[Senate Hearing 113-435]
[From the U.S. Government Printing Office]
S. Hrg. 113-435
HURRICANE SANDY: GETTING
THE RECOVERY RIGHT AND THE
VALUE OF MITIGATION
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HEARING
before the
COMMITTEE ON
HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
MARCH 20, 2013
__________
Available via the World Wide Web: http://www.fdsys.gov/
Printed for the use of the
Committee on Homeland Security and Governmental Affairs
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COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
THOMAS R. CARPER, Delaware Chairman
CARL LEVIN, Michigan TOM COBURN, Oklahoma
MARK L. PRYOR, Arkansas JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana RON JOHNSON, Wisconsin
CLAIRE McCASKILL, Missouri ROB PORTMAN, Ohio
JON TESTER, Montana RAND PAUL, Kentucky
MARK BEGICH, Alaska MICHAEL B. ENZI, Wyoming
TAMMY BALDWIN, Wisconsin KELLY AYOTTE, New Hampshire
HEIDI HEITKAMP, North Dakota
Richard J. Kessler, Staff Director
John P. Kilvington, Deputy Staff Director
Mary Beth Schultz, Chief Counsel for Homeland Security
Jason T. Barnosky, Senior Professional Staff Member
Elyse F. Greenwald, Professional Staff Member
Keith B. Ashdown, Minority Staff Director
Christopher J. Barkley, Minority Deputy Staff Director
Kathryn M. Edelman, Minority Senior Investigator
Daniel P. Lips, Minority Director for Homeland Security
Trina D. Shiffman, Chief Clerk
Laura W. Kilbride, Hearing Clerk
C O N T E N T S
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Opening statements:
Page
Senator Carper............................................... 1
Senator Coburn............................................... 3
Senator Johnson.............................................. 13
Senator Begich............................................... 19
Senator Levin................................................ 24
Senator Ayotte............................................... 39
Prepared statements:
Senator Carper............................................... 45
Senator Coburn............................................... 48
WITNESSES
Wednesday, March 20, 2013
Hon. W. Craig Fugate, Administrator, Federal Emergency Management
Agency, U.S. Department of Homeland Security................... 5
Hon. Shaun L.S. Donovan, Secretary, U.S. Department of Housing
and Urban Development.......................................... 7
Hon. Jo-Ellen Darcy, Assistant Secretary for Civil Works, U.S.
Department of the Army......................................... 9
Alphabetical List of Witnesses
Darcy, Hon. Jo-Ellen:
Testimony.................................................... 9
Prepared statement........................................... 67
Donovan, Hon. Shaun L.S.:
Testimony.................................................... 7
Prepared statement........................................... 62
Fugate, Hon. W. Craig:
Testimony.................................................... 5
Prepared statement........................................... 52
APPENDIX
Responses to post-hearing questions for the Record:
Mr. Fugate................................................... 74
Mr. Donovan.................................................. 104
Ms. Darcy.................................................... 128
HURRICANE SANDY:
GETTING THE RECOVERY RIGHT AND THE VALUE OF MITIGATION
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WEDNESDAY, MARCH 20, 2013
U.S. Senate,
Committee on Homeland Security
and Governmental Affairs,
Washington, DC.
The Committee met, pursuant to notice, at 10 a.m., in room
SD-342, Dirksen Senate Office Building, Hon. Thomas R. Carper,
Chairman of the Committee, presiding.
Present: Senators Carper, Levin, Begich, Coburn, Johnson,
and Ayotte.
OPENING STATEMENT OF CHAIRMAN CARPER
Chairman Carper. The hearing will come to order. Nice to
see you all. Assistant Secretary Darcy, very nice to see you.
Well, thanks to our witnesses for joining us today. This is
an important hearing in our oversight of Hurricane Sandy, what
we are doing right, what we are not doing right, and what we
could do better.
As you all know, on October 29, 2012, Hurricane Sandy made
landfall in our country, and its impact, particularly on the
Mid-Atlantic and the northeastern coast of our country, was
devastating and heartbreaking. New Jersey, New York, and parts
of New England were hit particularly hard. And on Staten Island
we had, I think, about 21 people who were killed. In Breezy
Point, Queens, a fire destroyed over 100 homes. In Hoboken, New
Jersey, more than 1,700 homes were flooded. And I am sure we
all saw pictures of the iconic Casino and Funtown Piers in New
Jersey--where a lot of families have spent their summers--
broken down and literally pulled into the ocean.
In Delaware, just to the south of there, we did not
experience the level of devastation that was inflicted on our
neighbors to the north. But our own State was hit hard.
Widespread flooding caused severe damage to many of our homes
and businesses. Roads and bridges were damaged or washed out,
hurting commerce and transportation and cutting off access to
hospitals, schools, and work.
The human cost of this storm was severe. I mentioned the
lives lost on Staten Island. In total, at least 162 people were
killed as a result of Hurricane Sandy. Preliminary estimates of
the financial damage the storm caused are approximately $50
billion. When all is said and done, Hurricane Sandy is expected
to rank as the second-costliest hurricane on record, right
after Hurricane Katrina.
It will take years to recover from devastation like this.
It is important that we get that recovery right. In the
aftermath of Hurricane Katrina, we saw many problems during the
recovery phase that held communities back and created great
suffering. Money was not always well spent or coordinated. The
recovery moved slowly as a result.
For instance, millions of dollars were spent providing
temporary housing for survivors in travel trailers. People
stayed in those trailers far too long because permanent housing
solutions were not identified. Rebuilding permanent housing was
also complicated because red tape prevented us from making the
impact we could have made with the Department of Housing and
Urban Development (HUD) and Federal Emergency Management Agency
(FEMA) funding that was available.
The Post-Katrina Emergency Management Reform Act of 2006,
which was shepherded through this Committee and through
Congress by Senators Collins and Lieberman, took steps to try
to fix these problems. And to be honest with you, we have seen
a lot of improvement as a result. The Act required FEMA to
bolster their regional offices in order to build stronger
relationships with State, local, and tribal governments. This
has not only improved the Federal Government's ability to
respond to disasters; it has also enhanced FEMA's capability to
support State, local, and tribal governments as they rebuild.
The law also required FEMA to coordinate with other Federal
departments to write a national disaster recovery strategy, and
this eventually led to the National Disaster Recovery Framework
(NDRF), which has helped organize and coordinate recovery
efforts to Hurricane Sandy. Although the recovery from
Hurricane Sandy is just beginning, we fortunately have not seen
the sort of problems that we did after Hurricane Katrina.
This Committee now has a Subcommittee with responsibility
for FEMA. It is headed by Chairman Mark Begich and Ranking
Member Rand Paul, and I know they will do great work in
overseeing FEMA in general and this recovery in particular.
A key question we need to ask after a storm like this is
whether it was an aberration or a harbinger of things to come.
Just a few short years ago, hurricanes hitting areas along the
northernmost half of the east coast were relatively uncommon.
Hurricane Sandy is actually the third major hurricane to
threaten or strike the northern east coast in the last 3 years.
Hurricane Irene devastated parts of the east coast in 2011. The
year before that, Hurricane Earl was a major threat.
Unfortunately, the Northeast, the Mid-Atlantic, and other
vulnerable areas are expected to see more frequent and larger
storms like Hurricane Sandy in the future.
Additionally, just this year, Government Accountability
Office (GAO) added a new area to its recently updated High-Risk
List--the impact of climate change on the Federal Government.
GAO explained that, among other things, climate change `could
threaten coastal areas with rising sea levels, alter
agricultural productivity, and increase the intensity and
frequency of severe weather events.' GAO also argued that the
Federal Government is not prepared to deal with the impacts of
climate change and recommended that we take a strategic look at
them and start to prepare accordingly.
I think this is a smart recommendation, and it is essential
we put it on our to-do list as a Congress, along with the other
items included in GAO's updated High Risk report. It is
certainly on this Committee's to-do list. The costs associated
with responding to and recovering from a hurricane such as
Sandy--both the human and the financial costs--are so severe
that we simply cannot afford to face this devastation over and
over again.
I will point out that, so far in this recovery, we have
seen States take some promising steps toward addressing the
issues GAO has identified. In particular, I am pleased to see
that the States of New York and New Jersey have begun to make
plans to mitigate against future disasters. We know all too
well that an ounce of prevention is worth a pound of cure. My
grandmother would be pleased to hear me repeat those words
today.
In fact, a few years ago, the National Institute of
Building Sciences issued a report that concluded that for every
dollar spent on various mitigation measures, we can save $4 in
response and recovery costs. Through mitigation, then, we can
get better results, save money, and save lives. We must ensure
that sound and effective mitigation policies are thoroughly
incorporated into this recovery effort.
This is especially important as climate change drives the
sea level to rise and increases the severity and frequency of
coastal storms. By working together, we can rebuild and become
stronger by better protecting ourselves from future storms. It
is that simple.
But in doing so, we cannot ignore what I believe and what
many experts believe may be the underlying cause of storms like
Hurricane Sandy. Finding a way to address climate change is not
the topic of this hearing today, but as we recover from this
most recent major storm and put into place the protections we
need to reduce the impact of the next one, we would be making a
mistake if we did not also think about what we need to do to
address not just the symptoms of climate change, but the core
problem itself.
With that having been said, I look forward to working with
all of you, the Obama Administration, and my colleagues on
these crucial tasks we have before us.
I am happy to turn to Dr. Coburn for any comments he wants
to make.
OPENING STATEMENT OF SENATOR COBURN
Senator Coburn. Well, first of all, let me apologize. I
have to go to the floor to object to the lack of amendments
that are being allowed on the continuing resolution (CR), so I
will not be able to hear your testimony. I have looked at it,
my staff have thoroughly read it, and I have summaries of all
of it. I will enter my statement into the record.
I just have to make a comment. I love Tom Carper, but the
tone of climate change and the reality of what we have actually
seen and what the predictions have been, do not have any
connection. As a scientist who has actually looked at the
science, we still have a long way to go to prove what has been
made as fact in Senator Carper's statements on climate change.
This is not a hearing about climate change. This is a hearing
about the response to Hurricane Sandy, and I look forward to
coming back and offering questions. I would also say I am very
proud of FEMA's response so far. They have done a great job. I
also would say I am very thankful for the cooperation that you
have offered the Committee as we have looked at the response
and tried to oversee it in real time to see if we are actually
making great improvements.
So with that, I would ask that my statement be placed in
the record, and I will return.
Chairman Carper. Without objection.
All right. And before he leaves, I just want to say I love
Tom Coburn, too, so there we go.
I think we are going to go right to our witnesses. Let me
introduce them and then, Senator Johnson, we will get into some
questions. OK?
Senator Johnson. Sure.
Chairman Carper. Our first witness is Craig Fugate,
Administrator of the Federal Emergency Management Agency. I
want to thank you and the folks that you lead for the really
outstanding effort that you have made in response to Hurricane
Sandy from our State and from the other States that were
affected. Mr. Fugate began his career as in emergency
management as a volunteer firefighter, emergency paramedic,
and, finally, as a lieutenant with the Alachua County Fire
Rescue. In 2001, he became Director of the Florida Division of
Emergency Management and held that position until he was
confirmed as Administrator of FEMA in May 2009.
Mr. Fugate, again, we are glad to see you. Welcome to this
hearing, and thanks for your testimony.
The second witness is the Honorable Shaun Donovan,
Secretary of the Department of Housing and Urban Development.
Mr. Donovan became Secretary in January 2009. He is also
currently serving as the Chair of the Hurricane Sandy
Rebuilding Task Force, which is the topic we will discuss
during this hearing. Before his appointment as Secretary, Mr.
Donovan served as Deputy Assistant Secretary for Multifamily
Housing at HUD during the Clinton Administration. He later
served as Commissioner of New York City's Department of Housing
Preservation and Development.
We thank you, Mr. Secretary, for joining us, and we look
forward to your testimony and our questions and answers.
And no stranger to the U.S. Senate, where she once toiled
and I think worked for--was it the Finance Committee?
Ms. Darcy. In the Environment and Public Works Committee
(EPW).
Chairman Carper. In EPW, very good. Great to see you again.
Ms. Darcy is Assistant Secretary for Civil Works at the U.S.
Department of the Army. Ms. Darcy became Assistant Secretary in
August 2009. Prior to her appointment, Ms. Darcy had a long and
distinguished career in the Legislative Branch, which I have
mentioned. From 1993 to 2000, she served as a professional
staff member on the Senate Environment and Public Works
Committee, which is in markup right now, and she then moved on
to the Senate Finance Committee, where I have just come from,
where she served as a senior environmental advisor. We thank
you for joining us. We thank you very much for your work and
the great work that is being done and the folks that you lead.
I am going to ask you to go ahead and start your testimony.
Try to keep it close to 5 minutes. If you go a little beyond
that, it is OK. But if you go way beyond that, I will have to
rein you in. We are going to start voting around 11:15, but we
want to get as much done as we can.
Mr. Fugate, please proceed.
TESTIMONY OF HON. W. CRAIG FUGATE,\1\ ADMINISTRATOR, FEDERAL
EMERGENCY MANAGEMENT AGENCY, U.S. DEPARTMENT OF HOMELAND
SECURITY
Mr. Fugate. Well, thank you, Mr. Chairman, Senator Johnson.
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\1\ The prepared statement of Mr. Fugate appears in the Appendix on
page 52.
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Hurricane Sandy was essentially two disasters in one, and
it also covered a geographical area that today we know the
heaviest impacts were in the Jersey shore, New York City harbor
area, and into Connecticut with peripheral impacts. But before
landfall, we were anticipating impacts from as far south as
Cape Hatteras in the Carolinas, as far west as West Virginia,
which was under a blizzard warning, all the way up through the
central Ohio Valley and up to the New England States, including
Maine.
