[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
FIVE YEARS AFTER KATRINA:
WHERE WE ARE AND WHAT WE HAVE LEARNED FOR FUTURE DISASTERS
=======================================================================
(111-137)
HEARING
BEFORE THE
SUBCOMMITTEE ON
ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND EMERGENCY MANAGEMENT
OF THE
COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
September 22, 2010
__________
Printed for the use of the
Committee on Transportation and Infrastructure
U.S. GOVERNMENT PRINTING OFFICE
58-458 PDF WASHINGTON : 2010
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC
area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, Washington, DC
20402-0001
COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
JAMES L. OBERSTAR, Minnesota, Chairman
NICK J. RAHALL, II, West Virginia, JOHN L. MICA, Florida
Vice Chair DON YOUNG, Alaska
PETER A. DeFAZIO, Oregon THOMAS E. PETRI, Wisconsin
JERRY F. COSTELLO, Illinois HOWARD COBLE, North Carolina
ELEANOR HOLMES NORTON, District of JOHN J. DUNCAN, Jr., Tennessee
Columbia VERNON J. EHLERS, Michigan
JERROLD NADLER, New York FRANK A. LoBIONDO, New Jersey
CORRINE BROWN, Florida JERRY MORAN, Kansas
BOB FILNER, California GARY G. MILLER, California
EDDIE BERNICE JOHNSON, Texas HENRY E. BROWN, Jr., South
GENE TAYLOR, Mississippi Carolina
ELIJAH E. CUMMINGS, Maryland TIMOTHY V. JOHNSON, Illinois
LEONARD L. BOSWELL, Iowa TODD RUSSELL PLATTS, Pennsylvania
TIM HOLDEN, Pennsylvania SAM GRAVES, Missouri
BRIAN BAIRD, Washington BILL SHUSTER, Pennsylvania
RICK LARSEN, Washington JOHN BOOZMAN, Arkansas
MICHAEL E. CAPUANO, Massachusetts SHELLEY MOORE CAPITO, West
TIMOTHY H. BISHOP, New York Virginia
MICHAEL H. MICHAUD, Maine JIM GERLACH, Pennsylvania
RUSS CARNAHAN, Missouri MARIO DIAZ-BALART, Florida
GRACE F. NAPOLITANO, California CHARLES W. DENT, Pennsylvania
DANIEL LIPINSKI, Illinois CONNIE MACK, Florida
MAZIE K. HIRONO, Hawaii LYNN A WESTMORELAND, Georgia
JASON ALTMIRE, Pennsylvania JEAN SCHMIDT, Ohio
TIMOTHY J. WALZ, Minnesota CANDICE S. MILLER, Michigan
HEATH SHULER, North Carolina MARY FALLIN, Oklahoma
MICHAEL A. ARCURI, New York VERN BUCHANAN, Florida
HARRY E. MITCHELL, Arizona BRETT GUTHRIE, Kentucky
CHRISTOPHER P. CARNEY, Pennsylvania ANH ``JOSEPH'' CAO, Louisiana
JOHN J. HALL, New York AARON SCHOCK, Illinois
STEVE KAGEN, Wisconsin PETE OLSON, Texas
STEVE COHEN, Tennessee TOM GRAVES, Georiga
LAURA A. RICHARDSON, California
ALBIO SIRES, New Jersey
DONNA F. EDWARDS, Maryland
SOLOMON P. ORTIZ, Texas
PHIL HARE, Illinois
JOHN A. BOCCIERI, Ohio
MARK H. SCHAUER, Michigan
BETSY MARKEY, Colorado
MICHAEL E. McMAHON, New York
THOMAS S. P. PERRIELLO, Virginia
DINA TITUS, Nevada
HARRY TEAGUE, New Mexico
JOHN GARAMENDI, California
HANK JOHNSON, Gerogia
(ii)
Subcommittee on Economic Development, Public Buildings, and Emergency
Management
ELEANOR HOLMES NORTON, District of Columbia, Chair
BETSY MARKEY, Colorado MARIO DIAZ-BALART, Florida
MICHAEL H. MICHAUD, Maine TIMOTHY V. JOHNSON, Illinois
HEATH SHULER, North Carolina SAM GRAVES, Missouri
RUSS CARNAHAN, Missouri SHELLEY MOORE CAPITO, West
TIMOTHY J. WALZ, Minnesota Virginia
MICHAEL A. ARCURI, New York MARY FALLIN, Oklahoma
CHRISTOPHER P. CARNEY, BRETT GUTHRIE, Kentucky
Pennsylvania, Vice Chair ANH ``JOSEPH'' CAO, Louisiana
DONNA F. EDWARDS, Maryland PETE OLSON, Texas
THOMAS S. P. PERRIELLO, Virginia
HANK JOHNSON, Georgia
JAMES L. OBERSTAR, Minnesota
(Ex Officio)
(iii)
CONTENTS
Page
Summary of Subject Matter........................................ vi
TESTIMONY
Bingham, Lisa Blomgren, Professor, School of Public and
Environmental Affairs, Indiana University and Visiting
Professor of Law, William S. Boyd School Of Law, University Of
Nevada, Las Vegas.............................................. 7
Daniels, Stephen, Chairman, Civilian Board of Contract Appeals... 28
Jadacki, Matt, Assistant Inspector General for Emergency
Management Oversight, Department of Homeland Security.......... 7
McCarthy, Francis, Federalism, Federal Elections and Emergency
Management Section, Congressional Research Service............. 7
Riley, Mark, Chief of Staff, Governor's Office of Homeland
Security and Emergency Preparedness, State of Louisiana........ 28
Russell, Tony, Region VI Administrator, Federal Emergency
Management Agency.............................................. 28
Womack, Mike, Executive Director, Mississippi Emergency
Management Agency, State of Mississippi........................ 28
PREPARED STATEMENT SUBMITTED BY MEMBERS OF CONGRESS
Taylor, Hon. Gene, of Missouri................................... 53
PREPARED STATEMENTS SUBMITTED BY WITNESSES
Bingham, Lisa Blomgren........................................... 58
Daniels, Stephen................................................. 66
Jadacki, Matt.................................................... 70
McCarthy, Francis................................................ 80
Riley, Mark...................................................... 93
Russell, Tony.................................................... 106
Womack, Mike..................................................... 115
ADDITION TO THE RECORD
Amnesty International, statement for the record.................. 124
HEARING ON FIVE YEARS AFTER KATRINA: WHERE WE ARE AND WHAT WE HAVE
LEARNED FOR FUTURE DISASTERS
----------
Wednesday, September 22, 2010
House of Representatives,
Subcommittee on Economic Development, Public
Buildings and Emergency Management,
Committee on Transportation and Infrastructure,
Washington, DC.
The Subcommittee met, pursuant to notice, at 2:11 p.m. in
room 2167, Rayburn House Office Building, the Honorable Eleanor
Holmes Norton [Chairman of the Subcommittee] presiding.
Ms. Norton. Good afternoon.
We are pleased to welcome our witnesses to another of our
important series of Subcommittee hearings to make certain that
there is real progress in the recovery from Hurricanes Katrina
and Rita on the Gulf Coast.
Today we will evaluate the efforts of the Federal Emergency
Management Agency, as well as the affected State and local
governments, in their efforts to proceed more rapidly with
their work on the long five-year recovery from these storms.
This hearing is part of the vigorous oversight agenda that
this Subcommittee has pursued on a bipartisan basis since the
storms struck our Nation in 2005.
Today we will hear about the arbitration program mandated
in the American Recovery and Reinvestment Act, as well as about
other steps that the leadership at FEMA is taking to improve
the pace and the quality of recovery efforts on the Gulf Coast.
Nearly a year ago, before our arbitration mandate was
instituted to break the logjam on billions of dollars of
projects, the Subcommittee received testimony about how the
arbitration program would be structured. Today we are not
merely looking at what has been done and what currently is
being done, we also are looking forward to seeing what lessons
we can learn from these experiences for future disasters. We do
not intend to allow logjams to develop when there is Federal
money on the table again.
We will hear from those who are engaged in these efforts to
improve the recovery from Hurricanes Katrina and Rita and also
from experts in the Federal Government and academia who will
provide analysis on these efforts.
Prior to last year, FEMA resisted efforts from the
Subcommittee and other stakeholders to try to break the logjam
on public assistance projects that were seriously impeding the
recovery from the storms. Yet at that time, in testimony before
the Subcommittee, FEMA officials denied that there was even a
problem with the Public Assistance Program.
Some of the key recommendations of the Subcommittee to
improve the recovery from these storms were reflected in H.R.
3247, the Hurricanes Katrina and Rita Recovery Facilitation Act
of 2007. This is 2010. This Subcommittee reported H.R. 3247 and
the House passed it in October of 2007. As a matter of fact, we
passed this bill not once, but twice, as a similar bill was
passed in October, 2008.
Unfortunately, the Senate never passed this legislation.
Many of the recommendations in today's testimony were included
in that legislation three years ago. These include such common
sense steps as encouraging the use of third parties to review
and expedite public assistance appeals, simplified procedures
under which small projects would be permitted to proceed on
estimates for projects up to $100,000, and raising the Federal
contribution for certain projects from 75 percent to 90
percent.
We are encouraged that recent hearings and the written
statement submitted for today's hearing indicate progress. Like
an individual who is in personal recovery, the first step to
improvement is acknowledgment that there is a problem. FEMA
Administrator Craig Fugate did acknowledge that there were
problems with recovery from these storms at our Subcommittee
hearing earlier this year.
FEMA is taking steps short of arbitration to resolve
disputes, including appointing special joint expediting teams
of FEMA and State officials to resolve lingering disputes.
In some cases, common sense solutions also are being
applied in other areas. For example, moving FEMA officials so
that they are in the same city as their state counterparts.
Another costly and exasperating example is eliminating dual
consultants, where both sides would hire licensed professionals
to provide expert opinions. And this elimination of dual
consultants was a strong recommendation of this Subcommittee.
Astonishingly, both State and Federal consultants were paid
with Federal disaster funds to essentially set up an
adversarial process to determine costs. This was a prodigious
waste of money.
At a Subcommittee hearing earlier this year, Administrator
Fugate announced that FEMA would move to a system, when
appropriate, allowing both parties to rely on the advice of a
single licensed professional.
It is important to emphasize that many of the items that
are recommended to improve the Public Assistance Program in
testimony today are already authorized and within FEMA's
discretion to carry out. For example, FEMA currently has
authority to engage in alternative dispute resolution as a
result of the Administrative Dispute Resolution Act of 1996,
and has been encouraged to do so by this Subcommittee.
A number of witnesses today note that one significant
improvement in FEMA's Public Assistance Program would be to
move to a system that pays State and local governments for
repair and construction projects on the basis of the cost
estimates as is done in the insurance industry. FEMA is not
only encouraged to do so, but has been mandated to do so by the
Disaster Litigation Act of 2000, a bill that was passed by this
Committee, enacted by Congress and signed by President Clinton
nearly 10 years ago.
That Act mandated that FEMA move to a cost-estimating
system once FEMA implemented a rule to do so. So it is
unconscionable that nearly 10 years later, the required
rulemaking has not occurred.
As this Subcommittee previously noted, had FEMA implemented
this provision as it was authorized to do in 2000, many of the
delays in the recovery from Hurricanes Katrina and Rita would
have been avoided.
In order to remedy this delay, legislation recently passed
by the Committee would require FEMA to implement this provision
within 180 days of enactment. I hope that this new statutory
mandate will prove unnecessary, however, because legislation
should not be necessary and FEMA is fully empowered to make
this step on its own.
We are looking forward to hearing from today's witnesses
and we very much appreciate their being here on how
arbitrations are proceeding, how FEMA and the States are moving
forward on the recovery from the devastating storms, and the
lessons that their experiences teach us for further actions.
Let me welcome again the witnesses and once again offer the
gratitude of the Subcommittee for their willingness to come
forward.
It is my great pleasure to introduce the Ranking Member,
Mr. Diaz-Balart, who is from a State which has extensive
experiences of just the kind we are discussing today.
Mr. Diaz-Balart. Thank you, Madam Chairwoman.
Let me just first thank you for this very important
hearing, for calling this very important hearing. Five years
after Katrina, it is hard to believe. Right?
But those of us in Florida understand that you have to
learn from these disasters in order to mitigate for future
disasters. Andrew was our wake-up call in Florida, Hurricane
Andrew, and a lot of good lessons were implemented after that.
And obviously Katrina was the wake-up call for the rest of the
Country and it was a big wake-up call.
So it has now been five years since it hit Louisiana,
Mississippi, Texas, and Alabama, and also Florida. Florida was
actually hit relatively hard by Hurricane Katrina. We had a lot
of interesting issues in those days trying to remind people
that Florida had also been hit by Katrina. It made landfall in
the District that I am privileged to represent, and also just
part of the Gulf Coast.
So obviously we all know that Katrina left a tremendous
amount of devastation in its wake. But since Hurricanes Katrina
and Rita, Congress has taken a number of I think really
important steps, frankly, to strengthen FEMA and our emergency
management capabilities, including passing the Post-Katrina
Reform Act.
Now, while that legislation took I think some very
important steps to improve preparedness and response, there is
a lot more that obviously needs to be done. For example, all
too often recovery following a major disaster has been
painfully slowed by bureaucratic red tape and just inflexible
policies. And the impact of this red tape is especially greatly
magnified following a large scale disaster when that assistance
is really critical, really critical to the rebuilding of those
local communities that have been devastated.
So finding ways to cut through that red tape and to
expedite funding really ultimately I think also saves money in
the long term. And it helps those communities recover more
quickly. In hearing after hearing, and the Chairwoman has
mentioned that, we have received testimony about the frankly
very slow process which communities have to navigate. And this
process, it really taxes Federal, State and local resources.
So I need to mention Congressman Cao from this Subcommittee
who has worked tirelessly, and frankly very effectively, to cut
through the bureaucracy, the red tape, to free up funding for
the recovery of Louisiana. And he is, as always, here today.
But last year, Ranking Member Mica hosted two roundtables at
Congressman Cao's request to bring together FEMA, the State and
the local representatives, to work through that funding backlog
to try to break through those barriers and figure out if we
could work through that. And since then, FEMA put into place
decision teams to tackle the growing funding backlog.
Last year, a new arbitration process was established to
expedite recovery funding which has freed out more funds for
the rebuilding of Louisiana, and I think that is a really
positive step. And I am pleased that today we will hear more on
how well that process is moving along.
So while it will be important to determine whether or how
even an arbitration process should be used in the future,
frankly it shouldn't take Congressional action and an
arbitration panel to cut through the bureaucratic red tape. It
is something that should just happen naturally.
So responsible changes to the Stafford Act and to FEMA
policies can go a long way to really speed up the recovery of
communities after they have been hit by one of these disasters.
And we know that others will be coming, unfortunately.
For example, reviewing and streamlining FEMA policies and
procedures or implementing the cost estimate provisions that
the Chairwoman just mentioned, and as usual the Chairwoman and
I really see eye to eye and there is very little light between
us on most of these issues. Doing that could go a long way in
speeding up the recovery process and again helping to rebuild
the communities.
This Congress, I am glad to have worked with my Chairwoman,
Chairwoman Norton, along with Chairman Oberstar and Ranking
Member Mica, on H.R. 3377, the Stafford Act bill. The bill, if
passed, would improve preparedness and mitigation, including
incentives for building codes, improving the Nation's public
alert and warning system. Those are two things that I have been
working on now for a number of years, along with the
Chairwoman. And providing for the transfer of excess goods and
housing units to local communities, which we keep hearing
about. Unfortunately, this Congress has decided to not move
that bill forward, maybe because they felt that naming post
offices was more important.
I hope that today we will be able to examine the progress
made in the recovery efforts of the Gulf Coast and what lessons
can we learn, have we learned, to better prepare for the future
disasters that we know unfortunately will hit us.
So I once again want to also thank the witnesses for
joining us today. We really look forward to your testimony.
And thank you, Madam Chairwoman, for calling this very
important hearing.
Ms. Norton. Thank you very much, Mr. Diaz-Balart.
I ask unanimous consent that Representative Gene Taylor of
Mississippi, a Member of the Committee on Transportation and
Infrastructure, be permitted to participate in today's
Subcommittee hearing.
Without objection, so ordered.
Mr. Taylor, have you any opening statement?
Mr. Taylor. Madam Chairman, just only to thank you and the
Ranking Member for letting me participate. I have a fairly
lengthy statement for the record that I would like to submit.
Ms. Norton. So ordered. Thank you, Mr. Taylor and welcome.
Mr. Cao, have you an opening statement?
Mr. Cao. Yes, I do, Madam Chair.
