[Senate Hearing 109-752]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 109-752
 
            SUPPLEMENTAL APPROPRIATIONS FOR FISCAL YEAR 2006

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

                                HEARINGS

                               before the

            COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                            SPECIAL HEARINGS

                     MARCH 7, 2006--WASHINGTON, DC
                     MARCH 8, 2006--WASHINGTON, DC
                     MARCH 9, 2006--WASHINGTON, DC

                               __________

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                               __________
                      COMMITTEE ON APPROPRIATIONS

                  THAD COCHRAN, Mississippi, Chairman
TED STEVENS, Alaska                  ROBERT C. BYRD, West Virginia
ARLEN SPECTER, Pennsylvania          DANIEL K. INOUYE, Hawaii
PETE V. DOMENICI, New Mexico         PATRICK J. LEAHY, Vermont
CHRISTOPHER S. BOND, Missouri        TOM HARKIN, Iowa
MITCH McCONNELL, Kentucky            BARBARA A. MIKULSKI, Maryland
CONRAD BURNS, Montana                HARRY REID, Nevada
RICHARD C. SHELBY, Alabama           HERB KOHL, Wisconsin
JUDD GREGG, New Hampshire            PATTY MURRAY, Washington
ROBERT F. BENNETT, Utah              BYRON L. DORGAN, North Dakota
LARRY CRAIG, Idaho                   DIANNE FEINSTEIN, California
KAY BAILEY HUTCHISON, Texas          RICHARD J. DURBIN, Illinois
MIKE DeWINE, Ohio                    TIM JOHNSON, South Dakota
SAM BROWNBACK, Kansas                MARY L. LANDRIEU, Louisiana
WAYNE ALLARD, Colorado
                    J. Keith Kennedy, Staff Director
                  Clayton Heil, Deputy Staff Director
              Terrence E. Sauvain, Minority Staff Director


                            C O N T E N T S

                              ----------                              

                         Tuesday, March 7, 2006

                                                                   Page

Opening Statement of Senator Thad Cochran........................     1
Statement of Senator Arlen Specter...............................     2
Statement of Senator Christopher S. Bond.........................     2
    Prepared Statement...........................................     3
Statement of Senator Wayne Allard................................     4
Statement of Senator Judd Gregg..................................     5
Statement of Senator Mary L. Landrieu............................     5
    Prepared Statement...........................................     6
Statement of Senator Kay Bailey Hutchison........................     7
    Prepared Statement...........................................     8
Statement of Hon. Bob Riley, Governor, State of Alabama..........     9
    Prepared Statement...........................................    10
Statement of Hon. Kathleen Babineaux Blanco, Governor, State of 
  Louisi- 
  ana............................................................    11
    Prepared Statement...........................................    29
Louisiana Recovery Authority Preliminary Proposal--The Road Home 
  Housing Program: A Blueprint for Building a Safer, Stronger, 
  Smarter Louisiana..............................................    13
Homeowner Program Descriptions...................................    13
Statement of Hon. Haley Barbour, Governor, State of Mississippi..    31
    Prepared Statement...........................................    35
Statement of Hon. Rick Perry, Governor, State of Texas...........    37
    Prepared Statement...........................................    39
Statement of Senator Robert C. Byrd..............................    41
Response From Hon. Rick Perry....................................    49
Response From Hon. Kathleen Babineaux Blanco.....................    49
Response From Hon. Haley Barbour.................................    53
Prepared Statement of Senator Richard C. Shelby..................    59
Additional Committee Questions...................................    61
Questions Submitted to Hon. Kathleen Babineaux Blanco............    62
Questions Submitted by Senator Arlen Specter.....................    62
Community Development Block Grants (CDBG)........................    62
FEMA Disaster Relief.............................................    62
Flood Control and Protection.....................................    63
Questions Submitted by Senator Richard C. Shelby.................    63
Questions Submitted by Senator Mary L. Landrieu..................    67
General Background on the State of Louisiana and Supplemental 
  Request........................................................    67
Reconstruction...................................................    70
National Guard...................................................    72
Questions Submitted to Hon. Rick Perry...........................    75
Questions Submitted by Senator Arlen Specter.....................    75
Community Development Block Grants (CDBG)........................    75
FEMA Disaster Relief.............................................    76
Questions Submitted by Senator Richard C. Shelby.................    76
Questions Submitted to Hon. Haley Barbour........................    77
Questions Submitted by Senator Arlen Specter.....................    77
Questions Submitted by Senator Richard C. Shelby.................    77
Question Submitted by Senator Mary L. Landrieu...................    78

                        Wednesday, March 8, 2006

Opening Statement of Senator Thad Cochran........................    81
Statement of Senator Pete V. Domenici............................    82
Statement of Senator Christopher S. Bond.........................    84
Statement of Senator Patty Murray................................    86
Prepared Statement of Senator Robert C. Byrd.....................    87
Statement of Senator Kay Bailey Hutchison........................    88
Statement of Senator Robert F. Bennett...........................    89
Statement of Senator Conrad Burns................................    90
Statement of Senator Wayne Allard................................    91
Statement of Senator Richard J. Durbin...........................    92
DHS' Emergency Preparedness and Response Tactics.................    92
Statement of Hon. Michael Chertoff, Secretary, Department of 
  Homeland Security..............................................    94
    Prepared Statement...........................................    97
DHS' Emergency Preparedness and Response Efforts.................    94
2006 Hurricane Season Preparation................................    95
Katrina Supplemental.............................................    96
Scope of Disaster and Activities.................................    97
Supplemental Funds Have Been Used................................    97
Stewardship Over Resources Provided..............................    99
Current Supplemental Funding Request.............................    99
Statement of Hon. Alphonso Jackson, Secretary, Department of 
  Housing and Urban Development..................................   100
    Prepared Statement of........................................   102
Statement of Hon. John Paul Woodley, Assistant Secretary, Corps 
  of Engineers--Civil, Department of the Army, Department of 
  Defense--Civil.................................................   104
    Prepared Statement...........................................   106
Lieutenant General Carl Strock, Chief of Engineers, Corps of 
  Engineers--Civil, Department of the Army, Department of 
  Defense--Civil.................................................   104
Repair of the Hurricane-Damaged Components to Original Design 
  Stand- 
  ards...........................................................   108
Restoration of Undamaged Levees and Floodwalls...................   108
Accelerated Completion of Authorized Projects....................   109
Strengthening the Hurricane Protection System....................   109
First: Permanent Pumps and Closures for New Orleans' Three 
  Outfall Canals.................................................   109
Second: Navigable Closures for the IHNC..........................   110
Third: Storm-Proofing Pump Stations..............................   110
Fourth: Selective Armoring.......................................   110
Fifth: Incorporation of Non-Federal Levees.......................   110
Sixth: Restoration of Critical Areas of Coastal Wetlands and 
  Ecosystems.....................................................   111
Temporary Housing................................................   111
Emergency Interoperable Communications System....................   113
FEMA's Failure to Adequately Manage Housing Subsidies............   114
Reduction of State and Local Emergency Disaster Preparedness 
  Funding........................................................   116
Location of Katrina Evacuees.....................................   118
Katrina Evacuees Outside of Louisiana............................   118
Economic Provisions for Katrina Evacuees Outside of Louisiana....   120
CDBG Grants......................................................   121
Economic Impact on States Housing Added Katrina Evacuees.........   121
Oversight and Accountability of Rebuilding the Gulf Coast........   123
Threat-Based Funding for Emergency Preparedness and Response 
  Tactics Outside of the Gulf States.............................   126
TSA Passenger Fee and Capital Infrastructure of Border Security 
  Funding........................................................   127
Improvement of FEMA Maps.........................................   131
Additional Committee Questions...................................   132
Questions Submitted to the Department of Housing and Urban 
  Develop- 
  ment...........................................................   132
Questions Submitted by Senator Christopher S. Bond...............   132
General Comment From the Department of Housing and Urban 
  Development About the Data Used to Respond to Questions........   132
Questions Submitted to the Department of Homeland Security.......   141
Questions Submitted by Senator Judd Gregg........................   141
DHS Inspector General............................................   141
USCG Pay Parity with DOD.........................................   142
FEMA Disaster Relief Fund Request................................   142
FEMA Housing Policy..............................................   143
Office of Federal Coordinator for Gulf Coast Rebuilding..........   144
Lessons Learned and Upcoming Hurricane Season....................   145
Controlling Waste, Fraud and Abuse...............................   146
National Flood Insurance Fund....................................   147
Questions Submitted by Senator Robert C. Byrd....................   148
Coast Guard and Border Security..................................   148
Coast Guard Mission in Iraq......................................   148
Chemical Security................................................   149

                        Thursday, March 9, 2006

Statement of Hon. Condoleezza Rice, Secretary, Department of 
  State..........................................................   151
    Prepared Statement...........................................   154
Opening Statement of Senator Thad Cochran........................   151
Iraq.............................................................   154
Afghanistan......................................................   155
Sudan............................................................   155
Iran.............................................................   156
Statement of Hon. Donald H. Rumsfeld, Secretary, Department of 
  Defense........................................................   156
    Prepared Statement...........................................   160
General Pete Pace, Chairman, Joint Chiefs of Staff, Department of 
  Defense........................................................   156
    Statement of.................................................   163
General John Abizaid, Commander, U.S. Central Command, Department 
  of Defense.....................................................   156
    Statement of.................................................   165
Content of Supplemental..........................................   157
Progress in Iraq.................................................   157
Quadrennial Defense Review.......................................   158
Interagency Cooperation..........................................   159
DOD Supplemental Request.........................................   160
The Task.........................................................   160
Partner Capacity.................................................   161
Inter-agency Cooperation.........................................   162
Reconstituting Equipment.........................................   163
Total Funding....................................................   164
Islamabad........................................................   165
Commander's Emergency Response Program Funding...................   166
Preventing Civil War in Iraq.....................................   171
Sectarian Tensions...............................................   171
Talon Program....................................................   174
Afghan Police Training...........................................   177
Afghanistan......................................................   177
Replacing Equipment..............................................   178
Port of Dubai....................................................   179
Timetable for Iraq...............................................   183
Troops in Theater................................................   185
Poll of Troops in Iraq...........................................   185
Troops in Iraq...................................................   186
Provinces........................................................   187
UAE..............................................................   187
United Arab Emirates Support.....................................   188
Horn of Africa...................................................   190
Investment in Ground Forces......................................   193
War on Terror....................................................   193
Cost of 9/11.....................................................   194
Port Security..................................................195, 198
Halliburton Contracting Oversight................................   199
Sole-source Bidding Requirements.................................   201
Ports............................................................   201
Troop Withdrawal.................................................   203
Mental Health of Returning Soldiers..............................   205
Health Services..................................................   206
Iran.............................................................   207
Funds............................................................   207
Operations.......................................................   209
Additional Committee Questions...................................   209
Questions Submitted to Secretary Donald H. Rumsfeld..............   210
Questions Submitted by Senator Conrad Burns......................   210
National Guard Equipment Shortage................................   210
Fielding Equipment Now...........................................   211
Voting...........................................................   211
Emergency?.......................................................   212
National Guard End Strength......................................   212
Cost of Operations in War on Terror..............................   212
Question Submitted by Senator Tom Harkin.........................   212
Pay..............................................................   212
Question Submitted by Senator Herb Kohl..........................   213
Increased Funding................................................   213


            SUPPLEMENTAL APPROPRIATIONS FOR FISCAL YEAR 2006

                              ----------                              


                         TUESDAY, MARCH 7, 2006

                                       U.S. Senate,
                               Committee on Appropriations,
                                                    Washington, DC.
    The committee met at 9:30 a.m., in room SD-106, Dirksen 
Senate Office Building, Hon. Thad Cochran (chairman) presiding.
    Present: Senators Cochran, Specter, Bond, Gregg, Hutchison, 
Allard, Byrd, and Landrieu.


               OPENING STATEMENT OF SENATOR THAD COCHRAN


    Chairman Cochran. The committee will please come to order.
    This morning, the Committee on Appropriations convenes a 
hearing to review the President's supplemental budget request. 
He has submitted a request of the Congress to appropriate 
$92,214,785,000 to supplement the funding that has already been 
appropriated for the administration in the regular annual 
appropriations bills for this fiscal year. Some of these funds 
are allocated to agencies and departments of the administration 
which have responsibility for recovering and rebuilding from 
the devastation caused by Hurricane Katrina and Hurricane Rita. 
That will be the focus of the hearing this morning.
    Tomorrow we will have a hearing to review the budget 
request as it relates to other departments of the Government, 
specifically the Departments of State and Defense. Secretary of 
State Condoleezza Rice will be here, with other witnesses, to 
discuss the need for those funds. We are also going to have 
with us the Secretary of Defense and other witnesses to help 
discuss these issues so we can have a body of evidence and a 
record on which to support a decision as to what we should 
approve that the President has requested.
    Today we are very pleased to have the Governors of the four 
States that were the most heavily impacted by the devastation 
of Hurricane Katrina, from Texas, Louisiana, Mississippi, and 
Alabama. We are very pleased to have each of you with us today.
    In almost every instance, the local and State officials 
have had to bear the brunt of the responsibility for the 
continuing challenges that face the people who have been harmed 
and suffer from the results of these hurricanes. The Federal 
Government, however, has also been actively engaged as everyone 
knows, not only providing financial resources, but people on 
the ground. The Department of Defense has accounts that have 
been depleted. They will be replenished in these hurricane 
funds that will be approved. State and local governments have 
had the National Guard forces, and others, involved. We've also 
seen a record amount of devastation to existing 
infrastructure--Government property and, of course, 
individuals' homes and businesses have been destroyed. There's 
never been a disaster that's hit our country that's more 
devastating than these hurricanes. So, we're confronted with 
the largest disaster recovery effort that the country has ever 
faced. And I, for one, am very impressed with the work that's 
been done under the leadership of these Governors to try to 
mobilize their resources, rally the people to dedicate our best 
efforts to rebuilding and recovering from this hurricane.
    So, I'm pleased to welcome each of you here today, and 
thank you for your leadership and your continuing efforts to 
help recover and rebuild from this terrible storm.
    I'm going to yield now to any other Senators who wish to 
make a comment or opening statement, and then go directly to 
statements and questions of the Governors.
    Senator Specter, do you have any comments?


                   STATEMENT OF SENATOR ARLEN SPECTER


    Senator Specter. Well, just a comment or two, Mr. Chairman. 
Thank you very much for convening these hearings.
    I have been here awhile. I've never seen four Governors in 
one room at one time, which is a testament to the importance of 
this issue and this--the problem of the devastation has been 
extraordinary, and we want to be as helpful as we can.
    You have an ambitious agenda, Mr. Chairman, going over the 
budgets of quite a number of departments. As I commented to you 
earlier, Judiciary is marking up on immigration, so I will not 
be able to be here tomorrow or Thursday for your sessions.
    I would like to make just one brief substantive comment 
that relates to the Department of Defense budget, and also 
relates to the Department of Justice budget, Judiciary 
Committee jurisdiction. We're having quite a time in getting 
responses to questions as to what has happened with the 
electronic surveillance program. And we had the Attorney 
General testify. We're going to have him come back and testify 
again. But I want to put the administration on notice, and this 
committee on notice, that I may be looking for an amendment to 
limit funding to the electronic surveillance program, which is 
the power of the purse, if we can't get an answer in any other 
way. We had seven academicians testify before Judiciary last 
week, and that was a suggestion which was very prominent. If we 
cannot find some political solution to the disagreement with 
the executive branch, our ultimate power is the power of the 
purse, which comes from the Appropriations Committee and the 
Subcommittee on Defense. So, I just wanted to make that brief 
comment.
    Thank you.
    Chairman Cochran. Thank you very much.
    Senator Bond.


                STATEMENT OF SENATOR CHRISTOPHER S. BOND


    Senator Bond. Thank you very much, Mr. Chairman.
    I welcome the Governors here today. I would just say to my 
good friend from Pennsylvania, I hope we don't do something 
like cut off the ability of our NSA to intercept calls from al 
Qaeda. As a member of the Intelligence Committee, I'm deeply 
involved in that, and I have been briefed, and I hope that we 
don't do anything like that.
    But let me turn to the subject at hand here today. Back 
ages ago when I was Governor and we faced floods, tornados, 
pestilence, even a heavy dose of dioxin in a place called Times 
Beach that most people have now, blessedly, forgotten, but I 
never had the opportunity to testify before Congress. Governors 
were not treated quite as well then. But we know how important 
your role is in handling these disasters. We commend you for 
it. We want to hear what progress has been made. We know--as a 
member of the National Guard Caucus, I know how important the 
National Guard assets are. And I know the Governors have joined 
Senator Leahy, my co-chairman, and others, pointing out to the 
budget makers in the Pentagon that the National Guard not only 
is a national security asset, which does a--puts 40 to 50 
percent of the boots on the ground in Iraq and Afghanistan, but 
with its civil defense role, or in--as the Army of the 
Governors, it has a vital role to play in these catastrophes. 
And we would urge you to continue to speak out, since you know 
how significant they are, that we have to have the Guard fully 
equipped. We sent one engineer battalion from Jefferson County, 
Missouri, to Louisiana. They were doing a great job. They said, 
``We need another one.'' They said, ``Fine, we've got all the 
people there, but we don't have the equipment.'' And engineers, 
without trucks, without equipment, can't help much. And under 
the emergency assistance plan, we had the men and women ready 
to go, but they didn't have the equipment. And that, I think, 
is a serious shortfall.
    The other thing I would say, quite seriously, we are all 
very much concerned and sympathetic. We want to help, as we 
can. We've heard too many reports about money not being well 
spent. And I, for one, believe that our constituents throughout 
the country, and, I believe, constituents in your State, would 
like to be sure that additional monies that we send would be 
sent in a manner where there are proper controls, proper 
utilization, and some assurance that there would be strict 
accountability to the taxpayers who are now looking at the 
billions of dollars and want to make sure that we don't see 
waste as we have seen in the past. I have heard from citizens 
in your States, saying, ``We need help, but we also don't want 
to see it misspent.''


                           PREPARED STATEMENT


    So, Mr. Chairman, I'm going to be--I look forward to 
working with you and the other members to make sure that 
additional funds that we send are sent with proper controls and 
an assured accountability that they are spent--that the funds 
are spent on the efforts which we believe, and we agree, are 
needed.
    I also have a small statement to be included in the record.
    [The statement follows:]

           Prepared Statement of Senator Christopher S. Bond

    The Katrina Supplemental which was enacted on December 30, 2005 
included, among the billions in emergency funding, some $11.5 billion 
for CDBG Unmet Needs funding, of which $6.2 billion has been allocated 
to the State of Louisiana, $5.06 billion to Mississippi, $74.4 million 
to Alabama, $82.9 million to Florida and $74.5 million to Texas. None 
of these funds have been spent and no State has submitted a plan 
detailing how it will use these CDBG funds. If history is a beacon then 
its light will show us that these funds will likely be used poorly. 
However, these hearings, however, provide us with a pause to understand 
how CDBG emergency funds should and could be used; an opportunity to 
establish benchmarks and accountability requirements.
    I support the use of the emergency CDBG funding for Mississippi and 
Louisiana, both of which suffered a tragedy of almost biblical 
dimensions, a tragedy that was overwhelming and unexpected in terms of 
scope. I have no complaints about the funds we have appropriated 
initially for Texas, Alabama and Florida, each of which suffered 
related losses. However, I am concerned about appropriating additional 
funding of $4.2 billion in emergency CDBG funds without any benchmarks 
for their use or accountability requirements. I recommend that Congress 
invest in additional IG resources to ensure all the emergency CDBG 
funds are used correctly and well. I also urge my colleagues that we 
only make $1 billion available at first of any additional CDBG funds 
with any remainder in reserve subject to release only when a State or 
jurisdiction meets certain benchmarks and goals, and only when fraud 
and abuse have been demonstrably contained.
    I also urge that additional CDBG emergency funds be limited to 
Mississippi and Louisiana where the most damage, losses and deaths 
occurred. I plan to review all testimony and related information 
carefully before I make any final decisions on CDBG or other emergency 
funding.

    Chairman Cochran. Thank you, Senator Bond.
    The Senator from Colorado, Mr. Allard, do you have a 
statement?

                   STATEMENT OF SENATOR WAYNE ALLARD

    Senator Allard. Well, thank you. Well, just a brief comment 
or two, Mr. Chairman.
    First of all, I want to thank you for holding this hearing. 
I think it's a very important hearing. We have allocated 
somewhere around $87 billion now, and now we're looking at 
about another $19.8 billion request. And I think it's 
appropriate that we hear from the Governors, because they've 
been on the front lines. And I want to welcome you to this 
committee hearing.
    You know, we're dealing with an emergency, and I've decided 
that emergencies are unique. Every one of them is different, 
and there are certain things that work with each emergency, and 
certain things that don't work. And I hope that you can share 
with us those things that are working and those things that 
aren't working so that we can learn from this emergency that we 
had with the hurricane, and hopefully avoid everything.
    But I don't--I'm convinced that because of the uniqueness 
of emergencies, you can't be prepared for every emergency all 
the time. And I think sometimes you get criticized because you 
just didn't do something right. Criticism falls back and forth.
    But I think we need to work at learning from our past 
mistakes. And your testimony here will be valuable, and that, I 
think, will be helpful in knowing how the money flow is 
working, and where your needs are, and where we're not meeting 
your needs. And if you see problems where we don't have enough 
accountability, I, for one, would very much like to hear 
where--we obviously don't want abuse and fraud. We want to keep 
that to a minimum, as much as we possibly can.
    So, I'm looking forward to your comments.
    And thank you, Mr. Chairman.
    Chairman Cochran. Thank you, Senator.
    The Senator from New Hampshire, Mr. Gregg.

                    STATEMENT OF SENATOR JUDD GREGG

    Senator Gregg. Well, again, I want to join in thanking you, 
Mr. Chairman, for holding this hearing. I know this disaster is 
having a huge impact on you, personally, and on everyone who's 
here representing your States. And I admire Governors. You're 
where the rubber meets the road, and your decisions have 
impact. Sort of wish I still was a Governor, some days.
    And I guess my question--and I know you're going to answer 
this--is, you know, the American taxpayer has stepped up and 
said, ``We're willing to help you,'' and now we're going to be 
over $100 billion in that effort. And yet, what we hear back so 
often from your part of the country is, help isn't working the 
way you want it to work, and the money's not getting where you 
want it to go, and the response time is--remains slow, and 
reconstruction remains spotty. So, how can we do a better job? 
We want to hear how we can do a better job with these dollars, 
and assist you in doing that job. And we thank you for taking 
the time to come here today to tell us those things.
    Chairman Cochran. Thank you, Senator.
    The Senator from Louisiana, Ms. Landrieu.

                 STATEMENT OF SENATOR MARY L. LANDRIEU

    Senator Landrieu. Thank you, Mr. Chairman.
    But let me just welcome the Governors, and particularly, of 
course, my Governor from Louisiana, but to thank all of you 
Governors for working as a team to help rebuild America's only 
Energy Coast, a coast that's absolutely critical for the 
expansion of economic opportunity in this great Nation, a coast 
that's critical to the expanded trade opportunities for the 
world, as we build a more strong, and more just, global 
economy. And without the ports, Governor from Alabama through 
Louisiana, Mississippi, and Texas, it would not be possible.
    And these two hurricanes, Mr. Chairman, were two of the 
worst to hit the country. And I know we've had some tough ones. 
Camille roared ashore right into your home State in my 
lifetime. And then, of course, Betsy was also tough. But we've 
had other hurricanes, Andrew and Hugo and others, that have 
roared through other parts of the country. But never have we 
seen two hurricanes this large in this amount of time, Mr. 
Chairman, and the flooding that ensued because of multiple 
breaks in levees throughout south Louisiana, particularly, but 
there was terrible flooding in other parts of the gulf coast.
    And then, I think, to my colleagues I would, particularly 
to Senator Gregg and Senator Bond, who have raised this issue, 
what maybe separates these catastrophes from others is the 
significant amount of flooding and the 10 to 15 to 20 feet of 
water that sat for 2 weeks, in some instances, first by 
Katrina, then by Rita, in this area, and also, the critical 
nature of this gulf coast, how it is the real hub of the energy 
offshore oil and gas industry, and how we have to protect the 
billions of dollars of infrastructure that are at risk if we 
don't help to rebuild.
    And the final thing, Mr. Chairman, I want to say in front 
of these Governors is, I want to thank you for your 
extraordinary leadership in reshaping some of the 
administrative packages--Governor Barbour, you were very 
helpful, as well, and all the Governors--in reshaping an 
administrative package that gives these Governors and these 
local governments a chance to really get their feet back 
underneath them, to rebuild, and rebuild this gulf coast area 
in a stronger and smarter way.

                           PREPARED STATEMENT

    And I hope, as we consider this next supplemental, that our 
focus of this committee will be not just sending more money to 
FEMA--that was never created to rebuild this gulf coast in the 
first place--to sending money through community development 
block grants, with accountability, money for levees, Chairman 
Bond, and flood control projects, and hopefully some revenue 
sharing of the billions of dollars that our States already 
contribute to this National Treasury to help secure this coast, 
Mr. Chairman, not just for the next few years, but for the 
centuries to come.
    And I thank you for your leadership.
    I have a longer statement to submit to the record.
    [The statement follows:]

             Prepared Statement of Senator Mary L. Landrieu

    I want to thank the governor of my home State of Louisiana, 
Kathleen Blanco, along with our friends and neighbors, Govs. Haley 
Barbour of Mississippi, Rick Perry of Texas, and Bob Riley Alabama, for 
testifying here today. Your presence is much appreciated.
    As we all know, our four gulf coast States have much in common.
    We contribute mightily to the Nation's energy supply. Our coast is 
a working coast. It is America's energy coast. Without it, our Nation 
would not have the ability to light its homes or to fuel its cars or to 
run its businesses. Without it, our Nation would be even more 
dangerously dependent upon foreign oil.
    In addition to oil and natural gas production, these four gulf 
coast States provide vital ports for American trade, agriculture and 
commerce. We also provide strategically critical military personnel, 
defense installations and shipbuilding facilities that protect our 
Nation's security.
    I'm sure all four governors here today would agree that we have 
much in common in so many positive, productive ways.
    Since last summer, our States are bound by something else. We were 
hit by the terrible force of Hurricanes Katrina and Rita.
    These were no ordinary storms. They were historic. The extent of 
devastation was Biblical. Our ravaged communities are struggling to 
recover. And it has been a long, difficult struggle, indeed.
    I am thankful that this Congress has appropriated billions of 
dollars to the recovery of the affected States. I am also thankful that 
the administration included vitally needed funds for housing and levees 
in this Supplemental Appropriations Bill.
    But rest assured, our work is not done. Far from it.
    Thousands and thousands of our people remain homeless and 
displaced.
    Thousands of our businesses are still closed and jobs lost.
    College classrooms and hospital emergency rooms are shut.
    People don't have reliable utility service.
    Infrastructure is broken.
    Neighborhoods and historic structures decay day by day.
    Local governments are sinking deeper into debt. Essential 
services--such as police, fire, and sanitation--are absent in vast 
stretches of our State.
    Louisiana simply does not enough the resources to handle these 
massive problems. We need a major national commitment to take action, 
and to take action now.
    Unfortunately, much of the Federal spending committed to hurricane 
recovery has been spent through largely dysfunctional Federal agencies, 
such as FEMA. This money has not always been wisely or efficiently 
spent nor has it properly addressed urgent rebuilding needs.
    While we hear much talk about the billions of dollars that have 
been spent by the Federal Government on Katrina and Rita, we rarely 
that few of those dollars have been used for rebuilding and the 
reestablishment of devastated communities.
    That's why the $11 billion in CDBG funds we passed in December were 
so important to the rebuilding process and why the additional $4.2 
billion now proposed in the administration's Supplemental 
Appropriations is so essential. They represent significant steps along 
the road to recovery.
    Let me also stress that the $1.4 billion in the administration's 
Supplemental Appropriations proposed for levees and flood control is as 
essential to the rebuilding process as it is vital to the obvious life-
and-death need to make our people safer.
    People must have confidence that they will be safe and secure in 
their homes and in their businesses before they will invest in 
rebuilding. Strong levees and flood protection are essential to that 
confidence.
    The more money the Federal Government puts into levees, flood 
control and wetlands restoration, the less money the Federal Government 
will ultimately have to spend on future hurricane rebuilding, storm 
damage recovery, and paying off flood insurance deficits.
    While the $1.4 billion in levee and flood control supplemental 
appropriation is absolutely essential, and needs to be passed and 
implemented immediately, it is by itself not a comprehensive solution.
    Protecting our people, our environment, our national security, our 
economy and our ability to provide the Nation with much of its energy 
supply requires long-term planning, integrated engineering and a clear, 
firm national commitment.
    That is something we have yet to get.
    That's why I'm working with other gulf coast Senators to develop a 
long-term revenue source to build levees and coastal protection. Such a 
revenue source would be reasonably related to each of our State's 
contributions to Federal oil and gas revenues produced off our coasts 
on the Outer Continental Shelf.
    Creating this long-term revenue stream--whether it's in the form of 
revenue sharing or coastal impact assistance--would give Louisiana the 
ability to fund a responsible, comprehensive, integrated levee, flood 
control and coastal restoration plan.
    With such a dedicated revenue stream, those of us from Louisiana 
would no longer have to come here, year after year, asking this 
committee and this Congress for emergency or piecemeal funding.
    Thank you very much.

    Chairman Cochran. Thank you, Senator.
    The Senator from Texas, Ms. Hutchison.

               STATEMENT OF SENATOR KAY BAILEY HUTCHISON

    Senator Hutchison. Thank you, Mr. Chairman. I, too, want to 
thank you for holding this hearing and for bringing in the four 
Governors who have had so much of an impact from these 
hurricanes.
    I just want to say something general, because Governor 
Perry will talk about some of the specifics that have hurt 
Texas so much. But I think that we have tended, in Washington, 
at the FEMA, to treat these hurricanes as if they were 
hurricanes that we have dealt with over the past 30 or 40 
years. And I don't think there has been enough adjustment for 
the unique circumstances of, for instance, a State like mine 
that has absorbed almost half a million people within a 2-week 
period and has incurred enormous costs that have not been 
reimbursed because they don't meet the bureaucratic words of 
FEMA, because the hurricane didn't hit Texas, it hit Louisiana 
and Mississippi and Alabama. And I think we need to make 
adjustments when a State such as ours are really good 
Samaritans. Our people took the evacuees in, took them into 
their homes. Our religious organizations came together to 
provide so much help. Yet, it wasn't nearly what was needed. 
And now, we're having to fight the bureaucracy for our fair 
share of the expenditures that were taken.
    We are facing a school finance crisis in our State, and yet 
we are not being reimbursed for a third of the actual costs of 
educating the children that have come in from Hurricane 
Katrina. And then, when Hurricane Rita hit our east Texas 
coast, our east Texans are being treated differently from the 
Louisiana friends right across the border. Contiguous counties 
are getting different treatment and different reimbursement, 
even though Katrina affected these east Texas counties because 
they had absorbed the children into the schools, the healthcare 
needs and the housing needs of the Katrina evacuees.
    So, my hope is, in the big picture, that we will be able to 
accommodate the needs of not only Texas, but every State that 
took evacuees in and absorbed a lot of cost from that. And I 
think that needs to be in the mix here. And I know that our 
Governor is going to make that point.

                           PREPARED STATEMENT

    My heart goes out to all four of you for everything that 
you have been through from this once-in-a-lifetime, one-of-a-
kind occurrence, I hope, that has affected all of our States, 
but in different ways. And I just hope that we will, in this 
big appropriation bill that we are holding a hearing on today, 
that we will try to meet the needs of all four States in the 
way that they need that help, so that if anything like this 
happens in the future, no State is going to worry that if they 
do the right thing, they are going to be left holding the bag.
    Thank you, Mr. Chairman. I also have a statement to be 
included for the record.
    [The statement follows:]

           Prepared Statement of Senator Kay Bailey Hutchison

    Thank you Mr. Chairman. I too would like to welcome our 
distinguished panel here today, and I look forward to our discussion on 
how best to meet the needs of our fellow Americans affected by the 
hurricanes of last summer.
    While we address the needs of those States which were physically 
impacted by the hurricanes, it is incumbent upon us to provide 
assistance to those States and cities which stepped up in a time of 
need and welcomed their neighbors from the Gulf Coast. All across the 
country, Americans opened their hearts and homes to victims of 
Hurricane Katrina. My home State of Texas proudly welcomed close to 
half a million evacuees from our neighbors to the East, only to have 
Hurricane Rita hit us 3 weeks later in our own backyard, creating a 
truly unprecedented set of circumstances and needs.
    In response to these events, Congress passed three supplementals, 
aimed at addressing the devastation and destruction those hurricanes 
reaped upon our Gulf Coast. In the last supplemental, we created the 
Community Development Fund, an account comprised of $11.5 billion for 
Community Development Block Grants. These grants, which I strongly 
supported, were focused on providing disaster relief, long-term 
recovery, and restoration of infrastructure in areas impacted by the 
hurricanes in the Gulf of Mexico last year, areas such as Waveland, 
Mississippi; Mobile, Alabama; Houma, Louisiana; Fort Lauderdale, 
Florida; and Orange, Texas. I had hoped Texas would be able to rebound 
with assistance from this Community Development fund, but I was 
dismayed when Texas was allocated only $74.5 million, or less than 1 
percent, of the Fund, considering that our damages and needs have been 
calculated to be in the multiple billions of dollars. In fact, Texas 
has estimated a need of over $1 billion for expenses related to Katrina 
evacuees alone.
    My State, which honorably accepted close to half a million Katrina 
evacuees--who are still in our State--and which then suffered 
subsequent, substantial destruction from Hurricane Rita, continues to 
struggle with the recovery from this unique set of events. The impact 
on our State will last for years, and will be felt in our schools, 
hospitals and with our State and local law enforcement; however, Texas 
is not alone. As Congress and this committee work to meet the needs of 
those States which were directly impacted by the hurricanes in the Gulf 
of Mexico last summer, we must not forget those across the country who 
have lent a helping hand in this national struggle as well.
    One of the ways we can recognize the contributions of the many 
States that rose to the occasion in helping the victims from Hurricane 
Katrina is to ensure they receive all of the Federal support available. 
Many Federal programs are based on population estimates, and the Census 
Bureau's official population estimates program produces annual 
estimates for States, counties, and municipalities throughout the 
United States to appropriately direct population-based spending to the 
States in accordance with their population. Last December, the Census 
Bureau released the annual population estimates for the States; 
unfortunately, this data was based on population information as of July 
of last year, which means it does not encompass the extraordinary 
relocation of Gulf Coast residents as a result of Hurricane Katrina. In 
fact, the preliminary population estimates resulting from this highly 
unusual event will not be released until this coming December when the 
next State estimates are released. In the meantime, States which warmly 
welcomed displaced families are providing services for populations that 
have been underestimated.
    I hope in the process of moving this supplemental, we can expedite 
an accounting for the relocation of Hurricane Katrina victims. 
Expedited population estimates will allow communities to better serve 
their citizens, will ensure Federal spending is aiding States assisting 
their fellow Americans, and ensure Federal dollars are flowing to the 
population.
    Mr. Chairman, I thank you for this hearing, and I look forward to 
today's testimony.

    Chairman Cochran. Thank you, Senator, for your comments and 
presence today.
STATEMENT OF HON. BOB RILEY, GOVERNOR, STATE OF ALABAMA
    Chairman Cochran. Let me take each Governor, with an 
opportunity to make an opening statement, in alphabetical order 
as the States are before us--Alabama, Louisiana, Mississippi, 
and Texas.
    And so, with that, Governor Riley, welcome to the 
committee. We appreciate you being here. And you may proceed 
with any statements you wish to make to the committee.
    Governor Riley. Thank you, Mr. Chairman. And thank you for 
holding this hearing.
    This is a critical time in the gulf coast. And I want to 
first say thank you to the Congress, the House and to the 
Senators who have been so responsive. Alabama's gotten a total 
of, I think, $650 million so far. It's allowed us to begin to 
rebuild some of the infrastructure. We didn't have the level of 
devastation they had in Mississippi and Louisiana, but where it 
was, it was extensive, when you go into an area like Dauphin 
Island, and you see it basically blown away. Alabama has 
recovered. We have gotten all of the kids that came into our 
school system, they're in place today.
    Alabama has the opportunity today, though, to do something 
fundamentally different than we've done before. This is what 
I'd like to talk to you about.
    We went through four hurricanes in 14 months. During those 
14 months, there are a lot of things that we've learned. And 
that's why I hope that Congress will allow us to take the 
lessons learned over the last couple of years--what the Senator 
said a moment ago, I hope it never happens again, either, but 
I'm not too sure that it won't.
    We know now, by going through this with evacuation routes, 
by making sure that we have pre-deployments in place, we can 
save lives. Now, we've gone through four hurricanes--God's 
blessed us--but we haven't lost a person yet. It all comes down 
to being able to be properly positioned with not only the 
materiel, but the manpower that we're going to need if and when 
it happens again. This is not like other disasters. We know 
when it's coming. We--it's programmable. We know what time it's 
going to be there, almost within the hour. And if we have the 
ability to take some of these funds and use it to buy 
generators, to preposition MREs, water, and get out of the 
commodity business that FEMA has been in for--I think we can do 
a better job with our commodities, probably, than FEMA can. 
Makes no sense to me to haul ice from New Jersey to Alabama, 
when we can haul ice from Alabama down to the Gulf Coast.

                           PREPARED STATEMENT

    So, what I want you to consider today--again, thank you for 
everything you've done--but consider building a new type of 
model that all of the Governors have access to all of the funds 
that we're going to need to make sure that we're properly 
positioned for the next hurricane. We're 3 months away. And 
today, we need to be talking about, What are we going to do if 
and when this happens again? I think all of the Governors 
understand what the needs are. If we have the flexibility to go 
and develop our own State models, then I think we not only can 
save lives, but I think we can alleviate a tremendous amount of 
suffering.
    [The statement follows:]

                  Prepared Statement of Hon. Bob Riley

    Mr. Chairman and distinguished members of the committee, 6 months 
after Katrina, signs of progress abound in Alabama. Damaged homes are 
being repaired and rebuilt, evacuees are finding more permanent housing 
options, and Alabama's economy continues growing. There are still 
pockets of damage, and life is still a long way from normal in places 
like Bayou La Batre and on Dauphin Island, but there's no doubt the 
people of Alabama are working hard to recovery, rebuild and renew their 
communities.
    The progress that's been made and will continue to be made is 
impossible without Federal assistance. On behalf of the people of 
Alabama, and on behalf of those from our neighboring States who sought 
refuge in Alabama, I want to thank the members of this committee, the 
entire United States Congress and President Bush for their help. This 
Congress and the Bush Administration worked together and, within a few 
weeks of this devastating hurricane, passed laws that are helping the 
people along the Gulf Coast recover and are helping communities 
throughout the region rebuild.
    Many members of Congress and many members of the President's 
Cabinet have made repeated trips to Alabama since Katrina to keep our 
citizens informed of the Federal response and to listen to our 
concerns. I believe that's critically important as our region continues 
its recovery, and I hope those visits will continue.
    The amount of Federal assistance has been unprecedented and much-
needed. Disaster aid for Alabama victims of Hurricane Katrina has 
totaled $590 million in the first 6 months after the storm. Nearly 
36,000 individuals and families have received housing assistance 
totaling more than $85 million. About 30,000 residents have benefited 
from $35 million in aid for other essential needs. One hundred eight 
million dollars have gone for vital infrastructure costs, debris 
removal, emergency services, road and bridge repair and restoration of 
public utilities.
    I know I join all the other governors here today in extending a 
special thank you to the individual members of our States' 
congressional delegations for their leadership on getting this 
assistance to our States.
    And I also want to make sure to thank the American people, 
corporations and faith-based organizations who made generous 
contributions of both financial resources and their own labor to help 
our areas with emergency assistance and rebuilding needs.
    Still, while the amount of assistance has been great, there are 
still needs that must be addressed. I'm pleased President Bush has kept 
this issue front-and-center and that he has proposed additional 
emergency funding of almost $20 billion to support ongoing hurricane 
recovery efforts. I also think it's very wise that the President's 
request includes measures designed to protect against waste, fraud and 
abuse of Federal assistance. I know all of us are committed to spending 
the taxpayers' money responsibly. Each report of waste, fraud and abuse 
of disaster assistance mars the good work that so many are 
accomplishing.
    I look forward to discussing the President's emergency funding 
request with you today and with my fellow governors. Thank you.

    Chairman Cochran. Thank you very much.
    Governor Blanco.

STATEMENT OF HON. KATHLEEN BABINEAUX BLANCO, GOVERNOR, 
            STATE OF LOUISIANA
    Governor Blanco. Thank you, Mr. Chairman and distinguished 
members of the committee. It's an honor to come before this 
committee that Louisiana's own outstanding Senator Mary 
Landrieu serves on. Thank you for your work that the committee 
has done over the past months to help Louisiana and the other 
States that have been involved in two hurricanes.
    There is no greater issue facing Louisiana, as we speak, 
than the funding for levees and for housing. President Bush has 
added some money for our housing needs in Louisiana's 
appropriations request. And, of course, I want to be here to 
fully support that.
    The immediate future and the hundreds of thousands of 
people who want to return home is now in the hands of this 
Congress. I greatly appreciate the President's initial funding 
request of some $1.5 billion for levees and his commitment of 
$4.2 billion for housing. The supplemental funding is critical 
if we are to construct a road home for our citizens who have 
been displaced. It's our ticket to rebuild, recover, and resume 
our productive place in our Nation's economy.
    We have been waiting for this funding since President Bush 
made his moving speech on Jackson Square, in September. Please 
do not make us wait any longer, and please help to honor his 
commitment to our people.
    Six months ago, Hurricane Katrina led to the catastrophic 
failure of our Federal levee system. This immense engineering 
failure sent water across our largest city for nearly a month. 
Our people relied, in good faith, on Federal flood maps and 
Federal levees. Imagine if your State's largest city was under 
water for a month. It's almost unthinkable.
    As we were drying out, Hurricane Rita struck. Rita did to 
southwest Louisiana and to areas of Texas, what Katrina did to 
Mississippi. The combined devastation can best be described as 
a catastrophe of biblical proportions.
    Katrina claimed over 1,100 lives in Louisiana alone. 
Together, Katrina and Rita displaced more than 780,000 people 
and destroyed the homes of over 200,000 families. An estimated 
81,000 businesses were stilled, and 18,000 of our businesses 
still have not reopened.
    I'd like to say a special word of welcome to Senator Byrd. 
Thank you for being here. And thank you, as I said, to the 
other members of the committee for your past help, sir.
    FEMA estimates show that we had over 100,000 homeowner 
properties, a full 76 percent of the total homes, destroyed by 
flood waters. Nearly 70,000, a full 80 percent of our rental 
units, were destroyed by flood waters.
    The Louisiana Recovery Authority worked with Chairman Don 
Powell, in the White House, to finalize our data. Chairman 
Powell subjected us, and our McKinsey & Company consultants, to 
a rigorous review of our compelling data.
    I know you want to help all of the States. And I want you 
to do that. But I would ask you to avoid the temptation to chip 
away at our promised funding and divert it to the other States. 
I do not, for a minute, seek to minimize the needs of 
Mississippi, Alabama, or Texas. I think that all of our States 
are in great need. My heart goes out to our neighbors. They've 
been good to us. We depended on them in difficult days. And 
then their difficult days also came, especially on--after Rita, 
and Texas was--became involved not only as a caretaker State, 
but also as a victim.
    I'm grateful for their warm response to our people, but 
Congress has the ability to appropriate funding to them without 
undermining the President's promise to us. Any amount less than 
the proposed funding would definitely jeopardize our recovery.
    This Congress regularly appropriates billions of dollars to 
help people all over this world. Every month, American 
taxpayers spend billions for operations in Iraq and 
Afghanistan, and our troops are very deserving of this support. 
Surely, we can provide at least $1.5 billion to strengthen 
levees protecting American citizens. Surely, we can fund the 
$4.2 billion for American homeowners who want to return to 
Louisiana. And we want them to come home.
    Safety is the first step in enabling Louisiana's families 
and businesses to return. Hurricane season is less than 3 
months away. We must not delay investing at least the 
designated $1.5 billion in our levees.
    Louisiana is working to improve our levee system. We've 
consolidated a 100-year-old system of levee boards to improve 
oversight and maintenance. Now we need Congress to make a 
lasting investment in a reliable levee system.
    Second, it's absolutely imperative that we rebuild our 
houses.
    Chairman Cochran, I want to say a special thanks to you for 
your personal intervention in securing the initial community 
development block grant funding. We are especially grateful for 
Louisiana's share. While very generous, this $6.2 billion 
leaves tens of thousands of our citizens stranded and homeless. 
The initial 54 percent share that Louisiana received from the 
CDBG funding does not allow us to enact a plan sufficient to 
address Louisiana's more than 75 percent share of the 
devastation.
    I believe most of you know that our delegation embraced a 
bipartisan housing plan proposed by Congressman Richard Baker. 
The Baker bill would have bridged the gap between resources and 
unmet needs. When the administration sidelined the Baker bill, 
we returned to the drawing board. We had to. I went to the 
administration and said, ``If not the Baker bill, then help us 
find an adequate solution.'' We fought hard for the additional 
$4.2 billion in CDBG funding that allowed us to announce our 
housing plan.
    If our combined total of $12.1 billion in housing and 
hazard mitigation that comes from FEMA is realized, I will 
invest it in four key areas. One, the first area, is $7.5 
billion to owner-occupied housing. The second is $1.75 billion 
to affordable rental properties. The third is $2.5 billion to 
infrastructure. And the fourth is $350 million to economic 
development.
    These funds will be spent in storm-damaged areas. We will 
demand the highest standards of accountability. And I know 
that's very important to all of you here on this committee. We 
have retained Deloitte & Touche to set up front-end controls 
and to thoroughly audit our investments. We will also hire our 
own internal auditor and investigative staff to root out fraud 
and abuse. Now, we have determined that every nickel of this 
money is going to be properly spent, where it's intended to be 
spent, and not wasted. And any fraud or abuse will be 
thoroughly prosecuted.
    I want to invest the infrastructure funding to address our 
most critical needs that are not covered by FEMA funds. Here's 
one example. The State just helped to broker a partnership 
between LSU's medical school and the United States Veterans 
Administration to open a shared hospital. This partnership 
would explore activities for healthcare delivery in the greater 
New Orleans area. And I think you all know that our medical 
system has collapsed. As planning for this healthcare 
partnership continues, our infrastructure funding will help us 
to support this new facility.
    Our housing plan provides a flexible package of four 
options for families. We'll help families that--in four ways--
those who need repairs, those who need to rebuild, and those 
who need to relocate through a buyout program. For owners who 
do not want to reinvest in Louisiana, they will have the option 
to sell. I propose capping this assistance at 150,000 per 
homeowner. Our plan prioritizes rebuilding in Louisiana and is 
not designated to be a simple compensation program.
    We must ensure that our communities of the future are not 
plagued with the blighted houses of the past. Our plan requires 
homeowners to rebuild safely and to mitigate hazards. For 
example, homeowners must comply with our newly enacted 
statewide building codes and with new FEMA flood map elevations 
if they are to be eligible for any of this money.
    With nearly 70,000 rental units lost, our plan seeks to 
restore affordable rental properties. We'll invest in new 
mixed-income communities. Gap financing, seed funding, and 
other mechanisms will help rebuild affordable housing.
    Mr. Chairman, I ask to submit for the record documents I 
have provided on our housing plan.
    [The information follows:]

   Louisiana Recovery Authority Preliminary Proposal--The Road Home 
 Housing Program: A Blueprint for Building a Safer, Stronger, Smarter 
                               Louisiana

                     HOMEOWNER PROGRAM DESCRIPTIONS
                             MARCH 5, 2006

                            1. INTRODUCTION

    The Louisiana Recovery Authority (LRA) on behalf of Governor 
Kathleen Babineaux Blanco has drafted recommendations for using 
Federal, State and local resources to assist Louisiana's homeowners and 
renters who were displaced by hurricanes Katrina and Rita.
    LRA is the planning and coordinating body that was created in the 
aftermath of hurricanes Katrina and Rita by Governor Blanco to plan for 
the recovery and rebuilding of Louisiana. The authority is working with 
Governor Blanco to plan for Louisiana's future, coordinate across 
jurisdictions, support community recovery and resurgence and ensure 
integrity and effectiveness. Working in collaboration with local, State 
and Federal agencies, the LRA is addressing short-term recovery needs 
while simultaneously guiding the planning process for long-term 
recovery of housing, infrastructure, and the economies of the most-
affected parishes.
1.1 Goals of The Road Home Housing Program
    The Road Home Housing Program has nine overarching objectives:
  --1. Get homeowners back into their homes or in locations nearby with 
        particular attention to seniors, persons with special needs, 
        and vulnerable populations;
  --2. Restore pre-storm home equity to homeowners who want to return;
  --3. Restore the stock of affordable rental housing in mixed-income 
        contexts, where feasible;
  --4. Rebuild in communities in ways that ensure safer and smarter 
        construction;
  --5. Support sound redevelopment and preservation plans of local 
        governments;
  --6. Rebuild according to new State codes and FEMA advisory base 
        flood elevations;
  --7. Empower local authorities to verify safety and reduce risks in 
        rebuilding;
  --8. Apply uniform criteria for assistance to all affected 
        homeowners;
  --9. Ensure resources are used with maximum efficiency and 
        effectiveness.
1.2 Comments on The Road Home Housing Program
    Comments can be submitted through the ``Contact Us'' section of the 
Louisiana Recovery Authority's website at http://LRA.louisiana.gov, or 
may be mailed to the following address: 525 Florida Street 2nd Floor, 
Baton Rouge, LA 70801-1732.
1.3 Basis for Recommendations
    The recommendations are based on the best available information on 
housing needs, housing costs, potential public funding and the ability 
of the programs to leverage private resources. Funds available to 
finance the homeowner programs will come from a special appropriation 
of Community Development Block Grant Program funds and from FEMA Hazard 
Mitigation Funds. In addition to grants already appropriated, the State 
is seeking an additional $4.2 billion in CDBG funds.
    If Federal agencies require changes to the State's plans or 
Congress does not provide additional, sufficient funding, Louisiana 
will be required to modify these proposed plans.
    This document outlines proposed plans for the Homeowner portions of 
The Road Home Housing Program. Subsequent papers will describe programs 
for rental housing and development programs.

                    2. ASSISTANCE TO OWNER OCCUPANTS

2.1 Overview of Homeowner Program
    According to FEMA estimates, approximately 115,000 owner-occupants 
lived in homes that were destroyed or suffered major or severe damage 
in the wake of storms Katrina and Rita. The Road Home Housing Program 
will make available approximately $7.5 billion to assist these 
homeowners.
    Financial assistance and advisory services will be available for 
homeowners who wish to:
  --Repair.--Rehabilitate their property up to the minimum standards of 
        the program;
  --Rebuild.--Construct new home on the same lot because repairs are 
        too costly or cannot be made to be compliant with local codes;
  --Buyout/Relocate.--Permit purchase of their home by the program and 
        agree to resettle in other Louisiana communities; or
  --Sell.--Voluntarily sell the home with no requirements to resettle 
        or otherwise remain in the community.
    The Homeowner Program is designed to achieve the overarching goals 
of The Road Home Housing Program. In addition, given the magnitude of 
the task, the diversity of the population to be served, and the 
importance of moving quickly, the program will strive to achieve 
balance among the following principles:
  --Fairness.--Treating households in similar circumstances in a 
        similar manner.
  --Simplicity and speed.--Given the large number of homeowners to be 
        assisted and their immediate needs, the program must provide 
        resources in a way that minimizes bureaucracy and maximizes 
        speed of delivering services.
  --Accessibility.--Some owners will need little more than a phone 
        number to call or address to visit to obtain assistance. Others 
        will need help from professionals to make hard choices about 
        their options related to repair, replacing or selling their 
        home. The program will endeavor to provide services to those 
        who need a little extra help but provide streamlined processing 
        for those who do not.
  --Accountability.--We will make sure that our recovery plans are 
        focused and sound and that every recovery dollar is spent 
        wisely and accounted for honestly.
2.1 Eligibility for Homeowner Assistance
    To be eligible to apply for assistance:
  --The owner must have occupied the home as a principal residence at 
        the time of the Katrina/Rita disasters;
  --The home must be a single family property; \1\ and
---------------------------------------------------------------------------
    \1\ The State of Louisiana is considering how best to handle 
properties that include both owner occupied and rental units. The 
homeowner program is limited to single family properties, but other 
programs may address rental units with owner occupants.
---------------------------------------------------------------------------
  --The home must be categorized by FEMA as having being ``destroyed'' 
        or having suffered ``major'' or ``severe'' damage.
    The program is considering other requirements for home owner 
assistance including:
  --Owners must be willing to sign a release so that information given 
        to FEMA can be verified by The Road Home Housing Program;
  --Independently from FEMA, owners must agree to verification of their 
        ownership status and the amount of disaster-related damage to 
        the home;
  --Owners must swear to the accuracy and completeness of all 
        information provided to The Road Home Housing Program under 
        penalty of law;
  --Owners must agree to bring their properties up to minimum 
        rehabilitation standards and into conformance with the State 
        adopted International Residential Building Code; \2\
---------------------------------------------------------------------------
    \2\ A number of communities have not yet adopted or implemented the 
International Residential Building Code. The State is committed to 
helping communities to adopt the code and implement it so that the 
requirements of this program can be met.
---------------------------------------------------------------------------
  --Owners must have been registered and been approved for FEMA 
        Individual (Household) Assistance; and
  --Owners must occupy the home for a certain period of time after the 
        repairs, home replacement or relocation has occurred.
    Making participation contingent on prior registration with FEMA 
provides a fair and disciplined way of establishing eligibility. It 
would permit program administrators to quickly identify who does and 
does not have a legitimate claim for assistance.
    Making participation contingent on occupancy standards will ensure 
that in exchange for the significant financial investments provided to 
homeowners--investments that are likely to be substantially more 
generous than those provided to rental property owners--the homeowner 
remains in the neighborhood to help rebuild community institutions and 
restore the fabric of neighborhoods. Post-assistance occupancy 
requirements would require enforcement provisions such as making some 
portion of the financial assistance due and payable if the owner rents 
or sells during an agreed upon occupancy period.
2.2. Amounts and Forms of Assistance
            Maximum Assistance
    The maximum assistance for owner-occupants is currently proposed to 
be $150,000. The proposed ceiling assumes that:
  --all Federal funds allocated to and sought for the program will be 
        available; and
  --estimates of likely demand for assistance derived from FEMA data 
        are accurate.
    If sufficient funds are not made available or demand exceeds 
estimates, the maximum amount of assistance per household will be 
lowered.
    Homeowners are not always entitled to the maximum amount of 
assistance and in most cases The Road Home Housing Program will not 
provide 100 percent of the required financing. All homeowners will be 
required to contribute their insurance payments and some or all of 
their FEMA payments towards the cost of repairs or replacement. And, 
assistance will be tailored to homeowner's losses and needs. For 
example, a homeowner that suffered only 40 percent damage to the home 
may not receive as much repair assistance as an owner with 80 percent 
damage.
    The amount of eligible assistance will be:
  --Eligible Assistance = Lesser of: (a) Allowable Rebuilding Costs + 
        Mitigation Costs - Insurance - FEMA Repair Payments, or (b) 
        $150,000.
            Forms of Assistance
    Homeowners may receive one of two types of financing: a grant and a 
loan. The proportion of the financing that is structured as a grant and 
a loan will vary depending on a range of issues such as pre-storm 
value, pre-storm owner equity, and whether the property, if in a flood 
zone, was insured against floods.
    A. For owners outside FEMA flood zones and for owners inside FEMA 
flood zones with a flood insurance policy in force at the time of the 
disaster.--The financing will be structured in two tiers.
  --The first tier will be a Road Home Grant that is intended to 
        restore the pre-storm value of the property. The Road Home 
        Grant tier, up to the pre-storm value of the home at the time 
        of the disaster, may be structured as a forgivable loan, at 0 
        percent interest.
      The Road Home Grant = Pre-Storm Value - Insurance - FEMA Payments
  --The second tier will be a Road Home Loan that provides the balance 
        of funds needed for repair, rebuilding, or relocation. The Road 
        Home Loan will be structured so that monthly payments are 
        affordable to the homeowner. Such affordability determinations 
        may take into consideration a spectrum of issues including, but 
        not limited to age, disability, and income levels.
      The Road Home Loan = Eligible Assistance - The Road Home Grant
    If post-assistance occupancy requirements are incorporated in the 
program, and the home is sold, refinanced, transferred, or rented 
during a prescribed residency period--then The Road Home Grant and/or 
Loan would become due and payable, with guidelines for hardship 
exceptions.
    When the sum of remaining pre-storm loans and the affordable loan 
portion of the assistance package exceed the market value of the home, 
policies may be developed to mitigate the impacts of ``negative 
equity'' positions on the home and homeowner by adjusting the repayment 
terms but not the maximum amount of assistance ($150,000).
    B. For owners inside FEMA flood zones who did not have flood 
insurance in force at the time of the disaster.--The financing will be 
the same as above, except that The Road Home Grant portion of 
assistance will be reduced by 30 percent and the assistance provided as 
a loan will be increased by that amount deducted from the Grant. Owners 
in this category still will be eligible to receive up to the same 
maximum financial assistance at affordable terms as other homeowners. 
They will, though, have more responsibility for repaying the assistance 
than their neighbors who followed prudent practices for homes in flood 
zones and bought flood insurance.
2.3 Types of Assistance
    Homeowners will have several options for using financial 
assistance.
            Option 1: Repair
    The amount of assistance provided for repairs will vary based on 
the degree of damage to the home, the need for hazard mitigation (for 
example, elevating the home), and the availability of insurance 
proceeds and FEMA compensation. For example:
  --If an owner had already been fully compensated for damages, then no 
        assistance would be provided.
  --If a home was fully insured but requires additional funds for 
        elevation, an owner might receive assistance of $15,000 or some 
        other amount needed for work not covered by insurance.
  --If an owner had no insurance and the home was 30 percent damaged, 
        the assistance might be set at $50,000.
    All repaired homes must comply with building codes and regulations, 
including the latest available FEMA guidance for base flood elevations. 
When local governments require it, repaired homes in historic districts 
will have to comply with additional design standards. At a later date, 
the program will publish minimum design and construction standards and 
provide technical resources to ensure that homes are rebuilt with 
features that meet or exceed minimum code and the latest available FEMA 
guidance for base flood elevations. These guidelines and resources will 
emphasize the benefits of--and practical ways to achieve--energy 
conservation, durability, mold mitigation, preservation of historic 
features, and other ways in which the housing stock can become better 
than ever.
    The program will encourage owners to use the services of qualified 
professionals such as home inspectors and architects to assist them in 
specifying the repairs, getting bids from contractors and monitoring 
the work in progress.
            Option 2: Replace
    Where existing homes are beyond repair, or repairs cost more than a 
replacement home, many homeowners will choose to rebuild on the site of 
their former home. When owners rebuild they will be provided financial 
assistance up to a maximum of $150,000.
    In accepting assistance, an owner must agree to reconstruct a home 
that complies with all codes and regulations, including the latest 
available FEMA guidance for base flood elevations. When local 
governments require it, new homes in historic districts will have to 
comply with additional design standards. At a later date, the program 
will publish minimum standards for replacement homes.
    Financial assistance packages for individual owners replacing homes 
on-site may be based on factors such as the size of the household and 
additional costs of elevating homes when it is required. For example, 
maximum assistance for building a one-bedroom replacement home might be 
set at $100,000, with an additional allowance of $15,000 if it had to 
be elevated substantially. Maximum assistance of $150,000 might be 
offered for reconstructing a large home (for a larger family) that must 
be elevated substantially. An owner who received substantial insurance 
payments, and thus has less need for assistance, might receive only 
$20,000.
    No discussions have yet been held with respect to existing 
mortgages. Some of the issues that may be negotiated with lenders 
include refinancing of existing debt and time extensions for repaying 
mortgages.
    For replacement homes, other program administrative requirements 
are being considered. For example, in some or all cases, a registered 
surveyor may be required to provide a site plan indicating the property 
lines and the footprint of any new structures. The site plan will help 
assure compliance with local recovery plans, building codes, and zoning 
requirements.
            Option 3: Relocate
    When owners have homes that are severely damaged or destroyed and 
choose to relocate to an alternate, eligible location, they will be 
offered financial assistance up to the proposed maximum of $150,000 to 
purchase or build a different home. Assistance amounts will be 
established that enable owners to buy homes of modest construction and 
size in designated areas in Louisiana.
    The relocation program will allow homeowners the option to repair, 
replace or buy a home in designated areas. The feedback to this 
proposed plan is expected to help determine the definition of a 
designated area for the purposes of relocations. If it is broadly 
drawn, it provides homeowners greater choice, but possibly creates a 
disincentive to for the homeowner's community's recovery. If a 
designated area is the more or less limited to the homeowner's 
community of origin, the program creates a strong incentive for 
community recovery, but homeowners seeking to rebuild or buy in new 
regions of the State could face barriers to doing so.
    When owners choose the relocation option, they will generally be 
required to convey their original property to the State or another 
designated agency in exchange for assistance in purchasing a new home.
    Holders of secured loans or other legitimate liens on the original 
properties may be required to ``transport'' the liens to the new home 
and/or to refinance the new home purchase, as a condition of the owners 
receiving assistance and the lien holders' security being restored.
    Just as with replacement of homes on-site, the assistance amount 
will be based on the size and estimated cost of replacement homes plus 
assistance with the additional costs of elevating homes when it is 
required. For example, maximum assistance for relocating and buying a 
two-bedroom replacement home might be set at $120,000, with, for 
example, an additional allowance of $15,000 if the replacement home is 
located in a flood zone and therefore requires substantial elevation to 
meet existing or new flood map standards.
            Option 4: Sale of Home
    Some owner-occupants may choose none of the basic options: to 
repair, replace or relocate. In these instances, it is proposed that 
the State or its agent will--subject to the availability of funds--
negotiate a purchase of the property up to the maximum amount of 
assistance, not to exceed 60 percent of the assessed pre-storm market 
value of the home. For these buy-outs to occur, a lien holder may be 
asked to write off a portion of the current outstanding principal 
balances of the loan or other lien. The State may consider provisions 
for an owner to sell his or her home on the open market, presumably for 
a price higher than the State would offer, and allowing the owner to 
assign rights to assistance. However, this raises complex issues of 
establishing equitable formulas for assistance, buyers' ability to 
finance both purchase and rebuilding, and administration.
    The Rebuilding Program will not publish application forms or 
detailed descriptions of the process for receiving assistance until the 
comment period has ended and the State of Louisiana has determined the 
amount of Federal funds that will be available for all recovery 
programs.
2.4 Process for Receiving Assistance
    When the program commences, eligible homeowners will be notified by 
mail and telephone to the greatest extent possible. Information also 
will be posted on public web sites as well as provided through other 
resources such as Housing Recovery Centers.
    The State is making plans to develop and implement Housing Recovery 
Centers in strategic locations in order to maximize the benefits of the 
funding provided to Louisiana families. The Housing Recovery Centers 
will streamline the process by which the recipients can access 
hurricane recovery related products and services such as financial 
counseling, construction management and mortgage financing. In 
addition, the Housing Recovery Centers will help mitigate the potential 
for misunderstanding and abuse by providing standardized, structured 
and guided relationships between homeowners and service providers.
    Centers will serve homeowners with advice and assistance as they 
navigate the process of rebuilding homes with financial and other 
assistance offered along the way. Centers will provide participating 
homeowners with financial counseling, contacts, cost estimates, 
rebuilding specifications and other information that will help these 
homeowners as they navigate the difficult decisions they will face in 
rebuilding.
2.5 Other Program Policies Under Consideration
    Escrow of Funds.--To ensure that funds provided to homeowners are 
invested in housing, The Road Home funds will likely be placed in 
escrow accounts in the owner's name. The escrow accounts would be 
managed by financial institutions that are registered with the program. 
Escrow accounts would be subject to standard terms and conditions for 
releasing funds. There would likely be fees charged for managing the 
account and making payments. Rules and formulas will be set to guide 
the disbursement of funds to applicants who decide to opt out of the 
program, or to sell out his or her property before work is brought to 
completion.
    Allowance for Owners' Pay-Downs of Mortgages.--Equitable policies 
and procedures will be put in place for compensation for instances in 
which an owner has used insurance or FEMA payments to pay down a 
mortgage or other lien, undertake construction work on the principal 
residence, or other pay other eligible expenses established by FEMA.
    Owner Occupants Who Have Already Sold Their Principal Residence.--
Equitable policies and procedures may be determined at a later date 
that may provide Rebuilding Program assistance to an owner who has sold 
a home and otherwise would have qualified for assistance. These 
policies and procedures are not yet determined.
    Owners Who Have Started or Completed Repairs.--Assistance may be 
provided to owners who have already commenced or completed home repairs 
or the construction of replacement homes, so long as all the 
requirements of the Rebuilding Program are met. Policies will be set 
for discounting assistance amounts for any grants or below-market 
interest rate loans from government agencies that may have been 
received by an owner from for these purposes.

                                   HOUSING IMPACT COMPARISON AMONG GULF COAST STATES--OWNER OCCUPIED AND RENTAL UNITS
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                Lousiana Parishes
                                                 LA     ------------------------------------------------------------------------------------------------
                                                           Orleans    Jefferson  St Bernard  St Tammany   Calcasieu  Plaquemines    Cameron    Vermilion
--------------------------------------------------------------------------------------------------------------------------------------------------------
Homes with flood damage:
    Homes in FEMA 100 yr. fl plain:
        Minor Damage.......................      15,675       4,751       6,523         115       1,271         131          130         115         831
        Major Damage.......................      50,566      15,088      18,039       1,517       9,405         296          465         556       2,034
        Severe/Destroyed...................      80,465      66,050       3,563       5,610       1,132          31        2,394       1,351         160
                                            ------------------------------------------------------------------------------------------------------------
          Subtotal.........................     146,706      85,889      28,125       7,242      11,808         458        2,989       2,022       3,025
                                            ============================================================================================================
    Homes outside 100 yr. fl plain:
        Minor Damage.......................       6,809       2,639       1,278         399         766         135          153          13         108
        Major Damage.......................      15,749       6,585       1,014       4,336       2,779         153          284          28          95
        Severe/Destroyed...................      22,033      12,266         320       8,085         101           7        1,026           7          21
                                            ------------------------------------------------------------------------------------------------------------
          Subtotal.........................      44,591      21,490       2,612      12,820       3,646         295        1,463          48         224
                                            ============================================================================================================
          MAJOR + SEVERE, FLOOD............     168,813      99,989      22,936      19,548      13,417         487        4,169       1,942       2,310
                                            ============================================================================================================
Homes with no flood damage:
    Minor Damage...........................     288,028      21,799      51,701          43      29,135      37,499        1,750         534       4,185
    Major Damage...........................      31,771       4,672      10,582          78       3,755       5,312          439         328         240
    Severe/Destroyed.......................       4,153         494         793          46         448         582          571         306          26
                                            ------------------------------------------------------------------------------------------------------------
      MAJOR + SEVERE, NO FLOOD.............      35,924       5,166      11,375         124       4,203       5,894        1,010         634         266
                                            ============================================================================================================
      Subtotal.............................     323,952      26,965      63,076         167      33,338      43,393        2,760       1,168       4,451
                                            ============================================================================================================
MAJOR + SEVERE, ALL........................     204,737     105,155      34,311      19,672      17,620       6,381        5,179       2,576       2,576
SEVERE/DESTROYED, ALL......................     106,651      78,810       4,676      13,741       1,681         620        3,991       1,664         207
                                            ============================================================================================================
      TOTAL................................     515,249     134,344      93,813      20,229      48,792      44,146        7,212       3,238       7,700
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                   HOUSING IMPACT COMPARISON AMONG GULF COAST STATES--OWNER OCCUPIED AND RENTAL UNITS
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                        Other States
                                                                  --------------------------------------------------------------------------------------
                                                                                                                     AL, FL,        LA/
                                                                       AL          FL          MS          TX        MS, TX    (AL,FL,MS,TX)     LA/MS
--------------------------------------------------------------------------------------------------------------------------------------------------------
Homes with flood damage:
    Homes in FEMA 100 yr. fl plain:
        Minor Damage.............................................         824       2,656         624         108       4,212          3.72        25.12
        Major Damage.............................................       1,347       3,599       7,854          52      12,852          3.93         6.44
        Severe/Destroyed.........................................         147          50       6,666  ..........       6,863         11.72        12.07
                                                                  --------------------------------------------------------------------------------------
          Subtotal...............................................       2,318       6,305      15,144         160      23,927          6.13         9.69
                                                                  ======================================================================================
    Homes outside 100 yr. fl plain:
        Minor Damage.............................................       1,270         777       3,984         581       6,612          1.03         1.71
        Major Damage.............................................         952         388      21,183         479      23,002          0.68         0.74
        Severe/Destroyed.........................................          65          22       5,407          54       5,548          3.97         4.07
                                                                  --------------------------------------------------------------------------------------
          Subtotal...............................................       2,287       1,187      30,574       1,114      35,162          1.27         1.46
                                                                  ======================================================================================
          MAJOR + SEVERE, FLOOD..................................       2,511       4,059      41,110         585      48,265          3.50         4.11
                                                                  ======================================================================================
Homes with no flood damage:
    Minor Damage.................................................      51,593     237,953     154,390     127,118     571,054          0.50         1.87
    Major Damage.................................................         937      17,770      16,739       9,992      45,438          0.70         1.90
    Severe/Destroyed.............................................         236       1,370       3,537       1,526       6,669          0.62         1.17
                                                                  --------------------------------------------------------------------------------------
      MAJOR + SEVERE, NO FLOOD...................................       1,173      19,140      20,276      11,518      52,107          0.69         1.77
                                                                  ======================================================================================
      Subtotal...................................................      52,766     257,093     174,666     138,636     623,161          0.52         1.85
                                                                  ======================================================================================
MAJOR + SEVERE, ALL..............................................       3,684      23,199      61,386      12,103     100,372          2.04         3.34
SEVERE/DESTROYED, ALL............................................         448       1,442      15,610       1,580      19,080          5.59         6.83
                                                                  --------------------------------------------------------------------------------------
      TOTAL......................................................      57,371     264,585     220,384     139,910     682,250          0.76         2.34
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                                                                                                                              
                                                                                                                                              
                                                                                                                                              
                           PREPARED STATEMENT

    Governor Blanco. Louisiana is moving forward. We've already 
moved 18 times more debris than was taken from the World Trade 
Center site. I ask that you please consider our proposals very 
carefully. They've been carefully designed. And I believe they 
can stand up to a lot of scrutiny. And I appreciate your 
consideration.
    [The statement follows:]

          Prepared Statement of Hon. Kathleen Babineaux Blanco

    Chairman Cochran, Senator Byrd, and distinguished members of this 
committee, it is an honor to be here. Thank you for the work your 
committee has done on behalf of our State.
    There is no greater issue facing Louisiana than the funding for 
levees and housing promised in the President's Supplemental 
Appropriations Bill, which I fully support. The immediate future of our 
State--and the hundreds of thousands of people who want to return 
home--is now in the hands of this Congress.
    I greatly appreciate the President's proposed $1.5 billion for 
levees and $4.2 billion for housing.
    The Supplemental funding will help construct a road home for 
hundreds of thousands of our displaced residents. It is our ticket to 
rebuild, recover, and resume our productive place in our Nation's 
economy. It enables us to implement our housing plan. You are the 
guarantors of the President's word. We have been waiting for this 
funding since his speech in Jackson Square in September. Do not make us 
wait any longer. Please honor his commitment to our people.
    Six months ago, Hurricane Katrina bore down on Louisiana, leading 
to the catastrophic failure of our Federal levee system. This storm and 
the immense engineering failure sent water into almost every part of 
our largest city, where it sat for nearly a month.
    Our people relied in good faith on Federal flood maps and Federal 
levees to protect their lives and property, and you have seen the 
unfortunate result.
    Imagine--for a minute--if your State's largest city was underwater 
for a month. I can only hope that this experience is never repeated.
    As we were drying out, Hurricane Rita struck. Rita was one of the 
most devastating storms in our Nation's history. Rita did to Southwest 
Louisiana what Katrina did to Mississippi. The combined devastation to 
our State is best described as a catastrophe of Biblical proportions.
    The entire Gulf Coast suffered, but Louisiana bore the brunt of 
this disaster. Katrina claimed over 1,100 lives in our State alone. 
Together, Katrina and Rita displaced more than 780,000 people and 
destroyed the homes of over 200,000 families.
    An estimated 81,000 businesses were stilled, and 18,000 of our 
businesses still have not reopened.
    FEMA estimates show that we had over 100,000 homeowner properties 
that suffered major damage or were destroyed from storm surges and 
levee breaks. This is a full 76 percent of the total homes destroyed by 
the floodwaters.
    Louisiana's rental properties were even more disproportionately 
impacted. Nearly 70,000 units were rendered uninhabitable. This equates 
to a full 80 percent of the rental losses from floodwaters.
    The Louisiana Recovery Authority worked closely with Chairman Don 
Powell and the White House to reach a consensus on this compelling 
data. Chairman Powell subjected us, and our consultants from McKinsey & 
Company, to a rigorous review that should inspire confidence in our 
data.
    I urge Congress to avoid the temptation to chip away at the 
promised funding and divert it to other States. I do not for a minute 
seek to minimize the needs of Mississippi, Alabama or Texas. My heart 
goes out to our neighbors.
    I am grateful for their warm response to our displaced people. But 
Congress has the ability to appropriate funding to them without 
undermining the President's promise to us.
    The data speaks for itself. Any shortfall in the proposed funding 
would jeopardize our recovery.
    Please understand that we are not asking for a handout, but a hand-
up to get our people back on their feet. History will judge us by how 
we respond to our own people's suffering with the resources of the 
greatest Nation on earth.
    This Congress regularly appropriates billions of dollars to help 
people all over this world.
    Every month, American taxpayers spend nearly $6.8 billion for 
infrastructure improvements, equipment and operations in Iraq and 
Afghanistan.
    Surely, we can find a way to provide the $1.4 billion needed to 
strengthen levees protecting Americans citizens. Surely, we can fund 
the $4.2 billion for American homeowners who want to return home to 
Louisiana.
    Safety is the first step in enabling Louisiana's families and 
businesses to return. Hurricane season is less than 3 months away. We 
must not waste another minute in putting the designated $1.4 billion to 
work strengthening our levees.
    Louisiana has taken great strides to improve our levee system. We 
have:
  --Consolidated a 100-year-old system of levee boards to improve 
        oversight and maintenance, and to eliminate opportunities for 
        corruption and cronyism.
  --Created the Coastal Protection and Restoration Authority to provide 
        State-wide oversight of levee boards and enforce a master plan 
        for coastal and flood protection.
    I have faith that these reforms will give Congress the assurances 
needed to make a lasting investment in a reliable levee system.
    Second, we must rebuild our houses in order to bring families home. 
Chairman Cochran, thank you and this Committee for your innovation and 
diligence in securing the initial $6.2 billion in Community Development 
Block Grants.
    This $6.2 billion, while generous, did not come close to solving 
our housing crisis. The initial 54 percent share Louisiana received 
from CDBG funding did not allow us to enact a plan sufficient to 
address Louisiana's more than 75 percent share of the devastation.
    Our delegation embraced the Baker Bill, a bipartisan plan proposed 
by Congressman Richard Baker. The Baker Bill would have bridged the gap 
between available resources and unmet needs.
    When the administration sidelined the Baker Bill, we returned to 
the drawing board. I went back to the administration and said: If not 
the Baker Bill, then help us find the resources to enact a more 
equitable solution.
    We fought hard for the additional $4.2 billion in CDBG funding that 
allowed us to announce our housing plan. If our combined total of $12.1 
billion in housing and hazard mitigation funding is realized, I will 
invest it in four key areas:
  --$7.5 billion to owner-occupied housing;
  --$1.75 billion to affordable rental properties;
  --$2.5 billion to infrastructure; and
  --$350 million to economic development.
    All of these funds will be spent in the storm damaged areas. I 
promise Congress that these funds will be held to the highest standards 
of accountability. We have retained Deloitte & Touche to set up front-
end controls and thoroughly audit our investment of taxpayers' money. 
We will also hire our own internal audit and investigative staff to 
root out fraud and abuse. We are determined to be responsible stewards 
of the Federal investment in our recovery.
    I want to invest the infrastructure funding to address our most 
critical needs in health care, schools and colleges, and other areas of 
critical needs that FEMA funds do not cover.
    Here is one example. The State just helped to broker a partnership 
between LSU and the United States Veterans' Administration to open a 
shared hospital.
    This partnership would explore activities for health care delivery 
in the greater New Orleans area. As planning for this health care 
partnership continues, our infrastructure funding will help us to bring 
resources to bear in support of this new facility.
    Known as The Road Home, our housing plan provides a flexible 
package of four options for families who want to return home. We will 
help families: Repair, Rebuild and Relocate through a Buyout.
    For owners who do not want to reinvest in their Louisiana 
properties, they will have the option to sell.
    I propose capping this assistance at $150,000 per homeowner. Our 
plan is not designed to be a simple compensation program. Our plan will 
prioritize rebuilding in Louisiana.
    We must ensure that our communities of the future are not plagued 
with blighted homes of the past. The sell option ensures that citizens 
who do not want to reinvest in Louisiana still have the ability to 
sell.
    Our plan requires homeowners to rebuild safely and to mitigate 
hazards.
    Homeowners must comply with our new State-wide building codes, and 
with new FEMA flood map elevations.
    With nearly 70,000 rental units lost, a component of our plan seeks 
to restore affordable rental properties in new mixed-income 
communities.
    Gap financing, seed funding, and other mechanisms are under 
consideration as a way to influence the restoration of affordable 
housing.
    Mr. Chairman, I ask to submit for the record documents I have 
provided to the committee on The Road Home housing plan.
    Louisiana is moving forward. As one example, we have removed 18 
times more debris than was taken from the World Trade Center site.
    We are conducting a comprehensive review of lessons learned, and 
making necessary changes to our emergency preparedness plans.
    We have taken over the failing New Orleans schools to create a 
school system that recognizes our children's potential.
    Six months after Katrina and 5 months after Rita, Louisiana is 
turning the corner and moving towards a safer, stronger and brighter 
future.
    With passage of the Supplemental funding, I predict the sounds of 
hammers and saws will ring through all of our communities as our homes 
are rebuilt. And not too long after that, we will hear the voices of 
children return to our streets. That will be a great day for America.
    Thank you for standing by us to make this day a reality. This is an 
investment in our collective future that America can be proud to 
support.