To prepare for that, we were able to utilize the
authorities granted to FEMA, when FEMA was authorized in the
Post-Katrina Emergency Management Reform Act, that clearly
stated that in the anticipation of a major disaster, we would
not have to wait until the States were overwhelmed before they
were able to request assistance. We had pre-staged not only
equipment and supplies, but we had sent teams into each State
to link up with the Governors' teams to begin that crucial
planning on what if the storm did hit and produced the impacts
possible throughout that region.
As the scale of the impact became more apparent that it was
going to be focused on the landfall somewhere between New
Jersey and Boston, it allowed us to concentrate our resources
and teams on those impacts.
But as Hurricane Sandy came ashore, we dealt with a storm
that produced a very significant storm surge, probably greater
than many people realized because of the nature of the storm
and the fact that they had gone through Hurricane Irene and
thought that was probably as bad as it was going to get. We saw
Hurricane Sandy produce storm surge in areas that had not
previously flooded, most notably in Manhattan, where the World
Trade Center Memorial was being flooded, as well as nine of the
hospitals in the lower boroughs, including New York University
(NYU), Bellevue, and others that were taken out of service
because of the damages.
But that damage was also compounded by the power outages.
It is estimated that 8.5 million customers were without power
at some point during Hurricane Sandy, but I think that number
underestimates the human impact in that those were actual
connections, not people. When you looked at the region, there
was in excess of 25 million people being impacted some way or
another by the power outages, whether it was directly because
they did not have power or because it was affecting
communications, transit, fuel, and other issues.
And so as we responded to this disaster using the tools
that we had, we were able to focus on the life safety issues,
much of this done by the local responders, augmented by
Homeland Security grant dollars they had received since 9/11 to
build more capability in search and rescue. We then supported
the immediate needs response--sheltering, distribution of
supplies--and began the process of starting the initial
recovery, getting debris picked up, dealing with those
immediate issues that were required to provide expedient and
temporary housing.
Some of the tools we learned from Hurricane Katrina is that
in long-term housing impacts, you have to start planning from
the very first day what the solutions were. Merely putting
people up temporarily in hotels and motels was not an answer.
So that is, again, why we engaged very quickly with the long-
term recovery type planning we do under the National Recovery
Framework. We are engaging with our partners at HUD, the Small
Business Administration (SBA), and others.
But as the density of the population showed, this was going
to be a very significant challenge to house people long term
given the density of the population and the amount of impact
that occurred.
We implemented a variety of tools that we had been
developing over the last couple of years, some very successful,
some not as successful, and we continue to learn how to do that
better. But, overall, the response was geared toward supporting
the States divided into phases: life safety, life sustaining,
and the immediate steps to set the stage for recovery.
We are now seeing these communities begin to move into the
long-term permanent work that will be required, and we also
want to ensure that when we build back, we are not just
building back to what was there. We are looking at how do we
ensure that critical infrastructure is built back in a way that
ensures its survivability and resilience in future storms.
As the President has directed us, we are looking at the
issue here as an adaptation to the hazards we face, and that
for the future, we cannot just merely build back to previous
standards. Again, if Hurricane Sandy was a record-setting
storm, but is not the storm potential that could occur and we
only build back to Hurricane Sandy, the next stronger storm may
undo all of our work.
We have seen where we have applied mitigation after
Hurricane Katrina, and then the impact of Hurricane Isaac
earlier this year, parts of the community that had mitigated
against Hurricane Katrina actually saw storm surge greater than
what they saw in that storm. But because of the mitigation,
fire stations, schools, and emergency operations centers were
up and running during the storm and able to continue to provide
essential services during the life safety phase of the
disaster, resulting in FEMA and the Federal agencies being able
to focus on recovery.
So we know mitigation works, but we also need to make sure
we are mitigating against the future threats, not just past
history, because every time we go out, it seems that the term
``100-year storm'' is being used several times a year to
describe events that are occurring with even greater frequency.
Thank you, Mr. Chairman.
Chairman Carper. Thank you very much.
Mr. Secretary, please proceed. Your entire statement and
all of your entire statements will be made part of the record.
Feel free to summarize. That was a nice summary, I thought.
Please proceed.
TESTIMONY OF HON. SHAUN L.S. DONOVAN,\1\ SECRETARY, U.S.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Secretary Donovan. Chairman Carper, Members of the
Committee, thank you for the opportunity to testify today
regarding the ongoing effort to rebuild in the region
devastated by Hurricane Sandy.
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\1\ The prepared statement of Mr. Donovan appears in the Appendix
on page 62.
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I chair the Hurricane Sandy Rebuilding Task Force
established by President Obama. Hurricane Sandy had immense
impacts in New York, New Jersey, Connecticut, Rhode Island,
Maryland, and a number of other States, as you know, Senator.
Based on the lessons learned from previous disasters, the
President asked Secretary Napolitano and me to develop a new
approach to disaster-related recovery and rebuilding challenges
from a national perspective. That led to the creation of the
National Disaster Recovery Framework, which we released in
2011. Administrator Fugate just mentioned its importance in
allowing us to bring a coordinated, governmentwide approach to
recovery and rebuilding.
As a result of the NDRF, for the very first time, we are
fully implementing the long-term recovery strategies that were
part of the NDRF, and today we have 150 Federal staff on the
ground in New York, New Jersey, and Connecticut who are working
on long-term rebuilding, because we know from past disasters
that planning for long-term rebuilding must begin even as
response activities are underway.
We also know that the unusual scale of the devastation
caused by Hurricane Sandy meant communities would face greater
rebuilding challenges than usual and that many of those
challenges would cut across agency and State lines.
For example, an issue like hardening our energy
infrastructure will require involvement from Federal, State,
and local government in addition to the private sector across
the region. In recognition of this, President Obama created the
Hurricane Sandy Task Force to ensure there was Cabinet-level,
governmentwide, and region-wide coordination to help
communities as they are making decisions about long-term
rebuilding.
The task force is a short-term entity. The President's
Executive Order (EO) calls for us to produce a comprehensive
rebuilding strategy by August 2. Following the completion of
this strategy, the task force will wind down and implementation
will be carried out by the relevant regional support functions
that are already in place under the NDRF.
One goal of the task force and the strategy is to identify
and share best practices adopted by other communities in the
wake of disasters and to help communities apply those lessons
to their own rebuilding efforts. A perfect example of this work
is an announcement we made last week to help communities get
the Community Development Block Grant (CDBG) disaster funding
into homeowners' and business owners' hands more quickly. We
released several model programs based on best practices from
other areas that local governments can modify and adapt to
launch their own programs to repair homes and small businesses
and offer their citizens housing counseling or, where
appropriate, buyouts.
Giving communities these model programs means they do not
have to reinvent the wheel and design new programs from
scratch, which ultimately means homeowners and businesses get
more help quickly and at a lower cost to taxpayers.
In addition to identifying opportunities for this type of
coordination, supporting local rebuilding efforts with the
financial resources that only the Federal Government can
provide is a key part of the Federal role. Federal agencies and
departments have already begun making money from the Disaster
Relief Appropriations Act available to State and local
governments in the region. In addition to what Administrator
Fugate mentioned, the Administration has allocated the first
tranche of CDBG disaster funds totaling $5.4 billion, and I
would add that HUD allocated this funding within 8 days of the
President's signing the supplemental, the fastest it has ever
been done in history.
We have also announced $2 billion in Federal Transit
Administration (FTA) emergency funding, and FEMA has released
more than $5.9 billion in National Flood Insurance payments.
The task force's role is to help supplement individual
agencies' efforts to get money where it is needed by sharing
lessons learned about how to use it most effectively and
efficiently. Our role is also to facilitate the monitoring of
those programs to ensure accountability and to take additional
measures to prevent waste, fraud, and abuse. We are working
with the Recovery Accountability and Transparency Board (RATB)
and with the relevant Inspectors General (IG) in support of
their critical oversight mission and are also working with
agencies and the Office of Management and Budget (OMB) to
coordinate the delivery of enhanced agency internal control
plans.
In addition, we will monitor and share data about how the
dollars are being spent on a public website similar to
Recovery.gov to give the public confidence their dollars are
being spent as intended.
The task force will also help impacted communities use this
funding to mitigate future risk from storms--storms that
science tells us will have greater intensity and severity in
the future. Mitigation is sensible and cost-effective, offering
a $4 return on each dollar invested by preventing future
damage, as you have recognized, Senator. And while each agency
is focused on mitigation, the role of the task force is to
ensure coordination and prioritization of projects across the
region so that we can ensure that benefits are not being
duplicated and that those efforts and investments are the most
cost-effective options.
We want to thank Congress and Members of this Committee, in
particular Senator Landrieu, for your leadership that cut red
tape and gave us new flexibility to build back stronger, and we
are working to combine CDBG and other funds so that the
opportunity to build back stronger is not an opportunity lost.
We know mitigation works. As Craig Fugate just described, we
saw it on the Gulf Coast, and we have seen it in Hurricane
Sandy as well.
We look forward to continuing our work with this Committee,
others in Congress, and our Federal, State, and local partners
to support communities' rebuilding efforts in a way that makes
them stronger, more economically sustainable, and better
prepared to withstand future storms.
Thank you again for the opportunity to testify today. I
look forward to answering any questions you may have.
Chairman Carper. Thank you, Secretary Donovan. Assistant
Secretary Darcy, please.
TESTIMONY OF HON. JO-ELLEN DARCY,\1\ ASSISTANT SECRETARY FOR
CIVIL WORKS, U.S. DEPARTMENT OF THE ARMY
Ms. Darcy. Thank you, Chairman Carper.
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\1\ The prepared statement of Ms. Darcy appears in the Appendix on
page 67.
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Everyone has talked about Superstorm Sandy, as we now call
it, with the 80-mile-per-hour winds and a 13.7 foot storm
surge; all of this caused a great deal of devastation. Flooding
has occurred causing damage to public infrastructure, causing
extensive power outages, affecting mass transit systems, and
causing damage to public housing and private residences.
It is clear that existing Corps of Engineers projects
helped to mitigate some of the flood damages to the residents.
However, degraded coastal features have resulted in increased
risks and vulnerability from future storm events. In addition,
expected changes in sea level rise, extreme weather events, and
other impacts of climate change are likely to further increase
those risks.
The Corps has authority under Public Law 84-99, the Flood
Control and Coastal Emergencies Act (FCCE), to perform
emergency management activities in response to natural
disasters. These include preparation for natural disaster
preparedness, advanced measures, emergency operations both
before and after a flood, and rehabilitation and repair of
damaged projects.
The Corps also responds to disasters at the direction of
FEMA under the Stafford Act. Under FEMA's National Response
Framework, the Corps is the coordinator for Emergency Support
Function (ESF) #3, which is ``Public Works and Engineering.''
FEMA missions assigned to the Corps are funded entirely from
FEMA's Disaster Relief Fund.
During and after Hurricane Sandy, the Corps responded to 68
missions assigned by FEMA, provided more than 1,000 highly
trained technical personnel and deployed the 249th Prime Power
Battalion. To date, FEMA mission assignments exceed $350
million in New York, New Jersey, Massachusetts, Delaware, Ohio,
Pennsylvania, Connecticut, West Virginia, and Rhode Island.
As of March 1, 2013, completed Corps response efforts under
both its own Public Law 84-99 and FEMA's Stafford Act include:
Completion of 567 power assessments and installation of 211
generators that at one time were generating 55 million
kilowatts of power;
Installation and operation of 162 pumps to un-water 14
strategic sites identified by State and local authorities,
including the New York City subway system's tunnels and the
Passaic Waste Water Treatment Plant, resulting in the removal
of over 475 million gallons of water. We restored operation of
the Hoboken Ferry Terminal and delivered 512 truckloads of
drinking water to New York, New Jersey, Pennsylvania, and West
Virginia. We refurbished 115 transitional housing units.
Completed an assessment of damages of Federal coastal
protection projects, and closed breaches in three coastal
barriers in New York and New Jersey.
Another major FEMA mission assignment that continues today
is the removal of debris left by Hurricane Sandy. I have an
update on the debris removal information that was included in
my complete statement for the hearing. I would like to do that
now so we can update those numbers.
As of this week, in the city of New York, more than 734,000
cubic yards of debris have been removed from public sites by
the Corps of Engineers.
On Fire Island, both the number of private property debris
removal assessments that were assigned to the Corps and the
number that have been completed has risen. The new total number
of assessments that were assigned to the Corps is 1,814, of
which 1,779 have been completed.
The success of these efforts was due to a dedicated and
determined team that included the Corps, the Navy, the Coast
Guard, the Department of Transportation (DOT), New York City's
Transit System, and many, many more.
Damage sufficient to warrant repair under Public Law 84-99
was reported for 19 Federal hurricane and shore protection
projects within the Corps' North Atlantic Division footprint.
The Corps has approved project information reports for these 19
projects, and engineering and design has begun on each of the
projects.
There were damages to projects outside our North Atlantic
Division for which we are continuing to prepare project
reports.
Finally, we also sustained damages to some of our Corps
navigation projects.
The Disaster Appropriations Act of 2013 provided $5.35
billion for the Civil Works program. This amount included
$3.461 billion of construction funding, of which more than 80
percent was to reduce future flood risks in a way that will
support the long-term sustainability of the coastal ecosystem
and the communities, and reduce the economic costs and risks
associated with large-scale flood and storm events.
The Act requires that all Corps projects funded for
construction, incorporate our current science and engineering
standards. The Army is in the process of developing its
implementation plan for the funding under the Act, with
project-specific measures. The Corps will perform an expedited,
limited re-evaluation that will address resiliency, economics,
risks, environmental compliance, as well as long-term
sustainability. Also, the Corps will enter into project
partnership agreements that will be executed with the non-
Federal project sponsor that, among other things, will ensure
an updated floodplain management plan is developed by the
responsible non-Federal authorities. The Corps will take a
broad, long-term approach to reducing future vulnerability in a
manner that is sustainable for the natural ecosystem, for the
individuals, as well as the communities in which they live.