And first of all, I just want to thank you and the Ranking
Member for your leadership in this important Subcommittee and
for working with me on some of my District's greatest
challenges in our ongoing recovery. Both of you have been
steady and compassionate partners, and together we have held
government accountable for their responsibilities in the
recovery of Orleans and Jefferson Parishes.
We have made a good team both in oversight initiatives and
on the legislation we have successfully passed during this
Congress. So on behalf of my constituents, I would like to
offer to both of you our thanks.
August 29 of this year marked five years since Hurricane
Katrina landfall along the Gulf Coast. The tragic loss of life
alone made this one of the greatest disasters this Nation has
ever seen. And more than 1.2 million people were under some
type of evacuation order; 3 million were left without
electricity for weeks; and hundreds of thousands were left
jobless.
So make no mistake, Hurricane Katrina destroyed Orleans and
Jefferson Parishes and these effects are still felt today. Many
of the critical institutions like Charity Hospital, and
basically the entire health care infrastructure in the hardest-
hit New Orleans east have never reopened. Many basic services
like hospitals, police, fire and rescue, libraries and schools
were wiped away by the floodwaters and today remain empty and
padlocked. In the immediate area around New Orleans, 80 percent
of the buildings and 40 percent of the housing stock were
damaged in some way.
But hurricane recovery continues even in the face of the
new environmental, economic and health challenges caused by the
massive BP oil spill. We have had tremendous successes in the
past two years, and this is because of the hard work of the
people I see before me today, including Tony Russell and Mark
Riley. So I thank both of you for everything, for your
compassion, as well as for your partnership in this recovery
process.
For the past two years, I have been focused on both
institutional change and the release of recovery money already
approved by the Congress to the devastated region. Since
January of 2009, through sustained oversight by this
Subcommittee, FEMA has obligated $2.55 billion in recovery
dollars to Louisiana. These are critical dollars for the State
and include education, $1.62 billion; public works, $235
million; public safety and protection, $177 million; health
care, $7.9 million; public infrastructure, $428 million; and
debris removal emergency protective measures, $83 million.
From this, I fought for a resolution to the Charity
Hospital dispute, which eventually came with the $475 million
settlement to reopen that critical health facility. This is in
addition to hundreds of millions for local universities, school
districts, and public services which came only after I brought
all the parties to the table to resolve their differences.
I also launched an investigation into allegations of
mismanagement, inordinate delays and unnecessary additional
levels of bureaucracy at the FEMA office in New Orleans, which
directly led to the closure of the office and its
reorganization. It also led to the streamlining by Mr. Russell
and his staff of hundreds of projects that had been stalled.
In addition, we have worked hard on institutional reform
within FEMA to ensure that policies are relevant and responsive
to actual disasters and catastrophes. In talking with
constituents, with State, local and Federal officials, with
FEMA Administrator Fugate, and with one of our witnesses today,
Mr. McCarthy, I drafted H.R. 3635, the Disaster Relief and
Recovery Development Act of 2009. This would streamline
operations and increase accountability and transparency at
FEMA; return focus on FEMA's role as the recovery and
coordinating agency; formally direct FEMA to consider lump sum
settlements for projects similar in nature; and ensure critical
emergency information is reaching citizens.
I am pleased to report that the majority of these
provisions were included in H.R. 3377, which passed out of
Committee.
My constituents know Stafford Act as something that was
evil and prohibited us from progress and recovery. But because
of our working together on this in this Subcommittee, we will
make it work for those who have been affected by the disaster.
We still have a long way to go. I look forward to working
with my colleagues to continue our important reforms. I look
forward to the testimony from our witnesses and discussing the
critical areas remaining for reform.
So again, I would like to thank the Chairwoman and the
Ranking Member for their hard work on this Subcommittee and I
yield back.
Ms. Norton. Thank you very much, Mr. Cao.
We will proceed to panel one. We will begin with Matt
Jadacki, Assistant Inspector General for Emergency Management
Oversight at the Department of Homeland Security.
Mr. Jadacki?
TESTIMONY OF MATT JADACKI, ASSISTANT INSPECTOR GENERAL FOR
EMERGENCY MANAGEMENT OVERSIGHT, DEPARTMENT OF HOMELAND
SECURITY; FRANCIS MCCARTHY, FEDERALISM, FEDERAL ELECTIONS AND
EMERGENCY MANAGEMENT SECTION, CONGRESSIONAL RESEARCH SERVICE;
LISA BLOMGREN BINGHAM, PROFESSOR, SCHOOL OF PUBLIC AND
ENVIRONMENTAL AFFAIRS, INDIANA UNIVERSITY AND VISITING
PROFESSOR OF LAW, WILLIAM S. BOYD SCHOOL OF LAW, UNIVERSITY OF
NEVADA, LAS VEGAS
Mr. Jadacki. Good afternoon, Madam Chairwoman and Members
of the Subcommittee.
Thank you for the opportunity to discuss where we are and
what we have learned in the five years since Hurricane Katrina.
In brief, we have learned a lot since Katrina, and FEMA is
better prepared to handle large disasters.
There is, however, still room for improvement to ensure
that preparedness, response, recovery and mitigation efforts
are carried out effectively and efficiently, and in a manner
that minimizes waste, fraud and abuse.
My office has conducted a significant amount of work in the
past five years assessing FEMA's programs and policies, as well
as conducting audits of disaster grantees and sub-grantees. Our
program let us cover a wide range of areas, including
acquisition management, logistics, individual assistance,
public assistance, and mitigation.
Today, I will discuss our recent report on public
assistance policies and procedures, as well as the arbitration
process that has been established for some public assistance
projects.
In response to concerns raised by this Committee, my office
conducted an in-depth assessment of design and implementation
of FEMA's Public Assistance Program policies and procedures.
Our review focused on the efficacy of FEMA's policies and
procedures with respect to the individuals and organizations
that have to navigate them, the grantees and the sub-grantees.
Our assessment revealed multiple challenges that
significantly hinder FEMA from consistently administering the
PA Program in an effective and efficient manner. These
challenges include untimely funding determinations,
deficiencies in program management, and poorly designed
performance measures. Although we determined many of these
obstacles derive from personnel-based issues, there are other
noteworthy causes that contribute to the obstacles that FEMA
must overcome.
Consequently, we presented FEMA with 16 recommendations to
improve not only FEMA's process for reviewing and approving the
public assistance projects, but the overall administration and
delivery of the program.
FEMA has taken some actions in response to our
recommendations. As I said, we found challenges in the areas of
program management and performance measures. FEMA needs to
improve the timeliness of PA to avoid project delays and
improve program efficiency. Such improvements should center on
the appeal determination process, the environmental and
historic preservation process, and the reconciliation of
insurance settlements.
In its response to our report, FEMA acknowledged the
untimeliness issue, but insisted the problem is being addressed
through the application of additional resources and
improvements in the process of appeals. We remain concerned
that FEMA does not plan to take action to establish time frames
in the appeal process beyond what is currently in regulation.
For example, current regulations do not include a time
frame for applicants who have submitted additional information
to support their appeal or a time frame for independent
technical experts to provide information to FEMA on the appeal.
Another area that could benefit from improvement is FEMA's
management of the PA Program. Keys to successful program
management include the use of the cost estimating format, as
required by the Disaster Mitigation Act of 2000; more accurate
cost estimation and scopes of work; procedures to minimize
repetitive documentation requests; and identifying eligible PA
hazard mitigation work early on in the process.
Contributing to many of the challenges we identified in our
report are turnover, inexperience and limited training within
FEMA's disaster workforce. FEMA has identified several areas of
planned improvement in its personnel system and is taking a
number of actions in this area, but full implementation is
lacking.
We identified various alternatives that could be employed
to streamline the PA process. All those alternatives represent
opportunities to improve the program. Each alternative also
presents drawbacks. Those alternatives that we explored include
negotiated settlements, increasing the large projects
threshold, replacing some grants with mission assignments,
transferring Federal disaster programs from other agencies to
FEMA or vice versa, and providing interval payments based on
project estimates.
Despite the challenges here, we have learned that many of
FEMA's customers consider the current PA Program design
inherently sound. They believe the flaws are primarily in
execution. Consequently, we are in agreement that most of the
challenges could be significantly diminished by focusing on the
fundamentals upon which the PA Program rests.
There are times, however, when FEMA and its grantees and
sub-grantees reach an impasse in the application and appeals
process. Hurricane Katrina occurred five years ago, yet there
are still critical public assistance projects that have not
been funded. In an effort to break the impasse that sometimes
leaves PA applications in limbo for years, Congress enacted
legislation that established an arbitration process for PA
projects related to Hurricanes Katrina and Rita. As of
September 9, 2010, there were 25 arbitration requests, 20 of
which have been undecided. The most well known of these
arbitration cases is Charity Hospital, in which the arbitration
panel awarded the applicant $474 million for replacing the
hospital.
We suggested in our report on public assistance policies
and procedures that FEMA should consider establishing a
mediation and arbitration process for appeals that reach an
impasse. We are currently monitoring the arbitration cases and
plan to conduct work in this area to determine whether the
current arbitration framework provides a means for speeding
assistance to communities, while protecting the interests of
American taxpayers.
Madam Chair, this concludes my prepared remarks. I welcome
any questions that you or the Members may have.
Thank you.
Ms. Norton. Thank you very much, Mr. Jadacki.
Next, Francis McCarthy, Federal Elections and Emergency
Management Section of the Congressional Research Service.
Mr. McCarthy?
Mr. McCarthy. Thank you, Madam Chair.
Good afternoon. It is an honor to appear before you today
to talk a bit about public assistance, or the PA Program, and
ways that we might be able to improve it.
The appeals process for PA generates a lot of interest
based upon the huge number of dollars involved, but also
because the projects are important to a community's recovery
from a disaster. Two of the criticisms that stand out on PA
appeals are usually the time-consuming nature of the appeal and
how long it can drag out, but also a feeling that the appeals
process is internal to FEMA without enough outside review.
Many have noted that due to its experience in disaster
situations, it is important for FEMA both to provide leadership
and to offer flexibility in the administration of disaster
programs. In essence, FEMA works on disasters every day, while
States and localities become involved due to an extraordinary
event that may never recur in their area. So it is difficult
for States and local governments to match FEMA's mastery of the
details of the appeals process.
That is also why it is important that FEMA explain its
process fully to applicants in order to provide a level playing
field for the exploration of eligible damage and the costs to
address that damage.
There are a couple of options that could be utilized to
lessen the need for appeals. As has been mentioned by everyone,
the cost-estimating process was approved in DMA2K in 2000. And
what that provides for is the ability for FEMA to pay for large
projects based upon an agreed upon estimate. Finally
implementing that authority would go a long way towards
shortening any appeals.
A second option is to use the alternate projects option to
turn multiple projects into a single project that captures the
recovery vision of a community. I think the recent experience
with the New Orleans Recovery School District might suggest a
promising approach in this area.
There are two existing options to lessen appeals, and maybe
improve the process itself. A project decision team, similar to
one used on the Gulf Coast, is a concept that is of interest
not due to only its recent success, but also in the fact that
conceptually it brings in experts from within the agency that
have not previously been associated with the case in dispute
and they can provide an objective review.
A second existing option is for increased use of the
alternative dispute resolution process. FEMA has an office that
can do this, and it could be used more extensively to really
improve the relationship between FEMA and applicants.
Regarding the arbitration system, it is not new to Federal
disputes, but it is very new to the recovery process. And while
the arbitration system may arguably lead to a more equitable
result, it may also stretch out the time of the recovery
process and thus the time of restoration.
A vital consideration is whether the arbitration process
should move toward a common agreement, or whether it
approximates litigation, rather than mediation. If so, an
adversarial arbitration process could undercut the existing
Federal-State relationship and reduce the overall level of
cooperation for all disaster response and recovery programs.
In approaching the establishment of permanent arbitration
authority, Congress ought to consider a number of criteria; if
the authority should be triggered by the projected cost of a
project, or by the definition of the project itself. One of the
things I thought of in looking at arbitration is that in some
ways we could suggest that maybe the threshold for dollars
should be higher so that the there will be fewer requests.
On the other hand, maybe we should think of arbitration as
something to have in the quiver that is going to encourage more
settlements, but also that could be used for any problem, no
matter how small, whether it involves not just large public
assistance projects, but also the kind of disputes that arise
within individual assistance where people are disputing the
types of housing that is being used or the way that services
are being provided.
I think if we are going to use arbitration, it might be
something that gives the President the discretion to use it
regardless of the size of the project, but as a way to overcome
an impasse.
Finally, I want to mention that a block granting approach
has a number of different angles to it. I think a number of
approaches have come forward. We have heard lump sums referred
to, and I would particularly speak to the special procedures
for widespread damage that are in H.R. 3377, that really
suggest a means of getting to a cost-estimating proposal that
could end with a block grant for disaster areas.
There are many approaches that can make a positive
contribution to the discussion. Congress may also wish to
conduct a study of the current arbitration pilot process to
determine the efficacy of the panel findings. Similarly,
Congress may also wish to examine the New Orleans Recovery
School Project that I mentioned, and the arbitration process
that has just completed to see which ones merit replication.
In addition, other suggestions such as the special
procedures in H.R. 3377 could at least initially be used as a
pilot program to see how it works. The pilot programs in both
I.A. and PA I think really did succeed in showing some
effective processes that can be used for the benefit of
disaster victims and their communities.
I hope my testimony was focused on those themes and
proposals that can improve PA and I would be happy to answer
any questions you might have.
Ms. Norton. Thank you, Mr. McCarthy.
Finally, Lisa Bingham, Professor Bingham, School of Public
and Environmental Affairs, University of Indiana, also the
University of Nevada, Las Vegas.
Professor Bingham?
Ms. Bingham. Thank you, Madam Chairwoman and Members of the
Committee. It is a tremendous honor and privilege to be here
today to discuss the use of dispute resolution in public
assistance programs under the Stafford Act.
My areas of expertise include dispute resolution in the
Federal Government. I have done research with the United States
Postal Service on mediation of discrimination cases; with the
Department of Justice on its use of dispute resolution in
Federal litigation involving the Assistant U.S. Attorneys; with
the Occupational Safety and Health Review Commission on its use
of settlement procedures.
In addition, I have served as a consultant with the
Departments of the Air Force, Agriculture and the National
Institutes of Health. I have, however, never served as a
consultant in any capacity with FEMA and this is my first
experience doing research on their project.
The arbitration program to date has entailed approximately
26 cases. A number of those involve cases in which the parties
have asked for the case to be withdrawn by agreement or
dismissed by agreement. It appears that there are settlements.
In addition, there are a number of awards. But the arbitration,
the total number of cases is too small to do any empirical
research on the program.
What we can say about the program is that there do not
appear to be any administrative problems. I believe it was
anticipated when this program was created that there would be
many more cases than have in fact been filed. And the Civilian
Board of Contract Appeals, which has substantial expertise in
the substantive area of these disputes, has been able to absorb
this caseload and establish an orderly system that does not
present any concerns about due process or fairness, unlike
arbitration programs, for example, for consumers and employees
that are mandated by corporations or employers.
This is an entirely voluntary program and therefore it
doesn't present issues about unequal bargaining power or
fairness of process.
However, the program has resulted in substantial awards
against FEMA and there are a number of alternatives that would
provide perhaps faster, less expensive and better ways of
handling conflicts involving the Public Assistance Program.
FEMA has an Office of Dispute Resolution. That Office of
Dispute Resolution has authority under the Administrative
Dispute Resolution Act to help the agency design systems for
handling conflict. To date, it has designed a system for
employment disputes.
FEMA does have some experience using mediation and
voluntary processes for hurricane-related damage. It did so in
1998 in a dispute involving Hurricane George and the island of
Puerto Rico, and mediated very successfully a dispute there.
Mediation is very different from arbitration. Arbitration
is an adjudicatory process that is adversarial, involves the
imposition of a final and binding award as it is designed in
this program. Mediation is assisted negotiation and a voluntary
process in which the parties use a third party to help them
reach a voluntary settlement.
FEMA could, and I would recommend, that FEMA undertake a
comprehensive dispute system design process. It could develop a
system that involves negotiation, mediation, potentially non-
binding fact finding, that could get at disputes much earlier
in the life of the conflict. It could involve stakeholders,
including grantees, sub-grantees, nonprofits, local
governments, as well as the public in its design process, and
its own staff. It should develop interest-based negotiation
training for its staff, and a comprehensive design would
include an evaluation system that would entail feedback from
stakeholders, including grantees.
This system should also address the question of the scope
of negotiation under the Stafford Act, which I believe has been
the source of some conflict as reflected in the Inspector
General's report.
This concludes my prepared remarks. I am happy to answer
any questions of the Committee.
Ms. Norton. Thank you very much, Ms. Bingham.
