State public assistance program. We have had four such
declarations in this same 1-year period, which have assisted 83
applicants at a total cost of $4.8 million. You can see the
relevant size that I am talking about in State disaster versus
Federal disaster declarations.
One challenge this year was a congressional appropriations
for 2003 were about half the normal anticipated costs in the
disaster relief fund. That resulted in the Federal Government
writing some IOUs which the committee asked about earlier in
this hearing. We have had some examples where snow and ice in
Monroe County, for instance, one our smallest counties. I think
15,000 people live there. They had a public assistance approval
for almost a half million dollars in losses from that snow and
ice disaster. Only earlier this month, we were able to draw
dollars to help them accomplish those projects.
Other issues that I would like to bring before this
committee involve both pre- and post-disaster mitigation
programs. I have really been pleased to see some questions
involving mitigation and the cost shares of these programs.
Senator Clinton, in particular, brought up the fact that
recently we have reduced the formula for mitigation money from
15 percent of total disaster cost to 7.5 percent. In fact, she
addressed the issue of a 5 percent cap put on mitigation for
the New York disaster.
Let me just give you the most recent success story that
emphasizes what I believe is critically important to our
mitigation efforts. Hurricane Isabel--there were 220 homes in
Bell Haven, NC that were elevated with Hazard Mitigation Grant
Program funds after Hurricane Fran in 1996.
None of these homes flooded last week, even though there
was significant flooding on the Pungo River.
We try constantly to find examples where we can go back and
show that getting people out of harm's way is good government,
good business, and reduces costs of life and property
ultimately if we can just mitigate what we know will be future
disasters.
My written testimony includes comments about a correction
to the Disaster Mitigation Act of 2000 asking for more
flexibility in our assistance to individuals and households
where we ended up with a cap of $5,000 in that program which
should be flexible. We should be able to increase it. It is in
the best interest of ourselves and our victims.
Senator, you asked specifically if we would address your
proposed legislation on health monitoring of volunteers. My
personal angle on that not only is to be supportive of that,
but that we all need to be critical, as you know, in all of our
disaster response. We are absolutely dependent upon the
thousands and thousands of volunteers who come forth to help
us. Government cannot do everything for everybody, nor should
we even try.
The Salvation Army and the Red Cross are voluntary
organizations active in disasters. All the religious
organizations and all the people that come forth to help are
critical to our success. People like we have volunteering to
serve in our urban search and rescue task forces must be cared
for. I appreciate your interest and your concern in doing that.
As we work to establish a new Federal Department of
Homeland Security, we must not forget the all hazards approach
to emergency management. We must prepare for and respond to all
threats, the common as well as the extraordinary, whether it is
flooding in Ohio, a hurricane in North Carolina, tornadoes in
Kansas, or an explosion of known or unknown origin.
States need a Federal commitment and system, recognizing
that each State and local government has unique disaster
mitigation, preparedness, response, and recovery needs that
require flexible, predictable, and adequate funding assistance
that is coordinated with the State emergency management plan.
Again, I thank you very much for the opportunity to be
here. I would ask that my written statement be placed in the
record in its entirety.
Senator Voinovich. Thank you for being here.
Mr. Larson.
STATEMENT OF BUD LARSON, ASSOCIATE DIRECTOR,
NEW YORK CITY OFFICE OF MANAGEMENT AND BUDGET
Mr. Larson. Good morning, Chairman Voinovich and Senator
Jeffords. My name is Bud Larson. I am the associate director of
the New York City Office of Management and Budget.
My responsibilities include, among others, coordinating and
processing all the FEMA claims by the city of New York. I am
thankful for the opportunity to share the city's experiences in
this process over the last 2 years. In particular, I would like
to provide you with some insight on how the city and FEMA
responded to certain limitations in the Stafford Act.
Immediately following the attacks of September 11, 2001,
the President and Congress committed over $20 billion of much
needed aid to the city of New York. The aid included a $5
billion Liberty Zone tax incentive package, over $3 billion in
Community Development Block Grants for Economic Development,
and almost $2 billion to the U.S. Department of Transportation
for downtown transit upgrades, and over $8 billion to FEMA for
transit improvements, individual and family assistance grants,
and public assistance programs.
Of these, the city of New York is eligible to make direct
claims for reimbursement of disaster-related costs only through
the FEMA's Public Assistance Programs. The city's claims have
totaled approximately $3.5 billion.
Overall, FEMA has been remarkably efficient and flexible in
reimbursing the city, given the constraints of the Stafford
Act. Since the 9/11 terrorist attack was the largest disaster
ever in the United States, the associated costs borne by the
local government was the largest FEMA has ever had to deal
with. FEMA recognized very early on in the process that they
had entered into new uncharted territory.
As this disaster was unlike any they had responded to
before, FEMA officials were willing to work as hard as possible
in order to provide the necessary reimbursements to the city of
New York. The city has already received almost 100 percent of
the claims filed and currently eligible to be reimbursed,
excluding the $1 billion insurance fund. A large portion of the
balance of Public Assistance funds have been earmarked for
transportation improvements for the new transit hub in lower
Manhattan and will be provided to the appropriate entity when
the expenses occur.
The city has already received almost 100 percent of all
claims filed and currently eligible to be reimbursed, excluding
the $1 billion insurance fund. A large portion of the balance
of Public Assistance funds have been earmarked for
transportation improvements for a new transit hub in Lower
Manhattan, and will be provided to the appropriated entity when
the expense occur.
This success is attributable to the staff of FEMA, the
State of New York, all our city agencies, and the assistance of
our congressional delegation including Senator Clinton. While
we greatly appreciate the work done by FEMA in providing the
city with appropriate reimbursement, there are a number of
limitations in the Stafford Act that did not make this an easy
process.
If not for congressional action, the city would still not
have received reimbursement necessary to cover the unique
expenses a local government incurs when responding to a
terrorist attack. In fact, there are some instances where the
city will never receive appropriate reimbursement due to these
limitations.
First and foremost, due to the extent of the damages and
the destruction of the financial center of the Nation, the city
and the State lost a substantial amount of tax revenue as a
direct result of this terrorist attack. The city estimated
substantial losses in tax revenue of almost $3 billion in 2002
and the 2003 city fiscal years directly attributable to the
attack, and independent of the economic slow down.
These losses were due to decreases in city personal income
taxes, business taxes, and reduced sales taxes. In addition,
the actual destruction of property, the closure of lower
Manhattan, and the significant effect on travel and tourism to
New York in particular, also had a devastating effect on our
tax revenues.
While some have argued that it is impossible to link the
loss of these revenues to the terrorist attack, the General
Accounting Office issued a report on July 26, 2002, reviewing
these estimates, and noted that the tax revenue loss estimates
for 2002 ``appear to reasonably approximate the impact of the
terrorist attacks on tax revenue.'' I also want to make it
clear that the city did not receive any funds based on the
city's experiencing a budget shortfall as a result of these
lost tax revenues.
Currently, the Stafford Act does not allow FEMA to provide
any reimbursement for lost tax revenue to local governments.
While the Community Disaster Loan Program currently exists, the
loan amount is capped at only $5 million, not even a fraction
of the costs associated to such a large terrorist attack in a
major metropolitan city.
Since the Stafford Act does not accommodate this very real
need for disaster stricken local governments, the people of the
city and the State of New York have been forced to shoulder
these additional financial burdens caused by an act of war.
Another limitation of the Stafford Act is the lack of
provision for local governments to receive reimbursement for
unique expenses associated with a terrorist attack. New York
City was the direct target, as were the Pentagon and the
District of Columbia. And as a direct target, the city needed
to take an action immediately by heightening security in all
parts of the city.
Prudence demanded that the entire city needed to be shut
down. Bridges and tunnels into Manhattan needed to be closed.
Subway lines and rail lines needed to be suspended. The
security at the United Nations and other key locations were
immediately heightened. These costs were incurred directly as a
result of the city being a terrorist target.
However, the Stafford Act does not recognize these expenses
as eligible reimbursements since these additional expenses did
not occur at the actual site of the disaster. While FEMA worked
to interpret the Act as broadly as possible under the narrow
confines of the Stafford Act, FEMA could not grant
reimbursement. It took a special act of Congress to allow FEMA
to provide the reimbursement to the city of New York for these
costs which would clearly not have been incurred but for the
terrorist attacks.
After receiving congressional authorization, FEMA responded
diligently and effectively in processing these new claims. But
the fact remains that in any future terrorist attack there will
be a significant related cost incurred by local government that
will be ineligible for reimbursement under the Stafford Act.
Finally, one of the most complex obstacles to full
reimbursement under the Stafford Act encountered by the city
involved in the environmental liability as it relates to debris
removal. Immediately after the attack on September 11, the city
responded by deploying police officers, firefighters, EMS
workers, and other employees to the site for search and rescue.
At the same time, the city contacted four construction
management companies to begin the process of debris removal.
These companies, along with dozens of subcontractors, acted
with a sense of patriotism and worked without contracts,
insurance, or indemnity. This response by the municipality and
its contractors were immediate and necessary. All parties took
substantial risks.
In order to protect against liability for the city and its
contractors, the city sought to obtain insurance in the private
market, but was able to obtain only $79 million of general
liability coverage. Even that coverage came with significant
exclusions. The city and its contractors accordingly sought
legislation providing for Federal indemnification of these
claims, but without success.
Finally, as a result of congressional action, FEMA set
aside approximately $1 billion for an insurance fund to protect
the city and its contractors from claims relating to the debris
removal process. While the city and the contractors will
benefit from the substantial coverage, the amount of coverage
is only a fraction of the $12 billion of damage claimed already
against the city.
The creation of this insurance fund was difficult and
complex and was aggravated because the Stafford Act provided no
facility for its funding. In fact, even after 2 years since
this attack, and 7 months after the additional congressional
action, this insurance fund has yet to be created and
negotiations between FEMA, the city, and its contractors are
still ongoing.
This clearly is an unfortunate circumstance and one no
local government or contractor should have to deal with. In
fact, this experience may cause governments and others to think
twice before responding to a terrorist attack. The Federal
Government must address this issue by either enacting Federal
indemnification or an insurance plan to protect municipalities
and their contractors.
While the city's experience with FEMA has not been without
difficulties as I just explained, I want to be very clear that
this was in no way due to the staff or the mission of the
Agency. I have the utmost respect for the professionalism and
the diligence of the people at FEMA. It was the constraints in
Federal statute that proved to be difficult.
I urge you to examine these issues and determine the best
course of action so local governments and taxpayers are
protected from the additional financial burdens of a terrorist
attacks.
I thank you for your patience and would be glad to take any
questions. I would ask that my written statement be placed in
the record in its entirety.
Senator Voinovich. Thank you, Mr. Larson.
I am impressed with your testimony. It follows up on some
of the questions that I asked the previous witness. The point
you are making is that even though the local share was waived
when you calculate some of the losses that you incurred that
were nontraditional in a typical disaster, that that cost far
exceeded any waiver of local match that you might have
benefited from?
Mr. Larson. That is true.
Senator Voinovich. I think the real issue here is this. Are
you aware whether FEMA is now reevaluating the Stafford Act to
have a separate category dealing with terrorist attacks like
you experienced?
Mr. Larson. I believe that they are doing a review, but I
am not really sure what the details of that review entail.
Senator Voinovich. I think what we will do is find out.
The question I would like to ask both of you is this. 9/11
was not typical. God forbid we have another one. But the fact
is that we could. Would you suggest having a separate set of
criteria laid out for that kind of disaster separate and apart
from the Stafford Act in terms of its traditional response to
disasters in this country?
Mr. Larson. I believe that there are modifications required
to the Stafford Act to look at those issues that relate
specifically to acts of terrorism which are not necessarily
something that FEMA has normally dealt with in a natural
disaster. The Act should be adjusted in such a way that those
could be recognized as true costs are reimbursed. Also very
importantly, because of the types of things that happen at
terrorist attacks, to make sure that those responders are
covered for any liability claims that might be put against them
in the future.
In the case of 9/11, obviously this was such a huge event
that the insurance industry was not able to handle this which
is how it would be handled under a normal event. In a normal
situation, when we would have entered into a contract with the
contractors, included within that contract would be standard
insurance. FEMA would pay for it. But since there was no market
for insurance, FEMA had no mechanism to provide the type of
liability coverage that they would normally do.
Senator Voinovich. On behalf of your national organization,
do you have an opinion on that?
Mr. Shipley. Sir, it would be my personal opinion. Yes, I
think we could establish thresholds at which certain additional
assistance might be available. Just as you have had occasion as
Governor to make a decision on when a local government was
impacted so severely that they could not even meet their 12.5
cost share, which we normally ask them, States would go ahead
and say, ``We will cover 100 percent of your costs.''
When you get into the sort of disaster that occurred here,
lost tax revenue, if we are without power for 24 or 48 hours,
probably should not be a consideration. But lost tax revenue
with an incident the size that occurred in New York City, I
think brings new dynamics into play. Yes, maybe we should look
at what point should additional assistance be made available
when it is just beyond the capability of local governments to
make it up.
Senator Voinovich. Do you the staff capacity at your
organization to put something together and make a
recommendation?
Mr. Shipley. I would take it back to NEMA and work with
them, if that is OK.
Senator Voinovich. I would really like them to sit down and
think about this and come back with some recommendations on how
we can handle this thing so we can prepare and eliminate some
of the problems that Mr. Larson has encountered.
Mr. Shipley. I think the issues were faced not only in New
York but in Virginia with the Pentagon, and the office building
in Oklahoma. I think all of those States have experienced these
extraordinary sized disasters. There was Hurricane Andrew in
Florida also. We will probably have valuable input for us to
look at what we might revise to deal with those.
Senator Voinovich. Thank you.
The other issue that you talked about and I am really
interested in is mitigation. Let us take the Ohio River. We had
those folks that continued to have their places flooded. We
made a condition, did we not, that they could not get any help
unless they moved? But then the issue was how much money did we
have available to help them move? Is that what you are talking
about, that they have limited the amount of money that is
available?
Mr. Shipley. Yes, sir.
Senator Voinovich. I do not understand. Fifteen percent of
what? The cost of moving?
Mr. Shipley. The money that has been made available for
mitigation projects has historically been set as a formula of
total disaster costs for a disaster. So if we in Ohio have a
disaster that we expend $20 million in recovery, then we would
take 15 percent of that amount which would be made available
for mitigation projects.
The percentage of the total disaster costs to calculate
mitigation was reduced from 15 percent to 7.5 percent in the
2003 Omnibus Appropriations bill.
Senator Voinovich. So you have less money to move people
out. Do you still have the rule that says that if you have been
a disaster victim and you do not move, you are not going to get
relief a second time without insurance?
Mr. Shipley. What we require is flood insurance. We cannot
force people to move. It is a voluntary program. But we can
require them to buy flood insurance or they would receive no
individual assistance in future flooding. We are trying to
encourage people to cover themselves, either through insurance
or elevation, or other forms of flood proofing, or let us buy
you out and get you completely out of the area.
There are a lot of options. As the Senator commented
earlier, sometimes people do not want to leave, but sometimes
even they get beaten down to the point where they say, ``Hey,
we have to get out of this town. We have to get to higher
ground.''
We have had some success, as you know, in doing that.
Senator Voinovich. Senator Jeffords.
Senator Jeffords. Thank you, Mr. Chairman.
I was pleased to have your testimony. It has been very
helpful.
Mr. Shipley, in light of the fact that the FEMA Director
was once a Cabinet-level position, and the past close
relationships FEMA Directors had with the Presidents, in your
opinion, how do you think FEMA is doing in the new Department
of Homeland Security? Are disaster declarations and assistance
taking longer to get approval? Does anything need to be done to
address FEMA's role in the Department?
Mr. Shipley. My answer may surprise you. FEMA and the
Department of Homeland Security leadership and the White House
have worked out the procedures for disaster declaration so that
they still move directly from FEMA to the White House with
information to the Secretary of Homeland Security's office.
There is no slow down in the processing and requesting that
the President make a decision and response. The major
difference that I am seeing is that there is a new boss over
FEMA dealing with all disasters, all threats. That organization
is still struggling to figure out exactly how they are going to
deal with defining the threat, accomplishing the intelligence
gathering and sharing, focus on prevention at the same time
that FEMA still has the mission of preparedness, response, and
recovery.
I think it is interesting to see that Senator Voinovich has
asked some of the questions of who is responsible for what and
when which is the essence of emergency planning. Who is
responsible and under what conditions? When you look at indoor
air, outdoor air, that is the responsibility of the Federal
response plan written by FEMA to spell out just those exact
things.
We are in the process, under the Department of Homeland
Security, of rewriting what we are calling a national response
plan. It is not being led by FEMA. Those are just some things I
see going on that is complicated, whereas Secretary Brown is
the Director of FEMA, was responsible for coordinating Federal
organizations in response to disaster. The Secretary is now
directly responsible to the President for that same thing. So
there is some growing pains and some coordination issues that
they are working hard on.
Senator Jeffords. I appreciate that response. We would like
to followup with you as time goes by to make sure that those
problems are resolved.
Thank you.
Mr. Shipley. I would welcome the opportunity.
Senator Jeffords. Mr. Larson, the GAO report indicates that
New York City officials interviewed believe that changes need
to be made to existing authorities under the Stafford Act in
order to effectively respond to events of terrorism.
Can you explain first what New York City wanted to do but
could not do in the structure of the existing program? Then
describe what legislative changes you might propose?
Mr. Larson. First, I do not believe that we were prohibited
in any fashion from doing what we wanted to do because of the
Stafford Act. All of the decisions as to how to respond to this
emergency were based on public safety issues being priority. We
did everything we believe we needed to do.
After we did those things, the ability to be reimbursed for
costs which we believe were directly related to this being a
terrorist attack, were not eligible reimbursement costs under
the Stafford Act. We believe that the definition of
reimbursable costs for terrorist attacks should have some
flexibility relating to those types of costs that do not occur
on the site, which is the limited focus of Stafford Act.
Also, unfortunate as it might be, we experienced such a
tremendous loss of members of our emergency response forces
that we had significant additional training costs to return
those offices to full staffing, after the event. Those costs
were not reimbursable. As unfortunate as it may be, we have
huge additional disability costs related to this event which
were not covered under the normal Stafford Act--potentially
$170 million of additional disability pension costs.
There are a whole series of those types of costs that I can
track directly back to this being a terrorist event, somewhat
different than the natural disaster. But the guidelines under
the Stafford Act did not permit those to be reimbursed. I think
we need to expand that definition to recognize some of these
issues.
Again, the other thing that is very important is the type
of liability that local governments might be facing because of
the actions they took to protect their citizens. They should
have some comfort that they will not be bearing a burden of
liability for what was an attack against this country.
Senator Jeffords. Will you or someone be preparing
suggestions on how to make improvements in the Stafford Act to
alleviate those problems?
Mr. Larson. We would be happy to work with somebody on
that.
Senator Jeffords. I would appreciate that very much. Thank
you.
Thank you, Mr. Chairman.
Senator Voinovich. I would like to thank both of you very
much for coming. We would really appreciate your followup to
some of the questions that we have raised here today and your
organization looking at this whole thing. We also appreciate
your continuing input as this reorganization goes.
I would welcome, as the chairman of this subcommittee,
periodically receiving information from you as to how you think
things are going, that they are doing this or they are doing
that, and ``Gee, if they did it differently, it would be
better.'' We do not want to not hear from you for a year and
they go ahead and do their thing. I would rather correct it as
we go along rather than wait until it is too late to do
anything.
Again, Mr. Larson, you have the experience. You have done a
nice job of outlining some of the things that you have been
confronted with that were not covered. You have the real
perspective. Then you have an issue--is it in the Stafford Act?
I would like from my perspective to lay out all the things
that you would be doing if you were sitting in the Department
of Homeland Security. You are the people that are on the ground
and know it.
Mr. Shipley knows I am a big believer in empowerment and
quality management and going to the people that are dealing
with the problems to get their information. I have to tell you
that in too many instances the folks here do not know what it
is. They do not understand what it is on the street. You would
really help me to give me the street impression of what is
going on so that can be fit into the Department of Homeland
Security and FEMA. Thank you.
Mr. Shipley. Thank you.
Mr. Larson. Thank you.
Senator Voinovich. With that, we are adjourned.
[Whereupon, at 11:20 a.m., the subcommittee was adjourned,
to reconvene at the call of the chair.]
