[Senate Hearing 111-952]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 111-952

         THE NEXT BIG DISASTER: IS THE PRIVATE SECTOR PREPARED?

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

                                HEARING

                               before the

                  AD HOC SUBCOMMITTEE ON STATE, LOCAL,
                    AND PRIVATE SECTOR PREPAREDNESS
                            AND INTEGRATION

                                 of the

                              COMMITTEE ON
                         HOMELAND SECURITY AND
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 4, 2010

                               __________

         Available via the World Wide Web: http://www.fdsys.gov

       Printed for the use of the Committee on Homeland Security
                        and Governmental Affairs


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        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TOM COBURN, Oklahoma
THOMAS R. CARPER, Delaware           SCOTT P. BROWN, Massachusetts
MARK L. PRYOR, Arkansas              JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana          GEORGE V. VOINOVICH, Ohio
CLAIRE McCASKILL, Missouri           JOHN ENSIGN, Nevada
JON TESTER, Montana                  LINDSEY GRAHAM, South Carolina
ROLAND W. BURRIS, Illinois
EDWARD E. KAUFMAN, Delaware

                  Michael L. Alexander, Staff Director
     Brandon L. Milhorn, Minority Staff Director and Chief Counsel
                  Trina Driessnack Tyrer, Chief Clerk
            Joyce Ward, Publications Clerk and GPO Detailee


 AD HOC SUBCOMMITTEE ON STATE, LOCAL, AND PRIVATE SECTOR PREPAREDNESS 
                            AND INTEGRATION

                        MARK L. PRYOR, Arkansas
DANIEL K. AKAKA, Hawaii              JOHN ENSIGN, Nevada
MARY L. LANDRIEU, Louisiana          GEORGE V. VOINOVICH, Ohio
JON TESTER, Montana                  LINDSEY GRAHAM, South Carolina
                     Donny William, Staff Director
                  Ryan Tully, Minority Staff Director
                       Kelsey Stroud, Chief Clerk






                            C O N T E N T S

                                 ------                                
Opening statement:
                                                                   Page
    Senator Pryor................................................     1
Prepared statement:
    Senator Pryor................................................    19

                               WITNESSES
                        Thursday, March 4, 2010

Stephen C. Jordan, Senior Vice President and Executive Director, 
  Business Civic Leadership Center...............................     3
John R. Harrald, Ph.D., Research Professor, Center for 
  Technology, Security and Policy, Virginia Polytechnic Institute 
  and State University, Co-Director and Professor Emeritus, 
  Institute for Crisis, Disaster and Risk Management, The George 
  Washington University, and Chair, Disaster Roundtable, The 
  National Academies.............................................     5
Stephen E. Flynn, Ph.D., President, Center for National Policy...     8

                     Alphabetical List of Witnesses

Flynn, Stephen E., Ph.D.:
    Testimony....................................................     8
    Prepared statement...........................................    33
Harrald, John R., Ph.D.:
    Testimony....................................................     5
    Prepared statement...........................................    27
Jordan, Stephen C.:
    Testimony....................................................     3
    Prepared statement...........................................    22

                                APPENDIX

Chart titled ``Disaster Funding 1989-2011,'' submitted for the 
  Record by Senator Pryor........................................    21
Questions and responses for the Record from:
    Mr. Harrald..................................................    41
    Mr. Jordan...................................................    43

 
         THE NEXT BIG DISASTER: IS THE PRIVATE SECTOR PREPARED?

                              ----------                              


                        THURSDAY, MARCH 4, 2010

                                 U.S. Senate,      
             Ad Hoc Subcommittee on State, Local, and      
           Private Sector Preparedness and Integration,    
                    of the Committee on Homeland Security  
                                  and Governmental Affairs,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 1 p.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Mark L. 
Pryor, Chairman of the Subcommittee, presiding.
    Present: Senator Pryor.