Thank you, Mr. Chairman, and I look forward to your
questions.
Chairman Carper. Thanks. Thank you all for your
testimonies.
Our Committee jurisdiction includes border security, and
last month, I was down along the border of U.S. and Mexico in
Arizona with Senator McCain and Congressman Michael McCaul from
Texas, who chairs the Homeland Security Committee over in the
House. I was joined on another day by Secretary Janet
Napolitano.
One of the things we have wrestled with on border security
is: How do we measure success? Is it the number of folks we
apprehend trying to get into the country illegally? Are there
other measures of success? And I think we are making great
progress in border security in that part of our country. We
still wrestle a bit with how do we measure success.
Let me just start right there. Administrator Fugate, how do
we measure success? And given that measure, how are we doing?
Mr. Fugate. We looked at disasters and response that--and
responding to disasters, there was never a criteria of
timeframe. So we looked at the first 72 hours that oftentimes
is the most critical for life saving and immediate
stabilization and said that, as a Nation, do we have enough
resources to get to people quickly, to do rescues? Do we have
enough law enforcement and security to make it safe? Do we have
the emergency communications to allow the first responders to
rebuild and get their systems back up, as well as provide the
most essential, basic needs to a community in that short
timeframe?
Now, that cannot just be done with the Federal agencies,
but we look at this through the whole community, what the
private sector can do, what we do with our other partners.
So the measures we look at very specifically are: Can we
physically get back into the area? Can we make sure it is safe
to operate in? Generally, law enforcement and security
concerns. Can we get to the injured in 24 to 48 hours while we
still have an opportunity to change the outcome? And do we have
enough supplies and capabilities to meet the most immediate
needs so that future loss from that disaster is not occurring
because of lack of response? And we could then begin the
process of setting the stage for the next immediate thing, such
as sheltering, picking up debris to set the stage for recovery.
And looking at our last responses, most notably Hurricane
Sandy, we are achieving that by and large but not uniformly
throughout the heavily impacted areas. And particularly in
Hurricane Sandy, a challenge there is the dense population, and
I think that is something we have to continue to look at, that
you just cannot look at geography. You have to look at where
the people are and make sure you have the resources there.
But in using that as a standard, we are now going back and
cataloguing our investments in homeland security, those grants,
and looking at how much capacity have we built, what does that
response look like? And one example we had, the Urban Search
and Rescue Teams which Congress funds that we sponsor--there
are 28 of them--had never been funded to do any type of water
rescue even though they had deployed most recently, from
Hurricane Katrina forward, to numerous hurricanes which
involved water rescues. So we began equipping them through
their grants with water rescue equipment. Six of those teams
were able to deploy and augment State and local responders.
Chairman Carper. Good. Thanks.
Secretary Donovan, how do we measure success, and how are
we doing?
Secretary Donovan. To complement Craig's focus on the
immediate response, we are also very focused on how do we
measure success in the longer-term recovery.
Chairman Carper. Good.
Secretary Donovan. And there is a set of, I think, more
obvious measures, and then there is a set of measures that are
perhaps less obvious and longer term.
Clearly, how quickly are homeowners getting back into their
homes, how quickly are small businesses getting up and running.
More broadly, will the shore be open for business this summer
in New Jersey and Long Island? Those are all critical measures,
and I would like to thank Congress for giving us in this
supplemental, for the first time, the ability to set clearer
deadlines, a 24-month timeline for what we would expect to be
most of the CDBG and other investments.
One of the roles the task force is playing is to go through
right now with OMB and try to set a consistent policy on how we
will implement those timelines from obligation.
We are also working with the agencies to get data-sharing
agreements. Frankly, sometimes just setting up the pipes, if
you will, to share that data in a single source so that we can
track it, make it available to the American public, to all of
you, and to the IGs to know whether we, in fact, are making
speedier progress than we did, say, in Hurricane Katrina in
helping businesses and homeowners get back.
The last thing I would point to goes to your focus on
mitigation. In the long run, one of the most important measures
of the recovery is: do we save money the next time we have a
storm? FEMA's analysis has showed, as you quoted, Senator, that
we save $4 for every dollar of investment in mitigation where
it is done wisely, and that is something we are going to be
gathering the data to be able to track going forward as well to
make sure we understand where those mitigation investments have
actually paid for themselves and where they have not.
Chairman Carper. Thank you.
Assistant Secretary Darcy, how do we measure success? How
are we doing?
Ms. Darcy. Well, we can measure success in two ways:
One is how we were able to respond to the orders and the
missions that were given to us by FEMA, and that success is
shown in the fact that we were able to un-water the Battery
Tunnel, that we were able to call on the resources that we have
not only within the Army but within the Defense Department to
help with that mission. That is one way we can measure success.
Another way for our agency to measure success is to be able
to look at the projects that we have built, especially our
storm risk reduction projects along the coastline that provided
storm damage reduction. And if you flew the coast of New Jersey
after Hurricane Sandy, you could see where there had been a
Corps of Engineers project and where there had not. The houses
behind the housing projects, those sand dunes were still
standing. And I think for us not only did we learn from that,
but we have to learn what did not work as well. Part of that is
working with the task force and looking at what kind of
sustainability we need to make sure is part of any project that
we plan to build.
Chairman Carper. Thank you.
Before I yield to Senator Johnson for his questions, I just
want to telegraph my next pitch. When he is finished and others
have had a chance to ask questions, I am going to be asking you
whether you think that State, local, and Federal Governments
involved in this recovery have the authority and the resources
that are necessary to make the recovery successful. And I will
be asking are there any other tools that you need for your
respective tool boxes or for other tool boxes to help make this
recovery successful.
All right. Thanks. Senator Johnson.
OPENING STATEMENT OF SENATOR JOHNSON
Senator Johnson. Thank you, Mr. Chairman, and thank all of
you for coming in and testifying.
I have not been along the coastline, I have not seen the
devastation, so I just would like to ask some basic questions
about that. How much of the damage was within what proximity to
the shoreline? Can you kind of give me some indication?
Mr. Fugate. Senator, most of the damages that occurred fell
within the 100-year floodplain area, so in some cases the
damage were within blocks. In some cases, it was almost half a
mile to a mile, depending upon where you were at.
Again, you have got to remember in this coastline you have
barrier islands and you have inlets and then you have rivers
that flooded upstream. So most of the damage occurred within
the first half-mile, is generally where you saw the
concentrated damage. But because of the coastline and the
shore, some of the water was going into places that may have
bypassed higher ground and impacted further upstream.
Particularly on the Hudson River, there was flooding well away
from the shore area on the river banks where it had moved up
the river.
Senator Johnson. But would it be safe to say that 80, 90
percent of the damage occurred within the 100-year floodplain?
Mr. Fugate. The bulk of it did, although we did identify
that in particular New Jersey, which had not had updated maps,
there was flooding outside of that. This is part of the updated
maps showing us better resolution of what could happen. But it
is also important to note that the 100-year floodplain only
shows the risk as 1 percent. In many areas, the flooding was
greater than that based upon localized impacts of the storm,
and in a stronger hurricane, the 100-year floodplain would not
identify all of the risk, and that is one of the things
Secretary Donovan and I and others are working on with the
Corps of Engineers, is to make good decisions on critical
infrastructure, not just based upon the 100-year flood events
but also what the potential storm impacts can be.
Secretary Donovan. Senator, if I could.
Senator Johnson. Sure.
Secretary Donovan. Just to clarify one point there and to
give Craig and his team some real credit, one of the most
important steps that we have taken--and the task force has
worked closely with Craig's team on this--is to update those
flood maps with new advisory maps. And so just to be clear,
there are places where the 100-year floodplain has gone up by
more than 10 feet in places within the region. So I think when
you described the 100-year floodplain, it is within that newer
version of it. Compared to the old maps, it was substantially
outside in many places, that original.
And I think one of the most important things that Craig has
done is to accelerate that process of getting those new flood
maps out so that now as towns, particularly along the shore,
are rebuilding they are using more accurate measures of what
that 100-year floodplain is, which in some cases is
dramatically different from what it was.
Senator Johnson. Which leads me to my next question. Give
me the effect of having a 100-year floodplain map, in terms of
the laws, in terms of insurance rules. I mean, tell me what the
100-year floodplain actually does in terms of mitigation, in
terms of insurance costs, in terms of what responsible
individuals should do in response to 100-year flood maps.
Mr. Fugate. Where we have the updated maps and the
community adopts them, the requirements to participate in the
Flood Insurance Program is they have to adopt the maps as
ordinances, and then they have to drive all of their
construction based upon those maps as far as elevation
requirements in areas where they are prohibited to build
certain types of structures or use certain construction
techniques.
The most common one for residential areas is the
requirement to build one foot above base flood elevation. We
saw numerous homes where I was at in Connecticut that had
flooding during Irene, that in rebuilding had been elevated.
Those homes are standing. Homes next to them that were not
elevated to the new data were destroyed. It oftentimes means
the difference between communities being able to rapidly
recover and people come home after cleanup and restoration of
power versus losing everything, including the community's tax
base.
So while it does not factor into the worst possible
scenarios that there could still be damages, by and large
across the gulf coast and now across the Northeast where these
standards have been applied, storms that have hit show that, by
and large, the elevation requirements preserve housing, the tax
base, and homes for people to return to after the storm. Those
that are not built to that level oftentimes are those that are
destroyed, causing not only the loss of the home but the loss
of the tax base.
Senator Johnson. OK. So that really applies to the building
codes. What about in terms of the insurance markets, the
ability to access insurance, the cost of insurance?
Mr. Fugate. Well, the cost of insurance, for flood
insurance, again, is provided by the Flood Insurance Program,
and if you are not elevated above that base flood, based upon
the latest reauthorization of the National Flood Insurance
Program (NFIP), going to an actuarially based rate is going to
be a very expensive proposition to people. If they will build
one foot above that base flood elevation, they will get a
discounted rate showing the reduced risk.
But moving toward a more actuarially sound basis is going
to price many people to the point where they will have to make
hard decisions about either elevation or not being able to
rebuild based upon their insurance rates.
Senator Johnson. Do you have any estimates so far of how
much of the cost of the disaster is going to be borne by
private insurance versus State governments versus the Federal
Government? Do you have some sort of breakdown on that?
Mr. Fugate. No, sir. Given that almost all of the flood
damage will be covered by the Flood Insurance Program as the
Federal and commercial industry has not chosen to write flood
insurance for homeowners, I think the preponderance of the
costs will be borne by the taxpayer and through the ratepayers
in the Flood Insurance Program. Those damages outside of that,
primarily wind damage, for those commercial entities that had
insurance, those would be the numbers that would be done by the
private sector.
Secretary Donovan. If I could add, Senator, one of the
critical things about what Craig has said, historically we have
not had a coordinated response across the Federal Government
where we are using the same standards. And so typically what
you have is that the official flood maps--in this case, this
would be the old flood maps for New Jersey and New York--would
govern the investments that we would make post-disaster.
What we are doing is trying to use these new maps--the task
force is working on this--to ensure not just FEMA is using the
latest information on the maps, but that across the Federal
Government we are doing that.
So, for example, in our first Community Development Block
Grant notice, we required that anytime, as FEMA does, you are
rebuilding more than 50 percent of the cost of the home, you
have to use these new maps, even if they are not going to be
official for the Flood Program within 2 years.
We also, for example, are looking at--you mentioned
insurance. The Federal Housing Administration (FHA) provides
insurance on lending. That is another area that we are looking
at to try to set a consistent standard so that even though we
have this new information, we are not rebuilding to an old
standard that will ultimately cost us more, particularly where
there are major investments being made by either private
entities, private insurers, or by the Federal or local
government.
Senator Johnson. OK. Well, I am out of time, but I will
give you a hint in terms of my followup, because I am going to
want to be talking about the moral hazard of insurance pricing
and how we basically just incentivize people to continue to
build in areas that are going to get wiped out once again, and
then the American taxpayer is on the hook for that. So that
will be my next line of questioning. Thanks.
Chairman Carper. Dr. Coburn.
Senator Coburn. Well, thank you all again for being here,
and I apologize once again for being absent during your
testimony.
I want to just make a few comments. We have had
investigators up there, and it has been bipartisan in terms of
what we examined. Overall, the initial response of FEMA has
been very positive, but some of the criticisms that we heard
from people on the ground, local mayors and other people, was
that when FEMA staff changed out, there was not a good transfer
or hand-off of what was done.
The other thing is that it seems to be too many questions
cannot be answered by your people on the ground; or people have
to wait for an answer.
And then the third thing is getting funds. Most of them are
having to hire consultants to be able to access funds.
Even though we have done a good, initial response, the
criticisms by the people that are actually impacted, I think,
are real and justifiable. I would love to hear your response to
the hand-off process as you move people in and out and why
people on the ground cannot give people who have been impacted
answers to their questions.
Mr. Fugate. The short answer is historically FEMA has never
staffed where we had the luxury of being able to deploy people
for long periods of time from the initial outset of a disaster.
We just do not have a workforce that is that scalable with that
many people ready to go to that many impacted communities early
in a disaster. So we used a lot of our permanent workforce from
our regions to do the initial staff, and then as we were able
to bring in our reservists and bring them in, we were able to
backfill. That resulted in the first change-out, and that has
never been a good change-out. We continue to work on that.