    Chairman Cochran. Thank you, Governor.
    The materials that you asked be included in the record will 
be made a part of the hearing record.
    Governor Barbour.

STATEMENT OF HON. HALEY BARBOUR, GOVERNOR, STATE OF 
            MISSISSIPPI
    Governor Barbour. Mr. Chairman and distinguished members of 
the committee--thank you. I haven't been around here much 
lately.
    Mr. Chairman and distinguished members of the committee, 
thank you for the opportunity to join you today to discuss the 
worst natural disaster in American history, Hurricane Katrina.
    First let me say, we, in Mississippi, greatly need, and 
genuinely appreciate, the generous Katrina appropriations 
package that you passed in December and the President signed 
into law. Thank you. Thank you very much.
    On August 29, Hurricane Katrina struck our State a grievous 
blow. Although the eye of the storm landed on the Mississippi/
Louisiana line, that eye was more than 30 miles wide, and 
Katrina completely devastated our entire coastline, from 
Pearlington to Pascagoula. The miles upon miles of utter 
destruction are unimaginable, except to those, like many of 
you, who have witnessed it with your own eyes, on the ground.
    But this hurricane wasn't just a calamity for the 
Mississippi gulf coast. Its impact extended far inland, with 
hurricane-force winds 200 miles inland from the gulf coast. In 
her wake, Katrina left literally tens of thousands of 
uninhabitable, often obligated homes. The Red Cross said 70,000 
homes were uninhabitable. Thousands of small businesses were in 
shambles, dozens of schools and public buildings ruined and 
unusable. Highways, ports, railroads, water and sewer systems, 
all destroyed.
    We can't recover and renew from a disaster of this 
magnitude without the help of others, and we are very grateful 
for the outpouring of support and generosity from across the 
country. It's been overwhelming. And, as I said, the financial 
resources authorized by this Congress and the President last 
December are essential.
    We're moving forward, in Mississippi, making progress every 
day. But we have a mighty tall mountain in front of us. Katrina 
left more than 45 million cubic yards of debris in its wake, 
more than twice as much debris as left by Andrew, which was the 
previous recordholder, so to speak. We're removing it twice as 
fast as has ever been done before, already have cleaned up 35 
million cubic yards. But we still have 10 million cubic yards 
to go. And we can't rebuild our infrastructure until we remove 
the debris.
    We've installed temporary housing more quickly than has 
ever been done on such a large scale, with more than 36,000 
travel trailers and mobile homes now occupied by more than 
100,000 Mississippians. But as many as 6,000 more units of 
temporary housing are still needed.
    Later, I want to talk to you briefly about other problems 
with temporary housing, and a proposed solution for this and 
for future natural disasters--future disasters.
    Last fall, I worked with our congressional delegation on a 
bipartisan basis--and I want to thank you, Senator Cochran, for 
leading that--to craft a Federal assistance package which 
addressed our most urgent needs. The Congress responded with an 
unprecedented level of resources and flexibility. And, again, 
we thank you.
    In Mississippi, we're setting up the systems to ensure 
accountability and successful implementations of the programs 
which you've funded. To address our biggest issue, housing, 
we'll use $4 billion of community development block grants to 
rebuild houses which were destroyed by the storm surge, 
therefore weren't covered by regular insurance. Other CDBG 
funds were used for water and sewer expansion, in that we 
anticipate many people on our coast will choose to move inland 
to get away from the storms. And we have to expand the 
infrastructure for them. We'll mitigate against large utility 
rate increases that would hurt our recovery, and for economic 
and community development.
    The funding you provided in December makes our recovery and 
our renewal efforts possible in a multitude of areas that I'll 
just touch on. We're rebuilding our roads and bridges. We're 
providing workforce training opportunities to help meet the 
incredibly increased demand for construction-related 
occupations. We'll soon be able to provide financial relief to 
State and local law enforcement agencies, who are overwhelmed 
by new tasks and changes in population. We're helping our 
school districts, all of which--all of which--have been open 
since early November, and 151 out of 152 have been open since 
October 10. Ninety-nine percent of Mississippi schoolchildren 
are back in school in the county they were in school in when 
the hurricane struck, on August 29.
    We're providing financial assistance to our universities 
and community college students. We're in the process of using 
new social service block grant funds to meet increased or 
unfunded human services needs and demands, such as childcare. 
We've begun a multiyear endeavor of restoring our environmental 
habitat and coastal protections.
    People of Mississippi are grateful for this assistance. And 
we commit to you that we'll be good stewards of the taxpayers' 
money.
    The President recently requested an additional $9.4 billion 
to replenish FEMA's Disaster Relief Fund, $1.3 billion for the 
SBA Disaster Loan Program, and $300 million for the Community 
Disaster Loan Program. I fully support these requests and hope 
that y'all will fund them.
    The Disaster Relief Fund contains the financial resources 
to pay for the individual and public assistance programs the 
Federal Government's required to provide out of the Stafford 
Act. As of last week, more than $7.7 billion had been allocated 
to these activities in Mississippi out of this fund. 
Ultimately, we expect to receive somewhere between $15 billion 
and $17 billion of Stafford Act monies under the law that 
existed prior to Katrina. This fund has to be replenished so 
that the government can meet its obligations.
    Same is true for the SBA account. Nearly 3,500 businesses 
and 20,000 homeowners in Mississippi have been approved for 
$1.7 billion in SBA loans. People are depending on these 
programs, so they have to be funded so the money will be there.
    The Community Disaster Loan Program is essential. Many 
local entities, from cities and counties to water and sewer 
districts, have simply lost their tax bases. Property tax 
collections will be low to nonexistent in some counties and 
cities in Mississippi. So, we have to continue to look for ways 
to help these local governments.
    In November, we presented the administration and the 
leaders of Congress with a plan for Mississippi to try to 
recover. Including the FEMA money we just discussed, $15 
billion or $17 billion, it's about a $33.5 billion program. 
Now, y'all were very generous to fund much of that in the 
December package. There were three projects for which we did 
not request funding last fall, simply because they weren't 
ready. And our policy is, we're not going to ask you to give us 
money for something that we're not prepared to do and show you 
exactly how we're going to do it, how we're going to be 
accountable for it. Since then, two of those projects have 
further developed. And I ask Congress and the committee to 
consider them. Both are integral transportation projects 
dealing with hazard mitigation, safety, economic community 
development.
    First is the rebuilding and redevelopment of the Port of 
Gulfport, the entire infrastructure of which was devastated. 
The second is to relocate a railroad from right on the coast to 
move it farther inland. The third unfunded major program is the 
Environmental Restoration and Hurricane Protection Program. In 
the last supplemental, Congress approved $10 million to study 
the best ways to protect our coastline and restore coastal 
ecosystems. Some funding was provided to begin the restoration 
in coastal marshes and oysteries, but more will be needed in 
the future. We're not asking for that support today, because we 
want the studies to be completed so we can come back to you and 
say, ``This is the best way to go forward.''
    As I mentioned earlier, temporary and permanent housing are 
the biggest issues on the gulf coast. In addition to the CDBG 
funds, we're dedicating almost all our Hazard Mitigation Grant 
Program allocation to rebuilding homes in such a way that 
they'll be better protected from future hurricanes. To better 
support this effort, I ask Congress to increase the funding cap 
for this program from 7.5 percent of total FEMA project costs 
to 15 percent, which had been the cap in the past.
    For many Mississippians, permanent housing, though, is a 
long way away. The new supply will not meet demand for several 
years. When you lose 70,000 units of housing in a community of 
400-and-something-thousand people, it will take years to 
rebuild.
    Under the current law, too many Mississippians will be 
trapped in FEMA trailers, the Government's current default 
solution for temporary housing. These trailers are designed and 
built to be used recreationally, for a few weeks a year. 
They're campers. They're not designed to be used as housing for 
a family for months, much less years. Trailers don't provide 
even the most basic protection from high winds or severe 
thunderstorms, much less tornados or hurricanes. In addition, 
they're highly vulnerable to electrical and propane fires.
    As I testified before the Senate Homeland Security 
Committee, the Federal Government needs more options for future 
hurricanes and large-scale disasters. The sole solution of the 
travel trailer is just not sufficient. Modular housing can be 
constructed quickly and efficiently, and, ultimately, we 
believe, cost the taxpayers less in construction and 
maintenance cost than a travel trailer. More importantly, 
modular housing, designed like the ``Katrina Cottages'' 
developed in the Mississippi Renewal Forum, provide a much 
better living environment for disaster victims. Occupants of a 
Katrina Cottage can use the cottage as a base from which to 
build a new permanent home, or can use it as simply temporary 
housing that can be taken away when a new home is built.
    I propose to you that Congress invest in a pilot program to 
install modular housing in the place of travel trailers on the 
Mississippi gulf coast. Such a project would prepare the 
Federal Government for the temporary housing demands of the 
next disaster and can get 20,000 to 25,000 Mississippi families 
out of FEMA trailers. We won't be able to get them out by this 
hurricane season, and you will see enormous evacuations 
required once the hurricane season starts, because of these 
travel trailers. But we can get it done this year.
    Mississippi is moving forward in our recovery and renewal 
efforts, and we're not depending solely on the Federal 
Government. We're working to leverage the generosity of faith-
based and nonprofit organizations to help meet the unmet needs 
of disaster assistance programs. And, to that end, our 
Mississippi Hurricane Recovery Fund is hosting a conference of 
nonprofits on the coast, this Thursday, from which, Mr. 
Chairman, we'd like to make a report to the committee, not for 
the purpose of asking you for more money, but to help identify 
the gaps for the committee and for the Congress as you look 
forward to future disasters and how the Stafford Act and other 
laws ought to be amended.

                           PREPARED STATEMENT

    State and local governments in Mississippi are working 
together. And we're working with the private sector and the 
Federal Government to find solutions to our common problems. 
The private sector is the ultimate key to our renewal, and 
we're working as quickly as possible to recreate the 
infrastructure needed for that success. We depend on the 
Federal Government to help us rebuild that infrastructure. And 
we thank you very much for your help.
    Thank you, Mr. Chairman.
    [The statement follows:]

                Prepared Statement of Hon. Haley Barbour

    Mr. Chairman and distinguished members of the committee, thank you 
for this opportunity to join you today to discuss the worst natural 
disaster in our Nation's history, Hurricane Katrina.
    First, we in Mississippi greatly need and genuinely appreciate the 
generous Katrina appropriations package you passed and the President 
signed in December. Thank you.
    On August 29, 2005, Hurricane Katrina struck our State a grievous 
blow. Although the eye of the storm landed at the Mississippi-Louisiana 
line, that eye was more than 30 miles wide, and Katrina completely 
devastated our entire coastline, from Pearlington to Pascagoula. The 
miles upon miles of utter destruction are unimaginable, except to those 
like many of you who have witnessed it with your own eyes, on the 
ground. But this hurricane wasn't just a calamity for the Mississippi 
Gulf Coast; its impact extended far inland with hurricane force more 
than 200 miles from the Coast.
    In her wake, Katrina left literally tens of thousands of 
uninhabitable, often obliterated homes; thousands of small businesses 
in shambles; dozens of schools and public buildings ruined and 
unusable; highways, ports and railroads, water and sewer systems, all 
destroyed.
    We cannot recover and renew from a disaster of this magnitude 
without the help of others. The outpouring of support and generosity 
from across the country has been overwhelming, and the financial 
resources authorized by this Congress and the President last December 
are essential.
    We are moving forward in Mississippi, making progress every day, 
but we have a tall mountain in front of us. Katrina left more than 45 
million cubic yards of debris, more than twice the debris left by 
Hurricane Andrew. We are removing it twice as fast as has ever been 
done, but 6 months after the storm, about 10 million cubic yards 
remain. We can't rebuild our infrastructure until we clear the debris.
    We have installed temporary housing quicker than it has ever been 
done on such a large scale, with more than 36,000 travel trailers and 
mobile homes occupied by more than 100,000 Mississippians. But as many 
as 6,000 units of temporary housing are still needed. Later, I will 
talk about other problems with temporary housing and a proposed 
solution for this and future disasters.
    Last fall, I worked with our Congressional delegation on a 
bipartisan basis, led by Senator Cochran, the chairman of this 
committee, to craft a Federal assistance package which addressed our 
most urgent needs. The Congress responded with an unprecedented level 
of resources and flexibility. Again, thank you.
    In Mississippi, we are setting up the systems to ensure 
accountability and successful implementation of the programs which you 
have funded.
    To help address our biggest issue, housing, we will use $4 billion 
of Community Development Block Grants to help rebuild homes which were 
destroyed by the storm surge. Other CDBG funds will be used for water 
and sewer expansion, mitigation against large utility rate increases, 
and economic and community development.
    The funding you provided in December makes our recovery and renewal 
efforts possible in a multitude of areas. We are rebuilding our roads 
and bridges. We are providing workforce training opportunities to help 
meet the increased demand for construction related occupations. We will 
soon be able to provide financial relief to State and local law 
enforcement agencies which are overwhelmed with new tasks. We are 
helping our school districts, all of which have been open since early 
November but whose local tax base is destroyed. We are helping the 
school districts who have displaced students to educate. We are 
providing financial assistance to our universities and community 
college students. We are in the process of using new Social Service 
Block Grant funds to meet increased or unfunded human service needs and 
demands, such as child care. We have begun the multi-year endeavor of 
restoring our environmental habitat and coastal protections.
    The people of Mississippi are grateful for this assistance and we 
commit to you that we will be good stewards of the dollars provided by 
the American taxpayer.
    The President recently requested an additional $9.4 billion to 
replenish FEMA's Disaster Relief Fund; $1.3 billion for the Small 
Business Administration's Disaster Loan Program; and $300 million for 
the Community Disaster Loan Program. I fully support these requests.
    The Disaster Relief Fund contains the financial resources to pay 
for the individual and public assistance programs the Federal 
Government is required to provide under the Stafford Act. As of last 
week, more than $7.7 billion has been allocated to activities in 
Mississippi out of this fund. Ultimately, we expect this amount to 
increase to about $15 billion to $17 billion. This fund must be 
replenished so the Federal Government can meet its obligations.
    The same is true for the SBA account. Nearly 3,500 businesses and 
20,000 homeowners in Mississippi have been approved for $1.7 billion in 
SBA loans. People are depending on these programs and they need to be 
funded.
    The Community Disaster Loan program is essential. Many local 
government entities, from cities and counties to water/sewer districts, 
have lost their tax bases. Property tax collections will be low to non-
existent in some places. We must continue to look for ways to help keep 
these local governments solvent.
    There are three projects for which I did not request funding last 
fall since they were not yet ready. Since then, two of the projects 
have further developed, and I ask the Congress and this committee to 
give them proper consideration. Both are integral transportation 
projects dealing with hazard mitigation, safety, economic and community 
development.
    The first is the rebuilding and redevelopment plan of the Port of 
Gulfport, the entire infrastructure of which was destroyed. The second 
is to relocate a railroad from right on the coast to far further 
inland.
    The third unfunded major program is the environmental restoration 
and hurricane protection program. In the last supplemental, Congress 
provided $10 million to study the best ways to protect our coastline 
and restore coastal ecosystems. Some funding was provided to begin the 
restoration of coastal marshes and the oyster reefs, but much more will 
be needed in future years. I look forward to working with you on this 
issue in the future.
    As I mentioned earlier, temporary and permanent housing are the 
biggest issues on the Gulf Coast. In addition to the CDBG funds, we are 
dedicating almost all of our Hazard Mitigation Grant Program allocation 
to rebuilding homes in such a way that they will be better protected 
from future hurricanes. To better support this effort, I ask Congress 
to increase the funding cap for the this program from 7.5 percent of 
total FEMA project costs to 15 percent, which had been the cap in the 
past.
    But for many Mississippians, permanent housing is far away because 
the new supply will not meet the demand for several years. Under the 
current law, too many Mississippians will be trapped in FEMA trailers, 
the government's current default solution for temporary housing. These 
trailers are designed and built to be used recreationally a few weeks a 
year; they are not designed to be used as housing for a family for 
several years.
    The trailers do not provide even the most basic protection from 
high winds or severe thunderstorms, much less tornadoes or hurricanes. 
In addition, they are highly vulnerable to electrical and propane 
fires.
    As I have testified to the Senate Homeland Security Committee, the 
Federal Government needs more options in future hurricanes. Modular 
housing can be constructed quickly and efficiently, and ultimately 
costs the taxpayer less in construction and maintenance costs. More 
importantly, modular housing designed like the ``Katrina Cottages'' 
developed in the Mississippi Renewal Forum provides a much better 
living environment for disaster victims. Occupants of a ``Katrina 
Cottage'' can use the cottage as a base from which to build their new 
permanent home.
    I propose the Congress invest in a pilot program to install modular 
housing on the Mississippi Gulf Coast. Such a project would prepare the 
Federal Government for the temporary housing demands of the next 
disaster and can get 20,000 to 25,000 Mississippi families out of FEMA 
trailers.
    Mississippi is moving forward in our recovery and renewal efforts. 
We are not depending solely on the Federal Government. We are working 
to leverage the generosity of faith-based and non-profit organizations 
to help meet the unmet needs of disaster assistance programs. To that 
end, the Mississippi Hurricane Recovery Fund is hosting a conference of 
the non-profits on the Coast this Thursday.
    State and local governments in Mississippi are working together, 
with the private sector, and with the Federal Government to find 
solutions to our common problems. The private sector is the ultimate 
key to our renewal and we are working as quickly as possible to 
recreate the infrastructure needed for that success. The support of 
this committee is essential in that effort.
    Thank you.

    Chairman Cochran. Thank you, Governor Barbour.
    Governor Perry, welcome. You may proceed.

STATEMENT OF HON. RICK PERRY, GOVERNOR, STATE OF TEXAS
    Governor Perry. Chairman Cochran, thank you very much. 
Senator Hutchison, members, thank you for the opportunity to 
address this committee.
    And, like Senator Hutchison, I learned, at a very early 
age, that your word is your bond. And today I'm asking the 
Federal Government to live up to its word. Federal officials 
made a solemn commitment to reimburse the cost of housing, 
food, medicine to hundreds of thousands of victims of Katrina. 
And, less than 4 weeks later, when our State became the victim 
of a second devastating hurricane, more promises were made. But 
to date, promised Federal reimbursement, financial assistance, 
has been woefully inadequate.
    First, we were promised that the Federal Government would 
develop and implement a national housing program for Katrina 
victims. And, after Rita, we were verbally assured by top HUD 
officials that Texas would receive hundreds of millions of 
dollars for housing and infrastructure needs. And the question 
is, then: ``What has been delivered?'' Financial aid that is a 
fraction of what was promised, less than 1 percent of all funds 
allocated by HUD through the community development block 
grants. Katrina victims left in hotels, left in those hotels 
with ever-changing eviction deadlines. And to date, there 
remains no viable or clear plan to return those victims to 
their home States.
    Second, to offset unexpected education costs, we were 
promised by Congress a per-child reimbursement of up to $7,500 
for evacuee students, including the 38,000 who are enrolled 
presently in Texas schools. Instead, we're being shortchanged 
between $2,000 and $3,500 per student.
    Third, we were promised that Katrina and Rita victims would 
be treated equally by the Federal Government. Instead, Texans 
who were impacted by Rita are receiving less Federal assistance 
than the victims of Katrina. Now, try explaining that 
discrepancy to folks over in Orange or Beaumont, Port Arthur. 
They were the first in line to welcome waves of evacuees coming 
into Texas. They triaged thousands, provided food, safe haven 
for those, those who came into the State with nothing but the 
clothes on their back--even opened their homes and their 
business to them. And then, after tragedy struck them, in the 
midst of helping all those folks, they saw their homes 
destroyed, their jobs lost, their lives turned upside down, 
Washington responded by providing them less, less than those 
whose lives they helped to save.
    Rita seems to be the storm that no one in Washington wants 
to remember. But let me be clear, it's a storm that continues 
to take a toll. Seventy-five thousand homes were destroyed or 
damaged, about half of which were uninsured. Electric utility 
infrastructure across the region was crippled. I'm sure none of 
us here would like to do what local leaders in south Texas have 
had to do, and that is to explain to Texas victims of Rita why 
they have a separate food stamp line that provides less food 
for their families than the victims of Katrina, or, for that 
matter, why the Federal Government will pay only 75 percent of 
their debris removal costs, but 100 percent of the very same 
storm, living a few miles away in Louisiana.
    These discrepancies cannot be explained, because they don't 
make sense. Mother Nature treated Rita victims on both sides of 
the border with equal wrath. And the Federal Government should 
treat Rita victims in both States with equal compassion, equal 
assistance.
    This is not just a matter of fairness, it's a matter of 
true need. Texas victims of Rita are not just bearing the great 
financial burden that resulted from the second storm, but also 
the expenses they so willingly incurred to help victims of the 
first storm.
    When Governor Blanco called me, on August 31, I didn't ask 
her how long her citizens would be displaced or what the plan 
would be to get them back home. I just said, ``Send them on. 
We'll take care of them.''
    What ensued was the most massive domestic relief effort 
ever undertaken on U.S. soil. And if Washington hadn't promised 
us 1 cent--Senator Hutchison, you know Texans well--we would 
have done what we did, because you can't put a price on lives 
saved.
    But the fact is, in the midst of a great tragedy, 
Washington did make a lot of promises. And if Washington gives 
short shrift to a Good Samaritan State like Texas, it'll send 
chills down the spine of any Governor asked to be a good 
neighbor in the future.
    We still have 640,000 hurricane victims in our State. Our 
hospitals, our schools, our social services are under great 
strain. And I know you have a tremendous obligation to help 
rebuild Mississippi and to help rebuild Louisiana. But don't 
forget the State that continues to host so many of their 
citizens, the State that suffered its own catastrophic 
hurricane, the State of Texas.
    Just yesterday, Federal coordinator of Gulf Coast 
Rebuilding, Don Powell, informed his Texas counterpart, Michael 
Williams, that we should not expect any additional help from 
Washington, because the damage that we sustained was caused 
mostly by wind, not by water. Perhaps helping only flood 
victims makes some sense to some, but I ask you to view the 
situation in the perspective of people whose lives were forever 
changed by these disasters. It doesn't matter to them which 
force of nature leveled their home or school or business. All 
that matters is whether their government is going to supply the 
promised aid that they need desperately, to pick up the pieces 
of their shattered lives.
    The $2 billion that I asked to be appropriated for Texas is 
conservative, it's critically needed and carefully documented 
in the Texas Rebounds publication that you have in front of 
you. It includes $322 million to rebuild homes badly damaged by 
Rita, $338 million so Texans can continue to educate tens of 
thousands of dislocated children, and nearly $500 million to 
restore utilities, rebuild critical government infrastructure, 
and repair vital first-responder equipment.
    This report also provides specific details justifying 
additional Federal funding for public safety efforts, small 
business and workforce assistance, medical care for the sick 
and elderly, and transportation and other priorities. These 
funds are absolutely essential to ensure that not only Texas 
fully recovers from the 2005 hurricane season, but that the 
American people can place faith in the credibility of a Federal 
Government that keeps its word.

                           PREPARED STATEMENT

    Our needs remain great, Mr. Chairman, and the rest of the 
Nation is watching carefully to see how Washington repays those 
who go to great length to help the victims of a national 
tragedy.
    Thank you, sir.
    [The statement follows:]

                 Prepared Statement of Hon. Rick Perry

    Thank you, Senator Hutchison. Chairman Cochran, members, thank you 
for the opportunity to address this committee.
    Like Senator Hutchison and all of you, I learned at an early age 
that your word is your bond. Today I am asking the Federal Government 
to live up to its word.
    Federal officials made a solemn commitment to reimburse our costs 
for providing housing, food and medicine to hundreds of thousands of 
victims of Katrina. Less than 4 weeks later, when our State became the 
victim of a second devastating hurricane, more promises were made.
    But to date, promised Federal financial assistance has been 
woefully inadequate.
    First, we were promised that the Federal Government would develop 
and implement a national housing program for Katrina victims, and after 
Rita, we were verbally assured by top HUD officials that Texas would 
receive hundreds of millions of dollars for housing and infrastructure 
needs.
    What has been delivered so far? Financial aid that is a fraction of 
what was promised, and less than 1 percent of all funds allocated by 
HUD through Community Development Block Grants. Katrina victims left in 
hotels received ever-changing eviction deadlines. And to date there 
remains no viable or clear plan to return victims to their home State.
    Second, to offset unexpected education costs we were promised by 
Congress a per-child reimbursement of up to $7,500 for evacuee 
students, including the 38,000 enrolled in our schools as of last 
month. Instead, we are being shortchanged between $2,000 and $3,500 per 
student.
    Third, we were promised that Katrina and Rita victims would be 
treated equally by the Federal Government. Instead, Texans impacted by 
Rita are receiving less Federal assistance than the victims of Katrina.
    Try explaining this discrepancy to people in towns like Orange, 
Beaumont and Port Arthur. They were the first in line to welcome waves 
of evacuees coming into Texas. They triaged thousands, provided food 
and a safe haven to those with nothing but the clothes on their backs, 
even opened their homes and businesses to them at their own expense.
    And then after tragedy struck them in the midst of helping all 
these people--and their homes were destroyed, their jobs lost, their 
lives turned upside down--Washington responded by providing them less 
than those whose lives they helped save.
    Rita seems to be the storm that no one in Washington wants to 
remember. But let me be clear: it's a storm that continues to take a 
great toll.
    Seventy-five thousand homes were destroyed or damaged, about half 
of which were uninsured, and electric utility infrastructure across the 
region was crippled.
    I'm sure none of us here would like to do what local leaders in 
Southeast Texas have had to do, which is explain to Texas victims of 
Rita why they have a separate food stamp line that provides less food 
for their families than the victims of Katrina. Or for that matter, why 
the Federal Government will pay for only 75 percent of their debris 
removal costs, but 100 percent for victims of the very same storm 
living a few miles away in Louisiana.
    These discrepancies cannot be explained, because they do not make 
sense. Mother Nature treated Rita victims on both sides of the border 
with equal wrath, and the Federal Government should treat Rita victims 
in both States with equal compassion and equal assistance.
    This is not just a matter of fairness; it is a matter of true need. 
Texas victims of Rita are not just bearing the great financial burden 
that resulted from the second storm, but also the expenses they so 
willingly incurred to help victims of the first storm.
    When Governor Blanco called me on August 31, I didn't ask her how 
long her citizens would be displaced, or what the plan was to get them 
back home. I simply said, ``Send them here.''
    What ensued was the most massive domestic relief effort ever 
undertaken on U.S. soil. And even if Washington hadn't promised us 1 
cent, we would have done what we did because you can't put a price on 
lives saved.
    But the fact is, in the midst of great tragedy, Washington did make 
a lot of promises. And if Washington gives short shrift to a Good 
Samaritan State like Texas, it will send chills down the spine of any 
governor asked to be a good neighbor in the future.
    We still have 640,000 hurricane victims in our State. Our 
hospitals, schools and social services are under great strain. I know 
you have a tremendous obligation in rebuilding Louisiana and 
Mississippi. But don't forget the State that continues to host so many 
of their citizens, the State that suffered its own catastrophic 
hurricane, the State of Texas.
    Just yesterday, Federal Coordinator of Gulf Coast Rebuilding Don 
Powell informed his Texas counterpart, Michael Williams, that we should 
not expect any additional help from Washington because the damage we 
sustained was caused mostly by wind, and not water.
    Perhaps helping only flood victims makes sense to some, but I ask 
you to view the situation from the perspective of the people whose 
lives were forever changed by these disasters. It doesn't matter to 
them which force of nature leveled their home or school or business, 
all that matters is whether their government is going to supply the 
promised aid they need to pick up the pieces of their shattered lives.
    The $2 billion I ask you to appropriate for Texas is conservative, 
critically needed and carefully documented in the Texas Rebounds report 
I have provided to this committee.
    It includes $322 million to rebuild homes badly damaged by Rita, 
$338 million so Texas can continue to educate tens of thousands of 
dislocated children, and nearly $500 million to restore utilities, 
rebuild critical government infrastructure and repair vital first 
responder equipment.
    This report also provides specific details justifying additional 
Federal funding for public safety efforts, small business and workforce 
assistance, medical care for the sick and elderly, transportation and 
other priorities.
    These funds are absolutely essential to ensure not only that Texas 
fully recovers from the 2005 hurricane season, but that the American 
people can place their faith in the credibility of a Federal Government 
that keeps its word.
    Our needs remain great. And the rest of the Nation is watching 
carefully to see how Washington repays those who go to great lengths to 
help the victims of a national tragedy. Thank you.

    Chairman Cochran. Thank you, Governor Perry.
    Thank you all for your statements, they are very helpful 
and instructive. We appreciate having the benefit of your 
information and insight into how we can further respond to help 
ensure recovery and rebuilding is successful in these gulf 
State areas.
    Senator Byrd, our distinguished ranking member on the 
committee--ranking minority member on the committee, is here, 
and I'm going to ask him if he has an opening statement. We're 
prepared to receive that at this time.

                  STATEMENT OF SENATOR ROBERT C. BYRD

    Senator Byrd. Thank you, Mr. Chairman.
    I thank you for calling this series of hearings on the 
President's emergency supplemental budget request for the wars 
in Iraq and Afghanistan, and for the Federal response to 
Hurricanes Katrina, Rita, and Wilma.
    The President asked Congress to approve $92 billion in 
emergency spending, including $72 billion for the wars in Iraq 
and Afghanistan, and nearly $20 billion for the Federal 
response to the terrible hurricanes that struck the gulf States 
in August and September.
    I think it's our duty to scrutinize the President's 
request, not only for what is in it, but for what was not 
requested. It is also our duty to review the policies and the 
operations of the Federal Government to make sure that funds 
that we approve are being well spent. And so, I commend my 
friend Chairman Thad Cochran for calling these hearings to 
begin that process.
    We're hearing testimony, excellent testimony, from the four 
Governors whose States took the brunt of the most devastating 
natural disasters ever to strike the United States. When the 
terrorists struck the Twin Towers in New York City on September 
11, I was chairman of this committee. In putting together the 
emergency funding bill for the response to the attacks, I told 
Senator Schumer and Senator Clinton to consider me the third 
Senator from New York. And I made good on that promise.
    When Hurricanes Katrina, Rita, and Wilma hit the gulf 
coast, I told Chairman Cochran and Senator Landrieu that I 
would help them in every way that I could in responding to 
those terrible storms.
    I renew that promise today to the four Governors. West 
Virginia has suffered through its share of tragedies, from 
devastating floods to the recent mine disasters. I am very 
sensitive to the ability of our Federal Government to prepare 
for, and to respond to, disasters promptly and with competence 
when our citizens are most in need. I'm also sensitive to the 
need for our Federal agencies to follow through with a 
sustained recovery effort. Sadly, many of our Federal agencies 
are no longer up to these fundamental tasks.
    I've enjoyed the testimony--I think it's excellent 
testimony--of our witnesses. And I look forward to trying to be 
helpful and do what's right and best in moving forward.
    Thank you, Mr. Chairman.
    Chairman Cochran. Thank you very much, Senator Byrd, for 
your comments and for your important and valuable assistance to 
the work of this committee.
    When I made the announcement about our plans for hearings 
to review the President's supplemental budget request, I 
mentioned that we would have administration officials coming 
before the committee tomorrow and the next day. Tomorrow's 
hearing is going to involve statements and questioning of the 
Secretary of the Department of Homeland Security, Michael 
Chertoff, and the Secretary of the Department of Housing and 
Urban Development, Secretary Alfonso Jackson, and the Assistant 
Secretary, John Paul Woodley, of the United States Army Corps 
of Engineers. And then, on the following morning, we will hear 
testimony from the Secretaries of Defense, Donald Rumsfeld, 
Secretary of State Condoleezza Rice, the Chairman of the Joint 
Chiefs of Staff, Peter Pace, and the commanding officer of the 
Central Command in charge of operations in the Iraqi area, 
General Abizaid.
    So, the committee has its work cut out for it to review and 
analyze and come to judgment as to what our recommendation will 
be to the Senate with respect to this supplemental budget 
request.
    We've had a lot of unanticipated strains and stresses on 
the Federal budget, because of natural disasters, because of 
war costs in Iraq, and we're at a point now where we need the 
best support and cooperation from members of our committee and 
the Congress, working with the administration, to try to come 
up with the best decisions to protect our national security 
interests and to help ensure that the people who have suffered 
such grievous damage from these hurricanes will have hope that 
rebuilding and recovery will be a reality and not just a 
promise.
    So, that's the goal that we have. That's the challenge that 
we have. And the support of the Governors and other local 
elected officials is essential in this effort, so your presence 
here today is very important to the committee and to our 
understanding what the needs are and what the challenges are, 
and how the Federal Government can be helpful to you in 
achieving the goals that we all share.
    I know that we haven't had any questions from committee 
members now, but just statements, opening statements from the 
witnesses and members of the committee. And I'm going to yield 
to the distinguished Senator from Pennsylvania, who has other 
responsibilities, other hearings, this morning, for any 
questions that he might have. And I must say, I think we should 
be limited to a certain number of minutes each. I would--I'll 
say 10 minutes per Senator until we've all had a chance to ask 
the questions we want to answer--we want answered.
    Senator Specter.
    Senator Specter. Thank you very much, Senator Cochran.
    And thank you, Governors, for coming in to testify. And we 
understand the enormity of the problem, and we want to be as 
helpful as we can.
    We have competing considerations. We have a very, very 
tight budget, generally. So, that's our job, and we will do our 
very best.
    In looking at the allocations in this supplemental 
appropriations bill, the question on my mind is: ``How 
realistic are these figures?'' And the best people to give us 
answers to those questions, at least part of the mix, are the 
Governors, who are intimately involved. I've taken a look, for 
example, at the Community Development Block Program, which is 
very materially cut this year, generally. Some 18 economic 
development programs have been folded into two, and the total 
allocations are reduced on our Federal budget from $5.3 billion 
to $3.36 billion. This supplemental appropriations request 
would provide $4.2 billion from community development block 
grants for your needs on flood mitigation, infrastructure 
improvements, and property acquisitions or relocations. Now, 
that's an aggregate figure, and I don't expect you to be able 
to answer it as you're sitting here today. But I think it would 
be very helpful to this committee if you pooled your requests, 
itemized what you think is needed for those categories--flood 
mitigation, infrastructure improvements, and property 
acquisition or relocation.
    Then, as to FEMA, there is disaster relief provided already 
in excess of $9 billion, $9.029 billion, in housing assistance, 
debris removal, public assistance, and individual and household 
assistance through the Disaster Relief Fund.
    We've also provided some $669 million in community disaster 
loans.
    The supplemental appropriations request calls for another 
$9.4 billion to FEMA and another $400 million for FEMA's 
Community Disaster Loan Program.
    So, the question is: ``What are the priorities?'' We're 
dealing with four sovereigns here, four States, four Governors, 
a lot of cities. And we really need your input to tell us if 
those are realistic figures.
    Then, on flood control and protection, the appropriations 
request in the supplemental here is for $1.36 billion. And this 
relates to you, Governor Blanco, for Louisiana, for the Corps 
of Engineers, $530 million to protect three drainage canals, 
$350 million for two closure structures along the inner harbor, 
$250 million for stormproof drainage, $170 million for levees 
and flood walls, and $60 million for an evacuation route.
    And, here again, it's pretty hard for us to look at these 
figures and look at these characterizations and to know, well, 
what we really need to do.
    So, my request to the four of you would be to tell us what 
your needs are and let us aggregate them and see if we're going 
to be doing the right thing, if we're in the ballpark.
    Again, I tell you, we have a very tough budget coming up, 
generally--very, very difficult. The subcommittee which I 
chair, which has education and healthcare and labor, was 
shortchanged $8 billion last year. We had a $2 billion cut, and 
we took a hit of about $6 billion on cost of living. And the 
National Institutes of Health, which my subcommittee funds, are 
reportedly in a state of panic as to what they're going to be 
doing there. But we know the natural disaster has struck, and 
we know our responsibility, so we want to do what we can to 
meet your needs. But we have to know what they are, 
specifically.
    I have no further questions, Mr. Chairman.
    Chairman Cochran. Senator Hutchison.
    Senator Hutchison. Yes, Mr. Chairman, thank you very much.
    I would like to ask Governor Perry what it actually costs 
to educate a child in Texas.
    Governor Perry. Senator, thank you for your continuing 
support on this issue. And the--your question is a very 
important one, from the standpoint of the impact that this is 
happening--having on the State of Texas. And--it's 
approximately $7,500 per student when you look at the cost of 
the Katrina victims. And those students that have been brought 
into the State of Texas--there's some additional costs there 
that we may not see on a daily basis--historically, prior to 
those students coming into the State of Texas. The----
    Senator Hutchison. Is that trying to help them with a 
different curriculum and different----
    Governor Perry. Yes, Senator. There's just--you know, I 
mean, obviously, when you move from one State to another, 
there's some difference. And the fact of the matter is, there 
are a number of these students, who were not at grade level, 
that are having to have some extra considerations and focus on 
those students.
    So, you know, somewhere between $6,000 and $7,500, of 
Federal dollars, is what--you have some local costs on top of 
that, also--I mean, the--you know, the dollars to--the complete 
amount of dollars, local and Federal, somewhere to the north of 
$9,000 per student in the State.
    So, the fact of the matter is, there is a substantial 
amount of dollars that are being expended on these 38,000 
students that we still have in the State. I think, Senator 
Hutchison, we were up close to 41,000 to 42,000 at the peak. 
Some of them have obviously gone back to Louisiana.
    Senator Hutchison. So, the cost, to the school district, of 
educating a child, generally, is between $6,000 and $7,500? Or 
is it closer to----
    Governor Perry. That's Federal dollars----
    Senator Hutchison [continuing]. Nine?
    Governor Perry. That's correct. I think what you'll find is 
that----
    Senator Hutchison. You're talking now just Katrina----
    Governor Perry. Yes.
    Senator Hutchison [continuing]. Evacuees, as opposed to 
just a normal----
    Governor Perry. Yes.
    Senator Hutchison [continuing]. Student that lives----
    Governor Perry. Yes.
    Senator Hutchison [continuing]. In Texas.
    Governor Perry. Yeah, it's my understanding that those 
students--that there's--and you have to look at the--you know, 
across the board, it's probably close to $6,000 per student, is 
going to be--is going to be pretty close. But we're seeing 
anywhere between----
    Senator Hutchison. And then, what are you getting 
reimbursed by FEMA?
    Governor Perry. I believe I gave you those numbers in my 
remarks. I think, $2,500 to $3,000. Isn't that--$4,000?--$3,000 
to $4,000 is what we're being reimbursed--$3,000 to $4,000--I'm 
sorry, Senator--is what we're being reimbursed. So, obviously, 
you know, somewhere between $2,500 and $3,000, even if we're 
working on the short end of that.
    Senator Hutchison. So, you are in a deficit of in the range 
of $120 million to $150 million----
    Governor Perry. That's correct.
    Senator Hutchison [continuing]. In today's standards.
    Governor Perry. That's correct.
    Senator Hutchison. Let me ask Governor Blanco a question. 
FEMA estimates that 30 percent of the schools that were shut 
down because of Katrina will be up and running for the next 
school year in September. What would--would your estimate agree 
with that, or are you more optimistic, or less optimistic?
    Governor Blanco. We are--excuse me--we are not able to 
strictly determine the exact number of schools that will come 
up, but we are opening them as the need arises. One of the 
problems in our inability to reopen the schools is, the housing 
stock is decimated. We have broken-down houses for--it's house 
after house after house after house, block after block after 
block, mile after mile, community after community. So, in some 
communities we have certainly opened up a number of schools.
    The State is in the process of redesigning the schools in 
Orleans Parish. We have taken the underperforming schools into 
a recovery district, and we're reopening those schools under 
new terms, and hope that we can rebuild internally. But the 
physical plants, in many cases, have been totally destroyed. 
So, we're using existing plants that are up and running. And 
some schools--you know, or are operational as we speak.
    We're working with demographers and trying to project into 
the future what exactly will happen with our student 
population. And watching all of these trends is speculative, in 
many cases, but it's the best information that we have at our 
disposal.
    Senator Hutchison. I'm sure it's difficult for you, because 
people won't come back if they aren't going to have schools; 
and yet, you have to try to plan the schools around who's 
coming back. I know that's hard.
    I was trying to also determine, from the States' standpoint 
who have evacuees, Texas being the largest, what they need to 
plan for. And I think looking at some of the deadlines, I'm 
looking at asking that we look at what our enrollment is of 
Katrina evacuees on September 1, or actually about August 18, 
when the schools open, to see if we can at least have an 
extension if we are going to have the Katrina evacuees continue 
in the school districts.
    So, it--we do have to try to estimate, and FEMA has said 30 
percent. And I guess we could just do it when we come to it, 
but we do need to extend the deadlines probably in this----
    Governor Blanco. Senator Hutchison, I have been very 
supportive of Texas and other States that have received our 
students, in their efforts to receive more Federal funding. We 
think that's critical.
    We're anticipating approximately 30,000 students to enroll 
in our schools in August. That's of approximately 50,000. Many 
of them are all across the country. And, certainly, Texas has 
taken the lion's share. And we are extremely grateful for that. 
I mean, Governor Perry is my next door neighbor, and Texas is 
full of Louisianans, historically; and a lot of Texans come to 
Louisiana to live at various intervals, as well.
    We have about 10,500 of our students currently enrolled in 
the disaster area. But, again, the disaster area is large and 
formidable.
    Senator Hutchison. Could I just ask, Governor Perry, again, 
back on the CDBG grants, as you know, out of $11 billion in the 
last appropriation, Texas got $72 million. And I'd like to just 
ask you what you are using the CDBG grants for, and why it is 
that Texas needs more CDBG grants, and why you have not been 
able to get, from the grant requests that have been made, the 
amount that you have said you are spending on Katrina and need 
for the future.
    Governor Perry. Senator, let me ask--answer your last 
question first. I have no idea why there was such a discrepancy 
between the amount of CDBG monies that went out. I think 
Louisiana received approximately $6.2 billion of those housing 
dollars, and Texas received somewhere between $72 million and 
$74 million. I mean, that is----
    Senator Hutchison. Actually, even less than Florida.
    Governor Perry [continuing]. Huge discrepancy in those 
dollars. So--and, again, we have laid out in great detail for 
the committee, and for the public, the expenditures and the 
requests. And I want to say thank you to Michael Williams and 
to--if I could, just a moment--for the work that he and the 
other folks in Washington have done in putting--or, in Austin--
putting this together, because it is a very powerful document 
that I think lays out clearly how we have spent our money and 
how--what our needs are in the future to appropriately get 
southeast Texas back into shape.
    Senator Hutchison. What are you estimating that you would 
need?
    Governor Perry. Oh----
    Senator Hutchison. And what would you spend it for?
    Governor Perry. We've--how much?--$367 million on housing, 
Senator Hutchison--$367 million on housing. That includes 
housing repairs and reconstruction in areas of--that were 
impacted by Rita, of approximately $322 million, and then we 
have another $45 million that would go for low housing--or, 
excuse me, low-income housing tax credits in those areas that 
were affected both by Rita and the influx of Katrina. 
Obviously, a lot of that into the Houston area, which is still 
under tremendous pressure. I'm sure you saw reports in both 
Newsweek and MSNBC this week about the continual pressure on 
the city of Houston, particularly on the law enforcement side 
and the costs that are being incurred there because of the 
continual impact of the Katrina residents.
    Senator Hutchison. Thank you, Mr. Chairman.
    Chairman Cochran. Thank you, Senator.
    Senator Landrieu.
    Senator Landrieu. Thank you, Mr. Chairman.
    And since Senator Byrd wasn't in the room when I made my 
opening statement, I just wanted to, again, thank both of you--
Senator Byrd, you, as well, with the chairman--for fashioning 
our last supplemental in a much more directed way to the States 
trying to help the Federal Government to understand that just 
sending more money to FEMA doesn't necessarily meet the needs 
of these four Governors. And, as Governor Riley so adequately 
said--and, I think, appropriately said--after all the 
hurricanes we've been through, these Governors most certainly 
are in a position to know how we can even do that better.
    So, as we struggle to refocus, rearm, retool, reshape FEMA, 
let us follow the lead of these two chairs, these two leaders, 
to try to direct funding to you all in a direct way, through 
community development block grant funding, which gives, I 
think, each of you the flexibility you need to make the 
adjustments necessary, State by State. Because, as has been so 
eloquently said here, these two storms are both enormous in 
their impact and devastation. What Texas has experienced is 
slightly different than Louisiana. Louisiana is a little 
different than Mississippi. Mississippi is different than 
Alabama. And, given the flexibility, with strong 
accountability, Mr. Chairman, I think the way that you two have 
structured this is excellent.
    Let me try to hone in on this housing issue, because all 
four of you have mentioned--and particularly Governor Blanco, 
which I agree with--that housing is our No. 1 challenge, 
really, to try to make an inadequate insurance system that we 
have now really work, and whether, as Governor Perry said--or, 
I think it was--I'm not sure, I'm sorry--whether your home was 
destroyed by water or wind, it was destroyed, and it was your 
home. And whether it was worth $50,000 or $5 million, it was 
still your home, and it's destroyed, and it's gone. And the 
Federal Government has an obligation to try to help fill those 
gaps, particularly people who did have insurance, and 
particularly people who were--built according to the flood 
plain and still, in these catastrophes, lost their single 
largest asset.
    So, if I could ask each Governor just to hone in again, for 
the purposes of this supplemental, what your request is, based 
on housing, through the community development block grant 
needs, starting with you, Governor Riley, and then Governor 
Blanco, just the housing portion that maybe you have prepared 
to ask us for of the community development block grant. Is it a 
couple of hundred million? Is it a billion? Starting with you, 
Governor Riley.
    Governor Riley. Senator, in Alabama, we had two 
communities, a part of Mobile County, that was absolutely 
devastated. It was a very poor community, a shrimping 
community, where people make their living off of a boat. We 
have $72 million now in block grants. That's where most of 
that's going to go. I would assume that that will cover most of 
the uninsured losses for the housing part in Alabama.
    But, again, let me encourage you, anytime we have the 
option--and you're exactly right--to have any of this money 
come into the community, because the needs are so drastically 
different, we do need the flexibility in our States and with 
the community development block grant program. You're putting 
money into a structure that already exists. It already has most 
of the checks. It's something that we're used to working with. 
We have the flexibility, but it also gives you a level of 
protection that I'm not too sure you always get when you 
start--or originate a new program.
    So, as we go through this process now, looking at each one 
of the housing requirements, looking at what the infrastructure 
cost is going to be for each one of our communities, for sewer, 
for water, for all of the things that were just totally 
devastated, that number may change. But with the $72 million 
now, and with some of the other monies that we've gotten over 
the last 6 months, we should be relatively close.
    Senator Landrieu. Okay. So, you're not asking for any 
additional housing funding, but you're asking for the 
additional flexibility, should we be allowed to give you some 
flexibility, and how, if additional monies are provided, could 
be used.
    Governor Riley. Right. And we're going through the process 
right now, Senator, of taking applications for each one of 
these. Until they're in, until they're processed, we're not 
going to know exactly what that number is going to be. We've 
got $72 million worth to work with today. And then, in these 
communities, I think that unless----
    Senator Landrieu. It might be sufficient.
    Governor Riley [continuing]. The infrastructure gets too 
high, then I think we may----
    Senator Landrieu. You may be----
    Governor Riley [continuing]. Be close.
    Senator Landrieu [continuing]. Sufficient.
    Governor Blanco, I understand that we sustained anywhere 
from 65 to 75 percent of the housing damage of estimates that 
have come in from both storms, Katrina and Rita. And, of 
course, there was a formula in place in the last supplemental 
that shorted that somewhat. Could you, for the purposes of the 
record, state, based on Louisiana's housing loss of about 70 
percent, 75 percent, what your housing needs are, so we can 
really keep that number in front of us as we try to build this 
bill?
    Governor Blanco. Thank you, Senator Landrieu.
    We have published our proposed housing plan, as requested, 
as is necessary for us to move on and submit it to HUD. And 
after the public comment, we'll do so.
    In Louisiana, it's almost--it's the most incredible thing 
that's ever happened to our State. As you know, we're all 
coastal States, and we've all weathered many, many hurricanes. 
And after Louisiana sustained two of the most severe hurricanes 
in gulf coast history, we ended up with actually over 500,000 
homes that were at--had sustained some damage. We're not trying 
to accommodate all of those homes in our request, our 
additional request.
    The first $6.2 billion also allows us the flexibility to 
help with some infrastructure, because communities' water 
systems and sewage systems and--well, and all the power 
systems, are down or were stilled. And so, the local 
communities need a tremendous amount of help just to be able to 
provide basic services to our citizens.
    We went through a big exercise to identify the right kinds 
of numbers for an--for the additional request for help. We 
identified 168,000 homes that had major and severe flood 
damage. When we add the wind damage, the numbers rise. We 
worked with the administration, using FEMA numbers. We also had 
our own estimates. And the number of $4.2 billion just puts the 
package together, and we believe that now we could cover the 
uninsured losses. We can do gap funding----
    Senator Landrieu. But I----
    Governor Blanco [continuing]. For a lot of----
    Senator Landrieu [continuing]. Guess what I'm getting at is 
to try to get, for the record for this committee--because this 
is a big part of this supplemental--is to understand, between 
the four of you, that there's some general understanding or 
agreement that, of the housing dollars--Louisiana sustained, 
you know, 70 percent of the damage; Governor Perry, maybe you 
sustained, you know, 10 percent; Governor Barbour, you 
sustained 20 percent of the housing damage--so that as we 
allocate these housing dollars, we can make sure that, while we 
do recognize the damage has been somewhat different, we can be 
very careful in our allocation among these States, and not 
leave Texas out, not underfund Louisiana, not underfund 
Mississippi.
    So, I don't want to take all of my time on this, but I'm 
going to ask Governor Perry and Governor Barbour if you would 
just submit to the record--and Governor Blanco--if you all 
could be in agreement of the percentage of housing damage, so, 
as we allocate these housing dollars, we can do it as fairly as 
possible, and not underfund anyone at the table, that would be 
helpful.
    [The information follows:]

                     Response From Hon. Rick Perry

    Texas has requested a total of $322 million in CDBG dollars. This 
amount represents roughly 2 percent of the $11.5 billion and $4.2 
billion in CDBG dollars already appropriated and proposed to be 
appropriated in this bill. An analysis of Texas' ``major'' and 
``severe/destroyed'' housing compared to the total from Hurricanes 
Rita, Katrina and Wilma indicates that Texas should be allocated 
between 4 percent and 20 percent of the total $15.7 billion, or $623 
million to $3.14 billion, depending upon whether one relies on FEMA 
data, insurance data or IA registrations. To date, Texas has received 
an allocation of $74 million in CDBG dollars for hurricane related 
damage.
    Texas believes that only ``major'' or ``severe/destroyed'' housing, 
as defined by FEMA, should be considered in allocating housing numbers. 
We have reviewed the ``major'' and ``severe/destroyed'' estimates upon 
which HUD relied in the previous allocation of CDBG dollars. We cannot 
comment on the accuracy of numbers in other States, but a comparison of 
those numbers with insurance reimbursement data collected by the Texas 
Department of Insurance indicates that HUD's data relating to Texas is 
irreparably flawed.
    For purposes of evaluating the proper allocation to Texas, the 
amount should therefore be based on the most recent insurance 
reimbursement data, with damage projections for uninsured homes done on 
a county-by-county basis. After subtracting out the percentage of homes 
suffering only minor damage, Texas estimates that approximately 72,965 
houses suffered major or severe damage, or 60,862 units more than 
estimated by HUD. While this difference is very significant, Texas is 
quite confident of its conservatism and relative accuracy. This number 
is based on actual losses paid by insurers as of February 1, 2006. The 
number is conservative based on estimates by insurers that the final 
paid loss total will likely double.
    According to HUD, the sum of all housing on the Gulf Coast 
suffering ``major'' or ``severe/destroyed'' damage was 305,109 as of 
February 12, 2006. After adding in the additional losses in Texas, that 
number increases to 365,971. The 72,965 insured and uninsured housing 
units with major or severe/destroyed damage in Texas would constitute 
roughly 19.937 percent of the 365,971 units.
    If one relies instead on total FEMA IA registrations, Texas would 
be allocated 27.14 percent, or $4.26 billion.
    If one chose to rely only on HUD's flawed numbers for Texas, the 
number of housing units receiving major or severed/destroyed damage 
would total 12,103. Taken as a percentage of the 305,109 total, that 
number represents 3.967 percent of the total, or $623 million out of 
the $15.7 billion proposed to be allocated.
                                 ______
                                 
              Response From Hon. Kathleen Babineaux Blanco

    According to latest FEMA estimates, the number of housing units 
with minor, major, or severe damage was 515,000. The number of housing 
units with major or severe damage was 205,000. Over two-thirds of the 
housing damage in the major and severe categories occurred in 
Louisiana. Over three quarters of the flood damage occurred in 
Louisiana.
    Damage estimates in total are estimated as follows:
  --Short-term relief (temp housing, human and emergency services).--
        $15 billion to $20 billion.
  --Damage to Infrastructure (housing, property, commercial, public 
        facilities, roads, etc.).--$73 billion to $90 billion.
  --Levees--PreKatrina levels.--$3 billion.
  --Levees--Category 5.--$20 billion to $30 billion.
  --Estimated 5-yr economic loss.--$50 billion to $70 billion.
  --Estimated 5-yr government revenue loss.--$8 billion to $10 billion.
    Note.--These numbers are not necessarily additive.
    
    
    
                                 ______
                                 
                    Response From Hon. Haley Barbour
    No response was received from this witness.

    Senator Landrieu. And let me ask, because my time is 
running out, maybe starting with you, again, Governor Blanco, 
but then I'd really like to hear from Governor Barbour and 
Governor Perry, part of our challenge is securing the coastal 
infrastructure, which is America's only energy coast. And, 
Governor Barbour, I commend you for your $10 million study, as 
we have put together great studies over the last couple of 
years about securing our coast and the ports that serve from 
Mobile to Beaumont to Houston, America's great energy coast. 
Have you all--Governor Blanco, could you just give a statement 
briefly about the need for--or the discrepancies between the 
funding for interior States on oil and gas revenues and how you 
see the significance of maybe using a portion of those monies 
to help rebuild the gulf coast? And then I'll ask Governor 
Barbour his thoughts about that.
    Governor Blanco. Well, the gulf coast States are oil-
friendly States in Texas, Alabama, Mississippi, and Louisiana. 
And we definitely think that if we were able to receive our 
fair--what we consider a fair share of the Outer Continental 
Shelf royalty stream that goes straight to the Federal 
Government, that we wouldn't have to be here year after year 
asking for money to restore our coastline and to build 
hurricane protection installations. Those two items actually 
will go to a vote of our people to commit any monies that the 
Congress would allocate to Louisiana from the royalties to 
those two efforts, hurricane protection and coastal erosion.
    And, again, let me just say that Louisiana is certainly 
amenable to a fair allocation based on the levels of 
destruction in CDBG funding. We think the $4.2 billion puts us 
where we need to be.
    Senator Landrieu. Okay. Governor Barbour.
    Governor Barbour. Senator, I'm all for getting--Louisiana 
getting whatever they need. I'm not capable of saying what 
percentage of the housing loss was in what State. I have read, 
in some publications, the idea that 70 percent's in Louisiana. 
I've seen figures that don't quite add up to that. So, I 
don't--I'm not an authority on that. I can tell you that the 
Red Cross tells us we lost about 70,000 units of housing in 
Mississippi. They were uninhabitable after the storm.
    Yes, ma'am, we do need to get a fair share of the OSC 
revenue. I think all of us would agree with that, that we're 
not getting our fair share. I think it's very important, 
though, that the allocation among the States be based on a 
geographically fairly drawn division. But, yes, ma'am, we all 
recognize that they've been sucking the Gulf dry for a long 
time, and we ought to get our fair share.
    Senator Landrieu. Governor Perry.
    And thank you, Mr. Chairman, for----
    Chairman Cochran. Yeah.
    Governor Perry. Let me speak to three things. First and 
foremost, I agree with Haley, that--I'm no expert on the 
percentage; and so, I wouldn't want to go on the record and say 
that we agree to anything--what I can be very specific about 
is, the housing needs today in the State of Texas are $322 
million, of which $45 million of that is for the tax credits on 
the low-income side, as I have shared with Senator Hutchison 
earlier.
    Let me look forward. I know I've talked a lot about looking 
back and--on what we feel like we did not receive from the 
Federal Government that was promised, but what all of these 
Governors have talked about--and I think it's very important--
on March 28, the end of this month, in Corpus Christi, there 
will be a gulf cost symposium, of which we, or our 
representatives, will be speaking to the future of the gulf 
coast, particularly on preparation for the next natural 
disaster, which will occur, along the gulf coast. And it will 
be an opportunity to talk about these issues, of which you 
brought up, whether it's the dollars that are coming in off the 
Continental Shelf into those States, and how to more 
appropriately and fairly put those to use in protecting that 
very important petrochemical industry all along the gulf coast.
    So, we stand prepared, not just to sit here and say we need 
more money, Mr. Chairman, which you've certainly heard a good 
dose of today, but we're also prepared to help the Federal 
Government make decisions about how to better prepare that gulf 
coast for the next disaster that will come, and the massive 
evacuations that will be required, and how to prepare those 
metropolitan areas for those types of activities.
    Senator Landrieu. And, Mr. Chairman, since Governor Riley 
sits right next to Florida, would you give him 30 seconds to 
comment on this revenue-sharing piece, really quickly?
    Governor Riley. Well, Senator, I hope everyone in the 
United States gets an option to participate in the OCS funding, 
because I think we need to be drilling off the coast of 
Florida.
    Senator Landrieu. I didn't want you to go that far, 
Governor Riley.
    We've got a little deal going here.
    Governor Riley. As long----
    Senator Landrieu. We----
    Governor Riley. As long as we have----
    Senator Landrieu. I didn't want you to go that far.
    Governor Riley. As long as we have these four States 
producing most of the petroleum and most of the natural gas, 
absolutely we need it, because--what Governor Blanco said a 
moment ago--we fight, continually, erosion on our beaches. We 
fight for mitigating the damage that's caused by this. We do it 
all up and down the gulf coast. And if we are going to be the 
ones that bear the brunt of this in every instance, surely I 
think that we should be fairly compensated.
    Senator Landrieu. Thank you.
    Governor Riley. But I do hope other States would have the 
opportunity to participate.
    Senator Landrieu. Thank you.
    Chairman Cochran. Thank you, Senator Landrieu.
    Senator Byrd, do you have any questions of the witnesses?
    Senator Byrd. Let me just say I appreciate Governor Perry's 
being here from Texas today. Your State is to be complimented 
for opening the doors to victims of Hurricane Katrina. I'm very 
proud of West Virginia's role in welcoming Katrina's victims, 
as well.
    Our great Governor from West Virginia, Joe Manchin, is very 
concerned about the ability of West Virginia to cope with a 
mass evacuation. And we can be sure there would be a massive 
evacuation from the National Capital Region if there were a 
terrorist attack here. With my support, he has been working to 
identify resources from the Department of Homeland Security for 
pre-positioning water, food, fuel, in the event of a mass 
evacuation to the West.
    Governor Perry, you just lived through a mass evacuation 
before Hurricane Rita. Based on that experience, do you 
believe--do you believe it would be helpful to pre-position 
items such as food, water, fuel, medicine, and interoperable 
communications equipment to prepare for a future mass 
migration?
    Governor Perry. Senator Byrd, thank you for the question. 
And let--prior to answering that, let me just say one thing. 
Your Governor, Joe Manchin, was one of the first on the phone 
to Texas, as the Katrina victims were coming, offering his help 
from the citizens of West Virginia.
    Senator Byrd. Yes.
    Governor Perry. And I want to publicly say to Joe, thank 
you for his passionate and compassionate outreach to all of us 
along the gulf coast. And our hearts are with him as he's gone 
through the tragedies that West Virginians have had.
    Now, let me say that in the concept of preparation for a 
natural disaster, some you see coming. One of the good things 
about a hurricane is that you see it coming. A tornado or a 
flood, generally speaking, those occur almost instantaneously, 
whether it was the Space Shuttle disaster that happened in east 
Texas or, Senator Hutchison, the collapse--man-made collapse of 
the Queen Isabella Causeway. Those happened overnight. But with 
a hurricane, it is different, in the sense of, you have the 
knowledge of, fairly well, where it's going to strike, and what 
the needs are.
    Since September 11, 2001, we've had over 150 different 
exercises in the State of Texas in preparation for a natural or 
man-made disaster, or, in some cases, these exercises combine 
the two or three, a nuclear event, a hurricane coming in, a 
flood, simultaneously. The preparation of those, Senator Byrd, 
in those exercises, is why the State of Texas, I think, was 
able to respond as well as it did. But the predeployment of 
resources, assets, is absolutely important.
    What we've found in evacuating almost 2.5 million people 
from the Texas gulf coast was, the predeployment of resources, 
whether it's fuel, whether it's ice and water, whether it's 
those essentials that people are going to need--when you start 
moving 2.5 to 3 million people, it's not going to be an easy 
task.
    Senator Byrd. No.
    Governor Perry. And what we learned during that process is 
that there are some things to more orderly put that into place. 
One of them is a legislative change that's going to be required 
in Texas that gives the Governor the authority to be able to 
mandate the evacuation of counties. Only a local county judge 
can do that, today. So, we're working on the coordination plans 
to be able to work with those local officials.
    But predeployment is absolutely--whether it's prior to a 
hurricane coming in or, in the other direction, of which you 
have massive evacuations--and predeployment of assets and the 
associated needs of an evacuating force of people back the 
other direction.
    Senator Byrd. All right.
    When the terrorists struck New York City on 9/11, FEMA was 
immediately onsite and played a key role in helping New York 
City recover. Four years later, when the three hurricanes 
struck the gulf coast, FEMA was no longer up to the task. For 
the last 3 years, FEMA has been part of the Department of 
Homeland Security. I was not for that. Did you find any value 
added to your working with the Secretary at the Department 
level?
    Governor Perry. Well, let me, first and foremost, say that 
the activities of--whether it was FEMA, Homeland Security--one 
of the most important things I think all of us learned out of 
this is that leaving the Governors in charge of the National 
Guard, and letting those Governors be the chief executive 
officer of those States, is very, very important. I know there 
was a short-lived debate about moving the authority of those 
Guard members to Washington, DC, from the standpoint of 
presidential oversight. I--and I think we, as a whole, clearly 
and strongly stated that that needs to stay in the Governors' 
oversight, and the Governors' authority.
    Day in and day out, our working relationship with FEMA--
look, I don't think anyone will tell you that they got it close 
to being perfect. There were things that they did that were 
appropriate, that were timely. There were some massive gaps. 
And as we go back and analyze these, and flow the information 
to you and to those agencies, we'll be brutally honest with 
what we saw and how to improve that.
    But obviously there were some breakdowns in communications. 
And here is one of those, Senator Byrd, that I think is very, 
very important for us to analyze and to cure before the next 
major disaster occurs, and that is, when a State operations 
center--these are the people that have been practicing these--
either in exercises or real life----
    Senator Byrd. Yes.
    Governor Perry. This is Jack Colley, and this is Steve 
McCraw at the State operations center in the State of Texas. 
They know what they're doing.
    Senator Byrd. Right.
    Governor Perry. They have been working with Federal 
counterparts, with local counterparts, with first responsers 
for years. And when they say, ``We've got to have an aircraft 
capable of taking 38 nonambulatory senior citizens out of 
Beaumont, Texas, at 10:30 in the morning,'' that aircraft needs 
to be there. And we shouldn't have to go through hours' worth 
of phone calling and follow-up. It ought to be a pretty simple 
process. And that, to me, was one of the great failures that we 
saw, was when someone at the State level that truly is at the 
position of knowing what the need is, it ought to be one phone 
call that Jack Colley at our SOC makes, and they ought to--the 
response ought to be, ``Yes, sir, the aircraft is on the way.''
    Senator Byrd. Governor Blanco, did you find any confusion 
over who was in charge?
    Governor Blanco. Senator Byrd, I always felt that I was in 
charge of the National Guard, and that the National Guard from 
all 50 States, four territories, and the District of Columbia 
came to our aid. And I agree with Governor Perry, and I think 
every Governor here and across the country will continue to say 
that Governors should maintain control of the National Guard. 
There's a very important reason for that. And the reason is 
that the National Guard is trained, and is missioned, to 
support local law enforcement, and DOD forces are not. DOD 
forces are, indeed, prohibited by that--for the--you know, 
prohibited from exercising that kind of authority.
    In our case, it's very important to be able to back up 
local law enforcement. Even in a normal hurricane, we call out 
the National Guard for that very purpose. And in these 
subnormal experiences, it's even more critical, because we--we 
brought in some 48,000 to 50,000 members of the Guard from all 
across this country. We deeply appreciated that kind of 
support. It is the kind of support that we absolutely needed to 
have.
    Senator Byrd. Governor Barbour, how about you?
    Governor Barbour. Senator Byrd, I think the question was, 
Did we have any trouble telling who was in charge of----
    Senator Byrd. Yes.
    Governor Barbour [continuing]. Between the Department of 
Homeland Security and FEMA.
    Senator Byrd. Yes.
    Governor Barbour. My dealings were exclusively with FEMA 
and with the President, who--but FEMA was who we dealt with 
prior to the storm, and then probably until Friday after the 
storm--that our dealings, as far as the Department of Homeland 
Security, were none at any level except with FEMA itself. That 
changed after that period of time. But prior to the storm and 
through the first few days after the storm, we didn't have any 
direct dealings, that I recall, with the Secretary of Homeland 
Security or anybody other than the head of FEMA and the people 
who work for FEMA.
    Senator Byrd. Governor Blanco, there was a failure at every 
level of government for preparing and executing a plan for 
evacuating the low income, the elderly, and the disabled from 
the disaster area. You know, we're only 3 months from the 
hurricane season now. What specific steps have you taken, in 
coordination with the Federal and local governments, to make 
sure that if there is a need for a mass evacuation this summer, 
the assets will be there to take care of the elderly, the 
disabled, the low-income people who do not have access to 
transportation?
    Governor Blanco. Senator Byrd, lessons learned tell us that 
the State needs to supplement and ensure that everyone is 
following the part of the plan that they agree to. We are in 
the process of going through an extraordinary period of 
analysis and implementation. For instance, nursing homes 
normally submitted their emergency plans to the local community 
leaders. But we have also now instructed them to send that to 
the State. We are not going to relicense nursing homes that 
don't have adequate plans. And, in the future, each nursing 
home will be contacted to make sure that they are following 
their emergency plans.
    Now, having said that, I do want you to know that some 
nursing homes were contacted and offered buses and 
transportation for their clients, and refused that 
transportation. And we ended up with big losses there. Those 
people are being prosecuted as we speak, and there are 
investigations going on.
    So, we're going to make sure that we get more engaged in 
determining every level of need during any evacuation of the 
future.
    Senator Byrd. The President has requested $530 million--
$530 million--to modify the 17th Street, Orleans Avenue, and 
London Avenue interior drainage canals that were damaged by 
Katrina. The President also has asked for approval of $350 
million to construct two closure structures along the Inner 
Harbor navigation canal and the Gulf Intracoastal Waterway. 
Does the State of Louisiana support each of these projects? And 
is the Federal Government forcing any of these projects on the 
State?
    Governor Blanco. I believe that the State of Louisiana does 
support each of these projects. These projects, we believe, 
will give us the right kind of flood protection and keep 
pressure off of our internal flood control canals.
    Senator Byrd. The Corps of Engineers is committed to 
restoring the levee system to the pre-Katrina level of 
protection by June 1. Obviously, the pre-Katrina level of 
protection was not up to the awesome power of Hurricane 
Katrina. Do you believe the Corps is on track to make the June 
1 deadline?
    Governor Blanco. We hope that the Corps is on track. They 
believe that they are, as we speak. There's a large amount of 
construction going on. And not only are they reestablishing the 
levees as they once were, but they're reinforcing them. And we 
hope that this new construction methodology will make them 
stronger.
    Senator Byrd. Has your State taken a formal position on a 
more robust levee system?
    Governor Blanco. Yes, we have, Sir. Senator Byrd, we've had 
two special sessions, the first in which I created an authority 
that all levee boards would answer to, and the second was where 
we reorganized the levee boards in southeast Louisiana, in 
particular, and created two out of a multiple number of boards. 
We have--we're going to restructure them with professionals who 
have engineering and hydrology knowledge and such. And we also 
are going to focus very heavily on overall flood control 
measures. And we've taken the politics, we believe, out of the 
system, in as much as one can possibly do that.
    We definitely understand the critical importance of our 
citizens feeling that they can rebuild in a safe environment, 
or return to a safe environment, where their homes have been 
heavily damaged.
    Senator Byrd. Mr. Chairman, I thank these four witnesses 
for their excellent testimony.
    Chairman Cochran. Thank you.
    Senator Byrd. And thank you.
    Chairman Cochran. Thank you, Mr. Chairman.
    We have a vote occurring on the floor of the Senate, and 
time is about to expire on that vote. And so, I'm sorry that we 
don't have that much more time to deal with right now.

            PREPARED STATEMENT OF SENATOR RICHARD C. SHELBY

    But, Senator Shelby of Alabama, who is chairing a hearing 
the Banking Committee today, has submitted a statement for the 
record, and also some questions for the Governors. And, with 
your permission, I'll submit those to you, and you can answer 
them for the record.
    [The statement follows:]

            Prepared Statement of Senator Richard C. Shelby

    Mr. Chairman, thank you for holding this important hearing to 
discuss the proposed emergency supplemental spending request. I believe 
it is important that we have hearings such as these so that we can hear 
from those on the ground and learn what is actually happening in the 
States damaged by Hurricane Katrina.
    Governor Riley, Governor Barbour, Governor Blanco and Governor 
Perry, thank you for taking time out of your busy schedules to share 
your views on the continuing and emerging needs as we begin the process 
of rebuilding the Gulf Coast. I want to take this moment to show my 
appreciation for your continual efforts to serve the people of your 
States.
    To date Congress has sent over $87 billion in direct relief to the 
Gulf Region. These funds have been used for cleanup, repair and initial 
rebuilding of damaged infrastructure. I look forward to hearing your 
thoughts on the rebuilding process and what remains to be done. In 
particular, I am interested in learning what you believe should be 
provided by the Federal Government that is not covered by this 
supplemental request or has not been provided in previous funding 
bills.
    To that end, I am especially interested in getting a detailed 
picture of the rebuilding efforts in place in each of your States. In 
particular I am interested in the specific plans in place that will 
guide your rebuilding efforts in those areas that were devastated by 
the storms.
    I am hopeful that this hearing will help us better understand the 
continuing needs of your States and demonstrate to us in Congress the 
ongoing challenges facing the Gulf States. Not only do I want to hear 
what more we can do for you, I want to hear what you are doing for 
yourselves. What have you as executives of these great States done with 
the Federal funding that has been provided thus far? I also want to 
hear about the obstacles you are facing in directing this money to the 
key infrastructure and industrial centers that were hit the hardest. 
Elaborate on programs you have implemented in your States to address 
the needs of your citizens and the distribution of funds to the most 
needy among you.
    As we continue this process of examining where taxpayer money can 
best be spent, let us not forget who we are working for, the people of 
these great States. They are the ones whose lives have been disrupted 
by this catastrophic event. Lost jobs, destroyed homes, and loss or 
separation of family members, are all realities of this storm. The need 
to repair infrastructure and get business up and running is vital. The 
Federal Government needs to help people help themselves.