               OPENING STATEMENT OF SENATOR PRYOR

    Senator Pryor. The Subcommittee will come to order.
    I will go ahead and call the hearing to order. I want to 
thank all the witnesses for being here and all the people in 
the audience for coming today.
    This is a hearing for the Subcommittee on State, Local and 
Private Sector Preparedness and Integration, ``The Next Big 
Disaster: Is the Private Sector Prepared? ''
    I really want to thank our witnesses. I am going to 
introduce you here in just a moment. What I would like to do is 
give each of you 7 minutes to make your statements.
    Because of some scheduling conflicts around the Senate, I 
am not sure we are going to have any other senators come; but 
certainly if we do, we will do our best to accommodate their 
schedules.
    Let me just start by saying that when you look at disasters 
and preparedness, in my State, for example, we have had 10 
presidentially-declared disasters in the last 2 years. Ten in 2 
years.
    The northeast corner of Arkansas is sitting on the New 
Madrid fault which experts say and most agree that it could 
cause the most deadly and destructive earthquake we have had, 
if and when it ever causes an earthquake.
    But we have had floods and tornadoes and ice storms in our 
State and you know that disasters are happening in other States 
as well.
    We have also had two large international disasters in the 
Americas in the last few weeks, Haiti and Chile. These 
earthquakes are very grim reminders of the devastation that a 
natural disaster can have on communities, economies and the 
lives of the individuals involved.
    We spend billions in disaster recovery and we probably do 
not spend as much as we should on preparedness. The private 
sector does a good job in many ways depending on the sector and 
the company on preparedness and dealing with the aftermath of a 
disaster.
    I wanted to point out the chart to my right.\1\ If you look 
at the last couple of decades, the bars represent different 
parts of paying for disasters. The first, the blue bar is the 
Administration's budget request. The red bar is what we 
actually appropriated through the Congress, and then the green 
bar is supplemental appropriations. By the way the purple bar 
is the recent supplemental request.
---------------------------------------------------------------------------
    \1\ The chart referred to by Senator Pryor appears in the Appendix 
on page 21.
---------------------------------------------------------------------------
    The reason I point out the green bar, the supplemental 
appropriations, is because we end up paying for disasters one 
way or the other; and to pay for these disasters on the tail 
end is much more expensive than trying to pay for something on 
the front. There are ways that you can prepare and either not 
have the damage or be in a better position to overcome a 
disaster.
    You can see the tall green bar for fiscal years 2000 to 
2011, and it is stark how much it has risen from the previous 
decade. Part of that is because of Hurricane Katrina but you 
have to remember we had some other events in the 1990s. 
Hurricanes and other disasters were expensive too but Hurricane 
Katrina does make that bar a little bit distorted.
    The point is I think that we need to do a better job of 
thinking through preparedness, working together. The private 
sector again has been working together on this.
    What I would like to do now is call on our three witnesses. 
I will do a very brief introduction of each one and you can 
keep your opening statements to 7 minutes. You have a little 
light system in front of you, and I would love for you all to 
just try to keep to that 7 minutes, if possible.
    Our first witness is Stephen Jordan, Senior Vice President 
and Executive Director of the Business Civic Leadership Center 
(BCLC). He has a long and distinguished background working on 
public and private partnerships and has been at this for a long 
time. We look forward to hearing from you.
    Our second witness will be Dr. Jack Harrald. He is the 
Chair of the Disaster Roundtable for the National Academies. He 
has been focused in the fields of emergency and crisis 
management for over 20 years. He has written on these topics 
and has worked on disaster mitigation tactics. We appreciate 
your expertise and appreciate your being here.
    Our third witness will be Dr. Stephen Flynn. He is the 
President of the Center for National Policy. He is a former 
advisor to the U.S. Commission on National Security, and has 
expertise in emergency preparedness and infrastructure 
protection.
    I could spend three times as much on each one of your 
resumes because all of you bring great things to the table. 
But, Mr. Jordan, would you mind leading us off and take your 7 
minutes. Thank you.