[Additional statements submitted for the record follow:]
Statement of Michael Brown, Under Secretary, Emergency Preparedness and
Response Directorate, Department of Homeland Security
Good morning Chairman Voinovich and Members of the Subcommittee. I
am Michael Brown, Under Secretary for the Emergency Preparedness and
Response Directorate of the Department of Homeland Security, which
includes the Federal Emergency Management Agency (FEMA).
Since becoming part of the Emergency Preparedness and Response
Directorate (EP&R) of the Department of Homeland Security (DHS), FEMA
has continued its traditional role of preparing for, mitigating
against, responding to, and recovering from disasters caused by all
hazards.
Over the last 2 weeks, we have worked closely with the States and
our Federal partners to effectively respond to Hurricane Isabel and all
within the new structure of DHS. DHS brought its resources to bear in
response to Hurricane Isabel in order to protect the public. We
deployed key new assets, including the National Disaster Medical System
(NDMS) teams. The U.S. Coast Guard also deployed its assets to assist
in the response effort. All of our response efforts have been
coordinated department-wide through the DHS emergency operations
center.
Our Hurricane Liaison Team was invaluable in arranging up to the
minute meteorological information and predictions from the National
Hurricane Center and other National Oceanic and Atmospheric
Administration (NOAA) components for State and local officials and
emergency managers in the path of the storm. We established
mobilization centers at Ft. Bragg, North Carolina, and Edison, New
Jersey, and staging areas at Ft. A. P. Hill, Virginia, and Columbus,
Ohio. Advanced elements of our Emergency Response Teams and our State
Liaisons were dispatched before the storm to the affected States and
the District of Columbia to coordinate disaster response activities.
Many other assets which we positioned from Alabama to New York were
also critical to staging an effective response including the Rapid
Needs Assessment Teams, National Disaster Medical System (NDMS)
Disaster Medical Assistance Teams, Urban Search and Rescue Task Forces,
Mobile Emergency Response Support Detachments, Environmental Protection
Agency HazMat Teams, Army Corps of Engineers, Forest Service, General
Services Administration, Department of Energy, and Department of Health
and Human Services Teams.
But, we must not rest on our past achievements. As in all major
incidents, we will learn valuable lessons from the Hurricane Isabel
response. The key to our continued improvement will be taking these
lessons and incorporating them into our planning, doctrine, and
procedures to ensure our continued improvement. DHS will continue
working with the Congress and our Federal partners, State and local
leaders, and other affected stakeholders and partners to continue to
enhance our ability to respond effectively to all types of disasters.
Prior to joining DHS, the focus of the disaster programs within
FEMA was an all-hazards approach. This focus remains today, and in fact
it benefits from the more global perspective of DHS and its related
components. I am proud of our response to the Hurricane Isabel disaster
on the east coast because it clearly demonstrates our steady
improvement in coordinating and leading Federal, State, tribal and
local response efforts to protect life and property in times of
disaster. The seamless collaboration of the different response elements
in the Department of Homeland Security, as well as those in other
Federal departments and agencies, allowed for a rapid and effective
positioning of disaster assets and capabilities throughout the eastern
United States to quickly provide any assistance needed by States and
communities to protect the life and property of their citizens.
We at FEMA, are proud to be doing our part to secure the homeland,
and I am proud to be a part of an organization made up of so many fine
and dedicated individuals. FEMA's greatest asset is its people. As we
have transitioned into DHS, we have continued our efforts to ensure
that FEMA's workforce remains one of the finest in the Federal
Government through the development of a comprehensive strategic Human
Capital Plan. We have also continued to work to integrate the new
missions into FEMA's structure. We are working with the Department of
Health and Human Services on a wide array of issues including
finalizing the consolidation of staff in the FEMA headquarters building
within the next few months, fully integrating NDMS assets into the FEMA
response structure and enhancing the operational readiness of NDMS
teams.
Since becoming part of the Department of Homeland Security, FEMA
has continued to carry out its mission to prepare for, mitigate
against, respond to, and recover from disasters of all kinds. It is a
great honor for me to serve Secretary Tom Ridge as I lead FEMA into a
new era as part of DHS.
In order to achieve our mission more efficiently, FEMA has been
divided into four disciplines: Preparedness, Mitigation, Response, and
Recovery. This organizational alignment reflects the traditional areas
of emergency management. It also resembles the organizational flow used
by many States, who continue to be our principal partners in emergency
management.
PREPAREDNESS
Since joining DHS on March 1, FEMA's Preparedness Division has
continued to implement its grants and training programs and has already
gained assets in the transition. The Preparedness Division had the
opportunity to test its capabilities during exercises including the
nationwide Top Officials 2 exercise (TOPOFF2) in May 2003; to provide
funding to State, tribal, and local governments; and to forge strong
working relationships with the Office for Domestic Preparedness (ODP),
which is also now part of DHS.
The recent TOPOFF2 exercise served as a good test of significant
new organizational structures and provided some good lessons as to how
our efforts can be improved. It tested new procedures, such as our
operational relationship with the DHS Crisis Assessment Team and
systems transferred to DHS, such as the Strategic National Stockpile.
Exercises such as TOPOFF2 allow us to pinpoint challenges to help
ensure a better response and a more timely delivery of assistance.
Although national level exercises like TOPOFF2 are important and
valuable, community-based exercises are equally important for a
comprehensive and truly effective national exercise program. Several
months ago, a train carrying hazardous materials derailed near Laguna,
New Mexico. Fortunately, local emergency responders and the New Mexico
Office of Emergency Services were ready. A response exercise held just
weeks earlier had prepared responders for such an event. The bottom
line is that community-based exercises work, and they work at the first
responder level. In cooperation with ODP, FEMA is continuing to support
a robust, multi-tiered system of exercises.
As a sign of the growing national interest in individual and
community preparedness, Citizen Corps has increased its number of local
councils by 377 since March 1, for a total of more than 628 Councils in
51 States and territories. Councils are serving nearly 35 percent of
the U.S. population or approximately 90 million people. Five new
affiliates have partnered with Citizen Corps since March, including the
U.S. Junior Chamber of Commerce, the National Volunteer Fire Council,
the National Voluntary Organizations Active in Disaster, the Points of
Light Foundation, and the National Safety Council.
Additionally, Federal affiliates have partnered with Citizen Corps.
On July 29, 2003, Tom Dunne, EPA's Associate Assistant Administrator
for the Office of Solid Waste and Emergency Response, signed an
agreement adding EPA as an affiliate with Citizen Corp. NOAA and the
Department of Education's Office of Safe and Drug-Free Schools have
also signed agreements.
A key component of Citizen Corps is the Community Emergency
Response Team (CERT) program, which helps train citizens to be better
prepared to respond to emergency situations in their communities. In
May 2003, DHS provided nearly $19 million in grant funds to States and
territories to expand the CERT program through additional State-offered
Train-the-Trainer courses and to help communities start CERT programs
and expand existing teams. When I announced these grants in Olathe,
Kansas, I had the good fortune to meet Community Emergency Response
Team members who worked together to help their neighbors recover from
the destructive tornadoes in the Midwest this past spring. This is a
fine example of what CERT can accomplish.
Our National Emergency Training Center, which includes the National
Fire Academy and the Emergency Management Institute, continues to
provide training to the leaders of the fire service and emergency
management communities. We train more than 16,000 students a year on
campus and more than 100,000 students a year through off-campus
programs with our partners in the State fire and emergency management
training systems. We also have trained over 185,000 students this year
through our Independent Study Program. Our training prepares the fire,
EMS and emergency management community, as well as local officials all
across the country. With the addition of Noble Training Center in
Anniston, Alabama, our capabilities are being expanded, and we will be
able to reach more personnel than ever before.
DHS is committed to helping firefighters improve their
effectiveness and stay safe. The responsibilities of the fire service
have increased since 9/11 to include planning for and responding to
possible terrorist attacks. So far this fiscal year, DHS has awarded
over $250 million to fire departments through the Assistance to
Firefighters grant program.
Given the recommendations to better consolidate and coordinate
grants for first responders and terrorism preparedness, the President's
Budget for fiscal year 2004 requested that Assistance to Firefighters
Grant Program be placed within ODP. In order for State and local
governments to be effective partners with the Federal Government in
securing the homeland, they need quick and easy access to terrorism and
emergency preparedness grant programs designed to support their work.
Prior to the formation of the Department of Homeland Security,
information about terrorism and emergency preparedness grant programs
were scattered throughout the Federal Government. Many are now centered
within DHS, though still divided among our various components. To make
them even more accessible, Secretary Ridge announced plans to
centralize these programs within a single office. State and local
authorities will soon have a single point of contact for terrorism and
emergency preparedness efforts--one access point to obtain critical
grant funding. It will help ensure that nationwide, State and local
officials have one place in the Department where they can tap into the
resources and information they need, from applying for funds to protect
critical infrastructure to receiving funding for first responders.
As a Department we have not waited to begin new initiatives that
leverage the resources of the Federal Government in support of our
first responders and first preventers. For example, DHS and the
Department of Justice COPS program coordinated the application and
review of their separate appropriations for interoperable communication
pilot programs. This innovative DHS/DOJ partnership demonstrated
Federal leadership and illustrates the importance of integrating
multiple disciplines in addressing the nation's preparedness needs. In
the coming weeks, the Departments will be announcing approximately $150
million in pilot project grants that will establish best practices and
help develop unique solutions to the interoperable communication issues
that have hampered our first responders.
RESPONSE
The Response Division continues working hard to consolidate and
integrate our existing and new disaster response assets, teams,
systems, programs and responsibilities into the Emergency Preparedness
and Response Directorate to create a more unified and comprehensive
all-hazards disaster response capability. We are looking into new
approaches that can result in greater efficiency and effectiveness in
our disaster response activities. I am confident that over time we will
be able to introduce a new response culture, one that will enable us to
elevate our operational response capabilities to a higher level of
proficiency and ensure better protection of and service to the American
people.
The Response Division's structure is based on the Incident
Management System so that it is optimally aligned to meet the needs of
State and local responders and designed to meet the President's
direction to establish a National Incident Management System (NIMS) and
National Response Plan (NRP). On February 28, 2003, the President
established a single, comprehensive national incident management system
and provided for the integration of separate Federal response plans
into a single all-discipline, all-hazards national response plan. The
Secretary of Homeland Security is responsible for developing and
implementing both initiatives. FEMA has been actively participating in
the effort to develop the National Response Plan (NRP) and a framework
for National Incident Management System (NIMS). We are also a co-
facilitator and have regional participation on the State, tribal and
local NIMS/NRP workgroup, which is an intergovernmental advisory group
assembled to provide State and local input, guidance and expertise to
the NRP/NIMS revision efforts. As directed in the Department of
Homeland Security Act of 2002, FEMA will play a key role in the
management and maintenance of NIMS once it is developed.
The Response Division is pulling together critical national
response assets formerly maintained within other Federal agencies, such
as the National Disaster Medical System (NDMS), the Strategic National
Stockpile (SNS), the Domestic Emergency Support Team (DEST), and the
Nuclear Incident Response Team (NIRT). Different options are under
consideration on the best way to staff and deploy these teams and
integrate these assets into a mission capable operation that builds
upon our existing and proven disaster response foundation. The Response
Division is also initiating steps to create dedicated, rapid-deployment
DHS Incident Management Teams that would form the initial core on-scene
management component of the Federal disaster response capability
interfacing with the State/local Incident Commander. The teams have not
been fielded yet but are an important aspect of FEMA's implementation
of Homeland Security Presidential Directive-5. We plan to staff, train,
and equip the teams over the next year.
We are coordinating with different elements of DHS to enhance the
operational readiness and capability of our National Emergency
Operations Center (NEOC), Regional Operations Centers, NDMS, DEST,
Urban Search and Rescue (US&R) Task Forces, Mobile Emergency Response
Support elements, and other specialized disaster response teams to
respond to protect the Nation in times of disaster.
In addition, the Response Division is taking steps to reduce
disaster response times so that eventually disaster teams will be able
to respond anywhere in the country within 12 hours and disaster
logistics packages, commodities, and equipment can be delivered
anywhere in the country within 24 hours of a disaster declaration. A
pilot test of a prototype disaster logistics pre-deployment program is
being planned as part of our efforts to ensure that we provide maximum
assistance to help State and local governments meet immediate disaster
needs in the first 24 hours of a disaster while additional disaster
response commodities and equipment are enroute.
We are placing additional emphasis on increasing patient evacuation
capabilities and conducting more hospital training and exercises under
NDMS, improving coordination of Strategic National Stockpile
activities, and working to ensure that US&R Task Forces can safely
respond to weapons of mass destruction incidents with the necessary
medical screening and equipment.
Work continues with the Department of Health and Human Services on
a wide array of issues including finalizing the consolidation of staff
in the FEMA headquarters building within the next few months, fully
integrating NDMS assets into the FEMA response structure, and enhancing
the operational readiness of NDMS teams. We are also finalizing
guidance that will clarify and specify in greater detail DHS and HHS
roles and responsibilities agreed to under the Memorandum of Agreement
the two departments signed related to the SNS.
Over the next few years we intend to focus much more attention on
completing catastrophic all-hazards planning for our most vulnerable
cities. Some work has already been accomplished in this area, but we
want to make sure as we move forward that we are addressing those
issues that are most critical to State and local officials in
responding to a truly catastrophic disaster. We are also drawing up a
plan to develop the capability to provide intermediate emergency
housing for up to 100,000 displaced disaster victims within 60 days of
a disaster, a situation that we could be easily faced following a truly
catastrophic disaster. Different options are being reviewed including
the possibility of using portable housing solutions involving trailers,
manufactured homes, modular housing, and other innovative approaches.
Our goal is to develop a methodology and template that will provide
useful planning and operational tools for all levels of government.
The consolidation of national response assets allows the Federal
Government not only to continue to provide the services which existed
prior to the establishment of DHS to which the American people have
become accustomed during emergencies and disasters, but also to enhance
our ability to maximize Federal resources, streamline delivery
processes, and directly focus programs and assets on meeting State and
local needs.
RECOVERY
The good work that FEMA continues to do after being incorporated
into the Department of Homeland Security is a commentary on how well
the transition has gone. Since the March 1 transition into DHS, FEMA
has provided disaster relief in 50 Presidentially declared disasters
and emergencies in 34 States and one territory from Alaska to New York
to American Samoa. These disasters include such events as the
President's Day snowstorm and the devastating tornadoes that struck the
Midwest and South in May. Most recently, of course, we have been
dealing with Hurricane Isabel.
When I traveled to these disaster areas, I had the opportunity to
meet with some of the victims. Their lives had been totally devastated.
They had lost family members. They had lost their homes. I cannot
adequately describe in words the impact of looking into the eyes of
people who have lost everything. But when things are at their worst,
our people are at their best I have never been more proud to be a part
of the Federal organization that already had individuals on the ground
providing assistance to those in need and getting the process of
disaster recovery underway.
The committee has expressed an interest in the GAO report on the
Public Assistance Program as implemented in New York following the
September 11, 2001 terrorist attacks. While the GAO report does not
address FEMA's performance or provide specific recommendations, it does
note some differences in the delivery of assistance that I would like
to take this opportunity to emphasize. FEMA implemented the Public
Assistance Program, which provides State and local governments
reimbursement for debris removal, emergency protective measures, and/or
the repair or replacement of public damaged facilities. However, the
Consolidated Appropriations Resolution of 2003 provided some
flexibility that allowed recovery operations for New York to move more
quickly. The resolution directed FEMA to fund non-Stafford Act 9/11
related projects with any remaining funds from the appropriation it
received for the September 11 terrorist attacks in P.L. 107-117, after
eligible projects had been funded. This flexibility did not forfeit
accountability or detract from the effectiveness of the program.
In our ongoing efforts to assist the recovery from the terrorist
attacks of September 11, FEMA has also finalized a Memorandum of
Understanding with the Centers for Disease Control and Prevention to
fulfill requirements in the Consolidated Appropriations Resolution of
2003. This agreement is providing $90 million for administering
baseline and followup screening, clinical exams, and health monitoring
for emergency services, rescue, and recovery personnel. I know this
issue is of particular interest to you Mr. Chairman, Senator Clinton
and the rest of the Subcommittee with regard to the legislation you
have recently introduced and considered.
MITIGATION
Since the integration into DHS, the Mitigation Division has focused
primarily on two Presidential initiatives: the flood map modernization
program and pre-disaster mitigation. This groundwork sets the stage for
results for the rest of this fiscal year and beyond.
We have nearly $200 million available for our flood map
modernization program this fiscal year, $149 million appropriated by
Congress and $50 million in National Flood Insurance Program (NFIP)
policyholder fees.
The funding enables us to embark on a multi-year effort to update
and digitize our flood map inventory. Updating flood insurance rate
maps will make community assessment of flood risks more accurate and
improve floodplain management decisions. An updated map inventory will
also provide the basis for prudent flood insurance decisions and an
actuarially sound insurance rating.
Flood risk identification is central to informing decisionmakers at
all levels of government and in helping to shape their assessment of
risks. Effective flood hazard mitigation hinges, in the final analysis,
on accurate identification of the risk. A sustained commitment to the
President's initiative for updating the NFIP's flood map inventory will
result in even more effective risk reduction.
Our flood map modernization initiative reflects, too, the
President's overall management agenda; the effort will be citizen-
centered, results-oriented, and market-based. We have been laying the
groundwork for this significant undertaking and plan to award a
contract for the flood map modernization program soon.
We have also continued our commitment to hazard mitigation
programs. This fiscal year, Congress appropriated $149 million for the
Pre-disaster Mitigation (PDM) Program and directed that grants be
awarded on a competitive basis and without reference to state
allocations, quotas, or other formula-based allocation.
The PDM program provides a significant opportunity to raise risk
awareness and to reduce the Nation's disaster losses through mitigation
planning that includes risk assessment, and the implementation of pre-
identified, cost-effective mitigation measures before disasters occur.
Examples of these measures include retrofitting existing structures to
protect against natural hazard events and acquisition and relocation of
flood-prone structures. Funding these hazard mitigation plans and
projects will reduce overall risks to the population and infrastructure
and--in the long-term--will reduce reliance on funding from disaster
assistance programs following an event.
We are requesting that the PDM program be reauthorized through
fiscal year 2009 to allow us to continue to implement this critical
initiative. We have worked closely with States, tribal governments, and
territories over the past months to share the PDM concepts through a
number of outreach opportunities, including meetings with the National
Emergency Managers Association and the Association of State Floodplain
Managers, and have conducted state mitigation workshops in all 10 FEMA
regions. We have also developed an electronic grants system for
stakeholders to electronically create, review, and submit grant
applications for the PDM program through the Internet, which will
enable us to review and evaluate grant applications more efficiently.
CONCLUSION
As part of the Department of Homeland Security, FEMA has continued
to carry out its mission to prepare for, mitigate against, respond to,
and recover from disasters and emergencies caused by all-hazards. And
we will continue to do so.
I appreciate the opportunity to testify before you today. I would
be glad to answer any questions that you have.
______
Response by Michael Brown to Additional Question from Senator Jeffords
Question. One of the issues raised in the GAO report is whether or
not FEMA should have reimbursed New York City for heightened security
costs in the wake of the terrorist attack. The GAO report states that
FEMA believed that this work was not eligible for reimbursement because
it was similar to work being done nationwide. How much did New York
spend on increased security costs in the wake of September 11th? How
does that compare with similar expenditures nationwide?
Response. New York City was a direct target of a terrorist act, as
were the District of Colombia and the Pentagon. The immediate response
required immediate action in the areas of bridges, tunnels, subways,
railroads, water supplies, foreign missions, the United Nations and
other potential targets located in the city. All entries to Manhattan
needed to be secured and there were certainly other security costs
surrounding the World Trade Center site. These steps taken in the
immediate aftermath of the attacks were, we believe, different than
steps taken elsewhere in the country that had not been attacked.