    Chairman Cochran. Now, I also want to ask a question about 
the tax situation. In these local governments--towns, 
counties--with businesses gone, houses gone, there is a 
desperate need for revenues that would otherwise be generated 
by sales taxes or real property taxes. And I'm sure the State 
is affected by that. The State governments are affected by that 
situation, as well. To what extent--and I'll just start with 
Governor Barbour--to what extent is tax policy affected? It was 
reported, for example, that Mississippi had cut taxes. What's 
the true story? Or is that true? And what is your reaction----
    Governor Barbour. Let me----
    Chairman Cochran [continuing]. To the local government----
    Governor Barbour. Let me answer the second--let me answer 
your second question first, Senator.
    Chairman Cochran. Okay.
    Governor Barbour. At the very beginning of our legislative 
session, there was an effort to raise some taxes, lower some 
taxes, with the idea that it would be balanced. And that--I 
give deference to the people that proposed that, but they were 
wrong. It wasn't balanced. It would have resulted in a huge 
revenue loss. I vetoed that on January 18. It has not become 
law. There is--votes are not there to override my veto. So, 
there was an effort. But, again, I think, to be fair to the 
people trying to do it, they thought it was revenue neutral 
until they really go to the facts. So, no, we have not reduced 
our taxes, reduced our revenue.
    However, Katrina has reduced the dickens out of our 
revenue. Our local governments, our city governments, only have 
two sources of revenue, sales tax and property tax. And we have 
places now, like Waveland Bay, St. Louis, where there are no 
stores, and there is no property to tax. Waveland, every single 
structure, home, in Waveland was unhabitable. So, when they 
come to collect property taxes, there's nothing to collect on.
    So, the Community Disaster Loan Program has been helpful. 
But, again, those are cities that are borrowing, that are not 
going to have any revenue for a couple of years. And so, yes, 
that is a very important thing.
    The State, in many ways, is lending money to cities, we're 
paying for law enforcement, we're paying of their employees, to 
some degree. Y'all, thanks to your package in December, are 
paying hundreds of millions of dollars to our local schools, 
whose--you know, who get about 35 percent of their revenue from 
local taxes that are nonexistent.
    So, yes, sir, it is a critical, critical issue. And thank 
you for looking for ways that the Federal Government can help.
    Chairman Cochran. Governor Riley, do you have a response?
    Governor Riley. Mr. Chairman, in the area that was more 
dramatically impacted in the State of Alabama, we've had an 
ongoing problem trying to get shrimp boats back in the water so 
we can generate something. I mean, essentially we've shut the 
whole area down. As Haley said a moment ago, the State of 
Alabama's having to pick up the lack of revenues for all of 
these local services.
    The biggest thing that we need to do, though, is get 
private industry to go back in, rebuild these, and open it back 
up. The limiting factor is creating the jobs. We create the 
jobs, everything else will fall in place.
    Chairman Cochran. Governor Blanco.
    Governor Blanco. Senator Cochran, we had at least four 
parishes that were just totally shut down, 100 percent 
decimated. And that was Orleans, St. Bernard, Cameron Parish, 
after Rita struck, and Plaquemines. Those parishes had--have 
absolutely no revenue streams. And Orleans is trying to come 
back. You know, they're--it's painful, but slow. They are 
making progress, I would have to say. St. Bernard and Cameron 
are not.
    And it did--in November, we thought that--our revenue-
estimating conference thought that we would take a $1 billion 
hit on the State revenue stream, and that was extremely 
conservative. And, by law, I had to bring our budget into 
balance, so I made dramatic cuts in our State revenue stream, 
in our State expenditures.
    And we've had a new revenue estimate, as of last week, and 
that--we've had some losses, but it's about half that much. And 
so, we're trying to reconstruct a budget now to reflect those 
new estimates.
    We really won't know anything for sure until after the 
income tax--the Federal income tax date of April 15, because a 
lot of people pay their State income taxes after that time--at 
that time.
    Chairman Cochran. Governor Perry.
    Governor Perry. Mr. Chairman, I'll be very brief. There's 
two things. You're absolutely correct. Those--that entire 
region of southeast Texas was devastated, from the standpoint 
of its tax base. Sales tax in the State of Texas, because we 
don't have an income tax--and we're not going to have one, 
either--I'll kind of go on the record here--but we use property 
taxes to pay for a lot of those county and school costs. So, 
all of those homes and businesses that were lost, that have 
been destroyed, those go off the tax record for some period of 
time, until they're put back on. So, both in the sales tax loss 
and in property taxes, a very, very negative impact.
    And one other thing that you asked about that I'll wrap up 
with is that we are moving dollars around in the State to 
assist the city of Houston and the county of Harris with their 
law enforcement cost. And, again, that's one of the reasons 
that we asked for $18.7 million in law enforcement cost, public 
safety cost. The vast majority of that's going to be going into 
the Houston area, because of the impact that they've had on 
overtime, et cetera.
    Chairman Cochran. Thank you very much.
    Governor Perry. Yes, sir.
    Chairman Cochran. Senator Landrieu, you indicated you had 
another question. You're recognized.
    Senator Landrieu. Thank you, Mr. Chairman. You've been very 
gracious with the time.
    I'd really like to follow up your question by just asking 
if our staff would work with each of these Governors to get on 
the record the loss of revenue of the main counties and 
parishes, and they were affected--because I know that the city 
of New Orleans is--borrowed $240 million, which the Governor 
knows, as well, with no opportunity, or no ability, to pay it 
back in the near future. And the law, Governor Barbour, as you 
know, requires those monies to be paid back within 3 years.
    I've heard the mayor of Waveland speak, and the mayor of 
Pass Christian speak. They're in no position to be able to pay 
those monies back that they've borrowed. Mississippi might be 
able to lend them money. But, since this is one of the largest 
cities in our State, it's very hard for our State to keep New 
Orleans, which is the biggest city, standing up, along with 
these two parishes.
    So, Mr. Chairman, I thank you. I think you're onto a good 
point here. And I'd like to focus some attention on that. And 
we'll get the figures to you.
    Thank you.

                     ADDITIONAL COMMITTEE QUESTIONS

    Chairman Cochran. Thank you very much, Senator Landrieu, 
for your participation in this hearing, and all Senators who 
were here. We appreciate their being here. And the Governors, 
thank you. Thank you for your leadership, for being cooperative 
with the committee and helping us understand the needs for 
approval of an additional supplemental budget request that's 
submitted by the President.
    [The following questions were not asked at the hearing, but 
were submitted to the witnesses for response subsequent to the 
hearing:]

         Questions Submitted to Hon. Kathleen Babineaux Blanco
              Questions Submitted by Senator Arlen Specter

               COMMUNITY DEVELOPMENT BLOCK GRANTS (CDBG)

    Question. The President's fiscal year 2007 budget includes a 
proposal to consolidate currently 18 economic development programs into 
2 programs--HUD's CDBG program and a Regional Development Account 
within Commerce's Economic Development Administration. In fiscal year 
2006, Congress funded these 18 programs at a combined level of $5.3 
billion. The fiscal year 2007 budget proposes only $3.36 billion for 
both programs--a reduction of nearly $2 billion below fiscal year 2006. 
I am aware that this Supplemental Appropriations request would provide 
$4.2 billion for the CDBG program to be used for flood mitigation 
through infrastructure improvements, real property acquisition or 
relocation, and other means to reduce the risk of future damages and 
loss in Louisiana.
    Do you anticipate that the $4.2 billion will fully meet your needs 
for flood mitigation, infrastructure improvements and property 
acquisition or relocation?
    Answer. With the additional $4.2 billion, Louisiana will be able to 
implement our housing plan fully and fund some key infrastructure 
repairs. The $4.2 billion request was determined in consultation with 
the Office of the Federal Coordinator for Gulf Coast Recovery using the 
latest data available from FEMA and HUD. Please note that many 
Louisiana homeowners will not be made fully whole due to caps on 
compensation and penalties for inadequate insurance, and that the 
infrastructure funds provided will cover some important infrastructure 
restorations but will not address the full long-term needs of our 
recovery.
    Question. How would the proposed cuts to the CDBG program impact 
your ability to reduce risk of damage in the future?
    Answer. The $2 billion cut to funding for economic development 
programs (the CDBG program and the Regional Development Account) 
proposed in the fiscal year 2007 budget would have an adverse impact on 
the State as a whole. Many of local governments use these dollars to 
provide necessary infrastructure, housing, and jobs to low and moderate 
income persons.

                          FEMA DISASTER RELIEF

    Question. So far, Congress has provided about $9.029 billion in 
housing assistance, debris removal, public assistance and individual 
and household assistance through the Disaster Relief Fund. 
Additionally, Congress has provided $669 million in Community Disaster 
Loans, a loan program that will help keep essential services online in 
the hardest hit communities, including a $120 million loan approved for 
the City of New Orleans. It is my understanding that this Supplemental 
Appropriations request would provide an additional $9.4 billion to FEMA 
to continue to fund its disaster assistance and benefits programs and 
another $400 million for FEMA's Community Disaster Loan Program. This 
request more than doubles funding from FEMA going directly to 
households, individuals and local communities.
    Have you, as Governors, identified and planned priorities on how to 
direct Community Disaster Loans and public assistance?
    Answer. The State, through the Louisiana Recovery Authority (LRA), 
which I appointed, has taken an active role in promoting sound short- 
and long-term recovery planning at the State and local levels.
    Dubbed ``Louisiana Speaks,'' this effort is a multifaceted planning 
process to develop a sustainable, long-term vision for South Louisiana 
in the wake of the destruction caused by Hurricanes Katrina and Rita. 
The process emphasizes the development of plans based on sound land use 
practices and plans that remain cognizant of the hazards of rebuilding 
in areas made more risky by new flood guidelines. Reflective of this 
emphasis has been a series of resolutions by the LRA tying safety and 
security to recovery funding. Notably, the LRA approved an immediate 
allocation of $250 million in hazard mitigation funding to help 
parishes prevent damage from future disasters.
    The community planning process accomplishes the following:
  --Supports a deliberate and democratic process that relies on active 
        participation;
  --Empowers local communities to develop plans that meet individual 
        needs;
  --Establishes priorities at the local level to guide decisions;
  --Supports communities with the best national planning experts 
        working in partnership with local architects, planners, and 
        engineers; and
  --Provides a user-friendly interface to enable development of 
        individual plans.
    The goal of the long-term community planning process is to develop 
a comprehensive plan that integrates both parish plans (coordinated 
with the support of FEMA technical assistance) and regional recovery 
plans. The LRA collaborated with planners from FEMA to develop a parish 
level planning process to address numerous recovery issues pertinent to 
the long-term recovery of severely damaged parishes. A total of 26 
parishes throughout Louisiana were identified to participate in this 
planning process, which began in November 2005 and will close in April 
2006.
    The local planning process will serve as the foundation for State 
prioritization of public assistance projects. Local teams are proposing 
public assistance projects on the basis of the plans, and each must 
meet FEMA requirements for funding. Moving forward, we will be using a 
web-based tool where local plans and projects associated with those 
plans will be posted. The LRA will assign recovery value to these plans 
as a means setting priorities.
    Louisiana Recovery Planning Day was an important part of the parish 
level planning process. On January 21, 2006, which was proclaimed 
Louisiana Recovery Planning Day by Governor Blanco, the Louisiana 
Recovery Authority (LRA) and FEMA's Long-Term Community Recovery (LT 
CR) team hosted 30 open houses throughout Louisiana and Southeastern 
States to provide Louisianans with an opportunity to express their 
needs and to help define a community-based vision for Louisiana's 
recovery.
    The parish level planning process will result in the development of 
initial parish recovery plans, which will be used to set funding 
priorities for the recovery effort. The final plans will include a 
community baseline, a needs assessment, a recovery strategy including 
principles, vision, goals, a set of high value recovery projects and a 
strategic recovery timeline. The final section will describe 
opportunities for the integration of the local plan with regional and 
State-wide plans. The section will also include an inventory of local 
resources, government structures and describe the level of technical 
expertise needed to implement the plan.

                      FLOOD CONTROL AND PROTECTION

    Question. The administration's supplemental appropriations request 
includes $1.36 billion for several U.S. Army Corps of Engineers flood 
protection projects in New Orleans and surrounding areas.
    Are the amounts requested by the administration sufficient to meet 
the flood protection needs of New Orleans? In addition to the projects 
outlined in the administration's request, have any other flood control 
projects been identified as necessary to more effectively protect the 
City of New Orleans?
    Answer. The Corps' Task Force Guardian effort is addressing those 
parts of the hurricane protection system that failed or were damaged 
during the storms. The $1.36 billion will address other weak spots that 
were identified in the system after the storm, substantially improving 
the hurricane protection, if not in elevation, in robustness and 
ability to survive and continue to protect the city and surrounding 
areas. In other words, the projects included in the $1.36 billion 
appropriation will make the protection system better than it was before 
the storm, but, ultimately, implementation of the coastal protection 
and restoration plan currently being developed by the Corps and the 
State will provide the long-term answer to robust, sustainable 
protection for the city and the entire coast.
    We recently received word that another $4.1 billion is needed for 
the Corps of Engineers to certify the levees surrounding the 
metropolitan New Orleans region from a 100-year storm. I have requested 
that the Bush Administration immediately request these funds from 
Congress as they are essential to bringing our people home safely.
    Finally, we have been working to secure an equitable share of Outer 
Continental Shelf revenues from Congress to fund a comprehensive 
coastal restoration program that will dramatically reduce the effects 
of storm surge from hurricanes on our coastal communities. This effort 
is absolutely essential yet is not addressed in the current 
supplemental.
                                 ______
                                 
            Questions Submitted by Senator Richard C. Shelby

    Question. In addition to the transport of commerce, waters 
surrounding our States provide billions of dollars in economic impact 
to each of our States every year through revenue generated by 
commercial, charter and recreational fishermen and oystermen. What 
progress has been made to get these industries up and running again? 
What more needs to be done?
    Answer. The State has implemented a small business bridge loan 
program that provides working capital for these industries, but there 
are a number of industry initiatives to assess the damage to the 
seafood industry and to help the industry recover.
    In addition, the Louisiana Departments of Wildlife and Fisheries 
and Economic Development have been working independently on the issue 
of seafood industry impacts of the storms, as well as with a large 
coalition of 20 State and fishing organizations which are together 
known as the Louisiana Seafood Coalition. The coalition has developed 
and released a multi-phase strategic recovery plan. Independent of this 
private/public group, the National Oceanic and Atmospheric 
Administration (NOAA) has developed ``A Plan for Recovering Gulf of 
Mexico Fisheries using an Ecosystem Approach.'' Finally, John Roussel, 
the Assistant Secretary for Fisheries from the Department of Wildlife 
and Fisheries, provided detailed testimony on March 21, 2006, before 
the U.S. House Committee on Resources, Subcommittee on Fisheries and 
Oceans regarding the impact to the industries and areas that need 
addressing to best bring about the industry's recovery. The reports 
from NOAA, DWF, and the industry all draw similar conclusions and 
recommend similar recovery strategies.
    Damage to the infrastructure of the Louisiana seafood communities 
alone is estimated to be nearly $1 billion, and 6 months after the 
storms the Louisiana Department of Wildlife and Fisheries estimates 
that approximately 30 percent to 40 percent of the fishing fleet is 
back. In those areas where the infrastructure was completely 
devastated, estimates of the returning fishing fleet may be as low as 5 
percent to 10 percent. Four of the largest fishing ports in the United 
States by landings are Empire, Venice, Cameron and Pascagoula-Moss 
Point--four of the hardest hit areas. While the resiliency of Gulf of 
Mexico fishermen is legendary, the devastation to the fishing 
communities is unprecedented and aid is needed to rebuild and sustain 
the infrastructure of this viable community.
    Louisiana and NOAA's recovery plans were developed independently of 
each other with very similar results regarding the damage assessments 
and the needs of the industry. According to NOAA's estimate, the total 
funding need is $866 million.
    The priorities needing to be addressed for fisheries are detailed 
by the industry as follows:
  --Rebuild infrastructure.--There is an extraordinarily urgent need to 
        reestablish the commercial and recreational fisheries 
        infrastructure. Docks, marinas, launches, ice houses, fuel 
        docks, and processing plants were decimated and are essential 
        to returning to business. In many instances, utilities are 
        either not available or inadequate.
  --Address housing needs of fishing families.--Fishermen were 
        disproportionately affected by the hurricanes since most of 
        their homes were at or near the water's edge. Fishing 
        communities such as Empire, Venice, Buras, Ycloskey, Hopedale, 
        Delacroix, Lafitte, Cameron, and Intracoastal City were 
        devastated by the storms. Fishermen have been slow to return to 
        fishing as they seek temporary housing for their families and 
        aspire to rebuild their homes.
  --Provide financial assistance to fishermen.--Boats are the fishing 
        industry's first unit of infrastructure and several thousand 
        harvest vessels need to be repaired, and in many instances, 
        replaced. Many of these vessels were uninsured and might 
        eventually become a public liability and pose water pollution 
        or navigation hazards. There is thus a need for assistance with 
        vessel recovery, refloating and repairing. By combining LDWF 
        trip ticket data with other procedures, Louisiana fishermen can 
        be assisted financially and this would help jump start the 
        recovery process. Fishermen also face a major financing dilemma 
        since it's virtually impossible for them to obtain reasonable 
        loans without collateral. Furthermore, it is impossible to 
        obtain vessel insurance if the boat is not operating and a loan 
        for repairs cannot be secured if the boat is uninsured.
  --Expand debris removal efforts.--A marking and mapping initiative to 
        identify sites should be initiated promptly. The Louisiana 
        Department of Environmental Quality (LDEQ) is undertaking a 
        program to remove vehicles and LDWF-registered vessels from 
        right-of-ways. Simultaneously, the U.S. Coast Guard is removing 
        approximately 1,500 vessels that are clogging waterways. But no 
        provisions have been made for removals from private property. 
        Consideration should also be given to revising rules governing 
        programs such as those administered by Louisiana Department of 
        Natural Resources--Underwater Obstructions Removal Program and 
        the Fishermen's Gear Compensation Fund--to help compensate 
        harvesters for gear and vessel losses stemming from storm 
        debris. When possible, harvesters should be contracted to help 
        with removal and cleanup activities.
  --Address labor problems.--Passage of the storms has exacerbated the 
        ongoing labor shortage faced by most sectors of the seafood 
        processing industry. Processing operations in the entire region 
        have been struggling for a number of years in this regard, but 
        the post-Katrina housing shortage has severely aggravated the 
        problem. In many instances, processors have had to pay for 
        temporary housing for their employees and these higher 
        operating costs have not been recovered.
  --Compensate uninsured inventory and accounts receivable losses.--
        Many of coastal Louisiana's cold storage and seafood processing 
        operations suffered uninsured inventory and accounts receivable 
        losses.
  --Affordable insurance for seafood processors will be needed once the 
        rebuilding process gets underway.--Such operations are by their 
        very nature in close proximity to a waterway and thus pay 
        higher insurance premiums.
  --Initiate a marketing campaign.--The promotion of Louisiana seafood 
        products is of extreme importance. Louisiana continues to 
        battle negative consumer notions over the perceived quality and 
        safety of post-hurricanes seafood products.
    Question. All of our States rely heavily on our navigable waters 
for the transportation of commerce. Katrina and previous hurricanes 
have caused significant damage. Have the actions taken by the Army 
Corps of Engineers and the Coast Guard rectified this situation and 
restored commerce to our waterways?
    Answer. The Army Corps of Engineers, U.S. DOT, and MARAD have 
substantially rehabilitated transportation of commerce following 
Hurricanes Katrina and Rita, except for the access to the inner harbor 
portion of the Port of New Orleans. Before the storm, 22 ships a week 
were calling at port in New Orleans. Today, there are between 22-25 
ships, not including the cruise ships that have not yet returned.
    The inner harbor is accessible only by two methods. The first, and 
most commonly used, means of access is through the Mississippi River 
Gulf Outlet (MRGO). The second means of access is through a system of 
locks connecting the inner harbor to the Mississippi River. The MRGO 
was substantially silted in by the hurricanes and is identified as one 
of the major causes of the storm surge which flooded St. Bernard 
Parish. The Corps has decided not to do any more maintenance on it 
because of the flood risk of MRGO. The other route into the inner 
harbor, the lock system, was built in the 1920's at a time when barges 
were much smaller than those currently used for water transportation. 
The lock system was authorized for replacement by Congress in 1956. 
However, the roughly $675 million necessary to complete the task has 
never been funded.
    If the funding for the lock system is not provided by Congress, 
there are seven businesses which will be in jeopardy. They have been 
impacted because of their location on the inner harbor of the Port of 
New Orleans and the damage of the storms to river traffic on the MRGO. 
One thousand direct jobs and 8,000 support jobs are at risk. Two of the 
companies can be relocated along the Mississippi River, while another 
five are looking for alternatives. However, for those five companies, 
their cost of doing business in the inner harbor has increased 
substantially because of the storm damage and the need to transfer 
goods to smaller barges to get into the inner harbor.
    The cost to assist the seven companies that are trapped as a result 
of the impact on the MRGO is $362 million.
    Question. We have all heard serious concerns regarding proper 
management of Federal funds appropriated thus far. We as Congress must 
continue to conduct oversight of Federal agencies involved in the 
recovery process. What are you as Governors doing to ensure funds sent 
to your States are being used in an honest and efficient manner?
    Answer. One of the principal functions of the LRA is to ensure the 
highest standards of integrity for all activities associated with the 
recovery and rebuilding of Louisiana. To support this, an Audit 
Committee was established to ensure best practices and procedures in 
the management of any funds received, expended, or disbursed by the 
LRA. The membership of the audit committee includes three LRA board 
members as well as a representative from two highly respected public 
interest organizations: the Public Affairs Research Council of 
Louisiana and the Council for a Better Louisiana.
    As Louisiana moves to recover and rebuild in response to hurricanes 
Katrina and Rita, there will be millions of dollars of contracts for 
cleanup, demolition, and construction awarded in Louisiana. Many of 
these contracts may be disbursed through time-and-materials contracts 
rather than on a pre-negotiated fixed price, which increases the risk 
of fraud. In an effort to eliminate fraud and abuse, the State has 
endorsed the use of Independent Private Sector Inspectors General 
wherever possible for certain construction contracts with the State. 
Additionally, Deloitte & Touche, LLP, one of the big four accounting 
firms, was selected by Louisiana's Division of Administration, to 
provide accounting and forensic services in Louisiana's receipt and 
disbursement of FEMA recovery funds. The firm of UHY, LLP, a nationally 
licensed firm, was selected to perform an independent examination level 
assessment of the State's internal controls, processes and procedures 
over the receipt and disbursement of FEMA disaster recovery funds, as 
well as additional assistance in the area of fraud detection, 
investigation, and mitigation. Contracts setting out the specific 
services to be provided by each are being developed. The LRA Audit 
Committee will receive any and all reports produced by the accounting 
firms engaged by the State, and shall present the reports' findings to 
the full Board.
    The LRA has worked to ensure complete transparency of operations by 
fully complying with the State's Open Meetings law for all board and 
task force meetings and by posting all relevant information on the 
website, www.lra.louisiana.gov, including meeting agendas, minutes, 
presentations, press releases, and data figures.
    To oversee the Federal CDBG funds, the OCD/DOA and the LRA will 
hire additional employees to carry out the administrative functions 
associated with the implementation and monitoring of the CDBG programs. 
The OCD has the staff expertise to train additional employees on the 
Federal and State regulations governing the CDBG program. The LRA has a 
mandate from the Governor and Louisiana Legislature to assure the 
coordinated use of resources for the recovery and to support the most 
efficient and effective use of such resources. The OCD and the LRA will 
work together to achieve this goal.
    The State has a monitoring plan for the regular CDBG program and 
will develop a monitoring guide for staff and contractors for each 
program. The plan will be revised somewhat to accommodate the waivers 
given to the State and other provisions cited in the legislation. For 
example, the State has contracted with ICF to assist in the development 
of a monitoring plan for all housing-related programs. Particular 
attention will be paid to ensuring that the use of funds are disaster 
related and that funding allocated will not duplicate other benefits. 
The State also will ensure through its design of programs, application 
process, monitoring of recipients, and oversight by the LRA Board's 
Audit Committee that recipients are not receiving duplication of 
benefits and that funds are not used for projects or activities that 
are reimbursable by or for which funds have been made available by FEMA 
or by the Army Corps of Engineers and are abiding by State and Federal 
regulations. The State, drawing upon the resources of the LRA and under 
its guidance, will coordinate with FEMA, the Army Corps of Engineers, 
insurance companies, and other entities during the application process 
to ensure there is no duplication of benefits. Recipients will be asked 
to sign a waiver of their privacy rights so that the State can obtain 
the appropriate information from FEMA and all other Federal agencies.
    The State has issued a Solicitation for Offers to provide program 
management services for the homeowner and rental programs. The SFO 
seeks the best available management firm to assist in the 
implementation of these programs. The State will have staff assigned to 
monitor the services being provided under the contract.
    In addition to the accountability mechanisms that have been 
implemented in response to the hurricanes, the State has long had a 
number of processes and procedures in place to avoid fraud, abuse and 
mismanagement. The Legislative Auditor serves as the watchdog of public 
spending, overseeing more than 3,500 audits of State and local 
governments and their related quasi-public enterprises. Conducting 
independent financial and performance audits of the State's agencies, 
colleges, and universities, auditors find ways to improve government 
and identify critical issues to protect public resources and tighten 
government control systems. When necessary, auditors follow up on 
allegations of fraud, waste, or abuse. The Legislative Auditor will 
perform an annual audit of the DOA.
    In addition, the State has an established Office of the Inspector 
General. The office's mission is to help prevent waste, mismanagement, 
abuse, fraud and corruption in the executive branch of State government 
without regard to partisan politics, allegiances, status, or influence. 
The Inspector General is appointed by the Governor.
    The Office of Finance and Support Services (OFSS), a section of the 
DOA, has established clear designation of responsibilities in order to 
ensure separation of duties. This separation of duties, along with 
other established operational policies and procedures, provides 
assurance that fraud cannot be accomplished without collusion among 
employees in separate areas.
    The OFSS is responsible for payments, Federal draw down requests, 
and State and Federal financial reporting. The OCD is responsible for 
the day-to-day administration of the CDBG program. Their staff reviews 
all requests for payment and accompanying invoices to ensure costs are 
reasonable and within the scope of the activity funded. Two signatures 
are required on a request for payment prior to being sent to OFSS for 
payment. All payment requests are reviewed for proper authorized 
signatures prior to input into the financial system for payment. One 
employee actually inputs the properly authorized payment request into 
the financial system and the request must be approved in the system by 
the payment unit supervisor. Through financial system security, no one 
person can both input and approve a payment request.
    The payment management unit of OFSS provides information to the 
appropriate accounting unit so that Federal funds can be drawn. The 
Federal draw down request is reviewed and approved by a supervisor 
prior to the draw down request being processed. All funds are 
electronically transferred to the State Treasurer's central depository 
account to be used to liquidate the payables. The financial reporting 
of the expenditure and revenue activities is prepared by the 
appropriation accounting unit. All reports are prepared by one employee 
and reviewed by the appropriate manager prior to release of the report/
statement.
    In addition, the State will hire an internal auditor who will be 
placed within the OCD to oversee the internal functions of this office. 
The auditor will report to the Commissioner of Administration and will 
make reports to the LRA Audit Committee as requested.
    The State follows the State Procurement Code and all other sub 
recipients are required to follow Title 24 Part 84 and Part 85. The 
monitoring plan outlines the requirements that must be followed.
    Question. In hindsight what is the most important action or actions 
that can be taken by the Federal Government on behalf of the affected 
citizens before and after a catastrophic Hurricane?
    Answer. The most important action the Federal Government could take 
on behalf of the citizens affected by the catastrophic hurricanes would 
be to reform the Stafford Act to account for catastrophic events and to 
allow the flexibility to adopt common sense cost-saving measures that 
meet our needs. For example, the Stafford Act forces FEMA to purchase 
costly temporary housing, when the wiser investment might be permanent 
housing.
    We would also ask the Federal Government to ensure our people will 
be protected by a strong sustainable levee protection and coastal 
restoration initiative. Louisiana residents and businesses must have 
the confidence to return home and invest in their communities. That 
confidence is built on a foundation of strong levees and coastal 
restoration. We can't have one without the other. We are counting on 
Congress to understand that this is essential to our recovery. In 
addition, we hope that Congress will investigate how such a massive 
miscalculation occurred.
                                 ______
                                 
            Questions Submitted by Senator Mary L. Landrieu

 GENERAL BACKGROUND ON THE STATE OF LOUISIANA AND SUPPLEMENTAL REQUEST

    Question. What evidence do you have that residents want to return 
to Louisiana? How did you arrive at your numbers? How can we be 
confident in these numbers?
    Answer. While we cannot say definitively how many residents want to 
return, there is evidence to suggest that the majority intend to go 
back to their communities.
    Based on estimates from the City of New Orleans, in consultation 
with the Census Bureau and the Centers for Disease Control, more than 
one half of the residents of Orleans Parish (181,000 out of 455,000) 
have returned. Many of those who have not yet returned are residing 
elsewhere in the metropolitan area or the State of Louisiana.
    Also, according to research by GCR Inc. for the Louisiana Secretary 
of State's Office, 51 percent (or 71,000 out of 129,000) of Orleans 
Parish registered voters who have filed changed of address forms stayed 
within the metropolitan area.
    Finally, a preliminary survey of displaced Louisiana residents 
supports the fact that more than 51 percent of residents are very or 
somewhat likely to return, with the majority of these in the likely 
category. This holds true for both those displaced in State and out of 
State.
    The study, conducted by the LSU Manship School of Communication 
Public Policy Lab, with input from prominent New Orleans African 
American pollster Dr. Silas Lee and other research experts, is part of 
a larger effort to determine how displaced Louisiana residents want to 
see their communities rebuilt. The research team has already surveyed 
more than 2,000 Louisiana citizens, more than 600 of whom are displaced 
both in Louisiana and out of State in such locations as Atlanta, 
Houston and Memphis. The survey includes a balanced mix of race, income 
and geographic region by design.
    While the survey is not yet finished, it is more than 90 percent 
complete.
    Question. What is your back-up plan should the State receive a 
smaller amount from this supplemental, such as $2 billion? How fast do 
you anticipate you will go through these funds?
    Answer. The Supplemental CDBG Action Plan amendment that has been 
approved by the LRA contains budgets for The Road Home Housing Programs 
at the current level of funding and the anticipated level of funding, 
which assumes the additional appropriation of $4.2 billion. Under the 
current level of funding, the plan provides half of homeowners' 
uninsured damages.
    Question. What are you doing to get people back from my State into 
yours?
    Answer. Publicizing the progress of the recovery and the commitment 
by local, State and Federal leaders is our main strategy for 
encouraging displaced residents to move back to Louisiana.
    I, along with the Louisiana Recovery Authority and the Office of 
Community Development, have launched a housing registry for The Road 
Home housing plan and devoted considerable resources toward publicizing 
the effort. Homeowners needing rebuilding assistance are urged to 
register via the web portal or toll-free line. A major advertising and 
public information campaign has been conducted throughout Louisiana and 
major cities outside of the State where the majority of displaced 
Louisiana residents reside.
    The LRA has also partnered with non-profit organizations and other 
government agencies to launch www.LouisianaRebuilds.info, a web portal 
that contains links to services and other essential information that 
residents need to rebuild their lives. The portal, which was launched 
in February, had 2.5 million hits in its first week. A 
LouisianaRebuilds call center is also in development. A national media 
campaign is currently being developed to attract more displaced 
Louisiana residents to the portal.
    In addition, the LRA and FEMA conducted 30 open house meetings in 
Louisiana and other States to provide information and collect input on 
rebuilding communities. The emphasis was on empowering residents to 
make decisions that will give them the confidence to return. Finally, 
an outreach effort surrounding long-term community planning will launch 
this summer.
    Efforts are continuing at the State and national level to get 
displaced residents the information they need to reestablish themselves 
in Louisiana. We see this effort increasing as more resources become 
available. We will continue to work with non-profit agencies to raise 
private dollars for public information.
    Question. What assurances do we have that genuine reform is taking 
place in Louisiana and that our investment will be well protected? In 
sum, how much money has the Federal Government provided to the State of 
Louisiana?
    Answer. In a November special session of the Legislature, I pushed 
through the creation of the Coastal Protection and Restoration 
Authority. The CPR is charged with creating Louisiana's first 
comprehensive coastal protection plan. Only with a single agency 
overseeing coastal protection can we ensure the safety of our coastal 
communities.
    The CPR is the single agency that coordinates all State, local and 
Federal agencies working on protecting our coastal communities.
    In the second special session, I worked with the Legislature to 
reform an outdated, 100-year-old patchwork of New Orleans-area levee 
boards and replaced it with a system that will produce professionally 
and ethically sound governance.
    The overriding goal is to further safety and confidence in the 
levee system. Katrina showed us all that the system of disjointed levee 
districts does not work for southeast Louisiana. These new boards will 
help us better protect our communities and our families.
    These boards--overseen by engineers, hydrologists and other 
professionals--will focus exclusively on protection, inspection and 
operation.
    Question. Will this supplemental appropriation cover your entire 
needs as it relates to housing?
    Answer. Yes, although our homeowners will receive substantial 
assistance, we will not be restoring the full equity or pre-storm value 
to many homeowners.
    Question. Did you reach out to any housing experts about the 
content and merits of this plan?
    Answer. Yes. We have received pro-bono assistance from McKinsey & 
Company and Enterprise Community Partners, Inc., as well as paid 
consulting assistance from ICF, Inc. We have had meetings with national 
and local housing experts through the Louisiana Recovery Authority's 
housing task force, as well from the finance industry, in the actual 
design of our plan.
    Question. How much additional funding will the State need for levee 
protection? For wetlands restoration?
    Answer. Because they are so clearly inter-related, both the State 
and the Corps of Engineers are considering levee protection and 
wetlands restoration together, as an integrated function. Our earliest 
estimates were in the $30 billion to $40 billion range for both, but 
the on-going Category 5-Louisiana Coastal Protection and Restoration 
(CAT5-ACPR) report effort will describe an integrated plan for 
protecting Louisiana's coast and will include cost estimates for those 
projects. Many of the features that were included in the initial 
estimate will also probably be in the CAT5-LACPR plan. The plan will 
also include many innovative solutions. As such, it is difficult to say 
at this point how much additional funding will be needed to protect and 
restore our coastal areas.
    Question. What accountability measures have been put into place to 
ensure that Federal money is being spent as intended and spent wisely?
    Answer. One of the principal functions of the LRA is to ensure the 
highest standards of integrity for all activities associated with the 
recovery and rebuilding of Louisiana. To support this, an Audit 
Committee was established to ensure best practices and procedures in 
the management of any funds received, expended, or disbursed by the 
LRA. The membership of the audit committee includes three LRA board 
members as well as a representative from two highly respected public 
interest organizations: the Public Affairs Research Council of 
Louisiana and the Council for a Better Louisiana.
    As Louisiana moves to recover and rebuild in response to hurricanes 
Katrina and Rita, there will be millions of dollars of contracts for 
cleanup, demolition, and construction awarded in Louisiana. Many of 
these contracts may be disbursed through time-and-materials contracts 
rather than on a pre-negotiated fixed price, which increases the risk 
of fraud. In an effort to eliminate fraud and abuse, the State has 
endorsed the use of Independent Private Sector Inspectors General 
wherever possible for certain construction contracts with the State. 
Additionally, Deloitte & Touche, LLP, one of the big four accounting 
firms, was selected by Louisiana's Division of Administration, to 
provide accounting and forensic services in Louisiana's receipt and 
disbursement of FEMA recovery funds. The firm of UHY, LLP, a nationally 
licensed firm, was selected to perform an independent examination level 
assessment of the State's internal controls, processes and procedures 
over the receipt and disbursement of FEMA disaster recovery funds, as 
well as additional assistance in the area of fraud detection, 
investigation, and mitigation. Contracts setting out the specific 
services to be provided by each are being developed. The LRA Audit 
Committee will receive any and all reports produced by the accounting 
firms engaged by the State, and shall present the reports' findings to 
the full Board.
    The LRA has worked to ensure complete transparency of operations by 
fully complying with the State's Open Meetings law for all board and 
task force meetings and by posting all relevant information on the 
website, www.lra.louisiana.gov, including meeting agendas, minutes, 
presentations, press releases, and data figures.
    To oversee the Federal CDBG funds, the OCD/DOA and the LRA will 
hire additional employees to carry out the administrative functions 
associated with the implementation and monitoring of the CDBG programs. 
The OCD has the staff expertise to train additional employees on the 
Federal and State regulations governing the CDBG program. The LRA has a 
mandate from the Governor and Louisiana Legislature to assure the 
coordinated use of resources for the recovery and to support the most 
efficient and effective use of such resources. The OCD and the LRA will 
work together to achieve this goal.
    The State has a monitoring plan for the regular CDBG program and 
will develop a monitoring guide for staff and contractors for each 
program. The plan will be revised somewhat to accommodate the waivers 
given to the State and other provisions cited in the legislation. For 
example, the State has contracted with ICF to assist in the development 
of a monitoring plan for all housing-related programs. Particular 
attention will be paid to ensuring that the use of funds are disaster 
related and that funding allocated will not duplicate other benefits. 
The State also will ensure through its design of programs, application 
process, monitoring of recipients, and oversight by the LRA Board's 
Audit Committee that recipients are not receiving duplication of 
benefits and that funds are not used for projects or activities that 
are reimbursable by or for which funds have been made available by FEMA 
or by the Army Corps of Engineers and are abiding by State and Federal 
regulations. The State, drawing upon the resources of the LRA and under 
its guidance, will coordinate with FEMA, the Army Corps of Engineers, 
insurance companies, and other entities during the application process 
to ensure there is no duplication of benefits. Recipients will be asked 
to sign a waiver of their privacy rights so that the State can obtain 
the appropriate information from FEMA and all other Federal agencies.
    The State has issued a Solicitation for Offers to provide program 
management services for the homeowner and rental programs. The SFO 
seeks the best available management firm to assist in the 
implementation of these programs. The State will have staff assigned to 
monitor the services being provided under the contract.
    In addition to the accountability mechanisms that have been 
implemented in response to the hurricanes, the State has long had a 
number of processes and procedures in place to avoid fraud, abuse and 
mismanagement. The Legislative Auditor serves as the watchdog of public 
spending, overseeing more than 3,500 audits of State and local 
governments and their related quasi-public enterprises. Conducting 
independent financial and performance audits of the State's agencies, 
colleges, and universities, auditors find ways to improve government 
and identify critical issues to protect public resources and tighten 
government control systems. When necessary, auditors follow up on 
allegations of fraud, waste, or abuse. The Legislative Auditor will 
perform an annual audit of the DOA.
    In addition, the State has an established Office of the Inspector 
General. The office's mission is to help prevent waste, mismanagement, 
abuse, fraud and corruption in the executive branch of State government 
without regard to partisan politics, allegiances, status, or influence. 
The Inspector General is appointed by the Governor.
    The Office of Finance and Support Services (OFSS), a section of the 
DOA, has established clear designation of responsibilities in order to 
ensure separation of duties. This separation of duties, along with 
other established operational policies and procedures, provides 
assurance that fraud cannot be accomplished without collusion among 
employees in separate areas.
    The OFSS is responsible for payments, Federal draw down requests, 
and State and Federal financial reporting. The OCD is responsible for 
the day-to-day administration of the CDBG program. Their staff reviews 
all requests for payment and accompanying invoices to ensure costs are 
reasonable and within the scope of the activity funded. Two signatures 
are required on a request for payment prior to being sent to OFSS for 
payment. All payment requests are reviewed for proper authorized 
signatures prior to input into the financial system for payment. One 
employee actually inputs the properly authorized payment request into 
the financial system and the request must be approved in the system by 
the payment unit supervisor. Through financial system security, no one 
person can both input and approve a payment request.
    The payment management unit of OFSS provides information to the 
appropriate accounting unit so that Federal funds can be drawn. The 
Federal draw down request is reviewed and approved by a supervisor 
prior to the draw down request being processed. All funds are 
electronically transferred to the State Treasurer's central depository 
account to be used to liquidate the payables. The financial reporting 
of the expenditure and revenue activities is prepared by the 
appropriation accounting unit. All reports are prepared by one employee 
and reviewed by the appropriate manager prior to release of the report/
statement.
    In addition, the State will hire an internal auditor who will be 
placed within the OCD to oversee the internal functions of this office. 
The auditor will report to the Commissioner of Administration and will 
make reports to the LRA Audit Committee as requested.
    The State follows the State Procurement Code and all other sub 
recipients are required to follow Title 24 Part 84 and Part 85. The 
monitoring plan outlines the requirements that must be followed.

                             RECONSTRUCTION

    Question. The supplemental appropriations request asks for an 
additional $4.2 billion for housing. How did you come up with that 
amount? How would you use this money?
    Answer. Working closely with the Office of the Federal Coordinator 
for Gulf Coast Recovery and using the best available information, an 
agreement was reached concerning the level of damage. Together, the LRA 
and the Office of the Federal Coordinator counted every house and key 
infrastructure component damaged as a result of the hurricanes to 
arrive at an appropriate figure. It was determined that $4.2 billion 
was the gap between Louisiana's housing and infrastructure needs and 
the funding already appropriated by Congress as illustrated in the 
attached graphic.
    Question. What measures, such as new building codes, have been put 
into place since the hurricanes to ensure safety for people as they 
return home and rebuild?
    Answer. In the 2005 First Extraordinary Session of the Louisiana 
Legislature, I proposed, and the Legislature adopted, the first State-
wide building code for residential and commercial structures. When 
setting policy for distribution of rebuilding funds, the Louisiana 
Recovery Authority has made it consistently clear that no homeowner or 
parish will be eligible for funding until it demonstrates adoption and 
enforcement of the code, formally called the State Uniform Construction 
Code, as well as the latest advisory flood guidelines produced by FEMA. 
To assist the impacted parishes with fulfilling their responsibilities 
to enforce the new State Uniform Construction Code, the current 
proposed CDBG Action Plan amendment outlining The Road Home Housing 
Programs includes $11 million for enforcement activities.
    Question. What is your position on the Baker Bill? Is this the last 
time you will be coming back to Washington for money? How many people 
do you estimate will take advantage of this plan?
    Answer. The Baker Bill is a thoughtful alternative to support 
rebuilding efforts in Louisiana for both commercial and residential 
property. However, the State has developed this $7.5 billion housing 
plan as an alternative to meet the need. If the $4.2 billion is 
approved and allocated to Louisiana, then the State will not be coming 
back to Congress to ask for additional residential housing assistance. 
Over 123,000 Louisiana homeowners will be eligible for this plan, and 
it is anticipated that most of these homeowners will take advantage of 
the program.
    Question. What other plans/options did you consider? Is this based 
on some other State's model that was successful? Why did it take this 
long to get this far with your plan?
    Answer. There is no comparable model since this level of 
devastation has never occurred within our borders. However, we did 
consider rebuilding options used in New York following 9/11 and 
Mississippi's current housing plan.
    Question. How are you equipped to deal with inquiries from those 
who want more information? What is your communications plan for 
reaching all those people dispersed around the country, many without 
computers and other resources?
    Answer. I, along with the Louisiana Recovery Authority and the 
Office of Community Development, have launched a housing registry for 
The Road Home housing plan and devoted considerable resources to 
publicizing the effort. In addition to registration on a website, 
homeowners can call a toll-free call center. A major advertising and 
public information campaign has been conducted throughout Louisiana and 
major cities outside of the State where the majority of displaced 
Louisiana residents reside.
    The LRA has also partnered with non-profit organizations and other 
government agencies to launch www.LouisianaRebuilds.info, a web portal 
that contains links to services and other essential information that 
residents need to rebuild their lives. The portal, which was launched 
in February, had 2.5 million hits in its first week. A national media 
campaign is currently being developed to attract more displaced 
Louisiana residents to the portal. An offline strategy utilizing 
grassroots communication through churches and other means is also being 
developed.
    One example of grassroots communication was Louisiana Recovery 
Planning Day, in which the LRA and FEMA conducted 30 open house 
meetings in Louisiana and other States to provide information and 
collect input on rebuilding. The emphasis was on empowering residents 
to make decisions that will give them the confidence to return.
    Efforts are continuing at the State and national level to get 
displaced residents the information they need to reestablish themselves 
in Louisiana. We see this effort increasing as more resources become 
available. We continue to work with non-profit agencies to raise 
private dollars for publicity.
    Question. How easy will this plan be for folks to understand--
especially those without a lot of resources or education? Will there be 
financial counselors available?
    Answer. As part of the plan, Housing Assistance Centers will be 
established by our private sector contractor throughout the State and 
in locations elsewhere in the country to provide counseling and 
information to Louisiana citizens. These counselors will be equipped to 
help citizens at all education levels.
    Question. How worried are you that folks will take the money and 
use it to move out of your State?
    Answer. We are worried about this and have considered this 
possibility in our planning. Our plan includes a residency requirement, 
an incentive for those that rebuild or relocate within Louisiana, and 
reduces compensation for those that choose to move out of State.
    Question. Hurricane season starts in 3 months. Will you be 
prepared?
    Answer. The State has been working diligently to refine and improve 
upon all of our plans for the upcoming hurricane season and to rebuild 
our infrastructure and health care systems that have been severely 
damaged by the hurricanes. However, due to the weakened condition of 
the levees, the almost 250,000 people living in FEMA trailers and our 
greatly diminished health care system, we must rely on FEMA to provide 
assets for pre-storm evacuation and sheltering for general population 
and special needs individuals. Provided we are given the required 
assistance in a timely manner, we feel our State will be ready.
    Question. What are your plans for rebuilding the ninth ward of New 
Orleans?
    Answer. The State's role is also to provide an appropriate share of 
Federal and State resources so that each community is successful in its 
rebuilding. The State, through the Louisiana Recovery Authority, has 
required that all FEMA base flood advisories are followed in order for 
those communities to receive CDBG funding and Hazard Mitigation Grant 
program funding to ensure that rebuilding will be done safely.
    The State will not dictate rebuilding plans to the local level, 
though we continue to actively support locally-driven planning efforts 
in New Orleans and elsewhere with State, Federal and private resources. 
Recently, the State helped attract $3.5 million in Rockefeller 
Foundation grants to assist the city in its neighborhood planning 
efforts.

                             NATIONAL GUARD

    Question. In this past special session of the Louisiana Legislature 
you had the position of Director of Emergency Preparedness moved from 
the Louisiana National Guard to your office. Have you appointed the 
person yet? Why did you move the position from the National Guard, 
especially since it seemed the Guard was one of the bright spots in the 
response effort? What type of person are you going to appoint to the 
position?
    Answer. I have appointed an acting director, Colonel Jeff Smith. I 
agree that the National Guard was a bright spot in the response. As one 
of the lessons learned, we noted that the Guard had to focus on its 
operational role and feel that by taking away the responsibility of 
overall coordination, the Guard would be in a better position to 
improve on its response.
    Clearly the individual appointed to this position should have 
extensive experience in emergency management or a related field. 
However, we know that response operations, while significant, are only 
a small part of the director's responsibility. The individual must be 
able to communicate effectively with local and State government 
officials and have the skill sets necessary to oversee the distribution 
of billions of dollars in Federal funds.
    Question. There seemed to be so many unused volunteers during the 
Hurricane Katrina rescue effort. As there were hundreds of boaters 
lined up on Interstate 10, it would seem they could be used. What 
efforts are being made to ensure that volunteers are utilized in the 
upcoming Hurricane season? Have you begun working on a plan to close 
the gap on the initial response?
    Answer. We certainly are deeply appreciative of all the volunteers 
that responded to one of the most catastrophic natural events in 
American history. The use of volunteers carries with it a 
responsibility, not only to insure the volunteers' safety, but also 
that of the victim. While we feel that the use of volunteers must be 
integrated into emergency response, we do not believe we should 
encourage individuals to self-deploy. We are reevaluating our plans to 
integrate our use of volunteers.
    Question. It has been said that had Hurricane Katrina not happened, 
the State would not have been ready to respond to Hurricane Rita. 
Although the hospital evacuation went well and there were adequate 
military aircraft resources available, what are you doing now to ensure 
that airlift assets are being coordinated?
    Answer. I strongly disagree with the assertion. It is very 
appropriate that the evacuation process was handled by the parishes of 
the State. The State coordinated the effective use of the pre-deployed 
Federal assets, and we believe that this should be a model for the 
future. We have requested that the Federal Government pre-stage 
aircraft capability for the 2006 hurricane season.
    Question. Are you taking special precautions for Nursing Homes? Is 
your State Department of Health and Hospitals inspecting evacuation 
plans now for the upcoming hurricane season?
    Answer. I have proposed legislation in the 2006 Regular Session of 
the Louisiana Legislature that aims to improve evacuation planning and 
processes from nursing homes in parishes susceptible to natural 
disaster.
    HB 848 by Rep. Diane Winston requires that such nursing homes 
develop an emergency preparedness plan and submit the plan to the 
Louisiana Department of Health and Hospitals (DHH) by August 1, 2006. 
The bill creates the Nursing Home Emergency Preparedness Review 
Committee within DHH to review the findings of the emergency 
preparedness plan submitted to DHH.
    The bill further requires that each emergency preparedness plan be 
reviewed and updated by the nursing home annually. By March 1 of each 
year, a summary of the updated plan must be submitted to DHH. Each 
summary of the plan must include and identify at a minimum:
  --An evacuation site, verified by a written agreement or contract.
  --A transportation company, verified by a written transportation 
        agreement or contract.
  --Staffing patterns for evacuation, including contact information for 
        such staff.
    Question. Governor, what measures have been taken by your State to 
ensure that Federal funds appropriated to Louisiana for hurricane 
recovery and rebuilding are spent wisely and honestly?
    Answer. One of the principal functions of the LRA is to ensure the 
highest standards of integrity for all activities associated with the 
recovery and rebuilding of Louisiana. To support this, an Audit 
Committee was established to ensure best practices and procedures in 
the management of any funds received, expended, or disbursed by the 
LRA. The membership of the audit committee includes three LRA board 
members as well as a representative from two highly respected public 
interest organizations: the Public Affairs Research Council of 
Louisiana and the Council for a Better Louisiana.
    As Louisiana moves to recover and rebuild in response to hurricanes 
Katrina and Rita, there will be millions of dollars of contracts for 
cleanup, demolition, and construction awarded in Louisiana. Many of 
these contracts may be disbursed through time-and-materials contracts 
rather than on a pre-negotiated fixed price, which increases the risk 
of fraud. In an effort to eliminate fraud and abuse, the State has 
endorsed the use of Independent Private Sector Inspectors General 
wherever possible for certain construction contracts with the State. 
Additionally, Deloitte & Touche, LLP, one of the big four accounting 
firms, was selected by Louisiana's Division of Administration, to 
provide accounting and forensic services in Louisiana's receipt and 
disbursement of FEMA recovery funds. The firm of UHY, LLP, a nationally 
licensed firm, was selected to perform an independent examination level 
assessment of the State's internal controls, processes and procedures 
over the receipt and disbursement of FEMA disaster recovery funds, as 
well as additional assistance in the area of fraud detection, 
investigation, and mitigation. Contracts setting out the specific 
services to be provided by each are being developed. The LRA Audit 
Committee will receive any and all reports produced by the accounting 
firms engaged by the State, and shall present the reports' findings to 
the full Board.
    The LRA has worked to ensure complete transparency of operations by 
fully complying with the State's Open Meetings law for all board and 
task force meetings and by posting all relevant information on the 
website, www.lra.louisiana.gov, including meeting agendas, minutes, 
presentations, press releases, and data figures.
    To oversee the Federal CDBG funds, the OCD/DOA and the LRA will 
hire additional employees to carry out the administrative functions 
associated with the implementation and monitoring of the CDBG programs. 
The OCD has the staff expertise to train additional employees on the 
Federal and State regulations governing the CDBG program. The LRA has a 
mandate from the Governor and Louisiana Legislature to assure the 
coordinated use of resources for the recovery and to support the most 
efficient and effective use of such resources. The OCD and the LRA will 
work together to achieve this goal.
    The State has a monitoring plan for the regular CDBG program and 
will develop a monitoring guide for staff and contractors for each 
program. The plan will be revised somewhat to accommodate the waivers 
given to the State and other provisions cited in the legislation. For 
example, the State has contracted with ICF to assist in the development 
of a monitoring plan for all housing-related programs. Particular 
attention will be paid to ensuring that the use of funds are disaster 
related and that funding allocated will not duplicate other benefits. 
The State also will ensure through its design of programs, application 
process, monitoring of recipients, and oversight by the LRA Board's 
Audit Committee that recipients are not receiving duplication of 
benefits and that funds are not used for projects or activities that 
are reimbursable by or for which funds have been made available by FEMA 
or by the Army Corps of Engineers and are abiding by State and Federal 
regulations. The State, drawing upon the resources of the LRA and under 
its guidance, will coordinate with FEMA, the Army Corps of Engineers, 
insurance companies, and other entities during the application process 
to ensure there is no duplication of benefits. Recipients will be asked 
to sign a waiver of their privacy rights so that the State can obtain 
the appropriate information from FEMA and all other Federal agencies.
    The State has issued a Solicitation for Offers to provide program 
management services for the homeowner and rental programs. The SFO 
seeks the best available management firm to assist in the 
implementation of these programs. The State will have staff assigned to 
monitor the services being provided under the contract.
    In addition to the accountability mechanisms that have been 
implemented in response to the hurricanes, the State has long had a 
number of processes and procedures in place to avoid fraud, abuse and 
mismanagement. The Legislative Auditor serves as the watchdog of public 
spending, overseeing more than 3,500 audits of State and local 
governments and their related quasi-public enterprises. Conducting 
independent financial and performance audits of the State's agencies, 
colleges, and universities, auditors find ways to improve government 
and identify critical issues to protect public resources and tighten 
government control systems. When necessary, auditors follow up on 
allegations of fraud, waste, or abuse. The Legislative Auditor will 
perform an annual audit of the DOA.
    In addition, the State has an established Office of the Inspector 
General. The office's mission is to help prevent waste, mismanagement, 
abuse, fraud and corruption in the executive branch of State government 
without regard to partisan politics, allegiances, status, or influence. 
The Inspector General is appointed by the Governor.
    The Office of Finance and Support Services (OFSS), a section of the 
DOA, has established clear designation of responsibilities in order to 
ensure separation of duties. This separation of duties, along with 
other established operational policies and procedures, provides 
assurance that fraud cannot be accomplished without collusion among 
employees in separate areas.
    The OFSS is responsible for payments, Federal draw down requests, 
and State and Federal financial reporting. The OCD is responsible for 
the day-to-day administration of the CDBG program. Their staff reviews 
all requests for payment and accompanying invoices to ensure costs are 
reasonable and within the scope of the activity funded. Two signatures 
are required on a request for payment prior to being sent to OFSS for 
payment. All payment requests are reviewed for proper authorized 
signatures prior to input into the financial system for payment. One 
employee actually inputs the properly authorized payment request into 
the financial system and the request must be approved in the system by 
the payment unit supervisor. Through financial system security, no one 
person can both input and approve a payment request.
    The payment management unit of OFSS provides information to the 
appropriate accounting unit so that Federal funds can be drawn. The 
Federal draw down request is reviewed and approved by a supervisor 
prior to the draw down request being processed. All funds are 
electronically transferred to the State Treasurer's central depository 
account to be used to liquidate the payables. The financial reporting 
of the expenditure and revenue activities is prepared by the 
appropriation accounting unit. All reports are prepared by one employee 
and reviewed by the appropriate manager prior to release of the report/
statement.
    In addition, the State will hire an internal auditor who will be 
placed within the OCD to oversee the internal functions of this office. 
The auditor will report to the Commissioner of Administration and will 
make reports to the LRA Audit Committee as requested.
    The State follows the State Procurement Code and all other sub 
recipients are required to follow Title 24 Part 84 and Part 85. The 
monitoring plan outlines the requirements that must be followed.
    Question. How would those spending controls and procedures compare 
to how the Federal Government is spending its money through FEMA?
    Answer. This is a question that would be more appropriately 
answered at the Federal level.
    Question. Governor, within the housing program that you have 
outlined, are funds available for preservation of historic structures 
and housing?
    Answer. The State does not explicitly reserve funds for historic 
preservation. However, home valuation will incorporate the historic 
value of structures. This is the value on which we base our assistance.
    Question. Within the portion of the funds you are going to allocate 
for economic development, how will this be spent? What kind of economic 
catalysts will be provided in this plan to jump start community 
rebuilding?
    Answer. Currently, we have $100 million dedicated to continuing our 
Bridge Loan program to provide gap funding for businesses awaiting SBA 
loans and insurance payouts. An additional $250 million will be used on 
other programs to provide small business loans, technical assistance, 
and workforce training initiatives so that the State's workforce has 
necessary assistance to sustain our struggling businesses.
    Question. There has been an issue raised about how the housing 
money will be used should the supplemental appropriations be tied to 
hazard mitigation. Are you confident that such a hazard mitigation 
approach will enable Louisiana to encourage the rebuilding and 
reestablishment of communities--or will it simply take existing 
neighborhoods out of commerce by turning them into parkland?
    Answer. We are confident that any required relocations will be done 
with community input in a safe and smart manner based on well 
considered community plans. Buyouts, elevations, and other mitigation 
efforts are key components of this program. However, requiring the 
entire $4.2 billion of proposed assistance follow the rules of the 
Stafford Act Hazard Mitigation Grant Program (MNGP) would severely 
impact our ability to implement ``The Road Home'' housing program we 
have designed because it would essentially require that $5.9 billion of 
funding be spent in accordance with those narrow rules (counting the 
$1.7 billion from HMGP plus the $4.2 billion in CDBG).
    Question. One of the chief benefits of the Baker Bill that was 
sponsored by Congressman Richard Baker and Sen. Mary Landrieu was that 
it would provide an aggregating mechanism to rebuild communities by 
reassembling land, cleaning it off and reselling it. Without the Baker 
bill, how can this be done through the CDBG funds you propose to use 
for housing?
    Answer. The goal of Congressman Baker's proposal was to buy out 
individual homeowners on an aggregate basis, allowing for the wholesale 
redevelopment of neighborhoods. The goal of The Road Home Homeowner 
Assistance Program, on the other hand, is to support the rebuilding and 
resettlement decisions of individual homeowners by helping them get 
back into a home. The Road Home will rebuild neighborhoods by providing 
the most generous incentives to homeowners that choose to reinvest in 
impacted communities.
    The Road Home does allow homeowners to sell their properties to the 
State and relocate elsewhere. It is the State's intention that property 
acquired through the housing program should be put back into the stream 
of commerce where it is safe to do so. Further, development plans for 
acquired land should be directed at the community or local level, such 
as by a local land management/development entity or unit of local 
government. The LRA will consider requests and approve plans for 
entities applying for land management authority.
    Finally, as an additional way to jump-start development in the 
communities that lost the most housing, the proposed Action Plan 
amendment detailing The Road Home programs includes a Land Assembly 
component. The program will provide seed money to acquire multiple 
properties in good locations for replacement housing and ``package'' 
them for sale or grant to maximize further affordable housing 
development--for example, to developers using CDBG-supported LIHTC tax 
incentives to develop rental housing, to supportive housing developers, 
to self-help ownership housing developers, etc. This program component 
will operate only in those jurisdictions where:
  --These activities are requested or supported by local governments; 
        and
  --Local governments have substantially engaged in the planning work 
        required to target areas that are suitable for the development 
        of replacement housing.
    A total of $2,070,000 of CDBG funds are budgeted for capital to 
purchase residential properties as well as operating costs. The capital 
used to purchase properties will be recycled through sales of 
properties to developers.
    Question. In terms of the housing piece that's tied to FEMA hazard 
mitigation, how will Louisiana and its local governments fund the 25 
percent match required to use this funding?
    Answer. Louisiana and local governments will meet the required 
State and local match through the use of available funds expended in 
compliance with the HMGP rules.
                                 ______
                                 
                 Questions Submitted to Hon. Rick Perry
              Questions Submitted by Senator Arlen Specter

               COMMUNITY DEVELOPMENT BLOCK GRANTS (CDBG)

    Question. The President's fiscal year 2007 budget includes a 
proposal to consolidate currently 18 economic development programs into 
2 programs--HUD's CDBG program and a Regional Development Account 
within Commerce's Economic Development Administration. In fiscal year 
2006, Congress funded these 18 programs at a combined level of $5.3 
billion. The fiscal year 2007 budget proposes only $3.36 billion for 
both programs--a reduction of nearly $2 billion below fiscal year 2006. 
I am aware that this Supplemental Appropriations request would provide 
$4.2 billion for the CDBG program to be used for flood mitigation 
through infrastructure improvements, real property acquisition or 
relocation, and other means to reduce the risk of future damages and 
loss in Louisiana.
    Do you anticipate that the $4.2 billion will fully meet your needs 
for flood mitigation, infrastructure improvements and property 
acquisition or relocation? How would the proposed cuts to the CDBG 
program impact your ability to reduce the risk of damage in the future?
    Answer. We believe this question to be directed to Governor Blanco.

                          FEMA DISASTER RELIEF

    Question. So far, Congress has provided about $9.029 billion in 
housing assistance, debris removal, public assistance and individual 
and household assistance through the Disaster Relief Fund. 
Additionally, Congress has provided $669 million in Community Disaster 
Loans, a loan program that will help keep essential services online in 
the hardest hit communities, including a $120 million loan approved for 
the City of New Orleans. It is my understanding that this Supplemental 
Appropriations request would provide an additional $9.4 billion to FEMA 
to continue to fund its disaster assistance and benefits programs and 
another $400 million for FEMA's Community Disaster Loan Program. This 
request more than doubles funding from FEMA going directly to 
households, individuals and local communities.
    Have you, as Governors, identified and planned priorities on how to 
direct Community Disaster Loans and public assistance?
    Answer. This funding was only allocated to Louisiana and 
Mississippi in the last round.
                                 ______
                                 
            Questions Submitted by Senator Richard C. Shelby

    Question. In addition to the transport of commerce, waters 
surrounding our States provide billions of dollars in economic impact 
to each of our States every year through revenue generated by 
commercial, charter and recreational fishermen and oystermen. What 
progress has been made to get these industries up and running again? 
What more needs to be done?
    Answer. In the Texas Rebounds document, Governor Perry requested 
approximately $150.0 million to offset agricultural and forestry 
losses. Among these losses is $15.0 million attributable to the fish 
and shellfish industry. Texas shrimp account for one-third of the total 
number of shrimp harvested from the Gulf of Mexico. Texas received 
$712,500 out of $25 million from USDA available to aquaculture shrimp 
producers affected by the 2005 hurricanes.
    The fish and shellfish industry lost a significant number of boats, 
many of which were uninsured. These boats were owned outright by many 
families and had been passed down within those families. Since this 
business is primarily a cash business, many of these family businesses 
have not recovered and those families are requesting help from State 
and local governments for the first time.
    Question. All of our States rely heavily on our navigable waters 
for the transportation of commerce. Katrina and previous hurricanes 
have caused significant damage. Have the actions taken by the Army 
Corps of Engineers and the Coast Guard rectified this situation and 
restored commerce to our waterways?
    Answer. The Corps of Engineers and the Coast Guard worked together 
to get the ports up and running; however, additional funds are needed 
to fully restore the ports. In the Texas Rebounds document, Governor 
Perry requested $59.0 million to address unreimbursed damages suffered 
by the Jefferson County Navigation District as a result of Hurricane 
Rita. About $31 million was appropriated to begin repair of the Sabine-
Neches waterway and jetties.
    Immediately after the storm, the Corps of Engineers along with the 
U.S. Coast Guard, National Oceanic and Atmospheric Administration and 
Geological Information Service assessed the damage to the State's coast 
and shipping channels. The Sabine-Neches Waterway was opened to 
shipping 6 days after Hurricane Rita made landfall. The Corps of 
Engineers estimates that Rita placed more than 7.9 million cubic yards 
of shoaling (silt) material into waterways essential to commerce and 
industry along the Texas Gulf Coast.
    Jefferson County is the home to the Ports of Beaumont and Port 
Arthur and is the main intersection for goods flowing through the Gulf 
Intercoastal Waterway (GIWW). Hurricane Rita destroyed the Navigation 
District's aging flood barriers, damaged jetties, deposited debris and 
hastened silting of area channels, threatening the flow of commerce 
through the region's ports and waterways.
    The Beaumont portion of the waterway, which includes public and 
private terminals on about a 20-mile stretch of the Neches River from 
Beaumont south to the Rainbow Bridge, is the fourth-busiest shipping 
channel in the United States. Last year, the Neches River handled 
85,540,979 tons of cargo, most of which was crude oil and refined 
petroleum products. Cargo handled by the public Port of Beaumont is 
also included in that total. The Port Arthur section of the Sabine-
Neches Waterway last year handled more than 27 million tons of cargo. 
Much of our Nation's refinery capacity and petrochemical manufacturing 
is concentrated along the Sabine-Neches Waterway. Port of Beaumont 
suffered only moderate damage from Hurricane Rita. Within 4 days of the 
storm, the port was able to resume cargo operations. The port loaded 
its first ship only 6 days after Rita, and full cargo operations 
resumed, when the port's grain elevator went back into service November 
10.
    Question. We have all heard serious concerns regarding proper 
management of Federal funds appropriated thus far. We as Congress must 
continue to conduct oversight of Federal agencies involved in the 
recovery process. What are you as Governors doing to ensure funds sent 
to your States are being used in an honest and efficient manner?
    Answer. Almost all funds for the recovery effort are being directed 
towards State agencies. These agencies are issuing the funds through 
established grant programs. For money that flows through the State, 
these funds will be distributed and monitored in compliance with any 
and all Federal requirements and State laws. The State has extensive 
experience with most of these Federal funds and the mechanisms are 
already in place to ensure that Federal funds are spent for their 
intended purposes through those monitored grant programs. Additionally, 
most of our agencies have significant anti-fraud programs as a result 
of Governor Perry's anti-fraud initiative, including an aggressive 
Inspector General at the Texas Health and Human Services Commission. 
Finally, we will be accepting invitations to work with Inspectors 
General from Federal agencies such as the Department of Housing and 
Urban Development.
    Question. In hindsight what is the most important action or actions 
that can be taken by the Federal Government on behalf of the affected 
citizens before and after a catastrophic Hurricane?
    Answer. The most important reform the Federal Government can enact 
is to provide a single point of contact during a disaster so States do 
not have to navigate various bureaucratic mazes to get things done.
    Federal resources are very important. Each Federal agency has a 
specific role and it needs to perform that role well. For example, 
FEMA, the Coast Guard, the Corps of Engineers and the military all have 
their own roles in a disaster that differ from State, local and faith-
based and non-profit roles.
    Advance planning and practice for hurricanes with State and local 
first responders ensures everyone knows their appropriate role and can 
act in a cohesive fashion during and after a disaster. Coordination and 
cooperation between the Federal Government, State and local 
governments, faith-based and non-profits is essential.
    One of the most important activities after an event is for the 
Federal Government to fulfill its promises made to State and local 
officials prior to, during and after the disaster. State and local 
governments must have confidence that, when Federal disaster officials 
direct them to take action, the assured reimbursement is in fact 
authorized by that agency and will be forthcoming. There were promises 
made during Katrina and Rita to State and local officials and 
ultimately to local citizens that have not been kept. The fulfillment 
of these promises will affect States' willingness to help their 
neighbors in the future.
                                 ______
                                 
               Questions Submitted to Hon. Haley Barbour
              Questions Submitted by Senator Arlen Specter

    Question. Do you anticipate that the $4.2 billion will fully meet 
your needs for flood mitigation, infrastructure improvements and 
property acquisition or relocation? How would the proposed cuts to the 
CDBG program impact your ability to reduce the risk of damage in the 
future?
    Answer. This question seems to be directed to Governor Blanco.
    Question. Have you, as Governors, identified and planned priorities 
on how to direct Community Disaster Loans and public assistance?
    Answer. While the State of Mississippi is required to guarantee 
loans to local entities of government, the State does not decide how to 
direct these loans. Local governments apply to the Department of 
Homeland Security, and that Federal agency decides how to direct these 
loans. However, the State of Mississippi is providing technical 
assistance and support to our local governments and we are guaranteeing 
the loans, as required by Federal law.
                                 ______
                                 
            Questions Submitted by Senator Richard C. Shelby

    Question. In addition to the transport of commerce, waters 
surrounding our States provide billions of dollars in economic impact 
to each of our States every year through revenue generated by 
commercial, charter and recreational fishermen and oystermen. What 
progress has been made to get these industries up and running again? 
What more needs to be done?
    Answer. A key to restoring these vital industries is removing the 
debris caused by Hurricane Katrina from our coastal waterways. This 
debris causes significant waterway hazards. The Corps of Engineers and 
FEMA are working in cooperation with our State's Department of Marine 
Resources to remove this debris as quickly as possible, for which I am 
grateful.
    For our fish, shrimp, and oyster populations to thrive, we must 
embark upon a significant environmental restoration effort to rebuild 
their habitats which have gradually eroded after many storms, 
especially Hurricane Katrina. With the assistance provided in the 
Supplemental of December 2005, we have begun on a small number of the 
necessary projects for reef and tidal marsh restoration. However, much 
more needs to be done. This should be an effort which addresses the 
entire gulf coast.
    Question. All of our States rely heavily on our navigable waters 
for the transportation of commerce. Katrina and previous hurricanes 
have caused significant damage. Have the actions taken by the Army 
Corps of Engineers and the Coast Guard rectified this situation and 
restored commerce to our waterways?
    Answer. They are working in partnership with the relevant State 
agencies to accomplish this mission, but the task has not been 
completed.
    Question. We have all heard serious concerns regarding proper 
management of Federal funds appropriated thus far. We as Congress must 
continue to conduct oversight of Federal agencies involved in the 
recovery process. What are you as Governors doing to ensure funds sent 
to your States are being used in an honest and efficient manner?
    Answer. As far as I am aware, the State of Mississippi is the first 
State that has ever undertaken a pre-audit process as ambitious ours. 
Before the State releases Federal public assistance funds, the State 
performs an audit of the project. Usually this audit happens several 
years after the initial obligation. It is our expectation that this 
will save local, State, and Federal Government much time, money, and 
trouble in the future.
    In addition, we have developed internal and external controls on 
the innovative program the State is managing with the Department of 
Housing and Urban Development. HUD has had teams of auditors in the 
State at every stage of the process and we welcome their attention.
    Question. In hindsight what is the most important action or actions 
that can be taken by the Federal Government on behalf of the affected 
citizens before and after a catastrophic Hurricane?
    Answer. When local and State supply systems are strained beyond 
capacity, the Federal Government can provide resources to supplement 
local efforts, in accordance with the National Response Plan. These 
resources need to be sufficient and delivered quickly and in a fashion 
that is transparent to State officials who are responsible for 
coordinating the response effort.
                                 ______
                                 
             Question Submitted by Senator Mary L. Landrieu

    Question. If you all could be in agreement of the percentage of 
housing damage, so, as we allocate these housing dollars, we can do it 
as fairly as possible, and not underfund anyone at the table, that 
would be helpful.
    Answer. I do not have any expertise on the amount of housing damage 
in other States.

    Chairman Cochran. If you have any other comments or 
thoughts--we're going to miss a vote--and I don't think that's 
necessary if we can go to the floor now and cast that vote.
    Governor Riley. Mr. Chairman----
    Chairman Cochran. Governor Riley.
    Governor Riley [continuing]. We don't have this opportunity 
very often to talk to the chairman. Two things coming up. We've 
got 3 months before we have to be prepared for the next 
hurricane season. I think all of us have developed plans that 
will help mitigate some of the damage that we've had before. I 
hope you will give us the flexibility to implement each one of 
the State's plans.
    Second thing, while we've got you, as we make a 
determination this year about how you score homeland security 
dollars, I hope we don't ever get to the point that we take 
natural disaster out of that mix, because we know that they're 
going to happen. I don't know if a terrorist will ever attack 
Alabama. We know a hurricane will. That is a----
    Governor Blanco. Amen.
    Governor Riley [continuing]. That is a large part of the 
money. And if we don't have the ability to factor natural 
disasters in, all of these gulf coast States will be at a 
disadvantage.
    Chairman Cochran. Yeah. Thank you, Governor.
    Governor Riley. Thank you.

                            COMMITTEE RECESS

    Chairman Cochran. Very thoughtful statement.
    Thank you all for your cooperation with the committee.
    The committee is recessed.
    [Whereupon, at 11:30 a.m., Tuesday, March 7, the committee 
was recessed, to reconvene at 9:30 a.m., Wednesday, March 8.]


            SUPPLEMENTAL APPROPRIATIONS FOR FISCAL YEAR 2006

                              ----------                              


                        WEDNESDAY, MARCH 8, 2006

                                       U.S. Senate,
                               Committee on Appropriations,
                                                    Washington, DC.
    The committee met at 9:35 a.m., in room SD-106, Dirksen 
Senate Office Building, Hon. Thad Cochran (chairman), 
presiding.
    Present: Senators Cochran, Domenici, Bond, Burns, Gregg, 
Bennett, Hutchison, Allard, Kohl, Murray, Durbin, and Landrieu.

               OPENING STATEMENT OF SENATOR THAD COCHRAN

    Chairman Cochran. The committee will please come to order. 
The committee convenes this hearing this morning to hear from 
witnesses from the administration, which include Mr. Michael 
Chertoff, Secretary of the Department of Homeland Security; Mr. 
Alfonso Jackson, Secretary of the Department of Housing and 
Urban Development; Assistant Secretary of the Army John Paul 
Woodley. We appreciate very much your being here.
    We are considering the President's request for supplemental 
appropriations to fund the Federal Government's response to the 
disasters that occurred on the gulf coast of our country last 
year in the form of hurricanes. We have learned a great deal 
already about the response of the Federal Government, which has 
been very generous up to this point, and we appreciate the 
assistance and leadership provided by members of the 
administration in this recovery effort.
    The President is requesting $19.8 billion to assist the 
region in its recovery from Katrina, Rita, and Wilma. Earlier 
appropriations that have been approved by Congress have been 
used to provide emergency assistance to the victims of the 
hurricanes, as well as funds for removing debris and rebuilding 
homes, businesses, schools, roads, bridges, and levees that 
were damaged or destroyed by the hurricanes.
    I'm pleased that we have other members of the committee 
here this morning. I know there are conflicts in some 
schedules, particularly Senator Domenici, who's supposed to be 
chairing a hearing right now of another committee. And, at this 
point, I'm going to yield to Senator Domenici for any comments 
of questions he has, and then we will recognize other Senators 
for opening statements, and then proceed to hear from the 
witnesses.
    Chairman Cochran. Senator Domenici.

                 STATEMENT OF SENATOR PETE V. DOMENICI

    Senator Domenici. Thank you very much, Mr. Chairman. And 
thank you for being here this morning, Secretaries.
    I have just a few moments. I will take just a few moments 
of the committee's time to discuss the levee situation, and 
then we'll revert back to you, Mr. Chairman, for your regular 
completion of the hearings.
    There's been some discussion, Secretary Woodley, about 
whether we are constructing the levees adequately, and how we 
are going about doing it. I note the attendance of General 
Strock, the head of the Corps. Thank you for coming. We may 
need you in a moment. Who knows?
    There have been press stories that contend that you're not 
using the right soil, and matters of that type. So, let me go 
right to that issue and ask you about the article that appeared 
in recent days questioning, No. 1, the design and the stability 
of the restored levee system. The Washington Post reported that 
National Academy of Science team had found that the levee 
repairs are likely to fall again, because they've been built on 
substandard soils.
    Secretary Woodley, would you respond to this, with 
reference to the soils and exactly what you are doing to assure 
that the right soils are being used to reconstruct the levees?
    Mr. Woodley. Yes, Mr. Chairman. Thank you so much for the 
opportunity to address that matter.
    The reports are not coming with--in reference to your 
question--say that these reports are not coming from the 
National Academy of Science. All right? The National Academy of 
Science is involved in an independent review of the engineering 
studies that we have underway to determine the precise 
character of the performance of the levees in the incident for 
Hurricane Katrina.
    There is a group from the National Science Foundation, 
which is a different organization entirely, that is doing work 
on this. And they are certainly very distinguished engineers, 
some of them from the University of California at Berkeley. And 
while there is--other than the--their practice that they have 
of releasing their correspondence with the agency to the press 
before they actually present it to the agency, we have a great 
deal of respect for them and their professional credentials, 
and intend to look very closely into all the concerns that they 
have addressed.
    In particular, I personally--Lieutenant General Strock and 
I both--personally visited the work underway on the St. Bernard 
levee, which is the subject of these reports, shortly after the 
first report came out that substandard soils were being used. 
And I was very much impressed with the professionalism of the 
Corps personnel and with the dedication and professionalism of 
the contractors that were being employed. They indicated to me 
that the soils that they were using to construct the levees 
were very carefully tested as to their moisture content, their 
clay content, and they were, in every way, suitable for the 
purpose that they were being placed. Certainly, we have a great 
deal of concern about the quality control and quality 
assurance, and we will, having this new letter from this 
California group, we will take that very seriously, and we'll 
redouble our efforts to ensure that these are properly done.
    But my personal observation, from walking the site--and I 
confess, not being an engineer, my personal observation's not 
worth a great deal, but--in this context, but I was accompanied 
at that time by the Chief of Engineers, and by many 
distinguished members of the Corps of Engineers, who have many 
years of experience in levee construction and design, and they 
believe that the materials being used are being carefully 
tested. I know for certain, for instance, that we are going as 
far afield as Alabama to bring in suitable materials by barge, 
at enormous expense, because, as is well know, the material--
some of the materials available near--at or near the site are 
not suitable for construction of levees.
    Senator Domenici. Well, Mr. Secretary, I very much 
appreciate this, but now we have to get something more specific 
than this, than your observations. I don't want your 
observations. I'm reading a news article that says, 
``Lieutenant General Carl Strock, head of the Corps of 
Engineers, told President Bush, in person in a briefing, that 
100 miles of the 169 miles of the levees that were damaged have 
been restored.'' He repeated later for reporters at the White 
House, he said, ``We are using the right kind of material. 
There is no question about it.''
    Now, do we need to get that authenticated or can you state 
that for the record?
    Mr. Woodley. I will state that for the record.
    Senator Domenici. Now, I wonder, Mr. Chairman, since this 
is a very big issue, could we ask the General to just step up 
and make that statement? I think that's the most important 
thing we're talking about.
    Chairman Cochran. General, if you're available, we'd 
appreciate your taking a seat at the witness stand and 
responding to Senator Domenici's questions.
    Senator Domenici. Thank you, Chairman.
    General Strock. Senator, I would be----
    Senator Domenici. General, would you proceed to answer this 
entire question? First, has the President asked you about this 
issue?
    General Strock. Yes, sir, he has. He asked me if there was 
substance to that allegation that we're using substandard 
materials. And I told him, no, there was not, that we are fully 
confident with the materials we're using.
    Sir, we have put over 1 million cubic yards of material on 
these levees. And I think that certainly somewhere within that, 
someone could go somewhere in the system and perhaps find some 
area where a small amount of unsuitable material might have 
gotten into it, particularly in the early days. But I have, as 
the Secretary said, been onsite myself. Granted, it's a 
relatively small section that I personally observed. And I have 
the assurance of my staff that we are very carefully 
controlling the quality of the material going in and the way 
it's being placed. And we're going in, after the fact, to 
ensure that the standards are being met.
    The allegations that were presented were first presented to 
me formally last night in a letter from Dr. Seed from the 
University of California. And, for the first time, I have very 
specific locations and explanation of his concerns. We will 
take those on, sir, and we will go to those sites, and we will 
confirm or refute his concerns.
    I do not have a reason to challenge the professor. He is a 
distinguished academician and is a very capable man. So, we 
must take his concerns seriously. And we'll do that.
    Senator Domenici. So, what you're saying is, he may have 
found certain areas of testing where he found some materials 
that you are now going to go look and see what that means. But, 
overall, your position is, the levees are being built back with 
appropriate materials?
    General Strock. Yes, sir. That's correct. And, in fact, 
people on the site have told me, anecdotally, that some of the 
samples taken were from areas of rejected materials that were 
set aside and not intended to be used on the levee.
    Dr. Seed does not agree with that. But we'll get into it, 
sir, and we'll determine exactly what he's concerned about.
    Senator Domenici. Are you bringing materials from far away 
in order to meet your standards?
    General Strock. Yes, sir, we are. We're bringing materials 
from Mississippi, and, in some cases, far away from Alabama--as 
Alabama, by truck and by barge, because the materials clearly 
are a challenge in the area.
    Senator Domenici. Thank you very much.
    To date, Congress has provided you with $3.3 billion for 
the hurricane recovery. Approximately $2.7 of that have been 
directed toward Louisiana. What's the status of the recovery 
efforts with reference to a hurricane system in New Orleans and 
South Louisiana, Mr. Woodley? Would you be as brief as you 
could?
    Mr. Woodley. Yes, sir. The repairs of the levees are very 
much underway. We expect to have all of the repairs of the 
damaged sections completed by June 1.
    Senator Domenici. All right. What level of protection will 
be provided for New Orleans by the beginning of the hurricane 
season, which is now less then 3 months away?
    Mr. Woodley. We believe that the levees that we'll provide 
at the beginning of the hurricane season will provide a level 
of protection equal to the authorized level of protection for 
the currently authorized projects.
    Senator Domenici. And that's what?
    Mr. Woodley. That is defined by the standard project 
hurricane for the--for each of the projects. And that is--it 
varies--each project has a different standard project 
hurricane. But in very--it's a very complex system, and I would 
have to provide that reach by reach and area by area, but it--
because it differs from one area to another.
    Senator Domenici. Back to where it was before the 
hurricanes?
    Mr. Woodley. Yes, sir.
    Senator Domenici. Mr. Chairman, I'll submit three other 
questions for the record, and I thank you very much for 
permitting me to get this in ahead of schedule.
    Chairman Cochran. Thank you, Senator, for your being here 
and your leadership and participation in this hearing.
    Senator Bond.