 TESTIMONY OF STEPHEN C. JORDAN,\1\ SENIOR VICE PRESIDENT AND 
      EXECUTIVE DIRECTOR, BUSINESS CIVIC LEADERSHIP CENTER

    Mr. Jordan. Thank you very much, Chairman Pryor. It is a 
pleasure to be here with you today. I greatly appreciate it.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Jordan appears in the appendix on 
page 22.
---------------------------------------------------------------------------
    As the Executive Director of the Business Civic Leadership 
Center, unfortunately we have had to deal with quite a few 
disasters over the past decade. I really appreciate this 
opportunity to discuss our current national preparedness 
efforts and some of the lessons learned and ideas that have 
been generated from some of those experiences.
    We work with many companies, chambers of commerce, and also 
government agencies and nonprofit organizations throughout the 
country and around the world. In fact, our help desk right now 
is dealing with about 1,500 cases related to the Haiti and 
Chile at the moment.
    The lessons that we have unfortunately date back to 
September 11, 2001, the Southeast Asia tsunami, Hurricane 
Katrina, floods, and fires. Clearly these disasters do not just 
come in one shape or size.
    A lot of the companies and the chambers are telling us 
there are three major reasons that they need to be prepared.
    First, they are very cognizant that the costs of disasters 
are rising.
    Second, there is no silver bullet. No single agency or 
entity is going to cover every fall-out or every symptom that 
comes out of these disasters. So there is a certain amount of 
self-help that has to be built into the process.
    And, third, disaster preparedness and community resilience, 
just by themselves, even if a disaster does not happen, promote 
risk reduction which, of course, lowers costs and also promotes 
operational efficiency.
    But as we move forward, our history shows that you can 
never be prepared enough for a disaster. I mean, the reason 
they call it a disaster is because it is unexpected. It is 
unprepared for.
    But there are several things that we know ahead of time 
that we really need to start working on and continue to 
improve. Some of these include raising awareness about the 
process, ``who is doing what and where,'' and figuring out ways 
to reward prudent behavior.
    Second, we need to invest in infrastructure upgrades. 
Third, we need to really develop this idea of mutual 
assistance. Earlier, I noted how no single entity can do it 
all. We have to figure out how we network together. Fourth, we 
have to improve information and coordination.
    We believe that the country needs to move away from an ad 
hoc, reactive approach to disasters that rewards urgent needs 
and punishes prudent investment and move toward a proactive 
policy that invests in continuously improving our 
infrastructure, community design and business resilience.
    The first step to achieve this goal is mapping who is doing 
what, where, and how. You know, we really need to invest more 
in mapping and benchmarking.
    We commissioned Dan Alesch, who is professor emeritus at 
the University of Wisconsin--he did the original Federal 
Emergency Management Agency (FEMA) study on the impact of 
disasters on business--to identify 10 recovery policies that 
States should have.
    Where we would like to go with this research is now that we 
have a template about some of the recovery policies that have 
to happen, we would like to see how the different States do on 
the different factors and then be able to provide information 
to the States that are lagging. The information would identify 
what some of the States that are more advanced than others are 
doing so that we create kind of a mutual learning system and 
continuous improvement.
    We also hold an annual disaster stimulation in DC. We did 
one actually on the New Madrid fault that I think some of the 
local chambers around the region kind of resisted at the start, 
but then they realized that the more that you prepare and look 
like you are engaged in risk reduction the more that people and 
investors feel comfortable about coming to a region because 
they know that you are taking into account the costs.
    So we want to commend organizations like Safe America and 
the Great Shakeout Program in California and other groups that 
continue to figure out ways we can do more around planning, 
preparedness, and training.
    We also think that it is vital to have continuous 
infrastructure design improvements and increased systems 
integration. Cases like the Minnesota I-35 bridge collapse, 
flooding in Cedar Rapids, and hurricanes in the Gulf Coast 
illustrate the fact that almost every part of the country needs 
to be thinking that how to reduce its vulnerabilities and 
improve its critical infrastructures.
    Third, as I said, we need to increase our mutual assistance 
network capabilities. I will be happy during the Q and A's to 
talk about things like next-generation versions of Project 
Impact and other things like that.
    Fourth, we need to explore ways to reward disaster 
preparedness and one of the things that we might want to raise 
awareness about is that after September 11, 2001, over 500 
local chambers joined the Manhattan Chamber; and the Executive 
Director of the Manhattan Chamber, Nancy Ploeger, took $500, 
$1,000 and helped local businesses south of 14th Street to get 
emergency loans to replace windows or make payroll or things 
like that.
    So one of the things we might think about is how do we 
reward companies that invest in mitigation ahead of time with 
perhaps improved or streamline capital access in the event of a 
disaster.
    Fifth, if we want businesses to contribute their core 
competencies, we need to set up better technical assistance 
systems support systems. Seventy-five percent of business 
contributions right now are in cash but this form of assistance 
leaves on the table some of the most vital contributions that 
companies can make.
    For example, logistics companies can help expedite the flow 
of goods. One of the things you would never think of that is 
important after a disaster is convenience stores being open 
because people know if they can get to the milk or the gas, 
they are willing to come back.
    There are some ways that we need to increase the 
relationships between local, State, and Federal officials about 
badging and credentialing and access so that we can streamline 
getting technical experts into place but streamline the ability 
of local people that are critical for recovery practices to 
come back in.
    So fundamentally we need to help make businesses and their 
communities more resilient. So we have many companies and 
chambers that are investing in sustainability projects and we 
think that starts with design, with regional sustainable 
design.
    With that, I will close my remarks at this point but will 
be happy to take questions during the Q and A's.
    Thank you so much.
    Senator Pryor. Mr. Harrald.

  TESTIMONY OF JOHN R. HARRALD, PH.D.,\1\ RESEARCH PROFESSOR, 
     CENTER FOR TECHNOLOGY, SECURITY AND POLICY, VIRGINIA 
  POLYTECHNIC INSTITUTE AND STATE UNIVERSITY, CO-DIRECTOR AND 
  PROFESSOR EMERITUS, INSTITUTE FOR CRISIS, DISASTER AND RISK 
   MANAGEMENT, THE GEORGE WASHINGTON UNIVERSITY, AND CHAIR, 
          DISASTER ROUNDTABLE, THE NATIONAL ACADEMIES