I want to thank all three of you for really quite
informative and interesting testimony.
Let me say a word as a predicate for my questions about the
arbitration process. This Subcommittee was faced with more than
$3 billion lying on the table in the middle of the Great
Recession. It hadn't moved. A Member from Louisiana in the
Senate was so disturbed, I can't blame her, at the misery of
seeing nothing happen that she actually put into legislation in
an appropriations bill that the President would appoint
arbitrators for the Gulf Coast. It just got that bad.
So the first thing you should bear in mind is that the
Subcommittee is very aware that arbitration is rarely used
except in circumstances where agreement has broken down.
We then worked with the Senate to say that is going to be
even more cumbersome to go through the Administration. And the
result was the arbitration process that you have. And you do
note that we looked to the existing procedures and found that
there were people of some independence that could all along
have been used and are used in this process.
Now, we would be very interested and do note that we
believe the fact that the arbitration process has had an effect
on both the agency and on the States. That is what it is
supposed to do.
This is my concern, and I think particularly, I don't know
if it is you, Professor Bingham, or you, Mr. McCarthy, talked
about what we are very aware of and very exasperated was not
used, and that is an ADR system within FEMA. One of the reasons
we figured out that the process didn't move, whether you were
talking about the appeals process, it still doesn't move, or
the negotiation process, is quite simply FEMA is a party.
FEMA's job is to preserve the taxpayer funds of the people of
the United States of America. The job of Mississippi, the job
of Louisiana is to extract as much as these States and these
localities can.
As Chair of the Equal Employment Opportunities Commission,
I set up a system that got rid of the backlog, an early
resolution system. So I am not only familiar, but a great
proponent of early resolution systems. But the EOC was an
independent agency. So when you suggest that FEMA as a party,
for example, within FEMA, if I am Mr. Cao's District or I am
Mr. Taylor's District, and FEMA invites me into its processes,
and says just come right here. And here you have an agency, a
part of FEMA, which will decide this dispute.
I want to know whether you believe that the localities and
the States involved are to have full confidence that out of
such a process located within FEMA, there could be a just
resolution, and particularly whether you believe it would go
any faster than the present appeals process or the present
arbitration process.
I give that to any of you who care to answer. It is a
question of independence. Who gets to decide when one of the
parties is holding the money and the other side wants the
money? And there is by definition an adversarial relationship
unless FEMA isn't doing its job, or Mississippi and Alabama
aren't doing their jobs.
Ms. Bingham. I understand the question and I would be happy
to address it, Madam Chairwoman.
A comprehensive system would be one that started at the
point that the parties are developing the project worksheet.
The parties are already negotiating and working collaboratively
in many instances in developing the estimates of costs. But we
don't have a system that provides interest-based negotiation
training skills.
Ms. Norton. Which would mean they would develop the costs
collaboratively, the cost sheets collaboratively as well?
Ms. Bingham. I confess I am not an expert on FEMA's
internal procedures.
Ms. Norton. No, but go right ahead. Don't assume that those
procedures can't be changed. OK?
Ms. Bingham. My understanding of the nature of the disputes
are that they involve facts, the facts of estimates of costs,
the estimates of construction, how those relate to total costs.
That is analogous to any kind of an insurance program where we
are trying to estimate what the policy should pay. Negotiation
in that circumstance is common. It is a daily fact, but it is
improved greatly with skills training. And that skills training
would encompass how to negotiate constructively using
principles and interests, as opposed to adversarial bargaining
like haggling over the price of a car.
It would also encompass discussions of the scope of
bargaining. I believe that one of the areas of disagreement is
the question of FEMA's obligations under the law, as
distinguished from the facts of a particular project. And so a
comprehensive system would start with negotiation. You could
then move to mediation. Mediation could either be provided by
inside neutrals, but there are also outside neutrals. There is
a shared neutrals program in the Federal Government that would
provide employees from other Federal agencies who are
substantially neutral. And that could be a next step.
There are other alternative processes that are designed to
encompass, including fact finding which can be either non-
binding or binding arbitration just on the facts, not the law.
And then there is also a process called partnering that the
Army Corps of Engineers uses where when there is a big
construction project, they set up a team. That sounds to me
that it may have some similarity to the expedited teams that
FEMA is now using, where all the players involved in that
project have a retreat. They have shared negotiation training.
They set up an agreed procedure for handling conflict. And then
there are backup processes. Binding arbitration of rights is a
last resort under these kinds of designs.
Ms. Norton. That is very helpful, your suggestions, and
that is from within the Federal Government. Your last
suggestion comes from within the Federal Government itself.
Mr. McCarthy, you speak about cost estimating procedures, I
take it, from the insurance industry, in your testimony?
Mr. McCarthy. Actually, insurance and other industry
experts. That was FEMA's charge, was to streamline.
Ms. Norton. Now, those are profit-making enterprises. How
come they rely on, how are they able to rely on estimates and
still stay in business and the Federal Government hasn't been
able to figure it out?
Mr. McCarthy. Madam Chair, I have to confess I worked at
FEMA and I worked on DMA2K and I didn't expect it was going to
be questioned 10 years later on why it hasn't been implemented.
Essentially, FEMA put together the panel it was supposed to
immediately after the bill passed. It did bring in industry
experts, insurance experts and other experts to set up a system
that would work, to develop estimates that would be of
assistance to local governments both on the high end and the
low end.
Ms. Norton. But it is the part of my question, I would be
particularly interested in. Somebody bumped into my car coming
to the Congress. I called the insurance agency. They said go to
the insurer and find out what is the estimate, and they paid
it. And the people who did the car reported to them, and they
didn't come and negotiate with me. They told how much it would
be.
I am trying to understand why they are able, and I
recognize that they have people there who look at it, who come
over. They are not just a pass-through.
I am asking how very profitable industries like the
insurance industry can say give me your cost estimate, take it,
and my car was fixed in a few days. Now, that is small compared
to what my colleagues have gone through on the Gulf Coast, but
I do not understand the process and would like to understand
it. And maybe I would understand why it took some time for FEMA
to implement it.
Mr. McCarthy. I can't answer on why that happens. I think
in some ways the culture that grew up in the PA Program was we
are going to be certain of every cost before a dollar is spent;
before the audit comes and gets us; that we are going to be
certain so that we are not going to be caught on anything, so
we will wait until the end of the process to pay.
Ms. Norton. I see. You may be right in the government.
Mr. Jadacki, and then I am going to go on to my colleagues
before I come back. I am interested in the shortest way to get
an answer. That is why the arbitration process ought to be a
last resort. It hasn't always been a last resort. After all,
the State, I understand we have been using both. And the State
can opt for arbitration, I guess it is. But once they do, they
are into arbitration, which is the way it ought to be.
But I understand from your report that the appeals process
still can go on for as much as eight or nine months, and that
the arbitrator gets done in 60 days. Now, I am trying to find
out what the reasons for the much longer process, because I
don't even think they accept, do they, the findings such as
they are of the appeals process? They do their own independent
findings.
How in the world could you do that in 60 days with judges?
That is who they are. And the appeals process takes many times
that.
Mr. Jadacki. In some cases, it takes years to get the
appeals done. There are several rounds of appeals and there are
timelines. I think there are 90 days, and I think in reviewing
your bill, the proposed legislation, you reduce that to 60
days, which I think is a good idea.
The problem is with the arbitration process, my
understanding is everything has to be in, the witnesses have to
be, everything has to be prepared so they make a decision. In
the appeals process, what we found was that documentation
submitted, may be deficient. They go back and ask the applicant
for additional documentation. The clock stops. It starts again
when the additional information comes in. And the process just
takes an inordinate amount of time to get done because there is
a lot of negotiating back and forth.
Ms. Norton. Mr. Jadacki, that doesn't sound like an appeals
process. That sounds like an ordinary negotiation.
Mr. Jadacki. That is a negotiation. That is exactly what it
is. In a lot of cases, some of the ones I have been reviewing,
and you used the example before about the accident. I think a
lot of the cases it's the extent of damage. How much damage did
it cause? I have seen some cases where FEMA comes in and says,
well, we are going for repairs because it is less than 50
percent, versus replacement. The same thing with the insurance
company with your car. If your car was totaled, you get the
entire replacement cost for that and a lot of the disputes
result from exactly how much damage was caused.
Now, the use of an independent, I don't know whether it
resides in FEMA. I think that would be very difficult to have
an arbitrator or mediation in FEMA, but if you can agree on an
independent assessor like you do in insurance companies, that
both parties agree with, saying yes, it is 150 percent damage;
we are going to pay replacement costs. Or no, it is somewhat
less than that; we are just going to pay for the repairs.
I think that is the basis for a lot of these problems.
Ms. Norton. Do you think this notion that I spoke about in
my opening statement about dual consultants. You tell me,
Mississippi, what the damage is. FEMA will tell you what the
damage is. That sounds like a real setup there.
Mr. Jadacki. Yes. It is kind of similar to what the
arbitration, you know, there is maybe one arbitrator if you use
an independent engineer. But it is the same basis the
arbitration is, where you present your evidence and they
present their evidence, and somebody decides.
So if it is a damaged building, you have one entity instead
of paying for both on the State side and the Federal side, and
they decide, yes, this is substantially damaged and you both
live by that.
Ms. Norton. So just getting rid of dual consultants and
having one agreement well ahead of time, that might not even
get you to the appeals process. Maybe you could decide it so
you wouldn't even have to appeal.
Mr. Jadacki. I think if they can agree on somebody that is
truly independent and doesn't have any of either side's
interest at stake, just like an insurance assessor, an
independent insurance assessor, as long as you are not
affiliated with the insurance company, same thing. They will go
out and do an honest assessment and the parties live by that.
There could be some negotiations back and forth still, but
right now the process is we want this, we want this, and it
just seems a long time to get these things settled.
Ms. Norton. Thank you very much, Mr. Jadacki.
Mr. Cao, please.
Mr. Cao. Thank you, Madam Chair.
My first question to the panel, or anyone who might have
expert knowledge on community disaster loans. I would like for
you to compare for me the rules promulgated by FEMA for
disasters before Katrina, and the rules promulgated by FEMA in
relation communities as to loans for Katrina.
Mr. McCarthy. Mr. Cao, the biggest difference would be how
the first sets of loan were made for Katrina. I think rules
were written differently at that point because there was an
idea that there would be no forgiveness of any loans and that
they all had to be paid back. And that when the second set of
loans were done, that was after Congress had permitted the idea
of forgiveness for loans.
So I think it was somewhat different between the two sets
of loans for CDLs, but I don't know the exact details of how
they changed it.
Mr. Cao. But for disasters prior to FEMA, it was routinely
done that CDLs were forgiven. Is that correct?
Mr. McCarthy. Yes, absolutely. I think you could count on
one hand the number of loans that were actually paid back, and
those were very small loans to smaller communities. I think the
amount of loans that were forgiven was well over 90 percent. In
fact, dollars forgiven was well over 90 or 95 percent.
Mr. Jadacki. Right. I actually worked in the FEMA CFO's
office and they had a default rate of 96 percent prior to
Katrina, which means 96 percent of the money that was lent
wasn't expected to come back. And it was based on three years'
average revenues, post-disaster revenues. I don't know all the
formulas on that, but there were a couple that paid it back,
but for the most part, most of them were canceled.
Mr. McCarthy. Those were loans from Hurricane Andrew.
Mr. Jadacki. There were floods.
Mr. McCarthy. Yes.
Mr. Cao. Now, based on the data that you have collected,
can you provide me with a percentage of CDL loans forgiven by
FEMA in connection with Katrina?
Mr. McCarthy. I can get that information.
Mr. Cao. I can ask Mr. Tony Russell when he comes up here
later. That would be a lot easier.
Mr. McCarthy. OK. Yes.
Mr. Cao. I know that one of the biggest issues in regards
to the community disaster loans forgiveness for Katrina-related
projects, or municipalities, is the issue of income, three
years' income. That is one of the requirements for St. Tammany,
for instance, for Jefferson Parish, and some other
municipalities like the Jefferson Parish Sheriff's Department.
Right after Katrina, they received a spike in income because of
the tremendous number of people moving over there to
temporarily reside while waiting for their homes to be rebuilt
in New Orleans.
Based on your understanding of rules promulgated by FEMA
for previous disasters, were the income criteria, were they the
same? Or are they different from what was drafted for Katrina?
Do you know?
Mr. McCarthy. I don't know if they are different. I just
don't know if there was a similar circumstance with the
jurisdiction absorbing that kind of population. I can't think
of one in Florida that was similar, but I am sorry, but I could
look into that and see if there was at least something similar.
Mr. Cao. OK. In regards to the arbitration process, I guess
I am somewhat in a similar circumstance as you, Mr. McCarthy,
in the sense that I am somewhat skeptical of the arbitration
process because I do feel that if the process is available to
them, they might just kick everything to arbitration, and thus
slow down the recovery after a disaster.
What we have seen in Louisiana after Katrina was the need
to move at a very quick pace. And that was not available there.
I guess when we are looking at ways to resolve disputes, what
would be some of your recommendations to possibly allow for an
expedient resolution to the many disputes that we have?
Mr. McCarthy. I guess one of the things I would point to
really is some of the things that you have experienced. The
idea of a project decision team of people admittedly within
FEMA, but still without a stake in the ongoing argument,
bringing in those people really does open a new page.
And it also starts dialogue within FEMA where people have
to start looking at regulations. And if you are bringing in
people from different regions who worked on different disasters
at different periods, I think it really does broaden the kind
of conversation and maybe make things a bit more flexible and
move you toward settlement.
On the other hand, having an arbitration process probably
also encourages many settlements that never go to arbitration.
It may be the threat of arbitration that helps to move some of
it that way. But I do think that the kind of action team that
was put together with Mr. Russell previously is good example of
what can be used for future disasters as well.
Mr. Cao. That is all the questions I have of this panel.
Thank you very much. I yield back.
Ms. Norton. Thank you very much, Mr. Cao.
Mr. Taylor of Mississippi?
Mr. Taylor. Again, I want to thank the panel for being
here.
Early on when it came to debris removal, something that
stuck out in my mind was the Corps of Engineers came to my home
county which lost the county courthouse and city hall. And
basically gave them the option of saying we estimate the debris
removal should cost this much per cubic yard; we will let you
put it out for bid; you do all the paperwork, and we will
reimburse you up to this. Or given the fact that you guys don't
even have a pocket calculator to your names, which was
accurate, we will do it, and let the Board of Supervisors make
that decision.
What I have really noticed in some of these adjustments
that have been dragging on for five years is the total lack of
initiative on the part of HUD for housing or the Department of
Education when it came to schools, to find an expert who could
look at a school or a building and say this is our estimate of
what it would cost to not only make it look like it did the day
before the event, but bring it up to compliance with the laws
that have been passed since that building was built, whether it
is for asbestos; whether it is for the Americans With
Disabilities Act, and say: This is what we have estimated it
will cost to fix; this is what we will make available to you,
or we will do it, and absolve you of all responsibility. We
will do it and we think we can bring it in at that price.
Given the enormous amount of money that has been spent and
is still being requested, I am still to this day appalled at
what I sense is a total lack of expertise within our Nation as
far as estimating what something should cost. And we ought to
be the experts, not communities of 4,000 or 5,000 people. They
can't afford an expert. We certainly have to afford an expert.
What, if anything, has happened in the past five years to
address those things?
Mr. McCarthy. I can't point to a specific instance where
that has happened. I guess that is why I have kind of belabored
the point about FEMA using the cost-estimating formula that
Congress gave it. And that goes back to when Director Witt was
at FEMA when that was granted. Since that hasn't been
implemented, everything FEMA worked on as far as developing
expertise to be able to do cost estimating right at the start
of a disaster to try to reach an agreement, use industry
experts to develop all that, has just lain dormant for those 10
years.
I think FEMA can have people that are expert at estimating.
They do a lot of disasters every year. They can have some staff
that is good at estimating. And I think they have also tried to
at least encourage a bit more that the local governments
themselves can begin to establish those kind of contracts for
debris removal and give them a greater cost share if they have
those kind of things in place.
But the overall expertise you are discussing I think, at
least as far as FEMA PA projects, wouldn't really develop
because I think we are staying with the system we have and not
with the authority Congress had given to maybe increase that
expertise.
Mr. Taylor. Going back to Congressman Cao's observation,
which we saw the same thing in many of the Mississippi Gulf
Coast communities that rely on sales tax for their revenue.
When all the stores are gone, obviously the sales tax revenue
is gone. But then when the big box stores come back, you will
have a spike since everyone is replacing every refrigerator,
every air conditioner, every microwave oven. So for a short
period of time, there will be a huge spike in sales tax, but
then it gets back to a desperate situation.