                STATEMENT OF SENATOR CHRISTOPHER S. BOND

    Senator Bond. Thank you very much, Mr. Chairman.
    My colleague and copartner in the Treasury, Transportation, 
HUD appropriations bill is here, as well. I, unfortunately, 
have to be--supposed to be on the House side in 5 minutes, but 
since the THUD bill has so much importance, there's some things 
I want to get on the record.
    The President's request is for over $4.5 billion for 
Katrina supplemental in our bill. And the subcommittee and the 
committee play a vital role in the recovery. The most recent 
supplemental provided $11.5 billion of CDBG unmet-needs 
funding. None of these funds have been spent, because no State 
has submitted a detailed plan on how we'll use CDBG funds, 
despite a period of some 6 months since Katrina. I'm very 
disappointed by the lack of efforts by States to produce 
comprehensive plans. Nevertheless, while no plan has been 
submitted for these CDBG funds, there is an extra $4.2 billion 
on the table for CDGB, ostensibly for Louisiana.
    I don't believe this is any way to run a program. The 
American public expects planning and accountability and we 
expect results. I don't want the citizens of the gulf 
fantasizing on the prospect of unlimited billions of dollars, 
when we haven't had comprehensive plans of accountability and 
benchmarks.
    That having been said, I'm pleased that the State of 
Mississippi has worked to develop a consensus plan and strategy 
that should be a model for other gulf States. And, while more 
needs to be done, I expect Mississippi to move forward with its 
plan very soon. Nevertheless, for every gulf State, we need a 
system to ensure these funds are well spent, reflect a 
comprehensive plan with strong public support, and that there 
is a system of accountability that will limit the risk of fraud 
and abuse.
    In conclusion, I support the use of emergency CDBG funding 
for Mississippi and Louisiana, both of which suffered tragedies 
of almost biblical dimensions. I have no complaints about the 
funding we've already provided. Nevertheless, I'm very much 
concerned that senior staff at HUD may have advised Texas that 
it would be getting additional significant CDBG funds, even 
while the administration expressly limited those funds to 
Louisiana.
    I strongly recommend that Congress invest in additional 
Inspector General resources to ensure all the emergency CDBG 
funds are used correctly and well. And I would also recommend 
and urge my colleagues that we only make $1 billion available 
initially in additional CDBG funds, with the remaining $3.2 
billion in CDBG funds held in reserve subject to our release 
when the State meets certain benchmarks and goals, and only 
when fraud and abuse have been demonstrably contained.
    I, again, urge the additional CDBG emergency funds be 
limited to Mississippi and Louisiana. I understand the State of 
Texas is seeking additional CDBG funds based on costs 
associated with taking on 400,000 or more displaced families. I 
know there are costs and burdens, but I need to be convinced 
that they should be compensated. Texas, in the best role of 
traditional Judeo-Christian charity, provided benefits, they 
took in displaced families who receive benefits, fill empty 
housing, and take on important jobs. And that should be part of 
the calculus, assuming the Federal Government should pay this--
for the good works of the citizens of Texas. I think it's time 
we get to being a good neighbor, and not a paid companion, if 
that is strictly charity.
    Chairman Cochran. Thank you, Senator Bond.
    Senator Murray.

                   STATEMENT OF SENATOR PATTY MURRAY

    Senator Murray. Well, thank you, Mr. Chairman, for holding 
this hearing.
    Secretary Chertoff, Secretary Jackson, Secretary Woodley, 
thank you for being here today to talk about the tragic 
situation in the gulf coast and what the administration now 
plans to do to rebuild and revitalize the communities that have 
lost so much and need, so badly, our help, and, importantly, 
today, to hear what you are doing to ensure that devastation of 
this magnitude never impacts another American community again.
    And, frankly, I can't say I'm very surprised that we're 
sitting here today having this conversation. As the saying 
goes, ``An ounce of prevention is worth a pound of cure,'' and, 
unfortunately, time and time again we have received budget 
requests from the administration that have failed to invest in 
our communities and our infrastructure and things that will 
ensure America's strength. The ounce of prevention just seems 
to be never a priority for this administration. And now I think 
we're all paying for the cure.
    By failing to smartly invest here at home in our roads and 
in our levees and in our housing infrastructure and our ports 
and border protection, our country's strength has been 
undermined, and it has put our American communities at risk.
    Hurricane Katrina made it crystal clear that if we do not 
make smart investments in our communities today, we risk 
disaster and greater costs in human life and in infrastructure 
and in economic loss down the line.
    The question is whether we are wise enough to learn from 
this tragic lesson. If we continue to fail to properly invest 
in our ports and in our borders, in our crumbling 
infrastructure, in educating our children, energy independence, 
then we only set ourselves up for future emergencies and future 
hearings like the one we're having today.
    I think it's time to change course, and I'm concerned that 
this administration's budget priorities and judgment are--have 
not changed. And I'm concerned that rhetoric has taken 
precedence over real action.
    This administration expects Congress and the American 
people to trust them on security and preparedness matters. And 
whether it's the Dubai deal or intelligence issues or preparing 
our communities for natural disaster and possible attacks, I 
have to tell you, my constituents are seeing how they handled 
Katrina, and they are saying, ``Why should we trust them?''
    I think it's time to make our communities, our 
preparedness, and our security a real priority, because I 
believe that Americans deserve a government that shares our 
values and works to make this country strong again.
    And, Mr. Chairman, I would just add that, as ranking member 
of Transportation and Treasury--and Senator Bond has left--I 
just want to raise one issue for this committee. Secretary 
Mineta was not invited to this morning's hearing, because we 
don't--have not received any additional requests for hurricane 
assistance within the DOT. But in the last supplemental, we did 
provide $2.75 billion for highway emergency relief, and we 
believed that amount would be sufficient to cover all the 
pending disaster costs. But in talking with the Federal Highway 
Administration, it's become clear that a number of major 
projects that are associated with Katrina recovery, including 
the replacement of the I-10 bridge in New Orleans, as well as 
Federal bridges in Biloxi, will be a good bit more expensive 
than it was estimated last December. And it now appears that 
our appropriation at the end of last year may be at least $500 
million short of what is needed.
    So, I wanted to raise that issue with you this morning, Mr. 
Chairman, because it may be a matter that we need to address on 
this supplemental before we pass it.
    Chairman Cochran. Thank you very much, Senator Murray, for 
your comments and participation in this hearing.
    I did get a call, incidentally, from Secretary Mineta, 
yesterday, about the approval of funding--to go forward with 
some of these bridge reconstruction projects that you 
mentioned. But we will be paying close attention to the needs, 
and working with your subcommittee and others to try to be sure 
that our response is appropriate.
    Senator Murray. Thank you. I appreciate that.

              PREPARED STATEMENT OF SENATOR ROBERT C. BYRD

    Chairman Cochran. Thank you.
    Senator Byrd was unable to be here this morning for this 
hearing, but he has prepared a statement, and I will ask that 
his statement be included in the record.
    [The statement follows:]

              Prepared Statement of Senator Robert C. Byrd

    Good morning. Today, we continue our series of hearings on 
the President's Emergency Supplemental Budget request for the 
wars in Iraq and Afghanistan and for the Federal Response to 
Hurricanes Katrina, Rita and Wilma. The President has asked the 
Congress to approve $92 billion of emergency spending, 
including $72 billion for the wars in Iraq and Afghanistan and 
nearly $20 billion for the Federal response to the terrible 
hurricanes that struck the Gulf States in August and September.
    Our witnesses today are from the Federal agencies that are 
directly involved in the response to the hurricanes that so 
devastated the Gulf Coast in August and September. I commend 
the chairman for calling these hearings.
    We have much to learn about the Federal response to 
Hurricane's Katrina, Rita, and Wilma. Clearly, the transfer of 
FEMA to the Department of Homeland Security 3 years ago has 
created confusion about the role of the Department, of FEMA, 
and of State and local governments.
    I am very concerned about the decision of the Department of 
Homeland Security to separate the emergency preparedness 
function from the response and recovery functions.
    When our marines go into battle, operational and 
preparedness planning is conducted by the Marine Corps, not 
some other agency of DOD. The Department of Homeland Security 
does not conduct preparedness planning for the Coast Guard. The 
Coast Guard conducts their own planning, and the Coast Guard 
performed brilliantly after the hurricanes. Similarly, the 
Department of Homeland Security does not do preparedness 
planning for the Secret Service.
    Emergency managers at the Federal, State and local levels 
all know that to successfully respond to a major disaster, 
whether it is a natural disaster or a terrorist attack, 
requires coordinated preparedness planning, training and 
exercising. If Federal, State, and local emergency managers and 
first responders prepare and exercise together, they know each 
other and they know their respective roles. When a disaster 
strikes, emergency personnel do not have time to learn these 
roles on the fly.
    Despite this, the Department of Homeland Security has 
stripped the preparedness function from FEMA. Moreover, the 
Department has starved FEMA, State and local emergency 
managers, and first responders of the funds necessary to do 
their jobs effectively.
    Finally, Mr. Chairman, the President has chosen to limit 
his supplemental request to the costs of the wars in Iraq and 
Afghanistan and the response to the hurricanes. It is 
disappointing that he has chosen to request nothing for low 
income home energy assistance, for border security, for 
agriculture disasters, or for preventing or preparing for an 
outbreak of the avian flu. These decisions are regrettable.
    I look forward to the testimony of our witnesses. Again, I 
thank the chairman for calling these hearings.

    Chairman Cochran. Other Senators who have arrived, I will 
recognize for opening statements in the order in which the 
Senators arrived. And I think that being--Senator Hutchison is 
the next person who arrived.
    Senator Hutchison.

               STATEMENT OF SENATOR KAY BAILEY HUTCHISON

    Senator Hutchison. Thank you, Mr. Chairman.
    Mr. Chairman, I feel the need to respond to Senator Bond. I 
think what he said was particularly harsh, and not at all fair 
or realistic. He seemed to indicate that he thought that we 
were asking for charitable contributions for the millions of 
dollars and hours that were put in by volunteers in Texas. That 
is not the case.
    I would point out that Texas received $70 million in CDBG 
grant money out of $11 billion that was put forward. And Texas 
used all of its allocation for regular allocation purposes on 
Katrina victims after Katrina happened. And then Texas was hit 
with Rita. Texas is sitting right on the border with Louisiana, 
where Rita victims are getting a 90/10 Federal response; 
whereas, Texas is on a 75/25 reimbursement. Cleanup has been 
slow. They were not able to even get the electricity in many of 
these places, because they couldn't get the debris cleaned up.
    There was an instant 3 percent increase in the State's 
population. Texas is the second largest State in America. We 
got one new congressional district in a 2-week period. And, in 
addition to the charitable outreach, which is not being asked 
for reimbursement, the police and overtime is estimated now to 
be in the hundreds of millions, and the crime rate has gone up 
in Houston, Texas, to a significant degree, and they are having 
to respond to that.
    We have 38,000 schoolchildren still in the schools from 
Katrina evacuations. The reimbursement rate is $4,000, when the 
normal rate of cost for educating a child in Texas is $6,000. 
And if there are special needs, it is up to $7,500. And there 
have had to be many accommodations and help for the students, 
who were moving in under very trying circumstances and trying 
to fit into a whole new curriculum. So, Texas has absorbed that 
cost.
    And, Mr. Chairman, I do hope that Texas gets some of the 
CDBG money. I really hope that equity is done. Because we 
shouldn't have to spend, on the Katrina evacuees, our regular 
allocation of CDBG money and not have that reimbursed. That is 
not fair.
    I do not think that Texas has been treated fairly, because 
FEMA and the people making up these budgets are going by all of 
the past hurricanes and tragedies in this country. And by that 
standard, you would say: ``What is the damage?'' And you assess 
the damage that is to infrastructure. We have a situation in 
which Texas was not hit by Katrina, but we are absorbing 
enormous costs that should be the Federal Government.
    So, I am going to ask questions of Secretary Chertoff and 
Secretary Jackson. I do believe that--I supported 
wholeheartedly when Missouri asked for hundreds of millions of 
dollars after the flooding the Mississippi River. I have 
supported the victims of California earthquakes and the victims 
of 9/11, in New York. And to all of a sudden take Texas out of 
the mix because we did not get Katrina, but we have 500,000 in 
population that we are providing healthcare, education, and 
housing for, is, in my opinion--it's beyond unfair, and it is 
not the spirit of America, nor is it the spirit of Congress.
    And, Mr. Chairman, I object vociferously to the comments of 
the Senator from Missouri. And I hope that is not the will of 
this committee or the will of the United States Senate.
    Thank you.
    Chairman Cochran. Thank you, Senator.
    Continuing to recognize Senators in the order in which they 
appeared for opening statements, I now recognize Senator 
Bennett.

                 STATEMENT OF SENATOR ROBERT F. BENNETT

    Senator Bennett. Thank you, Mr. Chairman.
    I have some questions of the witnesses, which I will ask 
when we get to that point.
    I have one overall reaction to this whole thing, which I 
hope the witnesses can help us deal with, and that's the 
fundamental question of who's in charge. We have overlapping 
jurisdictions, which are, in some circumstances, unique to 
America, in that we have an elected mayor, we have an elected 
Governor, we have appointed Cabinet officers in a variety of 
departments, all of which have jurisdiction and problems. But 
the impression I get--and I can very clearly be wrong here--but 
the impression I get is that there is not very much 
coordination going on here.
    And everyone has a desire to blame someone else for the 
problem, ``It's all FEMA's problem.'' If you want to get proof 
of that, just turn on the late-night comedians and David 
Letterman and Jay Leno and John Stewart will make it very 
clear, it's all FEMA's problem.
    There are some who say, ``Well, it's all Governor Blanco's 
problem. Louisiana has not requested. Louisiana has not 
implemented. Louisiana has not coordinated in a proper way.''
    And there are those who pick up on some somewhat 
unfortunate comments of Mayor Nagin and say, ``Well, it's all 
his problem.''
    I recognize that this is an unfair comparison, but it, 
nonetheless, comes to mind. When we put on the Olympics in Salt 
Lake City, we had local jurisdictions, we had State 
jurisdictions, we had Federal jurisdictions, and we had the 
International Olympic Committee to deal with. And somehow we 
solved all of those jurisdictional challenges and did not have 
a security incident in what was perhaps the highest profile 
international event after 9/11, where the opportunity for al 
Qaeda or someone else to strike initially appeared to be fairly 
high. And it was very clear that there was somebody in charge. 
Now, the somebody would shift from circumstance to 
circumstance, but the baton of who was in charge was always 
properly handed off. This was declared an event of national 
significance--I've forgotten what the proper term of art was--
because the President was there at the opening ceremonies, the 
Vice President was there at the closing ceremonies, and the 
Secret Service was very much in charge in that period of time, 
so that everyone else, even though they all had their own 
responsibilities, took their orders from the Secret Service.
    I went into the command center dealing with intelligence 
overseas, and there were a variety of intelligence services 
there. The CIA was there. The DIA was there. There were 
intelligence services from other countries there. I don't want 
to get into all of the classified information. But it was very 
clear who was in charge. I was a little bit bemused; it was an 
attractive, relatively young, pleasant young woman. But she was 
from DIA, and DIA was in charge. And everyone else deferred to 
this young woman. Hollywood would not have cast her in that 
role, but she obviously knew what she was doing. And everything 
worked.
    We're asking--being asked to appropriate a very large sum 
of money, and I'm willing to vote for it, as I was willing to 
vote for the earlier sums of money. But Senator Domenici's 
questions and some of the answers are somewhat reassuring. I'm 
delighted to have the General come forward and make it clear 
that at least when it comes to levees, he's in charge, and he 
knows what he's doing. That is, he knows that there is 
criticism, he has dealt with the criticism, he's going after 
sources. And that's reassuring.
    The overall challenge of rebuilding New Orleans is huge, 
and I can understand a sense of difficulty with it. But I would 
hope the witnesses would help--come forward with an 
understanding of who should be in charge, so that when we 
appropriate this money, we're not appropriating this money into 
a black hole. We're putting this money into someone's hands, 
and the lines of responsibility between the Governor and 
Secretary Chertoff and Secretary Jackson and so on should be a 
little clearer, I would hope, as a result of our testimony 
here, so that when the late-night comedians get going about how 
incompetent everybody is, we're in a position to say, ``Wait a 
minute. This is the structure.''
    Structure, somebody in charge, is just as important as 
money. And I hope we can get to that point in this hearing.
    Chairman Cochran. Thank you very much, Senator Bennett.
    Senator Burns.

                   STATEMENT OF SENATOR CONRAD BURNS

    Senator Burns. Thank you, Mr. Chairman.
    I guess, you know, listening to the conversation this 
morning--and this is a good, big chunk of change--I want to say 
to Secretaries Jackson and Chertoff that we hear of all of the 
charity money that was sent to organizations down there for 
relief and to help human beings down there. Do we have an 
accounting of how much money was sent down there, where it 
went, and how it was spent?
    You know, we look at that, and we hear how great the 
numbers are. Then we hear that a lot of that was insured. How 
much insurance money was down there? Had people bought 
insurance to build back their houses or their properties in 
case of a situation like this?
    We never get those numbers together so that we can estimate 
the cost. And I think it goes back to what Senator Bennett 
said: There hasn't been one person down there kind of running 
the show, and it's hard to get information.
    This is a very charitable country we live in. I mean, I 
wrote a check and sent down there. It wasn't the Red Cross, it 
was another organization. But, nonetheless, do we ever take a 
look at that accounting on what happens to that money and where 
it's placed? That's my question here to this committee. I don't 
mind appropriating money to help people out, but I think we 
also have to understand that there's a lot of moving parts down 
there.
    And some of the relief was done by private donors, who 
would take care of a lot of relief of the human suffering that 
went on. And none of us has ever seen devastation in this 
country like the magnitude that was. And I think we just have 
to ask those questions before we start taking the taxpayers' 
money, after they've already sent a check down there. They sent 
one check. Now we're going to ask them for another one to come 
to through the Federal Government to do the same thing.
    I may sound hard and cold, but I think that's the way we 
have to look at it, too.
    Thank you very much.
    Chairman Cochran. Thank you, Senator.
    Senator Allard.

                   STATEMENT OF SENATOR WAYNE ALLARD

    Senator Allard. Well, Mr. Chairman, I, again, would like to 
thank you for these series of hearings. I'm, personally, 
finding them most helpful in understanding--we heard from the 
Governors yesterday, and I'm looking forward to hearing from 
the panel this morning, Secretary Chertoff and Secretary 
Jackson and Assistant Secretary Woodley, hearing your 
perspective on what's happening and how things are progressing 
down in New Orleans.
    I want to join in with the rest of the chorus here, in 
that, you know, I'm looking for a plan of action. I don't see 
anybody coming up with what they want to see New Orleans and 
the Louisiana Delta look like 10 years from now, or 20 years 
from now. And I would assume that most of that is a function of 
local government. If it is, are we helping, working with them 
to provide the resources they need? Are we assisting them so 
that property owners, businesses, local communities 
surrounding--so all the States that are involved can be joined 
together in a united effort? I hope that we can hear some of 
those comments made from your testimony.
    There's no doubt this was the most serious, most severe 
crisis we've faced in this country, as far as a natural 
disaster is concerned. There is an area down here where they're 
prone toward hurricanes. And if we don't do this right, we'll 
be looking at it again.
    And I think we need to recognize that. And, again, I think 
if we had a plan, I think many of us would feel more 
comfortable in allocating more resources. I voted to give the 
$100 billion or so, and now we've got another $20 billion 
that's being requested. And, again, I'd feel, with the rest of 
my colleagues, more comfortable if we just could see how this 
was being spent. And I hope that an effort is being made to 
keep track of those costs. There's bound to be some waste, but 
we need to keep it down to a minimum.
    Thank you, Mr. Chairman.
    Chairman Cochran. Thank you, Senator Allard, for your 
statement and participation in this hearing.
    Senator Durbin.

                 STATEMENT OF SENATOR RICHARD J. DURBIN

    Senator Durbin. Thank you, Mr. Chairman. I thank the 
witnesses who have appeared.

            DHS' EMERGENCY PREPAREDNESS AND RESPONSE TACTICS

    Secretary Chertoff, on September 3, some 6 days after the 
briefing from Mr. Mayfield, you and several top officials in 
the Bush administration held a press conference in Washington 
to tell America and the world what had been done, and what 
would be done, to respond to Hurricane Katrina, what has been 
characterized as the greatest natural disaster in our Nation's 
history. At the press conference, you said, and I quote, ``The 
United States, as the President has said, is going to move 
heaven and earth to rescue, feed, shelter, and restore the life 
and health of the people who are currently suffering.''
    Mr. Secretary, 6 months later, many of Katrina's victims 
are still suffering, still without homes, still without jobs, 
still without basic healthcare. All of them, and all of us, are 
wondering when this nightmare is going to end. Not only has our 
Government and FEMA failed to move heaven and earth, we haven't 
been able to move FEMA trailers to the right location.
    It's important that we're holding this hearing today. My 
colleagues, Senator Landrieu, Chairman Cochran, and our other 
colleagues from the gulf coast State, have told us about the 
many unmet needs of Katrina survivors, not only in that region, 
but now those scattered across the country. We need to hear 
what America is prepared to do to help these members of 
America's family who are still suffering, 6 months after 
Katrina. We need to ensure that the catastrophe within the 
catastrophe, the preparation and response to the hurricane, 
never happens again.
    We knew, before Katrina hit, that it was going to cause 
massive damage. We now know that the President, that you, that 
others in the administration were warned in advance, by the 
Director of the National Hurricane Center, that Katrina would 
do massive damage to the gulf coast, and, quite possibly, the 
levees protecting New Orleans. We've all seen the videotape, 
Director Max Mayfield, August 28, and I quote, ``I don't think 
any model can tell you with any confidence right now whether 
the levees will be topped or not, but that's obviously a very, 
very grave concern.''
    Despite that explicit warning, administration officials, 
from the President on down, repeatedly insisted, in the days 
after Katrina, that no one anticipated the breach of the 
levees.
    At the same press conference I referred to on September 3, 
6 days after the briefing by Director Mayfield, you said, and I 
quote, ``Overflow from the levee, maybe a small break in the 
levee, the collapse of a significant portion of the levee 
leading to the very fast flooding of the city was not 
envisioned.''
    You insisted, and I quote again, ``I think that this major 
breach--not merely an overflow, but this major breach of the 
levee, while something itself that might have been anticipated 
coming together, I think, was outside of the scope of what 
people, I think, reasonably foresaw.''
    Mr. Secretary, if 9/11 was a failure of imagination, 
Katrina was a failure of leadership. I hope that we won't 
quibble over words here. Whether the levees were topped, 
breached, overflowed, the result was the same, and it was 
predicted. New Orleans would flood, and innocent people would 
die. FEMA knew this, not just from Director Mayfield's warning, 
but from the Hurricane Pam exercise conducted in 2004. That 
exercise predicted that a storm of Katrina's strength would 
cause storm waters to flow over the top of the levees, not 
simply breach them, and kill up to 60,000 people in the New 
Orleans area.
    So, Mr. Chertoff, I'd like to ask you to explain your 
statements of September 3, including, and I quote, ``This is 
really one in which--I think, was breathtaking in its surprise, 
and I will tell you, really, that perfect storm of combination 
of catastrophes exceeded the foresight of the planners, and 
maybe anybody's foresight.''
    Like people all over the country, I was stunned and angry 
by our government's failure to adequately prepare for, and 
respond to, Hurricane Katrina. The continued mistakes in the 6 
months since Katrina have only increased our concerns about the 
ability of your Department to respond to any disaster, whether 
it's caused by terrorists or by nature.
    There is evidence of life in New Orleans. There is evidence 
of the resurgence of the human spirit of that great city. It is 
encouraging to see people struggling and trying to get back on 
their feet, trying to get back in their homes, trying to reopen 
their business, trying to restore that wonderful city to its 
station of pride in American history. But I think we all have 
to concede, that great American city is on life support, and 
it's happening on your watch.
    Instead of indignation and determination from this 
administration, too often we sense resignation and more 
bureaucratic doubletalk. We need serious and experienced 
emergency managers, who listen to the warnings of their 
professional staff, and act on those warnings.
    With the start of a new hurricane season only a few months 
away, and the continued threat of a terrorist attack--we are 
told that those threats are always with us--we don't have a day 
to waste.
    Thank you, Mr. Chairman.
    Chairman Cochran. Thank you, Senator.
    We are pleased to welcome, again, our witnesses at this 
morning's hearing. We have received written statements from 
each of our witnesses, and these statements will be printed and 
placed in the record in full. And we invite you to make any 
summary comments or other statements that you would like to 
make at this point, and then we will have an opportunity to 
have questions of the witnesses.
    I'm pleased to start with Mr. Michael Chertoff, Secretary 
of the Department of Homeland Security.
    Welcome, sir.

STATEMENT OF HON. MICHAEL CHERTOFF, SECRETARY, 
            DEPARTMENT OF HOMELAND SECURITY
    Secretary Chertoff. Thank you, Mr. Chairman. And thank you, 
members of the committee.

            DHS' EMERGENCY PREPAREDNESS AND RESPONSE EFFORTS

    I do have a longer statement, which I'll ask to have placed 
in the record, but let me just summarize and make a few 
observations.
    And let me just begin by responding very briefly to Senator 
Durbin's comments of a couple of moments ago, recognizing that 
if he chooses to ask me questions, we'll have opportunity to 
amplify.
    You know, I always feel a little bit of a twinge when I 
have to let the facts get in the way of a good argument. But, 
in this case, the facts do get in the way of a good argument.
    The difference between ``topping'' and ``breaching,'' 
Senator, is a world of difference. And it's a world of 
difference in physics. When you top a levee after a storm 
surge, once the surge is passed, that stabilizes the amount of 
water that's held in the bowl that's been topped. When you 
break a levee, then the water continues to flow in until you 
hit physical equilibrium with the outside source of water--in 
this case, Lake Pontchartrain. And I can tell you that, for 
those who have looked at this issue--and I've certainly spent a 
lot of time looking at it--had we merely had overtopping, this 
would have been a catastrophe, but a lesser catastrophe. I can 
also tell you, since you talk about the Hurricane Pam planning 
process, that planning process, which began in 2003 under this 
administration, has been credited by the leadership of the 
State with resulting in a pre-storm evacuation of approximately 
80 to 90 percent of the people, which was significantly better 
than expected. And without in any sense minimizing the terrible 
devastation and loss of life of 1,200 people, when you consider 
that in comparison with the 60,000 people who were predicted as 
deaths under the Hurricane Pam exercise, I have to say that 
does require us to pause and reflect a little bit about the 
fact that some things were done very well.
    I'm acutely aware of the fact that there were delays in 
getting evacuations, and frustrations involved in getting 
physical control and situational awareness of what went on in 
the city, but I also think you have to look at the fact that we 
had 40,000 rescues, which, even if you look at the Coast Guard 
segment of this, was more than six times the rescues in a week 
that--as compared to the prior year.
    You have to look at the fact that we have put $6.7 billion 
in housing. We had the largest mass migration in American 
history, with the exception of the Dust Bowl. But the Dust Bowl 
took place over a period of decades, and this took place over a 
matter of 3 or 4 days.
    We, at the height of our dislocation, had more than 700,000 
households receiving apartment rental assistance. We sheltered 
hundreds of thousands of people, and we put them in hotels. We 
removed 77 million cubic yards of debris from the coast, which 
is more than the combined total of the 9/11 attacks and 
Hurricane Andrew.
    You know, we've gone through a period of a lot of blame 
assessment, but when you stand back and look at this in 
context, the lion's share of the blame goes to the storm. This 
was, short of a hydrogen bomb, about as big a storm as 
possible.
    And let there be no mistake about it, on Sunday, the 
Sunday--the day before landfall, everybody knew--and I think 
that we--no one has ever suggested to the contrary--that the 
potential here was catastrophic. And that's why we 
painstakingly reviewed, in the course of that now oft-discussed 
videotape, all of the assets that had been pre-positioned, the 
millions of meals ready to eat, the millions of gallons of 
water, the transportation resources that were poised and ready 
to be mobilized. That's why I specifically asked whether the 
Department of Defense, with all the resources of the military, 
had been fully engaged, and was personally assured, on a 
videotape, that that had been done, and it was shown, actually, 
the DOD representative in the room.
    So, I think we have to, as we evaluate what happened, make 
sure that our evaluation is rested on facts, rather than, 
sometimes, supposition or mischaracterization.

                   2006 HURRICANE SEASON PREPARATION

    I do agree with this, though. We are 90 days away from 
hurricane season. In addition to the possibility we could have 
another huge catastrophic hurricane, we have to recognize that 
right now Mississippi and Louisiana are in the middle of 
reconstruction. That means we have partly-built homes, partly-
built buildings, and people are not going to be in the kind of 
shelter that they would normally expect to be in. And, as much 
as we want to accelerate that process, something I have said, 
and I will say again repeatedly and repeatedly and repeatedly 
over the 90 days to come, we have to work to make sure we have 
special evacuation and emergency plans in place to deal with 
what could be other catastrophic hurricanes this summer.
    I have sent people down to meet with the local emergency 
officials. I expect that the FEMA Director, I expect our 
preparedness Under Secretary, and I expect myself personally to 
go down to make sure that we have had a very candid series of 
conversations with Governors and mayors and emergency managers, 
to make sure they've candidly assessed their capabilities; that 
we have a look at the plan, that if the plan needs to be 
adjusted, it gets adjusted; and that if there is a shortfall, 
we get an honest statement of the shortfall, so we can then 
turn to Federal assets to make the adjustments that are 
necessary, going forward. I think if we do that, we're going to 
put ourselves in the position we need to be. It's going to 
require that we not become complacent; to the contrary, that we 
engage all of our organs of power--Federal, State, and local--
to getting ourselves prepared.

                          KATRINA SUPPLEMENTAL

    Let me take a moment, however, to speak about the 
supplemental, which I think is an important element of moving 
forward to continue this process of moving heaven and earth to 
get people back to where they need to be, recognizing that 
heaven and Earth are not going to be moved in a day, or even 6 
months or 1 year. It's going to be a process that will require 
steady application of resources in a way that is accountable 
and prudent.
    We've allocated billions of dollars now for human services, 
housing, disaster unemployment insurance, for public 
assistance, which means rebuilding the infrastructure, whether 
it be roads or public buildings; logistical support for FEMA 
operations; community disaster loans to allow afflicted 
communities to meet payroll and their other responsibilities; 
as well as millions of dollars to allow us to replace damaged 
infrastructure and resources that were consumed in the course 
of our response.
    This supplemental request continues necessary elements of 
this assistance to continue to move forward. Nine point four 
billion dollars of the $9.9 billion that are requested for DHS 
are focused on the Disaster Relief Fund, which should take us 
through what is necessary to complete the reconstruction and 
recovery, in terms of those programs that are part of FEMA's 
responsibility. And that's going to include continued housing 
for hundreds of thousands of people, completing the process of 
getting them trailers, paying for emergency rental assistance 
for hundreds of thousands of people, as well as making sure 
they have other aid that they are entitled to have under the 
Stafford Act. It includes $400 million additional in funding 
for community disaster loans, additional money for 
communications equipment and staffing, so we can get that down 
there in the event of another hurricane or another emergency, 
as well as additional money for Coast Guard, Customs and Border 
Protection, and the Office of Inspector General, to make sure 
those components continue to carry out their responsibilities.
    We are very interested in accountability. We're very 
interested in making sure we can move forward.
    Sometimes people observe that we have a little bit of a 
messy system of government here. It's one that the framers, in 
their genius, foresaw as necessary to disperse power. We have a 
lot of power in the State governments, a lot in the local 
governments, and a lot in the Federal Government. But they are 
not all under one unitary czar.
    I do think that on the Federal level, we have now got 
ourselves well coordinated. Not only do the Cabinet Secretaries 
regularly coordinate, but we have a Federal coordinator who 
reports regularly to the President about what we're doing, 
making sure that we are marshaling all our resources.

                           PREPARED STATEMENT

    I think we're going to have to continue to work with the 
Governors and the mayors to make sure that--sometimes they're 
making tough decisions that need to be addressed if we're going 
to spend this money wisely.
    Thank you, Mr. Chairman.
    [The statement follows:]

              Prepared Statement of Hon. Michael Chertoff

    Mr. Chairman, Senator Byrd and members of the committee, I am 
pleased to appear before the committee to present the Department of 
Homeland Security's supplemental funding request that will further 
strengthen recovery efforts, continue to deliver services to Gulf Coast 
disaster victims and provide for continued recovery of DHS facilities 
and staff impacted in the region. I would like to thank the committee 
for the support provided through the previous supplemental 
appropriations. To date, we have received over $36.9 billion in net 
appropriations for response and recovery efforts associated with 
Hurricanes Katrina, Rita and Wilma and have accomplished a lot with 
those funds. Before beginning to outline our request, I would first 
like to provide additional background on the disaster and some of the 
Department's activities to date.

                    SCOPE OF DISASTER AND ACTIVITIES

    The scope of the damage caused by Hurricane Katrina is 
unprecedented--with some 90,000 square miles of impacted areas--an area 
larger than Great Britain and 3.5 times the area inundated by the Great 
Mississippi flood of 1927.
    Katrina also forced an estimated 770,000 people to seek refuge in 
other parts of our country, representing the largest displacement of 
Americans since the great Dust Bowl migrations of the 1930's.
    The Coast Guard rescued 33,000 people--six times higher than the 
number of rescues in all of 2004. In addition, Federal Emergency 
Management Agency (FEMA) coordinated the rescue of more than 6,500 
people and for the first time deployed all 28 of its Urban Search and 
Rescue teams for a single event. The combined rescues performed by 
these two agencies total almost 40,000--more than seven times the 
number of people rescued during the Florida hurricanes in 2004.
    U.S. Customs and Border Protection (CBP) performed over 1,428 
missions, which included 672 law enforcement, 128 search and rescue, 78 
recovery, 444 hurricane relief, and 97 other logistical support 
missions. During operations, CBP saved over 328 lives; provided food, 
water and other supplies to thousands of people impacted by the 
hurricanes; and donated well over $20 million dollars in seized goods 
and humanitarian aid. The Transportation Security Administration (TSA) 
flew in hundreds of air passenger screeners and Federal air marshals to 
supply ad hoc security during the massive airlift of storm evacuees 
from New Orleans. TSA processed thousands of evacuees. More than 22,000 
people were flown out of New Orleans on military and civilian aircraft; 
in a single day at the Houston airports, more than 50,000 passengers 
were screened--nearly double the traffic on previous peak days.
    As of February 28, 2006, FEMA has committed $6.7 billion to housing 
and other needs assistance to hurricane victims in the Gulf Coast, an 
amount that more than doubles the combined total of Individuals and 
Household Assistance Program (IHP) dollars given for six major U.S. 
natural disasters occurring since 1992. More than 700,000 households 
have received apartment rental assistance under FEMA's Individuals and 
Households Assistance Program ($1.7 billion committed). Through 
February 28, 2006, approximately 69 percent of the debris caused by the 
storms has been cleared in Mississippi; 55 percent in Louisiana. A 
total of 77 million cubic yards of debris have been removed from the 
Coast, overtaking the amount of debris from the September 11, 2001 
attacks and Hurricane Andrew combined--by 20 million cubic yards.

                   SUPPLEMENTAL FUNDS HAVE BEEN USED

    To date, Congress has provided $36.6 billion in supplemental funds 
to FEMA's Disaster Relief Fund (DRF) to support response, relief, and 
recovery activities in the wake of Hurricanes Katrina, Rita and Wilma. 
Given the unprecedented scale of the damage and the Federal response, 
the administration expects FEMA to make full use of these funds for 
programs authorized by the Stafford Act. With the long-term recovery 
efforts continuing, DRF allocations may reach nearly $40 billion over 
the next few months.
    Nearly $31 billion (78 percent) of that amount has already been 
allocated to major program areas including human services (housing, 
disaster unemployment insurance, counseling services and other needs 
assistance); public assistance (including public infrastructure costs, 
State run debris removal, and emergency assistance to States for 
responder overtime, search and rescue, evacuations, and emergency 
sheltering operations); and mission assignments to other Federal 
agencies, including the Corps of Engineers, Department of Defense, and 
Environmental Protection Agency.
    In addition, funds have been used to support FEMA operations in the 
affected States, including logistical support such as travel, 
transportation, temporary staff, communications, and support contracts; 
to purchase water, ice, food, tents, and other materials for victims 
and responders; and for long-term deployment of urban search and rescue 
teams. To date, over $4 billion has been allocated for these 
activities.
    To support essential local government operations, Congress 
authorized $1 billion of loan authority for the Community Disaster Loan 
Program (CDL) in the Community Disaster Loan Act of 2005. The CDL 
program provides loans to local governments who experience at least a 5 
percent loss of annual revenue during the year the disaster occurred. 
The maximum loan amount is 25 percent of the local government's annual 
operating budget or the total anticipated revenue loss during the 
current year and subsequent 3 years, whichever is less. Funds provided 
under the CDL program have supported essential local government 
operations, including law enforcement, fire department schools, and 
public sanitation functions.
    Based on the level of interest expressed by potential applicants in 
Louisiana and Mississippi, FEMA allocated $700 million to Louisiana and 
$300 million to Mississippi. To date FEMA has approved over $539 
million in loans in Louisiana and over $91 million in Mississippi, with 
additional applicants still likely to apply. Loan processing is 
continuing at both the State and Federal level.
    In addition to providing funding to FEMA's Disaster Relief Fund and 
for the CDL program, the Congress has provided funding for other DHS 
agencies to support repair, rebuilding and replacement of equipment and 
facilities damaged in Hurricanes Katrina, Rita, and Wilma.
    The Coast Guard received a total of $206.5 million in emergency 
supplemental funds for Hurricanes Katrina and Rita.
    These funds have supported immediate, incremental logistical costs 
for personnel affected or responding to Hurricanes Katrina and Rita, 
including costs for temporary assigned duty, loss of uniforms, medical 
expenses, activation of Coast Guard Reservists, civilian overtime, and 
the issuing of Permanent Change of Station orders to affected 
personnel. These funds also addressed the infrastructure costs needed 
to make temporary repairs to severely damaged facilities requiring long 
term support, to make permanent repairs to minor damaged facilities and 
Coast Guard infrastructure, to replace and restore lost navigational 
aids, repair or replace severely damaged Coast Guard small boats, and 
replace lost or destroyed Coast Guard property at facilities affected 
by Katrina and Rita in Florida, Alabama, Mississippi, Louisiana, and 
Texas.
    To support longer term needs of the Coast Guard as a result of 
damage suffered, the Congress also provided funding to initiate 
permanent recapitalization efforts to all severely damaged or destroyed 
Coast Guard facilities and other programs directly affected. Specific 
funding allocation includes:
  --$13.5 million to rebuild Station Gulfport, MS;
  --$9.8 million for survey and design work associated with the 
        Integrated Support Command (ISC) New Orleans relocation and 
        reconstruction at the NASA facility in Michoud, LA, including 
        master plan development, geotechnical survey work, 
        environmental assessment, design document specifications and 
        government travel;
  --$17.375 million for Sector New Orleans construction and repairs;
  --$10.2 million for the recovery of maritime distress communications 
        infrastructure; and,
  --$20.2 million for damages and equipment loss associated with the 
        first two National Security Cutters (NSCs) under construction.
    CBP received $34.5 million in Public Law 109-148. Of that amount, 
$13.4 million is being used to replace property, such as scientific/lab 
equipment, aircraft, boats, vehicles and communication equipment. In 
addition, $10.4 million provided is being used to re-establish CBP 
presence on the Gulf Coast in temporary modular building and new leased 
facilities. The final $10.7 million supported critical information 
technology (IT) equipment replacement, such as voice and data 
infrastructure replacement, tactical communication replacement of 
repeater stations that support radio communications, replacement and 
repair of non-intrusive inspection equipment at the ports, as well as a 
mobile scientific lab.
    Finally, Congress provided other supplemental funding that has 
supported the work of the Office of the Inspector General, equipment 
replacement and personnel relocations for the U.S. Secret Service, U.S. 
Immigration and Customs Enforcement and the Office of Grants and 
Training.

                  STEWARDSHIP OVER RESOURCES PROVIDED

    We take seriously our obligations to protect the taxpayer against 
waste, fraud and abuse. Indeed, we have implemented specific controls 
in the wake of Hurricane Katrina to protect the taxpayer. Our efforts 
to manage controls are coordinated by our Katrina Internal Controls and 
Procurement Oversight Board--which was established as a taskforce on 
waste, fraud and abuse to ensure that proper controls are in place to 
manage the response to and recovery from Hurricane Katrina. 
Participants include or are represented by the following offices: the 
DHS Under Secretary for Management, Chief Financial Officer, Chief 
Procurement Officer, Office of the General Counsel, DHS Inspector 
General and FEMA.
    We have actively engaged in a partnership with the Office of the 
Inspector General--including involving this Office upfront in our 
activities instead of just relying on after-the-fact audits. With 
funding provided by the Congress in the last supplemental 
appropriation, we are actively recruiting additional financial 
management and procurement staff for FEMA in order to bolster their 
ability to provide essential program management and oversight.

                  CURRENT SUPPLEMENTAL FUNDING REQUEST

    In total, the current request for the Department of Homeland 
Security totals $9.9 billion. As you would expect, almost all of this 
funding, $9.7 billion in budget authority, is sought to support 
continued recovery of the Gulf Coast through the Disaster Relief Fund 
and the Community Disaster Loan program.
    In the current request, the Department is seeking $9.4 billion for 
the Disaster Relief Fund. Together with funding provided to date, this 
request will fund current estimates of Disaster Relief Fund needs for 
the disaster declarations issued for Hurricanes Katrina, Rita and Wilma 
along with currently estimated fiscal year 2006 funding needs for other 
ongoing disasters. It is important to note that this does not include 
any costs for any potential new major event.\1\
---------------------------------------------------------------------------
    \1\ It should be noted that the formulation of FEMA's normal 
Disaster Relief Fund budget estimate for any given fiscal year uses a 
5-year rolling average of disaster costs less the costs of major 
events. This methodology is used to estimate the annual President's 
Budget request for the Disaster Relief Fund.
---------------------------------------------------------------------------
    For the Community Disaster Loan Program, our request seeks $400 
million in additional loan authority, bringing our total commitment to 
$1.4 billion for this program. The State of Louisiana has surveyed 
potential applicants in the State and estimates that there is critical 
need for an additional $400 million to meet the cash flow needs of 
disaster-impacted communities over the coming months.
    In addition to the request for FEMA's Disaster Relief Fund and 
Community Disaster Loan program, the supplemental request seeks a total 
of $75 million in additional funding for FEMA communications equipment 
and additional staffing. For additional staffing, a total of $5 million 
is sought to enable FEMA to hire 60 additional permanent staff this 
year. These additional staff will support FEMA activities across the 
spectrum of FEMA's programs, including Readiness, Mitigation, Response, 
and Recovery, both at headquarters and in the field. The supplemental 
request also seeks $70 million to support FEMA's efforts to reconstruct 
and improve existing public alert, warning and crisis communications 
systems in the Gulf region.
    For the Coast Guard, our request totals $69.5 million. This funding 
will support 200 Coast Guard Reservists recalled to active duty for 6 
months, including pay, temporary duty logistics support and per diem 
associated with the 200 Reservists directly supporting the Gulf 
region's recovery. Coast Guard Reservists have been a tremendous asset 
directly supporting all aspects of Coast Guard response and recovery 
efforts in the entire Gulf region. Keeping these dedicated Coast Guard 
Reservists on active duty in the greater Gulf region is critical during 
the third and fourth quarter as we continue with these historic 
recovery efforts as well as focus on next year's hurricane season, 
beginning in June.
    Of the requested $69.5 million for the Coast Guard, $62.2 million 
supports Phase II of the ISC New Orleans relocation and reconstruction 
in Michoud, Louisiana, due to the catastrophic damage by Hurricane 
Katrina and its associated flooding, as well as relocation of salvaged 
equipment from the current ISC New Orleans site.
    Finally, our request seeks $29.5 million for U.S. Customs and 
Border Protection (CBP) and the Office of the Inspector General. Funds 
sought for CBP will support repair of damaged facilities in New 
Orleans, LA and Gulfport, MS. Resources requested for the Office of the 
Inspector General (OIG) provide an additional $13.5 million to be 
transferred to other Federal OIG offices to support, investigate, and 
audit recovery activities related to Hurricane Katrina and other 
hurricanes of the 2005 season.

                               CONCLUSION

    While work still remains to ensure the Gulf Coast fully recovers 
from the devastating damage inflicted by the 2005 hurricane season, 
substantial progress has been made. We will continue to work with the 
Congress to ensure these efforts continue.
    Thank you for inviting me to appear before you today. I am pleased 
to answer any questions you may have.

STATEMENT OF HON. ALPHONSO JACKSON, SECRETARY, 
            DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
    Chairman Cochran. Thank you, Secretary Chertoff.
    Secretary Jackson, welcome to the hearing, sir. You may 
proceed.
    Secretary Jackson. Thank you.
    Good morning, Chairman Cochran and ranking member and the 
distinguished members of the committee.
    I sit before you today to outline the reason why the Bush 
administration is requesting additional funds for the State of 
Louisiana. This funding request, along with all of the past and 
future funding requests, is aimed at fulfilling the promise 
that President Bush made to the people of Louisiana when he 
said, ``We will do what it takes, we will stay as long as it 
takes, to help the citizens rebuild the community and their 
lives.''
    As the Secretary of Housing and Urban Development, it is my 
responsibility to carry out the administration's housing 
policy. Because of our mission, our expertise, our resources, 
HUD will continue to play a central role in the relief effort.
    Nearly 8,000 public housing units in Louisiana were 
affected by the hurricane. In New Orleans alone, Hurricane 
Katrina displaced 8,000 section 8 voucher holders. Without a 
doubt, this storm took a terrible toll on the community that we 
serve.
    Additional funds that the Bush administration is requesting 
would help rebuild the lives of people that choose to remain 
in, or return to, New Orleans. These funds would also go to 
help thousands of families who had not received HUD assistance 
before the storm, but need temporary assistance to rebuild 
their lives. Thousands of people want to return to Louisiana, 
but can't, because they have no home. They want to get back to 
work, they want to put their children back in school.
    The funds that the Bush administration is requesting would 
not only help rebuild the lives of families that HUD already 
serves, it would also help to rebuild more than 100,000 homes 
across southern Louisiana. This money would be used strictly 
for flood mitigation activities, such as buyout, relocation, 
rebuilding the residential properties, and related 
infrastructure. The Bush administration today is requesting 
$4.2 billion, and it is asking that the money be put into the 
Community Development Block Grant program, because of the 
program's great flexibility.
    The Community Development Block Grant program is the right 
program for the funds, for two main reasons. First, community 
development block grants would allow the local leaders to 
fashion their community strategy. The people of Louisiana know 
how to rebuild their community better than we do in Washington. 
Second, because HUD's broad experience with housing gives us 
the expertise to review Louisiana's plans to ensure that the 
plan minimizes the future risk to property and life, we expect 
Louisiana to develop a comprehensive and expert plan for using 
the monies, but we also want to retain the ability to 
distribute the funds based on a sound proposal.
    By transmitting the funds through the Community Development 
Block Grant program, the people of Louisiana will have 
flexibility to provide mortgage assistance to those who need 
it, to make repairs to existing homes, and to elevate housing 
that is at risk of future flooding.
    The Bush administration developed this request in light of 
three factors. The first is the need to mitigate Louisiana's 
current damages. Second is the need to mitigate Louisiana's 
future risk of flooding. And third is that Louisiana's 
mitigation needs are unique.
    First, Mr. Chairman, Louisiana faces a very unique 
mitigation of current housing and infrastructure damage. 
Governor Blanco has told the Louisiana legislature that $5.6 
billion of the $6.2 billion of Community Development Block 
Grant funds already allocated to the State will go directly to 
assisting homeowners and develop affordable housing in that 
State. But that still leaves a significant need to repair and 
replace infrastructure.
    Second, Mr. Chairman, Louisiana faces a unique need for 
mitigation of future risk of flooding. It would not make sense 
to rebuild Louisiana just the way it was. This could involve 
moving public facilities or buying out property owners in--or 
not rebuilding in certain areas. It could also involve 
rebuilding houses on stilts or meeting more stringent building-
code standards. It would be left to the State and the local 
government to decide which mitigation measures are best suited 
for this situation. Example, what areas to be bought out, to 
leave open, whether to use funds or rebuild on stilts, or other 
entities. The Community Development Block Grant program 
provides the local flexibility needed to make the decisions 
wisely.
    Third, Mr. Chairman, the concentration of damage is unique 
to Louisiana. In Louisiana, the damage is often concentrated so 
much in some areas that it's simply no infrastructure left to 
support the rebuilding process. This makes the challenge much 
more difficult.
    Let me give you an example. Even in Louisiana, 75 percent 
of the public housing units that were damaged were in New 
Orleans. That's 7,100 out of 9,500 damaged units in Louisiana. 
Mr. Chairman, if we can count the damage to all types of 
housing statewide, nearly 90 percent of it occurred in the 
metropolitan area of New Orleans. That puts Louisiana at a 
special disadvantage, because private investors are not likely 
to go into the area where there is the kind of intense 
infrastructure damage, unless they know the resources are 
available to leverage their investments.
    The $6.2 billion expenditure already allocated to Louisiana 
still leaves another $5.9 billion in total mitigation needs for 
Louisiana--$4.8 billion for housing that was severely damaged 
or destroyed, and $1.1 billion for other infrastructure. We 
estimate that FEMA can provide $1.7 billion in mitigation funds 
for Louisiana. Thus, Louisiana still needs $4.2 billion for 
mitigation. And that is why the President is requesting $4.2 
billion today.
    We are confident that Louisiana is developing a sound plan 
for using these funds. The administration has worked closely 
with Louisiana and New Orleans officials, to assist them in 
developing a proposal that will meet the State and the city's 
needs, and target the rebuilding efforts to support the flood 
mitigation. Subject to the proposed appropriation, the State of 
Louisiana will submit a plan for the use of the $4.2 billion 
for flood mitigation activities.
    In addition to the $4.2 billion I've already mentioned, we 
request, in addition, $202 million to continue the Disaster 
Voucher Program. That $202 million will help hurricane evacuees 
not just from Louisiana, but also from other States damaged by 
the hurricane. These funds would be added to the $390 million 
already provided for the disaster vouchers by Congress in 
December, and enable us to further assist people for 18 months.
    But our request does more than add funds. First, it would 
also broaden the language of the law so that HUD can assist 
families not covered under the initial $390 million. Second, 
the request would also provide, after the first right of return 
had been given to all households in any HUD-assisted 
development located in the city of New Orleans, an owner may 
then offer any remaining vacant dwelling units to city 
employees for a period not to exceed 12 months. This would 
allow an owner to assist in housing the city's first-
responders, regardless of income, age, or evacuee status.

                           PREPARED STATEMENT

    In conclusion, Mr. Chairman, ranking member, and 
distinguished members, this request that I am bringing before 
you today reflects the findings of the people who are in the 
best position to evaluate the housing needs of Louisiana--but, 
more specifically, Southern Louisiana. Six months after the 
initial evaluation of damages, the real extent of devastation 
is very clear. President Bush made a promise to the people of 
the gulf coast that he would do whatever it took to help them 
rebuild. This request represents the best effort to make good 
on that pledge.
    Thank you.
    [The statement follows:]

              Prepared Statement of Hon. Alphonso Jackson

    Good morning, Chairman Cochran, Ranking Member Byrd, and 
distinguished members of the committee.
    I sit before you today to outline the reasons the Bush 
Administration is requesting additional funding for the State of 
Louisiana.
    This funding request, along with all past and future funding 
requests, is aimed at fulfilling the promise that President Bush made 
to the people of Louisiana when he said: ``We will do what it takes, we 
will stay as long as it takes, to help citizens rebuild their 
communities and their lives.''
    As the Secretary of the Department of Housing and Urban 
Development, it is my responsibility to carry out the administration's 
housing policies.
    Because of our mission, our expertise, and our resources, HUD will 
continue to play a central role in the relief effort.
    Nearly 8,000 public housing units in Louisiana were affected by the 
hurricane. In New Orleans alone, Hurricane Katrina displaced nearly 
8,000 Section 8 voucher holders. Without a doubt, this storm took a 
terrible toll on the communities that HUD serves. The additional funds 
the Bush Administration is requesting would help rebuild the lives of 
the people that choose to remain in or return to New Orleans.
    The funds would also go to helping the thousands of families who 
were not receiving HUD assistance before the storm, but need temporary 
assistance to rebuild their lives.
    We have been having an ongoing dialogue with the elected 
representatives in Louisiana. They have described their needs to us.
    Thousands of people want to return to Louisiana but can't because 
they have no homes. They want to get back to work. They want to put 
their children back in school.
    The funding the Bush Administration is requesting would not only 
help rebuild the lives of the families that HUD already serves.
    It would also help to rebuild more than 100,000 homes across 
Southern Louisiana. The money would be used strictly for flood 
mitigation activities, such as buyouts, relocation, and rebuilding of 
residential properties and related infrastructure.
    The Bush Administration is requesting $4.2 billion. And it is 
asking that the money be put into the Community Development Block Grant 
fund because of this program's great flexibility.
    CDBG is the right program for these funds for two main reasons: 
First, CDBG would allow local leaders to fashion their community 
strategies--the people of Louisiana know how to rebuild their 
communities better than we do in Washington. Second, because HUD's 
broad experience with housing gives us the expertise to review 
Louisiana's plans to ensure that the plan minimizes future risks to 
property and life.
    We expect Louisiana to develop a comprehensive and expert plan for 
using the funds. But we also want to retain the ability to distribute 
those funds based on sound, smart proposals.
    By transmitting the funds through our CDBG program, the people of 
Louisiana will have the flexibility to provide mortgage assistance to 
those who need it, to make repairs to existing homes, and to elevate 
houses that are at risk of future flooding.
    The Bush Administration developed this request in light of three 
factors:
  --the first is the need to mitigate Louisiana's current damages;
  --the second is the need to mitigate Louisiana's future risk of 
        flooding;
  --and the third is that Louisiana's mitigation needs are unique.
    First, Mr. Chairman, Louisiana faces a unique need for mitigation 
of its current housing and infrastructure damages.
    Governor Blanco has told the Louisiana legislature that $5.6 
billion of the $6.2 billion dollars in CDBG funding already allocated 
to the State will be directed to assist homeowners and to develop 
affordable housing.
    But that still leaves a significant need to repair and/or replace 
infrastructure.
    Second, Mr. Chairman, Louisiana faces a unique need for mitigation 
of its future risk of flooding.
    It would not make sense to rebuild Louisiana just as it was.
    This could involve moving public facilities, or buying out property 
owners and not rebuilding in certain areas. It could also involve 
rebuilding houses on stilts or to meet more stringent building code 
standards.
    It will be left to State and local governments to decide which 
mitigation measures are best suited to their situation, e.g., what 
areas to buy out and leave open, whether to use funds to rebuild ``on 
stilts,'' and so on. The CDBG program provides the local flexibility 
needed to make these decisions wisely.
    Third, Mr. Chairman, the concentration of the damage is unique in 
Louisiana.
    If damage is spread out, even if there is a lot of it, then 
infrastructure remains and people remain to build back the damaged 
areas.
    But in Louisiana, the damage is often concentrated so much in some 
areas that there is simply no infrastructure left to support the 
rebuilding process. This makes the challenge much more difficult.
    Let me give you just one example of that: Even in Louisiana, 75 
percent of the public housing units that were damaged were in the City 
of New Orleans. That's a 7,100 out of 9,500 damaged public housing 
units in Louisiana.
    Mr. Chairman, if you count damage to all types of housing State-
wide, nearly 90 percent of it occurred in the Metro New Orleans area.
    That puts Louisiana at a special disadvantage, because private 
investors are not likely to go into an area with that kind of intense 
infrastructure damage unless they know that other resources will be 
available to leverage their own investments.
    The $6.2 billion dollar expenditure already allocated to Louisiana 
still leaves another estimated $5.9 billion in total mitigation needs 
for Louisiana: $4.8 billion for housing that was severely damaged or 
destroyed, and $1.1 billion for other infrastructure. We estimate FEMA 
can provide about $1.7 billion in mitigation funds to Louisiana.
    Thus, Louisiana still needs $4.2 billion for mitigation, and that 
is why the President is requesting $4.2 billion.
    We are confident that Louisiana is developing a sound plan for 
using these funds.
    Chairman Don Powell has worked closely with Louisiana and New 
Orleans' officials to assist them in developing a proposal that will 
meet the State and city needs, and target rebuilding efforts to support 
flood mitigation.
    Subject to the proposed appropriation, the State of Louisiana will 
submit a plan for the use of the $4.2 billion for flood mitigation 
activities.
    In addition to the $4.2 billion I have already mentioned, we are 
requesting an additional $202 million to continue the Disaster Voucher 
Program, or DVP.
    That $202 million will help hurricane evacuees, not just from 
Louisiana, but also from the other States damaged by the hurricanes.
    These funds would be added to the $390 million already provided for 
DVP by Congress in December, and enable assistance for 18 months.
    But our request does more than add funding:
    First, it would also broaden the language of the law so that HUD-
assisted families not covered under the initial $390 million would be 
covered.
    Second, the request would also provide that after the first right 
of return has been given to all households in any HUD-assisted 
development located in the City of New Orleans, an owner may then offer 
any remaining vacant dwelling units to city employees for a period not 
to exceed 12 months. This would allow an owner to assist in housing the 
city's first responders regardless of income, age, or evacuee status.
    In conclusion, Mr. Chairman, Mr. Ranking Member, and distinguished 
members, the request that I bring before you today reflects the 
findings of the people who are in the best position to evaluate the 
housing needs in Louisiana, but more specifically, Southern Louisiana. 
Six months after our initial evaluations of the damage, the real extent 
of the devastation has become clearer.
    President Bush made a promise to the people of the Gulf Coast that 
he would do whatever it took to help them rebuild their lives. This 
request represents the administration's best efforts to make good on 
that pledge.
    Thank you for your time. I will be happy to answer any questions 
you may have.

    Chairman Cochran. Thank you, Secretary Jackson. We 
appreciate your being here and the statement you've provided to 
the committee.
    Secretary Woodley.

STATEMENT OF HON. JOHN PAUL WOODLEY, ASSISTANT 
            SECRETARY, CORPS OF ENGINEERS--CIVIL, 
            DEPARTMENT OF THE ARMY, DEPARTMENT OF 
            DEFENSE--CIVIL
ACCOMPANIED BY LIEUTENANT GENERAL CARL STROCK, CHIEF OF ENGINEERS, 
            CORPS OF ENGINEERS--CIVIL, DEPARTMENT OF THE ARMY, 
            DEPARTMENT OF DEFENSE--CIVIL
    Mr. Woodley. Mr. Chairman and distinguished members of the 
committee, I'm John Paul Woodley, Jr., Assistant Secretary of 
the Army for Civil Works. I'm pleased to testify before the 
committee today on requested supplemental funding to support 
the Army Corps of Engineers activities related to strengthening 
the hurricane protection system in and around New Orleans, 
Louisiana.
    I am accompanied by Lieutenant General Carl Strock, chief 
of engineers, who will assist me, as he, indeed, already has, 
in answering any technical questions you may have.
    Immediate repairs and damage assessments of the New Orleans 
levees were well underway in September 2005, when President 
Bush pledged the full support of the Corps of Engineers to 
State, city, and parish officials in working to rebuild a 
stronger and better New Orleans. Shortly after Katrina, 
Lieutenant General Strock established the Interagency 
Performance Evaluation Task Force, or IPET, to provide 
objective and definitive answers about the design and 
performance of the existing system, and thereby inform the 
decisions that must be made about the future system.
    External peer review of all IPET activities and reports is 
being provided by the American Society of Civil Engineers. Both 
the IPET and the American Society of Civil Engineers external 
review panel are comprised of some of the most highly regarded 
national and international experts from Federal, State, and 
local government, from academia, and from private industry. In 
conducting their comprehensive study, these experts are using 
the most advanced scientific methods and tools available.
    In addition to the IPET effort, an independent panel of 
multidisciplinary experts, also drawn from the public and 
private sectors and from academia, was convened under the 
auspices of the National Academies of Science to provide 
independent review of these reports, and issue separate 
findings and recommendations to me.
    Immediately after the storm, the Corps set about repairing 
the damages sustained by the hurricane protection system. My 
direction and challenge to the Corps was to repair the 
hurricane protection system to its pre-storm condition before 
the next hurricane season. To date, about 45 percent of the 
damaged levees have been repaired, and 85 percent of the city's 
pumping capacity has been restored. The Corps is well on track 
to meet the commitment to have New Orleans' flood protection 
system repaired to its pre-Katrina condition by June 1, 2006.
    Mr. Chairman, in repairing to pre-storm conditions, we are 
not delaying the construction of identified design weaknesses. 
Corrections and improvements to the original design are being 
implemented as soon as we have actionable information. For 
example, the Corps has determined that the levees and flood 
walls that currently parallel the city's three outfall canals 
leading to Lake Pontchartrain will not perform to design levels 
without major reconstruction. Therefore, rather than rebuild 
the flood walls as they were originally designed, the Corps is 
installing temporary gates and pumps on each canal until a more 
permanent solution can be constructed.
    In many areas, settling and subsidence have reduced the 
system to something less than its designed height. The urgent 
supplemental funds already provided not only will allow the 
repair of hurricane-induced damages, but also will allow the 
Corps to restore the entire system to its design height. We 
expect this effort to be completed by September 1, 2007.
    With that as background, I am today asking you to support 
our recommendation for $1.46 billion in additional measures 
that will make the New Orleans hurricane protection system 
stronger and more reliable. While these measures do not further 
increase the height of the system, they will better protect it 
from the kinds of failures that produced catastrophic flooding 
during Hurricane Katrina.
    The six improvements proposed are, first, permanent pumps 
and closures for the three New Orleans outfall canals, for $530 
million; second, two navigable closures on the inner harbor 
navigation canal, for $350 million; third, storm-proofing of 
interior pump stations in Orleans and Jefferson Parishes, for 
$250 million; fourth, selective armoring of levees and flood 
walls throughout the system, for $170 million; fifth, 
incorporation of non-Federal levees in northern Plaquemines 
Parish, for $60 million; and sixth, restoration of critical 
areas of coastal wetlands and ecosystems, for $100 million.
    These six recommendations and all estimates of costs for 
work, both underway and anticipated, are based upon what we 
know at the present time. I have great confidence in this 
request. However, because we are planning and executing this 
work under a compressed timescale, we--there may be a need to 
adjust and refine these projects. Also, the ongoing studies I 
previously mentioned may provide new information that could 
result in additional recommendations, possibly to restore the 
New Orleans hurricane protection system projects to original 
design standards, or possibly to provide additional protection.
    Ordinarily, Mr. Chairman, I would not approach the Congress 
with this type of request without a full analysis of potential 
alternatives and evaluation of benefits and costs that support 
the selection of the recommended measures. However, the 
exigencies of this emergency compel me, and my confidence in 
the Corps allows me, to make this recommendation without all 
the analytical underpinnings that we would normally have 
available.
    As always, I commit to full transparency of our efforts and 
will work with all interested parties, including this 
committee, to ensure that the Corps's intent is fully 
understood, appreciated, and approved by the Congress.

                           PREPARED STATEMENT

    Mr. Chairman, this Nation has just experienced the most 
devastating hurricane season in its history. I'm proud of the 
work of the Corps' civilian workforce and military officers to 
restore protection to New Orleans. It's a testament to their 
selfless service and their unwavering sense of duty.
    Thank you very much for the opportunity to appear before 
you this morning.
    [The statement follows:]

           Prepared Statement of Hon. John Paul Woodley, Jr.

                              INTRODUCTION

    Mr. Chairman and distinguished members of the committee, I am John 
Paul Woodley, Jr., Assistant Secretary of the Army (Civil Works). I am 
pleased to testify before your committee today on the supplemental 
funding to support the United States Army Corps of Engineers' 
activities related to strengthening the hurricane protection system in 
New Orleans, Louisiana and its vicinity. My testimony today provides a 
brief background and update for the Committee on the Corps' efforts to 
repair and rebuild the hurricane protection system for New Orleans. In 
addition, I will provide details on features that will strengthen the 
existing system.

                               BACKGROUND

    There are more than 350 miles of levees in the southeast Louisiana 
area. About 169 miles of this system sustained damage from Hurricane 
Katrina, including 41 miles that sustained severe damage. The third 
urgent supplemental appropriations bill, enacted as Public Law 109-148, 
included appropriations to repair, rebuild, and rehabilitate previously 
authorized projects damaged by Hurricanes Katrina, Ophelia, Rita, and 
Wilma. To date, the Corps has received $3.3 billion in emergency 
supplemental appropriations to address the impacts of the 2005 
hurricane season. One billion, two hundred million dollars of these 
funds are being used to address impacts from Hurricanes Katrina, Rita, 
Ophelia and Wilma and for other purposes in Florida, North Carolina, 
Alabama, Mississippi, Texas and parts of Louisiana outside of New 
Orleans. The balance, $2.1 billion, is sufficient to repair the 
hurricane-damaged components of the New Orleans area hurricane 
protection system to their authorized design heights by June 1, 2006; 
to restore undamaged levees and floodwalls to their authorized design 
heights by September 1, 2007; and to accelerate completion of 
unconstructed portions of authorized projects, with completion expected 
by September 2009.
    All estimates of costs for work underway and anticipated are based 
upon the best available information, existing knowledge and known 
circumstances. Ongoing studies may provide new information that could 
result in additional recommendations for work necessary to restore the 
New Orleans hurricane protection system projects to their original 
design standards and for the additional measures the administration has 
requested to address the main causes of the catastrophic flooding that 
occurred during Hurricane Katrina.
    I believe it is important for the committee and the public to fully 
understand the efforts we are making to gain the information needed to 
inform prudent decisions for hurricane protection for New Orleans and 
the Louisiana coastal areas. Following landfall of Hurricane Katrina on 
29 August 2005, Secretary of Defense, Donald H. Rumsfeld, directed the 
Secretary of the Army, Dr. Francis J. Harvey, to convene an independent 
panel of national experts under the direction of the National Academies 
of Science to evaluate the performance of hurricane protection systems 
in New Orleans and the surrounding areas. I directed the National 
Academies to assemble a multidisciplinary (e.g., engineering, 
atmospheric sciences, etc.) panel drawn from the public and private 
sectors and academia. The purpose of the panel is to assist the office 
of the Assistant Secretary for Civil Works (ASA (CW)) in conducting a 
forensic investigation of the performance of U.S. Army Corps of 
Engineers (USACE) projects during Hurricane Katrina.
    The Chief of the U.S. Army Corps of Engineers formally established 
the Interagency Performance Evaluation Task Force (IPET) on October 10, 
2005, to provide credible and objective scientific and engineering 
facts to answer questions about the performance of the New Orleans 
hurricane and flood protection system during Hurricane Katrina. The 
IPET is examining and providing forensic analysis on the performance of 
the entire storm damage reduction system in New Orleans, helping us to 
understand the failures that occurred, to understand other components 
of the system that may have been degraded in their capacity to protect 
against future storms, and to understand where the system performed 
successfully. The IPET is developing information on risk and 
reliability of the system as it will be after the Corps completes the 
repairs. The Corps is acting on a real-time basis to incorporate 
findings into both its interim repairs and its long term restoration 
and improvements to the system.
    The American Society of Civil Engineers is providing external peer 
review of IPET activities--referred to as the External Review Report 
(ERP). Both the Corps IPET and the ASCE ERP teams are comprised of some 
of the Nation's most highly regarded engineers and scientists from 
government (Federal, State, and local agencies), academia and private 
industry. These experts are using some of the most advanced scientific 
and engineering methods and tools in their comprehensive study.
    The National Academies Committee on New Orleans Regional Hurricane 
Projects is performing an independent review of the IPET and ASCE 
reports and will issue separate findings and recommendations to me. The 
findings of the National Academies panel will be subject to peer review 
process before being released under the imprimatur of the National 
Academies of Science.
    The IPET product will include four reports. IPET Report 1, publicly 
released on 10 Jan 2006, provided the strategy for implementing their 
performance evaluation and provided interim status. IPET Report 2 is 
scheduled for release March 10, 2006 and will provide a progress report 
on implementation with interim results. IPET Report 3, scheduled for 
May 1, 2006, will provide a structural performance assessment for the 
hurricane protection system. IPET Report 4, scheduled for June 1, 2006, 
will be the final performance evaluation report for IPET. All 
information is being made publicly available to the greatest extent 
possible.
    The IPET Report 1 was reviewed by the ASCE External Review Panel 
(20 Feb 2006) and the National Academies Committee (21 Feb 2006). All 
comments pertaining to IPET will be addressed in future IPET reports. 
National Academies review comments on IPET reports are provided 
directly to the Department of the Army. ASCE review comments on IPET 
reports are provided to LTG Carl Strock, Chief of Engineers.
    The National Academies review of the IPET work will produce three 
reports. A preliminary letter report was issued February 21, 2006, to 
ASA (CW) providing an assessment of IPET Report 1. An interim report 
will be issued near the midpoint of their study (tentatively 1 June 
2006) with the final comprehensive report summarizing the IPET and ERP 
reports scheduled to be released tentatively in September 2006.
    At the same time, on a parallel path with the IPET and National 
Academies studies, Congress authorized and appropriated funds for a 2-
year, $20 million Louisiana Coastal Protection and Restoration Project 
to identify options for increasing the level of hurricane storm 
protection for New Orleans and coastal Louisiana. Planning and 
organization for this study is now underway. It will incorporate all 
information developed by other studies. As directed, the Corps is 
preparing an interim report, with a final report of recommendations and 
alternatives due December 30, 2007.
    The Louisiana Coastal Protection and Restoration Project has been 
referred to as the ``Category 5'' study, but I caution the committee 
and the public about the use of such terminology and measures when 
making decisions about the kinds and size of structures to build for 
storm protection. Storm category classifications, which are based on 
sustained wind velocities, are general categorizations best used to 
inform the general public about the expected level of destructiveness 
associated with a storm so that individuals and officials can make 
decisions about how to protect themselves and their property, such as 
whether or not to evacuate. Hurricane and storm damage reduction levees 
and similar structures, however, are designed to specific storm surge 
and wave criteria based on the modeled effects of a statistically-
selected ``design storm for the protected area.'' While sustained wind 
velocity is one measure that has an effect on surge and wave heights, 
many other factors are critically important, as well. These include 
storm characteristics such as forward speed, radius, barometric 
pressure, tidal factors, the bottom depth in front of levees, and more. 
A storm with Category 5 wind velocity characteristics could well be 
less destructive to a storm protection system than would a storm with 
Category 3 wind velocity but with other more unfavorable storm 
characteristics. The Louisiana Coastal Protection and Restoration 
Project will incorporate all these factors to study the means to 
provide a higher level of protection.
repair of the hurricane-damaged components to original design standards
    The Corps is well along with the task of repairing and restoring 
the hurricane protection system to its design height. We are on track 
to restoring damaged elements of the system by June 1, 2006. While 
circumstances compel immediate construction, the Corps is striving to 
make use of the best information currently available--and new 
information as it develops--to restore projects to their design 
heights, as directed by the Congress.
    In New Orleans East, along the Inner Harbor Navigation Canal, or 
IHNC, flooding resulted from the overtopping of floodwalls and levees. 
The Corps has completed about one-third of the necessary repairs to the 
floodwalls and levees in this area.
    On the Orleans East Bank, three drainage canals provide rainwater 
drainage from the interior of the city into Lake Pontchartrain. The 
Corps has determined that the canal levees and floodwalls will not 
perform to design levels without major reconstruction and 
strengthening, and better protection can be provided by installing 
closure structures at the outfall ends--at or near Lake Pontchartrain. 
For that reason, the Corps is implementing interim closure plan for 
these drainage canals that includes installation of temporary gates and 
pumps by June 1, 2006, until a more permanent solution can be 
constructed. The installation of temporary gates and pumps is about 15 
percent complete at this time. The temporary gates can be opened and 
closed to protect the canals from storm-induced surges from Lake 
Pontchartrain. The pumps will move water into the lake even when the 
gates are closed, which will occur only when water levels in Lake 
Pontchartrain reach an elevation of 7 feet above sea level. Only once 
during the past 74 years (during Hurricane Katrina) has Lake 
Pontchartrain reached that level, and it has only risen to 6 feet above 
sea level three times during the past 74 years.
    In Plaquemines Parish, repair of the levee system is about 65 
percent complete and is on schedule.
    In St. Bernard Parish, repair of the levees along the Mississippi 
River Gulf Outlet is about 65 percent complete and is on schedule.

             RESTORATION OF UNDAMAGED LEVEES AND FLOODWALLS

    In addition to the repair of the hurricane-induced damages, the 
Corps is working to restore undamaged levees and floodwalls to their 
authorized design heights by September 1, 2007. The foundation 
conditions in the area cause components of the hurricane protection 
system to settle and subside over time. The Corps is working to return 
27 miles of levee in Plaquemines Parish; 5.5 miles of levee and 2,700 
linear feet (lf) floodwall in New Orleans East; 4.3 miles of levee and 
2,500 lf of floodwall in Jefferson Parish East; and 5.2 miles of levee 
and two floodgates in St. Bernard Parish to what engineers call 
``design grade and required section.'' Funds have been provided for 
this purpose and the work is proceeding on schedule.