But you get to the second point, which is even more of a
problem, is the complexity of our programs have reached a point
where part of what we were looking forward to in the Sandy
Recovery and Improvement Act was better flexibility and tools
to get more consistent answers quicker. Our goal was to get the
right answer the first time, whether it was yes or no, and if
it was maybe, get the answer so local officials know what to
do.
Part of this will come back to looking at how we staff
disasters. What we have come to the conclusion with Hurricane
Sandy is we have been using a lot of our reservists which are
itinerant--brought on when we have disasters--workforce who,
for a lot of the programs work very well. But as you get into
the complexity of recovery, particularly as we have been
updating and changing the program, it often delayed responses
because they were not current and had to go to the next level
to get answers.
Based upon our analysis of Hurricane Sandy, we recognized
we were going to have to put more emphasis on a full-time, non-
permanent workforce to get the consistency in public
assistance. I think there are areas where the people that we
bring in as we need them work very well in disasters, but as
you point out, Senator, when it comes to public assistance,
getting the right answer the first time and the consistency in
that answer has been an issue since I have been a State
director and a local official. We feel the only way to address
that, as the programs have increasing complexity, is to have
the subject matter experts working full-time as a temporary not
permanent workforce, but having that full-time exposure and
expertise to answer those questions.
So we are in the process of reshaping that workforce in the
aftermath of Hurricane Sandy to address that issue.
Senator Coburn. So when they have to hire a consultant to
work through the maze of bureaucratic red tape, does the
American taxpayer end up paying for that consultant?
Mr. Fugate. They would get from us management costs. They
may be using that to pay for the consultant, and that could be
included in the bill. So the answer is yes.
Secretary Donovan. Senator, if I could just add on one
point related to this, some of this confusion comes out of
public programs, but there is also a lot of confusion that
homeowners have around the conflicting requirements or efforts
of different servicers with different types of loans.
So, for example, certain servicers may have a policy that
your insurance proceeds will only be released under this
condition; another might have that they would release insurance
proceeds under a different condition.
One of the efforts that the task force has undertaken, FHA
is part of HUD, an important part of the mortgage market.
Fannie and Freddie are overseen by a different agency. We have
brought together the private servicers, Fannie, Freddie, and
FHA to try to reach consistent standards for Hurricane Sandy,
for example, on how long forbearance will be of foreclosures,
what type of forbearance we will be offering, so that there is
consistent information. The more we can standardize those
things--we made a lot of progress on this--the more somebody
who is in the field, whether it is a HUD person or a private
sector person, can say, ``Here is the rule. It applies across
the board,'' as opposed to, well, depending on what side of the
street you are on or what lender you have, you are going to get
different answers.
So this is not just a question for sort of standardization
across government. It is also one that we are working on
through the task force to try to get consistency in the
private----
Senator Coburn. But the eligibility requirements have not
changed. They did not change. The last disaster we had, the
eligibility requirements are the same. So why is it so hard to
get an answer if the eligibility requirements have not changed?
Mr. Fugate. Well, Senator, I would like to talk
specifically about what those issues are. I think there are two
times when local officials have hired contractors, and based
upon my conversations, they have hired contractors because of
the workload issue, that they need additional staff because
they are having to process literally hundreds of thousands, if
not millions of dollars, and they just are not staffed for
that. So they hire consultants to provide the staffing for
that. It is when they have to hire consultants because of the
complexity of the program. So it is a balance between
simplifying the program without undoing or necessarily
incurring increasing risk of waste and fraud. It is to maintain
the consistency and the answers, but also the eligibility.
And I think it also comes back to those communities that
had gone through previous disasters have greater experience.
Oftentimes they are hiring the consultants to provide staffing.
So the issue is: What are the specifics that are requiring the
contractors to come in to answer questions on program
eligibility? And is it because they are not familiar with the
program and are looking for assistance or because the program
has become so complex it requires that?
I think the answer is a blend of that, and I am not going
to deny that it is complex.
Senator Coburn. All right.
Mr. Fugate. But I want to work toward that solution.
Senator Coburn. I am just about out of time. I want to
followup on one thing that Senator Johnson talked about. If you
are in the Hurricane Sandy disaster area and you are not going
to find out until July of this year what the floodplain map is,
what are you supposed to do for your home?
Mr. Fugate. Senator, except in a couple of cases, most of
the advisory based flood elevation maps are being published.
They are being updated as the traditional data. Probably the
biggest change will be in some of the tidal backwater areas
where it may reduce the vulnerability zone, which would change
construction, but the elevation requirements are not
significantly changing. The question is: Would we see these go
higher? And the answer is: Based upon our data, no. At best,
what the updated maps will show is maybe less area. But in any
case, building to those levels would ensure that you would not
risk the preferred rate for your insurance premium and would
also mitigate future storm damage.
Senator Coburn. So could a homeowner in one of those flood-
prone areas take away from this hearing today that, based on
the maps we have today, if they built to that, they are not
going to have their premium adjusted upward because they did
not follow a new flood zone map?
Mr. Fugate. As long as it is areas where we have the most
current advisory maps. There are some areas----
Senator Coburn. Do all these people know that? I mean, do
they know what is the most current versus what is not? In other
words, how do we get it going faster based on this real
limitation of not knowing what the requirements are?
Secretary Donovan. Senator, if I could just--one of the
things the task force has been doing, working with FEMA, is
exactly what you are describing. I think it is one of the real
successes of this, that FEMA was able to accelerate the process
of those new maps being created, put them out publicly. They
are now available across all of the State of New Jersey.
Governor Christie has adopted those new maps, plus a foot, for
the entire State for rebuilding. And there are meetings going
on across the State with the task force and FEMA personnel to
inform citizens about what those new standards are.
Is it perfect? Can we say that there are not going to be
some revisions in the months to come? No, because, obviously,
if there is feedback from local communities that we have gotten
it wrong or that things have changed, we ought to incorporate
that. But this is a vast improvement to what we have had before
where these new maps are out very quickly----
Senator Coburn. Yes, but it is highly unlikely that they
are going to ask you to raise it. They are going to ask you to
lower it, the local communities, if they think you have gotten
it wrong. So my question to both of you is: Can anybody in New
Jersey and New York and all the rest of the areas that were
affected, based on what is out there now, start rebuilding
based on what is out there now? And, can you assure them that,
following what is out there now, they are not going to get
dinged in their insurance?
Mr. Fugate. Senator, do you want me to say that for every
household or for----
Senator Coburn. Yes, sir I do.
Mr. Fugate. The answer is you cannot say that for every
household.
Senator Coburn. OK, and that is an important thing, because
that creates a slowdown in the rebuilding and response to
Hurricane Sandy, because people are not going to put themselves
at risk if they do not know what the requirements are. What we
ought to do is have a flat-out statement from you all that says
if you are doing it based on what is out there now, we are not
going to come back and ding you in the future. If we have to
readjust rates again and then we have another storm, then we
will. You ought to give them some certainty as to what the
rules are. Do you understand my point? I think there are a lot
of people waiting, from what we have heard, there are a lot of
people waiting to do things based on floodplain maps.
Secretary Donovan. I will----
Senator Coburn. Do you disagree that is not happening?
Secretary Donovan. I do not believe that is what is holding
people up from rebuilding. The more significant issues that we
have heard have been in making sure that payments are getting
to families and, frankly, being able to get the supplemental
funding, once it was passed by Congress. We are now moving very
quickly to get that out. But I have not heard that uncertainty
about the flood maps being the issue holding folks back. And,
again, this may not be----
Senator Coburn. Well, the investigators have heard exactly
that over, and over, and over again. So maybe we need to direct
those people to you so you all can hear it. But we have heard
it over, and over, and over again.
And I am way past my time. I am sorry.
Chairman Carper. That is OK. I think that is a very good
idea, to make sure we followup and do that. OK. Thanks.
Dr. Coburn and I, in restructuring the Subcommittees of
this Committee, have created a famous Subcommittee that focuses
on FEMA and emergency response. We are fortunate to have a
former mayor of Anchorage, the Senator from Alaska, to chair
that Subcommittee, and his Ranking Republican Member of that
Subcommittee will be Rand Paul from Kentucky. We are delighted
you are willing to take this on, and in the future, I think
hearings of this nature will be done at the Subcommittee level,
but this one for the lead-off, we wanted to do it at the full
Committee level.
So, Senator Begich, you are recognized. Thanks.
OPENING STATEMENT OF SENATOR BEGICH
Senator Begich. Thank you very much, Mr. Chairman, and I do
look forward to the opportunity to continue to work on these
issues around emergency preparedness, and my experience as a
former mayor gives me some on-the-ground experience dealing
with FEMA and emergency preparedness and other issues.
First I want to say, Administrator Fugate, thank you very
much for one provision that was in the Hurricane Sandy
appropriation package that allows now federally recognized
Native American/Alaska Native tribes to actually directly
request from the President in an emergency disaster. We think
this is a huge plus, and we are hearing positive things from
folks back in Alaska about how this gives them some opportunity
to recognize and not wait for State bureaucracy. To be frank
with you, in a couple disasters it has taken the State too darn
long to get an answer, and the people on the ground were
feeling the pain. So, first, thank you for having that in the
package.
But I would ask, I know you are working through the
regulatory process now. What is your timetable to get that into
play? And the reason I say this is we are moving into our
disaster time. This is when, if there is going to be a
disaster, between now and October is when we kind of see these
things occurring. So what is your timetable on putting those
regulations in place and giving some consultation to the tribes
to know how this will work?
Mr. Fugate. Well, thanks to the Senate and to the House for
providing that provision. We have already implemented it. Based
upon the statutory change, we are currently using the
provisions we use for States to determine that. There have been
two requests and two Presidential disaster declarations already
issued, one for the Eastern Band of the Cherokee Indians in
North Carolina and one for the Navajo Nation.
We are right now entering into a consultation process to
begin rule development, but we did not want to deny tribal
governments the opportunity to make their requests.
Senator Begich. So you are doing it simultaneously,
basically?
Mr. Fugate. Yes, sir.
Senator Begich. That is fantastic.
Mr. Fugate. We are doing this as a pilot. The consideration
is, though, many tribal governments based upon the current
rules, would not have the resources to manage that. So we
recognize self-determination. The tribal governments may elect
to request directly from the President if they have the
capability to manage a disaster. If not, they can still go with
the State and they will still receive disaster assistance. It
is not predetermined, but it is self-determination for a
sovereign nation to determine how they would like to request
and receive disaster assistance.
Senator Begich. Fantastic. Thank you for that.
Second--and this is my experience, again, as mayor--one of
the things we did, we recognized--and no disrespect to FEMA. We
did not want to do the programs where we had maybe Homeland
Security, FEMA, or whatever agency would assist us in this and
storing food and products and so forth. I think it might have
been one of the first. It was after Hurricane Katrina. We did
an agreement with companies like Home Depot, Sam's, and others
where they are our stock house. We have an agreement where for
the first 72 hours, certain stock keeping units (SKUs) that we
have listed out with the products are not able to be purchased
by the general public so we can determine if--for example,
plywood is a great example where people will come in, buy
everything, and then resell at a very high price. So what we
did is we created a system that the types of emergency products
that we needed in a case of emergency would be locked out from
purchase for 72 hours until we gave an OK to move it.
We think this has been very successful. It costs us
nothing. It was just civic responsibility. We did not have to
put a fee on it or anything. I will say this because our school
district decided to get big old vans and load them up with
stuff and put them at every school site, which to me is a total
waste. A lot of money, then you have got to rotate that
inventory, and it just does not make sense when we have got
huge warehouses that have a better understanding of logistics
than any Federal agency will ever have.
So tell me how you partner with the private sector about
ideas like this, are you exploring them?
Mr. Fugate. Yes, sir, Senator, this was actually something
I experienced in Florida under the leadership of Governor Bush.
We found ourselves competing with the private sector at
something they do better than us.
Senator Begich. That is right.
Mr. Fugate. So the goal was to quit competing with the
private sector and look at how we bring them onto the team and
complement where there are gaps. We currently have a Business
Emergency Operations Center where we work with the major
corporations. Part of what we track is where stores are open.
If we know stores are open, we know those are areas that most
likely do not need bulk supplies. They may need some tailored
equipment, but bulk distribution would be counterproductive. We
focus on the areas where the stores would not be open, and we
work with the industries on what supply chain issues are going
to occur.
Our experience tells us there are some things that make
sense to store, certain durable goods and certain consumable
items that oftentimes in the first 24 to 48 hours are the
hardest things to get into an area. But we also recognize that
the private sector needs to have a seat at the table. Much of
the planning has always been what I call ``government
centric.''
Senator Begich. Right.
Mr. Fugate. And ignored what the private sector was already
doing.
Senator Begich. Can you on that point--and you do not have
to do it now, and maybe we can have a further discussion later.
But I would like to get some additional information from you on
those relationships and how they are doing.
I give the Anchorage example, the school district, because
we have three Sam's, we have four Home Depots, and we have more
concentration of bulk supply in Anchorage, but yet now we are
doing these things that they had to get a grant from somebody,
and I just want to understand a little more of this. So if you
could prepare something or at least whatever you have that you
can share with us.
Mr. Fugate. I would be more than willing to, Senator.
Senator Begich. Let me jump, only because of time
limitations here, to Secretary Donovan. Thank you very much for
being here. Always good to see you.
Secretary Donovan. Thank you.
Senator Begich. When you visited Alaska some time ago, we
appreciated it. Let me ask you, you are doing the task force on
Hurricane Sandy. Out of that, will you derive ideas that will
say here is the list of structural changes we need, maybe in
FEMA or whatever other agency? Is that part of the goal of that
task force other than just making sure it all works well?
Secretary Donovan. Absolutely. So we are required to
deliver a report to the President by August 2. One of the
pieces of that report would include recommendations for how to
improve not response, but longer-term recovery going forward.