[GRAPHIC] [TIFF OMITTED] T2386.111
[GRAPHIC] [TIFF OMITTED] T2386.112
[GRAPHIC] [TIFF OMITTED] T2386.113
[GRAPHIC] [TIFF OMITTED] T2386.114
[GRAPHIC] [TIFF OMITTED] T2386.115
[GRAPHIC] [TIFF OMITTED] T2386.116
[GRAPHIC] [TIFF OMITTED] T2386.117
[GRAPHIC] [TIFF OMITTED] T2386.118
[GRAPHIC] [TIFF OMITTED] T2386.119
[GRAPHIC] [TIFF OMITTED] T2386.120
[GRAPHIC] [TIFF OMITTED] T2386.121
[GRAPHIC] [TIFF OMITTED] T2386.122
[GRAPHIC] [TIFF OMITTED] T2386.123
[GRAPHIC] [TIFF OMITTED] T2386.124
[GRAPHIC] [TIFF OMITTED] T2386.125
[GRAPHIC] [TIFF OMITTED] T2386.126
[GRAPHIC] [TIFF OMITTED] T2386.127
[GRAPHIC] [TIFF OMITTED] T2386.128
[GRAPHIC] [TIFF OMITTED] T2386.129
[GRAPHIC] [TIFF OMITTED] T2386.130
[GRAPHIC] [TIFF OMITTED] T2386.131
[GRAPHIC] [TIFF OMITTED] T2386.132
[GRAPHIC] [TIFF OMITTED] T2386.133
[GRAPHIC] [TIFF OMITTED] T2386.134
[GRAPHIC] [TIFF OMITTED] T2386.135
[GRAPHIC] [TIFF OMITTED] T2386.136
[GRAPHIC] [TIFF OMITTED] T2386.137
[GRAPHIC] [TIFF OMITTED] T2386.138
[GRAPHIC] [TIFF OMITTED] T2386.139
[GRAPHIC] [TIFF OMITTED] T2386.140
[GRAPHIC] [TIFF OMITTED] T2386.141
[GRAPHIC] [TIFF OMITTED] T2386.142
[GRAPHIC] [TIFF OMITTED] T2386.143
[GRAPHIC] [TIFF OMITTED] T2386.144
[GRAPHIC] [TIFF OMITTED] T2386.145
[GRAPHIC] [TIFF OMITTED] T2386.146
[GRAPHIC] [TIFF OMITTED] T2386.147
[GRAPHIC] [TIFF OMITTED] T2386.148
[GRAPHIC] [TIFF OMITTED] T2386.149
[GRAPHIC] [TIFF OMITTED] T2386.150
Responses by JayEtta Z. Hecker to Additional Questions
from Senator Jeffords
Question 1. Another issue raised in your report is that NYC was not
required to pay the 25 percent cost share that is normally required of
communities that receive Federal disaster assistance. In addition, you
report that the President reduced the amount of Hazard Mitigation Grant
Program Funds to 5 percent rather than the standard 15 percent of the
amount spent on the disaster. Coupled with the $20 billion cap I
mentioned earlier, do you believe that New York ultimately received
less or more Federal assistance than they would have if the normal
Stafford Act procedures were followed?
Response. Clearly, the Federal Government provided more assistance
to the New York City area in this disaster than if all funding has been
provided through the typical Stafford Act framework; however, it is
impossible to provide a definitive answer as to how much more. After a
large disaster, Congress has often appropriated funds outside the
constructs of the Stafford Act. In this disaster, well over $10 billion
was provided to the New York City area outside of Stafford Act
provisions. For example, Congress appropriated $2.37 billion for
transportation restoration and improvements. Congress also appropriated
$3.48 billion in HUD grants to compensate individuals, businesses and
State and local governments and other organizations for economic losses
and costs. Additionally, Congress passed the first ever tax benefit
package targeted to a disaster area to provide for economic
development, estimated to be $5.03 billion in benefits. This assistance
was all funded outside of the established Stafford Act framework.
In addition to this funding, FEMA was appropriated $8.8 billion to
assist in recovery efforts in the New York City area. Approximately
$7.4 billion was provided in public assistance funding, In order for
public assistance funding to be distributed, projects must meet
criteria set forth within the provisions of the Stafford Act. However,
in this disaster, Congress granted FEMA authority to provide funds that
were not eligible under the Stafford Act criteria. For example, FEMA
provided $2.75 billion in transportation funding that was authorized
for transportation infrastructure improvement, beyond pre-disaster
conditions. Under the Stafford Act, infrastructure restoration projects
would be eligible, but infrastructure improvement projects would not be
eligible. Furthermore, for some of these projects, the replacement
value was clear, but for others it would be impossible to determine how
much more funding has been provided for costs associated with enhancing
the infrastructure. As a result, a portion of the $2.75 billion in
transportation funding was for projects that would not traditionally be
eligible under the Stafford Act, but the exact amount is unclear.
Moreover, because Congress authorized FEMA to provide funding for costs
incurred regardless of project eligibility within the provisions of the
Stafford Act, FEMA conducted an early close-out process that made
available $1.2 billion, which was transferred to the city and State at
the end of fiscal year 2003. Although the close out process linked the
payout of the $1.2 billion with a variety of costs that were associated
with the disaster but not previously eligible for FEMA funds (such as
heightened security across the state, increased pension costs, and
tourism campaigns), New York City and State now have discretion for
allocating these funds. Most of these uses would not have been eligible
for reimbursement under the Stafford Act. However, as of the date of
the early close-out, some projects that were clearly eligible for
Stafford Act funding had not yet been not fully funded. As a result,
some portion of the $1.2 billion will likely be used to reimburse
agencies for Stafford eligible projects. Thus, it is impossible to
provide a definitive answer as to how much of the $1.2 billion in
public assistance funds provided to FEMA was for projects beyond
traditional Stafford Act eligibility.
New York also benefited from the elimination of the State and local
matching requirement for FEMA public assistance funding and DOT
funding. Typically, FEMA's public assistance program shares disaster
costs burdens, with FEMA providing 75 percent of the costs--the minimum
provided for under the Stafford Act--and affected State and local
governments paying the remaining share. After a major disaster,
sometimes the cost share balance has shifted and the State share
reduced for a limited time. In this disaster, at the direction of the
President, FEMA provided 100 percent of the entire range of public
assistance costs and over the full period of assistance for the New
York City area. This was the first time an entire FEMA public
assistance operation was 100 percent federally funded. Had New York
City and State been required to provide a 25 percent match of the $7.46
billion in public assistance and public assistance-related funding
authorized for this disaster, these governments would have incurred
costs of $1.85 billion. However, prior disasters have had varying State
match requirements for specified uses or over limited time periods,
when up to 100 percent of funding was provided. As a result, it is
difficult to pinpoint an exact savings to the New York City area. In
the case of DOT assistance, Congress eliminated the State and local
matching requirement for the entire disaster relief effort.
Historically, DOT funding has required a State and local share; for
FHWA projects this share has ranged from 80 to 90 percent and for FTA
projects it has ranged from 50 percent to 80 percent. By Congress
authorizing DOT funding to be provided with no State and local matching
requirement, the New York City area achieved significant savings, but
again, it is difficult to quantify the exact savings.
Although New York received the benefits of 100 percent funding of
FEMA public assistance programs and DOT funding, the President reduced
the amount of related Hazard Mitigation. Grant Program funds provided
to New York. At the time of the terrorist attacks, grant funds up to 15
percent of the total amount of FEMA assistance provided were available
to states following a disaster to support mitigation activities.
However, in this case, the President limited the mitigation grant funds
to 5 percent of the amount spent, Had the hazard mitigation funding
percentage not been reduced, more than $1.2 billion in mitigation funds
would have been available using the customary 15 percent of total cost
criteria.
Question 2. I discussed some of the air quality issues surrounding
the World Trade Center with Mr. Brown on the earlier panel, and I would
like your perspective on some of the same questions. Your report states
that FEMA determined that the testing of air quality and cleaning were
eligible for public assistance funding where the collapse of the World
Trade Center buildings, resulting fires, and subsequent debris removal
caused potential health issues related to air quality. FEMA entered
into an interagency agreement with EPA and partnered with the New York
Department of Environmental Projection to execute this testing and
leaning. I have several questions: What role did FEMA play in providing
information to the public on the results of the air quality testing
that was conducted at the site and in the surrounding areas? In
selecting the buildings or areas of the city that would be eligible for
public assistance funding, did FEMA include all areas impacted by the
dust cloud resulting from the collapse of the buildings?
The GAO report cites $8.6 million that went to the New York
Department of Environmental Protection for exterior building cleaning
and interior residence cleaning. I have several questions regarding
this expenditure. Who decided that New York would take, the lead for
this function? In selecting the 244 buildings that received exterior
cleaning and the residences that received interior cleaning did FEMA
include all areas impacted by the dust cloud resulting from the
collapse of the buildings? Can you explain why the interior cleaning
program was limited to lower Manhattan and why the interior cleaning
program was limited to residences and did not include workspaces? What
precautions were taken to protect the workers conducting this cleaning,
pedestrians, and other people in the area of these clean-ups? What
monitoring has occurred to ensure that those interior cleanings were
effective?
Response. The objectives of our audits of FEMA's post-9/11 public
assistance and overall Federal assistance to the New York City area did
not include a detailed review of the World Trade Center Dust. Cleaning
Program or the dissemination of information to the public regarding air
quality testing, but we can share some data we gathered on this work
related to your question.
In terms of providing a description of FEMA's role in, providing
the public with information regarding the air quality testing, it
appeared to us that FEMA did not have a direct role. That
responsibility was assigned to the U.S. Environmental Protection Agency
(EPA), the NYC Department of Environmental Protection, and its
contractors.
In terms of the World Trade Center Dust Cleaning Program, FEMA
entered into an interagency agreement with EPA in August 2002, under
which FEMA provided EPA with $19.5 million to provide overnight, data
management and data assessment. The interagency agreement specifically
tasked EPA with disseminating information to the public on the cleaning
program. EPA was to conduct outreach efforts and develop information
including printing, advertising, graphics, direct mail, and translation
services. In addition, EPA was to establish an Internet hotline that
residents could use to obtain information on the program and develop a
data base to support the hotline and house analytical data. Validated
laboratory analyses of dust samples were to be mailed to residents,
building owners and/or building associations who made requests for
cleaning and monitoring and to be uploaded to the EPA request data
base, where they could be accessed electronically by the requester.
The New York City Department of Environmental Protection was a
partner in the management of the Dust Cleaning Program and had lead
responsibility for key aspects of the program. For example, the city
agency developed contracts for the operation of the information hotline
for residents to request cleaning and sampling, and for performance of
the actual cleaning and sampling. However, EPA was to manage and direct
the contractors.
The scope of the Dust Cleaning Program included residences in the
specific area of lower Manhattan south and/or west of Canal, Allen and
Pike Streets--an estimated 20,000 to 25,000 residences. A FEMA official
said that this scope was within the zone that NYC closed to public
access immediately after the World Trade Center attacks. Workspaces
were not included because FEMA officials concluded that business owners
were more likely than residents to receive assistance for interior and
exterior building cleaning through the Small Business Administration
and/or private insurance companies. We did not do audit work to
determine whether residences outside of the area eligible for
assistance were impacted by the dust cloud nor to determine whether
businesses received dust cleaning assistance from SBA and/or private
insurance companies.
Under the FEMA/EPA interagency agreement, oversight of the cleaning
and monitoring effort of NYC's monitoring and scheduling contractors
was to be done by EPA. The U.S. Occupational Safety and Health
Administration (OSHA) was to provide oversight to ensure worker
protection. The scope of our audit did not extend to evaluating the
amount and quality of oversight done by these Federal agencies.
Question 3. One of the issues raised in the GAO report is whether
or not FEMA should have reimbursed New York City for heightened
security costs in the wake of the terrorist attack. How much did New
York spend on increased security costs in the wake of September 11? How
does that compare with similar expenditures nationwide?
Response. In our reviews, we did not estimate how much security
expenses have increased in the United States. in the aftermath of
September 11. To do so would be a difficult challenge. New York City
Office of Management and Budget officials have not yet determined the
amount of heightened security expenses they will reimburse city
agencies from the $1.2 billion in discretionary funds available as a
result of the early close-out of FEMA's traditional public assistance
program and Congressional authorization to FEMA to provide
reimbursement for heightened security costs.
It is important to reiterate that heightened security is a cost
incurred by NYC that FEMA officials told us they would not have
reimbursed had they not been directed by legislation to do so. FEMA
officials determined that costs related to heightened security in the
New York City area after the terrorist attacks were not eligible for
reimbursement under the provisions of the Stafford Act because these
costs were not a direct response to the disaster that occurred. On
February 20, 2003, Public Law 108-7 was enacted. The law stated,
``notwithstanding, any other provision of law, funds
appropriated to FEMA for disaster relief for the terrorist
attacks of September 11, 2001 may be used to provide funds to
the city of New York and the State of New York for costs
associated with such attacks that are unreimbursable under the
Stafford Act . . .''
Under this provision, FEMA has the authority to provide the city and
State funds for costs incurred as a result of the disaster that
officials can use to reimburse some city agencies for extra security
measures they took in the immediate aftermath of the terrorist attacks.
______
Response by JayEtta Z. Hecker to Additional Question
from Senator Voinovich
Question. Please provide a complete accounting of the
nontraditional projects that were funded in New York City. For example,
what were the extra costs of enhancing and modernizing Lower
Manhattan's transportation system rather than repairing the existing
infrastructure? In addition to this accounting of all the
nontraditional work, what were the nontraditional costs that New York
City faced due to the nature off this disaster? Also, how much
additional assistance was provided since the cost share was waived?
Response. We have not directly evaluated what the nontraditional
costs that New York City faced due to the nature of this disaster.
However, issues related to extra costs of enhancing the lower Manhattan
transportation system and an accounting of the nontraditional
assistance and savings related to the elimination of a State and local
cost share are addressed in our response above to the first question
from Senator Jeffords.
[GRAPHIC] [TIFF OMITTED] T2386.151
[GRAPHIC] [TIFF OMITTED] T2386.152
[GRAPHIC] [TIFF OMITTED] T2386.153
[GRAPHIC] [TIFF OMITTED] T2386.154
[GRAPHIC] [TIFF OMITTED] T2386.155
[GRAPHIC] [TIFF OMITTED] T2386.156
[GRAPHIC] [TIFF OMITTED] T2386.157
[GRAPHIC] [TIFF OMITTED] T2386.158
[GRAPHIC] [TIFF OMITTED] T2386.159
[GRAPHIC] [TIFF OMITTED] T2386.160
[GRAPHIC] [TIFF OMITTED] T2386.161
[GRAPHIC] [TIFF OMITTED] T2386.162
[GRAPHIC] [TIFF OMITTED] T2386.163
[GRAPHIC] [TIFF OMITTED] T2386.164
[GRAPHIC] [TIFF OMITTED] T2386.165
[GRAPHIC] [TIFF OMITTED] T2386.166
[GRAPHIC] [TIFF OMITTED] T2386.167
[GRAPHIC] [TIFF OMITTED] T2386.168
[GRAPHIC] [TIFF OMITTED] T2386.169
[GRAPHIC] [TIFF OMITTED] T2386.170
[GRAPHIC] [TIFF OMITTED] T2386.171
[GRAPHIC] [TIFF OMITTED] T2386.172
[GRAPHIC] [TIFF OMITTED] T2386.173
[GRAPHIC] [TIFF OMITTED] T2386.174
[GRAPHIC] [TIFF OMITTED] T2386.175
[GRAPHIC] [TIFF OMITTED] T2386.176
[GRAPHIC] [TIFF OMITTED] T2386.177
[GRAPHIC] [TIFF OMITTED] T2386.178
[GRAPHIC] [TIFF OMITTED] T2386.179
[GRAPHIC] [TIFF OMITTED] T2386.180
[GRAPHIC] [TIFF OMITTED] T2386.181
[GRAPHIC] [TIFF OMITTED] T2386.182
[GRAPHIC] [TIFF OMITTED] T2386.183
[GRAPHIC] [TIFF OMITTED] T2386.184
[GRAPHIC] [TIFF OMITTED] T2386.185
[GRAPHIC] [TIFF OMITTED] T2386.186
[GRAPHIC] [TIFF OMITTED] T2386.187
[GRAPHIC] [TIFF OMITTED] T2386.188
[GRAPHIC] [TIFF OMITTED] T2386.189
[GRAPHIC] [TIFF OMITTED] T2386.190
[GRAPHIC] [TIFF OMITTED] T2386.191
[GRAPHIC] [TIFF OMITTED] T2386.192
[GRAPHIC] [TIFF OMITTED] T2386.193
[GRAPHIC] [TIFF OMITTED] T2386.194
[GRAPHIC] [TIFF OMITTED] T2386.195
[GRAPHIC] [TIFF OMITTED] T2386.196
[GRAPHIC] [TIFF OMITTED] T2386.197
[GRAPHIC] [TIFF OMITTED] T2386.198
Statement of Richard L. Skinner, Deputy Inspector General,
Office of Inspector General, Department of Homeland Security
Good morning Mr. Chairman and Members of the Subcommittee. I am
Richard L. Skinner, Deputy Inspector General of the Office of Inspector
General (OIG) for the Department of Homeland Security, which includes
the Federal Emergency Management Agency (FEMA).
Thank you for the opportunity to be here today to discuss the work
of the OIG in response to the unparalleled terrorist events of
September 11, 2001, as well as our perspective on FEMA's merger into
the new Department of Homeland Security.
First let me address our work in New York following the September
11, 2001, terrorist attacks.
OIG RESPONSE TO SEPTEMBER 11
September 11, 2001, resulted in catastrophic physical damage and
loss to the business and residential infrastructure in the lower part
of the Borough of Manhattan. FEMA applied the full range of authorized
disaster assistance programs to the post-disaster needs of the city of
New York and its individuals, including Public Assistance grants,
Temporary Housing (specifically Mortgage and Rental Assistance),
Individual and Family Grants, Disaster Unemployment Assistance, Crisis
Counseling Assistance and Training, and Legal Services. FEMA, however,
due to the unique circumstances of this disaster, (i.e., managing the
consequence of a terrorist attack rather than the consequences of
hurricanes, tornadoes, or floods), had to use its authorities and
programs more broadly than it ever had before. FEMA's authorities were
not adequate to meet everyone's expectations in recovering from the
unprecedented needs created by this event.
The FEMA OIG deployed teams of auditors, inspectors, and
investigators from Headquarters and various field offices in early
October 2001 to the New York City Disaster Field Office (DFO). Our
mission was to assist the Federal Coordinating Officer (FCO) in
reviewing and assessing procedures, practices, and controls in place
throughout the operation, to identify and prevent fraud, and to assure
FEMA's Director that all possible actions were being taken to protect
public welfare and to ensure the efficient, effective, and economic
expenditure of Federal funds. One team of auditors and inspectors
worked directly with the FCO and monitored set-up and operation of the
DFO. Another team of auditors worked with the FEMA public assistance
staff and a team of inspectors worked with the FEMA individual
assistance staff. Several teams of investigators worked round the clock
at the DFO and at ground zero.
GENERAL MANAGEMENT OVERSIGHT
We worked in direct support of the FCO to respond to specific
requests and addressed matters that independently came to our
attention. Some of the tasks we performed related to accounting and
auditing, but some were as varied as tracking down missing copy
machines. We worked closely with a team of FEMA comptrollers and OGC
representatives, helping them with a wide assortment of financial
matters. We also worked with other Federal agencies, as well as State
and city organizations and voluntary agencies. Our support included
establishing a partnership with program staff to identify and suggest
courses of action with regard to potential and emerging issues
regarding duplication of benefits, donations management, accountable
property, program limitations and administration, DFO training, safety
and security. We identified a number of significant issues and made
recommendations for improvement.
INVESTIGATIVE INTIATIVES
Our Office of Investigations processed 787 fraud complaints and
resolved or closed 771 of them. Sixteen complaints remain open. We
continually receive new complaints through the DHS OIG fraud hotline,
FEMA personnel, and numerous Federal, state, and local agencies. We
have opened 112 criminal investigations and have received 89
indictments and arrested 86 individuals. We have recovered $922,028,
received restitution of $6,729,728, issued fines of $1,686,538, and
reported cost savings of $7,429,502.
PUBLIC ASSISTANCE OVERSIGHT
The FEMA OIG responded to the World Trade Center attack as a
partner to FEMA's response and recovery components. We deployed a team
of auditors to monitor public assistance operations and assist in
reviewing requests for assistance. This team maintained a presence for
more than a 1\1/2\ years working with FEMA public assistance staff to
ensure that recovery efforts were on track and complied with Federal
laws and regulations.