             ACCELERATED COMPLETION OF AUTHORIZED PROJECTS

    With funding included in Public Law 109-148, the Corps is also 
accelerating completion of unconstructed portions of six previously 
authorized projects in south Louisiana. These include New Orleans to 
Venice, Larose to Golden Meadow, Grand Isle, Southeast Louisiana 
(Interior Flood Damage Reduction), Lake Pontchartrain and Vicinity, and 
West Bank and Vicinity. The Corps will be constructing the remaining 
portions of these authorized Federal hurricane protection levees, 
floodwalls and other features to the current design grade and required 
section. The accelerated schedule is expected to result in their 
completion by September 2009.

             STRENGTHENING THE HURRICANE PROTECTION SYSTEM

    Mr. Chairman, the work I have just described is critical to 
providing hurricane protection to the New Orleans area, but additional 
measures are necessary to make the system stronger at its current level 
of protection, so as to better protect these works from the kinds of 
catastrophic failure that resulted from the Katrina storm surges. On 
February 16, the administration asked Congress to support an additional 
$1.46 billion in funding for improvements to southeast Louisiana's 
hurricane protection system. If approved, the proposal would pay for 
permanent pumps and closures for New Orleans' three outfall canals; 
improvements in protection along the Inner Harbor Navigation Canal 
through construction of two navigable closures that would help prevent 
storm surge from entering the IHNC area; storm-proofing authorized 
interior drainage pump stations in Jefferson and Orleans Parishes; 
selective armoring for critical portions of the New Orleans levee 
system; incorporation of Plaquemines Parish west bank non-Federal 
levees into the Federal levee system; and restoration of critical areas 
of coastal wetlands and ecosystems needed to improve long-term 
hurricane and storm damage reduction.
    Ordinarily, I would not approach the committee with this type of 
request without the full analysis of all potential alternatives, 
including NEPA compliance and evaluation of benefits and costs that 
would lead to the selection of those measures. The exigencies of this 
emergency compel the Corps, as an institution, and me, as the Assistant 
Secretary, at the direction of the President, to make this presentation 
without all of the full analytical underpinnings normally provided at 
this time. Nevertheless, I have confidence in this request is because 
it is based on the work of the Corps Mississippi Valley Division, in 
general, and the New Orleans District, in particular, whose knowledge 
of these systems is unparalleled in the Nation, as well as the 
aforementioned forensic investigation. Also, I want the committee to 
understand that because we are executing this work under such a 
compressed time scale, there may be a need to adjust and improve the 
precise structures that are under development. As always, I commit to 
full transparency of our efforts and will work with all interested 
parties, including Congress, to ensure that the Corps' intent is fully 
understood. A brief description of these six recommended improvements 
follows.

  FIRST: PERMANENT PUMPS AND CLOSURES FOR NEW ORLEANS' THREE OUTFALL 
                                 CANALS

    Temporary pumps and gates will be replaced by permanent closure 
structures and three new permanent pumping stations, one each at the 
outfall ends of the three drainage canals (17th Street, Orleans Avenue, 
and London Avenue in Orleans Parish). The drainage canals are part of 
the hurricane protection system and carry stormwater from the interior 
of the protected area to the lake. Modifications will also be made to 
the outfall canals and the existing levees and floodwalls. The closure 
structures will prevent storm surge from entering the canals from Lake 
Pontchartrain, and will eliminate the need to provide parallel 
protection. The pump stations will convey water from the canals to the 
lake. The closure structures and new stations will be constructed 
across the current alignment of the outfall canals and will serve as 
part of the hurricane protection front along the lake shore. They will 
be designed to resist storm induced surge and wave forces and will be 
fitted with appropriate backflow protection systems. Since they will 
have to work in concert with the multiple existing stations that 
currently discharge into the canals, control and monitoring systems 
will be required at both the new and existing facilities. The stations 
will limit the water levels in the existing outfall canals while 
discharging to the lake under the most adverse conditions. The pumping 
capacities of the new 17th Street, Orleans Avenue and London Avenue 
stations will be 12,500 cubic feet per second (cfs), 3,700 cfs, and 
9,480 cfs respectively, to match that of the existing feeder stations. 
There was no such pump capacity at the time of Hurricane Katrina since 
the canals had been designed to be evacuated by gravity. The funding 
needed for this measure is $530 million.

                SECOND: NAVIGABLE CLOSURES FOR THE IHNC

    Hurricane Katrina severely damaged portions of the I-walls along 
the IHNC and the Gulf Intracoastal Water Way or GIWW. The existing 
floodwalls along the IHNC are 1-3 feet below the required design grade 
due to subsidence. A review of the design of the existing walls has 
resulted in the determination that they cannot be restored to their 
authorized level without significant reconstruction. However, the 
preferred option is to prevent surge from entering the canal area by 
constructing flood gates that would also pass navigation. This would 
require two structures that prevent storm surge from entering the IHNC. 
One structure would be located at Seabrook where the IHNC enters Lake 
Pontchartrain. The other structure would be located west of the GIWW's 
intersection with the Mississippi River Gulf Outlet. These structures 
would be closed only when a storm threatens to enter the IHNC. The 
funding needed for improved protection along the IHNC is $350 million.

                  THIRD: STORM-PROOFING PUMP STATIONS

    At least 34 pump stations were considered damaged and non-
operational in Hurricane Katrina. With funding of $250 million, the 
Corps would provide protection against both hurricane force winds and 
surge to authorized drainage pump stations within the hurricane 
protection system in Orleans and Jefferson Parishes. Features include 
strengthening of structures, elevation of pump drives and switch gear, 
conversion of electrical equipment, provision of back-up power, and 
waterproofing. Some or all of these features would be applied at each 
site, as appropriate.

                       FOURTH: SELECTIVE ARMORING

    Armoring levees and floodwalls will help make them resistant to 
damage from overtopping and is intended to prevent failure of the 
structure when the design storm is exceeded. Storm events that cause 
limited or minor overtopping will likely result in less flooding in the 
protected area. This combined with improvements in pumping capacity 
could result in reduced flood damage. In lieu of armoring the entire 
system, selective armoring of levees and floodwalls could be 
accomplished to achieve some of the benefits at a reduced cost. The 
administration has proposed that armoring should be placed at such 
critical areas as pipeline crossings, the backsides of levees and 
floodwalls most exposed to storm surge, and areas where floodwalls 
transition to earthen levees. The funding needed for selective armoring 
is $170 million.

               FIFTH: INCORPORATION OF NON-FEDERAL LEVEES

    Plaquemines Parish is a long and slender parish that extends 
approximately 60 miles north to south and approximately 2 miles in 
width of developable lands. The parish is separated by the Mississippi 
River forming a west bank and an east bank with a vast amount of 
wetlands on both banks beyond the ``back levee'' protection system. The 
parish is ``the end of the boot'' in Louisiana, protruding into the 
Gulf of Mexico, and is subject to devastation due to tidal and 
hurricane events on both banks of the river. One major 4-lane 
transportation artery exists on the west bank and is the only route 
available that spans the entire north/south 60 mile distance. This 
route, being only several feet above sea level, is subject to flooding 
when the ``back levee'' system is overtopped during events on the order 
of a 10-year return interval.
    The protection of this ``low lying'' artery is critical to the 
daily success of Plaquemines Parish given that it serves 12,000 
residents and numerous workers including 8,200 oil production workers 
as they travel to their 5,400 residential structures, several schools 
and critical facilities, 32 commercial structures, and 60 industrial 
structures. The protection of this artery is vital to provide a safe 
and efficient evacuation route due to emergencies including frequent 
high tide conditions, hurricanes and other events. If this artery 
remains unprotected it could result in the catastrophic loss of life 
and property damage combined with an increase in State and local 
emergency costs, an increase in subsistence and lodging costs for 
residents and trapped workers, reoccupation costs by homeowners, and 
restoration costs to business and industry.
    The Corps has constructed the New Orleans to Venice hurricane 
protection levee system, which extends along a good portion of the west 
bank, but a 23-mile ``break'' in Federal protection exists from 
Oakville, LA to the north to St. Jude, LA to the south. This ``break'' 
not only jeopardizes resident's lives in the immediate area but 
compromises the safety and integrity of the ``low lying'' highway 
rendering it impassible. In an attempt to reduce the frequency of 
flooding along this 23-mile reach, a non-Federal levee exists, but is 
frequently overtopped during the hurricane season. It provides less 
than ideal protection and is considerably smaller than the Federal 
levee located on the remainder of the west bank. This 23-mile area, 
serviced by both a low elevation levee and a low lying evacuation 
route, places the safety and well being of all residents, workers, 
visitors, and others at risk during a hurricane or tidal event equal to 
or greater than a 25-year event. With $60 million in funding, we 
propose to incorporate the non-Federal levee into the New Orleans to 
Venice hurricane protection project and improve the levee to Federal 
design standards. The operation and maintenance, repair, replacement 
and rehabilitation of the levee, once raised to federal design 
standards, would be the responsibility of non-Federal interests. This 
is consistent with the requirements of existing law for Corps hurricane 
and flood damage reduction projects.
sixth: restoration of critical areas of coastal wetlands and ecosystems
    The administration has also requested $100 million to fund 
activities related to the restoration of natural coastal features that 
will help reduce the risk of storm damage in the greater New Orleans 
metropolitan area. Barrier islands and coastal marshes can provide a 
natural buffer against some storm surges. The coastal wetlands 
restoration activities must be integrated with hurricane and flood 
damage reduction and other development infrastructure. With the funds 
we have requested, the Corps would modify the Caernarvon diversion 
project. The structure at Caernarvon is authorized only to pass fresh 
water for management of salinity and to support oyster propagation. The 
project can be modified to allow the operation of Caernarvon diversion 
to enhance freshwater, sediment, and nutrient delivery to the wetlands 
of southern St. Bernard and Plaquemines Parishes which will support 
restoration of this storm ravaged area. The funds could also be used 
for ecosystem restoration projects that would restore marshland in the 
immediate vicinity of New Orleans. Tidal inflow well in advance of 
storms fill Lake Pontchartrain via three inlets, the Rigolets, Chef 
Pass, and Seabrook. Marshes act as dampers to this early inflow. 
Continued wetlands loss south of these inlets allows for more rapid 
inflow of tides reducing the storage capacity of the Lake in advance of 
hurricane surges. Restoring or preserving marshes south of Lake 
Pontchartrain can reduce the volume of inflow prior to a hurricane 
surge. This may result in lower stages in the lake and a higher 
potential of protecting from levee failure. We believe important work 
to repair openings into marshes that occurred along the various 
navigation, oil and gas and other channels is of high priority.

                                CLOSING

    Mr. Chairman, this Nation has just experienced the most devastating 
hurricane season in its history. Many of the Corps employees, 
contractors and others that are working on recovery operations and on 
the repair and restoration of the hurricane protection system were 
personally impacted by the storms. I am proud of the work of the Corps' 
civilian workforce and military officers to insure that protection is 
restored to New Orleans. It is a testament to their selfless service 
and their unwavering sense of duty.
    This concludes my statement. Again, I appreciate the opportunity to 
testify today. I am pleased to answer any questions you may have.

    Chairman Cochran. Thank you, Secretary Woodley.
    And thank you all for being here and providing us with your 
statements as we begin this hearing.
    I'm going to ask that we undertake to limit ourselves, in 
the first round of questioning, to 10 minutes. Each Senator 
would be recognized for up to 10 minutes. And then we will have 
a second round, if that is needed.

                           TEMPORARY HOUSING

    And I want to start by asking Secretary Chertoff 
specifically about some of the issues that were raised at 
yesterday's hearing, when we had the four Governors from the 
affected States before the committee. One of the issues that 
was brought up by Governor Barbour during his testimony was 
suggesting that consideration be given to more substantial 
housing for the hurricane victims who had been displaced from 
their homes, but who were being given access to trailers, that 
he described as really recreational vehicles, which were not 
designed to be family housing units. These people living in 
those temporary units might be there for some time, and that 
this might be particularly dangerous with a new hurricane 
season coming on, but not just from hurricanes, but a 
thunderstorm or just unusually high winds could do damage and 
put those people in jeopardy.
    I wonder if any consideration is being given to providing 
alternatives for those who appear to be in need of housing that 
goes beyond a few weeks or even a few months. He brought up a 
modular housing-unit alternative, which he called ``Katrina 
Cottages,'' which had been on display and suggested by some who 
are able to provide this new kind of housing.
    Secretary Chertoff, what is your reaction to that? And I'll 
ask Secretary Jackson the same question.
    Secretary Chertoff. Well, first of all, I share the 
Governor's concern about temporary housing and its ability to 
withstand another hurricane. In many instances, of course, the 
trailers are requested by people who want to put them on lots 
so they can rebuild their own houses, and it may not be 
practical to put a mobile home, for example, which is a larger 
structure, on a lot, if you're going to rebuild.
    We've actually tried, and we continue to try, to suggest 
and induce people to use mobile homes as alternatives, where 
it's safe to do so. That might require, in some instances, 
elevating it above a flood plain. Sometimes, the reaction we 
get back is that communities don't want to have large mobile-
home parks, or congregations of mobile homes. And so, we get 
resistance.
    As far as modular housing, again, I think we're certainly 
open to consider anything. We found, early on, given the huge 
demand, literally hundreds of thousands of displaced people, 
that there was simply a capacity issue. People wanted to have 
housing immediately, and we had to get the housing which was 
most quickly available in the marketplace as fast as possible. 
But we have also looked at alternatives such as putting people 
in rental housing that exists, rehabilitating housing. We are 
somewhat constrained by the requirements of the Stafford Act. I 
don't think the Act allows us to build permanent housing for 
people. It limits the amount of money for repair or 
rehabilitation. And that's one of the constraints that may have 
an impact on our ability to offer other kinds of houses.
    We've tried as hard to push the bounds of the Stafford Act 
as far as the lawyers will let us do, in order to come up with 
alternatives. And we will continue to do so. At the end of the 
day, it may require us to consider whether we want to change 
some of the boundaries that are in the law.
    Chairman Cochran. Secretary Jackson.
    Secretary Jackson. Mr. Chairman, I think we are presented 
with two problems, and understandably so. First is that most 
people do not want to move, even though their home has been 
destroyed. And, second, if they want to move, they do not want 
to move very far away from their home. So, it presents a unique 
dilemma. In that dilemma, we can either try to find temporary 
shelter in and around where they are, or to provide them with 
trailers.
    What I've been able to discern as I travel both Louisiana, 
Mississippi, and Alabama, is, many of the people are pleased 
with the trailer, but they have serious concerns that they 
might not withstand a hurricane. But I think that was denoted 
almost from the very inception, when they went into the 
trailer.
    The other part is very intriguing. When we met with the 
different Governors, we suggested that each Governor get a 
group of people and bring them together, the best experts, to 
design for them. We called it a charette. And the charette came 
up with the best way to design on the coast, the best way to 
design inland, in New Orleans and other places. I must tell you 
that Governor Barbour immediately convened a charette. Governor 
Riley really didn't think that he needed one, in the sense that 
he was not as--damaged as bad as Mississippi and Louisiana. To 
date, I don't think that Louisiana has convened a charette. 
They convened a group, which they called--the Governor called a 
group--I don't know the name--remember the name. And the mayor 
had a group convened. That was not a charette. A charette is to 
design a community--and I've suggested this both to the 
Governor and to the mayor--to design--to get a group--a 
charette, to design a community that can withstand the storm. 
And, if you have the storm, that can easily be cleaned up, that 
can be done.
    Now, with the kind of storm-resistant housing that you're 
talking about, it's already been implemented in Florida. 
Florida has done it. And if you remember last year, the houses 
that were standing after three major hurricanes were those 
homes that had been built to withstand hurricane strength and 
immediately could be cleaned up after the water had entered 
them. I think that can be done. And I think that the Governor 
of Mississippi is moving very quickly toward that. I hope that 
the Governor and the mayor will--in Louisiana--will do the same 
thing.

             EMERGENCY INTEROPERABLE COMMUNICATIONS SYSTEM

    Chairman Cochran. Thank you.
    One other issue that was raised in the hearing yesterday 
was Governor Riley's comments about having better interoperable 
communications in an emergency to facilitate local and State 
and Federal officials being able to talk to each other and work 
in a more effective way together.
    Is there a plan, based on lessons learned from this 
experience, to either have a national interoperable system, or 
a regional interoperable system? What is the Department of 
Homeland Security's view of what needs to be done now in 
response to that suggestion?
    Secretary Chertoff. Mr. Chairman, I think the Governor is 
right. And the issue wasn't even really interoperability, it 
was operability. Nothing--I mean, all the cell towers were 
down. There were satellite communications, but often the power 
ran out, the batteries ran out. And even satellite 
communication is imperfect.
    This supplemental actually contains a request for, I think, 
approximately $70 million to allow us to acquire what are 
called COWs and SOWs, which are, if I remember the acronym 
correctly, cell-based vehicles and switch-based vehicles, which 
you can actually drive into an afflicted, and they are 
essentially self-contained units that can be used as relays for 
people to communicate with a large number of cell phones or 
radios. These are exactly the kind of capabilities which would 
allow local and State officials to be communicating, even if 
all the other communications were knocked down. And to the 
extent we can get funding for this kind of equipment done as 
quickly as possible, we can start to get--acquire the equipment 
and get it into position before this hurricane season.
    We're doing some additional things, as well, in the 
Department. We're trying to build capabilities for this 
hurricane season that would allow us to use aircraft or Coast 
Guard cutters as relays for radio communications. And we're 
also equipping our own reconnaissance teams to go in with self-
contained packs of communications that would allow reachback 
into headquarters at operations centers.
    So, all of these things are part of an integrated plan to 
build basic operability, as well as interoperability, in an 
area where communications have been wiped out.
    Chairman Cochran. Thank you very much.
    I'm going to recognize other Senators now, and will do so 
in the order of appearance before the committee.
    Senator Hutchison.
    Well, I'm sorry, Senator Murray. I didn't see you come back 
in the hearing room.
    Senator Murray. I have been here the whole time.
    Chairman Cochran. I know.

         FEMA'S FAILURE TO ADEQUATELY MANAGE HOUSING SUBSIDIES

    Senator Murray. Thank you, Mr. Chairman.
    FEMA's performance in assisting Katrina victims with 
housing was extraordinarily poor. Federal judges were required, 
several times, to intervene to--so we would prevent thousands 
of families from being displaced from the hotels they were in, 
with no place to go. One judge referred to FEMA's actions in 
reference to its subsidy of hotels and motels as, ``notoriously 
erratic and numbingly insensitive.'' The court found that, 
``FEMA's actions discriminated against victims based on the 
grounds of economic status, and violated the intent of Congress 
to provide for an orderly and continuing means of assistance 
and alleviate the suffering of those most affected by Hurricane 
Katrina.'' Now, those were the judge's words, not mine.
    Even the White House has recognized these failures in its 
own report. The White House recommended that HUD, instead of 
FEMA, be designated as the lead Federal agency for providing 
temporary housing.
    Secretary Jackson, when is HUD formally going to take over 
this responsibility?
    Secretary Jackson. I think that's a very fair question, but 
in response I will say that it's in the hands of Congress. The 
Stafford Act clearly requires that FEMA does that. So, if the 
Stafford Act is repealed or changed, then I think we can. But, 
otherwise, I have to defer to my colleague, because that's the 
authority that you've given him.
    Secretary Chertoff. Let me respond, Senator. First of all, 
let me say--discuss the issue of hotels. I have to begin by 
saying that when a judge says, well, we discriminated on the 
basis of economic status, I think the Act itself, in terms of 
determining eligibility for certain kinds of funding, 
discriminates based on economic status. If a wealthy attorney 
from New Orleans is displaced, and requires housing, but has an 
income of $1 million a year, it strikes me that we ought not, 
as a matter of economic status, have the Federal Government pay 
for that attorney's hotel room.
    The story----
    Senator Murray. So, in the middle of----
    Secretary Chertoff [continuing]. Tells you----
    Senator Murray [continuing]. In the middle of the crisis, 
you're going start asking people what their income and assets 
are?
    Secretary Chertoff. Not in the middle. But I will tell you, 
Senator, that 3 months after the crisis, I think we do have to 
ask those questions. And if we don't, we get exactly the kind 
of report we got from the Government Accountability Office, 
that complains that we were overspending in some instances on 
hotels.
    And I think you've put your finger on exactly the dilemma. 
I think I owe it to the committee to be very forthright about 
what that dilemma is. In the immediate month, or even 2 months, 
after a crisis like this, we do basically focus on meeting 
needs, and we don't ask a lot of questions about economic 
status or eligibility, because you first have to save lives. 
And that's always been our philosophy. And I will tell you, 
Senator, that it will continue to be our philosophy.
    But as you get into month 3, 4, 5, and 6, it is fair to 
start asking questions about eligibility. If you don't do this, 
we're going to get stories about people who didn't actually 
lose their home, because they were in Jefferson Parish or 
another parish, but decided that they wanted to be in a hotel 
for a while longer.
    Senator Murray. Well, Mr. Secretary, not to interrupt you, 
but I just have a few minutes, and I just am very concerned 
that the judges themselves found that victims were 
discriminated against. I think this is an issue we need to look 
at. If Congress needs to act, then I think it's something we 
need to look at, if the recommendation is that it is under HUD 
and can be better managed.
    But since I just have a few minutes, I do--and I know that 
the Senator from Texas is here; she'll probably ask the same 
question--but as the ranking member on the subcommittee that 
oversees the funding for HUD, I do want to ask you, Secretary 
Jackson--because Texas Governor Perry told this committee, 
yesterday, that when he agreed to accept thousands upon 
thousands of Katrina victims from Louisiana, he was, and I 
quote what he said, ``Verbally assured by top HUD officials 
that Texas would receive hundreds of millions in housing 
assistance.''
    Now, to date, Texas has not--has received less than $75 
million. And a lot of other States that took Katrina victims, 
including my home State, haven't received a dime. There is no 
funding in your pending supplemental request for these States, 
either.
    So, I want to know from you: Did you personally make 
commitments to Governor Perry? And, if not, who in your 
Department did?
    Secretary Jackson. I did not speak with Governor Perry 
regarding that issue right after Katrina. But what we did say 
is this, according to my colleague, is that States that made 
this effort would be reimbursed. And I must tell you today that 
Homeland Security and FEMA have reimbursed Houston and the 
other cities very well. Have we reimbursed them completely? No. 
But to say that they have not been reimbursed is not true, 
because I just came back from Houston. Mayor White has been 
reimbursed by FEMA.
    So, I am saying to you, I'm not sure how this----
    Senator Murray. Well, most specifically, I'd like to find 
out why you have not had a supplemental--funding request within 
this supplemental for those costs for those States.
    Secretary Jackson. We don't have to have a supplemental. 
FEMA has reimbursed the cities for the monies that they've 
output to help house the persons. And that has been done very 
well.
    Senator Murray. All right. Well, I think the question is: 
what are they going to be reimbursed for, what was promised to 
them, and whether or not that has occurred. And I will--I know 
the Senator from Texas will probably ask questions, too, but I 
think that's a question that this committee needs to explore 
and have a handle on as we look at this supplemental.

  REDUCTION OF STATE AND LOCAL EMERGENCY DISASTER PREPAREDNESS FUNDING

    In my last minute--few minutes here, I just want to ask 
Secretary Chertoff--and I know this hearing is all about the 
supplemental. And that's important. But many of us are 
wondering what lessons your Department and the administration 
learned after Hurricane Katrina. State and local preparedness 
funding has been cut, across the board, in the President's 
budget request--port security grants, first-responders, 
traditional Coast Guard missions, emergency management grants. 
I thought that we would learn a lesson from Katrina that we 
have to have those kinds of things in place, so I was really 
surprised to see the President's budget cut a great deal of 
that.
    One example is the Emergency Management Performance Grant 
Program. That is the backbone of the Nation's emergency 
management system, and provides funding for all of our local 
emergency management offices across our country that they 
critically need.
    Under the President's budget request, in 5 years, the 50-50 
Federal/State/local match has become an 80 percent burden on 
State and local agencies. Now, when we put that burden on State 
and local agencies, if they, for whatever economic crisis or 
reason, don't have the funds, the rest of us end up paying for 
the disaster if it occurs. And that's what we're seeing here 
with this supplemental.
    And I would like to find out why DHS is proposing 
increasing the gap between the Federal commitment and that 
being made by States and local government emergency management 
programs.
    Secretary Chertoff. To answer briefly, I think that, first 
of all, the particular funding item on the emergency management 
grants, I think, is identical to what we proposed last year. I 
think Congress ultimately appropriated about $10 million more.
    But I think the issue for us is that we are trying to move 
away from specific line-item grants into more general grants 
that have specific capabilities through which States and 
localities actually have a real opportunity to meet these 
needs. But it also gives them the flexibility to determine 
whether they have more of a need in another area.
    I mean, a perfect area is port grants. In 2006, we have 
port grants, and we have individual infrastructure grants. In 
fact, the President's budget in 2007 rolls all those up into a 
single grant program, the Targeted Infrastructure Protection 
Program, and then adds $200 million in additional funding. So, 
we actually increase funding that's available.
    Senator Murray. Well, Mr. Secretary, as you well know, the 
Commandant of the Coast Guard--and we've diverted from the 
question that I've asked--asked for $7.3 billion for port 
security grants, because of what we required our ports to do. 
And yet, the administration has asked for just shy of, I think, 
$70 million--$45 million, which is incredibly short funding.
    But let me go back to this question, because this is 
critical. We will have more disasters in the future. There's no 
doubt about it. I worry about what's going to happen in 90 days 
again to our coastal States in the South when the hurricane 
season comes back. Yet, we are not even providing the dollars; 
we're telling local emergency management agencies across the 
country that the Federal Government is backing away from their 
commitment to make sure these communities have planned and 
prepared for these disasters, so they can be ready. Your 
administration is asking to change this 50-50 grant to 80 
percent burden on local and State agencies, I think, right at 
the wrong time. It's a philosophical disagreement with you, but 
I will tell you that if we put that on local and State 
governments, who, economically, can't afford it, don't have the 
funds to do it, and don't prepare, we're going to be back here 
with another supplemental next year, and the year after, and 
every year after, from whatever emergency hits this country.
    Secretary Chertoff. Well, if I could just briefly respond, 
just so we're clear on it. And I think I've said it before. I'm 
certainly going to say it again. And I agree with you that we 
have to be very mindful of the 90 days. But let me tell you 
what we are doing. I just talked about the $70 million in 
emergency communications funding----
    Senator Murray. Well, my specific question is: Why is the 
administration backing away from a commitment to make sure that 
these local communities have the disaster planning in place 
they need?
    Secretary Chertoff. And I guess my answer is, we have put 
$50 million into the budget--of course, that's 2007, so it's 
probably going to kick in after hurricane season--precisely for 
the planning you're talking about. As we speak, we have teams 
working to plan, with all the 50 States, on disaster planning, 
precisely addressing the issue you're talking about. We began 
the first stage of that, and completed the assessment on 
February 10, I think it was. We've got teams working down there 
now. I have talked to General Clark, who would be the military 
commander who would be responsible for disaster response on 
DOD's part, about the fact that we are going to be getting with 
the emergency managers, particularly in the gulf, and very 
specifically working with them on the planning and the 
capabilities, and that we'll be prepared to step in with 
Federal capabilities if there's a shortfall. So----
    Senator Murray. Whether it's an earthquake in my community 
or a hurricane, we need to make sure that our communities have 
these planning grants and are ready, Mr. Chairman.
    Thank you.
    Chairman Cochran. Time has expired.
    Senator Hutchison.

                      LOCATION OF KATRINA EVACUEES

    Senator Hutchison. Thank you, Mr. Chairman.
    Mr. Secretary Chertoff, can you tell me how many Katrina 
evacuees went outside of the State of Louisiana, and where 
those people are today?
    Secretary Chertoff. I don't have the--I'm sorry--I don't 
have the number right in my head. I think at one point in time, 
we had well in excess of 1 million people who moved. I can tell 
you, based on the numbers of rental assistance, we probably at 
a--I mean, some of those came back very quickly--we probably 
had over 700,000 who were displaced for some period of time. 
And I would estimate that there are probably--and this is a 
real estimation -- 400,000 or 500,000 that are probably still 
out of their homes.
    Most of them, I think, remained in Louisiana, but I think 
in terms of the State that has had the largest number of 
evacuees, far and away it's got to be Texas.
    Senator Hutchison. Do you have a calculation of how many 
are in Texas and other States?
    Secretary Chertoff. We do. I don't have it at the top of my 
head, but I could probably get it for you pretty quickly.
    [The information follows:]

                 Katrina Evacuees Outside of Louisiana

    Attached you will find a chart outlining the number of applicants 
that have registered for FEMA assistance and their current mailing 
address is different than their damaged residence by State (this report 
includes the number of LA evacuees still in the State but who are now 
residing in a different zip code than their damaged residence).

   APPLICANTS LIVING OUTSIDE THEIR DAMAGED ZIP--DR-1603-LA--3/16/2006
------------------------------------------------------------------------
                  Current Mailing State                        Apps
------------------------------------------------------------------------
AK......................................................             191
AL......................................................          14,366
AR......................................................           8,808
AZ......................................................           1,987
CA......................................................          13,172
CO......................................................           2,998
CT......................................................             756
DC......................................................             780
DE......................................................             206
FL......................................................          20,117
GA......................................................          31,315
HI......................................................             147
IA......................................................             668
ID......................................................             163
IL......................................................           5,263
IN......................................................           2,035
KS......................................................             842
KY......................................................           1,773
LA-dz\1\................................................         299,860
MA......................................................           1,711
MD......................................................           2,933
ME......................................................             248
MI......................................................           3,090
MN......................................................           1,237
MO......................................................           4,063
MS......................................................          29,328
MT......................................................             135
NC......................................................           4,943
ND......................................................              48
NE......................................................             510
NH......................................................             196
NJ......................................................           1,711
NM......................................................             755
NV......................................................           1,599
NY......................................................           4,298
OH......................................................           2,754
OK......................................................           3,034
OR......................................................             936
PA......................................................           2,135
RI......................................................             307
SC......................................................           2,448
SD......................................................              87
TN......................................................          12,526
TX......................................................         148,114
UT......................................................             508
VA......................................................           4,324
VT......................................................             120
WA......................................................           1,682
WI......................................................           1,314
WV......................................................             377
WY......................................................              96
                                                         ---------------
      Totals............................................         643,014
------------------------------------------------------------------------
\1\ dz = Current zip and damage zip is different.


    Senator Hutchison. Well, let me just ask you, if it is 
FEMA's goal to determine where the people are from all of the 
requests that you're getting for aid, and to continue to 
monitor that as we go through the next year, or until the end 
of this year and, particularly as it relates to education, into 
the next school year, are you--is that a goal?
    Secretary Chertoff. Yes. I mean, the way we monitor--and, 
as I said, and I want to be clear, we have the numbers, I just 
don't have them off the top of my head--we do--the whole point 
of registering people and getting authorization codes was to 
allow us to track people. And we track them through their 
continued requests for aid and assistance, which we supply 
through a number of programs. I mean, obviously if someone does 
not want aid and assistance, then they're going to drop off the 
radar screen. So, we will continue to monitor that over the 
next year as we continue to provide people who are--to what 
they're entitled to, in terms of assistance. Some of those 
will, hopefully, in the near future be moving back home, and 
then they will be in a different situation.

     ECONOMIC PROVISIONS FOR KATRINA EVACUEES OUTSIDE OF LOUISIANA

    Senator Hutchison. Is it the intention of FEMA to provide 
for the people who continue to be displaced, by the person, 
rather than by the State?
    Secretary Chertoff. Generally, we do two kinds of different 
programs. Public assistance operates through the States. There 
was a period of time--which is rapidly coming to a close, as a 
matter of law--under which we did give some individual 
assistance by giving money to the State to reimburse the State 
for what it did. But I think legally our ability to do that is 
rapidly ending. And our individual assistance generally goes 
directly to the individual--actually, the household--under the 
various programs.
    The one thing we have done, and it's particularly 
noteworthy in Texas, is with respect to Houston. Houston, 
because it entered into a large number of leases, requested a 
greater level of, let's say, visibility into how we were 
handling rental reimbursements. And so, we agreed to enter into 
an arrangement to let them become our agent for purposes of 
paying the rents, even though those are technically under 
individual assistance programs. We also, in this supplemental, 
propose language that would allow us to pay for the cost of 
utilities, although that's not normally permitted under the 
Stafford Act, because I think Houston had an unusual amount of 
burden. I can actually--I actually have the figures now. I 
think we now have approximately 90,000--a little under 95,000 
households are currently in Texas receiving rental assistance. 
And we have other large numbers--I think there's 300,000-plus 
got in Louisiana, and significant numbers in other parts of the 
country. It appears, here--actually, Mississippi--I think 
Mississippi has 115,000.
    Senator Hutchison. I would like for you to get back to me 
and tell me if that is accurate, because my numbers show that 
32 percent of the applicants for some kind of Katrina help are 
residing outside the State, which would be approximately 
344,000 people.
    Secretary Chertoff. I think we have 600,000--the total have 
here--and we'll verify it--is a little under 650,000 total 
number of rental assistance recipients, which ought to be 
households. And, of that, a little over 300,000 is in 
Louisiana. So, that--and 115,000 in Mississippi. So, if I do 
the math in my head, it suggests around 200,000 to a quarter of 
a million are outside the two afflicted States. But I'll have 
somebody verify that.
    [The information follows:]
       Economic Provisions for Katrina Evacuees Outside Louisana
    FEMA provides assistance to disaster victims as individual 
applicants, or heads of households, who have registered with FEMA for 
help. The assistance that has flowed through many other States was for 
sheltering costs undertaken by the States (under Section 403 of the 
Stafford Act) immediately following the disaster. This was a temporary 
measure until we could establish our relationship with the registered 
applicants. That relationship is delineated in the Individuals and 
Households Program (IHP--Section 408 of the Stafford Act) which 
provides various forms of help (rent, repairs, other needs) as needed 
by the individual applicant.
    Individuals register for help based on their previous location 
within the disaster area. The verification of their previous residence 
in the disaster area qualifies them for consideration for assistance. 
For example, either homeowners or renters whose previous home has been 
damaged or destroyed may receive such assistance.

    Senator Hutchison. Two hundred thousand to 250,000 outside 
the Mississippi and Louisiana.
    Secretary Chertoff. Correct.
    Senator Hutchison. And Mayor White announced an agreement 
with you to cover evacuees for the rest of this year. Is that 
correct?
    Secretary Chertoff. That's correct.

                              CDBG GRANTS

    Senator Hutchison. Mr. Secretary Jackson, we've talked 
about the CDBG grants. And, of the $11 billion, Texas has 
gotten $70 million. And I want to ask you what your plans are 
for helping the communities, such as Houston, which we've 
mentioned already, but all of the communities with large 
evacuee populations in other States, as well as Texas, for 
their housing needs.
    Secretary Jackson. We are relegated to helping those 
persons who are on some form of public assistance, whether it's 
public housing, sections 8, 202, or 811. And what we did in the 
process is--initially we had the Katrina vouchers, now we have 
the disaster vouchers--but eventually those persons who are 
already certificate holders, those certificates will transfer 
to them wherever they are, whether they're in Houston, Dallas, 
or wherever. Those persons in public housing, we will still 
have to subsidize the city of Houston if they continue to 
reside in some form of public housing. And that, in essence, 
will have to be taken away from the allocation that we give to 
Louisiana, because those units are no longer being used.
    So, clearly, no city will be burdened with taking up the 
payment without being reimbursed by HUD; because those persons 
would be in on the program if they had remained in New Orleans.
    Senator Hutchison. So, it will go to the person----
    Secretary Jackson. Yes, it will.
    Senator Hutchison [continuing]. In your instance.
    Mr. Secretary, the Governor testified--of Texas--yesterday 
that it costs approximately $6,000 to educate a student in 
Texas. And special-needs students go to about $7,500, of which 
there are a number. In the 38,000 schoolchildren in Texas, 
there are a number that do have special needs. So, the Governor 
estimates that Texas is losing approximately $120 million to 
$150 million just in this school year already, because the 
reimbursement rate is $4,000, not $6,000 and not $7,500.

        ECONOMIC IMPACT ON STATES HOUSING ADDED KATRINA EVACUEES

    My question is, Is FEMA looking at the actual costs? Are 
they doing any kind of study that would give actual 
reimbursements for the cost of educating, particularly in areas 
where there are concentrations of Katrina evacuees?
    Secretary Chertoff. I believe I'm correct in saying, 
Senator, that I don't think the Stafford Act allows 
reimbursement for expenses like school expenses, things of that 
sort, increased burdens of a noninfrastructure nature. I think 
we did cover, and are continuing to cover, through March, 
certain of those kinds of expenses as emergency assistance. 
But----
    Senator Hutchison. The----
    Secretary Chertoff [continuing]. I think----
    Senator Hutchison [continuing]. Stafford Act was amended, 
however, in the last supplemental.
    Secretary Chertoff. Well, I--but what I think is--I'm--and, 
again, I'm going to let the lawyers have the final word on 
this--I don't--my understanding is that, past a certain point, 
in terms of the emergency, the ability to use the Stafford Act, 
as opposed to another program, to fund things like overtime for 
police or additional education expenses, is limited. I think 
if--I mean, the question that's presented is whether one wants 
to change the model of reimbursement in this disaster, or in--
generally in disasters, to cover costs that occur when people 
move to other parts of the country and put a burden on other 
parts of the country, and then how long you want to do that 
for. I mean, at some point, you know, do people actually become 
citizens of another State?
    So, that's my understanding. If my understanding of the law 
is incorrect, I will certainly let you know. But----
    Senator Hutchison. Let me just end by saying that I would 
so appreciate if FEMA would acknowledge and look at the unusual 
situation of the large number that have gone to the States 
outside; 10,000, you can absorb; 38,000 is another issue. My 
State is having a special session, because they cannot get 
enough money to fund their schools properly, and they are under 
a court order to add more money for the schools. And yet, the 
Federal Government is not reimbursing for the cost of the added 
Katrina evacuees, when our citizens are going to have to have 
raised taxes to meet a court order for adequacy of school 
funding.
    I wish FEMA would--and I would ask you if you would 
consider looking at the unusual situation of the large number 
of evacuees in our State.
    Secretary Chertoff. First of all, let me say this. I think 
Texas did a magnificent job stepping up to the plate here. And 
I am really acutely aware of the burden--the intangible burden 
that this movement--large movement of people has placed on the 
State.
    So, I want to separate two things out. We--not only am I 
delighted to, but I am, in fact, looking and discussing with 
people inside the administration, How do we deal with the issue 
of a major catastrophe where there's a huge burden shifted on 
other States? And I want to continue to do that and work with 
Congress in figuring out: How do we--how are we fair about this 
and actually not penalize other States for doing it?
    On the other hand, I have to still live within the existing 
law as it is now. So, I'm not going to break the law in order 
to do something, even if I think it would be a good thing to 
do. What I will do, though, is look at whether we need to come 
back and talk about changes in the law or other adjustments, 
because it would--I would not want to leave you with the 
impression that I don't fully understand and appreciate, having 
seen what a great job the Governor did and the mayors did in 
stepping up to the plate, that they shouldn't have to pay a 
price for that.
    So, I mean, you make a very fair point, and I think it's a 
matter we have to really address.
    Chairman Cochran. Time has expired.
    Senator Bennett.

       OVERSIGHT AND ACCOUNTABILITY OF REBUILDING THE GULF COAST

    Senator Bennett. Thank you very much, Mr. Chairman.
    There's been enough looking backward in this hearing. I 
thank you, Secretary Chertoff, for your response to some of the 
comments that were made.
    I want to look forward and back to my opening statement: 
Who's in charge? Secretary Jackson, you said that, ``The people 
of Louisiana know how to rebuild their community. Louisiana 
will produce the plan.'' Do you have veto power over the plan? 
I'm talking future now. We're talking this supplemental money 
now. We're----
    Secretary Jackson. Yes.
    Senator Bennett [continuing]. Not rehashing old 
circumstances.
    Secretary Jackson. Right.
    Senator Bennett. Do you have veto power over what Louisiana 
decides they want?
    Secretary Jackson. I think the legislation that you passed 
allocating the $6.2 billion gives a great deal of flexibility 
to Louisiana, Mississippi, Alabama, and Texas. But, at the same 
time, I'm mindful of the fact that GAO, the Inspector General, 
is going to expect me to monitor the money, the same as we did 
with the Lower Manhattan Corporation in New York City. And we 
did a very good job. So, it is clear to me that I'm going to 
make sure that the money is spent in a very productive manner. 
If not, then we will let not only the chairman of the 
committee, but Congress, know. And I've said that, 
specifically, to the Governors, that the money's not going to 
be allocated and you can spend it as you want to without any 
accountability. Because, in the end, I'm going to be held 
accountable for it. And I think that if you look back at what 
occurred in New York City, we did a tremendous job. In fact, we 
ended up recouping--and I don't mean in the sense we took it 
back; it was unused--I think some $400 million that came back 
to us, because we did monitor it extremely well.
    Senator Bennett. I think one of the major challenges here 
is making the decision as to what exactly is going to be 
rebuilt, and what is not.
    Secretary Jackson. I think, Senator, in that case what 
President Bush has said is that we're there to augment; we're 
not there to dictate. But clearly I have made my position known 
to both the Governors, to the mayors in the respective cities, 
as to how I perceive certain areas. And I think in my opening 
statement, I said that if they choose to rebuild, there are 
ways to do it. And I think it's important to look at those ways 
to do it. But first--the first thing is that we must shore up 
the levees. And that's what we're doing first. Then we have to 
decide how we rebuild in those specific areas. But I will not 
go in, because of what the President has said to the Governors, 
and dictate, ``This is the way that I believe you should 
build.''
    Now, I think the next question you'll probably ask: Do I 
have some perspectives on where they should or should not 
build? Yes, I do. But the point is, that's just my perspective.
    Senator Bennett. Sure. I understand that. And this goes 
back to Secretary Chertoff's comments about the way the 
Founding Fathers set this up in such a way as to divide 
responsibility. But we're back to the--the question was raised, 
the difference between ``topping'' and ``breaching.'' The Army 
Corps of Engineers, if you look back in history, doesn't have a 
really good record of making wise decisions on how to handle 
water. The Mississippi flood of 1927 exposed a series of wrong 
decisions that had been made over a period of decades about 
levees. And I'm happy to appropriate money to help people who 
are in trouble, but if we're going to appropriate money, and 
then rebuild in a place that the laws of physics say doesn't 
make sense for people to live in, building a city 10 feet below 
sea level does not strike me as, inherently, basically a good 
idea.
    Secretary Jackson. I agree with you----
    Senator Bennett. Now----
    Secretary Jackson [continuing]. Senator.
    Senator Bennett. And----
    Secretary Jackson. You won't get a debate or an argument 
with me on that.
    Senator Bennett. Okay. Well, you know, that comes back to 
my fundamental question. Who's in charge? Who's--is there 
somebody who can say, ``Yeah, you get to decide, but we're not 
going to fund''----
    Secretary Jackson. You----
    Senator Bennett [continuing]. At some point, if somebody 
makes a really stupid decision--I'm not saying that the 
Governor will, but if somebody makes a really stupid decision, 
in the name of nostalgia, that, ``We want to rebuild this 
neighborhood just like it was,'' maybe Katrina said to us, 
``You don't want a neighborhood there.''
    Secretary Jackson. Well, in that case, I can tell you, you 
will hear the hue and cry from me----
    Senator Bennett. Okay.
    Secretary Jackson [continuing]. Because I have made it very 
clear to the mayor of New Orleans, it is he and the Governor's 
decision, but we will have input in it. And it does not make 
sense to build where there's a possibility that this might 
happen again. And I think that the present mayor and the 
Governor has been pretty receptive to that. I mean, they've----
    Senator Bennett. Okay.
    Secretary Jackson [continuing]. Got a lot of pressure on 
them to rebuild exactly where we had the problems. But I think 
they've resisted very well, to be very honest, in their stand.
    Senator Bennett. Okay. I guess, ultimately, Mr. Chairman, 
we're in charge, in the sense that we would deny the funds if 
we decided that the plan, going forward, didn't make sense.
    Secretary Chertoff. If I could just add something, Senator, 
that might be helpful, this will come up in one other way, 
where we will have--if we're disciplined about it, and even 
tough-minded, we will have a real influence. There will be 
advisory-based flood elevations coming out in March. There will 
be flood maps coming out later this year that will indicate the 
elevation to which people will have to build within a 
designated flood zone in order to get flood insurance. That 
should drive prudent building. There will be, I predict, 
pushback. And so, I--if we hold to the science, and we're 
disciplined about it, that's going to be important.
    Senator Bennett. Thank you.
    We have those problems everywhere. We have mud slides in 
Utah, because people build in a hillside that isn't stable, and 
we have a heavy water year, and the homes all slide down to the 
bottom of the valley. And then, when it dries out, they want to 
go back and build their homes there again.
    And you say, ``No.'' You just don't do that. That's kind of 
human nature.
    Every Governor that testified said, ``I'm very sympathetic 
to the needs of my fellow Governors, but don't shortchange my 
State.'' Now, that's both predictable and natural. How do you 
make decisions about priorities between States? We heard 
complaint that you're not spending enough, that the President's 
budget is not spending enough. And then, when we go down to the 
floor in another context, we will hear complaints that we're 
all drunken sailors and we're overspending everything. Somebody 
has to make some priority decisions. Ultimately, I guess, for 
the President's budget, that decision is made at OMB. I have 
served in the executive branch, and I know how the best 
intentions at the departmental level sometimes get shot down 
elsewhere.
    But the ultimate decision still constitutionally resides 
with us. And how do you make priorities between States? And can 
you give us any guidelines, as we have--when we have to make 
those decisions?
    Secretary Jackson. Well, I think--if you're talking about 
the supplemental, I think that the language was very clear as 
to what you wanted us to do. You said, ``Look at those areas 
that's most devastated in the most catastrophic way.'' And 
looking at it that way, it was clear where the monies should be 
divided, between, basically, Louisiana and Mississippi.
    I'd like to reiterate that even when the monies are 
allocated, we have the responsibility to make sure it's spent 
well. So, that's our task. We looked at the language that you 
gave us in the supplemental and divided the money accordingly.
    But it's important to understand, Senator, that we don't 
know if it's enough money, or not enough money, until they 
start spending it.
    Senator Bennett. Yeah.
    Secretary Jackson. Everybody keeps saying they don't have 
enough money. Let's spend some of the money first, and see what 
we get from spending the money. And then, if you don't have 
enough, then come back and talk to us. But right now, they're 
saying, ``We don't have enough money.'' We know that the $4.2 
billion that we're asking for today will augment what we've 
already given, the $11.5 million--to make sure that we address 
the needs of Louisiana. But let Louisiana get started. I think 
it was alluded to a few minutes ago, Mississippi has a plan in 
before us. We're evaluating the plan. We're still waiting on 
Louisiana's plan.
    Senator Bennett. Yeah.
    Secretary Jackson. So, I would suggest they do exactly what 
the Governor has done in Mississippi, bring all of the mayors, 
the county commissioners, together, sit down and submit a plan, 
so that we can actually respond to that plan and say, ``Let's 
go forward.''
    Senator Bennett. Okay, thank you.
    I note, Mr. Chairman, that your State suffered the 
equivalent of Hurricane Andrew, which, prior to Katrina, was 
the worst hurricane disaster we've ever had, which means all of 
the things in place for an Andrew-level disaster were exhausted 
in Mississippi, and then Louisiana was a bonus, beyond that. I 
think we need to keep that in mind as we examine all of the 
efforts of these good people.
    Chairman Cochran. It's a very good point, thank you.
    Senator Gregg.
    Senator Gregg. Thank you, Mr. Chairman.
    And I want to thank the witnesses for their work. It's a 
incredible challenge. This is a catastrophe of proportions 
which this country has never had to deal with before, and we 
haven't dealt with it as well as we should have. But I know 
that there's been a sincerity of effort on the part of the 
Secretaries who are here today.

 THREAT-BASED FUNDING FOR EMERGENCY PREPAREDNESS AND RESPONSE TACTICS 
                       OUTSIDE OF THE GULF STATES

    I'm interested in going back to the question which was 
raised by Senator Murray to you, Secretary Chertoff. She was 
essentially saying that she doesn't believe there's enough 
money in the funding stream for, I guess, first-responder and 
planning purposes relative to disasters outside of the gulf 
States. And so, maybe you could review with us how you're 
approaching that, especially relative to threat. Because I 
think one of the issues here, as I understand, is that some 
States are going to get less money, because you've decided to 
fund based on threat, but the funding is actually fairly 
constant, or actually being increased.
    Can you go over those numbers for us?
    Secretary Chertoff. Sure. I would say, actually, we find 
based on a risk. Threat is a part of risk, but it's not all of 
risk. Risk is measuring consequence, vulnerability, and threat, 
and putting them into a matrix in which you are able to assess 
what is the highest risk based on all those factors.
    We also, obviously, operate within the constraint of 
certain programs. And the State Homeland Security Grant 
Programs have certain parameters and requirements. The Urban 
Area Security Initiatives focus on cities. The budget item for 
targeted infrastructure protection focuses on infrastructure.
    That means that each program has to operate within the 
parameters of what Congress lays down. At the same time, 
sometimes what's not available in one program is available in 
another program.
    The general philosophy is this. First of all, with the 
amount of money that's proposed in the President's budget, 
we're talking about ultimately over $17 billion, with a ``b,'' 
in grant funding that would go to our various programs to help 
States and localities.
    Senator Gregg. Seventeen----
    Secretary Chertoff. Billion. That would be up to--spending 
from 2002 fiscal year to 2007 since we started, after 9/11, a 
total of $17.1 billion. That, by the way, does not consider the 
fact that we often support some of these issues with other 
kinds of funding. For example, if you want to deal with the 
issue of ports, as I testified about earlier, we've probably, 
since 9/11, spent a total of $10 billion on ports--not all in 
grants, but specific items for Coast Guard and Customs and 
Border Protection. Because the money we spend doesn't only come 
in grants to States and localities, but it comes in money we 
spend directly for services we provide as a matter of Federal 
resources.
    When we come to the grants, the general philosophy is this. 
We ought to be spending on capital investment, training, and 
equipment, things which allow the States to get essentially the 
additional help they need to put themselves in a position to 
prevent and respond to risks. What we generally don't want to 
be doing is paying for personnel costs, because then what we 
are doing is paying salaries for people that we don't employ, 
which is, I think, from a budgetary standpoint, probably the 
most perilous course to go down.
    We also recognize the fact that, of the $17 billion I've 
talked about, we've got a lot of money in the pipeline. And I 
want to echo what Secretary Jackson said. Sometimes we need to 
see the results of spending before we start to just shove more 
money into the pipeline. So that for this budget, although I 
think the total amount of money that we are proposing to spend 
on grants is less than last year, we're doing it mindful of the 
fact that there's over $5 billion that is awaiting drawdown.
    Senator Gregg. And that's first-responder money?
    Secretary Chertoff. No, that's all money under the 
programs. But a lot of that----
    Senator Gregg. But the $17 billion includes first-
responders.
    Secretary Chertoff. Correct. And that's money which is 
available for first-responders--not for salaries, but for 
equipment and training.
    We have spent literally billions directed in various first-
responder programs for new equipment and things of that sort. 
And I will tell you, Senator, that I have had conversations 
with mayors who are--will not dime out in the hearing, and they 
basically told me they've got the equipment they need, they've 
got the training they need. What they would really like us to 
do is pay for their personnel. And I think that is a line 
that--although we have sometimes crossed in certain 
circumstances, that's a line that, if we really jumped over, 
would open the door to having the Federal Government pay for 
basically all the law enforcement and first-responder salaries 
in the country, and that would be a huge philosophical change.

TSA PASSENGER FEE AND CAPITAL INFRASTRUCTURE OF BORDER SECURITY FUNDING

    Senator Gregg. I appreciate that. And I appreciate your 
clarifying that. I think it's important.
    Can I move on to another subject? I have been attempting to 
address the issue of border security, and specifically the 
issue of the capital infrastructure of our border security--the 
planes for the Customs, which are in serious disrepair, the 
unmanned vehicles, the physical facilities, the training 
facilities, the--to try to get a $1.2 billion initiative here 
which would pick up the capital items, knowing that the 
operating budget is coming, down the road.
    Initially, it was in last year's Defense bill. It was taken 
out when--the ANWR was taken out. It seems to me that in the 
$70 billion in this bill that's being asked for national 
defense, the purpose of which is to fight terrorism, that 
defending our borders and making sure we have adequate capital 
facilities necessary to support the people who are on the 
ground, the boots on the ground and the technology we need in 
order to give them the information they need in order to 
protect the border, especially the southern border, is just a 
logical extension of the war on terrorism, as integral a part 
as the war on terrorism as anything else we're doing, and that 
it should have been included in this supplemental that was sent 
up. Why wasn't it?
    Secretary Chertoff. Well, of course, I think we envisioned 
that, in the 2007 budget, there is a significant amount of 
money----
    Senator Gregg. No, Mr. Secretary, the 2007 budget is--we 
don't want to get into that, because it's a hollow budget, and 
we don't want to get into that. I want to know why it wasn't 
included in this supplemental, when it should have been.
    Secretary Chertoff. I think what I would say to you, 
Senator, is this. I'm well aware of the obstacles to some of 
the funding in the budget based on the fee. I still think the 
fee is the right idea. And certainly the total amount of 
spending in the budget, I think, is correct, and does put us in 
a much stronger position in border security. Now, if it were to 
turn out that the funding for that budget were not available, 
then I guess, you'd have to say, ``Well, is there an 
alternative basis?'' But at least based on what we've got now, 
in terms of going forward, what our plan is, in terms of----
    Senator Gregg. Well, Mr. Secretary, I'm almost tempted to 
say I'm going to make you live with it. You're going to get a 
budget that's $1.4 billion less than what you sent up, because 
you sent up a fee that was already rejected last year by the 
Congress. You send up a supplemental that doesn't include the 
funding you need for the capital items, when you're spending 
$70 billion in this supplemental on fighting terrorism. And 
where I--you know, I mean, I really should probably just say to 
the chairman, ``Give me the allocation that this administration 
sent up, and then ask the people of this country whether it's 
appropriate.''
    Secretary Chertoff. Let me say this to you, Senator----
    Senator Gregg. It's irresponsible not to have included in 
this supplemental that capital item, because if we don't pay 
for it in this supplemental, first off you're going to get 
significantly less, because we don't have the fees to cover 
your operating costs, and then you--you just won't be able to 
do that--those capital items, because they aren't paid for in 
your base budget.
    Secretary Chertoff. Let me try to put it this way. And I 
understand where you're coming from on this. I think the amount 
of money that we seek to spend in the 2007 budget is the right 
amount of money. I think the suggestion you're raising is that 
the money may not be funded because of the fee. And obviously 
if the fee were not funded, we would have to find some other 
way to fund that level of spending, which is the right amount 
of spending.
    I guess my reaction--and I'm still enough of an outsider in 
Washington--on the fee is this. Although I've been told it's a 
march up San Juan Hill to try to get the fee, and I may not be 
able to succeed in the march, although I'm certainly going to 
try this year, at the end of the day it's in our power, if we 
think the fee is the right thing to do, to get the fee. I think 
Congress originally envisioned the fee when it passed the 
legislation that set up TSA. I think it's the right thing to 
do. When people say--you know, I hear critics say, outside, 
``Well, you know, it's politically unrealistic,'' well, I mean, 
sometimes we have to take----
    Senator Gregg. Well, the fee is--Mr. Secretary, the fee is 
a straw dog, because the increase in the fee is not going to go 
to airline security, it's going to go--what we're looking at is 
border security that doesn't deal with airlines. We're looking 
at buying more planes, buying more unmanned vehicles, putting 
in place the training facilities, and hiring 1,500 new agents, 
and adding 1,000 or 2,000 new detention beds, none of which is 
an obligation of the person getting on an airplane and flying 
from here to there.
    Secretary Chertoff. Well----
    Senator Gregg. If you want to put in a fee that's related 
to this, you should have said, ``I want to charge 50 cents for 
everybody coming across the Mexican border or across the 
Canadian border.'' But you didn't. So, the quid pro quo doesn't 
exist, and what you've done is put us in a position of having 
to either underfund the Department or take money from somebody 
else who has legitimate need for these dollars, because you 
have basically sent up a budget that's hollow.
    And I guess my question was: When you had the opportunity 
to straighten this out with the supplemental, and $70 billion 
on the table for fighting the war on terrorism, why didn't you 
say, ``Well, there's the opportunity. Let's do the--at least 
the capital cost of this Department there?''
    Secretary Chertoff. Well, first of all, I obviously agree 
with you----
    Senator Gregg. I mean, it's more appropriate to fighting 
this war on terrorism that we address the immediate needs on 
the border--or it's equally important--as it is to restructure 
the Army, which is a core obligation of the Army, and not an 
emergency event.
    Secretary Chertoff. I certainly agree with this. I 
certainly agree these are critically important capital items. I 
agree with that. I agree with you that these capital items do 
relate to protection of our national security, because it is 
critical to the war on terror. I think the issue that you've 
raised about: What is the right funding source?--I guess all I 
can say is, although the fees in question--I mean, money is 
fungible. And maybe what you're saying to me is that if we 
don't get the fee filled, we ought to just basically take it 
out of TSA and say to the airlines, there'll be longer lines 
and more delays and that they basically will be visiting the 
consequences of the lack of a fee on the airlines.
    I understand the difficulties of this issue, Senator. And I 
guess what I can close by saying is, there's no doubt that the 
capital expenses are important. The budget envisions those--
that money should be spent. So, I mean, I don't think there's a 
quibble about that. It is related to national security. I think 
the issue we're dealing with here is how Pollyanna-ish I am in 
believing we can get the fee through. And I think we'll--
certainly it is legally possible to get the fee through, and in 
vision with Congress. And I hope that that is the approach that 
can work, as opposed to another approach.
    Chairman Cochran. The time is expired.
    Senator Allard.
    I'm--also call your attention to the fact that we have a 
vote occurring on the floor, and the second bells have rung.
    Senator Allard. Well, I--and then you're going to recess 
the committee, I guess. So, I don't have much time. And I'm 
just going to briefly make this comment with Secretary Woodley.
    I noticed in your comments you were very careful about 
saying ``repair to preexisting conditions on the levees.'' I 
thought that was carefully worded. Does that mean that when you 
rebuild the levees, they're not going to be any stronger than 
what they were, necessarily? Or they may be just that--in some 
cases, they may be just as strong as they were before, when 
there may be greater requirements for them. Does it mean that 
the levees are no higher than what they were before? And does 
the end result mean that those levees, that were designed for a 
category 3, when they're rebuilt, remain a category 3, and we 
haven't done anything to meet the challenges of a category 4 or 
5 hurricane?
    Mr. Woodley. Senator, the levees are not designed to a 
category 3, 4, or 5 hurricane, because that is not a--those 
categories are not significant or useful as design criteria. 
Our particular--the current authorized work that's being 
undertaken is being authorized--or is only able to return the 
levees to their authorized condition. Each one has an 
authorized level that we are not----
    Senator Allard. Who sets that authorized level?
    Mr. Woodley. The Congress does.
    Senator Allard. So, we--in legislation, we said that each 
levee--and there's different levees within here--we set the 
conditions for each one of those individual levees----
    Mr. Woodley. Yes, sir.
    Senator Allard [continuing]. Regardless of what the science 
may dictate it?
    Mr. Woodley. Oh, I'm sure that it was very carefully 
regarded, in terms of its science. I have no interest in 
criticizing your actions, sir.
    Senator Allard. Well, you know, I'm a little bit appalled 
here, Mr. Chairman. I mean, here we are setting standards, and 
we're putting them in legislation, and then, you know, maybe 
our technology changes, maybe conditions change in this area, 
and we're--set it here in Washington. It seems to me like we 
ought to let the experts in the field say, ``What--is it safe 
to meet the conditions and the threats to--of a hurricane 3, 4, 
or 5,'' and then apply that same standard to all of them. I'm 
kind of appalled at this.
    I think we ought to look at some legislation that would 
turn it back into the hands of the experts, and not have those 
mandates on it. And that's one of the issues I wanted to cover.

                        IMPROVEMENT OF FEMA MAPS

    The other one, I wanted to cover with you, Secretary 
Chertoff--on our maps. And I think that FEMA could do a better 
job on their maps. And I also think that when they give their 
figures, they say, ``Well, we have a certain percent of the 
population all taken care of.'' And they're not talking about 
the percent of the country they've gotten done, land mass. And 
I think that there are cheaper ways of doing those maps. And 
you just said, in your comments, that you're going to wait 
until March or May or some later month to get the maps. You 
know, the maps have already been done down there. And I don't 
understand why you don't have them.
    And so, I think that that--we need to look at the agency, 
FEMA, which is doing those maps. And I think maybe there might 
be some efficiencies that can happen there.
    And that's all I had, Mr. Chairman. I'm sorry that I don't 
have more time to pursue both of these issues, because of the 
votes that are pressing on the floor.
    Chairman Cochran. Thank you, Senator, very much.
    I'm going to have to go to the floor and vote, as well as 
Senator Allard. I don't know whether you--have you already 
voted?
    Senator Landrieu. No, I don't have much time.
    Chairman Cochran. Well, you don't have any time left. And I 
haven't asked a question that I need to ask.
    I'm going to--first of all, rather than ask a question, 
I'll just make this comment.
    Secretary Jackson, we appreciate very much your cooperation 
in permitting the use of Community Development Block Grant 
funds, and the program itself, as a means to get funds into the 
hands of the victims so they can make progress in recovering 
and rebuilding and overcoming the terrible disasters of these 
hurricanes. It shows a flexibility in government 
administration, I think, that is worthy of praise, and I wanted 
you to know how deeply we feel about that, and how we recognize 
you had a large part to play in that, as well as the Department 
of Homeland Security and the President and the White House 
itself.
    So, in the part of this request that you've submitted to 
us, you're asking for additional funds, over and above what 
we've already appropriated in the past, for that very purpose. 
But I'm convinced that it's working in Mississippi, and it's 
going to work in Louisiana, with the good efforts of local 
officials and--but you're going to have to monitor it. I--you 
know, I--and you admitted that. You--that's part of your 
responsibility.
    Do you feel as though you have enough resources to do the 
job of monitoring and making sure that the funds are being 
spent as they were intended and authorized by law?
    Secretary Jackson. Yes, I do, Mr. Chairman.
    Chairman Cochran. Okay.
    The Senator from Louisiana.
    Senator Landrieu. Mr. Chairman, as you know, I was in a 
markup all morning on the Energy bill, on a very important set 
of bills for Louisiana and the gulf coast, which is why I 
wasn't here earlier. And I also understand we have less than 1 
minute or 2 left on a vote. But I do have an extensive list of 
questions, as you gentlemen can imagine, from Louisiana and the 
gulf coast, and a great deal of comments. I will submit that in 
writing.
    I thank all three of you for your work, but there is a 
great deal more work that has to be done, whether it's levees, 
housing, or communications, mitigation issues, Mr. Secretary.
    And I look forward to working with all of you, and thank 
the chairman for his leadership.
    Chairman Cochran. Thank you very much, Senator Landrieu. We 
appreciate your contribution to the hearings yesterday, as well 
as your continued involvement helping making the decisions 
about how much funding we need to make available.

                     ADDITIONAL COMMITTEE QUESTIONS

    But we want to be responsive to the request the President 
has made for additional funding. The President is asking for 
over $19 billion for just the hurricane relief effort funding 
here, and a substantial amount more--$72 billion--for other 
needs that are pressing at the Department of Defense and the 
Department of State. We are aware of that.
    [The following questions were not asked at the hearing, but 
were submitted to the Departments for response subsequent to 
the hearing:]

 Questions Submitted to the Department of Housing and Urban Development
           Questions Submitted by Senator Christopher S. Bond

 GENERAL COMMENT FROM THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 
              ABOUT THE DATA USED TO RESPOND TO QUESTIONS

    As you know, many of the questions from the committee relate to the 
extent of damage to assisted housing units and HUD's estimated demand 
for disaster voucher program (DVP) assistance as a result of Hurricanes 
Katrina and Rita.
    To place the answers into context, we want to make clear that 
several different sources of data are used to answer the questions and 
the differences in the data sources will explain differences in unit 
counts. Answers to the questions below only refer to the impact of 
Hurricanes Katrina and Rita. The data sources are:
  --(1) FEMA Individual Assistance registrant information, including 
        unit inspection data, matched to the Social Security Numbers of 
        tenants of assisted housing (Vouchers, Public Housing, Project-
        Based Section 8, Section 236, Section 202, Section 811).--These 
        data allow for a direct comparison of damage to occupied 
        housing units across all of HUD's programs. These data are also 
        comparable to previously released data on the extent of damage 
        to all housing units affected by the disaster (http://
        www.dhs.gov/interweb/assetlibrary/
        GulfCoast_HousingDamageEstimates_021206.pdf).
      The FEMA data are useful for measuring likely demand relative to 
        current take-up for the DVP program and an overall discussion 
        of how the disasters affect the affordable housing stock 
        overall, including units occupied by voucher households.
      They are not as useful for determining the exact impact of the 
        storms on public and assisted housing units because (1) they 
        only reflect occupied units and (2) they lump units into only 
        three broad categories of minor, major, and severe damage. More 
        detailed and comprehensive inspections are required to assess 
        the full extent of damage incurred by individual public and 
        assisted housing developments.
  --(2) Housing Authority of New Orleans (HANO) direct inspections and 
        cost estimates.--HANO was the largest housing authority to be 
        substantially affected by Hurricane Katrina. At the time 
        Katrina struck, only 5,167 of the 7,100 HANO public housing 
        units were occupied. The FEMA data above only report on 
        occupied units. HANO's direct inspection reflects development-
        level inspections for all 7,100 units plus a substantial number 
        of units under development at the time of the storm. The data 
        on extent and type of damage to each development includes the 
        estimated cost to repair.
  --(3) Other affected PHAs in Mississippi and Louisiana.--HUD 
        conducted phone surveys of all housing authorities in the 
        affected areas to determine the extent of damage. Housing 
        authorities provided preliminary assessments of their damage 
        based on either visual inspections or more thorough 
        inspections. Specific estimates from insurance adjusters and 
        contractor bids are just now being developed and are not 
        available yet for this analysis.
  --(4) Privately-owned multifamily insured and assisted housing 
        units.--After Hurricanes Katrina and Rita struck, the 
        Department immediately initiated its damage assessment protocol 
        and process for all HUD-assisted properties (including the 
        senior and disabled housing) in the affected areas. The process 
        included initial telephone assessments (both of the physical 
        plant as well as the status of the residents) within the first 
        week of the disaster, followed by physical site visits to the 
        properties receiving moderate to severe damage and subsequent 
        individual meetings with each owner to discuss the repairs, 
        rehabilitation or rebuilding of the property. The Department 
        has completed all site visits and has commenced meetings with 
        the property owners. As with the public housing assessments, 
        these estimates are based on damage to the developments in 
        total and do not categorize individual units in the development 
        as having minor, major or severe damage.
    Question. Secretary Jackson, for the record, please identify all 
damage in the Gulf States to HUD-assisted housing, including all public 
housing, section 8 housing, section 202 housing, section 811 housing, 
HOPWA and housing assisted with HOME and Homeless assistance. Does HUD 
have a plan to address these housing needs? Where will the fund come 
from? Is there a schedule for rehab and are there projects that will be 
demolished?
    Answer. As noted above, this response is preliminary. Most of the 
housing authorities and private owners are just now getting very 
detailed cost estimates to repair the damage, including how much will 
be covered by insurance and how much will not.
    Using data from surveys of public housing authorities, 23,206 
public housing units sustained damage. Housing authorities report 716 
public housing units were destroyed. In the properties sustaining 
damage, 12,249 of the public housing units were occupied as of March 
10, 2006. It should be noted that the term ``damaged'' has varied 
meaning, ranging from minor damage (missing shingles, broken windows) 
to severe damage (uninhabitable, complete gutting of unit needed). Unit 
assessments of damaged/destroyed units in the Katrina-impacted areas 
are continuing and the numbers reported to date will change. For plans 
to rebuild public housing please see question 10.
    Using the data from a telephone survey of multifamily property 
owners in Alabama, Louisiana, and Mississippi and on-site inspections 
of the developments with severe damage, 7,487 units were in properties 
with modest damage and 14,349 units were in properties with major/
severe damage or destroyed. Owners report 9,019 residents are relocated 
as a result of damage. For plans to rebuild the multifamily assisted 
stock please see question 10.
    We have some limited information on damage to homeless facilities. 
In the New Orleans Continuum of Care, of the approximately 2,781 
homeless housing units supported prior to Hurricane Katrina, 
approximately 268 were HUD funded for either Acquisition or 
Rehabilitation or both. Only 1 of the 10 HUD-funded homeless facilities 
is currently habitable, 1 has been completely destroyed, 4 are under 
rehabilitation and the remaining 4 are waiting for funding for 
rehabilitation. In total, New Orleans hopes to be able to replace about 
75 percent of its homeless housing by June 1, 2006, using non-HUD 
resources including insurance claim funds.
    Interim reports from the other Gulf States and Continuums indicate 
that the impact of the loss of homeless facilities was even greater 
because the inventory in each community was smaller and their locations 
made them even more vulnerable. Current levels of rebuilding are not 
equal to the urban locations. HUD will begin a detailed assessment in 
those areas starting the week of March 27.
    HUD's Office of Special Needs Assistance Programs provided 
technical assistance to homeless providers in the Gulf States by 
transporting computer hardware in the days immediately following the 
hurricanes to enable them to account for clients and access HUD 
financial systems.
    The HOPWA program deployed technical assistance staff in September 
to work along the Gulf Coast in response to Hurricanes Rita and Katrina 
in the affected areas of Louisiana, Mississippi, Texas, and Alabama. 
The initial loss of 38 dedicated units of HIV-specific housing in New 
Orleans has been the primary focus of the City of New Orleans and 
technical assistance providers. To date, 8 of the units have been 
restored, an increase in 15 units of housing through a HOPWA 
Competitive program grant has been achieved, and repairs and 
rehabilitation on another 32 units are underway with the goal of 
completion by July 1. In addition, the City of New Orleans will likely 
introduce a new Tenant Based Rental Assistance program through HOPWA 
for an additional 50 units on July 1, 2006, and another 50 units on 
January 1, 2007. The 15 dedicated units of HIV-housing outside of New 
Orleans in Mississippi and Alabama re-opened immediately with limited 
damage. In Florida, 10 units were severely damaged in the City of West 
Palm Beach, and 3 units were severely damaged in Key West. The HIV/AIDS 
housing providers are poised to partner with all other special needs 
developers to utilize the supplemental Community Development Block 
Grant disaster recovery funds as well as Housing Tax Credits 
appropriated to assist in recovery efforts.
    HOME funds are distributed to States and local governments that 
make the funding decisions; therefore, we do not know which specific 
HOME-assisted properties were damaged as a result of Hurricane Katrina. 
We have notified the CPD field offices in the impacted States that HUD 
would entertain waivers of HOME requirements depending upon the extent 
of damage.
    Congress approved and the President signed into law (December 30, 
2005) $11.5 billion in disaster recovery funds through the Community 
Development Block Grant Program to assist the Gulf Region in the 
rebuilding process. Further, on February 16, 2006, President Bush 
requested an additional $4.2 billion for Louisiana because of its 
unique needs to mitigate against future flood risks. While such funds 
are managed by the States, it is anticipated that a major portion of 
the disaster recovery funds would be used to replace the pre-Katrina 
housing inventory for all of the affected areas. The $11.5 billion in 
CDBG disaster recovery funds may be used to rehabilitate or replace 
damaged housing and public facilities, including facilities operated by 
homeless providers. The five Gulf States were each required to develop 
an Action Plan for Disaster Recovery addressing how the funds will be 
used and each State will individually administer their share of these 
appropriated funds based on their Action Plans. All five States have 
submitted Action Plans to HUD; the State of Mississippi's Plan has been 
approved and the award announced on April 3, 2006. The States included 
their homeless needs assessments for individuals and families in their 
respective Plans. There is no rehabilitation or demolition schedule in 
place at this time.
    Question. Does HUD need additional S&E in order to meet its 
responsibilities with regard to CDBG and rebuilding the Gulf? What are 
the specific job responsibilities and what accountability requirements 
has HUD put in place?
    Answer. As you know, the Congress has appropriated $11.5 billion so 
far and is now considering a request for an additional $4.2 billion in 
disaster recovery assistance. Funding of this magnitude requires that 
HUD be able to ensure that it is used properly and as intended for the 
rebuilding of communities in the Gulf Coast States. In order to handle 
this tremendous workload, HUD identified approximately 12 positions and 
believes that the Department can absorb the additional costs from our 
fiscal year 2006 Salaries and Expenses account. The positions include 
Community Planning and Development Specialists, Financial Management 
Analysts and a Program Support Specialist. HUD is hoping to attract 
applicants with specialized experience in CPD programs and disaster 
recovery efforts. HUD recruited for some of these positions, which are 
located both in Headquarters and in each of the States impacted, on the 
Office of Personnel Management's USAJOBS website, as well as in local 
newspapers and industry newsletters. More than 800 applications were 
received. HUD is reviewing applications now and expects to make job 
offers shortly. Going forward, proper oversight will involve at least 
this level of staffing, as well as significant travel and other costs 
to maintain accountability through compliance monitoring, technical 
assistance, oversight and to train staff.
    Question. What additional CDBG funds does Texas need? Texas claims 
it should receive an additional $2 billion to care for displaced 
families. What is HUD's assessment of these funding needs, especially 
as compared with increased rental units, increased jobs for low-income 
families and other funds these families received from FEMA? Please 
provide data on the economic benefit to Houston and Texas in filling 
vacant housing units, jobs and other benefits from the infusion of 
FEMA- and HUD-related funds?
    Answer. The State of Texas issued a report entitled, ``Texas 
Rebounds 2006 Hurricane Needs Report''. The report covers a broad range 
of funding needs, totaling $2 billion in request; HUD has focused its 
assessment on Texas' housing request of $322 million. HUD has reviewed 
the housing request of the report and finds that HUD data support some 
but do not support other of the unmet housing needs documented in it. 
It is important to note, however, that most of the housing request is 
associated with uninsured damages due to Hurricane Rita, while only a 
modest portion is associated with the costs for evacuees.
    Most of the damage caused by Hurricane Rita for which Texas is 
seeking funding is due to the effects of scattered wind damage. In 
particular, Texas is requesting assistance related to scattered 
uninsured housing damage, an increase of the Federal share on payments 
for infrastructure repairs, and reimbursing private utilities for the 
damage that they have already repaired (in lieu of raising rates). 
These needs are very different than those in Louisiana and Mississippi, 
which experienced concentrated damage due to flooding and storm surge, 
and overall damage impacting high percentages of all housing units in 
the States as compared to relatively low percentages of total housing 
impacted in Florida and Texas. HUD's formula allocation of the $11.5 
billion in fiscal year 2006 CDBG disaster funds was targeted much more 
toward the unexpected flooding damage in areas not in flood zones and 
the concentrated damage associated with Hurricanes Katrina and Rita.
    In the area of housing, Texas claims that 75,000 homes had major 
damage or were destroyed, and that 40,000 of those were uninsured. In 
general, HUD's analysis of FEMA Individual Assistance inspection data 
finds only 12,103 units in Texas with major or severe damage, of which 
4,810 were uninsured owners and an additional 1,921 were single-family 
rentals (which we assume to be uninsured). See HUD's Office of Policy 
Development and Research table on housing unit damage due to Hurricanes 
Katrina, Rita, and Wilma at: http://www.dhs.gov/interweb/assetlibrary/
GulfCoast_HousingDamageEstimates_021206.pdf. The difference between 
75,000 and 12,103 may only be definitional, however, since (a) HUD's 
data show 140,000 units in Texas having some damage (mostly minor), and 
(b) HUD agrees with the Texas' estimate that $322 million is likely 
needed to repair damaged uninsured housing. It should be noted, 
however, that HUD estimates Florida's uninsured housing damage at 
greater than that of Texas.
    Texas is also asking for $45 million in LIHTC allocation to 
construct or rehabilitate approximately 7,700 affordable rental units. 
HUD is concerned that an increased allocation of LIHTC for Texas would 
result in more overbuilding in a rental market that continues to have 
high vacancy rates even after taking in Hurricane Katrina evacuees. HUD 
believes that the LIHTC funds are unlikely to be useful for repairing 
damaged rental units because most of those were single-family units 
that are very difficult to serve with LIHTC. The biggest component of 
costs for evacuee services is in the area of health care and education, 
costs that we would expect to come from programs other than CDBG.
    Question. What are the out-year costs for section 8 assistance in 
the Gulf?
    Answer. In line with the 2006 Department of Defense Appropriations 
Act, we have identified the 19 PHAs that received the most significant 
damage from Hurricane Katrina and/or Hurricane Rita. For these 20 PHAs, 
we have calculated the costs based on the current Section 8 assistance. 
The out-year costs are adjusted by applying the Annual Adjustment 
Factor.
    The following table summarizes the 19 most severely impacted PHAs 
and each Agency's section 8 assistance:

----------------------------------------------------------------------------------------------------------------
                                                                                      CY 2006
                                                                                     Prorated
                                                                                      Housing
                                                                                    Assistance        CY 2006
                    HA Code                                  HA Name                 Funding--    Prorated Admin
                                                                                      Housing           Fee
                                                                                    Assistance
                                                                                     Payments
----------------------------------------------------------------------------------------------------------------
LA001.........................................  NEW ORLEANS HOUSING AUTHORITY...     $63,415,296      $4,173,275
LA005.........................................  LAFAYETTE (CITY) HOUSING               5,867,870         734,915
                                                 AUTHORITY.
LA012.........................................  KENNER HOUSING AUTHORITY........       3,038,122         282,798
LA013.........................................  JEFFERSON PARISH HOUSING              13,075,512       1,292,804
                                                 AUTHORITY.
LA024.........................................  BOGALUSA HOUSING AUTHORITY......         358,966          42,099
LA031.........................................  MAMOU HOUSING AUTHORITY.........          52,038           8,978
LA046.........................................  VINTON HOUSING AUTHORITY........         128,906          21,601
LA063.........................................  SULPHUR HOUSING AUTHORITY.......         414,378          52,365
LA067.........................................  ST LANDRY PARISH HSG AUTHORITY..       1,969,105         303,100
LA075.........................................  PONCHATOULA HOUSING AUTHORITY...         178,134          26,283
LA101.........................................  DENHAM SPRINGS HOUSING AUTHORITY         388,845          66,279
LA129.........................................  RAPIDES PARISH HOUSING AUTHORITY       1,000,499         126,758
LA132.........................................  AVOYELLES PH. POLICE JURY, SEC.          370,705          53,170
                                                 8 HSG. AGENCY.
MS004.........................................  MERIDIAN HOUSING AUTHORITY......         597,920          64,149
MS005.........................................  HA BILOXI.......................       1,015,906          98,602
MS030.........................................  HA MISSISSIPPI REGIONAL NO 5....       4,727,757         654,846
MS040.........................................  MISS REGIONAL H/A VIII..........      23,342,726       2,545,069
MS057.........................................  HA MISSISSIPPI REGIONAL NO 7....       3,871,036         559,007
MS107.........................................  Long Beach......................         109,666          11,938
                                                                                 -------------------------------
                                                TOTAL...........................     123,923,387      11,118,036
----------------------------------------------------------------------------------------------------------------

    Question. Has HUD looked at the needs of the HUD IG in preventing 
fraud and abuse? What does the IG need? What additional funding needs 
does HUD have with regard to administering HUD funding? Please identify 
by program and staffing all transfers of resources to ensure disaster 
relief is used efficiently.
    Answer. Traditionally and in this case, HUD has not opined on the 
needs of the IG, instead leaving that up to the IG to independently 
determine its needs. The Department notes, however, that the President 
has requested $13.5 million in the recent Katrina supplemental for 
various Inspector Generals, including the HUD Inspector General. The 
funds are requested in an overall central pot to be distributed by the 
Inspector General of Department of Homeland Security. The Department 
has taken great care to ensure that management of Federal funds, and in 
specific the management of Hurricane related relief funds, includes 
deliberate efforts to prevent fraud and abuse (to include attention to 
additional needs the HUD IG may determine appropriate). The 
Department's focus on housing response and recovery related to 
Hurricane relief is properly aggressive, all the while, we have not 
lost sight of our responsibilities to ensure that we are vigilant about 
ensuring that HUD funds are being used properly and for the purposes 
for which they are intended. It is imperative that none of HUD's funds 
are misused or wasted. You should know, that as requested by OMB, HUD 
has provided a procurement and internal funds control plan and will 
continue to report on and update this plan. Further, we have issued a 
memorandum to all HUD contracting personnel and purchase cardholders 
that provide guidance to govern purchases in response to Hurricane 
Katrina and other rescue and relief operations.
    Question. How many beneficiaries of HUD-assisted housing in LA and 
MS have been relocated post-Hurricanes Katrina or Rita?
    Answer. Immediately prior to Hurricanes Katrina and Rita, a large 
number of households evacuated from the likely impact areas. Many of 
those that evacuated were only out of their homes a short time, 
returning to the homes with no or relatively minor damage. Over time, 
households continue to return to their homes when told that the units 
are habitable.
    As noted in the introduction to this letter, HUD has used several 
data sources to answer these questions. Those data sources include 
matching HUD records against FEMA data as well as surveys of our public 
housing authorities and multifamily property owners. On the issue of 
number of households relocated, these sources do not reconcile. The 
most consistent data we have on relocation comes from HUD's data 
matching to FEMA's registrant data. If those families are now being 
served by KDHAP or DVP, we have very certain information about their 
current relocation status. If not, we can only speculate. The table 
below provides an estimate by State and HUD program of the number of 
HUD-assisted households in housing units that experienced damage 
according to FEMA records. We speculate that households most likely to 
experience long-term displacement are those households in units that 
experienced major or severe damage. These homes require substantial 
repairs just to make them habitable. In Louisiana, this is 12,641 while 
in Mississippi it is 2,168.\1\
---------------------------------------------------------------------------
    \1\ A survey of the private multifamily-assisted stock indicated 
that 8,278 households were relocated in Louisiana and 741 in 
Mississippi. This is much greater than the number of seriously damaged 
multifamily assisted units identified with the FEMA data. At this 
point, we have not been able to reconcile the data matching results on 
FEMA damage against the survey results from the multifamily owners.