To what extent are the Federal agencies empowered to just
on their own turn to their bosses in Washington and say, look,
I have looked at this. These guys cannot repay the loans. I am
asking you, FEMA, to forgive them.
Why do even, in many instances when it is just blatantly
obvious in some of these communities, why do you even have to
wait for a town of 1,500 or 2,000 or 3,000 to hire an attorney
and a staff to put together that, when in so many instances it
is just obvious?
Does anyone wish to address that?
Mr. Jadacki. I have worked on CDLs for a number of years,
going back to Hurricane Hugo and Hurricane Marilyn, and I tend
to agree with you. There is a big spike. I mean, the whole
purpose of the CDL program is there is going to be a drop in
the tax base because homes are destroyed; people are moving
out. But eventually in some cases after disasters, you have a
real big spike on that.
I think the idea of the CDLs is a sound idea, that
communities do need the working capital. They do need to pay
the police force and the firemen and those types of things
because of that base. But they are eventually going to recover,
they are going to get back to where they were before, so they
are going to be living at this same level, but yet trying to
pay a big Federal loan back, too, at the same time.
So I think that needs to be taken into account also, even
though they did return to their tax base, now they have the
additional liability of paying back this Federal loan. And I
think, again I mentioned before, historically there is about a
95 percent, 96 percent default rate because communities have
just demonstrated through their financials that they just can't
recover. And I think that has to be taken into consideration
when the loans are up for cancellation.
Mr. McCarthy. And I would mention, too, check on this, but
I think another thing historically is that when CDLs first
began, very briefly, it was a grant program and not a loan
program. And I think when I was at FEMA years back, and I think
when we would look at straight up costs of looking at the
finances of many communities and sending auditors down and
trying to guesstimate things, and the cost involved in hiring
accounting firms to go to various counties and look, certainly
what we came back to is maybe another approach would be, maybe
loans not of that size, but maybe a smaller size that just
become grants to smaller communities, rather than trying to put
both the Feds and the communities through that kind of process.
In some cases, you can end up spending as much on the
administration of the loan as on the interest on the loan
itself.
So one of the suggestions that was made, at least back in
2000, was to consider making it a partial grant program. But
given all the other costs on the Federal Government, it is not
the kind of thing that gets a lot of traction.
Mr. Taylor. Mr. McCarthy, and again I very much appreciate
the Chairwoman. I am not even a Member of this Subcommittee, so
she is very kind of let me participate. But what, if anything,
if it happened again tomorrow, only this time it was coastal
North Carolina or coastal Georgia or Charleston for the second
time in 20 something years, if it happened again tomorrow, what
assurances can you give me that it would be done better than it
has been done since 2005? And if you can't give me any
assurances that it would be done better, what specific
recommendations would you or anyone on that panel make for
changes in the law so that we don't keep making the same
mistakes?
Mr. McCarthy. Mr. Taylor, I want to say that I think there
have been improvements. And when people ask me about the Act,
it wasn't retroactive to what Mississippi and Alabama and
Louisiana went through, but I think the pilot programs from
that project were useful. FEMA experimented in Iowa and Texas
and found out they could do something about helping to restore
the rental inventory, rather than just thinking about trailers,
of thinking of fixing up apartment buildings in areas so that
there is more available housing.
And another thing I always point to is I think when we had
all the people dispersed around the Country in 38 States after
Katrina, trying to meet up with family members, FEMA at that
point didn't have a case management authority where you could
actually have them talk to people and make them aware of what
services they were entitled to and how they could be linked
back with their family.
I think there have been small improvements. And I think
that Mr. Fugate at FEMA really has reinvigorated the agency to
be looking forward. And I think you put your finger on it,
initiative. You can't just have a law that sits there or
regulations that sit there. You have to have administrative
initiative to make it work because you can't legislate the
spirit of an organization. You can only give them the tools.
I think Congress has given the Administration a number of
tools to make disaster recovery work better, but it is partly
how it is administered that really counts.
Ms. Norton. Yes, Mr. Taylor, certainly.
Mr. Johnson of Georgia?
Mr. Johnson. Thank you, Madam Chair, for holding this
hearing, a very important hearing, five years after Hurricanes
Katrina and Rita, which struck the Gulf Coast. All of us will
never forget that area just literally being drowned, an
enormous stretch of land and an enormous number of people who
were adversely impacted. And to go back there now and look at
the lay of the land, it doesn't really look like a lot has been
done.
And as I understand it, I am pretty much interested in this
arbitration process that has been put into place to resolve
disputes. And I wanted to know who are the arbitrators? And do
the decisions come from arbitrators or arbitration panels?
Does anyone really know? I know we don't have anybody from
GSA.
Ms. Bingham. The arbitrators are experienced administrative
law judges with the Civilian Board of Contract Appeals. They
sit in panels of three. And each arbitrator has a vote and they
decide cases by majority vote, analogous to an appellate court,
for example, but they conduct the hearings using de novo
review. They take in evidence and argument from witnesses.
Mr. Johnson. Are there any rules of procedure, rules of
evidence?
Ms. Bingham. Arbitration is by design an informal process.
Arbitrators generally are not bound by the rules of evidence.
On the other hand, the rule of thumb is they let almost
everything in because that is the safer practice. So to my
knowledge, there haven't been disputes about arbitrators
excluding evidence in this program, and the rules of evidence,
when you have an expert decision maker, and these are expert
decision makers with substantial background in contracting and
construction disputes, for example, the rules of evidence
aren't as necessary. They are designed primarily to keep
evidence away from lay people on juries.
Mr. Johnson. Yes, how are these experts selected for a
particular case? Is there a wheel system or somebody pulls
their name out of a hat? Or do they volunteer, I want to hear
this one, I want to hear that one?
Ms. Bingham. I believe Chief Judge Daniels can respond to
that question. He is on a subsequent panel. I don't have
detailed information about that.
Mr. Johnson. Yes, I would be concerned about even with
trained witnesses or trained arbitrators without a set rule of
law, if you will, you know, on what basis can a decision be
made? And then how can one rely upon that decision as precedent
for any future decisions to be made? And without rules of
evidence, how can you determine whether or not something is
material or relevant or whether or not any evidence may be
tainted in some way? I wonder about those things.
Is there an ability to appeal from the arbitration panel's
decision?
Ms. Bingham. The process of arbitration is different.
Mr. Johnson. It is a binding arbitration?
Ms. Bingham. It is a binding arbitration. And it is
different from an administrative adjudication in that it does
not set precedent of any kind. It is substantially final under
the Federal Arbitration Act. Arbitration awards can only be
appealed on certain limited grounds, and these include fraud,
evident partiality, collusion, corruption of the arbitrators,
the failure to execute an award that is within the scope of the
submission, the refusal of arbitrators to admit evidence or to
postpone a hearing on good cause shown. These are very limited
grounds for appeal.
Mr. Johnson. Yes. So now on the front end of the process,
do the litigants or contestants, or whatever you want to call
them, are they given a choice as to whether or not to proceed
in binding arbitration? Are there any alternatives for them at
the beginning of the dispute?
Ms. Bingham. This is a voluntary program, so the claimants,
who are grantees and sub-grantees in the Public Assistance
Program, can opt into it by filing a request for arbitration.
Their other alternative is the two-stage administrative appeal
within FEMA, which results in a final agency decision that is
also not appealable, but largely committed to agency
discretion.
There is not in place right now a formal, more
comprehensive dispute system design for these kinds of cases
that start with a negotiation step or providing the mediation
alternative. And such a design, especially if it provides for a
prompt and early intervention at the outset of a dispute, might
resolve. Evidence shows in other programs that the earlier that
there is some sort of a dispute resolution intervention in the
life of that case, the more quickly it terminates and the
shorter time it spends on the docket.
Mr. Johnson. Yes, is mediation an alternative dispute
resolution process that is available?
Ms. Bingham. Yes. Mediation is voluntary assisted
negotiation. FEMA has a mediation program for employment
disputes in place. It has an ADR office with substantial
expertise in mediation, and there are mediators available
across the Federal Government in the Shared Neutrals Program
who are in agencies outside FEMA who could also provide
assistance. In addition, under the Administrative Dispute
Resolution Act, Federal agencies have the authority to hire
outside neutral mediators, as well as outside neutral
arbitrators.
Mr. Johnson. Are these mediators, by the way, paid hourly?
Are they hourly workers or salaried workers? Or do they work
for private dispute resolution companies, arbitration
associations and what not?
Ms. Bingham. Under the Shared Neutrals Program, the
mediators who participate in that program I believe are given
special duty assignments across agency lines in order to
mediate. So that there is no additional cost to the agency.
Mr. Johnson. And when you say mediators, are you referring
to the arbitrators as well? I am really wanting to know about
the arbitrators with that question.
Ms. Bingham. My understanding of the arbitrators that are
currently used, Civilian Board of Contract Appeals, is that
these folks are already salaried employees of the Federal
Government in the General Services Administration, and
therefore there are no additional fees paid to arbitrators as
there would be in the case of resort to outside neutrals. There
are panels of arbitrators available from nonprofit
organizations like the American Arbitration Association or
JAMS. And they charge varying fees, depending on the individual
practitioner. It is a private business, so it is as variable as
what lawyers charge.
Mr. Johnson. If I might ask one more question. What
determines whether or not to use the salaried arbitrators, as
opposed to an outside arbitration group?
Ms. Bingham. My understanding is that the previous
legislation in the stimulus bill delegated to the President the
authority to set up the program. The President, in turn,
delegated that to the Secretary of Homeland Security, who
designated the Civilian Board of Contract Appeals. It is within
the authority of FEMA to establish a different kind of
arbitration program provided it complies with guidance from the
Department of Justice and publishes a policy and establishes a
written agreement to arbitrate in each case. FEMA could, with
the voluntary agreement of the grantees and sub-grantees, the
other side of the dispute, could voluntarily agree to arbitrate
using outside neutrals.
Mr. Johnson. Thank you.
Ms. Bingham. You are welcome.
Ms. Norton. Thank you very much, Mr. Johnson.
I am going to quickly ask a few more questions to clarify
the record, and then move on to the next panel.
Mr. Jadacki, do you have any concerns about the arbitration
procedures now being used? You have looked at what they have
been doing. Or about any of the arbitration decisions that have
been made?
Mr. Jadacki. There haven't been that many decisions and I
haven't been privy to the proceedings. But I did review a lot
of the decisions that were made. Without knowing, having
intimate knowledge and being there and seeing what was
presented by both the oral testimony and some of the
documentation that was provided, it is really difficult for me
to say that.
I still believe that I think a lot of the cases that are
being presented could have been resolved a while ago.
Ms. Norton. Through what procedures, Mr. Jadacki?
Mr. Jadacki. I am sorry?
Ms. Norton. You have testified, though, that it takes nine
months through the appeals procedure. You mean through
procedures at the negotiating stage, the cost setting stage?
Mr. Jadacki. Right. I think some of the ideas that we
discussed earlier where we got the independent assessments,
some of those folks. I think if you could get buy-in from both
parties, you can probably avoid or prevent a lot of these cases
going to arbitration. Again, it is just sort of one party says
this, one party says this, and they can't agree. But if you get
somebody to come in before that and says this is what we are
going to do, this is the decision we are going to make, and we
both have to agree to do that. Because it is a very expensive
process. There is a lot of time that is consumed presenting
documentation and evidence and those types of things. It is a
very time consuming process.
Ms. Norton. This is very important because, as I said,
people are suffering when we are talking about this program.
Legal procedure is exasperating and therefore what you have to
say here is going to be the basis for our calling in FEMA after
this hearing to see whether or not we can go below the present
processes and get to where you can begin to get some kind of
agreement. We ourselves, just hearing FEMA talk back and forth,
got the dual consultants. That was pretty easy.
But you are suggesting that, and so did Professor Bingham,
that way down in the process, you could begin to get early
agreement on numbers so that you might even avoid other
processes, including the appeals process.
In fact, arbitration does seem has had the effect of
increasing settlements. Arbitration does seem to do that, an
independent somebody who is not beholden to either side does
get the attention. We see that eight have been settled. Several
more have been resolved before arbitration. It is as if you
look arbitration in the eye, it looks like the State can, once
you get into one system, you are into it. But then the State
can always look at what has happened before and make a decision
as to whether it is going to try arbitration the next time.
Do you think that arbitration should therefore be the bogey
man that is always there for disasters of a certain kind or
only for certain disasters?
Mr. Jadacki. What the arbitration does, it forces the
agency to do something it should be doing anyway. They should
be working with the States and the locals. They should be
coming up with the amount of the projects. And because they
promulgate the regulations based on the law, and that should be
it.
When you get to an arbitration point where you have to use
an arbitrator, there is something entirely wrong with the
system. OK? The system is not working if you have that much of
a disagreement on such a large scale.
I think in the case of Katrina, and I think you mentioned
it in some of the legislation that you have about the special
provisions, you know, using project worksheets for small
disasters may work very well. City hall gets damaged. You
rebuild city hall where it is. Where you have widespread people
being displaced, you don't know what the demographics are going
to be, I think that the States and locals need more
flexibility. Instead of possibly funding by P.W., why not fund
by category? Like, I think the RSD is a good example of that
where let them make the decision. If it doesn't make sense to
build a school here, build it here, but don't get penalized
because there is an alternative project.
So larger scale disasters, I think when there is
uncertainty about people moving back, what is going to happen,
I think you need to get more flexible. I am not familiar with
what the special provisions would be, but I certainly think in
a catastrophic type event, that the P.W. process may not work
as well as it did in the smaller types of disasters.
Ms. Norton. Ms. Bingham, I was interested in your
suggestions. I became Chair of the EOC as a litigating lawyer,
and quickly understood that my job was to help people, not to
help lawyers. I am a tenured professor of law, still, at
Georgetown, and I am always looking for ways to break through
legal processes because America has learned to hate lawyers, I
have to say, for good reasons. And we shouldn't let that go on
by looking as if there is no other way to get things done and
that we can't facilitate agreement.
You mentioned something called non-binding fact finding.
Ms. Bingham. Yes.
Ms. Norton. If it is non-binding fact finding, why should
the parties participate in it? What is the credibility to the
parties to make them have confidence that the fact finding is
something that they should rely upon? How would it work? Who
would do it?
Ms. Bingham. There are a couple of different models. First,
let me comment on non-binding arbitration. Fact finding is a
sub-category of arbitration.
Ms. Norton. Yes, or even of an appeals process, not just
arbitration.
Ms. Bingham. Right.
Ms. Norton. Could it be used even in an appeals?
Ms. Bingham. Absolutely.
Ms. Norton. All right.
Ms. Bingham. But in non-binding processes in general that
result in an award, the parties comply with the award over 90
percent of the time. And the reason for that is that it is a
public statement of what the appropriate and fair outcome is,
and there is a certain amount of moral suasion associated with
that public statement.
You can use fact finding in two different ways. You can use
it as a way to essentially adjudicate fact and determine a set
of facts retroactively that then are the basis for further
negotiation. Or the term is also used in labor relations as a
step toward creating a contract. So in labor relations if there
is a dispute between labor and management over what the new
contract should be, then a fact finder will come in, hear
evidence about the economics and comparable contracts in the
industry, and then recommend what that contract should be.
So it is actually a very broad use of fact finding, but it
can also be, again, non-binding and the parties then can sit
down and negotiate the parameters of their final deal.
So what that does is there is a conflict here. FEMA's
obligation is to enforce the law and act within the scope of
its delegated authority. And the disputes that are arising are
largely disputes of fact. The arbitration panel is not subject
to review on grounds of error of law. I think that under the
Federal Arbitration Act, an error of law is not a basis for
overturning an arbitration award, unlike an administrative
adjudication. When these same decision makers sit as
administrative law judges, then they are subject to a broader
scope of review.
Ms. Norton. Because both sides have agreed this will be the
fact finder, if the arbitrator is the agreed-upon fact finder.
Ms. Bingham. The parties could agree.
Ms. Norton. Often, the arbitrator is. Now, if I understand
it, in this case the State can say we want arbitration and
FEMA, I think, has to agree.
Ms. Bingham. Correct. That is my understanding.
Ms. Norton. One more question for you. Just let me say for
the record, I agree. I think it is you, Mr. Jadacki, who
indicated that by the time you get to arbitration, you have a
failed process. That is the only way this Committee got to
arbitration, with almost $4 billion on the table, a disgrace.
So I couldn't agree more that nobody would want to think of
arbitration as a way to proceed and we see that this was a
highly unusual act.