    Mr. Harrald. Good afternoon, Mr. Chairman. Thank you for 
the opportunity to be here and to testify.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Harrald appears in the appendix 
on page 27.
---------------------------------------------------------------------------
    The opinions that I am representing today are my own and do 
not necessarily represent the National Academies or other 
affiliated organizations.
    One of the preliminary titles of this hearing was New 
Paradigms for Private Sector Preparedness, which I thought was 
appropriate and timely. A paradigm shift is a fundamental 
change in how we perceive the world, what we believe, and in 
the ways we act.
    In my opinion, we are at a point in time where such a shift 
in our policies and actions concerning extreme events is both 
necessary and possible. This paradigm shift will fundamentally 
affect how both the private and public sectors react 
strategically and operationally to these events.
    The images of Hurricanes Katrina and Andrew, and the 
September 11, 2001, attacks are receding. The issues identified 
seem less urgent but the recent catastrophic earthquakes in 
Haiti and Chile have once again reminded us that our world view 
must include extreme events and their impacts.
    We know that United States is particularly vulnerable due 
to its large populations living and working in high risk areas, 
seismic zones, coastal and river flood plains and near urban 
terrorist targets.
    Catastrophic events can and will happened here. Are we 
resilient enough to ensure that our Nation and society can 
recover and thrive after such an event?
    Understanding and reacting to the risk of low probability, 
high consequence events is a challenge for any society. It is 
difficult to envision that which has not yet happened.
    Many view extreme events as rare exceptions to the normal 
and that preparing for them is a waste of time and money, and 
that if an event should occur, the government, the Red Cross 
and others should be able to meet our needs.
    The U.S. response doctrines imply that disasters produce 
victims that must depend upon the assistance provided by those 
trained and equipped to do so. In reacting to past events, we 
have created larger and more capable government-centric 
response systems.
    This system has worked well for large events such as the 
September 11, 2001, attacks and the 1984 Florida hurricanes but 
has failed during catastrophic events such as Hurricanes Andrew 
and Katrina with devastating social and economic impacts.
    How can this paradigm shift to one that will work when we 
need it most? I believe there are three areas where change is 
occurring now, and with leadership and investment will lead to 
a fundamental paradigm shift.
    The private sector plays a critical and central role in 
each of these elements. The first is building and sustaining 
community resilience. The second is creating a collaborative 
and enabling preparedness response culture. And the third is 
using science and technology to replace reactive doctrine with 
proactive agile systems.
    Community resilience is the key to preparedness. 
Relationships and resources that exist at the local level are 
the primary predictors of the ability to absorb, adapt survive 
and thrive when faced with extreme events.
    We have historically focused on promoting individual 
preparedness and supporting business recovery and ensuring 
government continuity of operations.
    Resilience, however, requires the building of a network of 
collaborative relationships. Significant national steps 
described in my written testimony have already been taken to 
make the development community and national resilience a 
strategic objective.
    The disaster management culture is changing albeit slowly. 
The current preparedness response and recovery doctrine based 
on government-centric control will be replaced by a culture 
that enables collaboration.
    Most people impacted by a disaster are uninjured, healthy 
and willing and able to help those more seriously impacted to 
rebuild their community. As stated by FEMA Administrator Craig 
Fugate, these willing and able citizens should be thought of as 
resources, not as victims.
    The objective is not to create government organizations 
capable of doing things for people. We must be able to mobilize 
national resources, public and private, to work with citizens 
to help restore social, physical and economic systems.
    Science and technology are providing us with new knowledge, 
capability and opportunities. We are witnessing a very 
significant shift in how science and technology are used in 
disaster response and recovery.
    Physical science better informs us of our risk exposure and 
helps us to develop credible planning scenarios. Social 
scientists have introduced the concept of social vulnerability 
into the preparedness response and recovery doctrine and have 
studied how people behave during the crisis and recovery 
periods.
    Preparedness must be based on what we have learned from 
science, not on disaster myths and fears. We are rapidly 
evolving a centralized, rigid government closed system to a 
decentralized, agile, open, private sector-owned and operated 
set of systems.
    The challenges of the future are threefold and will 
include, first, recognizing the new capabilities technology is 
providing rather than being constrained by narrowly designed 
existing systems; second, creating ways to capture and 
integrate the flood of information from unanticipated sources 
rather than relying on pre-existing formal lines of 
communications; and three, creating the relationships and 
networks needed for each event rather than living with 
artificial organizational and physical constraints.
    Already in 2010 there are two vivid disasters that 
exemplify the use of emerging technologies, the earthquakes in 
Haiti and Chile. I discuss examples of this innovation in my 
written testimony.
    The boards and committees of the National Academies have 
analyzed the research available for many of these issues and I 
have attached a list of study and workshop reports published by 
the Academies during last 5 years to my written statement.
    In conclusion, I would like to emphasize that the private 
sector involvement in leadership is key in all three paradigm 
changing trends I have described, building resilience, creating 
a collaborative culture, and creating new capabilities through 
technology.
    The policy implications for the Federal Government are, I 
believe, in three primary areas. The first is implementing 
policies and programs that enable public and private 
organizations to set local and regional priorities and to 
collaboratively use their local resources and knowledge.
    The second is to ensure that Federal funding and grant 
programs that are intended to create resilience are both 
adequately funded and well-coordinated. The stovepiping of 
current grants by agencies and programs can produce conflicting 
government mandated priorities that lead to competition for 
resources and actually discourage collaboration at the local 
level.
    Finally, the creation of trusted relationships is the basis 
of any collaborative network and particularly in disaster 
preparedness. This requires open and frequent information 
sharing which unfortunately conflicts with the cultural values 
of much in the public and private sectors. Managers in both the 
private and public sectors are trained in and rewarded for 
withholding and controlling information, not for sharing it.
    In my opinion, the trusted relationships necessary to break 
down these barriers are most likely developed at the local and 
regional level. Thank you.
    Senator Pryor. Thank you. Mr. Flynn.