------------------------------------------------------------------------
                                          Occupied Units  Occupied Units
              Program Type                  with Minor      with Major/
                                              Damage       Severe Damage
------------------------------------------------------------------------
Louisiana:
    Section 8 Vouchers..................           6,796           6,844
    Section 8 Project-Based.............           1,711           1,660
    Section 202.........................              59              95
    Section 811.........................              29              37
    Public Housing......................           3,018           3,699
    BMIR................................              58              14
    Section 236.........................             168             259
    Homeless and Special Needs Families.              12              33
                                         -------------------------------
      TOTAL.............................          11,851          12,641
                                         ===============================
Mississippi:
    Section 8 Vouchers..................           3,488           1,175
    Section 8 Project-Based.............           1,284             271
    Section 202.........................              12               6
    Section 811.........................               2  ..............
    Public Housing......................           1,406             710
    BMIR................................               3  ..............
    Section 236.........................               7               5
    Homeless and Special Needs Families.               4               1
                                         -------------------------------
      TOTAL.............................           6,206           2,168
------------------------------------------------------------------------
Source: HUD data matched to FEMA 2/12/06 extract.

    Question. Where are displaced families living now (number by city 
and State)? Please include those that have been relocated to vacant PH 
units in other cities, served by Section 8 or other HUD aid in other 
cities, and who have received KDHAP emergency rental assistance. Also 
include those that are currently receiving housing assistance from a 
city or State through FEMA's 403 ``public assistance'' program.
    Answer. Most of the assisted families initially displaced by 
Hurricanes Katrina and Rita have returned to their homes, even if the 
homes incurred minor damage. An exact count on the number of families 
still displaced is a function of what HUD knows and what HUD can 
surmise based on the available data. What HUD knows is that households 
referred to the KDHAP program were most certainly displaced, it was a 
condition for program participation. For households not yet referred to 
the KDHAP program but had major or severe damage, they are probably 
also displaced. The table below shows the total households who had 
either been offered a KDHAP/DVP voucher as of March 8 or whose units 
had major or severe damage according to FEMA inspections, broken down 
by both where they had lived pre-Katrina/Rita and the last known 
address from the KDHAP program or FEMA's data. The ``FEMA Rental 
Assistance'' category refers to individuals whose FEMA's data system 
shows had received a FEMA rental assistance payment since 11/1/2005. 
The Other or Unknown category reflect FEMA registrants whose units had 
major or severe damage, with FEMA's last known address different than 
their unit's damaged address. We do not have information on the number 
of HUD assisted households served by FEMA's 403 ``public assistance'' 
program.

----------------------------------------------------------------------------------------------------------------
                                                                        Pre-Katrina/Rita Home State
       Last Known Address State/Type of Assistance        ------------------------------------------------------
                                                             Total        AL         LA         MS         TX
----------------------------------------------------------------------------------------------------------------
AL: KDHAP-DVP............................................        419        187        168         64  .........
    FEMA rental assistance...............................         77         11         41         25  .........
    Other or Unknown.....................................        112         23         66         23  .........
                                                          ------------------------------------------------------
      Total..............................................        608        221        275        112  .........
                                                          ======================================================
AR: KDHAP-DVP............................................        117  .........        111          5          1
    FEMA rental assistance...............................         51          1         49          1  .........
    Other or Unknown.....................................        101  .........         95          6  .........
                                                          ------------------------------------------------------
      Total..............................................        267  .........        255         12  .........
                                                          ======================================================
CA: KDHAP-DVP............................................        145          1        127         17  .........
    FEMA rental assistance...............................         42  .........         35          7  .........
    Other or Unknown.....................................         68  .........         62          6  .........
                                                          ------------------------------------------------------
      Total..............................................        254  .........        224         30  .........
                                                          ======================================================
FL: KDHAP-DVP............................................        165          1        115         49  .........
    FEMA rental assistance...............................         59  .........         34         25  .........
    Other or Unknown.....................................         57  .........         41         16  .........
                                                          ------------------------------------------------------
    Total................................................        280  .........        190         90  .........
                                                          ======================================================
GA: KDHAP-DVP............................................      1,532         12      1,337        183  .........
    FEMA rental assistance...............................        132  .........        116         16  .........
    Other or Unknown.....................................        139  .........        119         20  .........
                                                          ------------------------------------------------------
      Total..............................................      1,791  .........      1,572        219  .........
                                                          ======================================================
LA: KDHAP-DVP............................................      4,612  .........      4,577         34          1
    FEMA rental assistance...............................        716  .........        704         11          1
    Other or Unknown.....................................      1,064  .........      1,044         18          2
                                                          ------------------------------------------------------
      Total..............................................      6,392  .........      6,325         63          4
                                                          ======================================================
MS: KDHAP-DVP............................................      1,507  .........        379      1,128  .........
    FEMA rental assistance...............................        501  .........         77        424  .........
    Other or Unknown.....................................        646  .........        105        541  .........
                                                          ------------------------------------------------------
      Total..............................................      2,654  .........        561      2,093  .........
                                                          ======================================================
TX: KDHAP-DVP............................................      6,724          1      6,608         99         16
    FEMA rental assistance...............................        646  .........        560          6         80
    Other or Unknown.....................................      1,023  .........        946         22         55
                                                          ------------------------------------------------------
      Total..............................................      8,392  .........      8,114        127        151
                                                          ======================================================
Other States: KDHAP-DVP..................................        891          1        746        144  .........
    FEMA rental assistance...............................        234          1        186         45          2
    Other or Unknown.....................................        377  .........        313         63          1
                                                          ------------------------------------------------------
      Total..............................................      1,502          2      1,245        252          3
                                                          ======================================================
      TOTAL: KDHAP-DVP\1\................................     16,112        203     14,168      1,723         18
        FEMA rental assistance...........................      2,458         13      1,802        560         83
        Other or Unknown.................................      3,587         23      2,791        715         58
                                                          ------------------------------------------------------
          Total..........................................     22,140        223     18,761      2,998       158
----------------------------------------------------------------------------------------------------------------
\1\ The total number of individuals referred to KDHAP/DVP as of March 8 was 17,260. This difference is due to
  data matching issues between the FEMA and KDHAP/DVP files.

    Question. What is the income and employment profiles of these HUD 
beneficiaries, prior to Hurricane Katrina, to provide a complete sense 
of the demographic make-up of residents served by HUD (for instance, 
many of the anecdotes argue that many of the public housing residents 
were employed in the hospitality/restaurant industry)?
    Answer. Based on the 6 months prior to Katrina, there were 
approximately 1,500 new records entered into the PIC system for 
Louisiana, which showed an average annual tenant income of $8,400. This 
is very close to the State-wide income average of all existing voucher 
tenants, which is $8,847. This is well below the 30 percent of median 
income State average for a family of four of $12,500 for the entire 
State. In contrast, PIC data shows the existing average tenant annual 
income in Mississippi for the same time period to be $9,046. For the 6 
months prior to Katrina, there were approximately 900 new records 
entered into the PIC system showing an annual tenant income of $8,000. 
This is also significantly less than the 30 percent of median income 
State average for a family of four at $11,600.
    The Department does not keep employment occupational data for any 
voucher or public housing recipients but recommends relying on BLS data 
for close approximation. Based on the Department of Labor's Bureau of 
Labor Statistical (BLS) data from November 2004, the New Orleans MSA 
showed approximately 11 percent employment in the BLS labor category of 
``Food Preparation and Serving Related Occupations'' while the State of 
Louisiana as a whole had 9 percent engaged in the same labor category. 
BLS data for Mississippi shows the Biloxi-Gulfport-Pasacagoula MSA at 
almost 12 percent in the ``Food Preparation and Serving Related 
Occupations'' with the State of Mississippi showing slightly above 8 
percent in the same labor category.
    Question. How many public and assisted-housing developments were 
damaged by the storm/by flooding? Please provide this information as to 
the number of units by city and parish/county?
    Answer. Using data from surveys of public housing authorities, 
23,206 public housing units sustained damage. Housing authorities 
report 716 public housing units were destroyed. In the properties 
sustaining damage, 12,249 of the units were occupied as of March 10, 
2006. It should be noted that the term ``damaged'' has varied meaning, 
ranging from minor damage (missing shingles, broken windows) to severe 
damage (uninhabitable, complete gutting of unit needed). Unit 
assessments of damaged/destroyed units in the Katrina-impacted areas 
are continuing and the numbers reported to date will change.
    The following chart identifies the damage in the States of Alabama, 
Mississippi and Louisiana for the Public Housing portfolio.

                         HURRICANE DAMAGED UNITS
------------------------------------------------------------------------
                                           No. Destroyed    No. Damaged
                                               Units           Units
------------------------------------------------------------------------
LOUISIANA...............................  ..............           2,411
MISSISSIPPI.............................             316           1,183
ALABAMA.................................  ..............           4,438
FLORIDA.................................  ..............           6,821
TEXAS...................................  ..............           1,228
NEW ORLEANS.............................             400           7,125
                                         -------------------------------
      Total Units.......................             716          23,206
------------------------------------------------------------------------

    Using the data from a telephone survey of multifamily property 
owners and on-site inspections of the developments with severe damage, 
7,487 units were in properties with modest damage and 14,349 units were 
in properties with major/severe damage or destroyed. Owners report 
9,019 residents are relocated as a result of damage.
    The following chart identifies the damage in the States of Alabama, 
Mississippi and Louisiana for the HUD-assisted multifamily portfolio 
including (Section 8, Section 202, and Section 811):

----------------------------------------------------------------------------------------------------------------
                                                                                    Properties
                                                    Properties      Units with      with Severe     Units with
                      State                         with Modest    Modest Damage     Damage or     Severe Damage
                                                      Damage                         Destroyed     or  Destroyed
----------------------------------------------------------------------------------------------------------------
Alabama.........................................              20           1,386              19           1,790
Louisiana.......................................              15           1,749              74           9,312
Mississippi.....................................              41           4,352              26           3,247
                                                 ---------------------------------------------------------------
      TOTALS....................................              76           7,487             119          14,349
----------------------------------------------------------------------------------------------------------------

    Question. What are the current HUD plans for these properties? What 
portion will be renovated, demolished and rebuilt, or not replaced at 
all? For properties that HUD does not plan to replace, what is the 
rationale? What funds or new flexibilities are needed to support such 
activities, after accounting for available insurance payments?
    Answer. Public Housing.--Plans to rebuild public housing are 
locally driven. PHAs will evaluate damage and make a determination on 
the viability of the damaged units. PHAs are also filing claims with 
their insurance carriers. Insurance reimbursements will be the primary 
source of funding for repairs and replacement of public housing damaged 
by Hurricane Katrina. To assist the PHAs in their recovery efforts, the 
Department has taken the following steps.
    Awarded $29.7 million from the Capital Fund Reserve for Emergencies 
and Natural Disasters to PHAs in the Gulf Coast region during fiscal 
year 2005. These awards exhausted the fiscal year 2005 Capital Fund 
Reserve and were made to PHAs in the Gulf Region within several weeks 
of the disasters. As mandated by Congress, HUD may only provide funding 
for emergencies and natural disasters if there are appropriated funds 
available from the Federal fiscal year in which the event occurred. 
Currently, no other Capital Fund disaster assistance is available for 
PHAs affected by Hurricane Katrina.
    Provided technical assistance to PHAs in the impacted area. HUD and 
contractor staff are working with housing agencies to conduct physical 
needs assessments, complete insurance applications, procure services to 
repair units, and submit applications for various public and private 
resources.
    Will permit combining voucher funding with public housing funding. 
HUD will soon issue guidance to PHAs in the most heavily impacted areas 
of Louisiana and Mississippi to combine calendar 2006 voucher funding 
and public housing funding to assist families who were receiving 
housing assistance under the United States Housing Act of 1937 
immediately prior to Hurricane Katrina or Rita and were displaced from 
their housing by Hurricanes Katrina or Rita. This combining of funds 
was authorized by section 901 of the Department of Defense 
Appropriations Act, 2006, (Public Law No. 109-148).
    In addition, the rehabilitation of public housing is an eligible 
use of the Katrina CDBG funds, including the $11.5 billion appropriated 
and the additional $4.2 billion in the pending request. State and local 
officials can decide on whether or not to use CDBG funds for this 
eligible activity.
    Multifamily Assisted.--The Department's goal is to repair, 
rehabilitate or re-build these affordable housing units as soon as 
possible with an emphasis on preservation of units. The Department has 
been and will continue to meet with each owner and lender (if 
applicable) to determine next steps in repairing, rehabilitating or 
rebuilding the projects. The Department conducted a group meeting with 
owners and managers of damaged properties on January 27 in New Orleans. 
Owners learned about loans, grants and other programs available to 
assist in their rebuilding from HUD, SBA, FEMA and State agencies. The 
Department anticipates conducting more meetings of this nature in the 
future.
    The owner is responsible for developing a plan that includes a work 
write-up, cost estimate and identification of sources of funds to pay 
for the work to be completed. HUD is requiring that those plans be 
reviewed and approved by the Department.
    The Department does understand from the owners that they are 
experiencing difficulties with insurance companies regarding damage 
assessments and the amount of insurance proceeds that is delaying the 
efforts to complete the necessary plans to submit to the Department. We 
are requesting that owners develop a secondary plan in the event 
insurance proceeds are not forthcoming in a timely manner.
    For the States of Mississippi and Alabama, a majority of the owner 
plans submitted to and reviewed by HUD to date indicate that the owners 
are completing the repairs or attempting to obtain financing to do 
rehabilitation or rebuild the projects. For the State of Louisiana, the 
Department is encouraging owners to repair, rehabilitate or rebuild the 
projects but has not yet reviewed enough plans to know what portion of 
the units may not be replaced.
    The Department's goal is to work with the owners and lenders to 
repair, rehabilitate or re-build these affordable housing units to the 
greatest extent possible and as soon as possible. If an owner chooses 
to prepay the mortgage and there are no use restrictions or project-
based rental assistance, the Department has no authority to require the 
owner to replace the units. However, the Department is working very 
diligently with the owners and lenders to ensure that the housing is 
replaced.
    Rehabilitation and rebuilding decisions must also consider factors 
external to the actual building itself. Those external factors are 
many, but several of the principal ones are availability of 
infrastructure, number of families that will be returning to the 
disaster area and the number that have permanently relocated elsewhere, 
the community redevelopment plans and flood mitigation requirements. 
The Department is taking an active role with each owner in dealing with 
these issues.
    Question. What is the status of the current staff at HANO and other 
housing agencies in the region? If operations remain dispersed, what 
are the plans for creating capacity to implement such plans?
    Answer. All HANO operations and staff are now centrally located in 
New Orleans. Other Public Housing Agencies (PHAs) in the region who 
were impacted by the hurricane have resumed operations. However, due to 
the devastation many PHAs experienced, housing operations are centered 
on damage assessment, procurement of services to repair damaged units 
and tenant outreach. PHAs are expending an enormous amount of time 
surveying damaged units, creating detailed cost estimates and drafting 
specifications for repairs. The lack of qualified contractors has also 
hindered housing agencies' ability to repair or rebuild units in an 
expeditious manner. Additionally, tenant outreach efforts have 
increased as residents begin to migrate back to their communities. The 
increase in procurement and tenant outreach is occurring while many 
housing agencies have experienced staff shortages due to the lack of 
housing in the Gulf Coast region.
                                 ______
                                 
       Questions Submitted to the Department of Homeland Security
               Questions Submitted by Senator Judd Gregg

                         DHS INSPECTOR GENERAL

    Question. Please provide a breakdown of the $13,509,539 in 
supplemental appropriations requested for the Department of Homeland 
Security Office of the Inspector General (IG).
    What level of funding is requested to be transferred to each 
department or agency IG outside of DHS?
    Answer. The funding requested is to be transferred as follows:

------------------------------------------------------------------------
                           IG                                 Amount
------------------------------------------------------------------------
DOD.....................................................        $325,868
DOJ.....................................................         500,000
DOL.....................................................       2,000,000
DOT.....................................................       1,200,000
ED......................................................       1,500,000
EPA.....................................................       1,050,000
GSA.....................................................         541,625
HHS.....................................................       2,669,846
HUD.....................................................       3,000,000
SSA.....................................................         277,200
USDA....................................................         445,000
                                                         ---------------
      Total.............................................      13,509,539
------------------------------------------------------------------------

    Question. What level of funding is requested for the DHS IG?
    Answer. DHS IG did not submit a funding request, $15 million was 
already provided in a previous supplemental.
    Question. How do these amounts compare with dollars identified to 
be needed by each IG to support hurricane-related audit activities?
    Answer. The breakdown of the $13,509,539 requested as listed in the 
answer above and in the chart below has been identified as what will be 
needed by each IG to support hurricane-related audit activities. While 
the department has information about each agency IG request to support 
hurricane-related audit activities, that information is considered pre-
decisional and not releasable.

------------------------------------------------------------------------
                           IG                                 Amount
------------------------------------------------------------------------
DOD.....................................................        $325,868
DOJ.....................................................         500,000
DOL.....................................................       2,000,000
DOT.....................................................       1,200,000
ED......................................................       1,500,000
EPA.....................................................       1,050,000
GSA.....................................................         541,625
HHS.....................................................       2,669,846
HUD.....................................................       3,000,000
SSA.....................................................         277,200
USDA....................................................         445,000
                                                         ---------------
      Total.............................................      13,509,539
------------------------------------------------------------------------

    Question. Why is the administration proposing the DHS Inspector 
General transfer appropriations to other Federal Inspector General 
offices rather than proposing supplemental funds be directly 
appropriated to each of the Department IGs supporting this effort?
    Answer. Prior to Hurricane Katrina, the President's Council on 
Integrity and Efficiency/Executive Council on Integrity and Efficiency 
(PCIE/ECIE) had established a Homeland Security Roundtable based on 
their collective experience after the 9/11 attacks and their clear need 
to coordinate activities on critical, cross-cutting homeland security 
challenges. As the lead agency for the Homeland Security Roundtable, 
DHS IG became a natural fit to lead the hurricane recovery oversight 
effort. Because of the many cross-agency roles and issues involved in 
the Hurricane relief efforts, the Federal Inspector Generals (IGs) 
wanted to facilitate coordination and achieve consistent reporting in 
order to effectively oversee the billions in recovery dollars. 
Therefore, rather than proposing several supplemental requests to 
directly appropriate funds to each IG supporting this effort, we 
believe that requesting a supplemental appropriation for DHS IG, as the 
lead agency, was an effort to expedite the funding and ease the related 
administrative burden of numerous funding proposals while assisting 
with inter-agency coordination and where appropriate, leveraging of 
people, resources, and time.

                        USCG PAY PARITY WITH DOD

    Question. Why is the Coast Guard being forced to absorb the 
entitlement costs associated with the housing allowance and evacuation 
of personnel and dependents within its base when supplemental 
appropriations have been requested and provided to DOD for these costs?
    Answer. The Coast Guard supports the President's supplemental 
appropriations request submitted to Congress. The Coast Guard works 
with the Department of Homeland Security, Department of Defense (DOD) 
and the Office of Management and Budget (OMB) to ensure that equitable 
resource allocation concerning parity with DOD are presented to the 
administration.
    The Coast Guard is required by Title 37 of the U.S. Code and the 
Joint Federal Travel Regulations to pay the same personnel entitlements 
as DOD.
    Question. What are you doing to ensure the Coast Guard is treated 
equitably with DOD?
    Answer. The Coast Guard works closely with DHS, Department of 
Defense (DOD) and the Office of Management and Budget when seeking 
funding parity with DOD.
    Question. Why have the shipbuilding needs of the Coast Guard, and 
its vital Deepwater project, not been addressed in the supplemental 
request as have the shipbuilding needs of DOD? (I understand that post-
Katrina the ``cost of doing business'' in the shipbuilding industry has 
gone up dramatically.)
    Answer. The enacted Third Katrina Supplemental (Public Law 109-148) 
included $74.5 million for the Coast Guard's Acquisition, Construction 
and Improvement Appropriation of which $20.235 million was allocated 
for the Deepwater Project. This supplemental funding was for direct 
hurricane damage impacts to National Security Cutters No. 1 and No. 2, 
currently under construction in Pascagoula, MS, and include the cost of 
damage to material, equipment and facilities, as well as schedule 
delays.
    The $20.235 million for Deepwater damages directly associated with 
Katrina was allocated as follows:
  --main control system $4.0 million;
  --rework labor $3.8 million;
  --cable assemblies & connectors $2.2 million;
  --joiner equipment $1.8 million;
  --powered operated valves $1.4 million;
  --ship service generator $1.2 million;
  --exhaust plume cooling system $1.15 million;
  --auxiliary piping $1.0 million;
  --steel $0.8 million;
  --HVAC ducting $0.6 million;
  --switchboards $0.6 million;
  --A/C equipment $0.5 million;
  --prime mover exhaust ducting $0.45 million;
  --TACAN antennae $0.375 million; and,
  --hangers, hydraulic systems, control valves $0.36 million.

                   FEMA DISASTER RELIEF FUND REQUEST

    Question. Cost estimates for recovery of the gulf coast have never 
been reliable for it depends on many complex factors. Why now does the 
administration feel $9.4 billion is an adequate funding level for 
Hurricane Katrina?
    Answer. Cost estimates for disaster recovery are dependent upon a 
number of factors, including: final damage estimates; continuing and 
changing needs of disaster victims; and analysis of how Federal funds 
can be best utilized to meet those needs. The administration wants to 
have the best information available, but in some cases estimates are 
still ``moving targets.'' To ensure disaster relief funding continues 
uninterrupted, the administration has requested $9.4 billion to satisfy 
FEMA's funding requirements under the Stafford Act for Hurricanes 
Katrina and Rita.
    Question. What are the specific assumptions the administration is 
using to determine the $9.4 billion?
    Answer. The funding estimate was developed based on projected needs 
for the Disaster Relief Fund to satisfy FEMA's Stafford Act 
requirements for the areas in the gulf affected by last year's 
devastating hurricanes. DHS and OMB worked with FEMA, which consulted 
with its field offices and State and local officials to develop 
estimates of need and eligible requirements.
    Question. Can you provide the longer-term recovery estimates used 
to determine this level of funding?
    Answer. DHS and OMB worked with FEMA, which consulted with its 
field offices and State and local officials to develop longer-term 
estimates for individual and public assistance needs in their 
communities.

                          FEMA HOUSING POLICY

    Question. Within the President's $9.4 billion request for the 
Disaster Relief Fund, there is some funding set aside for housing 
assistance. What is the actual funding level requested for housing?
    Answer. FEMA is projecting a total need of $15 billion for 
Individual Assistance programs of which housing assistance is a large 
part. The requested $9.4 billion for the Disaster Relief Fund is 
expected to cover remaining housing needs as well as other remaining 
costs anticipated for the hurricanes.
    Question. How was this funding level determined?
    Answer. All projected funding needs are determined by working with 
program offices, field personnel, and State and local officials to 
determine eligibility under the Stafford Act.
    Question. Governor Barbour and Governor Blanco stated housing is 
one of their top priorities for revitalizing their States. Why is there 
not a comprehensive housing strategy in place nearly 6 months after 
Hurricane Katrina hit the gulf coast?
    Answer. Under the Stafford Act, FEMA is charged with providing 
eligible disaster victims with temporary housing. Our mission is to 
ensure that applicants have a safe and secure place to live while they 
develop permanent housing plans. FEMA is fulfilling its temporary 
housing mission for the gulf coast area by providing housing in the 
form of mobile homes, travel trailers, limited repair and replacement 
funding, and rental assistance. Currently, 100,274 mobile homes and 
travel trailers are occupied. FEMA has provided approximately $2.5 
billion for repair, replacement, and rental assistance, as of March 8, 
2006.
    In recognition of the scope and depth of long-term recovery and 
reconstruction challenges across the gulf coast, on November 1, 2005, 
the White House appointed Mr. Donald E. Powell as Coordinator of 
Recovery and Rebuilding in the Gulf Coast Region. As the Coordinator of 
Federal Support for the Gulf Coast, Mr. Powell is responsible for 
coordinating the development of a comprehensive gulf coast long-term 
recovery plan, as well as policies and programs for the mid- to long-
term Federal support of recovery and rebuilding efforts in the region. 
He is also responsible for coordinating Federal involvement in support 
of State and local officials on issues ranging from economic 
development to infrastructure rebuilding.
    In addition to providing temporary housing, FEMA is supporting Mr. 
Powell's efforts by continuing to provide leadership for long term 
recovery efforts and FEMA program oversight at both the field and 
headquarters level. FEMA headquarters leadership is provided by the 
Director's office, through the newly created position of Deputy 
Director of Long Term Recovery. DHS/FEMA has worked with Chairman 
Powell's staff, along with representatives from the Department of 
Housing and Urban Development, on housing policies that support long-
term recovery plans on the gulf coast.
    The Deputy Director provides Agency leadership and oversight for 
FEMA's ongoing gulf coast recovery efforts and will continue to 
coordinate closely with Mr. Powell and his staff. Federal leadership at 
the Joint Field Office is provided by the Federal Coordinating Officers 
and directly supported by staff, including Planning and Emergency 
Support Function No. 14 (ESF No. 14), Long-Term Community Recovery, 
under the National Response Plan. FEMA is also hiring locally based 
staff to continue program implementation activities independent of 
current and future FEMA disaster operations.
    The leadership structure outlined above will continue to evolve to 
reflect recovery needs and the expanding management and oversight 
capabilities of State and local officials.

        OFFICE OF FEDERAL COORDINATOR FOR GULF COAST REBUILDING

    Question. What has the Office of Federal Coordinator for Gulf Coast 
Rebuilding accomplished since its establishment on November 1, 2005?
    Answer. Late in the summer of 2005, Hurricane Katrina tore through 
an area of the gulf coast equivalent to the size of Great Britain. A 
few weeks later, Hurricane Rita followed Katrina's path into the Gulf 
of Mexico and then made landfall on the coast of Texas and Louisiana. 
In the aftermath of Hurricane Katrina, President George W. Bush created 
the Office of the Federal Coordinator for Gulf Coast Rebuilding (OGCR) 
by Executive Order 13390. Donald E. Powell was charged by President 
Bush to coordinate Federal support for the long-term rebuilding efforts 
and his office is housed within the Office of Policy at DHS.
    Mr. Powell's job is to work closely with people on the ground to 
identify and prioritize the needs for long-term rebuilding. He then 
communicates those realities to the decision makers in Washington, and 
advises the President and his leadership team, on the most effective, 
integrated, and fiscally responsible strategies for a full and vibrant 
recovery. Overall, Mr. Powell's role is to provide thoughtful and 
coordinated Federal support to the affected areas.
    The President has laid out clear guidelines which emphasize that 
the vision and plans for rebuilding the gulf coast should come from the 
local and State leadership, not from Washington, DC. Rebuilding should 
not become an exercise in centralized planning. If Federal bureaucrats 
determine the path of rebuilding, local insight and initiative will be 
overrun and local needs overlooked. Mr. Powell has been using those 
guidelines to address the issues related to long-term rebuilding on the 
gulf coast and has already accomplished a great deal.
Safety--Levees
    Everyone who has visited the devastated areas of the gulf coast 
knows that safety is the top priority for the residents of the affected 
region. The President agrees that public safety is the most critical 
part of long-term rebuilding in that area. People must feel that there 
is adequate hurricane protection before they can make their decision to 
return--whether as a resident, a business owner or both.
    In December, the President asked Congress to authorize his $3.1 
billion commitment to make the hurricane protection system that 
surrounds the New Orleans area stronger and better. During the 
appropriations process, a portion of that $3.1 billion request was 
redirected to other uses along the gulf. In response, the President has 
included, as a part of his recent supplemental request to Congress, 
another $1.46 billion for the addition of flood gates and pumping 
stations to interior canals, selective armoring of levees, the 
initiation of wetlands restoration projects, and additional storm-proof 
pumping stations. Mr. Powell was recently with General Strock touring 
the levees and he receives regular updates from the U.S. Army Corps of 
Engineers on their progress.

Community--Housing
    After the administration made its commitment to rebuild the levees 
stronger and better, the next issue on the minds of the people of the 
gulf coast was housing. As a part of the DOD reallocation, Congress set 
aside $11.5 billion in Community Development Block Grant (CDBG) funds 
for the gulf coast. These funds will be used by the States as they 
implement their plans to assist homeowners in the areas affected by 
Hurricanes Katrina and Rita.
    The unique flood vulnerability of Louisiana extends the issue of 
safety beyond the levees. Safety is also about the home. As we build 
the hurricane protection system stronger and better, we must also allow 
the States to rebuild the housing stock in a safer and smarter manner 
that protects the lives and assets of the people of Southern Louisiana. 
In order to meet the unique needs of Louisiana, the President has 
requested $4.2 billion in CDBG funds for Louisiana, as a part of the 
recent supplemental, to address its plans for future flood mitigation 
to protect housing and infrastructure. These funds will be available 
once each State submits a detailed plan to the Federal Government 
outlining its use of the funds.

Economy--Economic Development
    The President, along with Congress, has also been mindful about the 
renewal of the region's economy. The role of the Federal Government in 
restoring the traditional industries of the region (i.e., tourism, 
seafood, and energy sectors), and attracting new industries, is to 
rebuild stronger hurricane protection, to assist in the renewal of the 
housing stock, and to create strong incentives, which will allow the 
private market to participate in the renewal of the region. At the end 
of 2005, the President signed into law the Gulf Opportunity Zones Act 
(or GO Zones). This legislation, providing approximately $8 billion in 
tax relief over 5 years, will help revitalize the region's economy by 
encouraging businesses to create new jobs and restore old ones. Some of 
the principal provisions within the Gulf Opportunity Zone Act of 2005 
include tax-exempt bond financing for both residential and non-
residential property, changes to the low-income housing credit, bonus 
depreciation, and expensing for certain demolition and clean up costs, 
just to name a few. Simply put, this law renews businesses, rebuilds 
homes, and restores communities.
    In the affected area, the Small Business Administration (SBA) has 
adapted and ramped up its capacity in order to provide loans and 
working capital to small businesses and families. Small Business 
Administration disaster loans provide vital low-cost funds to 
homeowners, renters, and businesses to cover uninsured disaster 
recovery costs as well as loans for the working capital needs of 
businesses affected by disasters. Since last year's hurricanes, SBA's 
Disaster Loan Program has approved over $6.4 billion in disaster loans 
to over 92,750 homeowners, renters, and businesses along the gulf 
coast. Given SBA's ongoing commitment to small business owners in this 
region, it is imperative that Congress approve the $1.25 billion for 
SBA's Disaster Loan Program and $400 million for Community Disaster 
Loans requested in the current supplemental.
    The financial services sector in the region is also doing its part 
to provide capital. When Hurricanes Katrina and Rita hit the gulf 
coast, they impacted the operations of at least 280 financial 
institutions, with 120 of these institutions headquartered in the 49 
counties and parishes in Alabama, Louisiana, and Mississippi designated 
by FEMA as eligible for individual and public assistance. Similar to 
other sectors of the gulf coast economy, financial institution 
facilities and employees experienced damage and disruption. While 
financial results to date do not yet provide a clear picture of the 
full effects of the storms, recent financial results provide some 
indications of how the institutions may be reacting and adjusting to 
the effects of the hurricanes. Post-hurricane data reveal that a number 
of institutions operating in areas hit hard by Katrina are moving 
fairly aggressively to build loan loss allowances and experienced a 
pick-up in charge-off rates. All institutions remained ``well 
capitalized'' or ``adequately capitalized,'' and liquidity for most of 
the institutions also remains strong. While the prospects for the 
financial institutions most affected will depend, in large measure, on 
the efforts underway to rebuild and revitalize the communities, local 
bankers remain cautiously optimistic and are not predicting any bank 
failures.
    Workforce development will also be critical to long-term economic 
security. Secretary of Labor Elaine L. Chao and Donald Powell attended 
a meeting in December 2005 with the President, labor leaders, civil 
rights groups and business associations to discuss workforce 
initiatives and overall employment issues facing the region. We tasked 
those leaders with devising a plan to prepare the workers of the region 
for the future of the gulf coast economy. That plan was recently 
completed and they look forward to implementing the program on May 1, 
2006, in New Orleans. The objective is to help prepare residents of the 
gulf coast to fill as many jobs in the region as possible. For 
starters, they have set an ambitious goal of training 20,000 new 
workers for careers in construction and skilled trades by the end of 
2009. The Federal Government will continue to work to make the gulf 
coast a great place to invest, to do business, and to live.
    Question. Is the Federal Coordinator, David Powell, in charge of 
coordinating the different policy and funding streams for the long-term 
rebuilding efforts in the gulf coast across all the Federal Government 
and State and local governments?
    Answer. Mr. Powell's job is to work closely with people on the 
ground to identify and prioritize the needs for long-term rebuilding. 
He then communicates those realities to the decision makers in 
Washington, and advises the President and his leadership team, on the 
most effective, integrated, and fiscally responsible strategies for a 
full and vibrant recovery. Overall, Mr. Powell's role is to provide 
thoughtful and coordinated Federal support to the affected areas. In 
that role, Mr. Powell is focused on maximizing the Federal investment 
in the region by assuring that it addresses the most pressing needs, 
receives appropriate oversight, and leverages, but does not duplicate, 
other funding streams.

             LESSONS LEARNED AND UPCOMING HURRICANE SEASON

    Question. There have been several reports released on the lessons 
learned from Hurricane Katrina. Given the fact hurricane season will be 
upon us in 3 months, will we have ample opportunity to implement any of 
the recommended changes to the Federal Government or will be still be 
in the lessons-learned phase?
    Answer. DHS worked aggressively to ensure that we are prepared for 
the next hurricane season. As an urgent matter, DHS and FEMA, working 
with our partners in other Federal and State agencies, identified 
certain priority milestones based upon last year's experience. We 
expect to meet these critical preparedness goals in June, the start of 
the hurricane season and many of the lessons learned will be 
implemented as part of that preparedness effort. Some of the larger and 
more detailed lessons leaned will not be implemented in the short time 
frame before hurricane season. DHS has also begun a longer-term 
implementation process with the intention of internalizing all of the 
lessons learned challenges as rapidly as possible.
    Within the Preparedness Directorate, the Office of Grants and 
Training (G&T) has initiated the design, development, conduct, and 
evaluation of Hurricane Preparedness Exercises for the Eastern 
Seaboard, gulf coast, and Caribbean Basin. Through this effort, the 
Preparedness Directorate's Office of Grants and Training (G&T), in 
partnership with FEMA, will conduct regional tabletop exercises in FEMA 
Regions I, II, III, IV, and VI, with participation from Federal, State, 
territorial, tribal nation, local, non-governmental organization, and 
private sector stakeholders. To initiate the effort and to ensure full 
coordination with other preparedness planning efforts being conducted 
at the Federal level and within the participating FEMA regions, G&T 
conducted a data call of all current and planned hurricane preparedness 
efforts and events. The information was compiled into a matrix and 
analyzed to deconflict events with the Hurricane Preparedness Exercises 
and identify opportunities for synchronization. G&T also conducted an 
analysis of the Federal after action reports to identify the core 
capabilities that will be examined during the exercises. Further, 
FEMA's draft 2006 Hurricane Response Concept of Operations (CONOPS) 
serves as the baseline document for the exercise scenarios and 
discussions. The primary goals of the Hurricane Preparedness Exercises 
were to validate the changes that had been made to plans, policies, and 
procedures at all levels of government as a result of the lessons 
learned from Hurricanes Katrina and Rita and to identify any additional 
immediate, high-priority coordination and preparedness improvements to 
be implemented prior to June 1.
    Question. Who will be responsible for implementing these 
recommendations?
    Answer. Many of the recommendations are cross-cutting 
recommendations that affect several Federal agencies, as well as State, 
local, tribal, and territorial first responders. Within the Department 
of Homeland Security, our Preparedness Directorate and FEMA, with 
assistance from our Policy Directorate are leading our implementation 
planning efforts. Those efforts will be coordinated across the Federal 
Government through the Homeland Security Council and with our State, 
local, tribal, and territorial partners through the Office of Grants 
and Training.

                   CONTROLLING WASTE, FRAUD AND ABUSE

    Question. The DHS Inspector General and GAO have found several 
internal weaknesses at FEMA which has cost the Government and taxpayer 
hundreds of millions of dollars due to questionable contracts and 
fraudulent claims. What are you doing to strengthen internal controls 
within FEMA?
    Answer. DHS is doing the following to strengthen internal controls 
within the Agency.
    DHS/FEMA has established an Integrity Board for the purpose of 
providing a forum for senior managers to work together to ensure that 
adequate financial and procurement controls exist. Participants 
include: the DHS Under Secretary for Management, DHS/FEMA CFO, DHS/FEMA 
CPO, DHS General Counsel, FEMA Director of Operations and DHS OIG 
(advisory).
    In addition, a procurement oversight team is reviewing all sole 
source contracts over $25 million dollars. The review team verifies the 
price competition or cost analysis used to derive the contract prices.
    FEMA has established a requirement for 100 percent acceptance of 
goods and services by FEMA technical staff before payment is made. The 
person accepting the services must verify that the invoiced services 
and amount are consistent with the contract requirements.
    FEMA assessed internal controls by contracting with Price 
Waterhouse and Coopers (PWC) to review internal controls over mission 
assignments (MA), Individuals and Households Program (IHP) and over 
asset management (AM). PWC provided a GAP analysis and recommendations 
to improve controls. The program offices have been tasked with 
identifying recommendations that can be implemented by June 30 and 
prioritized implementation after June 30, 2006.
    FEMA has establish a Senior Management Council made up of senior 
managers of FEMA programs and support offices to establish controls 
that are overseen by CFO, but owned by the program managers. At the 
initial briefing held March 21, 2006. Following the meeting a draft 
Internal Control Committee Charter was distributed for review and 
comment.
    The Senior Management Council will establish a Senior Assessment 
Team made up of FEMA staff from program and support offices to develop 
consolidated Corrective Action Plan (CAP) and a complete entity level 
assessment tool.
    DHS/FEMA has contracted with PWC to develop sample test plan for 
Katrina programs greater that $10 million. PWC was provided 2005 and 
2006 expense data including Individuals and Households Program (IHP), 
mission assignments (MA), Grants, and Vendor payments. PWC provided 
initial test plan samples on March 17, 2006. They will identify which 
payments need to be reviewed as part of their April 30, 2006 report. 
FEMA will execute sample plan to identify improper payments.
    Question. What can be accomplished to strengthen FEMA prior to the 
start of the hurricane season on June 1, 2006?
    Answer. FEMA's highest priorities to improve its response 
capability for the upcoming hurricane season include: increased 
capacity to register disaster victims and provide timely assistance to 
eligible applicants; improving logistical controls and awareness by 
procuring, pre-positioning, and tracking of essential commodities and 
supplies; improving guidance for debris removal; improving situational 
awareness and coordination between the DHS National Operations Center 
(NOC), the DHS/FEMA National Response Coordination Center (NRCC) and 
FEMA field offices; improving communications capabilities; and, 
ensuring the readiness of FEMA's disaster workforce. In addition, FEMA 
is in the process of implementing recommendations from internal DHS/
FEMA after action reports from Hurricane Katrina to improve financial 
management and internal controls.
    Question. Why is there no funding requested to improve information 
technology which would allow for a better tracking system of client 
information or tracking of logistics?
    Answer. Under Disaster Relief, FEMA is supporting a logistics 
tracking system. This system, called Total Asset Visibility (TAV), is a 
new system that tracks disaster commodities. FEMA is currently planning 
to implement the first phase of this tracking initiative prior to this 
year's hurricane season. This initiative will enable FEMA to perform 
logistics, warehouse management, and provide broad based disaster 
support by combining inventory management and warehouse management with 
GPS satellite tracking devices to give logistics personnel and trading 
partners real-time visibility regarding the location of certain 
disaster relief commodities.

                     NATIONAL FLOOD INSURANCE FUND

    Question. The administration has proposed a legislative change 
which would amend the Department of Homeland Security Appropriations 
Act, 2006, in order to allow the National Flood Insurance Fund to pay 
sufficient interest on the amounts the program has borrowed from the 
Treasury. What is the maximum amount the Department is proposing will 
be required to pay back interest to the Treasury on these borrowings?
    Answer. FEMA currently estimates that the National Flood Insurance 
Program (NFIP) will make the following schedule of interest payments to 
the Treasury through fiscal year 2007.

                        [In millions of dollars]
------------------------------------------------------------------------
                                                              Amount
------------------------------------------------------------------------
3/31/2006...............................................             180
9/30/2006...............................................             400
3/31/2007...............................................             534
9/30/2007...............................................             578
------------------------------------------------------------------------

    The NFIP currently collects $2 billion annually in premiums, which 
is not sufficient to meet simultaneously ongoing operational expenses, 
to make future flood insurance claim payments, and to service the more 
than $1 billion in interest payments. There is no reasonable scenario 
of flood insurance premium increases that would eliminate the need for 
additional borrowing in future fiscal years. Therefore, these increases 
in interest payments will continue indefinitely in fiscal year 2008 and 
subsequent years.
    Question. Why is the administration proposing to make this change 
on an appropriations bill and not through legislation submitted to and 
approved by the Senate Banking Committee, which has authorization 
jurisdiction over the National Flood Insurance program?
    Answer. The Department of Homeland Security Appropriations Act of 
2006 allows the National Flood Insurance Program (NFIP) to pay up to 
$30 million in interest payments in fiscal year 2006. An interest 
payment of $180 million is due at the end of March for monies borrowed 
as a result of Hurricane Katrina. The NFIP would like to be timely in 
the payment of this interest. For these reasons, the change to the 
amount of allowable interest that can be paid in fiscal year 2006 has 
been proposed in the supplemental appropriations bill.
                                 ______
                                 
             Questions Submitted by Senator Robert C. Byrd

                    COAST GUARD AND BORDER SECURITY

    Question. Why is the Coast Guard not part of the Secure Border 
Initiative?
    Answer. The Secure Border Initiative (SBI) is a comprehensive 
program designed to integrate border, coastal, and interior enforcement 
efforts eliminating cross border violations. Coast Guard activities and 
programs are closely aligned to the goals and objectives of SBI and 
will play a critical role in SBI's success, but are not directly part 
of the SBI effort.
    Coast Guard is coordinating requirements and standards for its 
Command 2010/Secure Ports Initiative with SBInet as part of DHS-wide 
effort to establish common systems, information sharing, operational 
pictures, and command center functions.

                      COAST GUARD MISSION IN IRAQ

    Question. If the President's request is approved, over $1 billion 
will have been appropriated for the Coast Guard to support operations 
in Iraq. Please provide a detailed list of costs associated with the 
funding appropriated to date and requested in this supplemental.
    Answer. The table below details the Coast Guard cost categories for 
Global War on Terrorism (GWOT) supplemental funding received from 
fiscal year 2003 through fiscal year 2005, and the requested funding 
levels for fiscal year 2006. Supplemental funding was provided either 
via a transfer from the Iraqi Freedom Fund, the Navy, or appropriated 
directly to the Coast Guard. Supplemental funding support is primarily 
for the Coast Guard Operating Expenses (OE) appropriation; however, in 
fiscal year 2005, Acquisition, Construction and Improvement (AC&I) 
appropriation received supplemental funding for select patrol boat 
reconstitution.
    The $201.6 million requested in fiscal year 2006 supports the 
incremental costs associated with the operations and in-theater 
deployment and logistical support of six 110-foot Patrol Boats and the 
crews to operate and maintain them; two deployed Port Security Units 
(PSUs); one PSU detachment deployed to Guantanamo Bay, Cuba for anti-
terrorism security; and Coast Guard Reserve support for strategic ports 
of embarkation and strategic ports of debarkation during military out 
loads. Funding also covers the Coast Guard share of the retroactive 
death gratuity benefit per the fiscal year 2006 DOD Authorization Act 
and $500,000 for the Coast Guard Intelligence Program.

                                            [In millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                              Fiscal Year   Fiscal Year  Fiscal Year   Fiscal Year
                                                  2003         2004          2005      2006 (Req)       Total
----------------------------------------------------------------------------------------------------------------
 Operation Iraqi Freedom (OIF) Cost Category

Pay and Personnel Support Costs (OE)........       225.00        46.30        110.50        78.80        460.60
Operating Support Costs (OE)................       123.00        12.70         19.10        26.90        181.70
Transportation, Depot Level Maintenance &           52.00         9.20         20.30        26.80        108.30
 Reconstitution (OE)........................
Contingency Operations (OE).................  ...........        12.00         31.40        42.20         85.60
Other Costs (OE)............................  ...........  ............        30.60        26.90         57.50
110-Foot WPB Reconstitution (AC&I)..........  ...........  ............        49.00  ............        49.00
                                             -------------------------------------------------------------------
      OIF Total.............................       400.00        80.20        260.90       201.60        942.70
                                             ===================================================================
   Operation Liberty Shield Cost Category

Pay and Personnel Support Costs (OE)........       150.00  ............  ...........  ............       150.00
Operating Support Costs (OE)................        25.00  ............  ...........  ............        25.00
Transportation, Depot Level Maintenance &            5.00  ............  ...........  ............         5.00
 Reconstitution (OE)........................
Port Security Assessment Earmark (OE).......        38.00  ............  ...........  ............        38.00
Merchant Mariner Documentation Earmark (OE).        10.00  ............  ...........  ............        10.00
Enacted Liberty Shield Supplemental           ...........       (71.00)  ...........       (15.20)       (86.20)
 Rescissions (OE)...........................
                                             -------------------------------------------------------------------
      Liberty Shield Total..................       228.00       (71.00)  ...........       (15.20)       141.80
                                             ===================================================================
      Total Coast Guard GWOT Costs..........       628.00         9.20        260.90       186.20      1,084.30
----------------------------------------------------------------------------------------------------------------

    Question. How long will a Coast Guard presence to support 
operations in Iraq be required?
    Answer. Coast Guard presence to support operations in Iraq will 
continue until the Commander, U.S. Central Command or the Secretary of 
Defense determines the Coast Guard's portion of the mission is 
complete.
    Question. What impact does this long-term presence have on Coast 
Guard operations and the Deepwater program?
    Answer. Coast Guard operations in Iraq impact Coast Guard 
operations domestically, contributing to the patrol boat gap currently 
being experienced by the service.
    Question. What does the Coast Guard plan on doing with the assets 
deployed to Iraq, and has the need to repair or replace those assets 
been incorporated into the long-term Deepwater plan and related 
budgets?
    Answer. The Coast Guard plans on returning these assets to the 
United States when the Commander, U.S. Central Command or the Secretary 
of Defense determines their mission is complete. Deepwater replacement 
plans include the replacement of the six patrol boats currently 
deployed at the end of their service lives.

                           CHEMICAL SECURITY

    Question. In January, the Government Accountability Office reported 
that approximately 15,000 facilities produce, use, or store more than 
threshold amounts of chemicals identified by the Environmental 
Protection Agency (EPA) as posing the greatest risk to human health and 
the environment if accidentally released in the air. How many of those 
facilities have voluntarily put in place security measures to prepare 
against terrorism?
    Answer. The exact number of chemical facilities that have 
voluntarily put in place security measures to prepare against terrorism 
is not known. This is one of the many reasons the Department believes 
that comprehensive chemical security legislation, giving DHS the 
authority to regulate security at chemical facilities, is needed. A 
large number have been very responsible in taking steps to elevate 
their security, including the 150 chemical companies that belong to the 
American Chemistry Council (ACC), representing approximately 80-90 
percent of U.S. chemical production by capacity. Implementation of the 
Responsible Care Security Code (RCSC) is mandatory for all ACC 
members.
    Other chemical trade associations have developed similar security 
requirements for their member companies. Typically, smaller, specialty, 
or batch chemical manufacturing facilities belong to these other 
chemical trades associations. Chemical sector industry associations, 
like the Synthetic Organic Chemical Manufacturers Association, the 
National Paint and Coatings Association, and the National Association 
of Chemical Distributors, mandate similar voluntary security 
requirements for their member companies. These voluntary security 
requirements are tailored to specific chemical sub-sectors, rather than 
the bulk chemical manufacturing focus of RCSC. For example, the 
Chlorine Institute formulated a detailed chlorine-specific security 
regime that is mandatory for all of their members.
    As I said in my March 2006 remarks before the ACC, ``The fact of 
the matter is that although large numbers of the chemical companies 
that operate in this country have been very responsible in taking steps 
to make sure that they are elevating their own security, we have to 
recognize that not all chemical companies have done that. And all the 
industry, in fact the whole country, is hostage to those few who do not 
undertake the responsibility that they have to make sure security is at 
an appropriate level.''
    Question. How much has been spent by the industry and on what types 
of security improvements?
    Answer. The American Chemistry Council (ACC) estimates its members 
spent $2 billion securing their sites in the 15 months following 
September 11 and an additional $1.1 billion toward security in 2004. 
These resources have been used to conduct vulnerability assessments, 
develop security plans and procedures, and make investments in physical 
and cyber-security improvements for facilities of concern. The 
investments include: tighter access controls, better surveillance, new 
process controls and equipment, enhanced crisis management and 
emergency response procedures, better information/computer security, 
and more stringent employee background checks.
    Beyond voluntary self-reporting by industry, the Department has 
little insight into the chemical sector's security spending. This is 
one of the many reasons the Department believes that comprehensive 
chemical security legislation, giving DHS the authority to regulate 
security at chemical facilities, is needed. Without this authority, the 
Department has limited visibility into the security efforts of the 
chemical sector.

                            COMMITTEE RECESS

    Chairman Cochran. Tomorrow, we will have a hearing and 
examine closely the war costs that are being requested for 
funding, and we will look forward to that, and we will resume 
our meeting of this committee for that purpose tomorrow.
    But this hearing is now recessed.
    [Whereupon, at 11:45 a.m., Wednesday, March 8, the 
committee was recessed, to reconvene subject to the call of the 
Chair.]


            SUPPLEMENTAL APPROPRIATIONS FOR FISCAL YEAR 2006

                              ----------                              


                        THURSDAY, MARCH 9, 2006

                                       U.S. Senate,
                               Committee on Appropriations,
                                                    Washington, DC.
    The committee met at 9:32 a.m., in room SD-106, Dirksen 
Senate Office Building, Hon. Thad Cochran (chairman) presiding.
    Present: Senators Cochran, Stevens, Domenici, Bond, Burns, 
Bennett, Craig, Brownback, Allard, Byrd, Leahy, Mikulski, Kohl, 
Murray, Dorgan, and Durbin.

STATEMENT OF HON. CONDOLEEZZA RICE, SECRETARY, 
            DEPARTMENT OF STATE

               OPENING STATEMENT OF SENATOR THAD COCHRAN

    Chairman Cochran. The committee will please come to order.
    We appreciate very much the attendance at this hearing, of 
Secretary Rumsfeld, Secretary Rice, General Peter Pace, General 
Abizaid, to discuss the President's budget request for 
supplemental appropriations to fund diplomatic and military 
operations.
    We appreciate having the benefit of statements that you 
have submitted. And rather than begin our committee hearing 
with statements from Senators, we will have an opportunity to 
ask questions of each of you, and so I suggest that we proceed 
directly with your statements, and then we'll have an 
opportunity to discuss the request.
    I would ask Secretary Rumsfeld to begin. Oh, you would 
defer to Secretary Rice? I'm happy to do that.
    Secretary Rice, you may begin.
    Secretary Rice. Well, I would have been happy to have 
Secretary Rumsfeld begin, but I'm happy to start.
    Thank you very much, Mr. Chairman, and thank you to the 
members of the committee, for receiving us in this format. I 
think that it demonstrates the importance that we attach to the 
deepest cooperation between the Department of State and our 
political and diplomatic activities, and the Department of 
Defense and our military activities. We believe that both are 
necessary to win the war on terrorism and to develop stable 
democracies that can give people hope that can supplant the 
ideologies of hatred that led people to fly airplanes into our 
buildings on September 11.
    This is a hearing on the supplemental, and I wanted to just 
begin with one word about why the requests are here in a 
supplemental, and then to just briefly talk about a few of the 
areas for which we're requesting funding. I have a complete 
statement, but I will not read that statement, Mr. Chairman, 
but I would like to ask that it be entered into the record in 
its entirety.
    Chairman Cochran. Without objection, it's so ordered.
    Secretary Rice. Mr. Chairman and members of the committee, 
natural disasters and the course of war do not take into 
account our budget timelines and practices. And it's, 
therefore, necessary----
    Chairman Cochran. Sergeant at Arms, please restore order. 
The committee will come to order.
    Madam Secretary, you may proceed.
    Secretary Rice. Thank you.
    Natural disasters and the course of war don't take into 
account our budget timelines and practices, and it is 
necessary, therefore, in the course of what is a very dynamic 
process, in places like Iraq and Afghanistan and the regions in 
which we are dealing, to sometimes make requests that are out 
of the normal budget cycle. As Secretary Rumsfeld has said in 
his testimony, the enemy is changing and adapting, and we must 
do that, too. Sometimes we are adapting to changes that the 
enemy has made, sometimes we are responding to humanitarian 
crises that come along unplanned for, and sometimes we are 
responding to new opportunities that emerge in what is a very 
dynamic world.
    The supplemental request before the Congress has a request 
for funding that will advance our security and economic and 
political goals in Iraq and Afghanistan, target urgent 
humanitarian relief and peacekeeping efforts for Darfur and 
southern Sudan, provide emergency food aid for Africa, and 
earthquake relief and reconstruction for Pakistan, and launch 
democracy promotion activities for Iran. I would like, briefly, 
to just speak to each of these, Mr. Chairman.
    In Iraq, we are seeing side-by-side contradictory processes 
in the continuation of violence, which we acknowledge, but, at 
the same time, a political process that is well underway in 
which most Iraqis believe their future interests can be 
accommodated. The Iraqis have had three elections in 1 year, 
and they are now in the process of the formation of a permanent 
government, but they still face a very determined enemy--an 
enemy that would like to see that political process halted so 
that Iraq might devolve into chaos and conflict.
    Our military is doing a very fine job of both training 
Iraqis to take on this fight themselves and continuing 
operations against the enemy. The contribution that we believe 
that we can make, in the State Department, to this 
counterinsurgency effort is to recognize that any 
counterinsurgency--any insurgency--must be defeated not just 
militarily, but also politically.
    And so, the funding that is requested on Iraq is for the 
effort to support counterinsurgency operations and 
stabilizations operations in the following ways:
    First of all, to build central government capacity for the 
Iraqis, national capacity in their ministries. They must be 
able to administer services themselves. They must be able to 
have a reasonable ability to deliver services for their people. 
It is no surprise that these are bureaucracies and ministries 
that have needed to be completely reformed as Iraq moves from a 
dictatorial society, one in which ministers were political 
choices of the dictator, one in which capacity was not the 
issue, and efficiency and effectiveness were not the issue, but 
political loyalty, and in which we found ministries that, 
indeed, have very little modern capacity to govern. The 
Embassy, working with the Iraqi Government, has been developing 
a plan for ministry assistance--ministry assistance teams. And 
that is represented here in the supplemental request.
    Second, Iraq is finally moving from a more centralized 
state--where everything happens in Baghdad--to one in which the 
constitution grants considerable authority to the provinces. We 
think that this is, in fact, a very good thing. We have put 
together a set of provincial reconstruction teams that will 
support the development of provincial leadership, government, 
and capacity, and also that can contribute to the 
counterinsurgency effort by establishing provincial governance, 
provincial infrastructure programs, once an area has been 
cleared of the insurgency. We have already funded, from our own 
resources, some of these teams, but we will need follow-on 
funding to continue to roll out a provincial reconstruction 
team structure that will allow us to be close to the action as 
the insurgents--as the terrorists--are defeated, to build 
provincial capacity and infrastructure capacity at the local 
and provincial level.
    There is also a relatively small infrastructure sustainment 
element here. This is not--and I'd like it not to be 
misunderstood as such--another effort to bring more 
infrastructure money of the kind that we had in the almost $20 
billion that was requested and approved by Congress some years 
ago; but, rather, we believe that the investments that we have 
made need to be sustained with maintenance and operations. We 
are encouraging the Iraqis to build that into their budgets 
over time.
    This budget--this supplemental--would also support 
Afghanistan. The issues there are debt forgiveness, refugee 
assistance, and some reconstruction efforts, in terms of power. 
It would support the Pakistan reconstruction efforts where, 
because of the issue of timeliness, we, in some cases, actually 
had to move funds around in order to be timely in support of 
those efforts after the Pakistan earthquake, but also to 
fulfill the pledges that the United States has made to 
Pakistani reconstruction.
    Finally, I'd like to just mention that we are also 
requesting humanitarian relief and peacekeeping for the dire 
situation in Darfur and in southern Sudan.
    Finally, Mr. Chairman, I'd like to say just a word about 
the request here for democracy promotion money for Iran. We may 
face no greater challenge from a single country than from Iran, 
whose policies are directed at developing a Middle East that 
would be 180 degrees different than the Middle East that we 
would like to see develop. This is a country that is 
determined, it seems, to develop a nuclear weapon, in defiance 
of the international community that is determined that they 
should not get one. It is a country that is the central banker 
for terrorism, whether that terrorism is in southern Iraq or in 
the Palestinian territories or in Lebanon. In all of those 
cases, Iranian support for terrorism is retarding, and, in some 
cases, helping to arrest, the growth of democratic and stable 
governments. Iran, of course, has a terrible human rights 
effort--and a country in which an unelected few are frustrating 
the desires and wishes of the Iranian people for democracy.
    We have proposed a $75 million package that would allow us 
to broadcast more effectively in Iran, better messaging for 
Iran. We have proposed money that would be used for innovation 
in our efforts to reach the Iranian people through Web sites 
and modern technology. We have also proposed that we would be 
able to support nongovernmental organizations that can function 
in Iran, and, in many ways, most importantly, to improve and 
increase our educational and cultural outreach to the people of 
Iran.

                           PREPARED STATEMENT

    I want to say, Mr. Chairman, that there is nothing more 
important, as we try and make certain that the Iranian 
Government recognizes that it will be isolated if it continues 
down this path, that we not isolate the Iranian people. These 
programs are, in many ways, critical to not isolating the 
Iranian people. We do not have a problem with the Iranian 
people. We want the Iranian people to be free. Our problem is 
with the Iranian regime, and these programs are intended to 
help us reach out to them.
    Thank you very much, Mr. Chairman, and I will be glad to 
take questions after the other statements.
    [The statement follows:]

            Prepared Statement of Secretary Condoleezza Rice

    Mr. Chairman, members of the committee, it is a pleasure to appear 
today in support of the President's fiscal year 2006 supplemental 
appropriations request. The President has requested a total of $4.229 
billion for International Affairs programs operated by the State 
Department and USAID.
    The Supplemental request will allow the United States to:
  --Advance security, economic and political goals in Iraq and 
        Afghanistan;
  --Target humanitarian relief and peacekeeping to Durfur and Southern 
        Sudan;
  --Provide emergency food aid for Africa and earthquake relief and 
        reconstruction for Pakistan; and
  --Launch democracy promotion activities for Iran.
    Mr. Chairman, let me speak frankly. Natural disasters and the 
course of war do not take into account our budgeting rules and 
practices. As we all recognize, it is difficult to predict far in 
advance the course of events in war or its aftermath, not to mention 
the devastation of an earthquake, tsunami or hurricane.
    There has been considerable debate over the past years about the 
way to fund natural disasters, the war in Iraq and the other conflicts 
related to the Global War on Terror. Some in Congress have argued that 
these activities should not be funded by supplemental appropriations, 
but should be included in annual funding through an amendment to the 
baseline budget requests. Others have argued that including these 
requests in the annual budget or through a budget amendment would 
artificially increase the baseline budget, and that when these requests 
inevitably decline, the perception among our allies and foes alike will 
be that the United States is withdrawing from the global community in 
favor of isolationism.
    Arguments can be made on both sides. But let me be clear: the 
resources we are requesting are funds which we urgently need. We can 
debate the modalities, but the essential point, the point that should 
rise above all other concerns, is that the President is requesting 
these funds because we need them, and we need them now.

                                  IRAQ

    Let me now touch on the main items in the President's request and 
then I will be pleased to answer your questions. For Iraq, the 
President has requested $3.2 billion to begin the transition to Iraqi 
security, economic and political self-reliance. Without these funds, 
key programs will end as the Iraq Relief and Reconstruction Fund (IRRF) 
monies are spent.
  --$1.6 billion of this request is to fund the U.S. mission in Iraq, 
        including embassy staffing, logistics, and security, as well as 
        operating expenses of USAID. These funds provide the necessary 
        operating monies to continue the robust U.S. diplomatic 
        presence in Iraq.
  --$1.6 billion of this request is to support and improve Iraqi self-
        reliance; complement Iraqi and U.S. military efforts against 
        the insurgents through focused political and economic 
        stabilization programs in key strategic areas; help Iraqis 
        protect and sustain their infrastructure; and build Iraqi 
        capacity at the national and provincial levels. This request 
        grows directly out of the three prongs of the President's 
        strategy for victory in Iraq. Success in Iraq requires progress 
        on all three tracks of the National Strategy for Victory in 
        Iraq--security, economic and political.
    The three tracks are fundamental to our counter-insurgency campaign 
and our effort to help Iraqis build a democratic, stable and prosperous 
country that is a partner in the war against terrorism. Each of these 
tracks is vital for success, and each is necessary if the others are to 
succeed. This committee is well acquainted with the security track. 
This request complements the $65.3 billion request for DOD funding and 
continues the State Department's support for counter-insurgency 
operations through the expansion of Provincial Reconstruction Teams 
(PRTs). It is vital that once towns and cities are cleared of 
insurgents, the immediate needs of their people--including services and 
governance--be addressed. This is an aspect of what we are seeking to 
do with the PRTs.
    The second track is the economic track. Congress has already 
provided roughly $20 billion for the economic reconstruction of Iraq. 
These funds have helped to modernize and to bring back online Iraq's 
critical infrastructure, including oil, water, and electricity. These 
funds have achieved much, but as we all know, they have not achieved 
all that was initially envisioned. A substantial portion of these funds 
has gone to supporting Iraqi security forces prior to the creation of 
ISFF and meeting the security needs of reconstruction workers and the 
infrastructure, which both have been repeatedly attacked by insurgents. 
We are in the process of obligating the last of these funds for 
infrastructure reconstruction. The supplemental request before you has 
two purposes: first, it provides funds to maintain the infrastructure 
that has been rebuilt and second, it trains Iraqis to manage their 
infrastructure needs themselves.
    The third track is the political track. Here we aim to build Iraq's 
capacity to manage its own affairs. This complements our efforts to 
turn over to Iraq the responsibility for its own security and its own 
economic well-being. These funds will train Iraqis to effectively 
manage the key government ministries including, and especially, the 
finance ministry and the oil ministry. The latter is responsible for 
over 95 percent of Iraq's revenues. This part of the President's three 
pronged strategy is essential if we are to achieve a full transition to 
successful Iraqi self-government.

                              AFGHANISTAN

    We are requesting $112.5 million for Afghanistan, a country that 
has made tremendous strides in the past several years. Afghanistan has 
held a series of elections in which turnout has been remarkable. 
Afghanistan has taken steps to expand its own ability to address 
challenges from insurgents and Afghanistan has seen tangible economic 
and social progress. But serious problems remain. The President's 
request speaks to four critical issues. First, it provides funds for 
several critical power projects which are essential to Afghanistan's 
economic development. Second, it provides emergency assistance to help 
re-settle the growing number of Afghans who are returning to 
Afghanistan. Third, it provides for the extraordinary security and 
related operating costs for U.S. diplomatic and aid personnel working 
in Afghanistan. And finally, it authorizes and provides $11 million in 
funding for debt relief for Afghanistan. The United States has led a 
multilateral debt relief effort, and this action will help leverage far 
greater relief from other creditors.

                                 SUDAN

    The President is requesting $514 million for Sudan. These funds 
mainly support two different, but important activities. First, we are 
seeking funds to address the desperate humanitarian needs of the people 
of Darfur and other parts of Sudan, including the South. I know that a 
number of members of Congress, including members of this committee, 
have seen the urgency of this situation firsthand. These funds will 
provide food, water, shelter and other basic necessities to counter the 
very real famine and dislocation which is facing so many refugees and 
others in Sudan.
    The second purpose for which we seek urgent support is to expand 
peacekeeping activities in Sudan. The United States has joined in 
providing financial support for the African Union Mission in the Sudan 
(AMIS). AMIS has had success in diminishing organized violence in 
Darfur. Yet the African Union is stretched thin, and we are seeking to 
fold it into a United Nations mission that is better equipped to deal 
with the multi-faceted challenges of peacekeeping in Darfur. These 
funds are urgently needed to help reduce the bloodshed that is now 
occurring at the hands of government-supported militias and rebel 
groups in Sudan.

                                  IRAN

    The President has also requested $75 million in supplemental 
funding for promoting democracy in Iran. Mr. Chairman, we prepared our 
budget request for fiscal year 2006 in the months soon after President 
Mahmud Ahmadi-Nejad was inaugurated as President of Iran. Since his 
inauguration he has referred to Israel as a ``disgraceful blot'' that 
should be ``removed,'' and he has called the Holocaust a ``fairy 
tale.'' He has purged Iran's foreign service of its experienced 
diplomats and replaced them with ideologues and hard-liners. The 
Iranian government has consolidated control over all branches of its 
government and is ratcheting up its internal information and 
counterrevolutionary operations. We cannot afford to wait through the 
current U.S. budget cycle before responding with a countervailing 
message.
    For that reason the President has requested $75 million for 
democracy promotion activities. As we aim to isolate the government of 
Iran because of its defiance of the international community over its 
nuclear program, it is all the more important that we make clear to the 
Iranian people our commitment to their well-being. Of the President's 
request, $50 million will be dedicated to radio and television 
broadcasts into Iran. These funds will enable us to expand considerably 
our direct communication with the Iranian people. The balance of the 
funds will support public diplomacy, educational and cultural 
exchanges, and other democracy promotion programs.
    Mr. Chairman, other funds in the request will reimburse monies used 
to respond to the disastrous earthquake in Pakistan; to repatriate 
Liberians in the wake of the recent successful presidential election in 
Liberia; and to fill gaps in our ability to provide food aid to 
refugees, particularly in Africa.
    In conclusion, let me reiterate the importance of this supplemental 
funding request. The continuity of funding through the fiscal year 2006 
request, the supplemental before you now, and the fiscal year 2007 
request is critical to our success in Iraq and Afghanistan. We simply 
cannot afford to fail in these places. The United States will be judged 
by whether we set in motion a process in which the people of the Middle 
East become democratic citizens and friends of the United States, or 
whether the region descends into chaos and autocracy. The stakes could 
not be higher. These requirements and the other urgent needs addressed 
in the supplemental request call for your prompt and positive 
consideration.
    Mr. Chairman, this is clearly a time in the life of our Nation when 
we need good people and good policy, as well as sufficient funds to 
support the full range of our diplomatic efforts. The President's 
supplemental funding request for the Department of State will help our 
diplomats, many of whom risk their lives each day, to do their jobs in 
Iraq, Afghanistan, Sudan and around the world. I appreciate the 
opportunity to appear before this committee today.
    I would be pleased to answer your questions.

    Chairman Cochran. Thank you very much, Madam Secretary, for 
your statement and your cooperation with our committee.
    Secretary Rumsfeld, you may proceed.

STATEMENT OF HON. DONALD H. RUMSFELD, SECRETARY, 
            DEPARTMENT OF DEFENSE
ACCOMPANIED BY:
        GENERAL PETE PACE, CHAIRMAN, JOINT CHIEFS OF STAFF, DEPARTMENT 
            OF DEFENSE
        GENERAL JOHN ABIZAID, COMMANDER, U.S. CENTRAL COMMAND, 
            DEPARTMENT OF DEFENSE

    Secretary Rumsfeld. Thank you, Mr. Chairman, members of the 
committee. I appreciate this opportunity to join Secretary Rice 
in discussing the President's supplemental budget request for 
Iraq, Afghanistan, and the war on terror.
    A joint appearance by the Secretary of State and Secretary 
of Defense is unusual. That we're doing so, I think, does 
indicate how much the success depends on our Departments being 
linked together in addressing the challenges that face our 
Nation.

                        CONTENT OF SUPPLEMENTAL

    Let me first outline a few of the details of the 
Department's portion of the supplemental request.
    The President's requested $65.3 billion to fight and win 
the war on terror in Afghanistan and Iraq. This supplemental 
includes priorities such as paying for ongoing deployments and 
operations by U.S. forces in Afghanistan and Iraq, some $34.7 
billion; continuing to develop Afghan and Iraqi security 
forces, $5.9 billion; countering the threats posed to our 
troops by improvised explosive devices, $1.9 billion; 
continuing the important transformation of the U.S. Army into 
modular brigade combat teams, $3.4 billion; repairing and 
replacing damaged or destroyed equipment, $10.4 billion; and 
reimbursement for the cost of the military response to the 
earthquake in Pakistan, some $60 million.
    To underscore the importance of this request, and discuss 
some of the particulars, I'm joined by General Pete Pace, the 
Chairman of the Joint Chiefs of Staff, and General John 
Abizaid, the Commander of the U.S. Central Command.
    We've been asked, on occasion, why the war costs are 
included in supplemental requests rather than in the Defense 
Department's annual budget. And it's a fair question. As 
Secretary Rice suggested, the traditional annual Federal budget 
takes up to 12 months to formulate. It takes another 8 or 12 
months to pass Congress. And then it takes another 12 months to 
execute it, a total of something like 2.5 to 3 years. Needless 
to say, in war circumstances on the ground change quickly, the 
enemy has a brain; it's continuously changing and adapting 
their tactics.
    Bridge and supplemental appropriations are, of course, put 
together much closer to the time the funds will actually be 
used. This allows considerably more accurate estimates of 
costs, and, importantly, much quicker access to funds when 
they're needed, without having to go through reprogramming 
contortions where we're forced to rob other accounts and 
distort good business practices.