Let me say another, the reason we looked at arbitration at
all, given the size of the dispute, is that it was brought to
our attention that there were disputes between a number of
States, a large number of States, in fact, and the Federal
Government some years back. And somebody got smart and figured
out to try to take something like Medicaid and disentangle it
enough State by State just wasn't going to work. They used
arbitration and we figured that that was the failed dispute of
the size and scope that we were faced with. Impact means
failure and therefore the fact that this process is unable to
do in 60 days what the entire process hasn't done in months,
and sometimes years, does speak to the efficacy of arbitration,
at least in such large disputes.
I am wondering if any of you are aware of, perhaps you,
since you are a student of these procedures, of the Federal
Arbitration Act, and whether the Federal Arbitration Act
informs or could inform what FEMA has done with arbitration
until now.
Ms. Bingham. The Federal Arbitration Act was adopted to
provide safe haven for arbitration from the courts.
Ms. Norton. What from the courts?
Ms. Bingham. To provide a safe haven for arbitration in the
early parts of the 20th century. Courts were interfering in
arbitration awards and commercial parties at arms length were
trying to use arbitration to resolve their conflicts and stay
out of court. So what the Federal Arbitration Act does is it
creates a space that is protected from judicial review for
parties to use a private justice system or private adjudicatory
process. And it does not speak to the design details of
arbitration.
Ms. Norton. Thank you.
Just a couple more questions. Mr. Jadacki, I was
interested, especially in light of all you know about the
issues and problems that FEMA has had with Katrina and Rita
public assistance programs that you recommended transferring
other disaster programs to FEMA. I wonder what you had in mind
and whether you think that would improve those particular
programs?
Mr. Jadacki. Yes, and I think it goes both ways. There
might be some FEMA programs. And I will use the case of the
highways, roads, you know, clearing debris. FEMA is responsible
for the local roads and in some cases the State roads, and the
Federal Highway Administration is in charge of the Interstates
and the Federal highways and those type of things. You have two
separate processes going on that essentially do the same thing,
remove debris.
So it might make sense for economies and efficiencies to
combine those efforts where you would have one entity, whether
it is FEMA or the Federal Highway Administration would be
responsible for that, versus having two separate things. In
some cases it could be the States and locals going through a
project worksheet to work debris. In some cases, the Corps of
Engineers would come in. So there is a lot of jurisdictional
issues there.
So looking at some of the places where there is duplication
and jurisdiction issues might be good.
Ms. Norton. But is there real duplication? The States are
supposed to do their part.
Mr. Jadacki. Right.
Ms. Norton. The roads intersect.
Mr. Jadacki. You are having in some cases Feds contract out
to debris removal people at the same time the States or locals
are doing the same thing. You could achieve economies by doing
it once and then sorting it out later on under the auspices of
one organization.
Ms. Norton. Just like your cost estimating procedures.
Mr. Jadacki. Just like that, yes.
Ms. Norton. Finally, Mr. McCarthy, I was intrigued and
could understand almost instantly when you said that the
Recovery School District, consolidating the schools and doing
it together, economies of scale, I guess, or even decisions of
scale might work. I wonder if it did work. If putting all the
schools together, in your judgment, as neat as it sounds, given
all of the issues that were raised in the process we have just
gone through whether you think it really worked, or if it
should work, because you would think theoretically schools
would have much in common and that would do it. So did that
work because people acted rationally when they had schools
together and said, hey, we are just building schools.
So all schools should cost no more than, and this is the
maximum amount, and we are going to make them out of the same
material. Did it have that effect? And do you think that there
are other examples other than school consolidations where the
desired effect, theoretical effect could come about?
Mr. McCarthy. I believe so. And I am basing it, I think we
are all students of Katrina at this point after five years. And
there were a lot of discussions at the beginning on the number
of schools affected and what the future would be, and the
reason I have expressed some enthusiasm regarding the Recovery
School District is that it was locally generated and it was
their decision as to how to approach it, about how many
campuses they wanted to have eventually.
And I think what Matt and others have pointed out is that
if you are going by a project worksheet for each school
building and suddenly you say, well, we are not planning on
having that campus anymore, and we want to move that money over
here. If there are questions about that throughout that process
and if you are doing it school by school by school, that is how
things stretch out into years.
But in this case, it really appeared to be the local
initiative and the local decision making that drove it. And the
good part is that Congress, first of all, gave the authority
that provided additional money. Because usually if you make
that choice to do something different than just repairing or
replacing that school, that means you will get 90 percent of
the Federal money, not 100 percent.
So in this case, Congress made sure that it was a full
Federal payment. They provided for 100 percent. So that is
something else that could be looked at in the future is whether
those kind of in lieu payments perhaps, I think the idea always
was that you don't want FEMA's money to be just repairing
overall infrastructure in an area. You just want to go to the
areas that were affected by the disaster.
And that was I think part of the reason to only pay 90
percent, to make sure that people are making a decision, a wise
decision on that. But I think the Recovery School District
maybe presents the argument that perhaps it ought to be treated
like every other PA project and that if people make a choice to
redesign parts of their public infrastructure that that ought
to be their decision, and that there shouldn't be a 10 percent
penalty for making that choice.
Ms. Norton. We think about Charity Hospital, which was one
of the projects which drove us to suggest arbitration, one
wonders if it would work with clinics and with smaller health
services, and where the economies of scale could come about
that way. So that you shouldn't really be preferring one
jurisdiction over another when it comes to health centers and
clinics and that you might, indeed, get some economies that you
would not otherwise get, jurisdiction by jurisdiction, after
the initial planning had been done and approved from the local
jurisdiction.
Could I thank all three of you for coming? We asked you to
come first because we don't like the experts from the agencies,
who are going to come next, to simply engage in show and tell.
They don't. They are often very analytical, but I have never
understood the witnesses who have looked at them come
afterwards, and then they come and testify and they leave. So
they don't even get to hear the independent critiques.
So we thought, while we have our own questions for the
officials from the States and from the Federal Government, we
thought it might be good to hear the critics first and that
would even inform our own questioning, and it certainly has.
Thanks to all three of you for very informative and
invaluable testimony. Thank you very much.
Now, could I ask the second panel to approach now: FEMA
from the State of Mississippi, from the State of Louisiana, and
of course from the Civilian Board of Appeals. We are going to
begin with Stephan Daniels, Chairman Daniels of the Civilian
Board of Appeals.
Mr. Daniels?
TESTIMONY OF STEPHEN DANIELS, CHAIRMAN, CIVILIAN BOARD OF
CONTRACT APPEALS; TONY RUSSELL, REGION VI ADMINISTRATOR,
FEDERAL EMERGENCY MANAGEMENT AGENCY; MIKE WOMACK, EXECUTIVE
DIRECTOR, MISSISSIPPI EMERGENCY MANAGEMENT AGENCY, STATE OF
MISSISSIPPI; MARK RILEY, CHIEF OF STAFF, GOVERNOR'S OFFICE OF
HOMELAND SECURITY AND EMERGENCY PREPAREDNESS, STATE OF
LOUISIANA
Mr. Daniels. Thank you very much, Madam Chairwoman and
Members of the Subcommittee.
A year ago when I testified before this Subcommittee, I
assured you that the Civilian Board of Contract Appeals would
do its utmost to fulfill a mission we have been assigned by the
Congress and the Secretary of Homeland Security. As the
arbitration panel established under the American Recovery and
Reinvestment Act of 2009, we would resolve as quickly and as
fairly as possible disputes between the Federal Emergency
Management Agency and State and local jurisdictions in the Gulf
Coast region concerning public assistance grants resulting from
damage caused by Hurricanes Katrina and Rita.
I am pleased to be able to report to you today that the
Civilian Board has over the past year been doing exactly that.
State and local governments have filed 26 cases with us seeking
arbitration of their disputes with FEMA regarding these grants.
The cases involve all sorts of facilities: schools, hospitals,
arenas, roadways, parks, port areas, canals, water and
wastewater treatment plants, solid waste disposal areas, and
fire hydrants.
Most of the cases have come from jurisdictions in Louisiana
and Mississippi, with 14 from Louisiana and 10 from
Mississippi. We have had one case from a jurisdiction in Texas
and one from a jurisdiction in Alabama.
Eight of the cases have been settled by the parties. Six
cases are still pending. Of the cases that have ended other
than by settlement, we resolved each one of them within the
time limit prescribed by regulation, which is 60 days after the
parties have completed their presentations.
Three of the applications have been granted in full. Six
have been granted in part. Two have been denied, meaning that
FEMA's position was upheld. And one was dismissed for lack of
jurisdiction.
Some of the cases, as was noted by the previous panel, have
involved large sums of money. The most publicized of them,
Charity Hospital in New Orleans, resulted in a determination
that FEMA should pay to the State of Louisiana nearly $475
million as the replacement value of the damaged facility. Other
cases have involved far less funds, and in some the project
value has been only slightly greater than the minimum of
$500,000 necessary to place a case before us.
However large the case, our proceedings have taken far less
time and required the expenditure of far less resources by the
parties than would have been involved in a court or even in a
contract case before the Board. Nevertheless, I feel confident
that we have understood the essence of every one of the cases,
and in each of them, we have reached a result which has been
fair and appropriate.
FEMA issued regulations on August 31, 2009, opening the
possibility for resolution of these disputes by arbitration.
And during the fall of 2009, the Board experienced an initial
rush of case filings. Indeed, 15 of our 26 cases were filed in
October, 2009. The numbers of filings has slowed since then,
and increasingly cases have been settling, rather than going to
decision.
My own personal sense is that this trend has occurred
because the ability of State and local governments to opt for
arbitration has had a positive impact on the process of
resolving the disputes. The parties have been addressing issues
earlier and more cooperatively in an effort to come to
positions which are mutually acceptable.
I thank you again for the opportunity to testify this
afternoon, and I am happy to respond to any questions the
Subcommittee may have.
Ms. Norton. Thank you very much, Chairman Daniels.
Tony Russell, Region VI Administrator, FEMA.
Mr. Russell. Yes, good afternoon, Madam Chairwoman, and the
distinguished Members of the Subcommittee.
My name is Tony Russell. I am the Region Administrator for
FEMA Region VI, which includes States of Texas, Louisiana, New
Mexico, Oklahoma, and Arkansas.
Before coming to Region VI, I served as the Acting Director
of the Louisiana Transitional Recovery Office. It is my honor
to appear before you today to discuss what we have done in the
aftermath of Hurricanes Katrina and Rita, and to help
facilitate a faster, smarter and better recovery for the Gulf
Coast.
Now, when I say what we have done, I mean we in the
broadest sense of the word, from individuals in the community,
the State, the parents, the local leaders, FEMA field and
regional staff, our Congressional partners, Administrator
Fugate, Secretary Napolitano, and President Obama. Together,
what we have done is to fundamentally adjust our attitude so
that we can create solutions to common problems.
We use the trust that we have built in order to speed up
the recovery process in the Gulf Coast.
When I began a year and a half ago as the Acting Director
for the LATRO, I noticed many obstacles to recovery. One was a
culture of formality where process prevailed over a focus on
outcomes. Another was that we lacked a system for regular
communication with our partners and the pace and the scale of
recovery suffered as a result.
My life experience has shown me that when working with
others, you can only go as fast as the speed of trust. So we
worked hard to establish a level of trust between the
communities, the States and FEMA. We also opened up the lines
of communication. Instead of writing letters back and forth, we
began sitting down across the table from each other and working
together.
As a result, we were able to use the law, the regulation
and the policies as tools to serve the communities. But with
time and with an established level of communications and trust,
we were able to shift the focus from the process to the
outcomes and break many of the logjams to recovery.
As an example, we completely changed the way we approached
disputed recovery projects. When I arrived in Louisiana, we had
hundreds of projects that were simply not moving forward. In
order to resolve these projects that were in dispute and speed
up the process of making a decision, Secretary Napolitano
established two joint public assistance decision teams in March
of 2009. To date, these review panels have resolved 173
previously disputed cases, helping those stalled projects move
forward.
Our ability to resolve these disputes was a direct result
of the relationships we have built in the community and our
willingness to sit in the same room together and arrive at
common sense solutions.
We try hard to communicate and resolve disputes with the
State before adjudication becomes required. However, there will
always be disagreements. Last year, you gave us another
important tool, an arbitration process to resolve those
disagreements. Most importantly, the use of arbitration allows
us to continue to remove barriers to communication and work
with our partners in an informal setting in order to speed up
the recovery process. While the law specifies that the
arbitration process be used for certain projects relating to
Hurricanes Katrina and Rita, we will evaluate whether the use
of arbitration could be useful in other contexts as well.
But there is no doubt that the trust we have built in the
community and the close collaboration with our partners has
been key to our ability to settle disputes and get stalled
projects moving again.
The good news is that our approach is getting real tangible
results. In Louisiana, FEMA has obligated $9 billion in public
assistance funds, including $2.5 billion in just the past year
and a half alone. In Mississippi, FEMA has obligated over $3
billion in public assistance funds, including more than $240
million in the past year and a half. We are seeing the results
of our work, which we measure not in terms of the dollars
spent, but in terms of communities rebuilt, parents getting
back to work, and children learning and growing in new and
improved schools.
As we at FEMA help our States and communities recover from
the devastation of Hurricanes Katrina and Rita, we have learned
and continue to learn valuable lessons about how to deliver the
best possible service to our communities. We view the work of
recovering from Hurricanes Katrina and Rita with a simple
approach. First, we are here as partners. Second, we work
closely with the affected communities to resolve common sense
outcomes. And third, we will be flexible and pragmatic as we
work to help the Gulf Coast rebuild.
Thank you again for the opportunity to testify before you
and I am happy to take your questions at this time.
Ms. Norton. Thank you very much, Mr. Russell.
Mike Womack, Executive Director of the Mississippi
Emergency Management Agency for the State of Mississippi.
Mr. Womack?
Mr. Womack. Thank you, Madam Chairwoman and Members of the
Committee.
I have been the State Coordinating Officer for Katrina
since the disaster happened on the 29th of August, and I have
been on the Mississippi Gulf Coast at least half the time since
then. I have been directly involved in the Public Assistance
Program, as well as housing programs and the mitigation
programs.
Mississippi has approximately $3.1 billion obligated for
public assistance projects. We have dispersed $2.1 billion of
that, meaning the projects are complete and we have paid the
applicants their money to pay their contractors.
We feel like the State of Mississippi, in partnership with
FEMA, has done a very good job in trying to resolve disputes.
Therefore, the fact that we only have 10 disputes that have
gone to arbitration, which represents about $40 million, which
is less than 2 percent, really a little bit more than 1 percent
of the total amount obligated, is a pretty good showing of how
well we have done with this.
It has been a partnership. It was a partnership from the
very beginning. We decided that we would try to build a team of
FEMA, MEMA and the local governments to make sure that we would
minimize the number of appeals and arbitrations, and certainly
minimize the amount of money that was ultimately not paid to
local governments or to the State.
Now, we did this primarily using the FEMA management cost
funds that were provided to the State. Now, I will say that if
under current rules and regulations, they are limited to 3.34
percent for all disasters after Katrina, roughly. There is no
way that we could have done what we have done in partnership
with FEMA with 3.34 percent. It just cannot be done.
Now, I will say that everything I am going to talk about
today I have discussed with Administrator Fugate, Associate
Administrator Bill Carwile, and Deputy Associate Administrator
Beth Zimmerman. They are very cooperative. They are working
with not only Mississippi, but all the States in trying to work
through these very difficult issues.
But getting back to how we tried to minimize the number of
disputes, we had integrated project management where we would
work with the State agency that was administrating the CDBG
funding, and with our State Department of Archives and History
and with the Department of Education and other State agencies
and Federal agencies, because we know that the rebuilding was
not just public assistance money. It was all sorts of Federal
grants. In fact, in total, about $24 billion worth of Federal
money has been provided to the State of Mississippi.
We developed a whole series of management tools to go well
beyond what the MEMA's program does as far as being able to
track the funding all the way from the date of obligation
through disbursement, through the final inspection process. We
also worked with FEMA on trying to make sure that the applicant
did in fact get the estimated amounts that they deserved before
they went and requested the improved and alternate projects.
So of the $40 million that is in dispute, I would say that
the arbitration process has been very favorable for our
applicants. Every one of the cases that has been settled, the
applicant received at least partial funding. The smallest
amount was about one-third of what they requested. All the
others were over half or a full amount that they requested.
I would say that while we have made great progress, we have
dozens of new facilities across the coast that are already
completed; dozens of others that are under completion right
now, to include numerous fire stations, police stations, city
halls that were built with mitigation money to harden them so
that they will be much safer for the next storm that comes to
the Mississippi Gulf Coast.
We do have some challenges. The biggest challenge we have
is that of FEMA individuals coming, changing decisions
throughout the process. Again, Administrator Fugate is going to
try his best to try to fix these problems, but just the fact
that many of the arbitration cases that we see are the result
of the fact that one FEMA employee or contractor would make a
decision, and then a year or two or three years later that
would change.