TESTIMONY OF STEPHEN E. FLYNN,\1\ PH.D., PRESIDENT, CENTER FOR 
                        NATIONAL POLICY

    Mr. Flynn. Thank you very much, Mr. Chairman.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Flynn appears in the appendix on 
page 33.
---------------------------------------------------------------------------
    It is an honor to be here today to testify on this 
important issue. As I said in my written testimony, I would 
argue this Subcommittee has the most important element and the 
most neglected element of the Homeland Security portfolio.
    I would suggest that if we had the ability to take a 
satellite image and capture all the national capacity to deal 
with the issues we call Homeland Security, we would see a lot 
of capacity, but we would also see that 90 percent of it or so 
is non-federal; and how to engage that capability has been the 
missing element of our post-September 11, 2001, efforts in my 
view.
    And that has national security implications. It has 
economic implications and it has civic implications. I would 
like to review those briefly.
    From a national security perspective, I see this as 
absolutely a paramount effort that we need to be engaged in, 
engaging our civil society and private sector and communities 
in building resilience.
    The reason for this is understanding the nature of the 
warfare we are confronting. The United States is so dominant 
militarily on the conventional front that the future of warfare 
regardless of what adversary you want to point to is 
undoubtedly going to be battling on the civil and economic 
ground, not on the conventional military ground.
    And the reason for that is because an adversary believes if 
they can conduct acts of terror or other efforts in that arena, 
they will get a big bang for their buck. It should follow that 
the more resilient we are as a society, the better prepared we 
are, the less brittle we are as a society, then the less value 
this has as a means of warfare for our adversaries.
    We basically have all our eggs in the basket of preventing 
future acts of terror on U.S. soil. I am frankly a little 
skeptical about the capacities, as good as they are, on the 
national security, intelligence and law enforcement front to 
eliminate this risk.
    I think what we end up needing is a capacity as well to 
demonstrate to the world and to our adversaries not only can we 
deliver a punch but we can take a punch, and that there is a 
national security value to investing in preparedness. And this 
is something we need to treat with a great deal of urgency.
    The second imperative is the economic one. The one thing I 
think we can safely predict in the 21st Century is that 
disruption will be a constant, whether it is coming from 
manmade threats or probably the natural world, and that could 
range from the pandemic risks to the ground moving as was done 
in Chile and Haiti to the range of storms that hit Arkansas. 
And you, like Texas, I understand, never have a down season on 
disasters.
    Finally, in a complex, interdependent, global society, 
systems go haywire from time to time. And so it is the 
communities, the companies, and the countries that are most 
capable of dealing with disruptive risk where people want to 
live, where they want to work and where people are going to 
want to invest.
    And an element of our competitiveness as a society will be 
our capacity to manage the risks that are foreseeable, and as 
your charts illustrate here, we could do a lot better job in 
the blue column than we are doing now in the green column.
    It is a combination that we know every dollar we invest in 
mitigation is a return on investment because it is so expensive 
when things go wrong and the fact that we can enhance 
competition gives us the opening for a much more robust 
private-public partnership than we have had to date.
    I raise in my testimony here a few areas where I think we 
have tools that we develop often for other reasons but could 
very well support this effort of advancing preparedness.
    The most straightforward one is developing incentives for 
the private sector to be an effective partner and to bring the 
resources to bear. That would just be very costly and frankly 
wasteful having this in the public sector sitting in a 
warehouse somewhere waiting for the balloon to go up or for the 
storm to role in.
    And the basic tools here are typically a form of subsidy or 
tax relief or regulatory relief if you have certain 
capabilities, and I provide a few examples in my testimony.
    One would be things like backup micro-energy systems that 
could even be mobile where we task facilities that really need 
to have dependable electricity like a hospital or other major 
company with important communications. They have this. They can 
sell that capacity during peak periods to the grid so they can 
recover some of their costs. And if that is a mobile 
capability, that could potentially be contracted by FEMA to go 
to another region where the grid is going to be down for a 
period of time.
    So we found that we are going to satisfy a company's need 
for continuity of service in this case with a backup capability 
that would be expensive to have in a separate column and by 
using incentives, whether it is subsidies or tax breaks or 
regulatory relief, I think we could go in those kinds of 
directions.
    Another clear area is the insurance realm, and I talked 
through a few examples of this as well and cite one that comes 
from my Coast Guard background. But in trying to essentially 
change behavior, the value of insurance is one of providing 
essentially a cost-benefit for doing a long-term investment 
that may be hard to do on a short-term analysis; but also when 
insurers provide that benefit, they want to make sure people 
are acting and have the behaviors. So there is often an 
oversight mechanism there can be combined.