                            PROGRESS IN IRAQ

    The task is this. We're engaged in what promises to be a 
long struggle, a conflict which requires that we transform the 
way the military, and, indeed, our Government, operates. The 
extremists, though under constant pressure and on the 
defensive, still seek to bring their terror to our shores and 
to our cities and to all who oppose their views. These enemies 
cannot win a single conventional battle, so they challenge us 
through nontraditional asymmetric means, using terror as their 
weapon of choice.
    Their current priority is to prevent the successful 
emergence of a democratic government in Iraq, and, indeed, in 
Afghanistan, as well, and to try to force the United States and 
our coalition partners to abandon those nations before they're 
fully able to defend themselves. They're skillful at 
manipulating the media. Of course, one of the principal goals 
of their attacks is to make our cause look hopeless.
    But consider the larger picture from the enemy's 
standpoint. They tried to stop the Iraqi national elections in 
January, 1 year ago, and they failed. They tried to stop the 
drafting of a constitution, and then the referendum on the 
constitution, October 15, and they failed. They tried to stop 
the Iraqi national elections last December 15, and they failed. 
And now, obviously, they attacked the Golden Dome Shrine in 
Samarra, in their latest attempt to incite a civil war and to 
try to stop the formation of the new Iraqi Government; and, 
thus far, they are failing at that, as well.

                       QUADRENNIAL DEFENSE REVIEW

    The Defense Department has drawn lessons that have helped 
guide us in making adjustments in the period ahead. These 
lessons and principles have been incorporated into the 
Quadrennial Defense Review (QDR), which was recently submitted 
to Congress. Those lessons and the decisions from the 
Quadrennial Defense Review will be incorporated more fully in 
the President's budget to be presented next year, in fiscal 
2008.
    The QDR recognized that, in this struggle, many of our 
enemies operate within borders of countries with whom we're not 
at war. It's clear that the challenge posed by these violent 
extremists will not be overcome by any one department or by any 
one country. To succeed, it will be essential to help partner 
nations and allies develop their capabilities to better govern 
and defend themselves.
    This emphasis on partner-building capability is at the 
heart of the efforts in Iraq and Afghanistan, as well as in 
several smaller-scale training and equipping operations in 
places like the Republic of Philippines and Georgia.
    Our investments and policies should reflect these new 
requirements. Last year, Congress, helpfully, provided some 
authority to provide money to train and equip security forces 
of partner nations, but we will be requesting, in our new 
budget, that authorities be strengthened and expanded.
    When other nations and partners can shoulder greater 
security burdens within their borders and around the globe, 
it's far less likely that U.S. troops will be called on at what 
is always considerably greater cost in both blood and treasure 
to our Nation. For example, it costs about $90,000 per year 
just to sustain a U.S. servicemember in theater. That's opposed 
to about $11,000 to sustain an Afghan soldier, or $40,000 to 
sustain an Iraqi soldier.
    I was concerned yesterday to learn that the House 
Appropriations Committee has cut $1 billion out of the $5.9 
billion request for sustaining and supporting Iraqi and Afghan 
security forces. In my view, that is clearly an enormously 
important thing for our country to be doing, and it 
unquestionably is cost effective.
    The United Nations peacekeeping operation in Haiti is one 
example of the benefit of empowering partner nations. A recent 
Government Accountability Office study found that if the United 
States had to conduct the Haiti mission on our own, without the 
major help of other nations, it would have cost the U.S. 
taxpayers almost eight times as much in dollars, to say nothing 
of the added stress on our forces.
    I think it's also important that we not complicate efforts 
to build useful relationships with nations that can aid in our 
defense. In the past, there's been a tendency--occasionally for 
good reason, and sometimes, in my view, for not-good reason--to 
cut off military-to-military relationships when a particular 
government did something that we, understandably, did not 
approve of. This happened some years ago with respect to our 
relations with both Indonesia and Pakistan, two of the largest 
and most important Muslim countries in the world. And today 
they're valuable allies in the war on terror. A result has been 
the equivalent of a lost generation in relationships between 
U.S. military and the militaries of their countries, in terms 
of friendships, contacts, relationships, and understanding 
between the U.S. military and their militaries, relationships 
that we've had to start up again--try to start up again, almost 
from scratch, in the wake of September 11.
    It's a complicated issue. I understand that there's 
arguments that are appropriate to be made on both sides of it. 
But I mention it, because I think it's something that we need 
to think very carefully, because, as a result of some of those 
actions, the United States is looked at as a less than 
perfectly reliable friend and ally.
    Since then, we've made progress in forging stronger ties--
with those two countries, and also with India, in particular--
to confront the threat posed by violent extremism.

                        INTERAGENCY COOPERATION

    I've mentioned the importance of closer cooperation between 
Cabinet departments and agencies, and Secretary Rice has 
discussed some specific provisions for the Department of State 
that are in the supplemental request, and which will clearly 
enhance our partnerships in Iraq and Afghanistan.
    The State Department requests are intended to help Iraq and 
Afghanistan transition to self-reliance by increasing the 
capacity of these still-fragile democracies to govern their 
people and to provide the needed services for them, services 
that, let there be no doubt, undermine support for terrorists 
and that reduce stress and danger to our men and women in 
uniform.
    Mr. Chairman, the tasks ahead are not easy. They're never 
easy in a time of war. There is always differences and debate 
and proper discussion. It's interesting, I recently visited the 
Truman Library, in Independence, Missouri. And, of course, he 
was the Commander in Chief at the dawn of the cold war. The 
institutions and policies and programs that came into being 
under his watch included the Marshall Plan, the Truman 
Doctrine, NATO, the Department of Defense, the Central 
Intelligence Agency, the World Bank, and so many others. With 
the perspective of history, the many new institutions and 
programs created during the Truman years may seem, to people 
not rooted in history, as part of a carefully crafted, broadly 
supported strategy leading inevitably to victory in the cold 
war.
    But, of course, things were not like that at all. In fact, 
those days, there were heated disagreements. Yet, together, our 
national leaders, both political parties, got the big things 
right. They understood that a cold war had been declared on our 
country, on the free world, whether we liked it or not, that we 
had to steel ourselves against an expansionist enemy, the 
Soviet Union, that was determined to destroy our way of life.
    Though this era is different--and it is different, to be 
sure--and though the enemy today is different, as we understand 
fully it is--nonetheless, that is our task today. We have to 
fashion some new approaches that will enable us to partner with 
other countries if we're to defeat this peril that faces us.

                           PREPARED STATEMENT

    Mr. Chairman, with the help of the Congress, we will 
provide the American people with the needed security in this 
dangerous and still uncertain new century.
    Thank you, sir.
    [The statement follows:]

           Prepared Statement of Secretary Donald H. Rumsfeld

    Mr. Chairman, members of the committee, I appreciate the 
opportunity to join Secretary Rice in discussing the President's 
supplemental budget request for operations in Iraq, Afghanistan and the 
Global War on Terror.
    A joint appearance of the Secretaries of State and Defense is 
unusual. That we are doing so today indicates how much success in this 
Global War on Terror is linked to the capabilities and resources of 
these two departments.
    The security challenges facing our Nation in this new century do 
not, after all, exist in neat bundles that can be easily divided up 
between departments or agencies.

                        DOD SUPPLEMENTAL REQUEST

    Let me first outline a few of the details of the Department of 
Defense's portion of the President's supplemental request.
    The President has requested an appropriation of $65.3 billion for 
this department to fight and win the War on Terror in Afghanistan and 
Iraq. This supplemental request includes priorities such as:
  --Paying for ongoing deployments and operations by U.S. forces in the 
        Afghanistan and Iraq theaters ($34.7 billion);
  --Continuing to develop Afghan and Iraqi security forces ($5.9 
        billion);
  --Countering the threats posed to our troops by Improvised Explosive 
        Devices ($1.9 billion);
  --Continuing the important transformation of the U.S. Army into 
        modular brigade combat teams ($3.4 billion);
  --Repairing or replacing damaged or destroyed equipment ($10.4 
        billion); and
  --Reimbursement for the cost of the military response to the terrible 
        earthquake in Pakistan ($60 million).
    To underscore the importance of this request, and discuss some of 
the particulars, we are joined by:
  --General Pete Pace, Chairman of the Joint Chiefs of Staff; and
  --General John Abizaid, the Commander of U.S. Central Command.
    We have been asked why war costs are included in supplemental 
requests, rather than in the annual Defense Department budget. It is a 
fair question.
    But it is a question that has been answered dozens of times, 
including by Secretary Rice in her submitted testimony to this 
committee.
    The traditional annual Federal budget takes up to 12 months to 
formulate, then it takes another 8 to 12 more months to pass Congress, 
and then it takes still another 12 months to execute--a total of close 
to 3 years. In war, circumstances on the ground change quickly. The 
enemy has a brain--and is continuously changing and adapting their 
tactics.
    Bridge and supplemental appropriations are put together much closer 
to the time the funds will actually be used. This allows a considerably 
more accurate estimate of costs, and, importantly, much quicker access 
to the funds when they are needed, without having to go through 
reprogramming contortions where we are forced to rob other accounts and 
distort good business practices.

                                THE TASK

    Mr. Chairman, we meet today with our country engaged in what 
promises to be a long struggle--a conflict which requires that we 
transform the way the military, and indeed the U.S. government, 
operates.
    The extremists, though under constant pressure and on the 
defensive, still seek to bring their terror to our shores and to our 
cities--and to all who oppose their views. These enemies cannot win a 
single conventional battle, so they challenge us through non-
traditional, asymmetric means, using terror as their weapon of choice.
    Their current priority is to prevent the successful emergence of 
democratic governments in Iraq and Afghanistan, and to force the United 
States and our Coalition partners to abandon those nations before they 
are able to fully defend themselves.
    They are skillful at manipulating the media. Of course, one of the 
principal goals of their attacks is to make our cause look hopeless.
    But consider the larger picture--the view from the enemy's 
perspective:
  --The terrorists tried to stop the Iraqi national elections a year 
        ago--and they failed;
  --They tried to stop the drafting of, and the referendum on, the new 
        Iraqi Constitution--and they failed;
  --They tried to stop the Iraqi national elections on December 15 for 
        a permanent Iraqi government--and they failed again; and
  --They attacked the Golden Dome Shrine in Samarra in their latest 
        attempt to incite an Iraqi civil war and to try to stop the 
        formation of the new Iraqi government--and thus far they are 
        failing at that as well.
    It is crucially important that we continue to help the Iraqi people 
move forward on the political, economic and security tracks so that we 
can see this important mission through to completion. And that we and 
our Coalition partners use all elements of national power to help the 
Iraqi people defeat the terrorists in their country.

                            PARTNER CAPACITY

    The Department of Defense has drawn lessons that have helped guide 
us in making adjustments for the period ahead. These lessons and 
principles have been incorporated into the Quadrennial Defense Review 
(QDR), which was recently submitted to the Congress. Those lessons and 
the decisions in the QDR will be incorporated fully in the President's 
budget to be presented next year for fiscal year 2008.
    The QDR recognized that in this global struggle many of our enemies 
operate within the borders of countries with whom we are not at war. It 
is clear that the challenge posed by violent extremists will not be 
overcome by any one Department, or by any one country.
    It will require the cooperation of a number of our departments and 
of a great many nations to successfully disrupt terrorist cells and 
prevent the proliferation of dangerous weapons.
    And to succeed, it will be essential to help partner nations and 
allies develop their capabilities to better govern and defend 
themselves. This emphasis on building partner capability is at the 
heart of our efforts in Iraq and Afghanistan, as well as in several 
smaller-scale training and equipping operations in places like the 
Republic of Georgia and the Philippines.
    Our investments and policies should reflect these new requirements. 
Last year, Congress helpfully provided authority to more quickly train 
and equip the security forces of partner nations, but we will be 
requesting that these authorities be strengthened and expanded.
    When other nations and partners can shoulder greater security 
burdens within their borders and around the globe, it is far less 
likely that U.S. troops will be called on--at what is always 
considerably greater cost, in both blood and treasure, to our Nation.
    For example, it costs approximately $90,000 per year to sustain a 
U.S. service member in theater, as opposed to about $11,000 to sustain 
an Afghan soldier, or $40,000 for an Iraqi soldier.
    The United Nations peacekeeping operation in Haiti is an example of 
the benefit of empowering partner nations. A recent Government 
Accountability Office study found that if the United States had had to 
conduct the Haiti mission on its own--without the major help of partner 
nations--it would have cost the U.S. taxpayers almost eight times as 
much in dollars, to say nothing of the added stress on our forces.
    So it is in the best interest of our country to provide whatever 
support we can to those departments and agencies working to help other 
nations take on a still greater share of the costs for our collective 
defense.
    It is also important that we not complicate efforts to build useful 
relationships with nations that can aid in our defense. In the past, 
there has been a tendency to cut off military-to-military relationships 
when a particular government did something we did not approve of. This 
happened some years ago with respect to our relations with both 
Indonesia and Pakistan--two of the largest and most important Muslim 
countries in the world, and today, valuable allies in the War on 
Terror. A result has been the equivalent of a ``lost generation'' of 
friendships, contacts, relationships and understanding between the U.S. 
military and their militaries--relationships that we have had to try to 
start again, almost from scratch, in the wake of September 11.
    Since then, we have made progress towards forging stronger ties 
with these and other new partners around the world--India in 
particular--to confront the threat posed by violent extremism. It is 
important to keep this in mind the next time we may be tempted to sever 
military relationships, that could prove crucial to the defense of the 
American people.

                        INTER-AGENCY COOPERATION

    I have mentioned the importance of closer cooperation between our 
Cabinet departments and agencies. And Secretary Rice has discussed some 
specific provisions for the Department of State that are included in 
the supplemental request, and which will enhance our partnerships in 
Iraq and Afghanistan.
    The State Department requests are intended to help Iraq and 
Afghanistan's transition to self-reliance by increasing the capacity of 
these still fragile democracies to govern their people and provide 
needed services for them--services that undermine support for the 
terrorists and that reduce the stress on--and danger to--our men and 
women in uniform.
    I should also mention Secretary Rice's proposal to support the 
aspirations of the Iranian people through expanded broadcasting. I 
believe that this proposal--and others like it that can help to spread 
the message of freedom--deserve the support of the Congress.
    Though the focus of this hearing is on the supplemental budget 
request, I would draw attention to important programs funded in the 
State Department's regular annual budget that are also of direct 
benefit to our Nation's security.
    These programs include:
  --The International Military Education and Training Program (IMET);
  --Civilian stabilization and reconstruction capabilities;
  --Foreign Military Financing (FMF); and
  --The Global Peacekeeping Operations Initiative, that will help less-
        developed countries train, so they can send peacekeeping forces 
        to potential crisis spots.

                               CONCLUSION

    Mr. Chairman, the tasks ahead of us will not be easy. They never 
are in a time of war.
    I recently visited the Truman Presidential Library in Independence, 
Missouri. President Truman of course, was the Commander-in-Chief at the 
dawn of the Cold War. The institutions, policies and programs that came 
into being under his watch included:
  --The Marshall Plan;
  --The Truman Doctrine;
  --NATO; and
  --The World Bank, to name just a few.
    With the perspective of history, the many new institutions and 
programs created during the Truman years may seem, to people not rooted 
in history, as part of a carefully crafted, broadly supported strategy, 
leading inevitably to victory in the Cold War.
    But of course, things were not that way at all.
    In fact those were days of heated disagreements. Yet together, our 
national leaders, of both political parties, got the big things right. 
They understood that a Cold War had been declared on our country--on 
the free world--whether we liked it or not. That we had to steel 
ourselves against an expansionist enemy, the Soviet Union, that was 
determined to destroy our way of life.
    Though this era is different, and though the enemy today is 
different, that is our task today. We must fashion new approaches to 
enable us to work more efficiently across agencies and departments in 
ways unimagined before, and to partner with other nations, if we are to 
defeat this peril to our way of life.
    Mr. Chairman, with the help of the Congress we will provide the 
American people with the security they need in this dangerous and 
uncertain new century.

    Chairman Cochran. Thank you, Secretary Rumsfeld.

                        RECONSTITUTING EQUIPMENT

    We'll now turn to General Pace for any opening comments you 
would like to make.

                     STATEMENT OF GENERAL PETE PACE

    General Pace. Mr. Chairman, Senator Byrd, members of the 
committee, it's my great privilege to sit before you as a 
representative of your Armed Forces, and, on behalf of all the 
women and men in uniform, to say thank you for your strong 
bipartisan support not only in the allocation of resources to 
your Armed Forces, but in your visits to the troops in the 
field and your visits to the hospitals. It makes a difference, 
and we thank you for that.
    We'd also like to take an opportunity to say thank you to 
the men and women who are protecting us as we sit here today--
they are doing a fabulous job--and to their families, who stand 
silent watch at home. The families serve this country as well 
as anyone who has ever wore the uniform. We owe them a great 
debt of gratitude.
    Today I'd like to just touch on four specific topics and 
then go to your questions.
    First, with regard to reconstituting equipment, the total 
2006 funding for reconstituting equipment is $18.2 billion. 
That includes $7.8 billion in the bridge fund and $10.4 billion 
in this supplemental request. It goes to replenish Humvees and 
trucks and helicopters and Bradley fighting vehicles and all 
the things that we have been using, getting damaged, wearing 
out, in the prosecution of this war. But the money is not being 
used to reset the old force. With the benefit of the recently 
conducted Quadrennial Defense Review, we are buying and 
resetting the force that we need for the future. For those 
things that are in the inventory that we will need for the next 
10-15 years, we are refurbishing those. But, in other cases, 
where there is a better item for the Armed Forces to be able to 
use in the future, that's what we will do--Ospreys, for 
example, instead of helicopters; 7-ton trucks for the future, 
instead of the older version we've had for 20 years. Those 
kinds of decisions are being made based on solid analysis.
    Second, with regard to force protection equipment, total 
2007 funding for force protection equipment is $5.1 billion. 
That includes $2.5 billion in the bridge fund, plus $2.6 
billion in this request. When you add that--add that to the 
$3.8 billion that you have already allocated, and we have 
spent, through fiscal year 2005, you can see that the amount of 
energy and resources applied to force protection for our troops 
has been enormous. Examples: 988,000 sets of individual body 
armor have been purchased; 13,000 up-armored Humvees have been 
purchased; over 40,000 other wheeled vehicles have had armor 
added to them.
    And as new items come along that are better than what we 
have, you have resourced us, and we have been able to get it. 
So, for example, we started the war with only about 2,000 sets 
of the small-arms protective inserts for body armor, because it 
was an experimental piece of gear at the time. It proved its 
worth, and you quickly funded, and we were able to quickly get 
to the field, that item for each and every soldier, sailor, 
airman, marine, and civilian in theater.
    While that was being done, our industry came up with the 
enhanced version, which is even more protective. And that has 
been fielded. Side armor that has been developed will now be 
fielded--it has been fielded, as of this month. So, as industry 
is able to produce better equipment and armor, you have given 
us the resources, and we have gotten to the field, as quickly 
as we can, those resources.
    Clearly, force protection--the best force protection is to 
have fewer troops in the field, in combat. And the enormous 
progress made this year by the Iraqi armed forces, in their 
capacity to control their own territory, has made it possible 
for us to go from 17 brigades, recently, down to 15 in Iraq.

                             TOTAL FUNDING

    Third, defeating the improvised explosive devices (IED). 
Total funding in 2006 for that amounts to $3.3 billion--$1.4 
billion in the bridge fund, $1.9 billion in this supplemental. 
It buys things like jammers and detection devices. It helps us 
test those. It helps us train, with those, in the deserts here, 
before we send our troops overseas.
    There is no silver bullet in this regard. But the 
combination of tactics, techniques, and procedures that are 
taught to our soldiers and marines, based on lessons learned in 
the field, the technology that is being funded, has been 
funded, and is requested to be funded through this 
supplemental, combined, will give us the best opportunity for 
our forces to succeed against IEDs in the field.
    Back in 2004, the United States Army stood up a task force 
specifically focused on IED defeat. That quickly grew to a 
joint task force, which then came underneath the Department of 
Defense. And within the last couple of months, U.S. Army 
retired General Monty Meigs has come on to take the lead of 
that task force, reporting directly to the Secretary of 
Defense, so that we can get the value and the benefit of the 
entire joint force kludged together as quickly as possible and 
brought to the field to help reduce casualties.
    There has been an increase in the number of IEDs that we 
have found before they have exploded, and a decrease in the 
number of casualties per explosion. That means that a lot of 
that work that's being done, and a lot of the resources that 
you have allocated, are having positive effect. But we have a 
lot of work to do in this regard, and we appreciate your 
support.
    Last, with regard to Army modularity, total 2006 funding 
for Army modularity is $5 billion--$1.6 billion in the bridge 
fund, and $3.4 billion in the supplemental. This is allowing 
the United States Army to transform at the same time that it is 
fighting in combat. It is taking 33 brigades that were embedded 
in divisions and were not independently deployable, and 
transforming those and building those up to 42 brigades that 
are deployable independent of each other. It's taking the 
National Guard that has 15 enhanced brigades, and building 
those to 28 fully modularized brigades, manned and equipped to 
be able to enter the battlefield independently, as well.
    When you take a look, then, at rotations, this will not 
only increase our Army's combat capability, but will also 
decrease the stress on the force. With the 42 active brigades 
and a rotation base of 1 year out and 2 years back, we can have 
14 active brigades in the field indefinitely. On the Reserve 
side, with 1 year out and 5 years back, of the 28 Reserve 
brigades, we can have 4 to 5 in the field all the time, if the 
Nation were to need it.
    This gives us 18 to 19 brigades that are sustainable for as 
long into the future as we need to, and the rest of the force 
available to surge, if needed. To put that 18 to 19 in 
perspective, you currently have 15 brigades in Iraq, and 3 
brigades, going to 2 brigades, in Afghanistan. So, we have 18, 
going to 17, right now. So, if we had to, into the future, 
sustain the force that is currently deployed, we could do so, 
based on the Army's modularity plan.
    Significantly, beginning in fiscal year 2007, modularity 
funding for the United States Army moves into their baseline 
budget; and in the fiscal year 2007 budget, it's $6.6 billion 
for Army modularity in the baseline budget.
    Mr. Chairman, thank you, sir.
    Chairman Cochran. Thank you, General Pace.
    General Abizaid, we would appreciate hearing from you.

                   STATEMENT OF GENERAL JOHN ABIZAID

    General Abizaid. Well, thank you, Chairman Cochran, Senator 
Byrd, members of the committee. Thanks for the opportunity to 
be here. Most importantly, thanks for your steadfast support of 
the young men and women in the field whose sacrifice, courage, 
and professionalism are unequaled.
    We've come a long way in both Afghanistan and Iraq; 
however, the fiscal year 2006 supplemental funds will help us 
to address the many challenges and threats that we'll face in 
the coming year.

                               ISLAMABAD

    I just came out of the field. I was in Islamabad yesterday, 
Afghanistan, the day before that, and spent a couple of days in 
Iraq, as well. So, my impressions coming out of the field are 
fairly fresh.
    I do know that the achievement of our national strategic 
goals in both Iraq and Afghanistan require a balance of 
security, governance, capacity-building, and economic 
development to create an environment that eliminates the root 
causes of the insurgency.
    The supplemental provides the necessary resources to 
support our strategy by funding the Commander's Emergency 
Response Program, and--which includes funds for both the armed 
forces and police of Iraq and Afghanistan.
    In the supplemental, we're requesting $3.7 billion to 
further develop Iraq's security capacity to secure their 
country while carrying out a campaign to defeat the terrorists 
and neutralize the insurgency. Previous appropriated funds have 
enabled the ISF to continue to increase capability and self-
reliance, with the aim of taking ownership of their country's 
security.
    Initial training and equipping of personnel and combat 
units in the defense forces is over 80 percent complete, while 
training the--and equipping of police forces is over 60 percent 
complete. There are over 100 Iraqi army and special operations 
forces battalions conducting counterinsurgency operations, 
compared with only 5 in 2004. The Iraqis are making good 
progress, with 49 Iraqi defense force battalions now 
controlling their own battlespace, with coalition forces in a 
supporting role. We didn't have any doing this last year. 
Iraqis are in the lead in about half the precincts in Baghdad. 
And, again, we didn't have any doing this last year. This was 
accomplished, certainly, in part, because of the funds that you 
provided us in last year's supplemental.
    We are requesting some funding for Iraqi security 
infrastructure, and we believe that failure to complete these 
critical infrastructure projects could seriously delay the 
ability of the Iraqis to fully engage the counterinsurgency 
fight, take control of their battlespace, and maintain 
operational readiness. Some of the infrastructure costs are 
associated with tactical changes on the ground that our 
commanders believe will greatly improve Iraqi capability to 
secure difficult parts of the country. Iraqis are investing 
fully 16 percent of their 2006 budget for their security 
forces, and we are confident that, over time, they will 
contribute more and more to the cost of full equip-and-training 
of their own forces.
    In Afghanistan, we are requesting $2.2 billion to continue 
developing the Afghan national security force capability so 
that they can secure and stabilize their country while 
executing the campaign to defeat and prevent a safe haven from 
being established there by the terrorists. These funds will 
provide assistance to organize, train, and equip the police and 
military to assume a greater role in providing their own 
security. I think it's important for the committee to 
understand that, in both Afghanistan and in Iraq, local 
security forces take on the brunt of the fighting and the brunt 
of the casualties. Assistance to the security forces will 
include the provision of equipment, supplies, services, 
training, and infrastructure repairs and construction. The 
ministry of interior forces, to include the border, highway, 
and national police, will eventually become the front line of 
defense in the current--in the counterinsurgency fight in 
Afghanistan. But after 25 years of war, these forces have 
largely had to make do with temporary stations, some of which 
are partially destroyed.
    The funds requested in the supplemental will allow these 
security forces to continue to provide increased security, to 
support reconstruction, and allow for private-sector 
development in economic, educational, and health reform.

             COMMANDER'S EMERGENCY RESPONSE PROGRAM FUNDING

    We're also requesting an additional $423 million in the 
supplemental for a Commander's Emergency Response Program to 
support the commanders on the ground. CERP is one of the most 
effective counterinsurgency tools that we have, and your 
continued support is vital to their success.
    CERP funds are intended to respond immediately to urgent 
requirements for humanitarian relief and reconstruction 
efforts. The provisioning of equipment, such as electrical 
generators to support critical infrastructure and large-scale 
civic cleanup and construction activities, employs many local 
nationals. And, as you know, one of the reasons for the 
insurgency being fueled in Iraq and Afghanistan is the large 
number of unemployed angry young men on the streets. Getting 
the angry young men off the streets is very important to our 
efforts to fight the counterinsurgency. CERP enables commanders 
the ability to make a difference, on a daily basis, and it's 
having an immediate, and a positive, effect.
    The fiscal year 2006 supplemental request supports 
operations and programs that will help facilitate the important 
transition of more responsibility of the security to local 
forces. Whether through facilities, equipment, and training 
funds for Iraq and Afghanistan's security forces, CERP funding 
resources for enhanced force protections and counter-IED 
capabilities, or support for our coalition partners, whose 
efforts in Iraq and Afghanistan remain vital, these funds will 
assist United States, coalition, Iraqi, and Afghan forces in 
making continued strategic advances in both places. Such funds 
will also help us address the many challenges and threats that 
we face in those countries in the upcoming year.
    Success in Iraq and Afghanistan are key to our success in 
the broader war against the dark ideology and methods of al 
Qaeda. We must remember the vital roles played by our friends 
and partners in the region, especially in the Arabian Gulf. 
Saudi Arabia, Kuwait, Bahrain, the United Arab Emirates, Oman, 
Qatar all cooperate with us in this fight against a common 
enemy. They all share, in common with us, the need to protect 
resources flowing through the Arabian Gulf.
    I'd like to bring to the committee's attention that the 
United Arab Emirates, in particular, has been especially 
steadfast in their support of our efforts.
    Mr. Chairman, thank you, again, for the opportunity to be 
here. Thanks for your continuing tremendous support of our 
troops on a difficult mission. Our commanders in the field 
believe in our success and in the success of our Iraqi and 
Afghan partners.
    Chairman Cochran. Thank you very much, General Abizaid.
    Let me begin by asking Secretary Rice about the status of 
our construction of facilities for the Department of State and 
those who are working in the mission in Baghdad. We had an 
interesting debate about whether those funds were important 
enough to be included in a previous supplemental. And they were 
included. I was pleased to see that we were able to fund that 
activity, which was requested by the administration. What is 
the status of that now? And how does this billion dollars in 
the supplemental, for operation, maintenance, security, fit in 
with the previously appropriated funds we have provided?
    Secretary Rice. Thank you, Senator.
    The plan for the Baghdad Embassy is on track, in terms of 
time. I meet with General Williams at least once a month to 
track this, because we were grateful to the Congress for 
appropriating the funds so that we could accelerate the 
building of an Embassy in Baghdad. I think we all know that our 
people in Baghdad are living in conditions that are very 
difficult--in a lot of temporary housing, trailers, and the 
like--and in areas that we are very concerned about security, 
although we're doing everything that we can to make them 
secure. We undertook to do this project in about 24 months. We 
are on course to complete the Embassy in that period of time.
    We've had to employ very aggressive methods to try to get 
this done in that period of time, including keeping a lot of 
people onsite in order to not have security issues associated 
with it. But I can report that it is on schedule.
    The money for operations and maintenance that is 
represented here in the supplemental is because operating in a 
war zone is very costly. We operate in a very difficult 
security environment. Our spend rate for the operations and 
maintenance of our existing Embassy needs to be funded now, for 
the rest of the year, in order to be able to continue our 
operations in Baghdad. So that's the split, but the 
appropriation for the Embassy itself we were very grateful, and 
I believe we're on schedule.
    Chairman Cochran. Also included in the request is $1.5 
billion for economic support funds to assist Iraqi government 
ministries. What do you hope to accomplish with the funds if we 
approve this request? What's your assessment of the 
capabilities of Iraq to carry out government functions and to 
carry out their governmental responsibilities?
    Secretary Rice. Thank you, Senator.
    There are three elements to this, but I'll describe the 
most important two--in this request for capability for the 
Iraqi government. To pick up on something that General Abizaid 
mentioned, what we have to do is to build the Iraqis' capacity 
to deal with the many problems that they face. Obviously, their 
ministries have to be capable. We assess that the ministries 
are highly variable right now in their capability, and I don't 
think that there are any that are really up to speed, in terms 
of procurement practices, the ability to actually hire 
effective people. Sometimes it's a matter that the 
``ministries'' are ``a minister'' and really very little else, 
and you're really developing, in some of these ministries, a 
civil service corps.
    We have, as a part of this, a substantial training element 
for Iraqi civil servants, including an effort to improve the 
anticorruption efforts. That is a major problem in some of 
these ministries, especially ones that are associated with 
natural resources. The funding will help us, at the central 
level in Baghdad, to make these ministries capable. We believe 
that's a program that will span over a couple-or-so years to 
try and make those ministries capable of delivering the day-to-
day governance of the country.
    There is a second element, which is very important to us, 
which is at the provincial level. The Iraqi constitution will 
finally devolve authority to the provincial level. And we 
recognize that the closer that governance is to the real issues 
and real needs of the people, the better. And so, at the 
provincial level, we are also working to develop better 
capability.
    There are provincial leaders who have not even tended to 
communicate very much with Baghdad, because Baghdad was the 
source of everything. They are now going to have to start to 
deliver for their people on the ground.
    Also, as a part of that provincial effort, we have employed 
provincial reconstruction teams. They're different than what we 
have employed in Afghanistan. Those have a very special 
character. But the ones in Iraq are really aimed at some areas 
in which there has been a strong insurgency, where the 
insurgency has been defeated, and where we now need to build 
that provincial leadership capability and infrastructure, at 
the local level, so that the insurgents don't come back. That's 
the program for about $1.5 billion. It's really to build Iraqi 
capacity, which is, frankly, lacking. This is something that 
dictatorships don't worry about. Saddam Hussein left, really, 
not very much in the ability of the Iraqis to really govern 
themselves.
    Chairman Cochran. Some of the funds requested in this 
submission include Afghanistan programs, some economic support 
funding for activities there. What progress are we making, to 
help develop the same kind of thing you have mapped out for 
Iraq, in Afghanistan? Are we learning lessons in Afghanistan 
that can be translated into activities in Iraq to accelerate 
our progress there?
    Secretary Rice. We are, indeed, learning important lessons 
in Afghanistan. One of the important lessons is that the reach 
of the central government into the provinces is one of the 
major problems in Afghanistan. We will use some of the lessons 
that we've learned in Afghanistan as we structure the outreach 
into the provinces in Iraq.
    In Afghanistan, of course, we are quite a bit further 
along, and we have been working for some time, as have certain 
coalition partners, to try to develop ministry capability in 
Afghanistan. Afghanistan also had the advantage that a number 
of people are returning to Afghanistan, people from the 
diaspora. If you go to Afghanistan, you will meet many Afghan 
Americans who have actually gone back, to try and help train 
Afghans in civil functions.
    But we need to continue to support Afghanistan. It's not 
there yet. It is a success story. There is no doubt that, 
despite the continued efforts of the Taliban to destabilize the 
country, Afghanistan is becoming a functioning government at 
the center and in most of the provinces.
    Some of the monies that are here, for debt forgiveness, for 
refugee assistance, are really next-step efforts with 
Afghanistan. And the reason that they are here in the 
supplemental is that these are really very much near-term costs 
that we're going to face in Afghanistan.
    Chairman Cochran. Another inclusion is one for U.N. 
peacekeeping missions activities in Darfur, Sudan. The question 
I want to ask is: Do you anticipate getting United Nations or 
other allied organizations to support this? The African Union, 
for example. What progress is made in enlisting support 
activities from others?
    Secretary Rice. We believe strongly, Mr. Chairman, that 
there needs to be a blue-helmeted force in Sudan--in Darfur. 
This is not to say that the African Union mission has not been 
effective or successful. It has been. But it has run the limits 
of what it can do. We now face a potential increased crisis, 
because the situation in Chad is feeding an increased conflict 
problem in western Sudan.
    It is also the view of a number of our European colleagues 
and Kofi Annan that there should be a U.N. mission. It will 
also be more sustainable than simply trying to fund the African 
Union mission.
    We are making some progress. Deputy Secretary Zoellick is 
in Europe as we speak, in consultations with the Europeans and 
also with the African Union on getting an African Union request 
for the United Nations to go forward with this blue-hatting 
mission. Assistant Secretary for Africa, Jendayi Frazer, is in 
Libya as we speak, talking to the Libyans about the same thing. 
We have a very active diplomatic effort, and it is our view 
that we will be able to get this done. We need to have the 
funds available when the blue hatting takes place.
    Chairman Cochran. Thank you very much.
    We appreciate, very much, Senator Byrd being here, and 
other members of the committee. My intention was to recognize 
other Senators in the order in which they came, but I'm going 
to make an exception in Senator Byrd's case and call on him at 
this point for any statement or questions he may make. And with 
the permission of the committee, we will follow the 10-minute 
rule. Each Senator will have an opportunity to ask questions or 
make statements for up to 10 minutes, and then we will have a 
second round if that's available to us.
    Senator Byrd.
    Senator Byrd. I thank you, Mr. Chairman.
    And it is a privilege to hear the testimony of these very 
distinguished witnesses concerning the President's supplemental 
appropriations request for the wars in Iraq and Afghanistan, 
two different wars.
    By any measure, the size of the numbers associated with 
these two wars is staggering. The Congressional Research 
Service reports that the wars in Iraq and Afghanistan have cost 
U.S. taxpayers $369 billion so far. That number will increase 
by $72.4 billion because of this supplemental request, not to 
mention the $50 billion proposed for next year's budget.
    Assuming this supplemental request is approved, total 
funding for the war in Iraq alone will reach an astounding $320 
billion. This comes at a time when our deficit is estimated to 
be $357 billion and our national debt is rapidly approaching $9 
trillion. Those numbers are almost incomprehensible in their 
enormity. But the figures that are understood by all American 
taxpayers are--all Americans--are the losses of our brave 
servicemembers on the battlefield. In Iraq, 2,297 troops have 
been killed, more than 17,000 wounded. In Afghanistan, 216 
servicemembers have given their lives. Our hearts are with all 
of those who have suffered losses in these wars, and we pray 
for the safe return of all the young men and women who are 
currently in harm's way.
    The Congress is considering this supplemental request to 
continue military operations in Iraq as a cloud of peril and 
uncertainty hangs over the nation. In recent days, Iraq has 
only narrowly missed descending into an all-out civil war, and 
top administration officials acknowledge that the threat of 
civil war is still very real.
    The Congress and the public have a right to know the 
administration's plans for Iraq before scores of additional 
billion dollars--billions of dollars are spent in that war. The 
funds requested by the administration could very well be the 
funds being spent if our troops find themselves in the middle 
of a civil war in the coming weeks and months. Congress cannot 
close its eyes, cross its fingers, appropriate more money, and 
just hope that the administration knows what it is doing in 
Iraq. It is alarming that parts of this supplemental request 
ask Congress to do just that.
    The supplemental asks for more flexibility for the 
Secretary of Defense to transfer funds, at his discretion. It 
asks Congress to exempt our troops' training programs from 
longstanding laws that prohibit assistance to human rights 
abusers. It asks for more reconstruction and--for Iraq--without 
a firm plan how it will be used. And the supplemental asks for 
billions more for the war, without presenting any idea of when 
our troops may be coming home.
    Mr. Chairman, we need straight answers to these questions, 
and I certainly am grateful to you for calling this hearing.
    Iraq continues to teeter on the brink of an all-out civil 
war. Even our Ambassador to Baghdad is continuing to speak of 
Iraq as a Pandora's box of ethnic and religious tensions that 
could provoke even greater violence.
    Secretary Rumsfeld, what is the plan if Iraq descends into 
civil war? Will our troops hunker down and wait out the 
violence? If not, whose side would our troops be ordered to 
take, in a civil war?

                      PREVENTING CIVIL WAR IN IRAQ

    Secretary Rumsfeld. Thank you, Senator Byrd.
    General Abizaid is here, of course, and he can add a 
comment or two, but as you correctly suggested, there is a high 
level of tension in the country, sectarian tension and 
conflict. As you also correctly said, it is not in a civil war 
at the present time, by most experts' calculation. General 
Casey and General Abizaid have been impressed by the work of 
the Iraqi security forces and the fact that they have stepped 
forward and assumed the responsibility for the conflict that 
has occurred, thus far. Needless to say, they've had some 
support from our forces, but the Iraqi security forces have 
been very much in the lead in dealing with it.
    In addition, fortunately, the Iraqi government leaders, and 
leaders in the country of a nongovernmental nature, have, 
almost to a person, stepped forward and urged calm, and argued 
against retaliation, thus far. And that has been a calming 
effect.
    So, unless--General Abizaid, do you want to add anything?

                           SECTARIAN TENSIONS

    General Abizaid. No, I think the only thing I'd want to 
add, Mr. Secretary, is that there's no doubt that the sectarian 
tensions are higher than we've seen, and it is of great concern 
to all of us. On the other hand, the role played by Iraqi 
security forces after the Samarra bombing was quite 
professional. They did a good job. It's my belief that the 
security situation in the country, while changing in its nature 
from insurgency toward sectarian violence, is controllable by 
Iraqi security forces and multinational force forces.
    It's also my impression that we need to move quickly to a 
government of national unity. I regard the current problem as 
more a problem of governance than security. But, of course, 
they mutually affect one another.
    Senator Byrd. Mr. Secretary, how can Congress be assured 
that the funds in this bill won't be used to put our troops 
right in the middle of a full-blown Iraqi civil war?
    Secretary Rumsfeld. Senator, I can say that certainly it is 
not the intention of the military commanders to allow that to 
happen. And, to repeat, at least thus far, the situation has 
been such that the Iraqi security forces could, for the most 
part, deal with the problems that exist.
    I think it's important to underline the point that General 
Abizaid made. The situation, to the extent that it's fragile 
and tense, is as much a governance issue as it is a security 
issue. The need is for the principal players in that country to 
recognize the seriousness of the situation and to come together 
to form a government of national unity that will govern from 
the center, and to do it in a reasonably prompt manner. And 
that will be what it will take, in my view, to further calm the 
situation. And they have a period of weeks to get that done, 
and they are--as we all read in the press and see on 
television, they're debating, they're discussing, they're 
politicking, they're going through that process. And, to some 
extent, it's a relatively new experience for most of them.
    Senator Byrd. That is true, Mr. Secretary. Is there any 
plan to respond to a civil war in Iraq?
    Secretary Rumsfeld. The plan is to prevent a civil war, 
and, to the extent one were to occur, to--from a security 
standpoint--have the Iraqi security forces deal with it, to the 
extent they're able to.
    Senator Byrd. Do you feel that there would be a request to 
respond to a civil war in Iraq?
    Secretary Rumsfeld. I don't know that I'd characterize it 
that way.
    Senator Byrd. How can we avoid it?
    Secretary Rumsfeld. The work that is being done today by 
the Ambassador, and by the Embassy, to bring the political 
parties together to form a government is the principal thing 
that needs to be accomplished to avoid it. And that is what the 
Ambassador and his team, as well as General Casey and his team, 
are working very diligently to do.
    Senator Byrd. Mr. Secretary, recent media reports indicate 
that one in five soldiers and marines returning from Iraq have 
reported mental health problems, yet the supplemental request 
for mental health for the VA is zero. The request for the 
military specifies only $68 million for screening and 
assessment. I ask this question of you or General Pace, or 
both. How can the Defense Department and the VA effectively 
coordinate efforts to meet the long-term needs of these 
veterans with such a sparse and uneven funding effort?
    General Pace. General Abizaid--General Pace.
    General Pace. Thank you, sir.
    Sir, as I understand it--and I will get the numbers for 
you--but as I understand it, there is provision in the baseline 
budget to transfer money from the Department of Defense to the 
Department of Veterans Affairs for all the things that Veterans 
Affairs does for us. And they do an enormous amount for our 
troops.
    I also know that--at the installation level, that we have 
family support groups that help not only the returning soldiers 
and marines, but their families. There are hotlines and groups 
that are headquartered here in Washington and throughout the 
Army and marine structure, primarily to be able to provide 
support to those families.
    [The information follows:]
    Each Service reimburses the Department of Veterans Affairs 
(VA) for both casualty and disability benefits. Although there 
is not a provision in the baseline budget to transfer money 
from the Department of Defense to the VA, this year's 
supplemental requests $900 million for VA reimbursement. The 
$900 million in reimbursement to the VA includes $400 million 
for Service members' Group Life Insurance (SGLI) claims in 
excess of the baseline level and $500 million for Traumatic-
SGLI.

    Senator Byrd. What long-term mental health services----
    Chairman Cochran. The gentleman is a minute over.
    Senator Byrd. Yes, thank you. I thank the chairman. Thank 
you.
    Chairman Cochran. The time of the Senator has expired.
    Senator Leahy.
    Senator Leahy. Thank you, Mr. Chairman.
    I'm glad we're having this hearing. I'm interested in the 
things requested and some of the things not requested; I notice 
in the supplemental there are some areas where, even though the 
agencies requested money, it's not in there. One that concerns 
me very much is $60 million to continue what I believe is a 
very cost-effective program in Iraq, USAID's Community Action 
Program. Four U.S. NGOs are doing it, spending only $15 million 
each. In fact, some of the funds are used to assist Iraqis who 
have lost family members in the conflict, through a program 
named after a young American woman who was also killed there, 
Marla Ruzicka. And they've restored basic services, they've 
created jobs, and I've been told by commanders in the field 
that these funds have been helpful to our military over there.
    I want to help strengthen Iraq's provincial councils, but 
that will take time. If we're going to shut down programs, 
let's pick some of the ones that are not working--not one that 
has been a success and the Iraqi people appreciate. Mr. 
Chairman, I want to work with you and Senator McConnell to find 
the money needed to continue the Community Action Program.
    Second, is Liberia and Haiti. They've recently elected new 
leaders. They face daunting challenges. Secretary Rice, you and 
the First Lady were in Liberia for the inauguration of Ellen 
Johnson-Sirleaf, the first woman African head of state. I 
shared the pride you had in that, but in the supplemental 
there's only a very small amount for returning refugees. We 
should be doing more to help that government. You know, it cost 
us an awful lot of money in Liberia and Haiti because of the 
failures of past governments. Let's help avoid repeating those 
failures.
    Secretary Rumsfeld, you mentioned the cost effectiveness of 
U.N. peacekeeping mission in Haiti, but this supplemental has 
no money in it for that peacekeeping mission, even though it's 
obviously needed.
    The supplemental does include $51 million for refugees. In 
fiscal year 2006, the administration requested $893 million. 
Congress provided only $782 million, so we're about $60 million 
too low on that, not just for Sudan, but for many other 
countries around the world.
    I mention these as areas because a lot of money is left out 
that everybody knows we need, and then the Congress has to 
figure out how to find the money.
    Secretary Rumsfeld, you did mention the limitation in aid 
to the Indonesian military. Of course, during that period they 
were behaving like a criminal enterprise, involved in all types 
of corruption and killings of political dissidents and so on. 
If this country stands for something--and I believe it does--we 
have to show that there are limits on the help we will give.
    Mr. Secretary, when you came in here this morning, I 
mentioned something to you. I've written several letters. I got 
back a letter that didn't answer questions. That is about the 
Talon program. We learned, from the press, not from our own 
Government, that a number of peaceful protest groups, like the 
Quakers, have ended up in the Department's database. And I'm 
worried about the Department spying on citizens that goes 
beyond any reasonable or legal means of protecting Defense 
Department personnel or installations. I worry we're getting 
back into the COINTELPRO days of Vietnam.
    My letters asked for specific things. In one--it should 
have been very easy to answer--is the press right that there 
was surveillance of citizens in my home State of Vermont? Now, 
I would think that a Senator who's been here for 31 years ought 
to be able to get an answer to a simple question like that. For 
months, everybody's refused to answer my question. So, I'll ask 
you. Did they conduct surveillance of citizens in Vermont?

                             TALON PROGRAM

    Secretary Rumsfeld. Senator, I'm told that the Department 
of Defense did not conduct any investigations of the domestic 
activities of persons in Vermont, nor did it target any groups 
in Vermont for the collection of intelligence.
    Apparently, the Department of Defense did receive two 
reports that came to it from the Department of Homeland 
Security, and they were reports about protests, or potential 
protests, against DOD recruiters by Vermont groups. 
Subsequently, the report came to the Department of Defense, the 
Army personnel generated a report based on that information--
that they had not generated, themselves--and placed it into the 
database.
    The first Talon report contained information about a 
potential protest action against military recruiters attending 
a career fair function on March 8. In an unidentified----
    Senator Leahy. March 8 of what year?
    Secretary Rumsfeld. Oh, I'm sorry, of 2005.
    Senator Leahy. Thank you.
    Secretary Rumsfeld [continuing]. In an unidentified Vermont 
town. Two participating groups were named in the report. The 
second report focused on a protest at an Army recruiting office 
in Washington, DC, and also noted that another protest was 
planned that day at an Armed Forces Recruiting Center in 
Williston, Vermont, but no group was mentioned.
    So, what happened was----
    Senator Leahy. So, the press account, that Quakers were 
under surveillance by the Department of Defense is inaccurate.
    Secretary Rumsfeld. I didn't see the press report; 
therefore, I would not want to characterize it.
    Senator Leahy. But if there was a press report that said 
that Vermont groups were under surveillance by the Department 
of Defense, such a press report would be inaccurate.
    Secretary Rumsfeld. Yeah, I'm----
    Senator Leahy [continuing]. Inaccurate.
    Secretary Rumsfeld [continuing]. I'm reluctant to heave 
charges around.
    Senator Leahy. I'm not making charges. I mean, that's a 
simple----
    Secretary Rumsfeld. Well----
    Senator Leahy [continuing]. Yes or no.
    Secretary Rumsfeld. Well, it isn't, for me.
    Let me explain this program. The program is for the purpose 
of force protection of the United States military facilities in 
the United States of America, which is a legal obligation of 
the Department of Defense, to protect their forces and their 
bases. So, they have a program that allows information to be 
sent to them that raises questions about possible threats to 
their bases. If that information comes in, and is not 
evaluated, it sits there.
    Senator Leahy. Okay. Mr. Secretary, that's not my question. 
The question is: If there was a report of surveillance of 
Vermont groups protesting the war, in Vermont, by the 
Department of Defense, that report is inaccurate, yes or no?
    Secretary Rumsfeld. I would have to see the report. I have 
read to you the fact that some reports about Vermont groups 
came into the Department, but they were not originated by the 
Department----
    Senator Leahy. Well, I----
    Secretary Rumsfeld [continuing]. Of Defense.
    Senator Leahy. Yeah, I should point out there are a number 
of Quakers, some older than you and I, who peacefully protest 
once a week in Vermont on the war. There are some----
    Secretary Rumsfeld. Sure.
    Senator Leahy. There are some in Vermont who do not support 
the war in Iraq. And----
    Secretary Rumsfeld. The----
    Senator Leahy [continuing]. If the intent is to surveil 
them, you could save your time, I'll speak against the war on 
the floor, and you can just take it off C-SPAN and save your 
money.
    I want to mention the situation in Darfur. Because Senator 
Cochran spoke about this. A lot of people called for more--
Secretary Rice, for more peacekeeping troops in Darfur. The 
administration does not support that. I see this as genocide. 
The African Union peacekeepers are incapable of performing some 
of the basic functions. There seem to be no consequences for 
attacking civilians. You've read the same reports I have.
    Now, the $161 million you've requested in the supplemental 
for peacekeeping in Darfur will cover our share of sustaining 
the current inadequate number of troops. It doesn't do anything 
to help pay for the doubling of U.N. troops, even though the 
President has acknowledged that's needed. Do we need more 
money?
    Secretary Rice. Senator, I think, for now, we believe that 
this an appropriate amount of money for the coverage of the 
U.N. peacekeeping force that is likely to be available in this 
period of time. We would authorize the U.N. peacekeeping force 
in the Security Council. There would then be an effort to 
actually raise that force. We believe that this funding from 
the supplemental can help us with the first stages of this 
process.
    Senator Leahy. But let----
    Secretary Rice [continuing]. We certainly will need to have 
our contribution be adequate to cover the peacekeeping force.
    Senator Leahy. Let me ask just this, and then you can add 
to your answer. Can we stop the genocide in Darfur?
    Secretary Rice. Well, Senator, I hope that we can stop the 
violence and the genocide in Darfur. That's certainly what we 
are attempting to do. There are really three prongs to this 
policy.
    We do, in fact, favor both a U.N. peacekeeping force and an 
expansion of the numbers of peacekeepers that are now on the 
ground. One reason that we want to go to a blue-hatted force is 
that we believe we would have a more sustainable way to attract 
enough forces to have a doubling of the force in Darfur. So, we 
do favor that.
    We also favor, as the President has said, a role for NATO 
in the planning and logistics and support to that force. 
General Jones is working within NATO to see what we can do to 
effectively bring that NATO piece into it.
    We want a more robust peacekeeping force in Darfur. The 
President himself has spoken to that. But it's going to require 
more than a peacekeeping force in Darfur to end the violence 
there. It is also going to require an effort at a peace 
agreement between the parties. And we are spending a lot of 
time in the Abuja talks trying to bring a peace agreement 
between the parties.
    We also, Senator, are trying to make certain that the 
Comprehensive Peace Agreement for the agreement between the 
south and the north is fully implemented, because that ended a 
civil war that killed millions of people, over decades.
    So, there are many pieces to our policy in Darfur, but we 
do favor a more robust peacekeeping force for Darfur.
    Senator Leahy. Thank you, Mr. Chairman.
    Chairman Cochran. Thank you, Senator.
    Senator Stevens.
    Senator Stevens. Thank you very much.
    And I--we commend all of you. I'm glad to see you take the 
time to come and justify these requests.
    I must say, though, Mr. Secretary, I'm worried about the 
sustainability of the level of funding for the Department when 
we've had so many supplementals now, in addition to the annual 
budgets, during this period. The chairman of the Budget 
Committee believes that these monies are fungible and that 
they're flowing back and forth between the funds that we put 
into the regular bill and the supplemental. There's hardly any 
way to track where the money's going.
    Let me tell you, for instance, right now, in the 2006 bill, 
we've funded monies to train the Afghan police forces in the 
State Department appropriations bill. This supplemental 
requests money for that purpose in the Department of Defense 
supplemental. Now, that's an indication of the fungibility.
    Why is it in the Defense bill now, when, in the regular 
bill, it was in the State Department bill?

                         AFGHAN POLICE TRAINING

    Secretary Rumsfeld. Well, I'll start, and Secretary Rice 
can comment.
    Historically, training for police has been considered part 
of the Department of State's activity. They've had an office 
that engaged in that. And in the case of Iraq, the Department 
of State had the responsibility for the training and equipping 
of Iraqi police up to----
    Senator Stevens. This is Afghan, now. This is----
    Secretary Rumsfeld. Oh----
    Senator Stevens [continuing]. This separates out Afghan's 
police forces from----
    Secretary Rumsfeld. Okay.
    Senator Stevens [continuing]. State Department in the 
regular bill, and puts in the supplemental for your Department.
    Secretary Rumsfeld. Okay, the principle is the same. The 
State Department had the responsibility for Afghanistan. And in 
a discussion between the Department of State and the Department 
of Defense, it was agreed that it would be appropriate, since 
we were staffed up to deal with the ministry of defense 
security forces there, that we assume that responsibility for 
Afghanistan.
    Originally, under the Bonn process, I believe the German 
Government had had the initial responsibility. But to make sure 
we got the job done and could begin reducing U.S. military 
forces, the Department of State asked us to assume that 
responsibility with our people, and that is now currently the 
case. The Department of Defense has that responsibility in 
Afghanistan, and I believe that's the reason for the changing 
in the funding.
    Senator Stevens. General Abizaid, there's $2 billion in 
this supplemental for infrastructure projects for Iraq and 
Afghanistan security forces. We have already funded 77 military 
base projects, 345 police facilities in Iraq. And now, this is 
$2 billion more. Will this fully fund the infrastructure 
requirements for security forces in Iraq and Afghanistan now?

                              AFGHANISTAN

    General Abizaid. Senator, I can't tell you, for 
Afghanistan, whether it fully funds it or not. I think 
Afghanistan, there will be continuing requirements, because the 
infrastructure conditions there are so abysmal.
    Senator Stevens. Well, General, they were funded through 
the Iraqi Reconstruction and Relief Fund in the past. This 
time, $2 billion goes into your budget.
    General Abizaid. I can't answer the question about where 
they went into various different locations in the budget.
    Senator Stevens. Well, I'm asking the question, because, 
you know, we really don't--when we get these monies as they 
come in on this--a supplemental request basis, we don't get the 
continuity of, really, reporting that we would get if we 
handled it through the regular bill.
    What about the IEDs? We've put up $2.9 billion, to date, 
for the IED counterthreat to try and establish it. We have now, 
in this bill, I understand it, a new permanent organization for 
that purpose, and there is a request in this supplemental for 
another $1.9 billion. I'm sure we all fear IEDs. But is this 
new organization now to take over the total funding of--
expenditure of funds to defeat the IED threat?
    General Pace. Sir, I'll try to answer that, if I could.
    General Meigs' organization does now have responsibility 
for the Department of Defense, reporting directly to the 
Secretary, for all things that have to do with IED defeat.
    Senator Stevens. He will spend this money that's in this--
--
    General Pace. He will----
    Senator Stevens [continuing]. Supplemental?
    General Pace. He will make recommendations to the Secretary 
of Defense for disbursement of the funding in this 
supplemental, yes, sir.
    Senator Stevens. Thank you.
    To date, we have provided--and the President, of course, 
has requested--we've approved $31.7 billion for equipment 
repair and maintenance, procurement and depot maintenance. This 
is now another $19.6 billion for that purpose. We saw some of 
that when we visited Fallujah. We saw the up-armoring of the 
major trucks but this is an extremely expensive process when 
it's done in country there. How long do you plan to pursue 
emergency supplemental funding for the restitution of these 
vehicles? Some of it's not even done in country, I understand. 
Who can answer that question?

                          REPLACING EQUIPMENT

    Secretary Rumsfeld. The broad approach of the Department 
has been that as equipment is used, either destroyed because of 
combat or exhausted because of use at a higher level than 
normally would be the case in a training environment, it will 
be replaced by supplementals. Now, you have to put a caveat on 
that, because instead of replacing everything exactly the way 
it was, people are replacing things the way they ought to be. 
So, if you have a next-generation, for example, up-armored 
Humvee, and you damaged an old Humvee, you would replace it 
with a new--a later-generation Humvee. And the goal, the 
intent, of the Department of Defense, and, I believe, the 
Office of Management and Budget, Senator Stevens, is to 
continue with supplementals for war costs, which clearly that 
would be categorized as a war cost.
    Senator Stevens. Mr. Secretary, we provided $8 billion for 
equipment procurement, and $4.1 billion in the bridge fund that 
was attached to the annual bill for 2006. This supplemental 
puts $19.6 billion more into that same account, now, for 2006. 
Plus, there is a bridge fund, going into 2007.
    Now, what I'm asking, really, is, how--we're going to 
review that procurement account in the regular bill for 2007, 
but here we've got $50 billion standing over our head, which is 
a bridge fund, going into 2007, which you will spend for the 
same thing we're reviewing now. I, again, say we have very 
little ability to deal with this. I, for instance, don't 
understand why this money would be spent here in the United 
States to buy new equipment, other than in terms of the regular 
bill. But it----
    Secretary Rumsfeld. Well----
    Senator Stevens [continuing]. This is--I understand this 
may have been destroyed over there, but you're buying the new 
equipment here. Now, we have difficulty following these budgets 
through, Mr. Secretary, and I think that's what's bothering the 
Budget Committee now, in terms of this funding. These are 
enormous amounts of money that's going into this procurement 
and restitution accounts.
    Have you got a watchdog on that activity?
    Secretary Rumsfeld. I'm told that there have been something 
like 31,000 pages of budget justifications that have been 
provided when you combine the regular budget and the bridge and 
the supplemental.
    Senator Stevens. We have not had any justification for this 
supplemental, Mr. Secretary. We had that discussion with Ms. 
Jonas yesterday. But we'll go into it later.
    Let me ask one last question, General Abizaid. And I think 
it's very important to this Senator. How important is the Port 
of Dubai to the war effort right now?

                             PORT OF DUBAI

    General Abizaid. Well, the Port of Dubai is very important 
to the war effort, Senator.
    Senator Stevens. Can you explain why?
    General Abizaid. Well, it's one of the largest ports in the 
region. A tremendous amount of equipment that ends up in the 
war zone ends up transiting through there. U.S. Navy aircraft 
carriers can use it, and do use it. It's a port of call for our 
servicemen and women. I think it's one of the largest in the 
world, if not the largest in the world.
    Senator Stevens. What percentage of the activities that you 
would supervise goes through the Port of Dubai?
    General Abizaid. It's hard to say what percentage of the 
activities, but clearly the Port of Dubai is essential for the 
defense of the Arabian Gulf.
    Senator Stevens. Thank you, Mr. Chairman.
    Chairman Cochran. Thank you, Senator.
    Senator Mikulski.
    Senator Mikulski. Thank you, Mr. Chairman.
    Mr. Chairman, I would like to thank you for the way you've 
structured this hearing, to have the Secretary of Defense, the 
Chairman of the Joint Chief, the General in the field, and our 
Secretary of State at the table. I think it is a very good way 
to have done this.
    I see this as a year of transition, particularly in Iraq. 
And in that year of transition one of the questions will be, in 
addition to the policy, support, and passion for our troops, 
is: How are we going to continue paying the bill, along the 
lines that even Senator Stevens has asked?
    My question goes to Iraq oil. When we were going into the 
war, we were assured that we wouldn't have to worry about how 
big the bill was, because we were going to be there on a short-
term basis, and that Iraqi oil would pay the bill for 
reconstruction. My question is: Where are we in terms of Iraqi 
oil? Who controls it's distribution and marketing? Is it 
flowing? When will it flow? And then, what about the issues of 
corruption and the impact on ethnic conflict?
    And I'd turn to anyone at the table, Mr. Secretary, Dr. 
Rice, how would you like to address that? But it's: Where are 
we with the oil? When is it going to start to pay the bill? 
What about corruption? And what about its reliability as a 
future revenue stream?
    Secretary Rice. Thank you, Senator. Perhaps I should start, 
and then if anyone would like to add----
    First of all, Iraq is a country that we believe should one 
day be able to sustain its own expenses, because it does have 
this great natural resource. It is in that sense in 
contradistinction to Afghanistan, which does not have resources 
of that kind.
    There have been two problems with the oil industry. One is 
a significant under-investment in the oil industry during the 
period of time of Saddam Hussein. Even though the Iraqis were 
producing about 2 to 2.5 million barrels per day, and exporting 
about 1.3 million barrels a day, it was doing it on a very 
creaky infrastructure. Indeed, some of the investments that we 
made as a part of the IRRF funding, the Iraqi reconstruction 
funding that was provided by the Congress, was to increase the 
capacity, in the near term, of the Iraqis to produce. It is 
also the case that the Iraqis have been looking at ways to have 
investment laws that will make it possible to get some foreign 
assistance with technology and the like for their oil industry, 
because one of the problems with the oil industry under Saddam 
Hussein was, it was isolated from the best of technologies, 
although they have very great----
    Senator Mikulski. Madam Secretary, I've got about 5 more 
minutes.
    Secretary Rice. Yes, I'm sorry.
    Senator Mikulski. So, are they producing it?
    Secretary Rice. They are producing, currently at below the 
prewar range of 2 to 2.5 million barrels, largely because of 
problems in inefficiency in the management of the oil 
industry--and we've worked very hard with the Iraqis on that 
piece of it--but also the interdiction by insurgents of the oil 
pipeline in the north, which has been transferring 400,000 
barrels a day and that has essentially been shut down.
    What we're doing about this is we are working with the 
Iraqis to improve their coordination of the oil industry. We 
are working with the Iraqis to improve security for the oil 
pipeline. And it is our hope that--we would be able, by the end 
of this year--as you said, this is a transitional year----
    Senator Mikulski. The end of the calendar year, Madam 
Secretary?
    Secretary Rice [continuing]. Yes, the end of the calendar 
year--to be able to see crude production at about 2.8 million 
barrels a day, and exports at about 2.2 million barrels.
    Senator Mikulski. But that's pretty slim, isn't it?
    Secretary Rice. No, it would be more than Iraq was 
producing before the war.
    Senator Mikulski. And what would be the revenue generated 
of them?
    Secretary Rice. What they are counting on in their 
projections right now is about $1.6 to $1.8 billion.
    Senator Mikulski. So, it would begin to pay the bill.
    Secretary Rice. So, they would be----
    Senator Mikulski. But who in this national government of 
unity that we all hope sticks together--who controls the oil? 
Is it the oil ministry? Is it through the prime minister? And 
then, the tools against corruption--because this seems to be an 
endemic problem in the region.
    Secretary Rice. It is an endemic problem in the region, and 
we have worked very hard with the Iraqis so that they don't 
fall prey to some of these problems. But there is significant 
corruption in the system, at this time.
    They have created a commission to deal with corruption, 
openness in government, declaration of assets, and similar 
kinds of reforms. Oil production is now under the control of 
the state oil company and the oil ministry. But I think you 
will see the Iraqis look also at innovative ways to think about 
the oil resource over the next several years so that they can 
get it closer to the people and less centralized in the 
government. But right now it follows the normal pattern in that 
region. It's state-owned oil.
    Senator Mikulski. I want to get to questions on 
Afghanistan--but having the pleasure and honor of being one on 
the Defense Appropriations Subcommittee, when we get into 
Defense appropriations I'm going to come back, other than 
through this supplemental, to ask about guarding the 
infrastructure and transitions.
    Iraq has an asset we need, which is oil. Afghanistan has an 
asset we don't want, which is opium. This, then, takes me to 
Afghanistan and the real need for a success story there, the 
backing of, truly, a democratic movement at all levels, the 
return of the diaspora. The Karzai family in the diaspora 
resides in Maryland. We're proud of their efforts.
    I'm concerned about the opium issue. No. 1, what are we 
doing to control it? And, No. 2, is the opium money funding 
terrorism and insurgent activity both in Afghanistan and in the 
region? And could you share with us the ways we could perhaps 
provide a more muscular support to Afghanistan in this area. 
Because I feel if we lose control of opium, we lose control of 
Afghanistan. Is that a good analysis?
    Secretary Rice. Senator, I think the single most important 
threat to Afghanistan now, in a strategic sense, is probably 
the opium trade, because it has not only the effect of--that 
you mentioned, of funding terrorists, but it is a source for 
people who are then able to threaten the central government, 
threaten people in the provinces. And so, we've been very 
attentive to the opium problem.
    It's a multipronged approach that we're taking. One is that 
the Karzai government believes very strongly that public 
education is important. Afghans have been growing poppies for a 
long time. People have to be dissuaded. Second, it is very 
important that there be alternative livelihoods for the farmers 
who are told not to plant. We have significant programs and are 
enlisting, also, the help of others, including the British, who 
have the lead on this area. Third, we are working to help the 
Afghans train forces that are particularly effective at this 
special kind of law enforcement/paramilitary operations. We're 
having some success in getting those forces into place now. 
Finally, the criminal justice system has got to be able to 
penalize people who engage in the opium trade. You will find 
that in our 2007 request--not in the supplemental, but in our 
2007 request--there is considerable money for civil justice and 
a rule-of-law efforts in Afghanistan.
    Senator Mikulski. Now, will that be in the foreign ops 
request?
    Secretary Rice. This would be in the foreign ops request.
    Senator Mikulski. So, that's where we should really look to 
provide assistance, on an ongoing basis.
    Secretary Rice. That's right.
    Senator Mikulski. Now, I have to ask you about the Polish 
visas. As you know now, coming back to Afghanistan, Poland will 
play the lead role in leading the NATO forces in Afghanistan. 
It's just what we had hoped for, with the expanded NATO and the 
coalition. As you know, it continues to be a prickly issue with 
our country. Senator Lugar and I are trying to focus it even 
more on a student/public exchange, kind of a Fulbright-style 
type of exchanges. Can you bring us up to date on where we are 
on cracking that?
    And I want to thank you for the very collegial cooperation 
of your staff in working with us.
    Secretary Rice. Thank you, Senator.
    We really do want to try to solve this problem, for Poland 
and for a number of other important allies who are now members 
of the EU, but are not capable of being a part of the Visa 
Waiver Program. For instance, you and I personally have 
discussed a visa roadmap program with the Poles to try to get 
them to the metrics that we take to determine who can be a part 
of the Visa Waiver Program. I think the Poles believe that we 
are making progress on that. Our Ambassador certainly does.
    We also want to make sure that students from this region 
can come to the United States. Margaret Spellings and I 
recently held a university summit to try to encourage foreign 
students to come. We'd like nothing better than to have more of 
them from East Central Europe. Our staffs are working together 
to try to find ways that we can do this.
    We have to keep this a worldwide standard so we can't have 
special exceptions to the program. But we are working very hard 
to see what we can do for students.
    Senator Mikulski. No, and I appreciate that we can't have 
exceptions. But there are exceptional allies, those that are 
truly embracing the responsibility sharing--we often use 
burdensharing, but responsibility sharing in peace and 
stability. Poland's role now in Afghanistan, an ally like South 
Korea, is crucial in what they're doing in the region. We don't 
want to make exceptions, but there are exceptional allies----
    Secretary Rice. Absolutely.
    Senator Mikulski [continuing]. Carrying exceptional 
responsibility. And I think that should be acknowledged--almost 
like a veterans preference. I'm working on it.
    Secretary Rice. Thank you, Senator.
    Senator Mikulski. Thank you very much.
    Chairman Cochran. The Senator's time is expired.
    Senator Kohl.
    Senator Kohl. Thank you, Mr. Chairman.
    Secretary Rumsfeld, this is the fourth time that you've 
come before our committee for emergency funds for the war, $445 
billion thus far. America has paid a high price in dollars, 
and, most importantly, in the lives of American soldiers. And 
now we find ourselves in a position no great country should 
ever occupy; namely, that we don't control the events that 
determine the success of the war, or even the safety of our 
troops.
    You've been telling the American people that the situation 
in Iraq is not that dire, but, Mr. Secretary, with all due 
respect, and speaking for a majority of the American people, 
that is hard to swallow.
    From the beginning, the administration's Iraq strategy has 
been an amalgamation of misdirection and missteps. Intelligence 
about weapons of mass destruction has justified--that justified 
our invasion, as we know, was wrong. We went to war with no 
plan, beyond the initial few weeks of military action. The 
estimates of the number of troops needed to accomplish the 
mission were too low. And now we are in Iraq, with public 
support waning, American casualties continuing to mount, and no 
apparent timetable or plan for turning Iraq back to the Iraqis 
and bringing our troops home.
    Mr. Secretary, a bipartisan majority of the Senate has 
agreed that 2006 needs to be a year of transition toward a 
successful conclusion of--to our involvement in Iraq. Senator 
Levin has suggested that the Shi'ite, Sunnis, and Kurds are all 
counting on the U.S. presence to keep the country from falling 
into civil war. He argues that we should use that leverage to 
motivate the Iraqis to make the necessary compromises to 
achieve the broadly based political settlement that is 
essential for defeating the insurgency, that we should tell the 
Iraqis that if they fail to reach a solution by the timetable 
that they have set forth, then we will consider a timetable for 
the reduction of U.S. forces. Can you comment, Mr. Secretary, 
on that option?

                           TIMETABLE FOR IRAQ

    Secretary Rumsfeld. First, Senator, you're quite correct 
that the intelligence with respect to the weapons of mass 
destruction has not proven to be the case. The comment you made 
that there was no plan with respect to the war, I'll let 
General Pace, who was the Vice Chief at the time, and General 
Abizaid, who was the Deputy CENTCOM Commander, comment on that, 
because there were plans.
    Third, with respect to the timetable question, it's a 
difficult one. And you've put your finger point on it. The 
implication of your question, I think, is correct, that it is 
important that the Iraqi people and the Iraqi government 
officials understand that it is their country, they are going 
to have to run that country, they're going to have to build 
that country, they're going to have to fashion a government 
that is acceptable to a broad range of people in that country, 
and their security forces are going to have to provide security 
for an environment that will permit that.
    The next step of it is the hard part. The idea of saying to 
them, ``or else, this is going to happen, on this basis,'' it 
seems to me, given the variabilities of the situation on the 
ground, given the uncertainties as to the role that--the 
damage, I should say, or the role--that some of their neighbors 
play with respect to their situation, my personal view is that 
it is not useful, in the context of their current political 
situation, to do anything other than what we have said, which 
is that we are training and equipping their forces to take over 
those responsibilities, and, as their forces stand up, we will 
pass responsibility to them, as we have been doing--we've 
closed some 30 bases, or passed them over to the Iraqis 
already, we're passing over pieces of real estate every month--
and as that happens we will continue to pass over to them and 
either shift the emphasis of our forces or reduce our force 
levels, as we've been doing.
    But to tie it to a tight timetable, I'm reluctant to 
suggest that.
    Senator Kohl. I appreciate that. And Senator Levin used a 
point--the word ``consider.'' He did not say ``either/or--if 
you don't do it, we will be gone,'' but at least to tell them 
that, ``This is the time for you all to come together, put 
aside your differences, and form a government of unity, which 
you have said is absolutely essential.'' But what would be 
destructive in any way by saying publicly to them that, ``If 
you do not, then we have the option to consider a timetable for 
the reduction of our forces?'' Not even to ``eliminate it,'' 
not even to ``leave''--to ``consider a timetable for the''--
doesn't that form of leverage at least bring some pressure to 
bear on them to put aside their differences? If they don't 
think we're ever going to leave--which some of them may be 
believing, Mr. Secretary, that we'll be there as long as it 
takes--then the pressure on them to reconcile their differences 
is almost nonexistent.
    Secretary Rumsfeld. Oh, I don't think so. I think there is 
pressure on them to settle their differences. They have 
everything to lose. If they're not able to put together a 
government in a relatively short period of time, they are 
facing a very difficult situation for all of the people 
involved in governance in that country.
    Senator Kohl. Well, do they face the situation that, if 
they don't, that we are prepared to consider a timetable for 
the reduction of our forces?
    Secretary Rumsfeld. Well, I think that they probably know 
that we are considering a timetable, but it's not a calendar 
timetable, it's based on conditions on the ground, it's based 
on the pace at which we're successful in training and equipping 
their forces. And, I must say, having a Senator from Michigan 
or Wisconsin saying what you're saying is not a problem. 
Switching it over and having it said directly by the President 
of the United States to them, it seems to me, runs the risk of 
playing into the internal political dynamics that are going on, 
because the--there are people in that mix who don't want us 
there right now. Let's face it. The Iranians don't want us 
there, and the Iranians have a lot of influence in that 
situation. They have a lot of people they talk to, and so 
forth. And I don't think the idea of strengthening the hand of 
those people who do not wish the Iraqi people well is a good 
idea for the President.
    Senator Kohl. Okay.
    General Pace. Senator----
    Senator Kohl. One----
    General Pace. May I----
    Senator Kohl. Yes, go ahead, Mr. Pace.

                           TROOPS IN THEATER

    General Pace [continuing]. Just clarify on one point, sir, 
because it's important for me to stand up to my 
responsibilities, and that has to do with the numbers of troops 
in theater. I've been the Vice Chairman or the Chairman since 
October 1, 2001. Tom Franks--General Tom Franks, General 
Abizaid, sitting next to me, General George Casey, in theater, 
are the ones who have made the proposals for the troop size 
that was needed to get the job done. Those proposals have come 
up to us at the Joint Chiefs, all six of us sitting, 
collectively, in the tank, reviewing those numbers. We have 
agreed with the numbers that the field commanders have come up 
with. We have recommended those numbers to the Vice--to the 
Secretary and to the President. It is the military experience 
and the military judgment to find the right balance of the size 
of the force. So, the size of the force that is there is based 
on uniformed experience----
    Senator Kohl. I was referring to what was there originally. 
I'm not referring to the troops in the theater at this point. 
My question referred where we were, back at the time that we 
made our initial assault.
    General Pace. Yes, sir. And all those numbers, I--every 
single one of those numbers, sir, is a--has been a uniformed 
analysis and----
    Senator Kohl. The only point I was making is that it turned 
out that the number was insufficient to pacify the country. 
But--I mean, that's the only--and that's really--it's 
hindsight, but it's a matter of somewhat well-established fact.
    Mr. Secretary, one more question. In a recent poll, over 70 
percent of the U.S. troops in Iraq thought the United States 
should pull out over the next 12 months. Presumably, since they 
are there on the ground, they know what is going on, as well as 
the risks, and they have concluded that it doesn't make sense 
to stay more than approximately 1 year. This is not the press 
or political opposition raising concerns about our mission or 
our chances of success, this is the--these are the men and 
women in a position to know best what the situation is on the 
ground.
    Does that assessment by them make you any more open to 
providing a plan or a timetable for winding down our 
involvement in the war?

                         POLL OF TROOPS IN IRAQ

    Secretary Rumsfeld. I've not seen the poll. I've heard it 
referred to. I doubt it. I doubt the poll. My experience is 
quite different. I don't know, maybe General Abizaid has 
experience, and he might want to comment. But I visit the 
troops regularly. I visit the ones that are there, the ones 
that are back here, the ones that are in the hospitals. And it 
just doesn't compute. And so, I'd have to see the poll and try 
to understand it.
    I would add, however, that I think there isn't anyone who 
has served, or is serving in Iraq, who may serve in Iraq, who 
has that as their first choice. They don't want to be there. We 
have no desire to be in Iraq, as a country. We're not there for 
their oil, we're not there for their water, we're not there to 
occupy their land. They're over there to perform a service, and 
they're doing it brilliantly and deserve our gratitude, as I 
know you know, Senator, and all of this committee has felt. But 
if someone came up to someone and said, ``Gee, do you want to 
be in Iraq next year?'' the answer is, ``Heck no.'' They don't 
want to be there. But they sure as heck do want to perform the 
job, do the job. They know it's noble work. They're proud of 
what they're doing. They believe in what they're doing. And I 
doubt the poll.
    John.