And that might include structural changes to the Federal
Government. It also will likely include a set of other types of
recommendations. Just to give one example, the inability to get
gasoline in the region was a major problem after the storm.
Are there things that we could do at the Federal level, but
also are there sort of model programs that States or localities
could adopt to deal with situations like that? So that would be
an example in addition to the structural changes internal to
the Federal Government that we would be looking at.
Senator Begich. Will you also look at--and I think Senator
Coburn was talking a little bit about it, but to expand on
this--one of the issues you always hear is how long it takes
from one point of entry into the system for an individual and
then how they can get their resources delivered to them,
whether they be monetary or otherwise. Are you going to look at
logistics and system issues, gas was one example, but
throughout the whole system?
Secretary Donovan. Absolutely. Let me give you one example
that we have already done. The Small Business Administration
has the authority after a storm to provide loans to small
businesses.
Senator Begich. Right.
Secretary Donovan. But what we have typically found in
Mississippi and a range of other places is that there are a set
of businesses where a loan does not work for them because of
the loss of income for some temporary period of time. So CDBG
typically provides grants to local governments, to States and
locals, that they then set up to help small businesses.
One of the things that we have done as the task force is to
take all the data that we get from SBA of folks who applied,
businesses that applied but were not eligible for loans. We
have provided that information to the States and the locals so
that they do not have to go back out and find these businesses
and do not have to re-underwrite--go through the paperwork
again that they have done the first time. So that is a benefit
to small businesses, it is a benefit to the agencies, and it
will get money to those businesses faster and at lower cost.
Senator Begich. Very good. Let me end on this question. I
am not sure who mentioned it in their opening statement, but
the issue we always hear about FEMA dollars replacing in the
current location after something is destroyed, but the Corps--
and I feel so bad, Ms. Darcy. No one is asking you questions,
at least, but maybe that is good.
Ms. Darcy. Do not feel badly. [Laughter.]
Senator Begich. Maybe that is good. I do not know. But, on
the one hand, the Corps might say, if you keep rebuilding in
the same location, you are going to have the same problem. But
FEMA has limitations. It just seems our goal in this big
picture is disaster relief, do not repeat the mistake, maybe
systematically or structurally.
Will you be, in your work through Hurricane Sandy, looking
at that broader picture? Because I tell you, it is the most
frustrating thing to hear. I hate hearing it, actually.
Secretary Donovan. Yes, and this drove us crazy in the
longer-term rebuilding in Hurricane Katrina and a range of
other areas. So let me just take an example of exactly what you
are talking about.
One of the things that Congress did in this supplemental
that was terrific was give FEMA more authority to say do not
just rebuild exactly what was there before----
Senator Begich. Right, mitigate.
Secretary Donovan. Mitigate. But the funding that FEMA has
will not necessarily pay for more than the cost to just
rebuild.
Senator Begich. Right.
Secretary Donovan. And so what we are going to see with
FEMA projects and with Army Corps projects is that CDBG will
supplement those other funding sources where local governments
are making a choice, no, we should build back stronger, it is
going to cost a little more money, it will pay for itself
through mitigation; but we are going to have to blend those
funding sources in ways that has been a real problem in the
past.
So you gave us authority not to require a duplicate
environmental. It makes perfect sense.
Senator Begich. Right.
Secretary Donovan. We are now implementing that. We are
looking at other ways that we can basically streamline using
different pots of money for the same project to make it as
efficient and quick as possible, and those models will be
useful in Hurricane Sandy, but also for future disasters, we
will have a sort of template for the way to bring those funds
together in as seamless a way as possible.
Senator Begich. Very good. Let me end on that to say, Ms.
Darcy, see that, you did not have to answer the question. That
is not bad.
Mr. Secretary, thank you. I will be very anxious--and
maybe, Mr. Chairman, as we move forward on these issues, as you
finish your work there, at least start preparing some of these
recommendations, maybe within our Subcommittee we will have
some further discussions about what is the next step to make
sure it is more seamless and less complicated for the agencies,
but also the recipients who are coming in on the front end.
Secretary Donovan. Amen.
Senator Begich. Thank you all very much.
Chairman Carper. Before I recognize Senator Levin, let me
just say, Senator Begich, and you are the Chair of the FEMA
Subcommittee and have Rand Paul as Ranking Member. Dr. Coburn's
staff has done some good investigative work up there northwards
of where I live, and I would just urge that there be a good
exchange of information between your staff as you staff up and
the work that has been done by his investigators.
Senator Begich. I look forward to it.
Chairman Carper. Good. Thank you.
Senator Levin, welcome.
OPENING STATEMENT OF SENATOR LEVIN
Senator Levin. Thank you very much, Mr. Chairman, and let
me welcome our witnesses as well.
Hurricane Sandy, incredibly enough, did some damage not
only where it was the most visible on the east coast but in the
Great Lakes as well. The destructive forces were so huge that
they caused damage to breakwaters and created a silting problem
in harbors on the Great Lakes. Prior, to Hurricane Sandy we had
already seen massive damage on the Great Lakes. We are in a
disaster situation because of drought and low water levels.
Lakes Michigan and Huron set new record lows, hitting more than
2 feet below their average. This was before Hurricane Sandy's
problem with the silt in the harbors. This was a drought
problem that Hurricane Sandy came on top of. Lake Superior is a
foot below its long-term average. The Army Corps is predicting
that all of the Great Lakes water levels are going to remain
below average. This is a huge problem for our freighters that
are getting stuck in channels and harbors threatened with
closures, and for boats that are unable now to sail. We have
apparently seven of our Great Lakes ships, these so-called
lakers, which are 1,000 feet long, that are not going to be
able to sail this summer.
So the damage of Hurricane Sandy is relevant to us.
Compared to the other damage that Hurricane Sandy created, this
seems small. But, if you are trying to do commerce in our Great
Lakes harbors and those harbors cannot function, it is a big
deal for you.
Assistant Secretary Darcy, we got an e-mail this morning
saying that of the $18 million estimated damage from Hurricane
Sandy, $5 million is going to be directed to Great Lakes
projects which were damaged as a result of Hurricane Sandy. Did
I read that e-mail correctly?
Ms. Darcy. Senator, my staff informs me that today we will
be providing $19 million of supplemental money for----
Senator Levin. OK, because I know it was 18 to 19 all
together, so that is very good news, and we thank you for that.
The other questions that I have, if I have--yes, I guess I
have at least another minute or two--got to the question of
whether or not the Stafford Act allows for support where
drought is the cause of the problem. So I guess, Mr. Fugate, I
would ask you that question.
Mr. Fugate. Senator, having been in a State that dealt with
droughts and looked at the Stafford Act at that time, and now
being the Administrator of FEMA, drought in itself would not
necessarily warrant a Stafford Act declaration. You would have
to look at the consequences. Since most of the drought
consequences are economic, the Stafford Act does not address
economic losses. It addresses uninsured losses that are the
responsibility of State and local governments to pay for.
So when we have looked at this, it really comes back to
whether or not there is an emergency to this that is not
economic, such as a failure of a major water system that may
require emergency supplemental assistance for drinking water.
Or is this causing physical damage or other types of loss that
are not economic in nature but are damaged due to the drought
that would warrant a declaration based upon the State's
impacts?
In looking at this, we think the thing we see most often
with droughts, is the symptom of droughts which is wildfires.
We worked with the U.S. Department of Agriculture on this
looking at drought last year. We provide elements of the
National Recovery Framework to support drought recovery. But
the Stafford Act itself does not address what is usually the
underlying issue, which is the economic impacts of drought
versus physical damages that are uninsured and may require
additional taxpayer support.
Senator Levin. And presumably that now is within the
jurisdiction of the Department of Agriculture? Is that where it
comes?
Mr. Fugate. The jurisdiction would be based upon the
programs. Agriculture, because of the agricultural droughts,
has had a big lead, but there are other Federal programs that
have support roles, such as Interior and others for Federal
lands and water management, and the Corps of Engineers. So,
again, using that National Recovery Framework, we knew States
were having to weave through all of the acronym soup of the
Federal Government looking at drought-related issues. But when
it came back to the Stafford Act, unless we have physical
losses that were uninsured, we think that the primary role of
the Stafford Act may be an emergency declaration if you had a
critical water system failure, but that the economic losses are
not addressed in the Stafford Act.
Senator Levin. Thank you. Thank you all.
Thank you, Mr. Chairman.
Chairman Carper. You bet.
I am going to ask a couple of questions for the whole panel
and start with you, Assistant Secretary Darcy, if you would. We
talked a little bit earlier about whether or not there are
sufficient resources at the Federal, State, and local
government level in order to make the recovery successful. We
talked about how do we measure success, and I want to just ask
you to think about what other tools you need in your tool box,
each of you; it could be money, it could be people, it could be
regulatory relief, it could be regulations. What other tools do
you need in your tool box to enable us to get closer to the
success we want?
Ms. Darcy. We have a pretty good tool box; however,
oftentimes in a recovery, there needs to be additional
flexibility. In the response, as opposed to the recovery, we
often have certain situations where we can use what we have
planned for a recovery response, to prepare us to do some
things a little quicker than we would ordinarily. But in
recovery, we need some additional flexibility.
One of the things that we are finding in response to this
Superstorm Sandy, through the work of the task force, we see
the more that we can coordinate our efforts, such as a CDBG
grant going to a community where there is a storm damage
reduction project that needs to be rebuilt. I think the
mechanisms that Secretary Donovan is talking about are being
developed through the work of this task force. These mechanisms
are the kinds of things that would help us to be able to
recover more quickly.
Chairman Carper. All right. Thank you. Secretary Donovan.
Secretary Donovan. Yes, I will just build on that, and I
want to recognize that we are still very much in the middle of
this and, really for the first time ever, fully implementing
the National Disaster Recovery Framework. So I want to make
sure we come back to you this summer when we are issuing the
report with a fuller answer to that. There are lots of things,
costs and other things, we do not yet know.
Having said that, I think one of the most important things
that Congress did is to make improvements in the Community
Development Block Grant program with this supplemental,
flexibility--for example, I talked earlier about not to having
to do duplicate environmentals, or a range of other things,
will make it easier to use with other funds.
However, I do think that going beyond that to create a kind
of permanent program for a disaster block grant would make
sense. There are still problems and issues with using kind of
disaster by disaster, creating supplementals using CDBG that do
not have a consistent structure that is set up to deal with
disasters. And we would be happy to provide you more specifics
on what exactly those are.
Again, a number of those, particularly led by Senator
Landrieu, were included this time. But I think there are others
that we could continue to work on to improve the CDBG program
for these cases.
Chairman Carper. All right. Thanks.
Administrator Fugate, but just very briefly, if you could
respond.
Mr. Fugate. There are a couple things. One, getting back to
Senator Coburn. Unless I am prohibited by legislation, I want
to look at what you recommended about what we can provide, if
you used the advisory-based flood map, best available data,
there would not be future penalties. I am not sure if I can do
that with the reauthorization, but I will review that.
Chairman Carper. Let us know what you find out.
Mr. Fugate. The second thing is that probably the biggest
tool that I am still wrestling with, which goes back to Senator
Johnson and Senator Coburn, has raised this issue with me about
threshold of disaster declarations, do we have the right
balance point for the risk that the Nation accepts? And is that
transfer to the Federal taxpayer disproportionate to what local
and State officials should be responsible for? And I think,
again, in the Flood Insurance Program, the key piece of that is
becoming that we want to make sure new growth and new
construction is not subsidized. But in doing that, we have
created a second situation where there is no affordability
built into that for pre-existing residents. My fear is the
backlash there may thwart our efforts to continue to build in
the future, an unsubsidized risk beyond which the taxpayer
benefits. And so affordability I think may be an issue that
thwarts our attempts in trying to make sure we do not transfer
risk to the taxpayer without benefit for future development,
given the enormous amount of homes that currently exist in
floodplains. As the rates go up, we are going to see a lot of
pressure to do something about that.
But, again, I think that we have to build better
incentives. This is a shared responsibility. It is not solely
the burden of the Federal Government to provide all assistance
in disasters, local and State governments have roles and
responsibilities as well as the private sector and individuals.
And if the thresholds for disasters are too low, there is not
much incentive for States to build that capability to reduce
future losses.
You directed us in the Sandy Recovery Improvement Act to
review the General Accountability Office reports on thresholds
for disaster declarations. We have undertaken that. We have
looked at some of the things we would do that would not require
legislation, Senator Coburn. There are some things I think may
actually increase a better understanding of States as to what
their threshold responsibilities will be versus the current
system, which in many cases we are seeing a lot of disasters
declared that you raise questions about whether the State could
manage it.
I want to make sure that in the rulemaking and consultation
process we are moving that, so States understand better what
their responsibilities are and when is it appropriate for the
Federal taxpayer to support those recoveries. Hurricane Sandy
is obviously one of those shared responsibilities. But it is
getting that right so that we do not continue to transfer risk
to the taxpayer without understanding the benefits and the
impetus to reduce that risk through mitigation.
Flood insurance, building codes, and land use management
are probably the three biggest tools in our arsenal, but only
one of those do we have direct control over, and that is flood
insurance and the regulations. Building codes and land use
management is often a local decision that has even greater
influence on the survivability and resiliency of our
communities.
Chairman Carper. Let me just followup on this notion of
shared responsibility. It is something I talk about a lot. I am
pleased to hear that this panel is doing the same thing.
Just an anecdote. I went to the high school basketball
tournament in our State this last weekend at the University of
Delaware. I was talking with a really good high school
basketball coach, and we were talking about who were the best
players--the best shooter, the best passer, the best rebounder,
the best dribbler--who were the best players. And he said
something to me that I think is really relevant here. He said,
``The best player is not necessarily the one that passes best,
shoots best, rebounds best. The best player is the one who
makes everybody else on the team better.''