Our efforts were far from the traditional role of the OIG, but this
was an extremely unique situation, and we were able to contribute
significantly to the effectiveness of FEMA's response by providing
proactive oversight rather than hindsight. Early in the process we
briefed applicants on how to qualify for FEMA assistance and maintain
records, and we reviewed accounting systems of some of the local
governments to ensure they were adequate for collecting necessary cost
data.
We reviewed requests for funding and the detailed worksheets for
proposed projects and met with public assistance program staff on a
regular basis to provide them technical assistance on cost
allowability. At FEMA's request, we reviewed questionable bills
submitted by applicants for payment and FEMA's implementation of its
policy on heightened security eligibility.
We did not conduct any traditional grant compliance audits of
public assistance grants, nor did we audit any costs incurred under the
Consolidated Appropriations Resolution Act of 2003, which provided that
costs not eligible for public assistance funding, referred to as
associated expenses, will be funded with the remainder of the $8.8
billion of authorized FEMA funding. FEMA estimates that $7.6 billion
will be required for Stafford Act purposes and $1.2 billion will be
used for associated expenses. Associated expenses include such costs as
local government employees' salaries, heightened security costs, and
the I Love NY campaign to encourage visitors to the state.
INDIVIDUAL ASSISTANCE REVIEW
In response to congressional inquiries, the FEMA OIG reviewed
FEMA's delivery of individual assistance in New York after September
11, 2001. The review focused on issues that need to be addressed by
both FEMA and Congress as they consider regulatory and legislative
changes to improve FEMA's delivery of assistance to victims of future
terrorist attacks that result in Presidential disaster declarations.
Following is a summary of issues raised during our review.
Eligibility Issues in the Mortgage and Rental Assistance Program
FEMA historically has not had to implement the Mortgage and Rental
Assistance (MRA) program on a large scale because previous disasters
did not coincide with nor result in widespread unemployment and
national economic losses. From the inception of MRA until September 11,
2001, only $18.1 million had been awarded under the program for 68
declared disasters, compared to approximately $76 million as a result
of the New York disaster alone.\1\ Because it was seldom used, Congress
eliminated the program when it enacted the Disaster Mitigation Act of
2000 (DMA 2000) making the program unavailable after May 1, 2002.
---------------------------------------------------------------------------
\1\ FEMA's Recovery Division, December 2002.
---------------------------------------------------------------------------
FEMA had to face the challenge of implementing this program in a
disaster that caused significant economic consequences, including not
only the obvious economic impact of the incident itself but also the
indirect economic effects felt throughout the country. The language of
the Stafford Act's MRA authority establishes as a criterion for
assistance a written notice of dispossession or eviction. The law is
silent, however, on what constitutes a financial hardship. This
omission required FEMA to interpret to what extent a personal financial
loss constitutes a financial hardship, and to determine if that
hardship resulted directly from the primary effects of the attacks or
from secondary effects on the Nation.
The MRA program's limited use, the broad economic impact of this
unprecedented event, and FEMA's challenge to differentiate between
primary and secondary economic effects contributed to difficulties in
delivering timely and effective assistance. The MRA program is unique
because it addresses limited, individual economic losses versus
physical damage resulting from a disaster. Traditional inspection of
damages as a basis for program eligibility, therefore, does not apply
to MRA. Individual financial hardships caused by the disaster must be
evaluated case-by-case. FEMA attempted to clarify eligibility criteria
that required a clear link between physical damage to the business or
industry caused by the disaster and an applicant's loss of household
income, work, and/or employment regardless of geographic location.
In summary, the MRA program, if reinstated, could continue to meet
a fairly narrow economic need but would still require legislative
revision to make it less complicated to administer. A broader, more
flexible program, however, would more appropriately meet the range of
economic losses experienced after events such as the September 11,
2001, terrorist attacks. The OIG believes FEMA should explore such a
program with Congress. In doing so, Congress may wish to consider
studying other existing mechanisms within the Federal Government as
possible vehicles through which broader assistance could be provided.
State Capability to Implement the Individual and Family Grants Program
The Stafford Act authorizes the Individual and Family Grants (IFG)
program to meet disaster related necessary expenses or serious needs of
disaster victims that could not be met through other provisions of the
Stafford Act or through other means such as: insurance, other Federal
assistance, or voluntary agency programs. Eligible expenses may include
those for real and personal property, medical and dental expenses,
funeral expenses, transportation needs, and other expenses specifically
requested by the State.\2\
---------------------------------------------------------------------------
\2\ Because the September 11 event was both a disaster and a
criminal act, programs of the U.S. Department of Justice's (DOJ) Office
for Victims of Crime were also applicable. As a result, expenses
related to medical, dental, and funeral were covered by DOJ.
---------------------------------------------------------------------------
Applications for IFG assistance rose sharply in June 2002, as
applicants requested assistance for the air quality items. FEMA
believes the increase in new applications coincided with public
announcements being made by the U.S. Environmental Protection Agency
(EPA) regarding the poor air quality in the city and the need for air-
conditioning and related items because of the unusually warm spring and
early summer. The State believes the surge in new applications
coincided with the closing of the nonprofit programs. FEMA received an
average of 7,660 applications per month from June to August 2002 for
air-quality items. Applications for IFG assistance typically do not
spike at this point in the recovery phase of a disaster.
The unanticipated increase in applications received after June 2002
also may be related to two other decisions regarding assistance for
air-quality items. First, assistance was made available to all
households in the five boroughs of New York City. The broad geographic
eligibility was not related to the areas of actual impact. A better
model might have been to limit eligibility to the same areas identified
by EPA and the New York City Department of Health for purposes of the
apartment cleaning and testing program. If the IFG program and the EPA
testing and cleaning program had worked more closely together in terms
of geographic eligibility, the program would have had reasonable and
justifiable boundaries. Second, as a result of concerns expressed by
certain advocacy groups, applicants were allowed to certify that they
were unable to pay for the air-quality items (costing as much as
$1600). Funding was advanced to those applicants and they were
requested to provide receipts after purchase. There were few
limitations placed upon who could qualify for this ``unable to pay''
option. This may also have increased the likelihood of fraud and abuse.
INTERAGENCY COORDINATION CHALLENGES
Responsibilities shared among FEMA, EPA, and the U.S. Department of
Justice (DOJ) Office for Victims of Crime were not defined clearly
enough to distinguish roles and establish the sequence of delivery of
assistance. Recovery from the September 11, 2001, event highlighted the
need for advance agreements regarding shared roles and responsibilities
among key agencies likely to respond to future events.
Response to Residential Air Quality, Testing, and Cleaning Requires
More Coordination
EPA was aware, based on its work in the aftermath of the 1993 WTC
terrorist bombing, that the WTC towers contained asbestos material.
Neither FEMA nor New York City officials, however, initially requested
that EPA test or clean inside buildings because neither EPA nor the New
York City Department of Environmental Protection (NYCDEP) could
identify any specific health or safety threat. EPA nevertheless advised
rescue workers early after the terrorist attack on the WTC that
materials from the collapsed buildings contained irritants, and advised
residents and building owners to use professional asbestos abatement
contractors to clean significantly affected spaces. Directions on how
to clean the exterior of buildings affected by dust and debris were
provided to building owners by NYCDEP, and directions on how to clean
interior spaces were provided by the New York City Department of
Health.
Neither FEMA nor EPA traditionally has been involved in testing and
cleaning private residences. Neither agency is specifically authorized
to provide such services. However, when a potential health and safety
threat was identified and New York officials documented that interior
testing and cleaning would beneficially impact the city's economic
recovery, FEMA used its debris removal authorities under the Stafford
Act to provide the necessary funding. Though the entire New York public
cannot be serviced, the low level of applications for cleaning and
testing, along with the low number of residences found with dangerous
asbestos levels, may indicate that FEMA and EPA have addressed the
need, or that individuals already have taken the initiative to clean
their residences.
The program to test and clean residences in lower Manhattan did not
commence until months after the disaster. Although FEMA has the
responsibility to coordinate recovery from Presidentially declared
disasters, FEMA must depend on the particular expertise of EPA in
circumstances involving possible air contaminants or environmental
hazards. EPA must confirm that such hazards constitute a public health
and safety threat before FEMA can provide funding for emergency
response. FEMA should be more proactive in requesting EPA to conduct
necessary testing and/or studies to determine if a public health or
safety threat exists in future, similar disasters so that cleaning
efforts can begin much earlier in the recovery phase. FEMA also should
address the roles of state and local agencies in such circumstances, as
consultation with these agencies would provide useful information in
review or evaluation.
Department of Justice Authorities Compliment FEMA Authorities
Because the September 11, 2001, terrorist attack sites were
Presidentially declared disasters resulting from criminal actions, both
FEMA and the DOJ's Office for Victims of Crime (OVC) had authority to
provide victim assistance. FEMA's Crisis Counseling Assistance and
Training Program (CCP) providers found it necessary to offer support
services that went beyond the normal levels of CCP mental health
programs. Too many entities were involved at the outset to ensure
coordination and avoid potential confusion of services provided to
victims.
The September 11, 2001, attacks uncovered potential DOJ-FEMA
overlaps in some programs covering disaster areas that are also crime
scenes. FEMA's CCP program funds crisis counseling and IFG program
reimburse victims of disasters for medical, dental, and funeral
expenses. The Victims of Crime Act of 1984, as amended (42 United
States Code Sec. 10603), authorizes DOJ's OVC to provide financial
assistance to victims of Federal crimes and of terrorism and mass
violence in the form of (1) grants to state crime victim compensation
programs to supplement state funding for reimbursement of the same out-
of-pocket expenses, including mental health counseling; and (2) grants
to state victim assistance agencies in support of direct victim
services, i.e., crisis counseling, criminal justice advocacy, shelter,
and other emergency assistance services.
FEMA, OVC, and DOJ's Executive Office for United States Attorneys
subscribed to a Letter of Intent to ensure that victims receive needed
services and information and to articulate services needed in
responding to catastrophic Federal crime. The Letter of Intent should
serve as the foundation for future cooperative activities but more
detailed and comprehensive guidance is necessary to ensure that
services delivered to disaster victims who are also victims of crime
are appropriate, consistent, and not duplicative. These objectives
could be accomplished through a Memorandum of Understanding between
FEMA and DOJ's OVC that formalizes the relationship, the
responsibilities and authorities to be applied, programs, timeframes,
and sequencing when a disaster is also a crime scene.
Coordination with Voluntary Agencies
Voluntary Agencies (VOLAGS) typically provide immediate emergency
assistance to victims, FEMA addresses short and long-term recovery
needs, and, near the end of the recovery cycle, VOLAGS address victims'
unmet needs. After the September 11, 2001, terrorist attacks,
individuals donated time, resources, and money in record volumes to a
large number of VOLAGS. The overwhelming generosity and rapid influx of
cash donations likely contributed to the ability of VOLAGS and other
groups to provide higher levels of assistance. Since so many VOLAGS, ad
hoc organizations, and other entities not traditionally in the sequence
of delivery were distributing assistance, it was difficult to collect
accurate information necessary to understand the scope of assistance
being provided.
FEMA, attempting to bring order to the chaos created by the
multitude of voluntary organizations, and developed a matrix of various
government and non-government entities. At one point, this matrix
included over 100 organizations and was used to identify their
contributions to disaster recovery efforts and the types of assistance
provided. FEMA validated the information and became familiar with the
kinds of assistance being offered so that staff could make informed
referrals. In spite of these efforts, FEMA was not able to ensure that
all voluntary agencies were coordinated appropriately to ensure that
benefits are not duplicated among disaster programs, insurance
benefits, and/or any other types of disaster assistance.
Historically, FEMA has not considered the assistance of voluntary
agencies to be duplicative under normal disaster conditions. In
response to this event, however, VOLAGS far exceeded their traditional
role in the provision of assistance. FEMA, to ensure timely assistance
to victims, decided to activate its own IA program and to treat VOLAG
and other non-governmental assistance as non-duplicative as it related
to the events of September 11, 2001. Had FEMA expended the resources
necessary to fully identify and quantify such assistance after
September 11, 2001, the timely provision of urgently needed assistance
would have been delayed. FEMA acknowledges, however, that some people
may have received assistance for similar losses from more than one
source.
Regardless of FEMA's decision to not identify and quantify
voluntary agency assistance on a case-by-case basis, the potential that
duplication occurred does exist although the nature and amount of
duplication remain unknown. FEMA needs to be better able to anticipate
the proactive role non-governmental organizations will play in disaster
recovery operations and attempt to coordinate relationships with those
organizations through protocols such as Memorandums of Understanding to
alleviate the potential for duplicating benefits. The General
Accounting Office (GAO) has also emphasized the need to improve
coordination among charities and between charities and FEMA.\3\
---------------------------------------------------------------------------
\3\ GAO draft report, ``More Effective Collaboration Could Enhance
Charitable Organizations' Contributions in Disaster,'' December 2002.
---------------------------------------------------------------------------
UNMET NEEDS
Several gaps in authorizations appear to exist for FEMA and other
Federal agencies to address recovery needs of certain individuals and
businesses. The OIG believes these gaps may be of concern in future
disasters.
Federal Public Benefit Classification Limits IA Eligibility
Title IV of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 requires that Federal public benefits be
provided only to United States citizens, non-citizen nationals, and
qualified aliens. Under Title IV, the following FEMA IA programs
authorized by the Stafford Act are considered Federal public benefits:
Temporary Housing Assistance; Unemployment Assistance; Individual and
Family Grants Programs; and Food Coupons and Distribution.
Temporary Housing Assistance and the IFG program have been repealed
and combined into one grant program, the Individuals and Households
Program, under DMA 2000. This new program falls under the Federal
public benefit standard.
The recipient limitations imposed by the Federal public benefit
standard do not apply to some types of post-disaster assistance. Any
victim may receive short-term, non-cash, in-kind emergency disaster
relief, including emergency medical care, emergency mass care,
emergency shelter, and other assistance provided by VOLAGS. Other
recovery tasks also must occur without regard to limitations. These
include clearing roads; constructing temporary bridges needed to
perform emergency repairs and deliver essential community services;
warning of further risk or hazards; disseminating public information;
assisting victims with health and safety measures; providing food,
water, medicine, and other essential goods; transporting supplies or
persons; and otherwise reducing immediate threats to life, property,
and public health and safety.
The September 11, 2001, disaster affected victims who are not
United States citizens, non-citizen nationals, or qualified aliens but
who were lawful residents of the United States under a valid
immigration category or classification. Because these residents are not
granted an alien status that would allow them to receive a Federal
public benefit, they were ineligible for assistance under the IA
program. For example, individuals who possess an un-expired Employment
Authorization Card, which permits lawful employment in the United
States, are precluded from Federal public benefit assistance. One
immigration advocacy group estimates that as many as 80,000 lawfully
present individuals in New York are not qualified for Federal disaster
assistance beyond the short-term emergency relief.\4\
---------------------------------------------------------------------------
\4\ The New York Immigration Coalition, ``Recommendation to improve
FEMA's Mortgage and Rental Assistance Program,'' June 23, 2002.
---------------------------------------------------------------------------
FEMA should consider pursuing legislative changes that would exempt
FEMA's IA programs from the Federal public benefit classification when
victims needing IA are lawfully present in the United States at the
time of the applicable disaster but may not have the qualified alien
status required by Title IV of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996.
FEMA Assistance for Non-Critical Private Non-Profit Service
Organizations is Limited
To be eligible for FEMA grant assistance, a Private Non-Profit
(PNP) organization must fall within the Stafford Act's definition of a
PNP that provides an essential service of a governmental nature. This
was true prior to DMA 2000 and DMA 2000 did not change the definition
of an eligible PNP applicant. However, with DMA 2000, Congress created
a two-tiered system of reimbursement for FEMA-eligible PNP's. For
eligible PNP facilities that provide ``critical services,'' FEMA may
provide assistance for eligible work just as it did prior to DMA 2000.
For eligible non-critical PNP facilities, DMA 2000 now requires the PNP
to first apply to SBA. FEMA can then provide the PNP assistance if the
PNP does not qualify for an SBA loan or if it obtains one in the
maximum amount for which it is eligible.
The intent of Congress to limit grant assistance to ``critical''
PNP organizations without applying first for a loan, is unambiguous.
Even the discretion given to the President to add to the list of
``critical'' PNP services is limited to a few emergency-related
activities. The attacks of September 11, 2001, enabled the first
significant test of this new approach to funding PNPs, and the
reactions were predictable. PNPs that lost immediate access to grants
as a result of DMA 2000 Colleges, Universities, and various providers
of social services understandably questioned the equity of the new law.
While these changes were under consideration by Congress, concern
surfaced that dividing PNP services into ``critical'' and ``non-
critical'' categories would be perceived as inequitable and would, in
fact, affect the relatively smaller and less well financially endowed
organizations more substantially than larger organizations that enjoyed
better, ongoing access to other forms of revenue.
On December 12, 2002, FEMA implemented a new policy, based on the
President's announcement to strengthen the Administration's compassion
agenda by making it easier for America's faith-based and community
groups to work with the Federal Government. FEMA's new policy extends
assistance to eligible and necessary faith-based organizations by
broadening the eligibility of certain non-profit organizations to
receive Federal disaster assistance. This policy recognizes the
statutory eligibility of PNP organizations that provide necessary and
vital functions to local communities and is retroactive to January 20,
2001.
Congress may wish to reconsider this ``critical'' and ``non-
critical'' PNP approach and either require all PNPs to apply first for
an SBA loan, which would achieve greater cost-savings, or require no
PNPs to apply for loans before qualifying for FEMA grants, which would
level the playing field but increase the amount of Federal grant
assistance.
LEGISLATIVE ISSUES
Congress may wish to consider legislation to either reinstate the
MRA program or develop a comparable program. Congress also might wish
to consider whether FEMA or another Federal agency should administer
grants to small businesses that have been adversely affected by a
disaster.
MRA is Eliminated by the Disaster Mitigation Act of 2000
DMA 2000 amendments to the Stafford Act repealed the MRA program as
a component of FEMA's Temporary Housing Assistance for disasters
declared on or after May 1, 2002. FEMA received an extension from
Congress and has made this effective for all disasters declared on or
after October 15, 2002. DMA 2000 also establishes a $25,000 cap on the
Individuals and Households Program. These new limitations raise serious
issues for addressing economic losses and financial hardships suffered
by victims of events similar to this one. Congressional consideration
may be warranted to better position FEMA to address economic issues in
future acts of terrorism.
Grants to Small Businesses Were Made on an Ad Hoc Basis
In its November 2002 report, September 11, Small Business
Assistance Provided in Lower Manhattan in Response to the Terrorist
Attacks, GAO documented assistance made available under various grant
and loan programs to both public and private entities. GAO reported,
``The September 11, 2001 terrorist attacks on the World Trade Center
had a substantially negative impact on the New York City economy,
strongly affecting businesses, both large and small, and as disparate
as financial services firms, travel agencies, and retail stores. Some
businesses were destroyed, some displaced, and still others could not
operate because of street closures and the lack of utilities. Many
businesses still face a diminished client base and uncertainty about
the future redevelopment of the World Trade Center site.'' There is,
however, presently no on-going Federal program that provides grant
support to businesses adversely affected by disasters, except in the
instance of special legislation targeted to an event.
FEMA is prohibited by the Stafford Act from providing disaster
assistance to businesses of any size. The Stafford Act provides
funding, principally in the form of grants, to individuals, state and
local governments, and certain private, non-profit organizations
adversely affected by a disaster. SBA is authorized to provide loans,
not grants, to businesses adversely affected by a disaster. SBA is
administratively prohibited, however, from making loans to businesses
that do not meet specific and generally established eligibility
criteria. SBA was unable, for example, to make loans to businesses that
did not meet the agency's size standards or financial qualifications.
SBA's limited ability to assist businesses financially after the
September 11, 2001, event was recognized early in the response phase.
FEMA, under special legislation, was already involved in compensating
businesses adversely affected by the May 2000 Cerro Grande fire in
northern New Mexico. Some Members of Congress introduced legislation
specific to the September 11, 2001, events that would allow FEMA to
initiate a similar program in Lower Manhattan.\5\ The bill would have
authorized FEMA to compensate businesses in an amount generally not to
exceed $500,000 for specified business losses. A companion bill was
introduced in the House of Representatives. Neither bill, however, was
enacted.