Now, the other thing that I want to mention is that the
role of the IG is absolutely critical, but the IG sometimes
drives those decisions that FEMA makes changes on. So it should
be a matter of making sure the IG is there at the very
beginning so when the decisions are made they agree with it and
there doesn't have to be a change.
As I have run out of time, I will simply say the one
program that we need to reinstitute or find out a way to do
administratively is the PA pilot program. It is a great program
and needs to be reinstituted.
Thank you.
Ms. Norton. Thank you very much, Mr. Womack.
Mark Riley, Chief of Staff of the Governor's Office of
Homeland Security and Emergency Preparedness, the State of
Louisiana.
Mr. Riley?
Mr. Riley. Madam Chairwoman, Committee Members, Louisiana
is in the midst of the recovery of several compounding
disasters that have occurred since 2005. Although I have not
always been able to say this, I believe that FEMA and the State
are now on the same path with common objectives in the
recovery. We now have a true and transparent partnership with
FEMA thanks to the leadership of people like Administrator
Fugate and Regional Administrator Russell.
With this change of leadership at FEMA, we are looking at
recovery as a holistic approach to restoring a community, not
just the repair of an individual piece of damaged
infrastructure.
The testimony that I will present today will review the
effects of several pieces of legislation which have assisted
the recovery, to include provisions authorizing arbitration. I
will also discuss additional actions that we may want to
consider, especially in the circumstances of a catastrophic
disaster.
In 2007, FEMA had obligated $5 billion for the recovery
from Katrina and Rita. Today, we have a little more than $9
billion or a $4 billion difference. At the fifth anniversary of
Katrina and Rita, we have 2,789 cases that we designate as
unresolved, and we believe that when we have resolved all these
projects, final dollar amounts will be between $13 billion and
$14 billion.
Our short-term goal with FEMA is to complete the funding
determinations in the Public Assistance Program and we think
this will take another 18 to 24 months at the current pace.
Arbitration has been a very effective tool and has
instilled a sense of independent evaluation and fairness in the
Stafford Act. We have filed 14 arbitration cases with the
Civilian Board of Contract Appeals, for an approximate value of
$952 million. The value of claims settled are determined by the
CBCA in favor of applicants total approximately $613 million.
Several new requests for arbitration are currently being
prepared and the need for this process will continue until we
have completely resolved the remaining 2,789 project worksheets
that have funding issues.
Based upon the State's experience with the arbitration
process, we recommend that Congress consider making the
arbitration option available or some other option that includes
independent third parties to all applicants in all future
disasters.
We would recommend three changes to the current process.
Allow applicants to be reimbursed for the costs that they incur
in the arbitration effort if the case is not frivolous.
Increase the time to file an arbitration filing from 30 days to
60 days from the FEMA decision. And lower the jurisdictional
threshold from $500,000 to $100,000.
I would like to take this opportunity to comment on the
service and professionalism of the CBCA, its Chairman, Judge
Stephen Daniels, and the judges serving on the assigned panels.
The Stafford Act Assistance Program is a very complex and
nuanced program and the CBCA has given each case detailed
attention and responded to the process in a fair and even-
handed manner.
There is a completely different toolkit that is needed to
respond to a catastrophic event as an ordinary disaster. The
Stafford Act needs a catastrophic annex to deal with such a
catastrophic event. The average disaster over the last 10
years, measured in terms of public assistance dollars, was
approximately $40 million. Hurricanes Katrina and Rita in
Louisiana will top $12 billion or 300 times the size of the
average disaster.
In order to effectively recover from a catastrophic event
like Katrina-Rita, communities need the following. They need
assistance in developing master recovery plans. They need 100
percent Federal funding of recovery activities even if that
includes a loan for the non-Federal cost share. And they need a
waiver of the alternate project penalty of 25 percent.
I would like to take a minute to discuss two other issues
affecting Louisiana's current recovery process. After
Hurricanes Katrina and Rita, 57 local governmental entities
took advantage of the Community Disaster Loan Program and
borrowed approximately $822 million. FEMA is in the process of
completing the review of these loans to determine the level of
payback.
Initial indications are that 42 local governmental entities
will be required to pay back all or part of the loans. We
suggest this puts an unfair burden on these communities still
attempting to recover and still in need of support, and that
FEMA's analysis of the ability of these local governmental
entities to repay CDL loans is flawed.
Finally, we ask for support to implement common sense
investment of hazard mitigation funds into shelters. Louisiana
and the Federal Government spent $50 million in transporting
critical transportation need individuals outside the State of
Louisiana during Hurricane Gustaf. We would like to take money
that is already appropriated to us and invest it in multi-
purpose facilities for sheltering.
Few jurisdictions in our Nation have experienced the levels
of disaster brought upon our State in the last five years.
Louisiana continues to recovery from Hurricanes Katrina and
Rita, the largest disasters in U.S. history, which have been
compounded by Hurricanes Gustaf and Ike in 2008, another $1
billion disaster. Most recently, the State has been contending
with the environmental and economic impact of the largest oil
spill in U.S. history. The 2010 hurricane season is still upon
us and we are keeping our fingers crossed.
In closing, the State of Louisiana greatly appreciates the
attention and interest that this Committee has demonstrated
over the years in helping the State navigate a very cumbersome,
bureaucratic, highly regulatory recovery process.
Thank you very much.
Ms. Norton. Thank you very much, Mr. Riley.
Let me begin with Chairman Daniels. First of all, let me
congratulate you, Chairman Daniels, on apparently meeting the
60-day time frame in every single arbitration. We would like to
understand why, particularly in light of testimony here and our
own investigation that shows that it has taken, what is the
charitable way to put this?, close to a year, let's put it, and
often longer for the ordinary appeals process.
So I would like to know whether it is you, the personnel,
Chairman Daniels, or whether there is something about the
process, which everybody fears, doesn't want to go to it.
Except when you go to it, it looks like you get an answer in
what I suppose the average layman would think would be a very
complicated process, in a whole lot less time than you do in
the so-called more simplified processes.
Could you explain that to us?
Mr. Daniels. Certainly by the time a case is presented to
us, each party presents the very best evidence and arguments it
has.
Ms. Norton. If I could pause there, Chairman Daniels. But
you reach the facts de novo.
Mr. Daniels. Yes, we do, but it is on the basis of what we
learn from the presentations and the hearings. And I think part
of it also is that as administrative judges, we are all trained
to be dispute resolution experts. We come into the process
thinking there needs to be an answer here, and the parties
benefit the faster we can get them the answer.
Ms. Norton. Do you sometimes find that in the middle of the
proceedings, as is the case with a District Court Judge, for
example, the parties will reach decision while the arbitration
is ongoing?
Mr. Daniels. That occasionally happens. And obviously, it
is the process that drives them to think about what really are
the strengths and weaknesses of each position; where can we
reach a middle ground? Because my goodness, parties came to
believe, we would rather have control over the resolution of
this case than leave it up to those ``crazy'' judges. Who knows
what they are going to come up with?
Ms. Norton. Do the 60 days include the time for
presentation of the evidence, as well as your own decision
making time?
Mr. Daniels. The 60 days is the period after the case is
finally presented to us.
Ms. Norton. About how long does it take the case to be
presented?
Mr. Daniels. Once an application is filed with us the State
has 15 days to file its comments, then FEMA has 30 days to file
its comments.
Ms. Norton. And you hold them to those time frames?
Mr. Daniels. Yes, we do. We will then have a hearing within
60 days and usually less of the time that we get FEMA's
comments. And we will issue a decision within 60 days after the
hearing.
Ms. Norton. This is notable because apparently not only do
you stay with your own time frames, you have been successful in
keeping the parties within time frames as well.
Mr. Daniels. Well, if a party doesn't choose to file any
particular comments, then all we have to rely on is what we
receive from the applicant. And I think that is quite an
inducement to having the other parties file comments.
Ms. Norton. I would like to hear something about Charity
Hospital. We were very chagrined when Charity Hospital took so
long. Charity Hospital was settled through this process. Can
you describe how that decision was reached? Why had it taken so
long before? And how you were able to do it within the 60-day
time frame, apparently holding the State and FEMA to the time
frames you just discussed?
Mr. Daniels. I couldn't tell you why it took so long for
the case to get to us. I think we might have some other
witnesses here who could address that. I could just tell you
that once the case did come to us, each party made a very
thorough and professional presentation. We then had a hearing
which took four days. We heard from all the witnesses that all
the parties felt were critical for us to hear from.
The feeling of the panel, the three of us who heard the
case, was that the witnesses who were presented by the
applicant, which was the State of Louisiana, were far more
qualified, far more experienced and knowledgeable, had spent a
lot more time in the facility than the FEMA people had, and had
given a great deal more thought to how to do their cost
estimates.
As a result, we found them a lot more credible than the
FEMA people. The issue in the Charity Hospital case involved
FEMA's rule, that if a facility is damaged during a disaster,
you are supposed to do estimates of the cost to repair and the
cost of replacement. Then you compare the two. If the cost of
repair is more than 50 percent of the cost of replacement, then
FEMA should reimburse the applicant for the replacement costs.
If the cost to repair is less than 50 percent, FEMA reimburses
for the repair costs.
In this case, the uniform evidence presented to us by the
applicant and believed by us was that the cost of repair would
be considerably more than 50 percent of the cost of
replacement. We went through the analysis that is required
under FEMA's regulations and came to the conclusion that the
cost of replacement is what should be reimbursed.
Ms. Norton. It just sounds like a very rational process. We
are only sorry that this was not available to FEMA beforehand.
But Mr. Russell, what was available to FEMA beforehand was its
statutory mandate to implement cost estimating procedures. Now,
that was 10 years ago and you have heard testimony from the
prior witnesses. All of them were experts. None of them could
tell me, because it is only appropriate to ask you, Mr.
Russell, perhaps the other witnesses as well from the States if
they have any insight. But why FEMA has not promulgated the
implementing regulations which were mandated when President
Clinton was President?
Mr. Russell. Well, yes, Madam Chair. I know that we are
working through that process now.
Ms. Norton. You are. Yes, Mr. Russell. We would really be
disappointed if you weren't at least working through it. Why
has it taken 10 years to do anything on the process is our
question. We don't think you have been doing nothing, unless
that is what you going to tell me.
Mr. Russell. Yes, ma'am. In fact, at this moment now, I can
tell you, ma'am, that we are working through that process now.
Ms. Norton. Mr. Russell, when will FEMA publish the
regulations? When is it your present plan to publish the
regulations under a law enacted 10 years ago?
Mr. Russell. Yes, ma'am. I know that we are working through
it now, and I don't have an exact date for you, ma'am.
Ms. Norton. I tell you what, Mr. Russell, I understand. We
don't want to shoot the messenger, but we are trying to find
somebody to shoot. We really think that there is a problem and
that the problem was acted out on the ground. And this is what
we would like you to submit, this is FEMA to submit, within 30
days, a timeline for the publishing of the cost estimating
procedures required by Federal law 10 years ago.
I am going to act like Chairman Daniels: no extension,
charted timeline. And we would hope, and there must be a very
good reason why, it could be rebuttable, but I doubt it. We
would expect to have implementing procedures on paper by the
end of the year. I am giving you 30 days, and by that time,
because as you say, you have been working on it for 10 years.
So we are impatient with any more extensions. The question
should have been called before Katrina. And frankly, hundreds
of thousands of people paid the price. Thirty days, less if
possible, timeline, end of the year. That is this year, Mr.
Russell. We want to see some implementing regulations.
I am simply reflecting the frustration of the entire
Committee. And this is two administrations. So we are
bipartisan in our concern here.
Why, Mr. Russell, or let me put it this way. I understand
that your own Office of Alternative Dispute Resolution is
largely confined to employee disputes. Is that correct? And is
that the intended purpose?
Mr. Russell. Yes, Madam Chair. At the moment now, they are
used mainly for disputes with the employees. But they are a
tool in the tool box.
Ms. Norton. Say that again?
Mr. Russell. They are a tool in the tool box to be used
where they are required to be used. Now, my goal and what I
push for in Louisiana is to solve things on the ground, to do
whatever we can to put the elements of arbitration into the
field. By that I mean by making it transparent between the
State, between FEMA, and between the applicant. We all come
together and work on the outcome, and the outcome is whatever
they want to build in this case. And so put all the minds
together towards that.
And I think that is why you have seen a reduction of the
cases going before arbitration because we are solving them in
the field now and that has been our main focus to do exactly
that.
Ms. Norton. Mr. Russell, yes, we know everyone's working
for the same outcome, but that hasn't in and of itself stopped
disputes at the very beginning level. I hope you heard the
testimony of the witnesses who preceded you, for example, the
whole notion of I asked Professor Bingham how non-binding fact
finding was useful. And it was very interesting to hear what
she said. And I am not sure people learn from these hearings
that once it is a matter of public record what somebody that is
not primarily involved, it becomes easier to reach conclusions.
We are going to ask you to work on the 10 year old statute
first, but we would be very interested in the agency's view of
what it could do outside of arbitration that would have the
confidence of the public that a fair decision would be reached,
and of the States involved.
As you may have heard me say, we regard FEMA as nothing
short of a party, so we think that if, or at least I think,
that if you set up a procedure within FEMA, you are already
suspect unless you can show some degree of independence to give
the other side confidence so that otherwise you are going to
have the same disputes arise because they don't think you are
fair.
And I have never regarded that as your fault or the fault
of FEMA, Mr. Russell, because it is true that we are looking at
FEMA not to squander taxpayers' funds.
And Mr. Womack and Mr. Riley are there representing
taxpayers of Louisiana and Mississippi, and they have had a
terrible disaster and they are not out here to save you money.
So it really does take some thinking, hard thinking, and I
would recommend to each of you that you look to the kind of
experts that preceded you to consider what FEMA should do for
the first time, it would appear, since your own internal
mechanism is largely for employees, to make alternative
resolution live in your work and in the field. And I am going
to go on because I want to ask a question of Mr. Womack and Mr.
Riley, and then go to my colleagues.
I want to ask something that I think may have plagued both
Mr. Womack and Mr. Riley, and that is something that FEMA
apparently is trying to come to grips with, which is the
turnover in the field that results in inconsistency of
decisions.
So that I take it you get a decision and it could actually
be turned around on you. And I want to know whether you have
seen any improvement in that, and what do you think should be
done with respect to that inconsistency beyond what you may
already know about? FEMA has recently issued standard operating
procedure. Do you think that will help it? And whether you
think that has really been a real issue in the recovery from
Rita and Katrina?
Both of you, it seems to me, would help us by answering
that question.
Mr. Womack. Yes, ma'am, I would say the turnover has been a
tremendous factor, and I quite frankly in a catastrophic event
am not sure how you would fix this, because you have to have
tens of thousands of very competent people. That may be too
large a number, but certainly thousands of competent people.
And they have to be mobilized and they have to be brought in
very quickly, and they have to live in very, very difficult
conditions.
So I would like FEMA to consider and the IG and all the
rest of the regulatory agencies to consider something. If a
FEMA representative, either a full-time FEMA employee or a
contractor, comes in and writes a project worksheet based on an
estimate, and they do this early on, if in fact there is not
fraud or a deliberate mission of trying to get somebody to
mislead someone, then say that FEMA has to stand behind it
unless the local government wants to change that project
worksheet.
Because these are good-intended people that I have worked
with over the past five years. They say by regulation, I have
to change the project worksheet because the initial one was
incorrect. And in my opinion, we should not delay recovery,
because that is exactly what it does, by having the local
governments have to go back and start over and redesign and
fight to try to get what they were originally told, and so
forth and so on.
So if we could just simply say that the first FEMA
representative that writes the estimate, that FEMA is bound by
that. And that no regulatory agency is going to come back and
say, nope, it wasn't done right so we have to change it, unless
there was fraud or directly trying to mislead the FEMA
representative.
Ms. Norton. It really is an outrage to make a State go all
through that again. I don't know if Mr. Riley agrees or
whether, for that matter, Mr. Riley or Mr. Womack believe that
this new standard operating procedure gets them toward that
goal
Mr. Riley. We have, in fact, experienced the change of
personnel, change of decision event on a number of occasions. I
think two mistakes were made at the front end of this. One,
FEMA headquarters took direct control of the people on the
ground that were making decisions, so you had headquarters
personnel involved in this decision making process. What
normally happens in a disaster is the people that are on the
ground responding to the disaster work for the region, and the
region has a close association with the people at the State
level and have a good working relationship. Well, that
relationship was abandoned and we could never, until recently,
get that good partnership approach with FEMA.