    And clearly whether at the State level it is tax relief or 
insurance policy writing to get a bigger pool of involvements 
or sometimes the government coming in and playing as the 
ultimate re-insurer, those kinds of tools can also very much 
get us in the kinds of behaviors that we want.
    As we saw very much in the story of Florida, such a 
compelling one between Hurricane Andrew when building standards 
were pretty slack and, therefore, we had mass devastation, and 
the same year when we had Hurricane Katrina and we saw three 
big storms come through, every building built after the new 
codes that were put in place--and insurers create incentives 
for that--those buildings are still standing. The lawn 
furniture is tossed around but the building is still there.
    So we know how to do this. And in my view it is something 
that we need to step up to do. Again, I offer some examples in 
my written testimony.
    Let me finish, though, with I think the final and perhaps 
the most important and timely imperative for raising this 
agenda, and that is the civic value of engaging in a national 
focus on preparedness.
    At the end of the day, we cannot get there from here unless 
it is all hands. It has to be an open and inclusive process. 
Alex de Tocqueville, when he marched through this country in 
the early 19th Century, remarked on two characteristics that 
made America stand out for him.
    One, our self-reliance, and second, our volunteerism, 
willingness to come together in times of public need.
    One of the dilemmas we had, I think, in the Cold War era, 
and it sort of evolved as well in the professional protection 
area, is that we ended up with essentially a view by everyday 
citizens that public safety is an entitlement provided by a 
very centralized public service.
    What we really need to move to is a world where it is all 
shared, and when we do that, remind yourself that we are not 
Democrats or Republicans, we are citizens who need to work 
together to recognize that public safety and preparedness is, 
in fact, a public civic good and something we should all strive 
to embrace.
    With that, Mr. Chairman, I look forward to your questions.
    Senator Pryor. Thank you. On that I would say amen. That 
was good. I appreciate that.
    Let me start, with just a general question, that may be a 
little bit of an odd way to start. I was looking at this chart 
a moment ago--where can we cut spending but at the same time 
improve our effectiveness. I have a few ideas but I would like 
to hear yours.
    Are there ways that you are aware of just in our disaster 
preparedness regime that we have out there, by which we can 
actually cut spending but increase the effectiveness of what we 
are trying to do?
    Does anybody want to take a stab at that? I think in 
Washington what happens is that when you see a problem, you 
want to throw money at it. That seems to have been the pattern 
in this town for a long time.
    And I think certainly there is going to be a very 
significant Federal portion of disaster preparedness funding 
but I think there are also ways that we can just work smarter 
and get better results.
    Mr. Harrald. I will give it a shot. I think obviously we 
would all agree that the easiest place to cut costs is that 
green bar of just being better prepared and that is going to 
take some investment.
    But the one place where I do think there is potential 
savings is looking at the Federal grants program. As I 
indicated in my scenario, that is one where a nuclear device in 
Washington, preparing massive population evacuation.
    The people who are looking at the public health aspects or 
working on public health emergency preparedness grants coming 
from the Centers for Disease Control and Prevention (CDC). The 
hospitals are working on hospital preparedness grants coming 
from the Department of Health and Human Services (DHHS). The 
metro is working on grants from the Department of 
Transportation. The Council of Governments is working on Urban 
Areas Security Initiative (UASI) grants.
    When you get down to the local level not only do you get 
some duplication you get some competition. What vanishes is the 
local priorities, the local needs. So I think it is very 
difficult. These are stovepiped not only by funds but by 
agencies, by physical locations where the grants come from.
    Senator Pryor. Mr. Flynn.
    Mr. Flynn. If I might, in my opening comment, Mr. Chairman, 
one of our challenges is we are not putting side by side our 
other investments in national security vis-a-vis these sets of 
issues by comparison, again because I do think there is such a 
national security imperative for doing this.
    And of course, the stovepipe that keeps all that review 
with even what we are spending on the homeland defense realm 
vis-a-vis what we might be spending to support States and 
locals or encouraging private, we do not have a means, it does 
not seem to me, to look at that very well.
    Aside from the homeland defense budget in the Department of 
Defense, which was in the high 30 billions, we are now talking 
about how we reallocate some very limited resources here on our 
level. So that is the elephant in the room kind of problem.
    But I agree very much with Dr. Harrald that the grant 
formulas are, the management of the grants process is a serious 
challenge, and to some extent it is the worst of all worlds 
from our Federal system of government.
    What I have heard a lot from our States and locals is that 
even if they want to step out and do something that is pretty 
sensible, the mayor or governor says, hey, you try that Federal 
trough; they got some grant money slushing up there, before we 
make the investment.
    Well, it is actually not a big slush of money and everybody 
is competing and the rules change every year, and everybody has 
to spend a lot of time diverting energy and effort chasing this 