---------------------------------------------------------------------------
\5\ Cerro Grande Fire Assistance Act, Division C. It should be
noted that FEMA received substantial assistance from SBA in
implementing the compensation program for businesses.
---------------------------------------------------------------------------
Alternatively, Congress enacted the Department of Defense and
Emergency Supplemental Appropriations for Recovery From and Response to
Terrorist Attacks on the United States Act of 2002, a provision of
which allowed the State of New York to use Community Development Block
Grant (CDBG) funds administered by the U.S. Department of Housing and
Urban Development (HUD) to make Business Recovery Grants. GAO noted
that the Business Recovery Grants covered, in total, about 17 percent
of business losses that were not covered by insurance and New York City
and State grants. GAO further reported that the Empire State
Development Corporation, which is administering the Business Recovery
Grant program, planned to increase payments to some businesses and
thereby reduce the amount of their uncompensated economic losses.
Congress may wish to consider whether the Federal Government should
be the insurer of last resort for all or part of disaster-related
business losses. Such a policy decision would eliminate the need to
respond on an ad hoc basis after each terrorist attack that results in
a Presidential disaster declaration. Factors that should be considered
are whether the lack of such assistance in recovering from difficulties
related to terrorist incidents could increase other Federal response
costs, such as DUA and MRA; and the respective roles of FEMA, SBA, and
HUD in administering financial assistance to small businesses.
TRANSITIONING INTO DHS
As Undersecretary Brown noted in his testimony, FEMA has not missed
a step in responding to disasters since becoming a part of DHS. In May
of this year, we sent a team of auditors to monitor FEMA's response and
recovery efforts to a series of major tornadoes in Missouri. The
caliber and effectiveness of FEMA's response was the same high standard
we have seen in the past.
In addition, the consolidation of first responder organizations
within DHS offers opportunities for a better coordinated, more
responsive, disaster response and recovery capability. In particular,
the addition of Department of Health and Human Services programs to DHS
and the creation of a National Incident Management System and a
National Response Plan should add to that capability. The OIG plans to
review those areas in the near future. However, the OIG has also
transitioned into DHS, and our ability to provide oversight has been
diluted due to the many non-FEMA priorities and demands being placed on
our limited staff.
Notwithstanding the continued success of FEMA's response and
recovery efforts, there are still shortcomings in FEMA operations (see
Attachment 2). Although we have not witnessed any changes in services,
FEMA has many problems that need to be addressed and its ability to
effectively address them is compounded by its merger into DHS. Areas of
particular concern as FEMA transitions into DHS include FEMA's
financial management, the security of FEMA's information technology
(IT) systems, and grant management. Deficiencies in these areas could
most certainly hamper the effective and efficient integration of FEMA
programs and operations into DHS.
Regarding financial management, the OIG identified six material
weaknesses in fiscal year 2002 related to FEMA's financial statement
audit. For example, FEMA's financial system functionality and financial
reporting process both need significant improvement. This problem is
exacerbated by other DHS components having similar problems.
Regarding IT security, The Office of Management and Budget scored
FEMA's e-gov status as unsatisfactory, and FEMA did not receive a
passing grade for computer security from the House Subcommittee on
Government Efficiency, Financial Management and Intergovernmental
Relations. FEMA is aware of its problems in IT management and is
working to address the weaknesses.
Regarding grants management, FEMA has had longstanding problems,
although it has made improvements and worked to develop a viable grants
management program. Previous FEMA OIG reports have identified
significant shortcomings in the pre-award process, cash management,
monitoring, and grant closeout processes. This in turn has allowed
grant recipients to misuse millions of dollars in Federal funds each
year.
In addition, although numerous grant programs are now consolidated
within DHS, their management is divided among various components within
the Department. Preparedness for terrorism is in the Border and
Transportation Security directorate, while other preparedness efforts
are in the Emergency Preparedness and Response directorate. This
bifurcation will create additional challenges related to inter-
departmental coordination, performance accountability, and fiscal
accountability. Furthermore, program managers have yet to develop
meaningful performance measures necessary to determine whether the
grant programs being absorbed by DHS have actually enhanced state and
local capabilities to respond to terrorist attacks and natural
disasters. The OIG addressed these concerns in the early days of the
Department's creation (see Attachment 3). It is our understanding that
this problem is now being addressed legislatively. Further, Secretary
Ridge recently announced plans to centralize these programs within a
single office of the Department.
In summary, although FEMA has made progress in many areas,
additional improvement is needed, and the remaining problems will make
an effective transition into DHS more difficult.
CONCLUSION
This concludes my written statement. Again, I appreciate the
opportunity to testify before you today. I would be happy to answer any
questions that you may have.
______
Attachment 1.--Financial Status of Individual Assistance Program as of
November 1, 2002
Temporary Housing Assistance: Mortgage and Rental Assistance--
$76,275,000; Minimal Home Repair--$1,450,000; Transient
Accommodations--$1,225,000; Rental Assistance--$26,150,000.
Individual and Family Grants: $25,400,000.
Crisis Counseling Assistance and Training Program: $162,400,000*.
---------------------------------------------------------------------------
* Approved funding includes New Jersey, Connecticut, Massachusetts,
and Pennsylvania.
---------------------------------------------------------------------------
Unemployment Assistance: $13,200,000.
Legal Services: $2,000.
Total FEMA Individual Assistance for New York: $306,102,000.
______
Attachment 2.--Federal Emergency Management Agency, Office of Inspector
General, Washington, DC.
December 31, 2002
Memorandum for: Joe M. Allbaugh (Director Signed)
From: Richard L. Skinner, Acting Inspector General
Subject: Management Challenges
The Office of Inspector General has identified the most serious
management and performance challenges we believe FEMA is facing and the
progress FEMA is making in addressing those challenges. We are required
to provide this statement to you under the Reports Consolidation Act of
2000. This statement is to be included in the consolidated report
described by the Act.
We believe, based on our work and our general knowledge of FEMA
operations and programs, that FEMA must continue to focus attention on
the following management and program initiatives to ensure public
accountability and improve program effectiveness. Although FEMA
managers acknowledge most of these issues and are addressing them to
varying degrees, much work is left to be done to ensure that business
is conducted economically and efficiently, and that appropriate program
results are achieved.
PROGRAM CHALLENGES
Homeland Security Transition.--The President established the
Department of Homeland Security on November 25, 2002. The mission of
the Department is to develop, coordinate, and implement a comprehensive
national strategy to secure the United States from terrorist threats or
attacks. The Department is responsible for coordinating efforts to
detect, prepare for, prevent, protect against, respond to, and recover
from terrorist attacks within the United States. FEMA will transfer
into the Department on March 1, 2003, as part of the Emergency
Preparedness and Response Directorate. FEMA will continue to lead and
support the Nation in responding to and recovering from any destructive
event, whether natural or man-made. FEMA will also continue its
preparedness and mitigation programs for non-terrorist-related
disasters. These programs will be coordinated with similar programs
from the components of the Departments of Health and Human Services and
Energy that are also transferring into the Emergency Preparedness and
Response Directorate. FEMA will cooperate closely with the new Office
for Domestic Preparedness in preparing for and mitigating terrorist
activities. The challenges facing FEMA are many. There are concerns of
FEMA losing its identity as an agency that is quick to respond to all
hazards and disasters. Members of Congress and the general public have
expressed concern that FEMA's disaster response and recovery and
mitigation missions will be diluted as it is absorbed into a much
larger organization and that funding issues will limit FEMA's ability
to respond to disasters as it has in the past. Further, the integration
of FEMA's many management and financial information systems with those
of other entities that will be brought into the Department will be a
daunting task. This is of particular concern because of problems
plaguing FEMA's systems lack of integration, security issues, and non-
compliance with the Federal Financial Management Integrity Act. There
are also concerns relating to the workforce--FEMA's most important
asset. As with all entities being transferred to the Department,
employees are concerned about their role and how the transfer will
affect their job. FEMA is well aware of these issues and is addressing
them as they arise through active communication with staff. FEMA's
experience in coordinating the Federal Response Plan will contribute to
the success of the Department's transition and integration efforts.
Disaster Response and Recovery.--FEMA's largest spending category
is disaster relief. According to the President's fiscal year 2003
budget proposal, $3.5 billion was obligated in that category in fiscal
year 2001 and due largely to the World Trade Center attack, $8.7
billion was estimated to be obligated in fiscal year 2002. Managing
disaster response and recovery continues to be one of FEMA's largest
challenges. FEMA faces difficulties establishing disaster declaration
criteria, reducing disaster response and recovery costs, managing its
disaster workforce, ensuring the integrity of its many financial
assistance programs, and improving program services. FEMA has begun to
address all of these problems. FEMA recently centralized deployment of
the Disaster Assistance Employee cadre, for example, to improve the
efficiency of disaster staffing; but much remains to be done.
Recent amendments to the Stafford Act increased FEMA's challenges
in managing disaster recovery. The amendments change estimating and
payment procedures under the Public Assistance Grant Program, FEMA's
largest grant program. Disaster grant applicants will be paid based on
damage estimates rather than actual damage repair costs. FEMA tested a
similar approach, called the Grant Acceleration Program, after the
Northridge Earthquake in Southern California. The test results
reflected inflated estimates, extreme overpayments, and ineligible work
performed at taxpayer expense. Finding solutions to these problems and
instituting other changes required by the amendments, such as
establishing fixed management cost rates for grantees and subgrantees,
will confront managers of FEMA's disaster assistance grants in fiscal
year 2003.
Managing disaster response is a major challenge, particularly when
the Federal Response Plan is activated and FEMA must coordinate the
activities of dozens of Federal, State, and local organizations. FEMA
also manages its own response assets to increase its ability to respond
quickly, and its disaster response capabilities have improved
substantially in recent years. Less than 3 hours after the World Trade
Center attack the first Urban Search and Rescue Teams were at the site.
FEMA also has warehouses around and outside the country in which
commodities and equipment are stocked to support disaster field
offices. Commodities such as water, meals, generators, tents and
blankets--that victims need immediately after a disaster--also are
stocked at the warehouses. These facilities contain thousands of items
valued at more than $40 million. Maintaining the warehouses, accounting
for property, and the logistics of deploying, recovering, and
refurbishing reusable items are continuing challenges for FEMA.
State and Local Preparedness.--The Director announced in November
2002 that FEMA will provide $225 million in grants to help State and
local responders and emergency managers to become better prepared to
respond to acts of terrorism and other emergencies and disasters. The
funds are available through the fiscal year 2002 supplemental
appropriation, a part of President Bush's First Responder Initiative.
The funds will serve as down payments on resources for States and local
communities to modernize plans and strengthen their preparedness for
disasters of all kinds. The funds will flow through the States, with at
least 75 percent going to local governments.
Roughly $100 million of the $225 million in supplemental funds will
be used for updating plans and procedures to respond to all hazards,
with a focus on weapons of mass destruction. Updated plans will address
a common incident command system, mutual aid agreements, resource
typing and standards, interoperability protocols, critical
infrastructure protection, and continuity of operations for State and
local governments. FEMA intends that the comprehensive plans will be
linked through mutual aid agreements and that they will outline the
specific roles of all first responders (fire service, law enforcement,
emergency medical services, public works, etc.) to terrorist incidents
and other disasters.
FEMA also will provide $56 million in 2002 supplemental funds to
upgrade State emergency operations centers. States and territories will
receive a base allocation but must submit grant proposals for
additional funding. A total of $25 million is available for Citizen
Corps activities, including Citizen Corps Councils, and expanded
training for FEMA's Community Emergency Response Teams (CERTs) across
the country. Other fiscal year 2002 supplemental fund allocations will
include $7 million for secure communications, $5 million to begin
laying the groundwork for a national mutual aid system, and $32.4
million for weapons-of-mass-destruction training for FEMA's urban
search and rescue task forces.
Although funds have been set aside to address State and local
preparedness issues, FEMA still faces the following challenges:
<bullet> Building and sustaining a national preparedness and
response capability; and
<bullet> Coordinating national terrorism preparedness programs.
FEMA must continue to place a high priority on developing State and
local capabilities to respond to acts of terrorism as well as natural
disasters. FEMA must develop State and local capacity to respond to and
manage small- to medium-sized disasters, particularly fairly
predictable ones such as repeated flooding in flood-prone areas.
FEMA also must continue expanding the development of the National
Hazard Loss Estimation Methodology for all hazards. Models for
estimating potential losses from hurricane wind and riverine flooding
are to be introduced in February 2003, but additional development is
required with regard to thunderstorms, tornadoes, tropical cyclones,
hail, and coastal flooding. The mounting dollar losses cannot be
adequately addressed by a fragmented approach to natural hazards.
Instead, estimated losses for other hazards are needed to support
FEMA's risk-based approach to mitigation and emergency preparedness,
and for comprehensive mitigation programs by local communities.
The increased threat of acts of terrorism spurred by the attacks of
September 11, 2001, also indicates a need for FEMA to consider
developing a terrorism-response methodology. Those attacks highlighted
the need to fully equip and train fire departments so they will be
better prepared to respond to terrorist events. FEMA is addressing this
matter through the U.S. Fire Administration's (USFA) Assistance to
Firefighters Grant Program (AFGP). FEMA and USFA also had awarded more
than $170 million to 2,756 fire departments throughout the United
States at the end of fiscal year 2002 under the AFGP. An additional
$190 million is predicted to be awarded in the first quarter of fiscal
year 2003. To date, nearly 5,500 fire stations have received funds for
training or equipment upgrades and purchases since the inception of
this program. It is likely that this program will continue indefinitely
and probable that the amount of grant funds will be increased. It is
imperative, therefore, that FEMA administer the program effectively and
efficiently to ensure that funds are directed to those most in need and
those most likely to be required to respond to a terrorist attack or
natural disaster.
Mitigation Programs.--The President's fiscal year 2003 budget
proposal includes $300 million under the National Pre-Disaster
Mitigation Fund to initiate a competitive grant program for pre-
disaster mitigation. FEMA is preparing to implement the program, which
would replace the current formula-based Hazard Mitigation Grant
Program, if enacted by Congress. FEMA is challenged with designing a
program that ensures fair evaluation of all applicants and their
proposed mitigation projects. Eligible activities include: risk
assessments; State and local planning; the reinforcement of structures
against seismic, wind, and other hazards; elevation, acquisition, or
relocation of flood-prone structures; and minor flood-control or
drainage-management projects. Program success will depend on the
quality and effectiveness of FEMA's evaluation process and criteria.
FEMA is taking into account stakeholder input to create the new
program. Considerable work remains to be done, specifically the
development of eligibility and evaluation criteria.
The OIG issued a report, ``Status of Funds Awarded under the Hazard
Mitigation Grant Program and Other Project Management Issues,'' in July
2001. In response, FEMA is strengthening its management of the HMGP by
monitoring unliquidated obligations and deobligating unspent funds. The
agency also is planning to publish new regulations that will address
problems cited in our report, such as co-mingling of funds, the quality
of applicant progress reports, and inadequate project timeframes.
Challenges remain for FEMA to ensure that States and local governments
are making the best use of Federal funds and carrying out their
mitigation projects timely and in accordance with grant agreements.
Multi-Hazard Flood-Map Modernization.--Flooding stands out as the
single most pervasive hazard facing the Nation, causing an estimated $6
billion in property damage annually. Much of the recovery spending
could be avoided by efficient, up-front planning using accurate, up-to-
date flood maps. Before flood maps can be used effectively, however,
they must reflect current hydrological conditions. An aggressive
program to update, modernize, and maintain the inventory of flood maps
is essential.
Multi-hazard flood-map modernization, a Presidential initiative, is
based on the need for FEMA to update its aging inventory of flood maps
in such a way that they can accommodate other hazards. A recent
assessment revealed that 67 percent of FEMA's flood maps are more than
10 years old and that the average age of a FEMA flood map is 14.1
years. Many of these maps do not reflect past development and, as a
result, do not show changes in flood hazards. Reliance on these
outdated flood maps in making decisions about new development harms
commercial and residential property owners and the taxpayers who
ultimately pay for flood damages. Accurate and useable flood maps are
the foundation of good local planning and natural-disaster mitigation.
New and updated flood maps will enable lenders, insurance agents, and
many others to make critical decisions on where to build, where and
when insurance is required, and what is an appropriate insurance
premium.
FEMA is seeking $300 million in new discretionary appropriations in
the President's budget for fiscal year 2003 for the multi-hazard flood-
map modernization program. FEMA is also seeking roughly $300 million
per year in its fiscal year 2004 and 2005 budgets. Approximately $1
billion may be spent over the next three fiscal years. With more than
19,000 communities in the National Flood Insurance Program (NFIP), FEMA
faces a daunting challenge in setting priorities for areas to be
mapped, keeping maps current, and creating new maps for participating,
unmapped communities.
Another significant challenge for FEMA is effective collaboration
with States and local entities through the Cooperating Technical
Partners (CTP) Program. The CTP program gives States and local entities
the opportunity to interject a tailored, local focus into the national
map-modernization program. The partnership mechanism also provides for
pooling resources, extending the productivity of public funds, and
sharing successes among partners. FEMA must also continue to seek input
from the Map Modernization Coalition, members of which are substantial
users of flood maps.
National Flood Insurance Program.--The NFIP continues to be the
largest single-line property insurer in the Nation with coverage in
excess of $580 billion. Aside from the fiscal enormity of this program,
FEMA faces an array of formidable management challenges that include:
<bullet> Increasing numbers of repetitively flooded structures that
are subsidized by the NFIP,
<bullet> Continued development and uninsured property in special
flood-hazard areas,
<bullet> Insufficient funds to mitigate repetitive-loss properties,
and
<bullet> Lack of exposure to mitigation opportunities.
Subsidized and low-cost flood insurance, available to residents of
NFIP-participating communities, helps to manage the risk of financial
loss due to flooding. Much more of the risk could be alleviated if
homeowners would take responsibility for mitigation on their own
property. Many property owners, however, fail to do so because (1) of
the availability of subsidized insurance, premiums for which are
typically a fraction of those for full risk-based policies; and (2)
they know that, if flooded, their property will be repaired or rebuilt
without penalty. Continuing to subsidize NFIP premiums fails to
encourage owners of flood-prone real estate to move out of high-risk
areas. This is no small problem, as the NFIP pays claims from floods in
the same high-risk areas again and again, yet the policyholders are not
required to pay risk-based premiums or to mitigate repetitive risks.
This situation undermines the financial stability of the insurance
program. On the other hand, if FEMA charged actuarially sound rates,
owners could cancel their policies, pay nothing to the government, and
rely on Federal disaster assistance after a flood, placing the recovery
burden back on the American taxpayer.
Mitigation is rarely a priority of property owners before a
disaster occurs but owners typically rush to have their property
restored to its pre-disaster condition after an event. One of FEMA's
main objectives in the response and recovery period is to get
assistance to flood victims quickly so they can rebuild and get their
lives back to normal. The opportunity to encourage mitigation at this
time is usually lost. FEMA must improve its outreach programs.
About 7 million structures are estimated to be located in special
flood-hazard areas. Less than 35 percent are covered by flood
insurance. FEMA needs to maintain a sustained campaign to provide
insurance coverage for the millions of uninsured properties still at-
risk.
FEMA believes that most communities participating in the NFIP have
effective floodplain-management programs and that new construction is
in accordance with the minimum requirements of the NFIP. FEMA officials
told us that communities participating in the Community Rating System
are closely monitored and subject to periodic inspections.
The OIG issued reports in 2002 that discussed most of the issues
noted thus far, and FEMA is addressing them or planning to do so.
Solutions to these matters, however, will not prevent FEMA's need to
address the following difficult future challenges:
<bullet> Effective enforcement of compliance with floodplain
management criteria as a condition for maintaining NFIP eligibility,
<bullet> Effective monitoring of enforcement of mandatory flood
insurance purchase requirements for property owners,
<bullet> Effective and reliable performance measurement criteria
and information systems used to assess accomplishment of insurance
goals and objectives, and
<bullet> Appropriate Community Rating System insurance premium
discounts based on conditions in and mitigation actions taken by a
community.
Public Building Insurance.--The Stafford Act requires State and
local governments, as a condition of receiving Federal assistance, to
obtain and maintain insurance coverage on insurable facilities for the
life of the facilities. FEMA reviews insurance coverage during the
project approval process to ensure that applicants satisfy the
requirements.