Secondly, because this was catastrophic and when FEMA
showed up to the event, they were looking for a hurricane and
they didn't find it. They found a catastrophe, a large
catastrophe. We have 23,000 projects. So one of the decisions
they made is we are going to go out and issue project
worksheets as placeholders, just to identify that there is a
building or some infrastructure that has been damaged. Now, we
are going to put just a very bland estimate on it and we will
come back later and then do the detailed analysis of what the
damage was.
Well, that group of people rotated out and a new group of
people came in. The new group of people took the position that
those project worksheets were good project worksheets, and so
if you, applicant, want to change that, the burden of proof is
on you, and you have to come in and change that.
Again, it belied this very collaborative relationship that
should have existed to really determine what the recovery was,
what the end goal was, as opposed to just what the dollar
amount might be.
But having a consistent relationship with the FEMA
personnel on the ground is very important.
Ms. Norton. I think you indicated there have been
improvements with that kind of partnership now.
Mr. Riley. Correct. One of the things FEMA did was transfer
the responsibility for the recovery back to the region. Tony
Russell said it. One of the things you have to do is establish
that trusting relationship between those people. We work
closely with Region XI, always have, and the people there know
us and we know them. And that trust is there because they know
how we operate. We know how they operate.
Ms. Norton. One more question for you both before I ask my
colleagues if they have questions.
It goes to Mr. Daniels' process. I have indicated I
certainly don't think the arbitration process is the way to
resolve most disputes; that we were driven to it by the
problems we were reaching while FEMA was getting a new act,
shall I say, together. But I think it is in Mr. Riley's
testimony that there was some concern about the impartiality or
the possible perception of impartiality in the first and second
appeals in FEMA's traditional appeals process.
Could you explain, since I take it that doesn't have the
same kinds of safeguards that Mr. Daniels' process has, what
your concerns are in these appeals processes which are where we
are still having problems? And do you still see problems there?
Mr. Riley. The problem we were having is as we were trying
to develop a project worksheet, we would sit down with a FEMA
counterpart on the other side of the table and we would work
through the project worksheet. We would come to some impasse.
So we would go away and we would file the appeal. Well, the
appeal would then be worked by the same guy that was sitting on
the other side of the table from us to begin with and he would
provide the Regional Director his input as to the answer to the
appeal.
So we don't get someone else looking at this thing afresh.
We get the same people involved.
Ms. Norton. And that is an appeal? I appeal to my
adversary?
Mr. Riley. That is exactly what our complaint was about
independent process. Even within FEMA, if they had had an
independent team come in and look at it, but their practice
was, and I don't have enough experience to know whether it was
unique to Louisiana TRO or whether this was throughout the
system, but the practice was when we filed that appeal, it
would go back to the same individual that made the decision in
the first place.
Ms. Norton. Mr. Womack, was that your experience as well?
Mr. Womack. It is a little bit more complicated than that.
You had the people, in our case in Biloxi, that wrote the
project worksheets. If it was a difficult decision, they might
in fact call the region, or before the region had control of
the recovery office, they would call headquarters. And they
would ask their opinion on these things.
Then once a decision was made, the applicant didn't like
the decision, they appealed it. Before it went to the Regional
Administrator, the same office that made the decision had a
chance to write their comments. Then it went to the Regional
Administrator and his staff, the public assistance staff that
in fact may have consulted with the local field office for
FEMA, they wrote their recommendation back to the Regional
Administrator.
Now, the Regional Administrator in some cases would go
against his program staff, but that is very difficult to do in
many cases because you hire these people to be the experts. But
if they were already consulted on the front end as to what they
thought the project should be, then it doesn't seem that there
is a lot of value in having those same people provide input
into the appeal.
Ms. Norton. Mr. Russell, I understand if you are sitting
outside of the system that we are, and trying to get inside a
moment. When sitting outside, this sounds kafkaesque. If you
are inside, you are inside a Federal bureaucracy and you are
trying to operate according to regular procedure.
You can understand, though, I am sure, if you extract
yourself for a moment from your own processes, how circular
this process necessarily is.
What if, for example, I heard neither of these State
representatives say go hire yourself somebody like Professor
Bingham. But they seem to imply that there have got to be fresh
eyes. What about a different regional office, for example,
looking at the matter? So that you don't have the frustration
of no confidence, even when the appeal goes upstairs, because
those who had input, who are closer to the decision maker, have
already influenced the decision maker as to the outcome. What
about a different regional office?
I mean, this is off the top of our head. You might be able
to think of a better person inside of FEMA. I might even ask
you to go to Mr. Daniels. I am trying to find something within
your own processes that would eliminate the appearance of
unfairness that our two State officials have spoken of
Mr. Russell. Yes, ma'am. I think that, at least for me, my
first objective has always been to solve this in the field. And
that is with a culture shift to where the default answer is
yes. OK? That is my default answer. So when my employees come
to meet with the applicant in the State, the default is yes.
Ms. Norton. Mr. Russell, you are not answering my question.
The default answer is the no. When the default answer is no,
and as you said yourself in your own testimony, there will be
some things that have to be appealed.
Mr. Russell. Yes.
Ms. Norton. I am now trying to find, out of this hearing,
some procedures which FEMA would consider. The default answer
is no. You tried your best. Now, Mr. Womack and Mr. Riley are
appealing. They are now spending months upon months in the same
process, essentially. Would it assist the process in having,
for example, a different Regional Administrator who has not
been part of the process look at it? Or do you have a
suggestion as to how to restore the perception of fairness of
the State officials who are on the ground?
Mr. Russell. Ma'am, you know, we are looking at a bottom-up
review as we review our whole PA process, and I will definitely
take that back as an option for us to take a look at.
Ms. Norton. Thank you very much. In 30 days, Mr. Russell,
we would like an answer to the following question. Will FEMA
consider, in order to--let me, the predicate of this question
is, we have seen huge improvement once we reach impasse and go
to the arbitrators. They have stayed within their timelines and
they have been successful in getting the parties to stay within
their timelines. We are very, very satisfied with how that
process, should that process be used, go.
According to those who testified before you, the process
that we now have the most trouble with doesn't have anything to
do with this atom bomb process which has done its work
apparently in keeping wars from breaking out, and of course,
once things get to arbitration. Our process now is in the
ordinary appeals process.
In 30 days, will FEMA consider the use of a different
regional office at the first level of appeal so that the
appeals process will be not only close to a year, but will get
closer to what the arbitration process is? And if you find that
unsatisfactory, within 30 days, let the Subcommittee know what
alternatives are under consideration.
I will turn now to Mr. Cao, who is acting as Ranking
Member.
Mr. Cao. Thank you, Madam Chair.
I thought that my hari-kari statement was tough. You just
want to line up people and--anyway.
[Laughter.]
Ms. Norton. So you are right with me.
Mr. Cao. Well, maybe. Anyway, thank you very much.
Tony, it seems to me that, based on my conversation with
counsel, that the Hazard Mitigation Act of 2000 enables us to
prevent many of the backlogs that we saw after Katrina. And if
the Chairwoman is right that it has taken FEMA 10 years, over
10 years to come up with the rules and regulations, I see that
as inexcusable.
And I hope that you can bring the words back to
Administrator Fugate that this Subcommittee is thoroughly
disappointed and I hope that a greater urgency would be put on
FEMA to come up with these rules because based on what I have
heard so far, the Act itself would provide incentives for the
State to actually save money, and in essence save FEMA money.
At the same time, it would create a structure upon which
FEMA can settle many of the projects through a lump sum
settlement type of procedure that we have been pushing for.
So again, once you have come up with a time line to submit
to the Chairwoman, I would like to get a copy of that time
line, if you don't mind. But beyond that, I would have to say
that you have done a wonderful job as the TRO Director and now
as the Regional Director of Region VI.
And I have mentioned it many, many times before. I
appreciate your cooperation and your hard work and your staff's
hard work in the past two years.
But now we have a new problem and this new problem that we
have is the Community Disaster Loan Forgiveness Program. It
seems to me, based on the testimony of the prior panel members,
that for previous disasters, community disaster loan
forgiveness has been routinely given, up to 96 percent of the
loans.
The question that I have here is why is FEMA changing its
perception or its position on the forgiveness of these loans? I
am not sure what the rationale is based on the fact that
Katrina was and still is the most devastating disaster to
befall upon our Country. It seems to me a no-brainer to forgive
these loans so that communities can recover and then to
obviously continue with what they have to do in order to
rebuild and to assist their citizens.
I know that I have confronted Administrator Fugate many,
many times in the last two years, pushing for very friendly
regulations so that loans can be forgiven. And it seems to me
that our plea has fallen on deaf ears because we are
encountering frustration upon frustration, before with P.W.s,
now with community disaster loan forgiveness.
And it seems to me that, again, rather than to work in
cooperation with municipalities to rebuild and then to carry on
with their lives, obstructions are now being put forward and
barriers are being built. And again, I would like for you to
approach the Administrator and ask him to revisit this problem.
With that being said, based on what I have heard so far
with respect to the appeals process and with respect to the
arbitration panel that we now have, would it be more efficient
for us just to simply get rid of the appeals process, to go
from first termination and allow the members to ask for
arbitration?
Mr. Russell. Well, sir, you know I will go back to my first
statement that we tried to do it all in the field, but if we
can't do it in the field, then I think that what is going to
happen is we are going to look at this from the bottom up. And
to look at arbitration and to look at appeals and to see how
those timelines match up. And is it more efficient? And in my
mind, what is the less amount of burden on the applicant?
Because there is a burdensome process to get your case
together, to file your case. There is an expense there when it
comes to arbitration.
And so I would like to be able to analyze both of those and
figure out what is the best way to proceed for the applicant.
And we are in that process now.
Mr. Cao. But based on the testimony of the previous panel,
the average time wait for the appeal process to go through was
about a year. And if children were waiting for schools to
reopen, if ill people were waiting for hospitals to reopen, it
seems to me that the one-year period is a time that people
cannot afford to waste. And if you can look at really, really
streamline this process and to bring as much efficiency, as
much as possible, I am pretty sure that future victims of any
natural disaster would appreciate that.
Mr. Riley, first of all, I just want to thank you so much
for everything that you have done for Louisiana. I know that
you and your staff have worked very hard to push forward the
recovery. As we go forward to look at how we would deal with
future disaster, what would be the most important area based on
your experience that we need to focus on right now?
Mr. Riley. I think this was mentioned by the earlier panel.
You get these small communities that have been hit by a
disaster and if it is an ordinary disaster, in my terms, they
might have a building or two that needs to be repaired or
replaced, and that is pretty simple to do.
When it is a catastrophic event, they are overwhelmed and
they don't have the capabilities necessary to really develop
the kind of planning that it takes to bring an entire community
back, as opposed to just build a building back.
Now, the experience that we had early on with FEMA was that
they would come in and they would concentrate on building the
building back, not reestablishing the community. And it is that
sort of urban planning master planning expertise that FEMA
could bring with them to help the community do a good planning
process.
We want to build communities back more resilient, safer,
stronger than they were before the storm so that the next storm
doesn't hurt them the same way.
So bring in the right expertise to help them do that sort
of planning to become more resilient, safer, stronger and to do
the sorts of things that you need to do to bring the community
back. What are the priorities of processes or infrastructure
that you need to be back? How do you bring it back? Do you
bring it back exactly like it was? Or do you do something like
the Recovery School District and develop a master plan and
bring schools back online in a different sequence of events
that matches the community coming back to town.
So that sort of expertise at the front end of a disaster,
to help these communities I think would be really helpful.
Mr. Cao. So, Tony, based on what Mr. Riley has said, what
is FEMA's position, FEMA's perspective going forward?
Mr. Russell. Yes, sir. I think that we have an emergency
support function 14, which is long-term recovery. And during a
disaster, we can mobilize them. They can get with the State and
begin those long-term planning of that matter. So that is
something that can be done.
Mr. Cao. Thank you, and I yield back.
Ms. Norton. Thank you, Mr. Cao.
Mr. Taylor of Mississippi?
Mr. Taylor. Thank you, Madam Chairman.
I want to thank our panelists for being with us this late
in the day.
Mr. Russell, let me start by saying that the people of
South Mississippi are incredibly grateful for the help this
Congress and your agency has provided. Mr. Womack says $24
billion. My number if $21.8 billion. That is a lot of money to
the State of Mississippi and we are grateful for every penny of
it.
There have, however--and I want to context everything in
that we are grateful for the help we have received. But there
are still some communities where the majority of neighborhoods
are driveways that lead to a vacant lot; where the houses have
not come back.
As you know, most local communities are a combination of
property taxes, and so if the house isn't there, the property
tax revenue is way down. And sales taxes, again if people
aren't there, they aren't buying things, and in many instances
the stores haven't come back because the people haven't come
back, et cetera.
Some of the communities that I represent, the loans have
been forgiven for rebuilding schools. There are other
communities that in my mind's eye were actually more
devastated, where the loans haven't. One of the things that has
happened that I think has skewed this is that our Nation, and
again I say this with gratitude, came up with re-start money
knowing that the houses were gone, that the stores were gone,
therefore there was no property tax or sales tax to pay for
this. Our Nation stepped forward to get these schools going
again within about 60 days of the storm with re-start money,
and we are grateful for it.
The problem comes in in that that was one-time money from
our Nation to get these schools going, but it was counted as if
it was an ongoing source of funds for these communities trying
to get their loans forgiven, when it was not an ongoing source
of funds. It was a one-time source of funds.
I was wondering if this has been brought to your attention
by Mr. Womack or others? And if it has not, I would certainly
ask that you take a look at this because I do think some of
these communities--no, I know some of these communities have a
very legitimate request for help.
Mr. Russell. Yes, sir. At this time, we are still in the
process of gaining additional information about the loan
process. And if the recipient has information to bring forward,
we are receptive to receiving that because nothing is final
yet. We are still in the process and it is still being under
review even as I speak. And it is on a case-by-case basis also.
So as more information comes through that is advantageous
toward the recipient, then they can be taken into account.
Mr. Taylor. OK. Secondly, and I am going to shift gears,
Madam Chairman, if you don't mind. But again, hopefully we have
learned some lessons from the last storm.
In my mind's eye, one of the visions that I both said, gee,
I am grateful to my Nation, and boy, there has got to be a
better way to do this, is passing about a week after the events
of the storm, passing by the Stennis Airport and seeing an L-
1011, an absolutely enormous cargo plane, the nose of which is
now picked up and looking in the cargo plane it is full of ice.
So on one hand, I am going, gee, we sure need that ice. I
am sure grateful for this. On the other hand, being a self-
professed logistician, I am going, that is the most expensive
way on earth to get that ice here. We need the stuff. We are
grateful for it, but, boy, there had to be a cheaper way to get
this stuff here.
Mr. Brown never got it on the importance of ice. You've got
people who weren't working outside suddenly working outside. It
prevents them from getting a heat stroke.
Mr. Womack and I recall the very sad situation where we
actually commandeered an ice truck to put corpses in because
there was no electricity and they were rotting in the sun.
For those people who could find their refrigerators, it
gives them a few days to take their frozen goods and slowly
thaw them out so they can feed themselves for a period of weeks
until the stores get open again. It is a necessity. I can tell
you from experience, it is a necessity to help people be as
self-reliant as possible under these terrible circumstances.
Having said that, Brown and I think his predecessor said in
the future that there would not be ice. And again, going back
to that L-1011 full of ice, I am grateful for it, but boy,
there has got to be a better way to do this.
One of the advances that I have seen since then, and
understanding that the cost of moving that commodity is
extremely expensive. Something that has come along since
Katrina are these portable ice-making machines. It is actually
a vending machine, that are fairly common throughout South
Mississippi now.
Almost every city in my District has their own water wells.
Almost all of them have backup generators to get water to those
wells.
I would ask that FEMA strongly consider as a short-term
relief buying machines, or at least having the ability to lease
machines like that so that they could be placed at the water
wells in a community that has lost its electricity and needs
some ice, and cut down on those huge logistics costs of taking
ice from the Midwest and dragging it down to coastal
Mississippi or the Midwest that in a future storm and taking it
to coastal North Carolina.
Again, I have a responsibility to the taxpayers who aren't
affected, but also to those people who are affected. We want to
help those people affected and we have to do it in the most
cost-effective manner. I think this is just a common sense
thing that ought to be looking at.
Secondly, hurricanes can hit a coastal community. There is
a really good chance the bridges will be out, just like they
were last time. I never really could get it through the
previous Administration of the need to have a response from the
sea, a rescue from the sea. And there are businesses that
transport fuel by barge. And I would hope that you would
seriously consider pre-negotiated contracts with those barge
firms to deliver fuel.
And that does a couple of things. Number one, it gets the
fuel to the point of greatest impact, which is going to be
closest to the water. But the second phenomena that we went
through is that everyone who went through the hurricane thought
they had it the worst, when the truth of the matter is the
people the farthest from the refinery actually had it the worst
because they were right there on the coast. But every community
between that inland refinery and the coast tried to grab that
fuel truck.