                             TROOPS IN IRAQ

    General Abizaid. Well, I'm not familiar with the poll, 
other than I saw it in the newspaper. I don't know how it was 
conducted, Senator. But clearly some of our troops are on their 
second, and some of them even on their third, tour in Iraq. And 
they know, clearly, that, as you said, this is a year of 
transition, and they want to get the tools into the hands of 
the Iraqi armed forces so that they can take the lead in the 
counterinsurgency fight. And that's precisely what General 
Casey intends to do. So, our troops are anxious to have them 
fight their fight, but they're also realistic about it. They 
know that they're going to require some backup from us for some 
time, and, at this particular point, while we're still looking 
for a government of national unity to form, it's difficult for 
us to say what we're going to do here militarily.
    But I think the confidence of the troops in the field about 
the job that they're doing, and, indeed, the confidence that 
they have about how the Iraqi security forces are developing, 
is pretty good.
    Senator Kohl. Thank you.
    Chairman Cochran. The time of the Senator is expired.
    Senator Bond.
    Senator Bond. Thank you very much, Mr. Chairman.
    And, Mr. Secretary, thank you very much for that last 
answer. Having just returned, about 45 days ago, from the 
region with a small CODEL, I can tell you that that is what 
we're hearing from the troops in the field. And I would say, to 
my colleague from Wisconsin, that I endorse what the Secretary 
has said. The leaders--Sunni, Kurd, and Shi'a leaders with whom 
we met have gotten the message. They have the message. We 
carried the message. And I know, and will not discuss, what 
messages have come from other areas, but they know they have to 
have a national unity government, because--and right now, after 
the bombing in Samarra, which has the--either the handiwork--
the fine hand of either al Zawahiri or the Iranians to foment 
civil strife, they have seen and stepped from that precipice. 
They know they have to get back.
    But I would say, to General Pace, I personally am very 
delighted to hear about the personnel--personal protection for 
the marines and soldiers in Iraq and in theater. And it's 
vitally important. We're moving forward with the anti-IED 
activities.
    But the interesting thing that I heard as I have talked to 
a lot of boots on the ground, enlisted and low-ranking 
officers, their biggest complaint is not that they're in Iraq, 
not that they're suffering casualties--their biggest complaint 
is that nobody is recognizing the accomplishments they make, 
the progress they are making. Frequently heard word is, on a 
certain TV network, ``If it bleeds, it leads.'' Only the 
casualties are showing up. And their frustration is that the 
American people are not hearing that they are accomplishing the 
military mission. And they are less worried about the IED 
exposure and the casualties than the failure for us to be able 
to get the message across that they are accomplishing their 
mission.
    General Abizaid and General Pace, do you hear those same 
things from the field?

                               PROVINCES

    General Pace. Sir, absolutely. And it would be very 
interesting to take a map of Iraq and lay down where the 
attacks are, and then--which is mostly in 4 provinces--and the 
other 14 provinces--and then lay down where the reporting is 
being done from to see what the opportunity is to have a 
balanced picture of what's going on. I'd suspect that there's 
very sparse numbers of individuals looking for stories inside 
the 14 provinces that are in very, very good shape and making 
the progress we would expect, and that there's more in the 
places where there are bombs going off that are the kinds of 
things that catch people's attention.
    Senator Bond. General Abizaid.
    General Abizaid. Senator, what I would say is that the 
growth of the Iraqi security forces, in particular, and the 
army, in particular, has been nothing short of breathtaking. In 
April 2003, I was in Baghdad. You couldn't find an armed Iraqi, 
unless it was somebody shooting against us. Today, 200,000-plus 
people are in the Iraqi security forces fighting for their 
country. The commander of the Iraqi 6th Division was 
assassinated the other day. General Casey went to his funeral, 
and he told me that the outpouring of grief, and also 
gratitude, to that man for leading that division was absolutely 
unmistakable.
    So, the story of Iraqis fighting for their country is one 
that we never quite hear. They're taking casualties at three 
times the rate of our troops. And the work that our troops have 
done to build that army and the work that our troops do to be 
embedded with their units is really one of the untold stories 
of the war. And it's the key to success, by the way.
    Senator Bond. Thank you very much.
    Moving to a question that Senator Stevens raised, 
unfortunately the issue of Dubai Ports may become an issue in 
this supplemental. And I--we've heard from General Abizaid. 
General Pace, I'd like to ask you and Secretary Rumsfeld, on 
the record: Has the United Arab Emirates--has the government 
been a valuable ally? Are they committed in the war on terror? 
Are they taking steps to improve security for our forces and 
our troops? Are they a reliable ally? And is it essential that 
we maintain good relationships with the UAE?

                                  UAE

    General Pace.
    General Pace. Sir, the short answer is, yes, sir.
    Senator Bond. Could you state it----
    General Pace. I will----
    Senator Bond [continuing]. In your own words----
    General Pace. I will. You--yes, sir, I'd be----
    Senator Bond [continuing]. For quotation purposes?
    General Pace. I'd be happy to, sir.
    Sir, military to military, we could not ask for better 
partners in that region, as you've already heard--the ports 
that are available to us, more U.S. Navy ships visiting, and 
operating out of, and being repaired in, those ports than any 
other ports in the world other than those here in the United 
States of America; their airfield and the ability to fly the 
kinds of missions that we fly from there in support of both 
Iraq and Afghanistan and the Horn of Africa, significant 
benefit to us; an air combat training range that they allow us 
to use, significant to us; in many other ways that I cannot 
talk about in front of this microphone, where they have been 
very, very solid partners with us. In every way that we have 
needed them to help us militarily, they have responded 
favorably. And as you look to potential problems in the future 
in that region, the United Arab Emirates location and capacity 
will be critical to our ability to succeed.
    Senator Bond. Thank you, General.
    Mr. Secretary, you might have a thought on that.

                      UNITED ARAB EMIRATES SUPPORT

    Secretary Rumsfeld. Well, I do, Senator Bond, and I thank 
you for asking.
    I certainly agree with General Abizaid and General Pace. 
From day one, they have been helpful to us. From 9/11 on, 
before we ever entered Afghanistan to go after the al Qaeda and 
the Taliban that had killed 3,000 Americans, that country has 
provided direct assistance to the global war on terror.
    Today they are providing a hospitable environment for U.S. 
military personnel, for ships, in a secure environment--as 
General Abizaid said, probably as many ship visits as any port 
in the world. And the White House, I know, is working with the 
Congress to try to find a way to sort through this issue in a 
manner that's acceptable. And that's appropriate. And it's 
understandable that the issue was raised, but I think it would 
be a mistake if people went away with the impression that this 
country is in any way anything other than very helpful to us in 
the global war on terror.
    Senator Bond. Mr. Secretary, I share your view very 
strongly. I know we've asked for a 45-day review so everybody 
can be comfortable with it. I would tell my colleagues I hope 
we can do everything possible not to address this prematurely 
before everyone has had a chance fully to investigate and 
understand how important this relationship is.
    Let me move on to another question that was actually 
touched on by my colleague from Maryland, Senator Mikulski. In 
visiting Afghanistan, as well as Iraq, we found a great need 
for civil affairs assistance in strengthening Afghanistan. And 
in some areas the progress was very good. They even wanted more 
lawyers. As a recovering lawyer myself, I said, ``The more 
lawyers we can send them, the better.'' But the one thing they 
didn't have--and this is something the Defense Department is 
not set up to do--they didn't have people who could help them 
with agriculture, getting--bringing their agriculture up to 
speed, even starting Ag credit operations. They cut down the 
pomegranates to grow poppies, and we need to have some bridge 
assistance to allow them to eliminate the poppy field and 
replant the pomegranates. But I was very distressed, and I 
wrote to you, Madam Secretary and Secretary Rumsfeld, as well 
as Secretary Johanns, to ask if we could bring together a 
better operational situation to provide agriculture assistance. 
And I suggested the--that the--my university, in Missouri, has 
a great agriculture extension program. Senator Mikulski is 
ready to volunteer Maryland's Agriculture Extension Service. I 
believe we have resources around this country that are not 
available through USAID, and, in my letter to you of January 
31, I asked for your comments on how we can help make this 
work. And I'd appreciate your comments, Madam Secretary and 
Secretary Rumsfeld, if you have anything you wish to add.
    Secretary Rice. Thank you, Senator.
    First of all, we do have agricultural programs in both 
Afghanistan and Iraq, including a request for $84 million for 
agriculture assistance in Iraq in 2007. And we're continuing 
agriculture programs in Afghanistan. But I take the point that 
agricultural extension programs do something a little bit 
different than we do through USAID.
    And we are now taking a more comprehensive look at the 
Afghanistan--I'll call it the ``how to build an economy'' 
problem, because it is true that right now the thing that 
people grow most is poppy. We need people to grow other crops. 
That is why the Afghan government has focused a great deal on 
alternative livelihoods programs. Those are run mostly through 
USAID, but we certainly will look at agricultural extension as 
a part of that.
    The other piece is that we would like to see some other 
countries get involved, also, in helping to build this piece of 
the Afghan economy. We talked, for instance, with the Indians, 
when we were in India, about similar kinds of programs.
    But I take the point. And I appreciated, very much, your 
letter, and we're looking into it.
    Senator Bond. Thank you.
    Chairman Cochran. The time of the Senator has expired.
    Senator Bennett.
    Senator Bennett. Thank you very much, Mr. Chairman.
    Madam Secretary, I have to wear my hat as chairman of the 
Agriculture Subcommittee of this committee, and ask you the 
appropriate agriculture questions so that we get this on the 
record.
    This supplemental request includes $350 million for food 
aid under Public Law 480 title II, which is administered by 
USAID. And it's my understanding the money would be primarily 
for African countries, $150 million for the Darfur region of 
Sudan, and an additional $75 million for southern Sudan.
    Could you briefly describe the current food-aid needs in 
Sudan, and tell us if these funds are sufficient to meet those 
needs, or do you expect that there will be another supplemental 
with respect to this sometime later this year?
    Secretary Rice. Well, thank you, Senator.
    Everything that we can foresee, to this point, is covered 
in this supplemental request for food aid for the Darfur region 
and for southern Sudan. Obviously, these are the kinds of 
crises that sometimes take a different turn. We're watching 
very carefully the situation in west Darfur, where humanitarian 
assistance has been difficult to get in, because of 
difficulties with Chad and problems on that border.
    But assuming that we can maintain the levels of security 
that we need to make it possible to make the food assistance 
available, and humanitarian assistance available, this is what 
we think we would need to deal with the humanitarian problem in 
Darfur and in the south.
    The south is very often underrepresented in our 
discussions, but I think we should not lose sight of the fact 
that this was an area that went through decades of civil war. 
Millions of people were killed in this civil war. There is 
still a problem with transportation of food in that region. And 
so, we are using food assistance, but hoping to be able to do 
more also in the transport of that food around the country.
    This is what we think we need at this point, but I would be 
the first to say these humanitarian situations in war zones can 
sometimes take a different turn.
    Senator Bennett. Thank you very much.

                             HORN OF AFRICA

    General Abizaid. Madam Secretary, if I could just add 
something to that, Senator, the Central Command has a small 
command in the Horn of Africa.
    Senator Bennett. Yes.
    General Abizaid. And the level of food insecurity there is 
really the No. 1 problem out there. It spawns terrorism, it 
spawns instability. And the more we can do to help out there, 
through the use of the good services of that small command we 
have there, the better we'll be.
    Senator Bennett. Thank you.
    Going from that to the question that Senator Mikulski 
pursued having to do with oil revenue to be able to finance the 
reconstruction of Iraq, one of the problems, of course, is 
security, as the folks in the insurgency recognize that they 
can destabilize the country as much by interrupting the oil 
revenue as they can by the other more--what we might consider 
more traditional military kinds of attacks.
    General Pace, General Abizaid, whichever, it's wonderful 
that the Iraqi forces are standing up and trying to provide the 
level of security that we need in Baghdad and in the other 
areas, the four provinces you referred to that are aflame. Are 
you satisfied, or have you an opinion about their ability to 
secure the oilfields so as to bring the oil revenue to the 
point where Iraq can make a much bigger contribution to the 
economic challenge of their own reconstruction?
    General Abizaid. Well, Senator, let me take that question.
    The situation with regard to oil flow throughout the 
Arabian Gulf, and not just Iraq, is one that I think we all 
need to carefully consider. The attack the other day on the 
Saudi Arabian oilfield at Abqaiq was an attack by al Qaeda, and 
there's a stated intention by al Qaeda to continue efforts to 
attack the oil infrastructure, not just in Iraq, but throughout 
the region.
    Senator Bennett. Yes.
    General Abizaid. And so, we do take this very seriously, as 
do all the countries in the region.
    With regard to the security situation in the Iraqi 
oilfields, in particular, we have built a number of battalions 
known as security infrastructure battalions. We've looked at 
them. We aren't altogether satisfied with their organization 
and what has to be done to make them more effective. So, in the 
security arena, we are working hard to integrate them more 
fully into the overall defense structures in the country. And 
that will help a lot.
    But part of the insecurity of the oil has to do with bad 
infrastructure that's in terrible state of disrepair, it has to 
do with economic conditions where it becomes advantageous to 
smuggle oil, it has to do with a lot of corruption and criminal 
activity, and tribal activity, as well.
    So, it's a complicated issue. Can the Iraqis solve it? Yes, 
the Iraqis can solve it. They'll need some help from us, in 
terms of training and posturing, but I'm confident they'll get 
it under control.
    Senator Bennett. Do you feel there's been progress made?
    General Abizaid. Well, there are days when there's a lot of 
progress, and then there are days when there's no progress. 
But, in general, we're moving in a direction where Iraq will 
more and more have control over its resources, providing 
governance comes together, along with the security and the 
economic activity.
    Senator Bennett. The one thing about Iraq that has always 
interested me is that prior to Saddam Hussein it was not a 
``petrostate.'' That is, oil was important, but the economy was 
producing income from other activity besides oil. Iraq was a 
net exporter of food before Saddam Hussein destroyed the 
agriculture sector. What's going on with respect to rebuilding 
that kind of economic activity, something unrelated to oil? 
Petrostates, by their nature, tend to be instable. Great 
Britain has a lot of oil in the North Sea, but they're not 
dependent on it, and that balanced economy is very important to 
their stability.
    Yeah, we've got to focus on governance, we've got to focus 
on security, and we've got to focus on getting the oil revenue 
back, but if we're going to have the kind of Iraq that we want 
to have, long term, what activities are going on? And maybe 
this is not within the purview of the Defense Department, but--
Secretary Rice, you're nodding.
    Secretary Rice. Yes.
    Senator Bennett. Someone comment on what can be done to 
create the other areas of economic activity that will keep Iraq 
from being a petrostate and create the kind of stability that 
we need?
    Secretary Rice. Thank you, Senator.
    The reason I'm nodding is that I think you've put your 
finger on something very important about Iraq. It has not only 
oil, it has water, and it has very good agricultural lands. A 
combination of Saddam Hussein's polices----
    Senator Bennett. And productive people.
    Secretary Rice [continuing]. And productive people--the 
combination of Saddam Hussein's policies, and then, frankly, 
the Oil-for-Food Programme, which depressed the internal market 
by essentially importing everything, and then the war, drove a 
lot of people off the land, because the land was no longer 
productive. It not only would help the economy to get the 
agricultural lands going again, but it would help employment, 
because it was a fairly labor-intensive agricultural sector. 
And so, we recognize that link.
    We have requested--there are agricultural programs going on 
currently--$84 million for agriculture in Iraq in 2007. Some of 
the funding for these small projects in the provincial efforts 
would probably also be agricultural in nature. So, I think 
you've put your finger on it. This is a country that does not 
have to depend simply on oil. It can be a quite diversified 
economy. And we want to support that.
    Senator Bennett. Thank you.
    I want to associate myself, just for the record, with 
Senator Bond's attitude with respect to Dubai Ports World. And 
I hope we, in the Senate, can calm down the passions that have 
been stirred in the House and elsewhere with respect to the 
ports deal. I do think the administration can be faulted for 
the way this was announced and handled, but that doesn't mean 
that the substance of the deal was a bad deal from the 
beginning. And I hope we can let cooler heads prevail and 
recognize that we have an ally there whom we do not need to 
denigrate on television in an effort to chase the ratings game.
    Thank you, Mr. Chairman.
    Chairman Cochran. Thank you, Senator.
    Senator Allard.
    Senator Allard. Mr. Chairman, I think that Senator Burns 
has a problem with, and wants to ask questions. And I--is it 
possible--is he after me?
    Chairman Cochran. Yes.
    Senator Allard. Is it possible for you to yield to him, and 
then I can follow after him?
    Chairman Cochran. You surely may.
    Senator Allard. Thank you. I yield to the Senator.
    Chairman Cochran. Senator Burns.
    Senator Burns. Thank you very much. And thank you all for 
coming. I've got a couple of questions and a comment.
    You will not reach the potential in your agriculture until 
you have land reform and put that land into private ownership 
where they--and they'll take care of it. It is the same with 
the oil. The sooner they move that into private corporations 
and they start collecting royalties and everything like that--
that system has served this country very well, and it can serve 
them.
    But, you're right, they've got two rivers, two great 
irrigation systems, they've got dry-land farming. I've been 
over there and looked at it. But you've got to have land 
reform, Madam Secretary, in order to do it.
    And then, you know, when we're successful in this whole 
thing, I think our transportation and communications corridor 
that will run from Tel Aviv to Kuwait City will develop an 
economic culture that's different than they've ever known 
before, and that has a tendency to spread among the Middle 
East. It could be the key to the Middle East peace process. And 
so--but those things have to fall in place before it really 
happens.
    On this supplemental, I'm concerned about one thing. In the 
movement of money, we continue to move off-budget. And I'd like 
to see a little more on-budget. I think the American people 
deserve that, Secretary Rumsfeld. And, for right now, I know we 
know we're investing in new weapons systems. We're trying to 
restructure our--the way we--our military looks. I applaud you 
on that. But we're at a time when we've got to win this war, 
and it's going to be won on the ground, and it's going to be 
boots. And I have a feeling that we move too much money around, 
and we don't put our money, kind of, where we really need it.
    This committee needs assurances that we're putting it in 
the--I understand we've got a new kind of IED now that's out 
there that we have to--we've got the garage door deal, I think 
I was reading about, like that. But I--for us to get a handle 
on it and to understand where the--where our money's going, the 
investment on the people on the ground, where this--because 
this war is not going to be won--because we already control the 
air, we control the sea, but it's going to be with the folks 
that are on the ground. And that sort of concerned me.
    Now, I've never been a green-eyeshade guy, as you well 
know, but I think it's--we have to take a look at that and see 
where this--these dollars are going.
    Would you want to comment on that? And I realize we're 
investing in new systems, but maybe we'd better slow up and 
take a look at that, and put our money kind of where our action 
is.

                      INVESTMENT IN GROUND FORCES

    Secretary Rumsfeld. Senator, if you take the budget and the 
supplemental, and look at the investment that's being made in 
ground forces, it is substantial, it is significantly higher, 
it is a reflection of the concern you've expressed, and 
certainly our understanding, that not only do we need to see 
that we invest properly in ground forces, but we also need to 
see that we invest in ground forces in a way that they're able 
to successfully, on behalf of our country, deal with the kinds 
of asymmetric and irregular challenges that we are facing 
today, and that we very likely will face for the foreseeable 
future.
    Senator Burns. Well, that's--you know, and--but it will 
allow us--and it would kind of take--it would answer some of 
the questions that Senator Byrd has. We're on budget, we can 
handle it. But the emphasis should be winning the war on the 
ground. And, you know, there's no doubt--now, if those folks 
who believe that we're spending a lot of money there taking on 
terror at the stem, need we remind folks of what the cost of 9/
11 was, and what it cost this country to recover not only from 
the lack of economic, but what it did to us--we found out that 
our economy was very fragile. And so, we're going to have to 
make this investment on the war on terror, whether we make it 
there or here, because I have a feeling they're going to follow 
us wherever we go. We might get comments from the generals.

                             WAR ON TERROR

    General Abizaid. Sir, you--I agree 100 percent with what 
you said about having to invest in the war on terror. This 
issue of improvised explosive devices, suicide car bombs, and 
vests, is, unfortunately, with us for a long time. The more we 
invest now in trying to figure out how to detect and neutralize 
this threat, the better off we'll be in the years to come. This 
asymmetric threat has moved from Iraq to Afghanistan, it'll 
move to other places. It's certainly with us for a while. It is 
very well organized and networked, and it's made easier to 
spread through the Internet and through the way that global 
communications work today. So, the notion that we can isolate 
it in a particular country on a particular battlefield at a 
particular time is incorrect. It's with us for the long term, 
and investing in technologies against it now is absolutely 
essential.
    General Pace. Sir, I would say that you are spot on with 
regard to focusing our resources. And that's, for example, by 
General Meigs, in this new assignment, is going to be so 
helpful to that process. The money that's in the supplemental 
request will allow him to focus all of our efforts, tied into 
General Abizaid and General Casey's efforts in the theater, to 
be able to do things like learn the lessons, and then, out at 
Fort Irwin in California, for the Army, and Twentynine Palms, 
California, for the Marine Corps, be able to train to those 
lessons, understand that we're facing a thinking enemy. They 
will respond to the way that we change our tactics, techniques, 
and procedures. And we are going to need to be able to, inside 
of a very short loop, discover what their new approach is, 
determine how to defeat it, change our tactics, techniques, and 
procedures, train our soldiers and marines to those standards, 
and get on about our business, sir.
    Senator Burns. I thank the chairman, and I'll yield back 
the rest of my time. And I was concerned about the poll over 
there. I think if we'd have taken a poll in the English Channel 
on June 6, 1944, not very many of us would have liked to have 
been there either. And so, the poll is a little misleading. But 
the young men and women that we've got coming back to Montana 
are truly terrific people, and they ``get it.'' They really get 
it.
    Thank you, Mr. Chairman.

                              COST OF 9/11

    Secretary Rumsfeld. Senator, I just would thank you for 
bringing up the cost of September 11. There were never any 
perfect calculations made. The only one I ever saw suggested 
that it was not just 3,000 lives, but it was hundreds of 
billions of dollars, the cost of that day, in the impact it had 
on our economy. And the cost to impose that damage on our 
country was probably hundreds of thousands of dollars, is all, 
to put together that attack, maybe a few million.
    So, we do have to remind ourselves of the enormous cost of 
an event like that, and how important it is for our country to 
invest to see that we prevent that from happening again.
    Chairman Cochran. Thank you, Senator Burns.
    Senator Allard.
    Senator Allard. Thank you, Mr. Chairman.
    Before I get into my questions, I just wanted to take time 
to thank all of you for your service to our country. I mean, 
this is obviously a time when we're facing a lot of difficult 
situations, and I, for one, appreciate your leadership and the 
effort that you've been putting out. I know you put in 
countless hours making sure that our country is safe and secure 
and to try and deal with issues that are coming up today that 
could create a problem in the future. And these are different--
these are really difficult policy questions.
    I want to ask a brief question on the port management deal 
with the United Arab Emirates. Now, the other questions have 
been focusing on, you know, their--What kind of allies are 
they? But the issue that's before the Congress is: Is our port 
security at risk in this country with their management? And my 
question to you, Secretary Rumsfeld is: Did you have an 
opportunity to get involved in that process? And, if you did, 
did you see any concerns--do you see any concerns now--as far 
as that company, which is state-owned, operating port security?

                             PORT SECURITY

    Secretary Rumsfeld. Senator, as I understand the CFIUS 
process, there is a committee that involves six or seven 
departments and agencies----
    Senator Allard. Yes.
    Secretary Rumsfeld [continuing]. And six or seven offices 
in the White House.
    Senator Allard. Yes.
    Secretary Rumsfeld. That committee, the individuals 
representing the departments considered it carefully, made a 
decision. I was not aware of it. It was not considered 
something, from a security standpoint, that was elevated to my 
level. And I have since gone back and reviewed their work and 
concluded that they made the right decision.
    The security situation would not change. It would still be 
handled, as I understand it, by the United States Coast Guard. 
Coast Guard's part of the Department of Homeland Security, so 
I'm responding a little out of my lane here. But the same 
people would be engaged as the people that are engaged today.
    And, back in my lane, the reality is that the ports that 
our United States military ships use in their country are, we 
believe, sufficiently secure that we're happy to use them, to 
an extensive extent. General Abizaid's commented on it. General 
Pace has commented on it. And I think it's fine, for an issue 
of this importance, to have a 45-day review, and for the 
Congress and the House and the Senate to consider, with the 
executive branch, to make sure that it was reviewed in an 
appropriate way.
    But if you're asking me--from my standpoint, am I 
comfortable with it from the standpoint of the security of the 
United States, the answer is yes.
    Senator Allard. Yes. Now, on the 45-day review, I guess if 
we don't do the 45-day review, how do we--how can we be assured 
that, you know, we don't have any security lapses?
    Secretary Rumsfeld. I guess you can never be assured you're 
not going to have a security lapse, regardless of who's 
managing some aspect of a port. We know that there's going to 
be no change--as I understand it--there's going to be no change 
in who will be handling the security. It'll be the United 
States Coast Guard.
    Senator Allard. Yeah, it's a--I--and I understand that. But 
I guess when you have a company like that, there is information 
they deal with that could be important to a terrorist; for 
example, arrival times and departure times of ships, and 
manifests, and those kind of things. And I guess that's where 
my security concerns come, is the information that could 
possibly be made available to terrorists.
    But I gather from your comments that you're comfortable 
with their management in that regard.
    Secretary Rumsfeld. I am comfortable that the process 
looked at the security aspects from the standpoint of the 
Department of Defense, and that they made the correct decision 
in supporting it.
    Senator Allard. Yeah. You know, the--maybe I should pose 
this to both Secretary Rumsfeld as well as Secretary Rice, but 
I was rather astounded about this--how strong a statement was 
made by Iran's chief representative at the International Atomic 
Energy Agency yesterday, where he, frankly, seemed to threaten 
the United States by saying that there would be harm or pain if 
the United States Security Council imposed sanctions on Iran. 
So, the question comes up: Does Iran pose a significant threat 
to the United States, at this point in time? And how does this 
change if they develop a nuclear weapon?
    Secretary Rice. Thank you, Senator.
    Iran, indeed, does pose a considerable challenge and threat 
to our interests in the region. They do so with their role in 
Lebanon, through the terrorist organization Hezbollah, and by 
their increasing association with Syria to try and destabilize 
that area. They, of course, fund some of the Palestinian 
terrorist groups; and, therefore, make it more difficult to 
imagine a peace between Israel and the Palestinians. As both 
Secretary Rumsfeld and I have spoken to before, there are 
concerns about Iranian activities in southern Iraq, and support 
there for militias and for terrorists.
    They already pose, I think, a significant challenge, and 
even threat, to our interests. They also, of course, are of 
concern to many of our allies in the region, that their 
activities might be aimed, ultimately, at destabilizing the 
entire region.
    If you can take that and multiply it by several hundred, 
you can imagine an Iran with a nuclear weapon, and the threat 
that they would then pose to that region. It is why the United 
States, along with, now, a very strong coalition of states in 
the international community, have determined that Iran must not 
be allowed to get a nuclear weapon.
    I think that the rhetoric that you're seeing from the 
Iranians exposes their own concern that they are now isolated 
and that the world is very much against them on this issue. 
They would like to make this an issue between the United States 
and Iran. That's why, I think, they spoke about threatening the 
interests of the United States. But it, in fact, is not an 
issue between the United States and Iran, it is an issue 
between Iran and the international community, as exhibited by 
the substantial vote in the Board of Governors to report the 
Iranian dossier to the Security Council, including states like 
India and Russia.
    So, it is not that Iran does not have the ability to try 
and cause harm, but I think that if you look at the long run, 
we cannot be deterred by Iranian threats, because an Iran with 
a nuclear weapon would be such a much more dire threat to our 
interests that I think we have to do whatever we can to join 
with the international community to stop them.
    Senator Allard. I'm asking myself--I'm sure you've asked 
yourself--this question: What else can we do to dissuade them 
from pursuing nuclear weapons, or act as an advisory to the 
international community, since we're dealing with the 
international community, to dissuade them from going with 
nuclear weapons? And perhaps you can respond, Secretary Rice. 
Maybe Secretary Rumsfeld has some thoughts on that. I'd like to 
hear it.
    Secretary Rice. We certainly believe that our case is going 
to be stronger, our ability to deal with this, when we're in 
the Security Council. Because the Security Council has at its 
disposal instruments that the International Atomic Energy 
Agency Board of Governors does not. For instance, the Security 
Council can put a state under chapter 7 resolution and compel a 
state to cooperate with the International Atomic Energy Agency.
    I think we also will want to look at what other measures 
are available. We have, from time to time, used asset freezes 
against states. We've used visa restrictions, as an 
international community, on leadership. There are a number of 
possible steps that could be taken. But I think we'll take this 
one step at a time.
    Right now, Iran is facing the reality that the regime will 
be isolated in the international system.
    I might just note, Senator, that already the effect of that 
and the prospect of Security Council referral has caused a 
number of financial institutions to decide that they don't want 
to deal with the Iranians, for reputational reasons. I think 
people may start to take a second look at whether investments 
in Iran are really a good idea, under the circumstances. The 
pressure that you can bring on a state once it is brought to 
the Security Council is considerably greater than what we can 
do now. And I think we continue to look for other ways, with 
our allies. We're always going to be stronger in this if we are 
doing it with other members of the international community. And 
I think, so far, we've been effective at bringing others along.
    Senator Allard. Secretary Rumsfeld, do you have a comment?
    Secretary Rumsfeld. I have nothing to add.
    Senator Allard. Okay.
    I have 16 seconds, and I've got the caution light, and my 
time's running out, Mr. Chairman, so thank you for my 
opportunity to ask some questions.
    Chairman Cochran. Thank you, Senator.
    Senator Dorgan.
    Senator Dorgan. Mr. Chairman, thank you very much.
    The--a couple of questions have been asked, and the 
implication of the questions and answers seem to suggest that 
our ability to continue to use the ports at the United Arab 
Emirates might be connected to our willingness to allow a UAE-
owned company to manage our ports. I assume that's not the 
case. If this--if the Congress or the President or this country 
decided that we will not allow a United Arab Emirates-owned 
company to manage our ports, if that's our decision--and I 
think it will be--I assume that doesn't mean that we cannot 
continue to use the UAE ports.
    Would you respond to that, Madam Secretary?
    Secretary Rice. Well, Senator, I can't speak to what might 
happen in the future. I think the point that is being made here 
is simply that the UAE has been an excellent ally, and that, in 
fact, whether it is with our military operations or efforts 
that we're making in terrorist financing, this has been a state 
that has been responsive to our calls to join the war on 
terrorism.
    I was just in Abu Dhabi, and I can tell you that, for them, 
the way that this is handled, and the language around it, is 
very important. I think it is important to say that the UAE is 
an important ally, that whatever the process is, whatever goes 
on over the next 45 days, or whatever the outcome of this is, 
that we treat this state like a valued ally, that we speak of 
this state as a valued ally. So, I think that is what is being 
said here. I can't judge what may or may not happen in the 
future.
    Senator Dorgan. I understand that, but you saw the vote 
yesterday in the U.S. House. I think it was Congressman Lewis, 
the chairman of the committee, offered an amendment to the 
emergency supplemental in the House. I think the vote was 60 to 
2, or 62 to 2. There's great anxiety about this. I believe, and 
would offer such an amendment in the Senate deliberations, as 
well, so that we could go to the conference with the same 
amendment.
    I--but, having said that, I don't--I just didn't want there 
to be a misimpression. I don't think anybody is really saying 
that the condition of our being able to use UAE ports in the 
future is that we would allow them to manage our ports now. I 
assume that's not a condition. You don't expect that to be the 
condition.
    Madam Secretary, I accept your proposition that we ought to 
be respectful of allies that are helping us, but I don't think 
there ought to be a connection between being willing to allow 
them to manage our ports and us to use their ports.
    Secretary Rice. I think this is an issue of respect for an 
ally, and how they are treated----
    Senator Dorgan. I understand.
    Secretary Rice [continuing]. And how they are talked about, 
and that the language we use, however people feel about the 
particular deal, is such that we remember that this is an ally.
    Senator Dorgan. But I do think that the bill will come from 
the House with the amendment, and it likely will come from the 
Senate. I intend to offer the amendment, so that we can have an 
amendment that is identical to the House amendment.
    Having said that, let me go, just for a----
    Secretary Rumsfeld. Well, could I----
    Senator Dorgan. Yes.
    Secretary Rumsfeld [continuing]. Comment?
    Senator Dorgan. Yes, of course.

                             PORT SECURITY

    Secretary Rumsfeld. You're correct, no one here said 
anything that should imply that we know what their reaction 
would be. The other way of saying that is, we don't know what 
their reaction would be. And they are a valued ally. And they 
do sit at a strategic spot in the Arabian Sea, where an 
enormous fraction of the world's oil moves. And we ought to be, 
as the Secretary of State said, sensitive to that. And, 
frankly, I would hope that the Senate would not pass an 
identical amendment, and that it wouldn't even be offered, 
because it seems to me that this is an issue that, as a number 
of people have suggested, people ought to step back, take a 
look, analyze it, take some time, and think it through very 
carefully, and try to understand what the actions and reactions 
might be.
    Senator Dorgan. Mr. Secretary, thank you.
    Mr. Secretary, I'd like to ask you about the LOGCAP 
Program. ``60 Minutes'' did a piece about the Halliburton 
Corporation and the contaminated water supply of a base called 
Ar Ramadi. And that information has been sent to you. We've had 
whistleblowers come to us about that. I want to just give you a 
couple of facts about it and ask--there's money for the LOGCAP 
contract in this request, $1.75 billion, at least, as I 
understand, which is the Halliburton contract. The folks that 
work for Halliburton--one of whom still works for Halliburton--
have said that, at Ar Ramadi, the nonpotable water, which was 
used by the troops for showering and brushing teeth and making 
coffee and shaving and so on, had two times the normal 
contamination of untreated water from the Euphrates River--
twice the contamination of the untreated water from the 
Euphrates River. And the water expert at Halliburton who 
discovered this told company officials that they would have to 
notify the military. They--he said, ``They told me it was none 
of my concern and to keep my mouth shut.''
    There's an internal Halliburton document, which I have, 
that says the following--and, by the way, both the Defense 
Department and Halliburton deny this ever happened. This was 
disclosed on ``60 Minutes'', this series of events, and they--
both the Defense Department and Halliburton deny it happened. 
This is an internal Halliburton document I have, and it reads 
as follows--and this is from the fellow that was in charge of 
water supply in all of Iraq--``This event should be considered 
a `near miss' ''--``as the consequences of these actions could 
have been very severe, resulting in mass sickness or death.'' 
This is an internal memorandum from the company that denies 
this circumstance happened.
    I know, Mr. Secretary, you and others care a great deal 
about our troops, want to do the right thing, but you also know 
there are substantial public questions being raised about the 
misuse of these funds in large sole-source, no-bid contracts, 
including this issue, which would have problems with respect to 
the health of our troops. The $1.75 billion in the LOGCAP 
contract that's in this request, how can we be sure that we're 
not going to see the same press reports about misuse and waste 
that we've seen in the past?

                   HALLIBURTON CONTRACTING OVERSIGHT

    Secretary Rumsfeld. Well, Senator, we've talked about this 
before from time to time, and I guess the answer--the honest 
answer is, no one can ever be sure on something like that.
    You know the concern and the care that the people in the 
Department of Defense have for the employees, civilian and 
military, of the Department of Defense. We care deeply about 
their health, their well-being, and their success.
    This question of contaminated water is something that 
obviously would cause great concern to the Department. The Army 
is looking at it. They are aware of the allegations, but they 
are unaware of anything that would substantiate that something 
like that happened. I don't doubt for a minute the internal 
document you have, that somebody believes that happened.
    Senator Dorgan. Not just internal documents, employees and 
former employers, who worked for the company, who were there, 
who were in charge, who said it happened.
    Secretary Rumsfeld. Yeah. And yet, there were not numbers 
of people who got sick, to my knowledge.
    Senator Dorgan. No, you're absolutely right about that.
    Secretary Rumsfeld. Right.
    Senator Dorgan. At least there is--there are not known to 
be people who were----
    Secretary Rumsfeld. Right.
    Senator Dorgan [continuing]. Affected or sick. I'm just 
telling you that the internal document, however, from the 
Halliburton Corporation, says this event should be considered a 
``near miss'', ``as the consequences of these actions could 
have been very severe, resulting in mass sickness''----
    Secretary Rumsfeld. Yeah.
    Senator Dorgan [continuing]. ``Or death''. And this----
    Secretary Rumsfeld. Well, no one----
    Senator Dorgan [continuing]. From a company that denies it 
happened.
    Secretary Rumsfeld. And no one even wants a near miss, 
you're quite right. And I would be happy to take a copy of the 
document and go back to the Army and see if they, in fact, are 
aware of that.
    Senator Dorgan. The--I received, yesterday, from the 
Inspector General, a letter saying that they plan to initiate 
an audit to review the entire issue.
    But the only reason I ask the question is, I'm--and I'm not 
suggesting that you don't, in every way, care deeply about the 
circumstances the troops face. I'm not--I would not suggest 
that. But I think the things that we see in the newspaper, the 
whistleblowers that come forward that talk about these issues, 
I think it ought to persuade everybody to be a tiger to try to 
find out: What are the facts and how do we deal with it? 
Because when we do have big sole-source, no-bid contracts out 
there, boy, I'm telling you, it invites waste, fraud, and 
abuse, and there is plenty of it. I won't go through the 
recitation, but I've sent you----
    Secretary Rumsfeld. Yeah.
    Senator Dorgan [continuing]. A good number of letters about 
it. And it is not in question. The fact is, these are 
whistleblowers who were involved in it, who reported it, some 
of whom got fired for reporting it.
    Secretary Rumsfeld. It is something that requires vigilance 
and prompt and harsh steps at any occasion where something is 
found that would even approximate something like you've 
described.
    I would say one other thing. I can't believe this, myself, 
but my staff handed me something that says that the Special 
Inspector General for Iraq Reconstruction has said that the 
progress made in the reconstruction program is noteworthy. He 
said, ``The positive results achieved in the reconstruction 
program are impressive.''
    Now, that does not sound like they're perfect, to me. It 
sounds like they were over here, and they've improved somewhat, 
which I find reassuring, if, in fact, this is correct.
    Senator Dorgan. Mr. Chairman, thank you for convening a 
panel like this, allowing us to ask these questions. I 
appreciate very much the four of you appearing here today.
    Chairman Cochran. Thank you, Senator.
    Senator Domenici.
    Senator Domenici. Thank you, Mr. Chairman.
    Let me just say--I only have a couple of minutes, because 
I'm supposed to be at the Budget Committee to vote at 12:15, 
for about 15 votes in succession. So, excuse me for being 
brief.
    But on the sole-source issue that's being raised, I just 
want to ask, Mr. Secretary: Why do we use sole-source 
contracts? I would assume it isn't because we want to be nice 
to somebody. There must be some reason it has to happen, some 
justification. That's just a question that's prompted by his 
questioning of you.

                    SOLE-SOURCE BIDDING REQUIREMENTS

    Secretary Rumsfeld. There are. There are a set of rules and 
requirements. Some things require bidding, some things don't. 
And sometimes if there's an ongoing relationship with some 
organization, there may be a sole-source contract that fits the 
regulations. I'm sure if they did not, that it would not have 
been done.
    Senator Domenici. So sole-source contracting is being done 
pursuant to existing regulations, rules, and laws. Is that 
correct?
    Secretary Rumsfeld. Indeed.
    Senator Domenici. Whomever the contractor is.
    Do any of you know--maybe the generals--do you have an 
impression of what would happen to our efforts in Iraq if the 
UAE told us we couldn't use their ports--we couldn't use their 
ports for anything anymore? What would happen?

                                 PORTS

    General Abizaid.
    General Abizaid. Well, sir, first of all, the--as the 
Secretary said, they haven't made any sort of threat whatsoever 
about doing anything differently with regard to whether or not 
they get this contract or not. But I can tell you that the UAE 
is vital to the defense of the Arabian Gulf, the continued flow 
of resources, and our missions in Iraq and Afghanistan.
    Senator Domenici. General, I did not intend to put them, or 
you, on the spot, but it's pretty obvious to this Senator that 
we are taking some big risks up here, and we'd better know what 
we're doing. And that's the reason I asked the question.
    From what I know, they're not going to do that, because 
they are our friends, apparently; but if they did, I think I 
would say it would be a disaster, in terms of what we--whether 
we could conduct the affairs of the United States Government 
and our allies in that area. Do I see your head nodding, or 
not, in that regard?
    General Abizaid. I'd--I say that their role is vital to----
    Senator Domenici. Vital.
    General Abizaid [continuing]. Our defense.
    General Pace. Yes, sir. And I would agree with General 
Abizaid. Their role is vital, and they have been, since we 
began thinking about going into Afghanistan, and through today, 
very, very dependable partners.
    Senator Domenici. My other question is really kind of 
beyond your jurisdiction, but perhaps you have read or learned: 
Do you know how many foreign companies and/or corporations have 
permits and/or licenses to operate at United States ports? Does 
anybody have any idea how many hundreds there are? Secretary of 
State, do you know?
    Secretary Rice. I don't.
    Senator Domenici. Any of you generals know? Secretary?
    Well, I'm going to just speculate that it's far more than a 
couple of hundred permits to do exactly what the Dubai World 
Port company is trying to do, corporations and countries 
operating within our port system. There are more than a couple 
of hundred that are foreign. China is one, is it not? Do you 
all know that? They have one, don't they? Yes? I would think 
maybe those people who want to stop this kind of action might 
add to their amendment that maybe we should kick China out, 
maybe they shouldn't be running a port. I don't know. Maybe 
that would be a good amendment to put the question before the 
House.
    Madam Secretary, on the India proposition, which isn't 
relevant today, but it's a major, major breakthrough, in terms 
of your negotiations for an international agreement, can you 
state for the record, and publicly here, those countries, major 
countries that are part of the international nonproliferation 
agreement, who supports it? Does Britain support what you're 
doing--what we're doing?
    Secretary Rice. Thank you, Senator.
    Britain supports this. France supports it. Russia supports 
it. We have had other states say that they believe they support 
the deal, in principle, like Australia. I think you will find 
that others will come onboard as they know more about it.
    Senator Domenici. How about the IAEA?
    Secretary Rice. Director General Mohamed El Baradei, on the 
day of the deal, made a statement that said that this was an 
important deal for India, but also an important deal for the 
nonproliferation regime, because it brings India into the 
mainstream of the nonproliferation regime, and that the IAEA 
would, therefore, be able to access the Indian programs in a 
way that it has not been in the past.
    Senator Domenici. Let me close just by saying to the two 
generals that are here, I have not had an opportunity to visit 
with you over foreign countries as much as I would like, but I 
do follow carefully, and I do commend both of you, and 
particularly you, General Abizaid, for the terrific job you're 
doing. And I know we don't make it as easy as we might from 
time to time, but I think you have a deep understanding of 
democracy and know what's going on. We try our best. Thank you 
for everything.
    Thank you, Mr. Chairman.
    Chairman Cochran. Thank you, Senator.
    Senator Durbin.
    Senator Durbin. Thank you, Mr. Chairman.
    I thank the panel. Thanks to all of you for your service to 
our country, especially those in uniform, for what you have 
sacrificed to make our country safe.
    Secretary Rumsfeld, we had a vote in the Senate last year 
about whether or not this would be a year of transition in 
Iraq, whether there would be some significant change in what we 
have seen in the past. And the vote was authored--a resolution 
authored, rather, by Senator Warner, and the vote was 
overwhelming, it was 79 to 19 for a year of transition.
    As I listen to what you've said in answer to questions, and 
read your testimony, and look at the budget request, I do not 
detect in there that there's any anticipated significant 
change, in terms of troop deployment in Iraq. If I'm wrong, I 
hope you will correct me, but I'd like to ask you directly: Do 
you believe that by the end of this fiscal year, that we can 
withdraw a significant number of American troops from Iraq and 
bring them home?

                            TROOP WITHDRAWAL

    Secretary Rumsfeld. Senator Durbin, that's, of course, a 
question that will be recommended by General Abizaid and 
General Casey, depending on their assessments of the situation 
on the ground in Iraq, and to the President, and the President 
will make a decision. It would be ill-advised for me to make a 
prediction.
    I do think that there are some points that have been made 
here that are highly relevant. General Abizaid has commented on 
the importance of the governance piece of it. And the stability 
in that country and the confidence, or lack of confidence, that 
the various sectarian elements in the country have in the 
fairness of whatever government evolves from this election that 
took place January 15 will have an effect on that. And they 
have done pretty well. I mean, they had an election January 15. 
It was successful. They had a referendum. They drafted a 
constitution. It was successful, October 15. They had an 
election, December 15. And now, obviously, the insurgents and 
terrorists are trying to cause a civil war. And so, they've 
attacked the Golden Dome Shrine, and they're trying to create 
sectarian conflict.
    I don't think they're going to be successful. I don't know. 
Nobody knows. But if the government gets formed, and if our 
success with the Iraqi security forces continues, which is 
notable, that they have been able to manage, very effectively, 
those elections--10 or 12 million people voted, at risk to 
their lives in some cases, and God bless them for it--if the 
Iraqi security forces continue to do the kind of job they're 
doing, then there's no doubt in mind but that we're going to be 
able to reduce some troops.
    Senator Durbin. Mr. Secretary----
    Secretary Rumsfeld. I wouldn't want to use your phrase, of 
``significant,'' because then we'd get into a debate, ``Well, 
what's significant?'' And I don't know.
    Senator Durbin. I think ``significant'' is when the son or 
daughter of someone that I represent knows that their son or 
daughter is not going to be activated, is not going to have to 
serve, or may come home sooner, or may not go for another 
period of service. And I would just say to you that what you've 
told us, in reference to the strength of the Iraqi forces and 
the conditions on the ground in Iraq, is similar to what we 
were told last year. We have now lost over 2,300 of our best 
and bravest, and have 15,000 to 17,000 wounded soldiers. I 
think what the Senate was saying to the administration was, we 
want this year to be different. And measuring it as a 
difference would mean bringing our troops home.
    Now, I know you don't want to signal how many are leaving 
and what day they're leaving, but if, at the end of this year, 
there are still the same numbers of boots on the ground, as 
we've said over and over here, then I don't think our message 
was delivered effectively to this administration.
    We hear, every time you appear, that the Iraqis are just 
getting stronger and stronger, in terms of their security 
forces. There are conflicting reports, you know, about how 
ready they are to stand and fight. I think you know that. I'm 
sure you've been prepped for this. Some of the reports that we 
receive measuring stability and security in Iraq suggest that 
the number of battalions that are prepared at level one have 
reduced from one to zero. There were more battalions prepared 
to stand and fight, as long as we're with them. But it doesn't 
give me confidence that I can say to the people I represent, 
``Yes, this will be a year of transition. Yes, your sons and 
daughters are not likely to be activated in the Guard units 
again. Yes, they are likely to come home.'' And so, I think 
that the message we tried to send--I hope it was delivered--but 
the testimony today doesn't suggest to me that this is going to 
be a year in transition. I hope I'm mistaken. I hope that it 
does turn out to be such a year.
    Secretary Rumsfeld. Senator Durbin, first thing to 
remember, it seems to me, is critically important. Every single 
person serving over there is a volunteer. Every single man and 
woman, soldier, sailor, marine, airman volunteered. They put 
their hands up and they said they wanted to serve our country. 
They're not there under duress. They're not there under 
conscription. And that is critically important to remember. And 
they're darn proud of what they're doing. And they're doing a 
superb job.
    Second, with respect to the Iraqi security forces, there 
have been a lot of people parading around denigrating the Iraqi 
security forces for the last 2 years. And they're wrong. The 
Iraqi security forces are doing a good job. Are they perfect? 
No. Are they going to be the same as ours? No. Is it equally 
good between the ministry of interior police forces and the 
ministry of defense forces? No. But in net, are they doing a 
good job? You bet they are.
    Their success is going to be dependent upon having a 
government that they have confidence in, a government that puts 
in ministers that are capable, ministers that are not going to 
consider their ministries the spoils of an election, but 
they're going to consider their ministries something to be 
governed from the center and to be fair to all elements, all 
sectarian elements in that country.
    I think that the Iraqi security forces, if a government is 
formed, and if it's a government that puts in capable 
ministries, will demonstrate that they can continue on the path 
they're on of assuming more and more responsibility, and it 
will, in fact, work.
    Senator Durbin. Mr. Secretary, let me say, at the outset--
to suggest that I want the soldiers to come home safely is not 
denigrating their valor or devotion to this country.
    Secretary Rumsfeld. I was talking about the Iraqi 
security----
    Senator Durbin. You first----
    Secretary Rumsfeld [continuing]. Forces having been 
denigrated.
    Senator Durbin. The first point you raised was about the 
volunteerism----
    Secretary Rumsfeld. They are all volunteers.
    Senator Durbin [continuing]. Of our soldiers. And I will 
acknowledge that point. But I think we both have a solemn 
obligation to bring them home safely as quickly as possible.
    Secretary Rumsfeld. Well, of course we do.
    Senator Durbin. And if raising that question causes you to 
question whether or not I understand why they're there, or the 
type of people that are there, that's wrong. I do know the 
people that are there. I've met them in Iraq. I've met them at 
home. I've attended the funerals, and I've met their families. 
We all understand that, on both sides of this table.
    And, second, the proof positive the Iraqi security forces 
are as good as you say is when American troops can come home. 
That's proof positive. Every year, we hear about growing 
numbers and growing capabilities. And yet, 138,000 of our best 
and bravest are still there, in danger, today. There is a sense 
about this country that this war has gone on for 3 years, and 
now it's time to see the transition that the American people 
are looking for, where the Iraqis take responsibility for their 
own safety and their own future. And that's the point that was 
made by a vote of----
    Secretary Rumsfeld. We all agree----
    Senator Durbin [continuing]. Seventy-nine----
    Secretary Rumsfeld [continuing]. With that.
    Senator Durbin [continuing]. To 19 in the Senate.
    Secretary Rumsfeld. We all agree with that.
    Senator Durbin. Let me talk to you about the soldiers who 
are coming back, too. And I think Senator Byrd has raised this 
point earlier. Some of them come back with some serious wounds 
that are very visible, and some with serious wounds that are 
not visible. I have really focused on this whole post-traumatic 
stress disorder situation. It appears to me to be a much larger 
problem with this war than it's been in other conflicts. Maybe 
it's more open now. Maybe people have courage to talk about it 
openly now. But I'm not certain that we are dealing with the 
reality of it, as I go to meet with the soldiers that have 
returned, go to the veterans' facilities. Do you sense that we 
are engaged with a more serious problem now when it comes to 
the psychological scars that these soldiers are bringing back 
than we have in the past?

                  MENTAL HEALTH OF RETURNING SOLDIERS

    Secretary Rumsfeld. I don't think the answer to that 
question is known for sure. I think that there is a much 
greater sensitivity to the issue in this conflict than possibly 
in previous conflicts. And that's a good thing.
    Senator Durbin. It is.
    Secretary Rumsfeld. But that may be one of the reasons why 
it seems to be a significant issue that needs to be addressed.
    I know that each of the services is engaged in mental 
health services that they provide in the theater, that they 
provide back here, and that they're arranging with the Veterans 
Administration, to provide at a point where somebody may be 
transferred.
    It is something we're concerned about and we are 
addressing.
    General Pace might want to comment on that.

                            HEALTH SERVICES

    General Pace. Sir, we have initiated several programs, both 
in conjunction with the Veterans Administration and on our own. 
Specifically, as units come home now there is a process by 
which they are--they and their families are counseled on things 
to be mindful of, things to look for, and then told how to get 
plugged into the assistance if those kinds of things start to 
show themselves after the soldier's gotten home.
    Senator Durbin. I applaud you for that, General. And I 
would just say, in closing that I ran into a situation where a 
Guard unit from Illinois went to Camp McCoy, as they were being 
mustered out and sent home. And, of course, they were anxious 
to get home as fast as possible. And they were asked, ``Have 
any problems?'' And they said, ``Nope. Wanna go home.'' They 
went home. And they did have problems. When they got home, they 
acknowledged it.
    And so, I think we're in a situation here where I'm glad to 
hear that you're making that extra effort. I think we really 
need to.
    Thank you, Mr. Chairman.
    Chairman Cochran. The time of the Senator has expired.
    Senator Byrd has asked to have some additional time for 
questions. Secretary Rice, if you need to go to the White 
House, please feel free to----
    Secretary Rice. Thank you very much.
    Chairman Cochran [continuing]. To leave.
    Secretary Rice. I appreciate it very much.
    Chairman Cochran. Thank you very much for your cooperation 
in attending this hearing today.
    Secretary Rice. Thank you.
    Chairman Cochran. Senator Byrd.
    Senator Byrd. Thank you, Mr. Chairman.
    Rumors continue to swirl about a potential attack on Iran 
if there is no diplomatic solution to be found in the coming 
months to Iran's suspected nuclear program. I believe that an 
attack on Iran, either by the United States or another country, 
would risk triggering a regional war. I also think that we also 
already have our hands full in Iraq.
    Vice President Cheney, in the Philadelphia Inquirer, on 
March 8--and I read from the Inquirer, ``Vice President Cheney 
said, yesterday, that conditions in Iraq were improving 
steadily, but the American Ambassador in Baghdad has said the 
U.S. invasion opened a Pandora's box of ethnic and religious 
violence that could inflame the entire Middle East. Ambassador 
Zalmay Khalilzad told the Los Angeles Times, in an interview 
published yesterday, that the potential is there for a full-
scale civil war in Iraq. Khalilzad, a highly regarded diplomat, 
warned that a victory by Islamic extremists in Iraq would make 
the Taliban in Afghanistan look like child's play. Vice 
President Cheney, on the other hand, speaking in Washington, 
expressed firm resolve, `Our strategy in Iraq is clear. Our 
tactics will remain flexible. And we'll keep at the work until 
we finish the job.' ''
    Secretary Rumsfeld, bearing in mind the Vice President's 
saber-rattling comments about Iran on Tuesday, do you 
contemplate that any funds in this supplemental appropriations 
request will be used to plan an attack on Iran, or that any 
funds in the supplemental will be used to carry out an attack 
on Iran?

                                  IRAN

    Secretary Rumsfeld. Senator Byrd, I know of no plans to 
attack Iran, if that's the thrust of the question. I'm not 
going to get into what the Department of Defense plans for, but 
it is a responsibility under law for the Department of Defense 
to consider a variety of contingencies, and be prepared to deal 
with them, should the Congress and the President request it.
    With respect to attacks on Iran, I would reverse it. At the 
present time, Iran is inserting people into Iraq and doing 
things that are damaging and dangerous to our forces there. And 
clearly in the event we are successful, through intelligence, 
of locating people, Iranians, in Iraq that are engaged in acts 
against our forces, we certainly would take--our forces would 
take--the appropriate steps to stop them.
    Senator Byrd. Well, I think that the response is generally 
along the line of responses that I received when I asked, a few 
years ago, if we had any plans to go into Iraq. So, I'm not 
surprised that that would be the response.
    I'm interested in pressing this question once more. Will 
any funds in this supplemental appropriations request be used 
to plan or to carry out an attack on Iran?
    Secretary Rumsfeld. I don't know how I could answer it any 
better than I did.
    General Pace, do you want to see if you can respond in a 
way that is more fulfilling?

                                 FUNDS

    General Pace. Sir, the answer is, no, sir, with inside the 
borders of Iran. But if there are Iranians fighting against us 
in Iraq, then, of course, we would treat them like the enemy in 
Iraq.
    Senator Byrd. Do you anticipate that they would be fighting 
us, that the Iranians would be fighting us in Iraq?
    General Pace. We know that they have provided some 
munitions, some weapons, and that there are some agents, 
Iranian, in Iraq. I do not know the intent with regard to the 
battlefield.
    Senator Byrd. Would you repeat that last, please?
    General Pace. I do not know the intent with regard to the 
battlefield, as to whether or not the Iranians in Iraq intend 
to participate in battle, sir.
    Senator Byrd. Well, I would think that, based on what we've 
seen and heard thus far and what the situation is there, that 
we might expect--we might expect such an attack.
    Secretary Rumsfeld. Senator, I think that probably would be 
a misplaced expectation. It's rather clear that the United 
States and the European countries and the countries of the 
world are, as Secretary Rice indicated, on a diplomatic path. 
They're doing everything they can figure out to work with Iran 
and try to avoid having Iran develop nuclear weapons. They're 
doing it bilaterally, they're doing it multilaterally, they're 
doing it through the United Nations and the International 
Atomic Energy Agency, the IAEA, and it seems to me the path is 
rather clear.
    Senator Byrd. What was that last comment, please?
    Secretary Rumsfeld. It seems to me the path that they're on 
is rather clear.
    Senator Byrd. I think the path they're on is somewhat 
clear, but it's not to be gainsaid that an attack on Iran, 
either by the United States or another country, would risk 
triggering a regional war, when we already have our hands full 
in Iraq. So, I suppose--might assume that any funds in the 
supplemental appropriations request would be used in such an 
event with respect to a plan or an attack on Iran. I can only 
assume that from the answers.
    Thank you, Mr. Chairman.
    Chairman Cochran. Thank you, Senator Byrd.
    Senator Stevens, any further questions?
    Senator Stevens. Well, no. I just wish more people would 
talk about why we're there.
    I don't know if you noticed that the new National 
Geographic talks about, and has, a genocide article, ``Genocide 
in the 20th Century.'' And it talks about the Kurdish women and 
children that were found in mass graves that had been shot with 
AK-47s. When we were over there, we heard all sorts of talk 
about what was over there. And very few people talk about that 
anymore, why we're there.
    They also don't talk about the fact there's been no 9/11 
since we've been there. We have preserved our freedom here by 
taking on the enemy there. And I think we're there--and we know 
why we're there. My people at home know why we're there. And I 
know why the young men and women of Alaska have volunteered to 
go there.
    So, I do decry the attacks on us for doing our job. And I 
congratulate all of you for doing the job. I have great 
admiration for you and for the members of the Defense 
establishment now. And I support what you do, and I intend to 
support this bill.
    The last comment I'd make is, our committee, the Commerce 
Committee, has looked into the problem of the contract that's 
being reviewed for 45 days. It's a contract to take over, from 
the British, a British company, a contract that's been 
outstanding for some time. There are similar contracts for Los 
Angeles, for Seattle--not for this same outfit, but they are 
not managing the port, they're managing a function within the 
port. And they do not manage security.
    And the people of the country have been alarmed over the 
charges that we're, somehow or other, turning over the security 
of our ports to a foreign company, which is not true. And I 
just wish, somehow or other, we could get some understanding of 
that fact.
    This has turned into a political issue, an overwhelming 
political issue. We saw it on the floor last night. We're going 
to see it on this bill. Let's see how far we go to stop this 
bill with that amendment. And I'm sad to see that our friends 
in the House have passed that amendment, because I intend to 
oppose that amendment when it gets to the floor. We may or may 
not win. But I do think it's wrong to pursue this in the 
concept that somehow or other that company is trying to 
``manage a port'' or a series of ports in the United States. 
They'll be dealing with the longshoreman function.
    And I took our committee up--we flew over the Port of Los 
Angeles. It's an enormous port. And it has a series of 
contracts with foreign companies managing various functions 
within that port. But they do not manage that port.
    And I think that we're wrong to have these questions that 
this contract is to take over the management of ports in the 
United States. It's not true. And someone has got to stand up 
and say that it's not true. And I intend to do that.
    Thank you very much.
    Senator Byrd. Mr. Chairman, may I just----
    Chairman Cochran. Thank you, Senator.
    Senator Byrd [continuing]. Add one postscript?
    Chairman Cochran. Senator Byrd.
    Senator Byrd. I do not--I, for one, do not subscribe to the 
suggestion that we are avoiding an attack on us on our soil by 
being involved in a war in Iraq. I did not believe it at the 
time we entered that war. I voted against such an entry. And I 
believe the same today. I think that if the--if and when they 
do decide to attack us, even if it is on our soil, they'll do 
it. They did it before, they'll do it again.
    Chairman Cochran. Thank you very much, Secretary Rumsfeld, 
General Pace--
    Would you like to respond?
    General Pace. Senator, thank you. I appreciate your 
indulgence, sir.
    I wanted to make absolutely sure that my answer to Senator 
Byrd is as precise as possible, because I'm not sure that his--
what he said after I spoke, that I was understood.
    I believe you asked, Senator, is any of the supplemental 
funding in this bill going to be used to either, plan an attack 
against, or conduct an attack against, Iran, inside of Iran?
    Senator Byrd. Yes.

                               OPERATIONS

    General Pace. The answer to that question, sir, is: No, 
sir. It will be used for operations in Afghanistan, operations 
in Iraq, and operations in the global war on terror, sir.

                     ADDITIONAL COMMITTEE QUESTIONS

    Chairman Cochran. Thank you very much, General Pace, 
General Abizaid, and Secretary Rumsfeld for your participation 
in this hearing. We appreciate your service, your outstanding 
caliber of leadership for our military forces and our civilian 
forces in the Department of Defense and the Department of 
State.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]

          Questions Submitted to Secretary Donald H. Rumsfeld
              Questions Submitted by Senator Conrad Burns

    Question. The fiscal year 2007 budget request calls for expanding 
funding for new weapon systems like the F/A-22, which runs at a quarter 
billion dollars per copy; the DDX destroyer that, when the costs of R&D 
are factored in will cost $10 billion per ship; the Army's Future 
Combat System, whose cost grows by the month and has recently been 
estimated to cost $160 billion.
    And yet this fight that we are in is not a fight for ``aerial 
dominance'' requiring stealth fighters, we are not facing armored 
columns of Russian tanks, or fleets of enemy submarines. We are facing 
insurgents.
    This ``long war'' is a ``boots on the ground'' engagement. This is 
a war of corporals, and sergeants. Soldiers are being asked to find and 
kill the enemy--without killing civilians--speak foreign languages, 
understand alien cultures, and build nations. I would hazard that more 
emphasis should be directed at producing more capable military service 
members, augmented with the tools and technology available right now, 
rather than visionary weapons of the future.
    How does this supplemental request address our immediate 
requirements for building more capable service members now?
    Answer. The fiscal year 2006 supplemental request for the global 
war on terrorism helps build more capable service members now by 
including:
  --$2.6 billion for force protection for deployed forces, which will 
        keep our military fighters less vulnerable and therefore more 
        capable of prevailing in combat.
  --$7.2 billion to reconstitute equipment, including major overhaul 
        and replacement of equipment lost or expended in battle--which 
        helps meet the immediate needs of our military members.
  --$3.4 billion for Army Modularity, which will make our ``boots on 
        the ground'' forces more capable of finding and killing the 
        enemy, and more flexible for deployment wherever needed.

                   NATIONAL GUARD EQUIPMENT SHORTAGE

    Question. Since the beginning of the War in Iraq, equipment 
availability problems before deployment and replenishment upon return 
has been an issue for our National Guard forces.
    According to the National Guard Bureau, the problem continues to 
worsen across the country, as a great deal of Guard equipment comprised 
of approximately 64,000 items valued at more than $1.2 billion, has 
either been destroyed or left in Iraq. According to a GAO report 
published in October 2005 at the request of the Congress, the U.S. Army 
``does not have a complete accounting of these items or a plan to 
replace the equipment.''
    Because Army National Guard units have had to turnover vital items 
such as helicopters, trucks, radios, and night vision goggles to 
incoming units in Iraq, it leaves the Guard in the U.S. incapable of 
fully carrying out emergency operations in the event of a crisis. 
Leaving equipment in a theater of operations makes sense, given the 
open-ended nature of our missions, but I am concerned that our 
Guardsmen have their unit equipment replenished in order to be prepared 
for emergencies or enforcement of national security at home.
    Does this supplemental address this immediate equipment shortage 
problem? Is there a priority in replacing/fielding equipment needed for 
Homeland Security or Disaster Relief to National Guard units?
    Answer. The fiscal year 2006 supplemental contains $1.85 billion in 
new equipment for the Army National Guard (ARNG) including the 
following:
  --$356 million for Bridge to Future Networks;
  --$187 million for SINCGARS (radios);
  --$189 million for improved HF radios;
  --$157 million in Family of Heavy Tactical Vehicles (FHTVs)/Family of 
        Medium Tactical Vehicles (FMTVs); and
  --$95 million for Night Vision Devices.
    In addition, the ARNG received $700 million in National Guard and 
Reserve Equipment Appropriations and $312 million in normal 
appropriations in Title IX of the fiscal year 2006 Appropriations Bill 
to procure the following:
  --$315 million for FMTVs;
  --$160 million for Joint Node Network;
  --$16 million for Night Vision Devices;
  --$15 million for SINCGARS;
  --$30 million for UH-60 Blackhawks; and
  --$28 million for Small Arms.
    The Army is committed to the Homeland Security and Disaster Relief 
missions even as we fight in Iraq and Afghanistan. Equipping the ARNG 
is a key element of the Army Equipping Strategy. When we began the war, 
the program for ARNG equipment was $5 billion from fiscal year 2005-
2011, now it is $21 billion. The Army is committed to having a Guard 
that is as well equipped at home as it is when deployed with the latest 
technology.

                         FIELDING EQUIPMENT NOW

    Question. We understand our responsibility to get our service 
members the best possible equipment. Given that we are engaged now, it 
is central to that responsibility to get them the best equipment as 
soon as possible. They are in harm's way now. The common sense answer 
to getting the best equipment to our soldiers as quickly as possible 
can be summarized with three points:
  --Effective implementation of Commercial off the Shelf (COTS) 
        products.
  --Evolutionary ``spiral'' development of existing systems to 
        incorporate new technologies and bridge to the next generation 
        of systems.
  --Delaying or re-thinking revolutionary jumps in technology by 
        prioritizing number 1 and 2.
    How much of this supplemental request provides existing 
technologies and equipment to troops that are deployed now in the GWOT 
or about to deploy?
    Answer. The fiscal year 2006 supplemental request for the global 
war on terror funds the most pressing, immediately needed requirements 
of our military members, and generally we have to rely only on existing 
technologies and equipment to meet those requirements. Still, we 
continue to scrutinize and develop new technologies that might help us 
meet war-related requirements--e.g. to defeat improvised explosive 
devices (IEDs).

                                 VOTING

    Question.We have hundreds of thousands of troops deployed overseas. 
How is the Department making positive steps to ensure that we improve 
the process to make sure that these heroic Service men and women are 
not disenfranchised in the upcoming election?
    Answer. The importance of voting is being emphasized at every level 
of command in the Department. The Federal Post Card Application, the 
Federal Write-in Absentee Ballot, and the Voting Assistance Guide have 
been automatically distributed to all units, both CONUS and OCONUS. All 
of these materials are also available online at the Federal Voting 
Assistance Program (FVAP) Web site.
    Furthermore, the FVAP is conducting training workshops worldwide 
for military Voting Assistance Officers, educating them and giving them 
greater knowledge of their role, giving more military members and 
dependents the opportunity to request and cast an absentee ballot.
    The FVAP is working proactively to address and educate Local 
Election Officials about the Uniformed and Overseas Citizens Absentee 
Voting Act (UOCAVA), voting in advance of the election. The FVAP staff 
is addressing meetings of national election organizations, training 
local election officials at State-wide meetings, and updating 
information for Local Election Officials via the FVAP Web site. Local 
Election Officials are being encouraged to send out absentee ballots 
early enough so that they can be voted and returned by the State 
deadline for counting; provide a State write-in ballot, when 
applicable; and provide simple ballot marking and return instructions 
with absentee ballots, including instructions to return the voted 
ballot by e-mail or fax, where authorized.
    Additionally, FVAP's Electronic Transmission Service (ETS) enables 
local election officials to transmit and receive election materials via 
fax or e-mail to/from Uniformed Services members and overseas citizens. 
The ETS can forward the documents as either a fax or e-mail, whichever 
the local election official decides will best serve the voter. Election 
officials transmit election materials to Uniformed Services members and 
overseas citizens via fax through the ETS toll-free number or via e-
mail as an attached Portable Document Format (PDF) file. The ETS 
delivers materials as a read-only file just as they are received 
regardless of completion, legibility, or accuracy.
    The availability of electronic transmission of forms as an 
alternative to mail has greatly expanded in the last 5 years. The 
number of States permitting fax delivery of blank absentee ballots has 
increased from 23 to 34 Sstates. The number of States permitting fax 
return of voted ballots increased from 17 to 24 States. At the same 
time, the Department has increased the number of toll-free fax numbers 
available to Service members and overseas citizens worldwide from 
numbers in two countries to toll-free numbers in 51 countries.
    Some States and counties have also taken the initiative to allow 
the e-mailing of blank and voted ballots. North Dakota, Mississippi, 
South Carolina, Florida, Virginia, Wisconsin, some counties in Montana, 
and Washington, as well as Chicago/Cook County, Illinois (and Missouri 
for the 2004 election) have sent ballots by e-mail, accepted voted 
ballots by e-mail, or both.

                               EMERGENCY?

    Question. Mr. Secretary a major issue in the congressional debate 
on funding continuing military operations and reconstruction in Iraq 
and Afghanistan is whether requested funding meets the test of being 
designated as ``emergency'' requirements. During the fiscal year 2005 
appropriation deliberations, several Members of Congress put DOD on 
notice that they will look closely at future supplemental proposals.
    Following up on this notice, how is DOD ensuring that all 
supplemental budget requests are for emergency needs?
    Answer. As a key element of the process of preparing supplemental 
budget requests, our DOD leadership and officials from the Office of 
Management and Budget scrutinize all proposals to endure that they 
truly are for emergency needs. We are confident in defending the fiscal 
year 2006 supplemental as funding only emergency requirements.

                      NATIONAL GUARD END STRENGTH

    Question. The QDR initially proposed to reduce the authorized level 
of Army Guard and Reserve from 350,000 to 333,000--a 17,000-man 
reduction.
    Now that the Army Guard and Reserve end strength is staying at or 
near 350,000, can you tell me where the funds are coming from to fund 
this change from your original budget request?
    Answer. The Army is committed to funding the Army National Guard up 
to the 350,000 strength level in fiscal year 2007 and is in the process 
of identifying sources to meet this commitment.

                  COST OF OPERATIONS IN WAR ON TERROR

    Question. Since 9/11, the Congressional Budget Office estimates 
that the administration has allocated more than $360 billion for 
military operations and reconstruction in Iraq and Afghanistan, a 
number that includes ``emergency'' and ``bridge'' funding. DOD's is 
currently spending about between $4 billion and $7 billion per month in 
Iraq and Afghanistan.
    DOD has not provided an overall explanation of the administration 
of these funds by specific operation or by mission. Last year, the GAO 
found that DOD had ``lost visibility'' on more than $7 billion 
appropriated for the War on Terror. Furthermore, it is clear that 
regular budget and war-related spending are not properly segregated. It 
would be an understatement to say that Congress's visibility into war 
spending has been obscured.
    How will DOD demonstrate separation between your transformation/
modernization and its war-related spending?
    Answer. The Department can distinguish between transformation/
modernization and war-related spending. The DOD has an accounting 
system implemented by the Defense Finance and Accounting Service (DFAS) 
to separately capture and report on a monthly basis the costs of 
contingency operations like Operation Iraqi Freedom (OIF) and Operation 
Enduring Freedom (OEF). This system excludes the costs of baseline 
costs like transformation and modernization initiatives. The 
obligations and expenditures of funds for transformation and 
modernization, along with annual operating accounts, are reported in 
the monthly DFAS DD-1002 accounting report.
                                 ______
                                 
                Question Submitted by Senator Tom Harkin

                                  PAY

    Question. In the numerous articles written about these pay 
problems, Department of Defense officials have repeatedly insisted that 
the problem is being fixed. There has been a tendency on the part of 
Department officials to blame amorphous ``systems'' instead of holding 
leaders accountable. We are now told that there are finance personnel 
at Landstuhl and Walter Reed Medical Centers checking wounded soldiers 
into the computer as soon as they arrive at those hospitals, but surely 
greater measures are needed to adequately remedy the tracking problem. 
And, of course, flagging soldiers in a computer as wounded doesn't 
resolve the larger issue of there not being enough finance personnel to 
support the pay system in resolving wounded service members' pay 
problems.
    So my question is--given the importance, the morality, and the 
force-multiplying qualities attendant to paying our war heroes all that 
they are entitled to in a timely manner, why do these problems persist, 
and who should be held accountable for subjecting our wounded troops to 
these unacceptable problems with receiving their pay? Who within DOD 
has been charged with correcting these ``systemic'' problems, and when 
do you expect them to have these problems resolved?
    Answer. We know that the root cause for many of the pay problems is 
the lack of an integrated personnel, pay and medical system that 
records daily duty status of service members and provides consistent 
information as soldiers proceed from combat zone through medical 
evacuation to their next duty assignment. Despite this shortfall, the 
services are now partnering with the Defense Finance and Accounting 
Service to coordinate the flow of information related to battle injured 
and non-battle injured service members who served in a combat zone. The 
primary goal for this action is to minimize adverse impact on pay and 
entitlements.
    The processes for managing this information have been tailored by 
each service based on their respective personnel administration 
procedures. Despite procedural variances, the actions common for all 
services begin by identifying injured service members upon arrival at 
the medical treatment facility. Once identified, the information is 
provided to the finance community who reviews the service members' pay 
and entitlements for accuracy. These accounts are placed in a special 
handling status and closely monitored until the service member is 
returned to duty or separated from the service. If an in debtedness is 
discovered during this process, a request for relief is initiated.
    While an integrated system that allows us to update a service 
member's status in both personnel and pay records is our ultimate 
solution, the procedures we are now following have made a difference.
                                 ______
                                 
                Question Submitted by Senator Herb Kohl

                           INCREASED FUNDING

    Question. As of today, the existing domestic tent manufacturing 
industrial base is being jeopardized through lack of consistency in 
funding and orders. Currently, the majority of all planned tent 
purchases (56 percent) are for the Modular General Purpose Tent System 
(MGPTS). There are only two U.S. companies qualified to supply the 
MGPTS to our armed forces. Current funding and inconsistent orders 
threaten to close down one of these qualified domestic suppliers which 
would leave the government with only a single-source supplier for the 
most demanded tent system of our Armed Forces. With the lack of a 
competitive industry, our troops out in the field will not be assured 
of high quality, domestically produced tents as they serve our country 
in Afghanistan, Iraq and around the world.
    Mr. Secretary, will you commit to maintain this important part of 
our industrial base, by providing substantially increased funding 
within the Department for military tents and shelters through funding 
received in the fiscal year 2006 Emergency Supplemental Appropriations 
and the fiscal year 2007 Defense appropriations?
    Answer. The Department of Defense (DOD) is committed to the 
maintenance of the domestic tent manufacturing industrial base. In 
fiscal year 2006, DLA anticipates issuing $160 million in orders to 
this industrial base, of which 23 percent is projected for Modular 
General Purpose Tent Systems. On March 14, 2006, the Defense Logistics 
Agency (DLA) met with representatives from this industrial base through 
a trade organization known as the United Status Industrial Fabrics 
Institute (USIFI) to discuss customer demands and future requirements.
    In response to the House Armed Services Committee Report (108-491), 
page 298, to accompany the ``National Defense Authorization Act for 
Fiscal Year 2005,'' requesting a report outlining actions that may be 
taken to promote a more consistent requirement for tents and to assist 
the small business industrial base in meeting surge requirements, the 
DLA provided a copy of the industrial base study it had recently 
conducted for tents to the Chairmen of the House and Senate Armed 
Services Committees. The basic finding of this report was the need, 
beginning in fiscal year 2008, for Long-Term Contracts with a Minimum 
Sustaining Rate (MSR) to maintain a warm industrial base for this 
commodity during periods of low peace-time demands.
    At this time MILSPEC tents are being purchased at a level above the 
need for a MSR for this industrial base. However, this situation will 
be closely monitored and should demands decline at an even greater rate 
than we now anticipate, we will revaluate the situation to assess the 
need to seek additional appropriated dollars for MSR contracts.

                         CONCLUSION OF HEARINGS

    Chairman Cochran. You can be assured that this committee is 
going to carefully review and analyze this request for 
supplemental funding for the war on terror. We have a record of 
supporting the administration's requests to protect the 
security interests of this country along with the safety and 
security of American citizens. I have no doubt that this 
committee will report out a bill that does just that in time 
for it to be useful and to help ensure that security is a 
reality.
    The hearing is recessed.
    [Whereupon, at 12:35 p.m., Thursday, March 9, the hearings 
were concluded, and the committee was recessed, to reconvene 
subject to the call of the Chair.]

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