What can we be doing at the Federal level to make the rest
of this team, including State and local governments, including
emergency responders, including insurers, what can we do, what
should we be doing in addition to what we have already done to
make everybody else better so we can be more successful?
Jo-Ellen, do you want to go first, please?
Ms. Darcy. Having the support from the Congress for us to
be able to, in recovery, move out quickly as well as provide
the support of what is needed for the long term. Oftentimes
what we are looking for in a recovery response is to get
everything back exactly the way it was today. We need the
support to be able to take a long-term view on what we should
be doing, we especially want to make a Federal investment that
is smart; to make a smart expenditure of the dollars that the
Congress is going to give us. So I think, to have your support
and to look long-term at how we can be better at storm damage
reduction, recovery, and need less recovery and disaster
response.
Chairman Carper. Thank you. Mr. Secretary.
Secretary Donovan. It is a great question, and I would just
go back to--I do think on CDBG, and in a range of other areas,
permanently authorizing programs that are more flexible, that
really do get this balance right, as Craig has said, between
private responsibilities and public responsibilities is
important.
The other thing I think I would say from our experience,
not just here but over the last 4 years across the country, is
that planning matters. And we spend an enormous amount of time
and effort and public cost recuperating from these disasters,
where smaller investments up front, both in mitigation--and I
mean the infrastructure there--but also in getting localities
and States ready for these kinds of events.
I happen to have been involved in planning for exactly this
kind of disaster in New York City when I was Housing
Commissioner there, and I will tell you, not just the
evacuation plans but a lot of the other longer-term mitigation
work that was put in place has made a difference. There is lots
more that could have been done, but I think we could do more as
a Nation to help localities and States prepare for these kind
of disasters and to do smart things in advance.
Chairman Carper. OK. Good.
Craig, if you could respond just briefly, I want to yield
to Senator Johnson and then back to Dr. Coburn. Please, go
ahead.
Mr. Fugate. Ask the hard questions, Mr. Chairman. I think
as Federal agencies we dread hearings, but I think the reality
is that it is in the process of exercising the healthy debate
of how we get better that forces us to do the things that
oftentimes may not be easy, but it pushes us to make those
changes.
Chairman Carper. Good. Dr. Coburn and I, as I said, had a
conversation when we assumed our new responsibilities in
leading this Committee that we were going to focus a lot on
oversight. And it is interesting to me how often that oversight
is welcomed. But there is that old adage, ``Be careful what you
ask for.'' You are going to get it. Thank you. [Laughter.]
Thank you. Mr. Johnson.
Senator Johnson. I hope you think we have been pretty kind
and gentle on you. I think these are some pretty legitimate
questions.
I would like to go back to the public-private and the
pricing of risk. I realize it is too early on Hurricane Sandy,
but do we have the final figures on Hurricane Katrina in terms
of how much was the total cost of that disaster, how much was
borne by the Federal Government, State governments, and private
insurance?
Mr. Fugate. Off the top of my head, Senator, I think it may
be there, but I do not have it at my fingertips. We will
provide that. I will put that together and get you that. And I
am not sure it is a complete story because what I keep finding
is, since FEMA only looks at what were the FEMA assistance
provided, we can look at what other Federal agencies provided.
But the hard number to get is what the private sector went
through.
Senator Johnson. Yes.
Mr. Fugate. Because if it was not insured, it is not always
easy to get what that number was. But I think on the Federal
dollars spent, we have that. I do not know if I am comfortable
with what the private sector has.
Senator Johnson. I would be interested in just private
insurance. I mean, forget uninsured, but, we will submit that
for the record.
Mr. Fugate. And part of that is still contested;
particularly in the wind insurance arena, that was heavily
contested and is still being litigated over the differences
between flood damage, wind damage, when the homes were impacted
by both hazards.
Senator Johnson. You administer the Flood Program, so,
again, if you do not have these figures at your fingertips, I
understand. But to what extent has the Flood Program been
underfunded year after year? Can you kind of go back, starting
with this year versus last year versus as far as you can go
back?
Mr. Fugate. Well, again, we sought an additional borrowing
authority of $9 billion to cover potential losses for Hurricane
Sandy as well as provide a cap going into the rest of this
year. We still owed a little under $18 billion that we had
borrowed from the Treasury from payouts from Hurricane Katrina.
Those are outliers, and generally the program, on what you see
as a typical year, provides enough revenue to pay those out.
Senator Johnson. Now, is that through premiums, or is that
also from Federal funding?
Mr. Fugate. That is from premiums.
Senator Johnson. Just from premiums.
Mr. Fugate. But the problem is it has undervalued the risk,
and that is why, again, in moving toward more actuarially
based, particularly new growth and new construction, we were
subsidizing risk below the actual cost of those impacts. And so
our exposure is far greater than the typical year-to-year
impacts. So outliers such as Hurricanes Katrina and Sandy
produced tremendous impacts that result in us having to borrow
additional funds. But those funds and the premiums themselves
are what drives the payments and the borrowing authority.
Senator Johnson. If it was a private insurance program, to
what extent do you think it is underfunded? What do you think a
private insurer would actually have in terms of reserves for
potential losses?
Mr. Fugate. Private insurance refuses to write flood
insurance because they cannot capitalize the risk.
Senator Johnson. And I guess that is somewhat the problem
there, isn't it? Do you have any feel for what that amount
would be? Would it be $50 billion? Would it be $150 billion?
Mr. Fugate. You are probably talking levels that are in
excess of half a billion or greater, depending upon the
exposure and what risk they will write. But in looking at----
Senator Johnson. Half a billion or half a trillion?
Mr. Fugate. Half a trillion. Sorry, sir.
Senator Johnson. OK.
Mr. Fugate. Just knowing the exposure in certain areas, it
really comes back to if they were able to write policies in
less risky areas where there were strong building codes and
mitigation, they may be getting to that point now where there
may be opportunities where it would make sense to offer
commercial insurance. But in far too many areas, their concern
is that they cannot leverage borrowing authority, reinsurance,
and apply this nationally on a State-by-State basis given the
risk.
So, I mean, one of my earlier stated goals was: could we
privatize or privatize elements of the Flood Insurance Program,
create the incentive that the commercial industry would write
that so you would not have bifurcated policies, you would have
all-hazard policies, instead of one for wind, one for flood,
one for whatever.
Those conversations, although they have taken place, have
not resulted in industry seeing this as an opportunity to
return a sufficient return on their investments. And as I tell
people, it should be a sign when the commercial industry cannot
figure out how to manage this risk and make money, the Federal
Government--that we are probably undervaluing that risk and
have a greater exposure. And so part of the reauthorization of
the Stafford Act is to start moving toward more actuarially
sound.
But the true test when we are actuarially sound is when
people realize they can write flood insurance and make money
from that and begin writing it and offering it commercially
rather than just as a federally backed program.
Senator Johnson. I understand your point that if you start
writing policies that are more actuarially sound, how do you
grandfather the neighbor right next door that did not--so how
do you start moving that direction then? What is the process?
Mr. Fugate. Well, the rulemaking will take place--we have
already taken all of the secondary homes. They went to full
actuarially rate this year, so they are getting their renewal
policies, they are getting their initial bills. For the other
policies that are not secondary homes, we are going into
rulemaking. We are looking at the rulemaking process and we
expect to start those comments in the next couple of months.
Those rules would go in effect by fall and it would start the
next iteration of those policies as they move to full
actuarially.
If we were able to look at affordability, we would very
much want to limit that to only those that are existing or
primary homeowners, not new construction, and look at a means
test versus what we have done before, which was giving entire
communities a phased-in, a preferred rate as their risk had
changed. We want to make sure that it is means tested so that
we are not continuing to subsidize risk except where it makes
sense for affordability. But the hard part here is you do not
want to create an incentive that says: if I build something new
or I sell my home, I am giving that affordability to the next
buyer without them accepting that risk.
Senator Johnson. That is the problem. When you bring in the
concept of affordability, you are basically subsidizing the
risk, and you are incentivizing people to build where,
truthfully, unless they can afford to do it, they probably
should not be building, and you are just putting the American
taxpayer on the hook again in the same situation.
Secretary Donovan. I do think it is a very important
distinction Craig has made between existing homeowners until
you have a transaction on that versus new construction. And
this is where--flood insurance is a critical lever, and I do
think that these new maps, as I said before, are a huge step
forward. The problem is, if they are not adopted, not just for
flood insurance but in a range of other areas, we will not make
as much progress.
So one of the critical things I think we are trying to do
in the CDBG, in other investments we are going to be making in
the region for rebuilding, anytime you have a substantial
enough level of damage, we should be requiring that they move
to those new maps, including where we are issuing a new
mortgage in those areas. And so those are all, in addition to
the Flood Insurance Program, other levers that we have in the
Hurricane Sandy rebuilding process that can go to the exact
same goal that you are talking about.
Senator Johnson. Just one quick question. As you are trying
to make that distinction between new and recovered
construction, are we doing that across the board, all coastal
areas, all floodplains, or just strictly in the Hurricane Sandy
area or each particular disaster area?
Mr. Fugate. Senator Johnson, as the NFIP was reauthorized,
there is no affordability. So as we go through the rules, what
will happen over the next several years is we adjust the rules
to reflect actuarially based for all. We did it for the
secondary homes. That was a clear direction. For the other
policies, we are having to do that through rules. We are going
to look at about a 3-year phase-in. So after 3 years, no matter
where you are, you are going to be paying the full cost of that
insurance. Our concern is, there is going to be tremendous
pushback on low-income people that live in floodplains that are
not coastal, that are going to be faced with tremendous bills,
which potentially could force them out of their homes. Knowing
that there will be pushback, how do we mitigate that--if that
is even possible, because currently we do not have that
authority. But, more importantly, how do we ensure whatever we
do for that does not translate into subsidizing future risk
when a transaction takes place or somebody builds new?
But my concern is if the affordability piece is not
addressed in this timeframe, there will be tremendous pressure
to reduce those costs, and, unfortunately, historically we have
done that in a way that did not keep future growth at an
actuarially sound rate.
Senator Johnson. Thanks a lot.
Secretary Donovan. And I would echo Craig's point here. As
the lead Federal official now dealing with the Governors, the
Mayors, the pressure is building on this affordability
question, and there is some, I think, political risk that it
gets reversed or that localities would not adopt the maps
there. There are other things that can happen that could set us
back.
I would also say, unlike flood insurance, we do not have
Federal standards at this point that would take the same things
we are trying to do for Hurricane Sandy and apply them
nationally. That is one of the things that in our report to the
President we will be making recommendations about. I see this
as a testing ground outside of the Flood Insurance Program for
how we can put these measures in place nationally that will
avoid this kind of incentive that you have talked about to
build in the wrong places.
Senator Johnson. Thanks.
Chairman Carper. Dr. Coburn.
Senator Coburn. I hope you will send us a copy of those
recommendations.
Secretary Donovan. Absolutely. In fact, we would love to
come talk to you about them before we finalize them.
Senator Coburn. You bet. So far your task force has spent a
couple million dollars. Has any of the CDBG money authorized in
the supplemental been granted?
Secretary Donovan. We have allocated $5.4----
Senator Coburn. Has any of it been granted?
Secretary Donovan. The States have not submitted their
plans to us yet, and we expect that within the new few weeks,
we will start seeing allocations.
Senator Coburn. Let me ask you one question about----
Secretary Donovan. Senator, there has been about $170
million that has already been obligated, about $50 million from
the supplemental that has been disbursed already. So there is
spending that is happening.
Senator Coburn. It is starting.
Secretary Donovan. Yes.
Senator Coburn. OK. Is the New York City Housing Authority
likely to receive significant CDBG funding?
Secretary Donovan. We expect that in the plan we will get
from New York City, they will propose funding, particularly for
mitigation measures in the housing authority there.
Senator Coburn. According to the New York City Comptroller,
the New York City Housing Authority operation is like an
onion--I am quoting--``the more you peel back, the more you
want to cry.''
I have also read that the New York City Housing Authority
is sitting on $1 billion right now. I would hope that you would
take that into consideration. That $1 billion--as well as some
of the other problems with the New York City Housing Authority.
That $1 billion should be applied first to these issues before
we give more CDBG money for the disaster up there.
Are you at all concerned with how they will spend the
money--I am talking about the New York City Housing Authority--
given their track record?
Secretary Donovan. We have actually been looking at this
issue of the $1 billion that you are talking about. The vast
majority of that is committed to particular projects that are
underway. So just to be clear, it is not that there is $1
billion that is not slated to go to particular projects. I will
say, however, that we do have some concerns about the speed of
that spending and the effectiveness, and we will be looking
very carefully at how they are spending this money.
Senator Coburn. So they should take note that we are going
to keep our eye on it.
The $16 billion for the CDBG block grants, they are not
just for the Hurricane Sandy area, right? They could be used in
any of the disaster areas. Do you have any idea what proportion
of that will be spent in other areas? Kind of like what Senator
Levin was talking about, the port areas on the Great Lakes and
some of the other disasters that we have noted.
Secretary Donovan. So you did give us authority to use it
for 2011, 2012, and any remaining disasters in 2013.
Senator Coburn. Right.
Secretary Donovan. So we will not be fully allocating that
until we have a better sense of what is happening. But I do
expect that this week we will send the Appropriations
Committees allocations for non-Sandy storms and that next week
we will be announcing those.
I will tell you that the vast majority of the $16 billion
will go to the Hurricane Sandy-affected areas, but there will
be a substantial allocation, I would expect less than $1
billion, toward those other places.
Senator Coburn. Good. Director Fugate, if I remember
correctly--and you can correct me; I may not be right--I think
there is still $4 billion from Hurricane Katrina that is
unspent. Do you know the percentage of what has been obligated?