And in many instances, that fuel truck ended up where it
really didn't need to be, and never got to where it needed to
be.
Secondly, you can carry a heck of a lot more fuel on a
barge than a truck. And it becomes the filling station if
properly designed.
And so again, lessons learned, response from the sea, and
keeping in mind that over half of all Americans live in coastal
America, so something bad happens and it is not the hand of
God, but a terrorist, is probably going to happen in a coastal
community; and a response from the sea for a floating hospitals
using large-deck amphibious assault ships that the Marines
have; fuel; food.
Again, I would hope that you would be working with the
Military Sealift Command and others in the military to come up
with this response ahead of time, rather than doing it on the
fly after one of these events.
Mr. Russell. Yes, sir. In fact we are doing exactly that.
We are looking at every avenue for health and safety, and I
will take this back with me to make sure this is one the agenda
also.
Mr. Taylor. OK. Again, Madam Chairman, thank you for your
courtesy of letting me participate in your hearing.
Ms. Norton. Of course, Mr. Taylor.
I don't have many more questions, but I would like to ask a
couple more questions before we dismiss this panel, because
these are questions I like; when everybody who is engaged in a
process are before us, so that you can react candidly to one
another.
Now, I note that in the arbitrations, and remember that is
a new process, so we had a very special obligation to look at
it. We note that three had resulted in full implementation for
the State; six in partial implementation for the State; and two
were denied.
So I would like to ask Mr. Russell, Mr. Womack and Mr.
Riley, are you all satisfied with Mr. Daniels sitting right
here? He would be glad to hear it, I know. Are you all
satisfied with the arbitration process? What has been its
effects on other parts of the process? And why have more
arbitrations not been requested?
Mr. Russell, why don't you start?
Mr. Russell. Yes. Madam Chairwoman, my goal is to put Mr.
Daniels out of business, and that is by solving things at the
lowest level possible.
Ms. Norton. Has this process, arbitration, had the effect,
if not of putting him out of business, he is very much still in
business, but had an effect on the speed or ease of the process
you are necessarily involved in? And if so, how? Be specific,
Mr. Russell.
Mr. Russell. Well, I think that the trust that we have
built has had a factor in the field of getting things done. And
that we continue to try to solve that, and we know that
arbitration is there. It is a choice that we can take, but we
will try as much as possible not to go there if at all
possible.
Ms. Norton. Mr. Womack?
Mr. Womack. I personally participated on behalf of the
State in four of the hearings that were held. First of all, I
think that the panel, the judges, do a tremendous job with it.
I was at the very first one and we were allocated two days for
the oral testimony. And now they have shortened it for most
cases down to one day. And it is a very good process as far as
I am concerned.
I will be quite frank with you. I have very good friends at
the local level in Mississippi, the Regional Administrator,
Deputy Administrator, much of his staff and here at FEMA
headquarters. It was almost like my support for the arbitration
process I was being disloyal to my friends in some way because
they felt like they had been doing the right things.
And what I tried to emphasize, and I have continued to
emphasize to them is look at what the arbitration panel said
and say: Do we need to change our policies and process? Is
there something that we missed in all of this?
And as I looked at it, what I thought was that the judges
looked at things like what was an applicant told early on; did
decision, were they changed throughout the process?
And the other thing is one of the cases where you had one
part of FEMA, Public Assistance, who said one thing and the
National Flood Insurance Program, who had a different set of
regulations. And so the school district got a new school based
on the fact of the National Flood Insurance Program regulations
versus the Public Assistance, or at least that was part of the
decision making process.
Has it assisted us in decision making? I think so. I think
that, yes, we are moving forward quicker on some cases. As to
why there haven't been more cases filed, you have to remember
if you had already gone through your second appeal process, you
could not go back and enter into arbitration. So well over $1
billion had already been dispersed, maybe $1.5 billion, that
was not subject to arbitration.
Mississippi is further along in the recovery, I believe,
than Louisiana, but basically because $12 billion versus $3
billion in PA cost. So logically speaking, I think we are at
the end of many of our processes.
Ms. Norton. The reason Mississippi is further along is?
Mr. Womack. Well, they had $12 billion worth of PA
projects. We had $3 billion. So their disaster is about four
times the size of ours, if that makes sense. And I also like to
say that the water came up and went down in 12 hours in
Mississippi. It had to be pumped out of New Orleans and it took
months.
So it is two different disasters, and in many of their
projects they are still in that negotiation phase of trying to
sort through what they are actually entitled to, where we are
really under construction on most of ours. So that is why we
don't have as many arbitration cases.
Ms. Norton. Mr. Riley?
Mr. Riley. First of all, I think that the arbitration
services that the CBCA provides have been excellent. Whether we
win or lose, we walk away with a feeling that we have fair and
impartial and very professional services. What that tool has
done for us is it has allowed us to bring FEMA to the table in
a manner with a larger propensity to work the issue out.
When I first met Tony Russell, he said just give me
something to hang my hat on and the answer is going to be yes.
He didn't wear a hat, so I gave him a hat and then I gave him a
nail. And it has worked.
And so we have been able to in a very professional manner
with the personalities involved currently to sit down and come
to reasonable solutions. But I do think one of the reasons that
you haven't seen as many arbitrations, when we came here last
year, we said that there were over 4,000 cases in dispute. And
now we are saying there are a little over 2,600 and almost
2,000 have been resolved.
One of the reasons more have not ended up in arbitration,
however, is because I think the dollar limit for arbitration is
too high, and when FEMA adopted its regulations it said that
the applicant will pay for the costs of arbitration. And in
order to do this, in the cases that have been successful before
the CBCA, hired lawyers and experts. In order to do that, you
need money. And if you are a small applicant, you don't have
the money to hire lawyers and experts.
Ms. Norton. What do you think the ceiling should be? Or
should they vary based on the size of the community?
Mr. Riley. In our disaster, the way I have looked at it, if
we were at $100,000 or more, that would be a good arbitration
case. And so that is just a casual observation from us.
Ms. Norton. Do you think the State or local government
should use the administrative or management funds to help
defray the costs, if allowed?
Mr. Riley. Yes, I do. Many of them are stretched as it is
to provide the necessary administrative management just to
oversee the projects. So it would be helpful if there was a
consideration of additional funding. And you can use your
arbitrator to kind of balance that out. You could give him
authority to set fees maybe for attorneys, and also to deny
costs if the case is simply a frivolous case.
So you could manage it so that it is not excessive. But
Charity Hospital, for example, is a good example. We had a
highly professional team of lawyers. We had three experts in
architectural construction engineering, cost-estimating world.
And that cost money to do that.
Ms. Norton. Final question. What all of you have had to say
has been very encouraging.
And let me say, Mr. Russell and Mr. Womack, Mr. Riley, it
has been the first time I have heard States speak so favorably,
Mr. Russell, of FEMA. And so it says a great deal about
improvements at FEMA that you hear two guys on the ground, if I
may call them that, who in their respective positions and with
their predecessors have flooded us with complaints about FEMA,
now speak about a new partnership. It is very encouraging to
the Subcommittee.
It is very encouraging from all of you to hear both the
effects of arbitration, shall we say, direct and indirect. And
we use these hearings to resolve issues. We don't do ``gotcha''
hearings. We then follow up based on your answers and our
questions just as we have given Mr. Russell a time frame. We
give the agency a time frame for responding based on what we
have learned here.
Now, because we have with us Mr. Russell and Mr. Womack and
Mr. Riley who have an effective partnership, and because we
would like to see the appeals process, for example, and the
negotiating process at the ground level do the job so that, as
Mr. Russell says, Mr. Daniels just fades away like an old
soldier. Because we would really like to see that. And he looks
like he is ready to go, if need be.
I would most appreciate your using this opportunity, Mr.
Womack and Mr. Riley, to indicate for the public record what
other steps FEMA should take. You may discuss what steps they
have taken, if you like, to hasten, cut red tape, speed
recovery for public assistance projects on the ground where you
are. What more would you like Mr. Russell to do?
We can start at the very beginning and especially going
through appeals.
Mr. Womack. Well, first of all, I think we need to keep the
appeals in place. I think we need to have a form of
arbitration. Whether what we have now is the right one, I don't
know, but some sort of independent way of looking at things.
But what I would like as part of the bottom-up review that
Tony has talked about, that FEMA is looking at Public
Assistance. I really think over the last 20 or 30 years that
FEMA and the other regulatory agencies have kind of lost sight
a little bit of what the Stafford Act is all about. And it may
mean that we need to go back and rewrite regulations that say,
OK, let's always give the applicant the benefit of the doubt;
rather than let's try to figure out to make sure that they are
not getting something they are not entitled to.
And certainly, local governments and sometimes their
contractors will push to try to get more than they are truly
entitled to, and I fully understand that. But I think now we
have a whole set of regulations, policies and procedures, and I
don't want to over-emphasize this, but I think a lot of them
were driven by external sources to FEMA. So that now it is such
a cumbersome process that I think a lot of the regulations need
to be rewritten.
One example is this. Under the PA pilot program, you could
get straight time for debris removal for your employees, for
the local employees. OK? It is now in regulation that they
cannot do that.
Ms. Norton. The statute allows it? The regulations say you
cannot do it?
Mr. Womack. As I understand it, the statute doesn't address
straight time for emergency work and debris removal. The
regulation does.
Ms. Norton. And it disallows it?
Mr. Womack. It does. Which means that your incentive is to
go out and hire a contractor, rather than let your employees do
the work. You can get overtime and you can get equipment cost,
but you cannot get their straight time.
Ms. Norton. Mr. Russell, excuse me, while we have that on
the table, could you explain that one to us?
Mr. Russell. Yes, ma'am. Again, as Mr. Womack said, that is
part of our bottom-up review to make sure that we are not
overly taxing our State partners.
Ms. Norton. You are not taxing your State partners. They
are making a rational decision to get as much money from FEMA
as possible because of a regulation you put in place.
Mr. Russell. Yes, and then that was, my understanding of
it, it was to ensure that we didn't double-pay somebody for
doing the exact same work. But again, it is going to be under
review, ma'am, and we are going to take a look at it again.
Ms. Norton. You have 30 days to tell us whether you intend
to change that particular regulation and whether it is under
consideration for change and the options you are considering.
Mr. Russell. Will do.
Ms. Norton. The taxpayers, it seems to me, are on the bad
end of that one, U.S. taxpayers, because the encouragement is
to do exactly what Mr. Womack says: maximize your costs, and he
is not doing it to jack up the government. He is trying to get
as much as is possible for reimbursement for work done.
Mr. Womack, you can continue.
Mr. Womack. I would just finish that by saying that I think
there are a lot of other regulations and policies that need to
be looked at. And I do know that the senior leadership at FEMA
are doing this. They are looking at this.
It is going to take some time. If it took us 20 years or 30
years to get here, an overly cumbersome Public Assistance
Program, it is going to take some time to move back the other
direction. I think they are moving in the right direction.
Ms. Norton. Mr. Riley, do you have any thing you would like
to say to Mr. Russell about how the process leading up and
going through appeals could be streamlined, shortened and the
rest?
Mr. Riley. The Stafford Act, the Act itself is full of the
ability to make subjective decisions. And I think it was
intentionally done that way because every disaster is
different. So when you get on the ground, you have to make
different decisions.
The regulations have removed a lot of that subjective
decision making. And so, again, you have to default to the
ordinary hurricane by regulation. That is what you can do. OK?
But it may not fit the circumstance you have.
So I would encourage the regulation to give the Regional
Administrator a lot more flexibility on how he responds to a
disaster. The goal of a disaster is recovery, not the
expenditure of funds. And if both the State and FEMA have that
same goal of recovery, not to reduce the amount of funds that
are necessary for recovery, but to do an adequate job at
recovery.
I think what we do in our program is we design the program
so that one person that is trying to get over on us won't get
over on us. And if we design it so that we have adequate
safeguards in place, but focus on the necessity to recover and
to give the applicant the necessary means to recover. From an
applicant's point of view, it is all about the cash flow. I
can't start my project until I have identified all the money
that I think I am going to need. OK? So we have to get there
quickly.
From the State's perspective, for example, when we bring an
architect or an engineer to the table to give a professional
opinion, he is a licensed architect or engineer. Our experience
with FEMA is that that is not always the case. He may have an
architectural or engineering background, or he may be an
engineer who has experience on roads and we are talking about a
building.
So we don't have the same experts talking to each other,
and sometimes they talk a different language. So having the
ability to get with FEMA and to agree on a single expert for a
project I think is a very important thing, someone that both
the applicant and FEMA can trust to make a professional opinion
that he signed off on and his license is at risk and every
other thing that is at risk when you hire an architect or an
engineer in the private sector.
So I do think that we need to work on the culture that Mr.
Russell has built about the trust between the State and FEMA,
and that is a lot of what happened to us in the first part of
this disaster was that lack of trust, and it was hard to work
through.
So a culture of trust, some more subjective decision making
for the Regional Administrator who knows what is going on on
the ground, and putting the right experts in place to make
decisions that people have confidence in.
Ms. Norton. Thank you very much.
I want to thank all of you. Because this is a hearing on
Katrina and Rita and because I have learned of some assistance
from the private sector this Committee or at least this Chair
did not know of, but you may know of, for the record I would
like to get your comments.
Though I am a Member of the Aviation Subcommittee, of the
Homeland Security Committee as well, I was unaware of the role
that general aviation played during Katrina and Rita. And I
wonder if you had any comments on what I am told was the case
that general aviation planes played an important role in the
early days of the disaster. What has been cited to me is
delivering of supplies.
I raise general aviation because of the difficulty of
planes at all getting in. And of course, even in New Orleans,
for example, it was difficult for plane travel to occur. So if
that was the case, imagine these smaller areas in Mississippi
and New Orleans. And what we are told is that there were
missions to deliver supplies to devastated areas in the Gulf
Coast. This is general aviation, smaller planes which can
sometimes maneuver into disaster areas to transport evacuees,
to coordinate relief flights, to connect available aircraft to
people who needed airlifting to Gulf Coast area hospitals, or
from those hospitals to other hospitals. That general aviation
was instrumental in a rescue operation and an example was cited
to us of patients who were airlifted. This happened with
helicopters as well.
I wondered if any of you in your experience for the record
have anything to say about the role of general aviation in this
disaster, these smaller planes that can get where larger planes
didn't and couldn't.
Mr. Womack. Congressman Taylor may know more about this
than I do. I do know that there were a lot of general aviation
aircraft that had volunteered their services; that did come in
and provide services. It was similar to what we saw with people
driving up with their pickup loads full of water and food and
diapers and that sort of thing. It was volunteers, spontaneous
volunteers. It was extremely helpful, but the flip side of it
was it was very difficult to control all that aviation into the
area.
Ms. Norton. How do you control it? I mean, you have to go
through some kind of----
Mr. Womack. Exactly, and there were so many aircraft
flying. If you think of all the military aircraft that were
flying and then you bring in all the civilian aircraft, all
trying to get to the same areas and do the same things.
But yes, absolutely. They did some life-saving missions
early on in Katrina.
Ms. Norton. Mr. Riley?
Mr. Riley. We had the same experience. The volunteerism is
a very important part of any disaster response. And I think
what we are trying to do is put together a process where we
organize it a little better up front so that it is not so
haphazard and we have a single source to go through for
aviation requests and that sort of thing.
Ms. Norton. Yes, and we do understand these are volunteer
efforts. I don't know if Mr. Taylor knows anything about this.
Do you know anything about the general aviation? Because you
certainly had smaller areas.
Mr. Taylor. Madam Chairman, I am certain it happened. I
would be fibbing if I said I was an eyewitness to it. We saw
the Mississippi National Guard. We saw C-130's with Navy SEALs.
We saw a 13 year old kid hop on a street sweeper to clear a
10,000-foot runway the day of the storm, which I mistook as an
act of God that there wasn't a twig on this runway, and it was
a 13 year old kid jumped on his dad's street sweeper. I know of
a 13 year old kid who was refueling Blackhawk helicopters,
which I am sure violated every OSHA rule on earth.
[Laughter.]
Mr. Taylor. But that crew got the fuel they needed and no
one got hurt. So there were a lot of remarkable things
involving aviation, and I am sure something like that happened.
I am just not a witness to it.
Ms. Norton. Thank you very much. I just thought that in
this hearing on Katrina after five years, we ought to take note
of all the unsung heroes. We certainly have before us some of
the more visible heroes and we thank each of you for being here
and for your very valuable testimony.
The hearing is adjourned.
[Whereupon, at 5:22 p.m., the Subcommittee was adjourned.]