We noted in a January 2001 OIG report that neither FEMA nor the
States consistently maintain sufficient information to support their
conclusions about applicants' insurance status. At the time the report
was issued, only 39 percent of the project files in our sample
contained acceptable evidence of insurance. In fact, insurance was not
maintained in 34 percent of projects reviewed. We also determined that
insurance reviews are not always timely or complete, and neither FEMA
nor the States regularly monitors public entities that have received
previous assistance to ensure that they are maintaining the required
insurance. Keeping abreast of insurance status presents a significant
challenge for FEMA.
Determining what constitutes the required ``insurance'' is another
key issue confronting FEMA. The amount of assistance a public entity
may receive depends on FEMA's definition of insurance. Several public
entities seeking disaster assistance recently challenged successfully
FEMA's interpretations that various reserve or contingency funds did
not constitute ``insurance.'' As a result, a higher percentage of the
repair, restoration, or replacement costs of their damaged facilities
became eligible for reimbursement by FEMA. FEMA faces significant
hurdles in addressing the issues of (1) the absence in current
regulations of an adequate definition of ``insurance,'' and (2)
incentives for entities to purchase insurance.
Underinsured applicants and regular monitoring of the insurance
status of public entities also present challenges. Some FEMA applicants
purchase less insurance than required or may reduce coverage after an
insurance review. The fact of under-insurance may not be known for long
periods to FEMA and/or States because they do not regularly monitor
public entities to ensure the maintenance of insurance on public
buildings.
MANAGEMENT CHALLENGES
Information Technology Management.--FEMA is heavily dependent on
information technology (IT) to accomplish its mission. The agency
relies on technology for performing tasks ranging from emergency
communications to remote data entry to automated processing of disaster
assistance. Because of IT's importance, the agency must maintain secure
systems that help to ensure the integrity, confidentiality, and
availability of information FEMA needs to do its job. IT can be
expensive and complex, however, so FEMA needs to have in place good
capital planning and investment control procedures for managing IT
projects. The e-gov initiative under the President's Management Agenda
encompasses these challenges. Although the Office of Management and
Budget (OMB) scored FEMA's e-gov status as unsatisfactory, it also
indicated that improvements are underway.
FEMA made progress during fiscal year 2002 toward improving
information security, primarily through establishing the Office of
Cyber Security, designing an information security program plan, and
developing a security certification and accreditation methodology. Much
more work lies ahead. Like many other Federal agencies, FEMA did not
receive a passing grade for computer security from the House
Subcommittee on Government Efficiency, Financial Management and
Intergovernmental Relations. FEMA has struggled to ensure that the
agency's information security plan is practiced throughout the agency
and applied to individual systems. As of the end of fiscal year 2002,
however, no systems had received formal authorization, required by OMB,
to process information, although FEMA's planned security certification
and accreditation methodology will facilitate the approval process.
FEMA is struggling to build security into its system business plans,
also required by OMB. FEMA must begin to assess the system security
controls in place at critical service-provider points.
FEMA management has acknowledged weaknesses in IT capital planning
and investment controls. Improving procedures in these areas were key
initiatives of the reorganization of FEMA's IT Services Directorate in
fiscal year 2002. Improvement efforts have just begun. In a recent
audit report, we recommended that FEMA consistently prepare current
benefit-cost and alternative analyses, identify and maintain a current
inventory of systems, provide more effective oversight of IT projects,
conduct post-implementation system reviews to identify ``lessons
learned,'' and complete an Information Resources Management Strategic
Plan and IT Capital Plan as required by OMB.
FEMA is working to address the weaknesses in IT management,
security, and other areas. OMB's most recent scorecard rates other
challenges that FEMA faces, including integrating itself smoothly into
the new Department of Homeland Security, implementing its e-government
agenda, managing its systems effectively in a rapidly changing IT
environment, and meeting its human capital needs.
Financial Management.--FEMA continues to face significant financial
management challenges but, over the past year, has been working very
hard to overcome them. FEMA developed a detailed remediation plan, for
example, that it uses regularly to monitor progress in addressing
weaknesses we identified in the financial audit of fiscal year 2001.
Although FEMA has not been able to achieve all of its goals, it has
been making progress. FEMA still needs more time and resources and a
continued commitment by management to achieve an appropriate level of
financial management.
Major factors motivating to FEMA's progress were the qualification
of the auditors' opinion on FEMA's fiscal year 2001 financial
statements, and the auditors' identification of six material internal
control weaknesses. Although the qualified opinion was disappointing,
it helped to focus management's attention on long-standing problems. We
had noted in previous audit reports that FEMA's financial reporting
process was unstable and, in fiscal year 2001, after 3 years of
unqualified opinions, the auditors could no longer attest to the
accuracy of all balances presented in the statements. Specifically, the
auditors could not verify (1) the reported obligations incurred and
unobligated balances (because of an unsupported $77 million reduction
to unliquidated obligations), or (2) the reported equipment balance.
The six material internal weaknesses described in our audit report,
on which FEMA's remediation plan is based, related to information
system security, real and personal property, financial system
functionality, financial statement reporting, account reconciliation,
and accounts receivable.
<bullet> Information System Security.--FEMA has been able to
address some of its more critical system security problems but other
weaknesses remain. We again found vulnerabilities in FEMA's internal
network environment during our audit of fiscal year 2002 financial
statements. FEMA's core financial system, the Integrated Financial
Management Information System (IFMIS), still needs a back-up
administrator, a contingency plan, policies and procedures for audit
trail reviews, and a review of user access rights (currently underway).
Although these issues have not been entirely addressed, FEMA has
reported progress.
<bullet> Real and Personal Property Accounting.--FEMA simply does
not have a property management system that supports property accounting
requirements. A system acquisition moratorium due to FEMA's move to the
new Department of Homeland Security has prevented FEMA from acquiring
an acceptable system. As a result, FEMA has had to rely on inefficient,
difficult, manually based processes to account for its property in
fiscal year 2002.
<bullet> Financial System Functionality.--FEMA recently upgraded
IFMIS and expects significant improvements in financial statement
preparation and intragovernmental reconciliations, although the upgrade
remains to be tested as part of the fiscal year 2002 financial
statement audit. FEMA reports that it is working on vendor files and
specific system-interface issues, although the interface issues are
sometimes dependent on external business partners. FEMA also does not
have a cost-accounting system that would allow FEMA managers to more
effectively link performance measures and budget execution.
<bullet> Financial Statement Reporting.--FEMA has made progress in
financial reporting by developing standard operating procedures for the
preparation of financial statements. FEMA historically has not had
routine procedures to guide production of the financial statements that
link to other policies, procedures, and internal controls. Statements
typically were prepared late in the audit process and required several
revisions. We will test during the fiscal year 2002 financial statement
audit whether the process has improved.
<bullet> Account Reconciliation and Accounts Receivable.--FEMA
continued to have problems during the year with timely reconciliation
of many accounts and has obtained assistance from a contractor. FEMA
has also made improvements in accounts receivable.
Grants Management.--FEMA awards billions of dollars in grants each
year to State and local governments and may become responsible for
additional grants under the Department of Homeland Security. FEMA
grants are used for a myriad of State and local preparedness,
mitigation, and response and recovery projects. Although grant funds
are spent at the State or local level, it is ultimately FEMA's
responsibility to ensure that these funds are spent in accordance with
Federal laws and regulations. To do this, FEMA must have an effective
grants management system that fulfills both its program and fiduciary
responsibilities and, particularly important, satisfies Government
Performance and Results Act (GPRA) requirements. Not only must FEMA
adhere to the procedural and compliance aspects of grants management,
it must also focus on what grantees actually accomplish using FEMA
grant funds. To demonstrate its own program efficiency and
effectiveness, FEMA must require grantees to do the same.
FEMA's grants management system, prior to fiscal year 1998, did not
ensure that grantees met programmatic and fiduciary responsibilities.
We documented waste and mismanagement at grantee and subgrantee
agencies throughout the country that resulted in the misuse of millions
of dollars in Federal funds. FEMA acknowledged that major improvements
were needed in its grants management system and began several
initiatives to correct long-standing problems. FEMA created a Grants
Management Office, issued improved policy guidance and standardized
procedures, implemented training and credentialing for grant managers,
and formed grant closeout teams to facilitate the timely closeout of
grants and to provide technical assistance to regional office personnel
in their closeout efforts.
Significant problems still need to be addressed. Our audits of
States' management of FEMA disaster grants found an alarming number of
recurring problems. For example, States often do not (1) monitor and
accurately report on subgrantee performance and financial activities,
(2) make payments or close out projects in a timely manner, (3) file
accurate or timely financial status reports with FEMA, and (4) maintain
adequate documentation to support their share of disaster costs and
other financial transactions. These problems indicate that FEMA needs
to continue to take the initiative to provide technical assistance and
guidance to States to ensure that they have reliable disaster grants
management systems to safeguard FEMA funds.
Improvements in FEMA's grants management system also will require
resolution of issues of staffing and automation. FEMA must persist in
efforts to ensure that implementation of its recent initiatives does
not lose momentum when the next catastrophic disaster strikes and staff
resources are stretched. FEMA recently began to develop an agency-wide
Strategic and Tactical Plan for coordinating the automation of its
grant programs to comply with OMB's E-Grants initiative. FEMA plans to
automate many processes by creating a comprehensive grants management
system. Successful implementation, however, will require resources and
will ultimately depend on top management's continued support of the
system's development.
Property Management.--FEMA does not have a property management
system that supports property accounting requirements. FEMA's primary
property management system is the Logistics Information Management
System (LIMS), that is used to track the location of personal property.
LIMS cannot perform accounting functions and it cannot provide reliable
accounting information, such as property values and acquisition dates.
These deficiencies have required FEMA to conduct labor-intensive
inventories and use manual procedures to support personal property
accounting balances. FEMA also lacks an automated system to support
accounting for real property and deferred maintenance. FEMA recognizes
these problems but the systems moratorium during the transition to the
new Department of Homeland Security has prevented FEMA from acquiring
an acceptable system. Instead, FEMA is articulating requirements and
options for an Enterprise Resource Planning (ERP) system that would
support FEMA's property accounting and management needs.
Human Capital Management.--FEMA's most valuable asset is its human
capital. Maximizing the value of that asset and increasing
organizational performance are significant challenges for FEMA. How
FEMA acquires, develops, and deploys its human capital will determine
how effectively its mission will be accomplished.
Through its strategic planning process, FEMA is developing a 5-
year, comprehensive, enterprise-wide human capital strategy that can be
integrated with FEMA's mission, goals, operational requirements, and
financial resources. The strategy will include workforce planning and
initiatives to address imbalances between staff talents and skills and
agency needs. It will address the anticipated surge of voluntary
retirements over the next 3 to 5 years (FEMA estimates that 70 percent
of its workforce is from 40- to 59-years old) and the attrition factors
that normally affect the stability of the workforce. FEMA also analyzed
its workforce for OMB. The results will support decisions about future
management reform, budget planning, and performance goals. According to
the GAO, FEMA's fiscal year 2003 performance plan does not contain
performance measures that quantify progress toward achieving human
capital-related goals.
The President has determined that nearly half of all Federal
employees perform tasks that are readily available in the commercial
marketplace, and that those tasks should be subject to competition.
Public-private competition will generate savings and improve
performance governmentwide. In fiscal year 2003, agencies will conduct
public-private or direct conversion competitions involving 10 percent
of the FTE listed on their Federal Activities Inventory Reform Act
inventories above the number needed to meet fiscal year 2002
competition goals. The sweeping personnel changes accompanying FEMA's
entry into the Department of Homeland Security will increase the
challenges associated with this increase and with the overall
management of FEMA's human capital.
______
Attachment 3.--Department of Homeland Security, Office of Inspector
General, Washington, DC
February 14, 2003
Memorandum for: The Secretary, The Deputy Secretary (Signed)
From: Clark Kent Ervin, Acting Inspector General
Subject: Controls Over Procurements and Grants
Two areas that DHS needs to get control of early to minimize waste
and abuse are the procurement and grant (Federal assistance) management
functions. Getting the right leadership and systems in place for both
functions should be made a high priority. To assist the department in
this regard, and per your request, I asked my audit staff to identify
some specific controls and other issues that need to be addressed right
away, as follows.
PROCUREMENT MANAGEMENT
DHS will be integrating the procurement functions of many
constituent programs and missions, some lacking important management
controls. For example, as reported by GAO, Customs has not begun to
establish process controls for determining whether acquired software
products and services satisfy contract requirements before acceptance,
nor to establish related controls for effective and efficient transfer
of acquired software products to the support organization responsible
for software maintenance. At TSA, the Transportation OIG found that
procurements were made in an environment where there was no pre-
existing infrastructure for overseeing contracts. TSA had to rely
extensively on contractors to support its mission, leading to
tremendous growth in contract costs. A recent Transportation OIG review
of one TSA contractor found that, out of $18 million in expenses,
between $6 million and $9 million appeared to be attributed to wasteful
and abusive spending practices.
Also, some agencies have major procurement programs under way that
need to be closely managed. For example, Customs' Automated Commercial
Environment (ACE) project will cost $5 billion, and Coast Guard's
Deepwater Capability Replacement Project will cost $17 billion and take
two to three decades to complete. Both projects will continue to
receive OIG and, most likely, GAO attention. GAO identified a
performance and accountability challenge of enhancing Coast Guard
acquisition management to maximize returns from investments of public
funds in large, complex, high-cost procurements. Further, some
contracts, regardless of their earlier merits, may no longer be
necessary in accomplishing DHS' mission.
Early attention to strong systems and controls for acquisition and
related business processes will be critical both to ensuring success
and maintaining integrity and accountability. OIG would suggest the
following:
<bullet> Review all contracts transferring to DHS to ensure they
are relevant to DHS' mission and, particularly for systems development
contracts, will not be affected by or conflict with DHS systems
integration efforts. For example, TSA issued a 7-year, $1 billion task
order to Unisys Corporation for enterprise operations center deployment
and field/headquarters infrastructure deployment. Needless to say,
close attention must be paid to a contract of this size and scope.
<bullet> Ensure that contracting officers and contracting officers'
representatives are properly warranted, trained, and supervised, and
that they maintain proper documentation in the contract files.
<bullet> Establish a robust and effective contract oversight
function. Construction contracts and contracts for local guard services
have been shown to be subject to waste and abuse if not closely
monitored.
<bullet> Establish effective systems and controls for managing
purchase and travel cards, including issuance of appropriate written
guidance for card use, effective monitoring of card use and appropriate
handling of card abuse, and elimination of excessive numbers of card
holders.
GRANTS (FEDERAL ASSISTANCE) MANAGEMENT
DHS will be inheriting major grant programs from FEMA and Justice.
Both agencies' programs will be problematic.
FEMA plans to award about $7.9 billion in grants this fiscal year.
FEMA OIG reports on audits of grantees demonstrate that FEMA has not
adequately accounted for or monitored its grant activities. These
reports have identified shortcomings in the pre-award process, cash
management, monitoring, and the grant closeout process. For example,
FEMA does not have a comprehensive grants management tracking system,
many grantees do not make required cost-share payments and draw down
million of dollars in Federal funds in excess of immediate needs, and
some grantees were not spending mitigation funds according to
established time periods. Grant closeouts are also problematic; for
example, FEMA still has a Disaster Field Office for the 1994 Northridge
earthquake.
The DOJ Office of Justice Programs will be transferring the Office
of Domestic Preparedness (ODP) to DHS. ODP is responsible for awarding
grants to state and local governments to prepare for and respond to
incidents of domestic terrorism involving chemical and biological
agents, radiological and explosive devices, and other weapons of mass
destruction. Between fiscal year 1998 through fiscal year 2001, ODP was
appropriated $243 million to provide these grants. As of March 2002,
approximately $141 million still had not been awarded.
In fiscal year 2002, ODP's appropriation was $651.5 million, but
its fiscal year 2003 budget is $3.5 billion, the increase attributable
to a new First Responder program. DOJ OIG has reported weak monitoring
of grants by the Office of Justice Programs, and the size of the new
program will severely test ODP's grant management systems.
OIG would suggest early attention to the following key controls:
<bullet> A comprehensive grants management system that complies
with Grant Financial System Requirements issued by the Joint Financial
Management Improvement Program (JFMIP). The JFMIP document (JFMIP-SR-
00-3) provides functional requirements for 11 functions, namely: (1)
commitments, (2) de-commitments, (3) obligations, (4) payments, (5)
cost accruals, (6) financial reports, (7) interest collections, (8)
grant closeout, (9) records retention, (10) general system
requirements, and (11) information technology in the grants process. In
addition, DHS must ensure compliance with the Federal Financial
Assistance Management Improvement Act of 1999, which requires, among
other things, use of electronic application and reporting by grantees
via the internet (E-Grants).
<bullet> Adequate monitoring of and assistance to states and other
grantees in all phases of the grants management life cycle (i.e., from
award to closeout)
<bullet> Assurance that grant closeouts (and required audits) are
within established time periods, and extensions are adequately
justified, approved, and documented.
<bullet> Adequate training and supervision of the grants management
workforce.
In addition to conducting audits and evaluations of the procurement
and grant functions, OIG would be happy to advise those officials
establishing or enhancing controls in these areas. If you have any
questions, or would like to discuss this matter further, please call me
at 6-8310, or ask your staff to call J. Richard (Dick) Berman, Acting
Assistant Inspector General for Audits, at 6-2125.
______
Responses by Richard L. Skinner to Additional Questions
from Senator Jeffords
Question 1. EPA's Inspector General initiated an evaluation of the
Agency's response to September 11, reviewing how EPA responded and how
it could better respond in the future. The report described lessons
that may prove valuable should such a tragedy happen again. Has the DHS
Inspector General conducted a similar review and if not, will you
consider doing so?
Response. The Department of Homeland Security (DHS) Office of
Inspector General (OIG) has not conducted a similar review, but we will
be looking at the coordination efforts of the Federal Emergency
Management Agency (FEMA) and the Environmental Protection Agency (EPA)
as part of our assessment of DHS' ``National Response Plan,'' which was
signed in draft by Secretary Ridge on October 10, 2003.
The FEMA OIG,\1\ however, also conducted a review of FEMA and EPA's
coordination and delivery of assistance in response to September
11th.\2\ The FEMA OIG found that neither FEMA nor EPA traditionally has
been involved in testing and cleaning private residences. Neither
agency is specifically authorized to provide such services. Although
FEMA has the responsibility to coordinate recovery from Presidentially
declared disasters, FEMA must depend on the particular expertise of EPA
in circumstances involving possible air contaminants or environmental
hazards. EPA must confirm that such hazards constitute a public health
and safety threat before FEMA can provide funding for emergency
response. The OIG concluded that FEMA should be more proactive in
requesting EPA to conduct necessary testing or studies to determine
whether a public health or safety threat exists in future, similar
disasters so that cleaning efforts can begin much earlier in the
recovery phase. FEMA also should address the roles of State and local
agencies in such circumstances, as consultation with these agencies
would provide useful information in review or evaluation.
---------------------------------------------------------------------------
\1\ The Federal Emergency Management Agency Office of Inspector
General transitioned into the Department of Homeland Security Office of
Inspector General on March 1, 2003.
\2\ FEMA's Delivery of Individual Assistance Programs: New York--
September 11, 2001, December 2002.
Question 2. In your testimony, you describe the challenges that
arise because the grant making functions within DHS are distributed
throughout several directorates. Can you articulate some of the
challenges that have arisen due to this organizational structure?
Response. Although numerous grant programs are now consolidated
within DHS, their management is divided among various components within
the DHS. Preparedness grants for terrorism are in the Border and
Transportation Security directorate, while other preparedness efforts
are in the Emergency Preparedness and Response directorate. This
bifurcation will create additional challenges related to inter-
departmental coordination, performance accountability, and fiscal
accountability. For example, there are several Federal grants programs
that fund first responder training, activities, and equipment to
prepare states and local communities better for responding to terrorism
incidents, natural disasters, and other emergencies that are
administered by DHS' State Homeland Security Grant program or the
Assistance to Firefighters Grant program. While these programs reflect
different objectives, both programs allow funding for certain items.
There is a potential overlap of 113 distinct items in the areas of
personal protective equipment, interoperable communications equipment,
detection equipment, and decontamination equipment, which can result in
uncoordinated and overlapping grant decisions.