Mr. Fugate. That would be----
Senator Coburn. And how many years, 9 years, 8 years?
Mr. Fugate. Yes, sir. Senator, there are still projects
that have not been completed. We have been working, as we have
with the State, to try to get all remaining projects finalized.
And where there is still dispute, we have an arbitration
process, but we are trying to get those finished.
So I would have to get back to you with an exact number,
but that is something----
Senator Coburn. If you would, I would appreciate it very
much.
Assistant Secretary Darcy, I want to thank you for the
cooperation of the Corps. We got a load of information last
night and this morning, so I am going to be submitting multiple
questions for the record. We see two different ways to handle
debris cleanup, one going on in New Jersey and one going on in
New York, and there are a lot of questions about that. I would
just give you my general note.
The reason I am so interested in this is I saw the wasted
money in Hurricane Katrina on debris cleanup, and it was
atrocious. During Hurricane Katrina, the Corps contracted at
about $70 a cubic yard, but the guys that were actually doing
it and hauling it to the dump were making about anywhere from
$6, $9 to $15 a cubic yard. In other words, the people actually
doing the work were consuming about 25 percent of what actually
was allocated, and subcontractors all through that took that
money and actually did not do anything except organize.
So we are going to be very interested in following up on
that. I hope you will take it in good faith. It is not to be
critical of the Corps, but we think wise spending of that money
and in a way that is efficient and yet accomplishes the
purposes is important. So I have a lot of questions. Why do we
have a dump site for New York 300 miles away from the facility?
And what are the rules that make us have to go 300 miles when,
in fact, there are other areas in other States that it could
have been transferred to?
In other words, there are a lot of costs based on either
State rules or city rules or other factors. We want to help you
figure that out for the next time so that we are not spending
too much. I think so far we are averaging about $62 a cubic
yard, and we are 7 or 8 years later on debris cleanup. There is
a contrast between New York and New Jersey and how it is done.
We also have the pre-positioned contracts, and the requirement
to use local contractors and, there is a question of whether or
not that is efficient for the taxpayer--because basically we
are paying for it. The Federal Government is paying for debris
cleanup. We need to look at the controls on it, because we are
going to pay what they submit. Yet, we have very little
influence on how they spend that money and whether or not it is
a clean transaction, and the most efficient and the most
effective way to get it done. So I hope you will take our
questions in that light, and we are just going to be good
stewards with taxpayer money asking these questions.
Ms. Darcy. I look forward to the questions.
Senator Coburn. All right. I want to go back to you,
Administrator Fugate. The Stafford Act says that the Federal
Government should get involved in disasters when State and
local capacity is overwhelmed. Right?
Mr. Fugate. Yes, sir.
Senator Coburn. And there is no question in Hurricane Sandy
that happened. Do you believe the per capita damage indicator
is a good measure to determine whether or not State and local
capacity is overwhelmed?
Mr. Fugate. It is a factor that has been accepted, but I do
not think it is the best tool.
Senator Coburn. I want to pin you down. Is this per capita
damage indicator a good measure to determine State and local
capacity to handle disasters?
Mr. Fugate. No, sir. It only looks at, on a numeric basis,
the population of the State and total damages. It looks at
nothing such as the State's reserves, financing, taxing
authority. It does not look at the impacts of that disaster. It
is also clear that the Stafford Act does not require a
declaration merely because you reached your per capita
threshold. In fact, there have been recent declarations that
were denied. Even though they made a numerical mark, it did not
demonstrate it had exceeded the State capability because no
life, critical infrastructure, or other issues were involved
other than economic impacts.
Senator Coburn. Right. You and I visited in the office
about the political problems with changing that, and I
understand that. But we have got to figure out a way to have a
better assessment. The per capita indicator is $1.37 today, yet
it has not been changed to account for inflation. There is
nothing to it. So we have to work together, both with Secretary
Donovan and you, to figure out how do we really know when to
apply Federal funding. When are our States overwhelmed? In
Oklahoma, we are the highest State in the country as far as
disasters in the last year, but some of those certainly did not
overwhelm Oklahoma's capability.
And so we need to figure out together, how we do this more
effectively to really help States when they are overwhelmed
versus not helping them when they are not, especially when
States have a surplus--like Oklahoma has a surplus. We put $600
million in the bank last year.
Mr. Fugate. Senator Coburn, as we go through this, again,
in the Sandy Recovery Improvement Act, you have directed us to
look at this. We do find a lot of agreement with the general
accounting. I think we have to really look at what is the
outcome we are trying to achieve. If it is merely reduce the
number of disasters being declared, that is one route. I would
rather take an approach that says we give States some more
predictable level of a support so they are driven to build that
capacity.
Senator Coburn. Right.
Mr. Fugate. Because ultimately a disaster occurs, somebody
is paying for it, whether it is a local, State, or Federal
taxpayer. I think that should be a shared responsibility. But I
think it should be done in such a way that it incentivizes
building more capability at the State and local level and
reducing the cost of disaster response and use that to drive
that process. But as you point out, the minute you start
talking about raising the threshold, States are going to be
very concerned about how that adversely impacts them.
Senator Coburn. Right.
Mr. Fugate. But I do not think it is a reason not to look
at it. But we are going to have to work to look at this as the
end game of how do we build capacity and a better understanding
of what the expectations are for State and local response to
when it becomes a Federal shared----
Senator Coburn. That is much better said than I did.
Let me make one other----
Secretary Donovan. Senator, if I could just add quickly on
that, I would love to be part of that conversation because CDBG
by definition is only authorized and appropriated when there is
a major disaster. We have done a lot of work over the last few
years to try to focus on a formula--because you give me
flexibility to determine the formula--that is not just a per
capita formula. We do use only severe damage. We use
concentration measures and a range of other things in how we
determine the formula that could be useful in this----
Senator Coburn. Did I hear you say that you only get CDBG
funds based on disasters? We allocated CDBG funds every year.
Secretary Donovan. The CDBG disaster funds are not
available in every disaster. Really, typically they only come
when you have something that overwhelms the State and local
capacity by definition.
Senator Coburn. Right. One last question, if I might. We
authorize I think $9.7 billion into the NFIP, and according to
my staff--and you correct me if this is not correct--85 percent
of the claims have been closed to date. Is that correct?
Mr. Fugate. It has been going up, sir. I think as of
yesterday we were at 90, 91 percent of all claims----
Senator Coburn. So we are worried about $6.2 billion or so
that has been spent?
Mr. Fugate. Yes, sir.
Senator Coburn. So if you take that, we overshot a couple
billion dollars, right? Does it look like that to you?
Mr. Fugate. It gave us the borrowing authority going into
the rest of the year.
Senator Coburn. Right.
Mr. Fugate. Again, these were borrowed dollars. This was
not an appropriation.
Senator Coburn. Right.
Mr. Fugate. So what this gave us was, we were getting up
close to our borrowing authority, and with Hurricane Sandy we
would have reached that and possibly exceeded it and would not
have been able to service claims.
Senator Coburn. Got you.
Mr. Fugate. So we will pay out approximately two-thirds of
that loan. That will leave us about $3 billion----
Senator Coburn. About $3 to $5 billion.
Mr. Fugate. $3 to $5 billion depending upon final payments
for future disasters. And that is borrowing authority.
Senator Coburn. Yes. It is not borrowed.
Mr. Fugate. The way that it is structured is it has to be
serviced by the claims, and that, again, is a second issue. But
it is that potential that it raised the borrowing authority for
the future flooding, knowing that Hurricane Sandy was going to
take us to our caps that we already had.
Senator Coburn. Got you. Well, I want to again thank you
all. This is the way to do oversight. We actually learned a lot
here today from all of you.
I would love some promptness in response to these questions
that we are going to have. My questions for you, Assistant
Secretary Darcy, may take a little longer because you gave us a
lot to chew on.
Ms. Darcy. I gave you a lot of information last night.
Senator Coburn. You sure did, and they are still going
through it right now. But a prompt response to the questions
for the record would really be appreciated so we can continue
to work on this.
Ms. Darcy. Thank you.
Senator Coburn. Mr. Chairman, I thank you.
Secretary Donovan. Thank you.
Chairman Carper. You bet. I am going to ask one more
question, and then I am going to ask Senator Johnson if he
would like to ask one, and that will probably wrap it up at
that point. But we expect to be out of here by noon.
Senator Coburn alluded to how much money was spent down in
the southeastern part of our country on debris removal, whether
or not that money was spent effectively. I think most of us
agree not. Sometimes people ask me, well, why do you talk so
much about waste, fraud, and abuse? I say it is because there
is a fair amount of that, and part of our responsibility and
one of the reasons why we do oversight is to try to reduce that
wherever we can.
The Hurricane Sandy supplemental legislation, as you know,
required the Recovery Accountability and Transparency Board, a
body that was created to oversee stimulus spending, to develop
oversight mechanisms that can detect waste, fraud, and abuse
with regards to Hurricane Sandy funds.
I wonder if each of you would just very briefly explain how
you are working with the Oversight Board to try to ensure that
your program funds, which are limited, are well spent.
Assistant Secretary Darcy.
Ms. Darcy. The funding that we are receiving under the
supplemental? Is that what you are referring to, Senator?
Chairman Carper. Yes.
Ms. Darcy. We provide monthly expenditure reports to the
Appropriations Committees on both sides in order to keep you
informed as to how funds are being spent. We were very involved
in Hurricane Katrina and have many lessons learned from what we
did there and are using that, not only in our engineering, but
also in our contracting. So I think in each disaster, we
learned something new, and from this one we are going to find
out how we can be more expeditious and efficient in our
contracting response to disasters. We are looking at any other
improvements we can make, not only through contracting but also
through re-looking at design criteria we use for the rebuilds
of some projects.
Chairman Carper. Good. Thank you. Secretary.
Secretary Donovan. Senator, the task force has a primary
role in working with the Recovery Accountability and
Transparency Board and the IGs of the individual agencies.
First, we are creating a centralized data system to collect
all the information on spending, locations, other things for
the projects, to provide that to--we call them the ``RAT
Board,'' the Recovery Accountability and Transparency Board--
and also to make sure that we are working with them on the
internal control plans.
OMB has essentially designated in advance that this is
potential high-risk spending. Every agency is required by the
end of this month, by March 31, to create an enhanced internal
control plan. We are coordinating with all the agencies on
producing those plans by the end of the month, and then we will
be helping to implement those.
We are also having a regular ongoing meeting with each of
the IGs and the Recovery Accountability and Transparency Board
to make sure that there is ongoing communication.
So those are three ways that the task force is working with
them regularly.
Chairman Carper. Good.
Administrator Fugate, same question. How are you working
with the Oversight Board to ensure that your program funds are
well spent?
Mr. Fugate. The short answer, Mr. Chairman, is we are doing
it through the Sandy Recovery and Rebuilding Task Force that
Secretary Donovan is leading. We have an additional requirement
that you had in the Sandy Recovery Improvement Act for us to
post our transactions within 24 hours on the website, at
FEMA.gov. That is being done already. But we are also working
with Secretary Donovan and the other members of the task force,
as you said, because many of our programs are touching similar
projects. We wanted to make sure that all of those projects and
all the funding that goes to those projects is visible, and we
are going to use this process to seam it, bring it together.
The first step was to make sure we had the data fees that
would support that, so each agency that was funding and
receiving dollars in the supplemental can show where those
dollars are being expended, and then we can use this tool to
display it to you and the public.
Chairman Carper. OK, thanks.
Senator Johnson. I got a quick one.
Chairman Carper. Senator Johnson.
Senator Johnson. Plus I guess Senator Ayotte is coming
here, so I will do a little place holding.
First of all, I do want to say I agree with Senator Coburn.
I really appreciate your testimony here, and it has really been
very instructive. And I truly appreciate the fact that you
really are looking at the Flood Insurance Program and working
through those very difficult issues of how do we design that
program so we are not incentivizing uneconomic behavior. Let us
put it that way.
But going back to one of the points that Senator Coburn was
talking about, just in terms of claims processing, answering
questions, coming from the private sector I am big into
benchmarking, taking a look at what are the best practices,
taking a look at my competitors and going, well, if they are
doing it better than I am, how am I doing then?
Now, I am not sure it is always true, but you certainly
hear in the private insurance market, disaster strikes and that
claim check is issued that next day. Are you looking at the
private insurance model? Are there things that we can do
legislatively to make--the bottom line is I think the solution
here is reduce the complexity. I do not doubt that you are
dealing with a great deal of complexity. So is there a
legislative solution looking at a kind of benchmarked approach
that obviously private insurance companies are pretty concerned
about the efficiency, the lack of fraud in terms of making the
payments, in terms of reimbursements. Are you looking at that
type of model?
Mr. Fugate. Yes, sir, Senator, and that probably explains
some of the delays. We use write-your-own companies. We use
major companies who, although it is a national flood insurance
policy, they write it, they service it, they adjust it. They
want to do their due diligence because they know that if they
have made excessive payments or fraud or waste, we are not
going to reimburse them. So they do a lot of accounting to make
sure their adjusters, as that information comes in, they make
those payouts.
The second thing is the Flood Insurance Program is not what
you would normally find as a commercial model in that it is not
designed to do replacement costs. It is designed primarily to
make sure that the mortgage is protected and to provide limited
consumer benefits. So where it is easy for an adjuster to come
in and say, ``Your home is destroyed. I am going to give you
replacement value,'' we look at depreciated value. We look at
servicing the mortgage, and we look at your contents'
depreciated value.