elusive pot of gold.
    We are in sort of one or two situations. Either we need to 
push self-sufficiency back into the State and local level and 
create some incentives for that or it has to be a bigger pot.
    But we are in sort of this no-man's land right now, enough 
to make it that States and locals think that they can grab this 
where they are and they are not going to come out empty-handed 
and then we are not really getting the capacity that we want in 
a sustained way.
    So I think still that the grants program is one that needs 
a hard looking at. Again it is spread like peanut butter across 
the Federal apparatus and that makes coherence not, things are 
pretty incoherent.
    Senator Pryor. Mr. Jordan.
    Mr. Jordan. To tell you the truth, beyond Ready.gov, I do 
not think that there are many programs specifically for 
business preparedness. I think that what we see is a lot of 
episodic and ad hoc initiatives. Some of them are great and we 
see a number of things that are being done through the 
voluntary sector.
    But to tell you the truth, there really is not a concerted 
emphasis on mitigation and resilience right now. In fact, Win 
Hallett, the head of the Mobile Chamber of Commerce--he is also 
the head of the Chamber Federation--was one of the first 
chambers to want to invest in a sustainability plan for Mobile 
Bay.
    He said that we have a situation where up and down the Gulf 
Coast we know if we have to rebuild a bridge or a series of 
bridges we are talking millions and millions of dollars. Doing 
a better design, a better plan might cost two or three million 
dollars but it would save hundreds of millions down the road.
    However, it is a lot harder to get funding for the design 
work than it is to do the post-disaster recovery work which 
your green bar illustrates so much. So I would say on the 
business preparedness side there is plenty of money being saved 
right now because it is not being spent.
    Senator Pryor. OK. Fair enough.
    Dr. Harrald mentioned in his statement the need for a 
fundamental culture change or a new mind set in disaster 
thinking, a change from centralized planning and control to 
community-based, decentralized planning and control.
    Can the other two witnesses, comment on that? Do you agree 
or disagree with that?
    Mr. Flynn. I could not agree more on that point. It is, I 
think, one of the core challenges, the move away from I would 
say almost an increasingly paternalistic and closed process for 
protecting the American people that assumes when things go 
wrong there are victims that have to be handled, and I think 
Administrator Fugate is straight on this.
    These are survivors who can be assets. That is the 
important message to go. But Americans are not being treated 
that way. They are essentially told the professionals will take 
care of this, just go about your lives.
    So the culture change, it is not just bottom up. It really 
is that we have to overcome kind of an ethos in these 
bureaucracies that I call sort of professional protectors. This 
is not business for amateurs. You folks stay out of here.
    So it is important that we find ways to really attack the 
culture at the top as well as develop at the bottom.
    One of the things I write about in my testimony and 
something I have been involved with closely is, and developed 
down in the southeast, is an initiative called the Community 
Regional Resilience Institute that grew out of work with three 
southern cities, Gulfport, Memphis, and Charleston.
    And what they did there was to go work with the local 
players, the private, the nonprofits, the faith-based 
organizations, and the public officials and said what would 
make this community be able to cope well with a big event.
    The goal is to identify those qualities that make a 
community essentially able to withstand and recover from these 
events. We know there are huge cost savings if they do that, 
with the objective of if we can identify those standards, we 
can measure those standards. And then we could rate communities 
like we do hotels on a one through four stars. A four-star 
community could potentially get lower insurance, lower bond 
ratings because they are a much better and safer investment. 
You are going to get your money pay back if you get this right 
here.
    Obviously it has something for the Chamber of Commerce to 
crow about because this is a place, if you are a company and 
you locate, that if things come through here, you are going to 
bounce back.
    So the cost, we are talking about potentially something 
where that work could go out to maybe six or eight more cities. 
It is a grassroots effort. It is convening role. It is not a 
huge overhead and we get the insights.
    We look at that and say is there something that we can 
share with the border other communities and create ideally 
incentives for communities to embrace those. So fundamentally I 
think the message that comes through with all of us here is 
that the expertise for this is really fundamentally often at 
the grassroots level.
    The capability is ultimately always there. There are just 
not enough professionals to go around. And how we create that 
incentive of it not just being an expensive, top down national 
program to one that is more about how we convene, how we 
engage, how we capture the best practices and share it with 
others, that should be where the Federal Government is going 
and I do not see enough of that activity.
    Mr. Jordan. I would like to modify that just a little bit 
in that when a disaster happens, sometimes your local 
authorities and your local networks are traumatized and 
displaced.
    So one of the challenges that you have is you are working 
with parish presidents or other local officials and their kid 
is in another State and the mom is in the hospital and they 
lost everything and they have a million other things going on 