Close coordination between all programs is essential to ensure
that: (1) duplication does not occur; (2) maximum effectiveness of
available funding is realized; and (3) minimum confusion exists at
State and local levels of government. Furthermore, program managers
have yet to develop meaningful performance measures necessary to
determine whether the grant programs being absorbed by DHS have
actually enhanced State and local capabilities to respond to terrorist
attacks and natural disasters.
The DHS OIG addressed these concerns in the early days of the
Department's creation and it is our understanding that this problem is
now being addressed legislatively. Further, Secretary Ridge recently
announced plans to centralize these programs within a single office of
the Department.
__________
Statement of Dale Shipley, Executive Director, Ohio Emergency
Management Agency, on behalf of the National Emergency Management
Association
INTRODUCTION
Thank you Chairman Voinovich, Ranking Member Carper, and
distinguished members of the Subcommittee for allowing me the
opportunity to provide you with testimony on the public assistance
program and emergency preparedness issues. My name is Dale Shipley and
I am representing the National Emergency Management Association (NEMA)
as the Vice-Chairman of the Legislative Committee and as a Past-
President of the Association. My daily job is the Executive Director of
the Ohio Emergency Management Agency. In my statement, I am
representing the state emergency management directors in the 50 states,
the District of Columbia, and the U.S. territories who are its core
members. NEMA's members are responsible to their Governors for
emergency preparedness, homeland security, mitigation, response, and
recovery activities.
This is a historic time as the Congress and the Administration have
reorganized to address the Department of Homeland Security, yet it is
critical that we remember that all-hazards disaster preparedness is the
basis that we have used to build homeland security preparedness. At no
time was this made more apparent than in preparation for Hurricane
Isabel last week and as the Mid-Atlantic States begin their recovery
from damages caused by this ravaging storm. While focus remains high on
homeland security, we as a Nation cannot forget the key programs
related to natural disasters and the carefully crafted authority of the
Stafford Act that governs our mitigation, preparedness, response, and
recovery activities. Today, I'd like to tell you about how the current
program is working and offer some suggestions that you might consider
to make our disaster response and recovery program stronger.
FEMA IN THE DEPARTMENT OF HOMELAND SECURITY
NEMA supported efforts by Congress and the Administration to
include the Federal Emergency Management Agency (FEMA) in its entirety
in the new Department of Homeland Security. FEMA continues to maintain
an all-hazards approach to disasters, which both NEMA and Secretary
Ridge vigorously support. State emergency management agencies continue
to interface with FEMA on a regular basis, as was the case before the
Department was created. In Ohio, we have had two Presidential disaster
declarations since March 2003. We have seen no changes in the speed,
availability, or flexibility of assistance since FEMA has become a part
of the Department of Homeland Security then we experienced with two
Presidential disaster declarations before March 2003.
Certainly the aftermath of Hurricane Isabel has shown that
regardless of the new focus on terrorism, we must continue all-hazards
preparedness activities and all-hazards programs like the Emergency
Management Performance Grant Program (EMPG). EMPG is the program that
enables the emergency management infrastructure to work in state and
local governments through its flexibility to address unique needs in
each state. These funds and the requirements associated with them
maintain the national system of preparedness and coordination of
emergency response and recovery in the United States.
NEMA understands that in any new Department there is a learning
curve and a meshing of cultures of the various agencies. We hope to
continue an open dialog and good working relationships with key offices
such as FEMA in the Department, as we develop new relationships with
other agencies in the Department as they address new ventures.
PUBLIC ASSISTANCE
After a disaster, the Stafford Act provides for assistance to state
and local governments and qualifies certain private non-profit
facilities for disaster relief. In particular, public assistance helps
to address debris removal, emergency protective measures, road systems
and bridges, water control facilities, public buildings and their
contents, public utilities, and parks and recreational facilities.
Public assistance is particularly important for disaster relief because
communities need to have vital functions restored in order to get back
on their feet.
Ohio's current public assistance program addresses disaster impacts
on government-related functions. After a disaster, the Ohio public
assistance staff coordinates with FEMA to assist applicants with
identifying eligible projects. During the last Federal fiscal year we
had 4 Presidentially declared disasters in Ohio with $49 million of
public assistance and 997 applicants.
Ohio has two full-time employees who manage the public assistance
program and act as an interface for governmental entities, all
applicants, and the Federal Government. The staff is charged with
keeping all records, handling all reporting requirements, closing-out
all the projects and disasters, and addressing the 25 percent cost-
shares. The Ohio staff also trains local officials on debris removal,
documentation, and damage assessment.
In addition, our staff manages one of the few state public
assistance programs financed by state funds. Our public assistance
officers handle damage under gubernatorial disaster declarations that
are not large enough for Federal declarations. In the last Federal
fiscal year, we have had four of these gubernatorial declarations
amounting to $4.8 million of assistance and 83 applications. Routinely,
public assistance reconstruction projects take up to 2 years to
complete, so our staff in Ohio is very busy handling multiple projects
and multiple disasters.
This spring, many state and local government had problems getting
public assistance beyond categories A and B, which includes debris
removal and emergency protection measures, due to the lack of funds in
the disaster relief fund. In fact, a number of states are still in the
process of receiving funds toward public assistance projects going back
to the President's Day winter storms in some states. Absent Federal
supplemental assistance, which is provided by law, state and local
governments have to come up with other sources of funding to begin and
complete these projects. In the tight fiscal environment, the lack of
funding is particularly troubling, as poorer communities cannot afford
to front the costs. State and local governments have had to front funds
for projects while waiting until August for additional Federal
appropriations for the disaster relief fund.
Appropriations for fiscal year 2003 only included $800 million for
the disaster relief fund, while a typical appropriation in previous
years has been around $1.8 billion to $2.2 billion, plus supplementals
to address disasters. While we appreciate recent efforts of Congress to
get disaster relief funds to state and local governments in August,
2003, we do not support this piecemeal approach to the disaster
appropriations process. Assistance for reconstruction projects and for
disasters victims must not be put on hold, since any deferment limits
the ability for a community and of an individual or family to recover
from a disaster. Delays in assistance mean delays in recovery, and
overall those delays hamper our national economy.
I want to share with you some couple of examples that illustrate
how important getting public assistance funding to communities.
<bullet> Southern Ohio Monroe County received a Presidential
disaster declaration (FEMA disaster declaration 1453) for snow and ice
storms in February 2003. The County had multiple needs for road
repairs. The applicant was approved for $498,729, but Federal funds
were not available to draw down for use until September 8, 2003. This
same applicant was impacted by storms and flooding included in FEMA
disaster declaration 1484 in August 2003. We have yet to determine if
Federal funds are available for this recent declaration. Monroe County
has a population of about 15,000, which is not a very large tax base to
be able to front half a million dollars; and
<bullet> The city of Portsmouth in Scioto County.-- As a result of
an ice storm in which the city lost thousands of trees, the city was
approved for $319,250 for debris removal. FEMA funds were not available
for draw down until the last week of August 2003. The state had to help
the city get an extension, since the debris removal category funds
expire after 6 months.
The advent of terrorism-related attacks that involve the potential
use of chemical, biological, radiological and explosives bring a unique
challenge to programs that were designed to address natural and man-
made disasters. Speaking as the Ohio Director, it may be appropriate to
enlarge the scope of eligibility under terrorism and catastrophic
disasters. Obviously, there is currently room for flexibility and
adjustment in the Stafford Act and that flexibility was exercised by
Federal officials following September 11, 2001.
FEMA is looking closely at the public assistance program and is
exploring ways to allow states to manage some aspects of the program.
NEMA is participating on a concept development working group to
identify the needs of the public assistance program in the current
environment and when several disasters occur simultaneously within a
short-time period such as garden-variety disasters and catastrophic
disasters. One scenario could be allowing states the option of state
management of the public assistance program. My colleagues in Arizona
have managed the Federal public assistance in the last three disasters.
One of the things they find difficult is the lack of funding to
maintain continuity and institutional memory for disasters, since many
of these positions are temporary. Conversely, if a state is unable to
manage the program it would need to have the option of utilizing FEMA's
resources to manage the program. Ideally, Federal assistance would
contribute toward a Public Assistance Officer (PAO) in each state who
could provide training and awareness to applicants. Having a dedicated
PAO could lead to greater consistency and faster recovery which could
cause a reduction in overall disaster costs.
OTHER ISSUES
In addition to public assistance, there are other key pre- and
post-disaster programs for which this committee has oversight that I
wish to bring to your attention. We ask for your assistance to address
these issues.
1. Individuals and Households Repair Cap Fix
When the Disaster Mitigation Act of 2000 (DMA2K) was signed into
law, a provision was inadvertently changed in the bill that lowered the
cap on assistance for individuals and households to repair damaged
residences. This assistance includes from the cap includes repair of
owner-occupied private residences, to a safe and sanitary condition.
Repair assistance is used to allow disaster victims to continue living
in damaged residences after a disaster and thus minimizing the overall
disaster costs. Originally, the cap was set at more than $5,000, but
could be increased to as much as $15,000. With DMA2K's enactment, the
cap was lowered to $5,000. We call on this committee to address this
error in correction legislation, so that disaster victims are not
limited to $5,000 when no other assistance is available. We suggest
calling this assistance ``initial'' and support FEMA's suggested
language to fix the problem. This spring, many state emergency
management directors found this provision hampering when responding to
tornadoes and floods. Typically the persons who have no other means of
assistance are those most highly impacted by this provision. We expect
the cap to become an issue in the aftermath of Hurricane Isabel as
well.
2. Predisaster Mitigation
NEMA was instrumental in working with this committee during the
development of the legislation that initially authorized a pre-disaster
mitigation program through the Disaster Mitigation Act of 2000 (DMA2K)
(P.L. 106-390). Pre-disaster mitigation is essential, but we need to
ensure that pre-disaster mitigation corresponds with DMA2K that was
passed overwhelmingly by the House and Senate and signed into law.
Title I of the DMA2K expires on December 31, 2003. While the House
and Senate have appropriated funds for the program in their own
versions of the Department of Homeland Security appropriations bills at
$180 million and $150 million respectively, we need program
reauthorization to prevent the program from being forgotten and not
funded in future years. NEMA strongly believes that this program,
coupled with the Hazard Mitigation Grant Program (HMGP) is effective at
reducing the costs of disasters overall by saving lives and protecting
property. Each program has a specific function that is relative to the
environment that exists before a disaster and after a disaster. For
example, it is easier to convince the homeowner of a waterfront
property of the need to relocate from the floodplain after a disaster
occurs and the home is filled with mud and water than it would be on a
serene sunny day.
Fiscal year 2003, was the first year that FEMA received funding for
the national competitive pre-disaster mitigation program. The funding
level was $150 million and currently state and local governments are
working cooperatively to complete project applications and to submit
them to FEMA. As NEMA understand the process, initial reviews will
begin in early October and the peer reviews will commence in late
October. The pre-disaster mitigation program is in its infancy, as the
first round of significant funding has only just been made available
and not yet awarded. It would be a shame to let the program die at this
time without having been able to make any demonstrable achievements in
mitigation. NEMA believes that the value of the program will be
evidenced after the projects are approved and implemented. We therefore
are asking this committee to reauthorize the program for 3 years, at
which time FEMA should be asked to provide evidence to Congress of the
achievements made as a result of the pre-disaster mitigation program.
Early on, NEMA believed that the pre-disaster mitigation program
should not be a competitive program, however, the Administration's
budget proposals to make the program competitive were affirmed by
Congress in fiscal year 2003. FEMA began implementing the requirements
of DMA2K 2 years ago with the requirement of state and local multi-
hazard mitigation plans (Section 322 plans). With impending deadlines
for these plans on November 1, 2003 and November 1, 2004 many state and
local governments have submitted plans for consideration or are
actively involved in developing these mitigation plans, despite the
fact that no significant source of Federal funding was provided to
state and local governments to accomplish this mandate. The 322 plans
are essential to identifying key areas where mitigation resources are
needed in each state and will work hand-in-hand with the pre-disaster
mitigation program and the HMGP program. We were a bit surprised by
some of the FEMA guidance on the pre-disaster mitigation program. In
particular, NEMA is worried that the heavy focus of the program on
repetitive loss priorities for floods will deflect from the program's
intended all-hazards approach.
We are also concerned that management costs will not be available
to state and local governments unless a project is approved. This will
again place smaller and less affluent communities at a disadvantage,
since they are not able to provide the costs associated with hiring a
consultant to prepare the applications and an engineer necessary for
the environmental and historical reviews, as well as the benefit-costs
analysis. We suggest that future year programs allow for administrative
costs out of the total program funds at the beginning of the notice of
availability of funds. We also suggest that cost-share requirements may
place some communities and states at a disadvantage and discourage them
from applying for the pre-disaster mitigation program. Waivers in cost-
share requirements would be a way to address this problem in a tough
financial environment for state and local governments.
Because NEMA firmly believes in pre-disaster and post-disaster
mitigation, we have re-energized the Stafford Act Coalition. A group of
13 associations representing a variety of interests, including the
American Red Cross, the National Rural Electric Cooperative, the
National League of Cities and the National Association of Counties have
supported both pre-disaster mitigation reauthorization and restoring
the HMGP formula to 15 percent. We believe that such wide and varied
support, with no opposition known, shows the need to reauthorize the
pre-disaster mitigation program and to keep the HMGP program in place
at the 15 percent level.
3. Hazard Mitigation Grant Program
The Administration's budget proposal to eliminate the post-disaster
Hazard Mitigation Grant Program (HMGP) in favor of funding a
competitive pre-disaster mitigation program is wrong. While Federal
costs toward disasters remain a concern, significant commitments must
be made toward both pre-disaster and a fully funded post-disaster
mitigation in order to lower overall disaster costs in the long run.
Last year, Congress changed the formula for post-disaster
mitigation grants from 15 percent to 7.5 percent. This change limits
the availability of funds for post-disaster mitigation and prevents the
lessons learned from disasters from being immediately incorporated into
mitigation projects to prevent losses of life and destruction of
property. State governments no longer can offer buy-outs or mitigation
projects to many disaster victims as a result. The months immediately
following disasters provide unique opportunities to efficiently
incorporate risk reduction measures in a very cost-effective manner, in
many cases lowering the overall cost of the project by leveraging other
funding sources including insurance settlements. We appreciate efforts
by the Senate and the House to keep the 7.5 percent formula in place in
the House and Senate versions of the Department of Homeland Security
appropriations. NEMA supports keeping the program in place. As
authorizers, we ask that you maintain the program and restore the
formula to 15 percent.
The HMGP has proven to be a highly effective tool in steering
communities toward risk reduction measures, in many cases breaking
repetitive loss cycles that have cost other Federal disaster relief
programs multiple times. Cost-benefit analysis is currently a
requirement for pre-disaster mitigation programs. In a purely
competitive grant program, lower income communities, often those most
at risk to natural disaster, will not effectively compete with more
prosperous cities. Also, disasters graphically and vividly expose the
need for and value of mitigation projects. We must not lose these
opportunities to initiate projects to enhance our communities and
reduce future disaster costs. Damage caused by disasters would go
largely unrepaired thereby further impacting the economic and social
recovery of particular areas. There are not enough mitigation dollars
available to address all of the vulnerabilities that exist in this
country. During Hurricane Isabel, 220 homes in the Bell Haven, North
Carolina (Beaufort County) that were elevated with HMGP funds after
Hurricane Fran in 1996 did not flood, despite significant flooding on
the Pungo River. This example shows that HMGP works.
Making mitigation funds available only in a pre-disaster
competitive environment will set this country's mitigation efforts back
by removing the prime motivation factor, the disaster itself. The HMGP
change is perhaps one of the most burning issues for emergency managers
across the country. At this point we have not been able to quantify
which projects were laid aside as a result of the change since HMGP
funds for this year were on hold until additional funds were made
available through a supplemental to the disaster relief fund. However,
the program has literally been cut in half and that significantly
reduces mitigation activities after a disaster, when the opportunity is
most ripe for participation. Just imagine the opportunities that will
be lost in the Mid-Atlantic states in the aftermath of the hurricane
because of the formula change.
NEMA calls on Congress to maximize the benefits of both HMGP and
pre-disaster mitigation. NEMA pre-disaster mitigation, but maintains
that HMGP should be retained as a separate and fully funded post-
disaster program. We need both.
CONCLUSION
As we work to implement a new Federal Department of Homeland
Security, we must not forget about the all-hazards approach to
emergency management and the role it plays in preventing our Nation
from losing focus on the daily perils that we face in addition to new
threats.
Whether it is a flood in Ohio, a hurricane in North Carolina, or
tornadoes in Kansas, states need a Federal commitment to recognize that
each state and local government has unique disaster mitigation,
preparedness, response, and recovery needs that require flexible,
predictable, and adequate funding assistance that is coordinated with
the state emergency management plan. I thank you for the opportunity to
testify on behalf of NEMA and welcome any questions that you might
have. Only through a partnership of Federal, state, and local
governments, can we prevent the loss of lives and property as a result
of all disasters regardless of cause. Thank you for your consideration
and partnership.
______
Ohio Infrastructure Impacts for Federal FY 2003
----------------------------------------------------------------------------------------------------------------
No. of Non-Federal
Event applicants Total cost Share (25%)
----------------------------------------------------------------------------------------------------------------
Public Assistant Program
DR-1453, Severe winter storm, flooding.......................... 744 $36,552,402.09 $9,138,100.52
DR-1484, Flooding and tornado................................... 253 $12,625,000.00 $3,156,250.00
-----------------------------------------------
Totals........................................................ 997 $49,177,402.09 $12,294,350.52
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
No. of Non-Federal
Event applicants Total IHP cost Share (25%)
----------------------------------------------------------------------------------------------------------------
Individuals and Households Program
DR-1444, Severe Storms and tornadoes............................ 726 $564,627.00 $69,217.00
DR-1453, Severe winter storm, flooding.......................... 3,026 2,596,111.00 246,908.00
DR-1478, Severe storms and flooding............................. 2,049 1,918,966.00 123,706.00
DR-1484, Severe storms and flooding............................. 39,684 38,177,945.00 3,588,351.00
-----------------------------------------------
Totals........................................................ 45,485 $43,257,649.00 $4,028,182.00
----------------------------------------------------------------------------------------------------------------
Ohio Infrastructure Impacts for Federal FY 2003--Continued
----------------------------------------------------------------------------------------------------------------
No. of Non-Federal
Event applicants Total cost Share (75%)
----------------------------------------------------------------------------------------------------------------
State Disaster Relief Program
November 2002, Tornadoes........................................ 22 1,258,533 $943,899.75
May 2003 flooding............................................... 6 1,119,161 $839,370.56
June 2003 flooding.............................................. 8 1,131,117 848,337.75
July 4, 2003 flooding........................................... 47 2,975,369 2,231,526.79
-----------------------------------------------
Totals........................................................ 83 $6,484,180 $4,863,134.85
----------------------------------------------------------------------------------------------------------------
[GRAPHIC] [TIFF OMITTED] T2386.199
[GRAPHIC] [TIFF OMITTED] T2386.200
[GRAPHIC] [TIFF OMITTED] T2386.201
[GRAPHIC] [TIFF OMITTED] T2386.202
[GRAPHIC] [TIFF OMITTED] T2386.203
[GRAPHIC] [TIFF OMITTED] T2386.204
[GRAPHIC] [TIFF OMITTED] T2386.205
[GRAPHIC] [TIFF OMITTED] T2386.206
[GRAPHIC] [TIFF OMITTED] T2386.207
[GRAPHIC] [TIFF OMITTED] T2386.208
[GRAPHIC] [TIFF OMITTED] T2386.209
[GRAPHIC] [TIFF OMITTED] T2386.210
[GRAPHIC] [TIFF OMITTED] T2386.211
[GRAPHIC] [TIFF OMITTED] T2386.212
[GRAPHIC] [TIFF OMITTED] T2386.213
[GRAPHIC] [TIFF OMITTED] T2386.214
[GRAPHIC] [TIFF OMITTED] T2386.215
[GRAPHIC] [TIFF OMITTED] T2386.216
[GRAPHIC] [TIFF OMITTED] T2386.217
[GRAPHIC] [TIFF OMITTED] T2386.218
[GRAPHIC] [TIFF OMITTED] T2386.219
[GRAPHIC] [TIFF OMITTED] T2386.220
[GRAPHIC] [TIFF OMITTED] T2386.221
[GRAPHIC] [TIFF OMITTED] T2386.222
[GRAPHIC] [TIFF OMITTED] T2386.223
[GRAPHIC] [TIFF OMITTED] T2386.224
[GRAPHIC] [TIFF OMITTED] T2386.225
[GRAPHIC] [TIFF OMITTED] T2386.226
[GRAPHIC] [TIFF OMITTED] T2386.227
[GRAPHIC] [TIFF OMITTED] T2386.228
[GRAPHIC] [TIFF OMITTED] T2386.229
[GRAPHIC] [TIFF OMITTED] T2386.230
[GRAPHIC] [TIFF OMITTED] T2386.231
National Emergency Management Association (NEMA), Issues and
Recommendations for Congress to Consider for Amending the Stafford Act
to Better Address Catastrophic Disasters
At the request of United States Senator, George Voinovich (OH), the
National Emergency Management Association (NEMA) has identified a
series of issues and recommendations for Congress to consider for
amending the Stafford Act to better address catastrophic disasters,
including acts of terrorism. NEMA established a small working group of
those entities having experienced terrorist attacks: New York Oklahoma,
Virginia, and the city of New York The State of Ohio was also included
in the work group as the home State of Senator Voinovich, and as a
State that has experienced large disasters in recent years.