Again, the Flood Insurance Program was never designed by
Congress to be what I would call consumer friendly. It was to
be a tool to provide insurance that nobody else would provide,
providing what was essential to protect, essentially the
mortgage, the lender, and provide some limited benefits to
content and household for those people that own their homes
outright. But unlike a traditional policy, we use depreciated
value. The third parties that write those have to be very
diligent in making sure as they adjust those, they do the
depreciated values, because, again, they are subject to audits
by our IGs if they make excessive payments, and we would seek
to get reimbursement from them.
So the process is using the insurance model. However, the
tool itself is really focused on first-party payee, which is
generally the lender, depreciated value, not full replacement
value. And that is part of what has driven to make it as
affordable while making sure the exposure to the taxpayer is
not excessive.
Secretary Donovan. And, Senator, I did host this past
Friday my second lender roundtable in the region with the four
largest lenders in the region. We are working with them, as I
said earlier, to streamline and make consistent the policies
around disbursements of the flood insurance. What evidence do
you have to have that the work is done? How much do you hold
back with the concern that the money may get used for other
purposes--all of those policies, we are working with them to
try to get the best practices from the private sector to make
them consistent.
Senator Johnson. OK. And based on the fact that this is way
underfunded, I am not encouraging you to change it to
replacement value. I understand that. I appreciate the fact
that this is insurance of last resort, and that is the way it
should be handled, and I would obviously encourage you to keep
working on the pricing model so that we reduce the risk.
Mr. Fugate. The biggest lesson there, sir, is that the pool
of the adjusters--which are not standard adjusters, they have
to be specifically trained to do the flood insurance--was a
limited pool. We were able to work and expand that with the
private insurers, and that was one of the initial bottlenecks,
was to get the adjusters out there. So the lesson learned there
is that pool is not sufficient given the large, dense
population areas. We are continuing to work with the private
sector to see how we continue to maintain a larger pool of
trained adjusters for flood insurance.
Senator Johnson. OK. Again, thanks for your testimony.
Thank you, Mr. Chairman.
Chairman Carper. You bet. And then there was one. Saving
the best for last, Senator Ayotte, happy you are here. Good to
see you.
OPENING STATEMENT OF SENATOR AYOTTE
Senator Ayotte. Thank you, Mr. Chairman, and I thank the
witnesses for being here today.
I wanted to ask Assistant Secretary Darcy, you in your
testimony had said that the Corps will undertake a broad and
conceptual examination of the best ideas and approaches to
reducing the vulnerability of major storms over time. And I
certainly think that it is very important that we take a long
view. And in my view, the budgeting for mitigation and disaster
preparedness, we often do ourselves a disservice by lumping
them together and not looking at a longer-term view. We end up
in this concept, whenever there is an emergency, of putting it
all together in the immediate aftermath of that disaster, and I
would like to see us think about planning ahead.
Part of planning ahead is coordination, and New Hampshire
homeland security and emergency management officials have said
that they are working to identify and prioritize mitigation
projects. In developing the mitigation approach, how much
coordination will there be between the Corps and local and
State officials?
Ms. Darcy. Senator, through the supplemental appropriations
bill, we received direction to do a comprehensive study. We are
beginning to scope out that study. It is due to the Congress 2
years after the initial appropriations act was funded. We are
already beginning to scope that out with local and State
officials as well as other Federal agencies. We are looking at
long-term sustainability for our coastline within the North
Atlantic Division, which begins in Norfolk and goes all the way
to Maine.
So we are coordinating that and looking for input from
State and local officials when we put that study together.
Senator Ayotte. And the study will be 2 years from the
passage of the appropriations bill?
Ms. Darcy. Yes, due to Congress. Yes.
Senator Ayotte. OK. Have we done anything like this in the
past?
Ms. Darcy. We have done comprehensive studies, but not to
the degree that this is directed toward a specific geographic
area of the country, which is our North Atlantic Division. That
is the boundary. It is as a result of Hurricane Sandy and
looking at what we have done and what we need to look to in the
future, especially in planning for any additional projects that
are focused on reducing flood risk.
Secretary Donovan. Senator, I would just add that there is
going to be a significant amount of investment in mitigation
beyond the Army Corps' investment--from the CDBG program, from
the Department of Transportation, from FEMA, a hazard
mitigation program.
One of the jobs of the task force is going to be, on a
shorter-term basis than the 2 years, coordinating a mitigation
strategy for the region more directly affected by Hurricane
Sandy. So we will have in our report to the President a
strategy to coordinate and effectively pick the most cost-
effective strategies across the various programs and types of
infrastructure and other investments.
Senator Ayotte. When we look at this report that we will be
receiving, will it contain--for example, we find ourselves
providing emergency disaster funding, but if we look at a more
long-term plan, there are probably financial investments we
could make along the way that would actually save us, in the
event of a disaster, taxpayer dollars. Will this plan also--
when you said it would take a long-term view, will that be part
of the analysis? I mean, I think that is the goal. Obviously,
we want to make sure that people are prepared for emergencies,
but then when we are in an emergency situation, if there are
things we could have done in advance that would have saved
lives, property, and taxpayer dollars, we want to look ahead
instead of, like we do a lot around here, moving from crisis to
crisis. Is that part of what we are hoping to get from this?
Ms. Darcy. It will be part of the study, but I also believe
it will be part of the plan that the task force is looking into
in the short term, in the August timeframe.
Senator Ayotte. Good. I appreciate that. I think that is
really important.
And I also want to say I appreciate that there is going to
be a lot of coordination with the State and local officials.
They are really obviously the front lines, and they are
directly dealing with these issues. And they, I think, have a
lot of terrific advice to offer, all of the Federal agencies
interacting with them, not only on how we can best address
disasters and emergencies, but on the mitigation piece and how
we can more effectively do that.
In my prior position, I had a chance to work with many of
these officials, and I was always really impressed with their
depth of knowledge. So I am glad that there is going to be--and
I will hope and continue to press to make sure that there is
maximum amount of coordination.
Secretary Donovan. We convened the first meeting of the
advisory group for the task force last Friday. It includes
almost 50 State and local officials from across the five States
that were most directly impacted.
What I would like to do is get the contact information of
the folks that you are thinking of----
Senator Ayotte. Terrific.
Secretary Donovan [continuing]. To make sure that the
advisory group can reach out to them and try to get their
input.
Senator Ayotte. That would be terrific. We appreciate it.
Thank you all for being here today.
Secretary Donovan. Thank you.
Chairman Carper. Senator Ayotte, I know you have a lot
going on today. Thank you for making the time to be here.
Senator Ayotte. This is an important hearing. Thank you for
holding it, Chairman.
Chairman Carper. You bet. Thanks for joining us.
A lot of times when we have time--and we have a minute or
two, and I am going to just do this. We appreciate your coming.
We appreciate the preparation that goes into your testimony. We
appreciate all the hard work for the last couple of months that
really back it up.
We appreciate your willingness to respond to our questions
here, and before I forget, let me just note that the hearing
record will remain open for 15 days, until April 4, for
submission of statements and questions for the record. We
appreciate your willingness to respond to those questions, even
all those questions, Assistant Secretary Darcy, that you are
getting from Senator Coburn.
What I would like to do is ask--you gave an opening
statement, I would like you to give a closing statement. Just
take maybe a minute. Over in the House of Representatives, they
give these 1-minute statements. Maybe give us 1 minute, just a
good takeaway, kind of thinking about what has been said here;
what you said, what you have heard your colleagues say at the
table there, some of the questions asked and some of the
dialogue that we have had back and forth. Just give us a good
1-minute close, please. Craig.
Mr. Fugate. Well, I think, I want to come back to flood
insurance in that the way it is designed, the way it operates,
oftentimes the public believes it is one tool, we think it is
another tool, and we have not communicated well what it can and
cannot do.
I think it is a good tool to help reduce the risk to people
to the financial ruin that a flood can cause by providing that
tool. But it is also important to understand it cannot continue
in a way that subsidizes risk below which the Nation can
afford. And I think this is really the tool we have to look at
across our programs. Are we building and investing not just to
the disaster we responded to, but will this reduce our
vulnerabilities and drive down costs and provide more stable
tax bases to government? And I think too often we make
decisions about the immediate and do not always make sure that
we are planning for the future as well. And I think this is one
reason why with this task force structure of bringing together
all the Federal agencies in implementing this large recovery,
we want to avoid what we saw in Hurricane Katrina, knowing that
we have to get better, because we cannot continue to afford
disaster after disaster after disaster and see the same things
occur over and over again. The lessons have to be learned.
Chairman Carper. Thank you.
Secretary Donovan, a takeaway, please?
Secretary Donovan. Senator, first of all, just thank you
for hosting this hearing in the spirit that you and your
colleagues have. In my 4 years in this role, there is no moment
where a family or a community recognizes the need for Federal
help more than in a disaster like this, and there is also no
moment when we have more risk of disappointing the citizens if
we do not respond effectively.
There is no Democratic or Republican way to respond to a
disaster. There is simply effectiveness and speed as well as
excellence. And I just want to commend you on the spirit of the
way you have carried on your duties, you and your colleagues,
in this hearing. And I do think this is in the spirit of how do
we get better. We are getting better, but there is much more
that we can continue to do.
The only other thing I would say is that one of the
consistent themes we heard today was how do we make the
investments that will lower the loss of lives, the devastation
to communities, and the costs to the taxpayer going forward.
And I think if we can learn out of Hurricane Sandy--and,
clearly, the task force has this--I see this as a major goal.
The President has asked us to make it a major goal. How do we
do a better job of investing--whether you call it mitigation,
whether you call it being smart, rebuilding better and
stronger, we have to find ways to invest in those kind of
important measures, and this is a testing ground in my mind for
doing that.
Chairman Carper. Good. Thank you. That was excellent. That
was very helpful. Thank you. Assistant Secretary Darcy, please?
Ms. Darcy. When you hear the word ``disaster,'' you do not
usually think of the word ``opportunity,'' but I think as a
result of this disaster, we have an opportunity to look long
term at the way we are going to not only plan for future
disasters but rebuild as a result of what has happened.
Craig mentioned earlier that one of the things that we
cannot control is land use planning and zoning, which happens
at the local level. I think it is an opportunity for us not
only to help with, but also educate those people in the local
floodplains. Educate those who are living in the floodplains
about their risks. We build storm risk reduction projects, but
we call them ``reduction projects.'' We do not call them
``protection projects,'' because you are not totally protected.
I think it is an opportunity for us to not only educate people,
but also look into our own internal programs as to what it is
we should be looking to for the future. We are looking at our
planning process within the Army Corps of Engineers, looking
toward incorporating sea level rise into what we are looking to
in future projects because that is a reality. We need to be
able to adapt now to what we can anticipate in the future. Our
planning to do that is a way for us to anticipate and also
hopefully have some risk reduction in future disasters.
Chairman Carper. Thank you very much for that.
I am going to give a very short closing statement of my
own, just kind of looking back on the last couple of hours and
what we have heard and said here.
Something you just said, oh, gosh, 10, 15 minutes ago,
Assistant Secretary Darcy, I wrote it down. You said, ``In each
disaster we learn something new.'' And I used to say to my
sons, who are now 23 and 24, I used to say to them, ``There is
nothing wrong with making mistakes. We all make mistakes.''
I like to quote Richard Nixon. I think I am the only
Democrat around who quotes Richard Nixon. But Richard Nixon
used to say, ``The only people that do not make mistakes are
the people that do not do anything.''
Well, as it turns out, there are plenty of opportunities
for making mistakes. And you said, again, ``In each disaster we
learn something new.''
The key here is when we respond to these disasters--and,
unfortunately, we are going to be seeing more of them. The
scientists tell us we are going to be seeing more of these
along our east coast. How do we learn from each one? And it is
very clear that we have learned a lot since Hurricane Katrina.
And we continue to learn literally each week that has passed
since Hurricane Sandy struck the east coast.
Among the takeaways for me today was the emphasis on shared
responsibility. This is not just about the Federal Government.
This is not just about State or local governments. This is not
just about the private sector. We are in this together, and we
need to be able to work together, and part of our
responsibility, as I said earlier, is like that basketball
coach saying, ``The best player is the one who makes sure that
everybody else on the team plays to their capability.'' And
that is part of our responsibility.
In order to do that, we hold these oversight hearings, and
for the most part, they are welcome by agencies and folks who
come before us. But I think--and thanks for what you said,
Secretary Donovan, because the nature of our oversight--we do
not do ``gotcha'' hearings. We try to be constructive. Where
there is good behavior, exemplary behavior, we try to put a
spotlight on that and applaud it, reinforce it. And when there
is not, we try to shame people sometimes, other times just make
it clear we expect better, and they know that.
But one of the things that I take away from here is, again,
the reinforcement. When there has been a disaster, let us
respond to it swiftly, let us respond to it cost-effectively,
and so that when the next one comes, we will have learned and
will be able to do that even better.
The issue of--I did not count the number of times
``mitigation'' was said here today. It has been said a lot. And
there is huge value in mitigation and preparing for the worst.
So we have this shared responsibility. We know the need to
respond swiftly and effectively when there has been a disaster,
the idea that we mitigate against future disasters to reduce
our exposure and reduce the loss of life and the harm to
people.
But I am going to go back to something I said earlier, and
I will not dwell on this, but I want to say it earlier. All my
adult life I have been taught and reinforced to focus not just
on symptoms of problems but on underlying causes. And today we
are talking about symptoms. How do we treat the symptoms? How
do we do that in a cost-effective, smart way? How do we
mitigate against those symptoms in the future? But there are
some underlying causes out here that it is not the purview of
this hearing to go into. We need to be mindful of those, and we
need to be guided by good science.
And with that, I am going to say again thank you all, and
we look forward to seeing you again soon and working with you
for a long, long time. Thank you.
With that having been said, this hearing is concluded.
Thank you.
[Whereupon, at 12:07 p.m., the Committee was adjourned.]
A P P E N D I X
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