GENERAL STATEMENT
The focus of any amendments to the Stafford Act should be on
catastrophic disasters regardless of cause. The impacts of a major
hurricane, earthquake or epidemic could result in as catastrophic a
disaster as a terrorist act.
NEMA believes there should be financial commitments for State and
local governments in disaster response and recovery. We are not
advocates for increased assistance across the board for those disasters
typically addressed through the Stafford Act. We do feel strongly
however, that for catastrophic disasters requiring actions above and
beyond typical disasters there should be triggers or thresholds
established for increased assistance to State and local governments.
There must also be statutory authority for the Federal Government to
provide increased assistance without delay.
issues identified after september 11, 2001 and likely to occur again
Disaster response and recovery needs resulting from the terrorist
attacks on September 11, 2001 in New York City and at the Pentagon
revealed limitations in the type and amount of assistance that could be
provided to State and local governments through the Stafford Act. The
law and the disaster assistance programs it authorizes had never before
been applied in a terrorist incident of this magnitude. Repeatedly,
policy decisions on reimbursement had to be determined by FEMA or by
Congress, outside the parameters of the Stafford Act. FEMA broadly
interpreted its provisions within the Stafford Act, and Congress
authorized FEMA to compensate the cities and states for costs that it
could not otherwise have funded within the current Stafford Act.
The following issues were identified from the September 11
terrorist attacks and will likely occur again in another terrorist
attack, or other catastrophic disaster:
<bullet> Increased Costs for Security. The Stafford Act lacks
provisions for State and local governments to receive reimbursement for
certain costs--including extensive additional security across a
geographic area which may be significantly broader than the physically
impacted disaster site, and security required for a period of time
longer due to ongoing terrorist threat. We know that following a
terrorist act, there will be a need for increased security at critical
infrastructure sites, historical sites, government facilities, along
transportation routes, bridges and tunnels, etc. all of which will
result in extraordinary costs to State and local governments.
Recommendation: The Stafford, Act should include increased security
as an eligible cost reimbursement for catastrophic disasters.
<bullet> Insurance. The availability of liability insurance
coverage for cities and contractors as it relates to debris removal is
absolutely vital. The appropriate level of coverage for a terrorist
incident is not available on the private market and what is available
covers only a fraction of the cost to local government. This issue
still hasn't been resolved more than 2 years after September 11, 2001.
Recommendation: Congress should provide Federal indemnification for
State and local governments (and their agents) for prudent actions
(such as debris removal) taken in response to a catastrophic or
terrorist disaster. This is especially important in disasters, such as
WTC, where there are significant environmental concerns.
<bullet> Debris Removal. Currently, debris removal is limited to
the impacted area. In New York City, debris including human remains and
dust from the collapse of the towers was discovered outside the
immediate vicinity of Ground Zero.
Recommendation: The removal of any debris such as this, as well as
debris that is potentially hazardous to the public should be reimbursed
as long as it is a result of the catastrophic event.
<bullet> Mass Evacuation. The Stafford Act does not provide for
post reimbursement for states and localities outside the declared
disaster area. The need for mass evacuations into other cities,
counties and states will continue to be necessary in catastrophic
events.
Recommendation: Entities outside the declared disaster area that
mobilize to receive and care for evacuees should be eligible for
reimbursement.
<bullet> Lost Government Revenue. New York City estimated losses in
tax revenue of almost $3B in 2002 and 2003 directly attributable to the
attack and independent of the economic slowdown. These losses were due
to decreases in city personal income taxes, business taxes and reduced
sales tax. In addition, the destruction of property, the virtual
closing of Lower Manhattan and the significant effect on travel and
tourism had a significant impact on tax revenues. The Stafford Act does
not allow FEMA to provide reimbursement for lost tax revenue to local
governments. The Community Disaster Loan Program is capped at only
$5M--a fraction of the costs from a catastrophic disaster. At a
minimum, this arbitrary cap should be eliminated in catastrophic
events.
Recommendation: Congress should take into consideration the impact
on local budgets and establish triggers or thresholds at which Federal
disaster assistance is provided for catastrophic events. One approach
may be to trigger assistance when catastrophic disaster costs exceed
the local budget by more than 1 percent. Non-Federal cost share
requirements should be considered as well and perhaps a sliding scale
created based on the size of the event and the overall impact on State
and local budgets.
<bullet> Special designations for certain for-profit organizations
within the Stafford Act definition of ``critical facilities''. For-
profit entities are not eligible for Stafford Act assistance and
certain non-profit facilities are eligible for grants for the
reconstruction and repair of damaged facilities. The September 11
attacks disrupted services provided by utilities, transportation,
communication, educational and medical care facilities. Congress later
appropriated funds to help meet these costs.
Recommendation: The Stafford Act should allow, in catastrophic
events, the flexibility for special designations to be given to certain
for-profit entities that provide government type services for
assistance deemed essential.
<bullet> Individuals and Households Repair Assistance Program. When
The Disaster Mitigation Act of 2000 was signed into law, a provision
was inadvertently changed in the bill that lowered the cap on
assistance for individuals and households to repair damaged residences.
The assistance under the cap severely limits assistance for repair of
owner-occupied private residences, utilities, and residential
infrastructure damaged by a major disaster to a safe or sanitary living
or functioning condition. Repair assistance is used to allow disaster
victims to continue living in damaged residences after a disaster and
thus minimizing the overall disaster costs, especially rental and
transportation assistance, and availability of rental property.
Previously, the cap was set at more than, $15,000, but with DMA2K the
cap was lowered to $5,000 without any avenues for any additional
assistance should other assistance programs fail. Typically the persons
who have no other means of assistance are those most highly impacted by
this provision.
Recommendation: Congress should expeditiously address this error in
corrective legislation, so that disaster victims are not limited to
$5,000 when no other assistance is available. We suggest calling this
assistance ``initial'' and support FEMA's suggested language to
increase the cap as appropriate while remaining within the overall
$25,000 limit for assistance to individuals.
<bullet> The Mortgage and Rental Assistance Program was eliminated
in the Disaster Mitigation Act of 2000.
Recommendation: Re-instate the Mortgage and Rental Assistance
Program under the Stafford Act.
<bullet> Long-term Economic and Societal Recovery. The magnitude of
destruction caused by catastrophic disasters, the losses to the economy
and the psychological impact on individuals and communities requires
long-term recovery efforts. In the area of crisis counseling
assistance, only individuals from a declared disaster area are eligible
to receive counseling services and for a short period of time. In
catastrophic disasters there may be a need for assistance to be
provided to individuals not only outside the immediate disaster area,
but also in other states.
The Stafford Act does not currently provide Federal authorities
adequate flexibility to coordinate and monitor Federal rebuilding
efforts that may be required after catastrophic events. In addition,
there is no formalized Federal coordination point to--assist state, and
local governments with identifying and accessing all the assistanoe
available to them from the Federal Government. A one-stop-shop approach
is needed to assist states with long-term recovery.
Recommendation: FEMA should be held accountable for coordinating
assistance on behalf of all Federal agencies so that State and local
governments have a single point of contact for collecting information
and resolving issues.
Statutory and administrative requirements placed on disaster
assistance programs may, at times, delay the delivery of assistance.
Congress should provide flexibility for the President or the director
of FEMA to waive regulations or extend deadlines for providing
assistance in catastrophic situations when economic and societal
impacts require broader provisions of assistance and for longer time
periods.
ADDITIONAL ISSUES TO CONSIDER
1. Re-examine Public Assistance Program eligibility requirements of
private nonprofit organizations.
2. Ensure a methodology for FEMA to use to address incremental
costs to State and local governments.
3. Clarify agencies' authorities and ensure immediate environmental
hazard assessment, monitoring and reporting to emergency responders.
__________
Statement of Bud Larson, Associate Director, New York City Office
of Management and Budget
Good Morning Chairman Voinovich, Senator Carper, our own New York
Senator, Senator Clinton, and distinguished Members of the
Subcommittee. My name is Bud Larson, and I am the Associate Director of
the New York City Office of Management and Budget. My responsibilities
include, among others, coordinating and processing all of the FEMA
claims by the city of New York, and I am thankful for the opportunity
to share the city's experiences in this process over the last 2 years.
In particular, I would like to provide you with some insight on how the
city and FEMA responded to certain limitations in the Stafford Act.
Immediately following the attacks of September 11th, 2001, the
President and Congress committed over $20 billion of much needed aid to
the city of New York. This aid included a $5 billion Liberty Zone Tax
Incentive Package, over $3 billion in Community Development Block
Grants for economic development, almost $2 billion to the U.S.
Department of Transportation for downtown transit upgrades, and over $8
billion to FEMA for transit improvements, individual and family
assistance grants and the public assistance program. Of these, the city
of New York is eligible to make direct claims for reimbursements of
disaster-related costs only through FEMA's Public Assistance program.
The City's claims have totaled approximately $3.5 billion.
Overall, FEMA has been remarkably efficient and flexible in
reimbursing the city, given the constraints of the Stafford Act. Since
the 9/11 terrorist attack was the largest disaster ever in the United
Sates, the associated costs borne by the local government was the
largest FEMA has ever had to deal with. FEMA recognized very early on
in the process that they had entered into new, un-chartered territory,
as this disaster was unlike any they had ever responded to, and FEMA
officials were willing to work as hard as possible in order to provide
the necessary reimbursements to the city of New York.
The City has already received almost 100 percent of all claims
filed and currently eligible to be reimbursed, excluding the $1 billion
insurance fund. A large portion of the balance of Public Assistance
funds have been earmarked for transportation improvements for a new
transit hub in Lower Manhattan, and will be provided to the appropriate
entity when the expenses occur. This success is attributable to the
staff at FEMA, the State of New York, all of our City agencies and the
assistance of our congressional delegation, including Senator Clinton.
While we greatly appreciate the work done by the staff at FEMA in
providing the city with appropriate reimbursement, there are a number
of limitations in the Stafford Act that did not make this an easy
process. If not for congressional action, the city would still not have
received the reimbursement necessary to cover the unique expenses a
local government incurs when responding to a terrorist attack. In fact,
there are some instances where the city will never receive the
appropriate reimbursement due to these limitations.
First and foremost, due to the extent of the damages and the
destruction of the financial center of the Nation, the city and State
lost a substantial amount of tax revenue as a direct result of this
terrorist attack. The City estimated substantial losses in tax revenue
of almost $3 billion in the 2002 and 2003 City fiscal years directly
attributable to the attack and independent of the economic slowdown.
These losses were due to decreases in City personal income taxes,
business taxes and reduced sales taxes. In addition, the actual
destruction of property, the closure of Lower Manhattan and the
significant effect on travel and tourism to New York in particular,
also had devastating affects on our tax revenues. While some have
argued that it is impossible to link the loss of these revenues to the
terrorist attack, the General Accounting Office issued a report on July
26, 2002 reviewing these estimates and noted that the tax revenue loss
estimates for 2002 ``appear to reasonably approximate the impact of the
terrorist attacks on tax revenues''.
I also want to make it clear that the city did not receive any
Federal funds based on the city's experiencing a budget shortfall as a
result of these lost tax revenues.
Currently the Stafford Act does not allow FEMA to provide any
reimbursement for lost tax revenue to local governments. While a
Community Disaster Loan Program currently exists, the loan amount is
capped at only $5 million not even a fraction of the costs associated
to such a large terrorist attack in a major metropolitan city. Since
the Stafford Act does not accommodate this very real need for disaster-
stricken local governments, the people of the city and State of New
York have been forced to shoulder these additional financial burdens
caused by an act of war.
Another limitation of the Stafford Act is its lack of provisions
for local governments to receive reimbursement for unique expenses
associated with a terrorist attack. New York City was a direct target
as was the Pentagon and the District of Columbia; and as a direct
target, the city needed to take action immediately by heightening
security in all parts of the city. Prudence demanded that the entire
City needed to be shut down, bridges and tunnels into Manhattan needed
to be closed, subway lines and railroads needed to be suspended and
security at the United Nations and other key locations was immediately
heightened. These costs were incurred directly as a result of the city
being a terrorist target. However, the Stafford Act does not recognize
these expenses as eligible reimbursements since these additional
expenses did not occur at the actual site of the ``disaster''. While
FEMA worked to interpret the act as broadly as possible, under the
narrow confines of the Stafford act, FEMA could not grant
reimbursement. It took a special act of Congress to allow FEMA to
provide reimbursement to the city of New York for these costs, which
would clearly not have been incurred but for the terrorist attacks.
After receiving congressional authorization, FEMA responded diligently
and effectively in processing these new claims. But the fact remains
that in any future terrorist attack there will be significant related
costs incurred by local government that will be ineligible for
reimbursement under the Stafford Act.
Finally, one of the most complex obstacles to full reimbursement
under the Stafford Act encountered by the city involved environmental
liability as it relates to debris removal. Immediately after the
attacks on September 11th, the city responded by deploying police
officers, firefighters, EMS workers and other employees to the site for
search and rescue. At the same time, the city contacted four
construction companies to begin the process of debris removal. These
companies acted with a sense of patriotism, and worked without
contracts, insurance or indemnity. This response by the municipality
and its contractors were immediate and necessary, and both parties took
substantial risks. In order to protect against liability for the city
and its contractors, the city sought to obtain insurance on the private
market, but was able to obtain only $79 million of general liability
coverage; and even that coverage came with significant exclusions. The
City and its contractors accordingly sought legislation providing for
Federal indemnification of these claims, but without success. Finally,
as a result of congressional action, FEMA set aside approximately $1
billion for an insurance fund to protect the city and its contractors
from claims relating to the debris removal process. While the city and
contractors will benefit from this substantial coverage, the amount of
coverage is only a fraction of the $12 billion of damages already
claimed against the city.
The creation of this insurance fund was difficult and complex, and
this was aggravated because the Stafford Act provided no facility for
its funding. In fact, even after 2 years since the attack and 7 months
after additional congressional action, this insurance fund has yet to
be created and negotiations between FEMA, the city and its contractors
are still ongoing. This is clearly an unfortunate circumstance, and no
one local government or contractor should have to deal with. In fact,
this experience may cause governments and others to think twice before
responding to a terrorist attack. The Federal Government must address
this issue, by either enacting Federal indemnification or an insurance
plan to protect municipalities and their contractors.
While the city's experiences with FEMA have not been without some
difficulties--as I just explained--I want to be very clear that this
was in no way due to the staff or mission of the agency. I have the
utmost respect for the professionalism and diligence of the people at
FEMA. It was the constraints in Federal statute that proved to be
difficult. I urge you to examine these issues and determine the best
course of action, so local governments and taxpayers are protected from
the additional financial burdens of a terrorist attack.
I thank you for your patience and would be glad to take any
questions.
______
Responses by Bud Larson to Additional Questions from Senator Jeffords
Question 1a. The GAO report cites $8.6 million that went to the New
York Department of Environmental Protection for exterior building
cleaning. Who decided that New York would take the lead for this
function, how were buildings to be cleaned selected, what precautions
were taken to protect the workers conducting this cleaning,
pedestrians, and other people in the area of these clean-ups?
Response. I, Bud Larson, am not the expert and would defer to New
York City Department of Environmental Protection on the following
question. The following answer is provided by NYC Deputy Commissioner
Chris Ward:
Question 1b. Who decided that New York would take the lead for this
function?
Response. The USEPA and FEMA decided that DEP should retain the
contractors for the exterior building cleaning program after DEP
proposed the program in a multi-agency meeting that had been convened
by the EPA in February 2002. NYC DEP, in coordination with U.S. EPA
developed cleaning protocols and it contracted with qualified firms to
undertake the necessary cleaning. This program became part of a
broader, U.S. EPA-lead, effort to take the necessary steps to rid the
downtown area of air quality concerns, which required the cleaning of
building interiors.
Question 1c. What precautions were taken to protect the workers
conducting this cleaning, pedestrians, and other people in the area of
these clean ups?
Response. All contractors were required to perform cleaning in
compliance with USEPA, OSHA, NYSDOL, NYS DEC, NYCDOS, NYCDOH, and
NYCDEP regulations, as well as contractual protocols assuring that all
necessary precautions were put in place to protect those performing the
cleaning, and those in the area. For example, multiple roofs were
cleaned simultaneously in order to ensure that one roof waiting for a
clean up would not have wind disperse debris from it onto other already
cleaned rooftops. The Clean-up Program included low-pressure washing
and HEPA vacuuming to remove visible debris.
The DEP applied for permits from the NYC DOT to close streets, or
lanes of traffic, and sidewalks as necessary to protect pedestrians and
others in the area. Work was planned to limit impact on the public and
to businesses whenever possible. Some work was only performed on nights
and weekends.
All workers were required to wear full coveralls, gloves, and a
minimum of half-face air purifying respirators equipped with HEPA
filters.
Question 1d. How were the buildings to be cleaned selected?
Response. New York City Department of Environmental Protection
field staff with representatives from the NYS Department of Labor and
the United States Environmental Protection Agency inspected 1,073
buildings beginning at ground zero and proceeding outward. Buildings
where WTC debris was observed were identified for clean up and notices
were provided to each building owner. Once the Exterior Cleaning
Program was established, buildings where debris had been observed were
re-inspected. If debris was still present, the owner was offered
participation in the program.
Question 2. The GAO report states that NYC was not required to pay
the 25% cost share that is normally required of communities that
receive Federal disaster assistance. GAO reports that the President
capped the spending on this disaster at $20 billion, rather than using
the normal process for disaster spending. GAO also reports that the
President reduced the amount of Hazard Mitigation Grant Program Funds
to 5 percent rather than the standard 15 percent of the amount spent on
the disaster. Do you believe that the city ultimately received less or
more Federal assistance than they would have if the normal Stafford Act
procedures were followed?
Response. As discussed in my prepared remarks, much of the costs
incurred by the city as a direct result of the disaster were not
eligible under normal Stafford rules. Because Congress and the
President authorized FEMA to use a portion of the capped funds to pay
for these Stafford-ineligible costs, the city ultimately received more
FEMA assistance than under normal Stafford Act procedures and rules.
The authority to use funds for Stafford-ineligible costs was necessary
because the Stafford act was not and is not designed to respond to a
terrorist attack, particularly on the scale of September 11.
However, because of the $20 billion cap and the prohibition against
reimbursing the city for lost revenues, the reimbursement received was
still substantially less than the true cost to the city of the
disaster.
Question 3. The GAO report describes $1.7 to $2 billion of the $4.6
billion in FEMA and DOT funds for which uses had not been determined as
of June 2003. Potential projects under consideration were improving
access to JFK airport and Long Island, improvements to West Street
Route 9A, and a tour bus facility. Have you determined how these funds
will be used and if so, what criteria were used to select those
projects that will receive funds?
Response. To date, $2.85 billion has been allocated of the $4.55
billion in FEMA/DOT funding.
The three projects included in this allocation are the replacement
of a commuter train from New Jersey to Lower Manhattan (the PATH
train), a subway hub on Broadway, and a renovation of the subway
station at South Ferry, which was the first subway station ever built
in New York City.
The criteria are improving access to the area, modernizing its
transportation facilities, and improving the experience of using Lower
Manhattan's transportation system.
<all>