and they need help too. So that sometimes what you want to do 
is have an external support system that is not necessarily 
commanding it but supporting it.
    For example, with Chile right now, the head of the American 
Chamber in Chile was asking us to provide examples of what 
other Chambers of Commerce have done, and we had the head of 
the American Chamber in the Philippines and the head of the 
Manhattan Chamber already sending him information such as, this 
is what happened with us in this situation. These are the kind 
of things we are here to help.
    And I could see kind of a network of, say, mayors or city 
managers or people from other parts of the country and where 
the Federal Government, of course, having visibility across the 
country can also be providing kind of a backstop too, 
especially when you have folks who have never been through a 
disaster and want to have kind of the lesson learned from 
somewhere else on this.
    So I think that we are moving toward a distributed network 
idea where it is not so much a top down system or just a bottom 
up system, but both.
    I think the other thing that happens right now is that the 
areas of responsibility for people are too nebulously defined.
    For example, after the flood Cedar Rapids officials said 
they needed five billion dollars in housing assistance.
    And I went and I was working with the local chamber, the 
city manager, the local authorities. I said, who is point on 
housing? They said, well, we are. No. Who is responsible for 
doing this?
    It takes a little while to start to drill down to figuring 
out who is responsible for the different functions; and then 
how do you help the person that is in housing? Do you help 
coordinate them with the person who is responsible for 
environmental cleanup because debris removal, for example, is 
important.
    Or with the lawyers, because sometimes in low income 
communities, they do not necessarily have clear title to the 
property. So actually getting the legal title squared away and 
the debris cleanup squared away is a prerequisite to getting 
the housing situation dealt with.
    So one of the things that we need to do is sharpen up the 
roles and responsibilities and then also sharpen up how they 
connect to each other and then sharpen up how these on-the-
ground systems connect with support systems outside. It is kind 
of like a three-level system that we are really looking at 
here.
    Senator Pryor. That is helpful.
    Mr. Jordan, let me follow up with you on a different 
matter. You mentioned in your opening statement Project Impact. 
You just glazed over that a little bit. As I understand it, 
that was a FEMA initiative under James Lee Witt, and I am not 
sure about this but I think it was scrapped several years ago 
under the Bush Administration.
    Tell me about the pros and cons of Project Impact and 
should FEMA be doing that again?
    Mr. Jordan. We have been talking about the importance of 
this mutual assistance network, the support system between the 
different groups and then between the government, the nonprofit 
and the private sector.
    You know that famous saying that people always trot out 
that ``after disasters is not the time you want to be 
exchanging business cards.'' I am sure you must have heard that 
one a million times. Well, it is true.
    After a disaster, folk's bandwidth, gets sliced very thin 
and they are running around and they end up having to fall back 
on trusted relationships.
    So one of the things we think that happened with Project 
Impact was that by 2000 there were 220 more or less communities 
that were involved in it, and what you had was, say, the head 
of the local chamber, the head of the utility, the head of the 
hospital, the head of the school system, the emergency 
responders, the mayor's office were all meeting together, maybe 
on a quarterly basis to compare notes, and work through 
different preparedness issues with each other. And then James 
Lee Witt convened all of the communities together so they could 
know each other.
    So for example, one of the things that happens after a 
disaster is that everybody focuses on the direct impact area. 
So everyone is focusing on New Orleans after Hurricane Katrina. 
But we were getting phone calls from Texarkana and Little Rock 
for assistance too, and for a smaller community just dealing 
with a couple of hundred people is a big deal. They needed help 
with questions like: ``Who do I go to or who can help me to 
figure out how to deal with things like that?''
    Project Impact was kind of a first at creating one of those 
distributed mutual assistance network models. And I think some 
kind of evolution of that is naturally going to happen. I mean, 
it is one of those things if it was not discovered yet it would 
be anyway. The question then is how do we aid and abet it as 
effectively as possible.
    So to answer the rest of your question, obviously the cons 
of it is that it could be time intensive, more time intensive 
than what we currently have but I am a firm believer in an 
ounce of prevention being worth a pound of cure. So I mean, I 
think the cons can be overcome.
    Senator Pryor. Right. We have been reminded with Haiti and 
Chile about how devastating an earthquake would be. In this 
country I think psychologically we think the LA area or the 
West Coast, when we talk about major earthquakes, but we have a 
fault zone in the Boothill of Missouri and down into Arkansas, 
the New Madrid fault.
    Just based on what you know, if that fault were to cause an 
earthquake today, what is your sense of how prepared we are to 
respond to that?
    Mr. Harrald. I have been working with FEMA for the last 2 
years on this project so I have been going to a lot of State 
and local meetings and that brings out a lot of the issues that 
we have been talking about.
    It is clearly something that exceeds the capacity of the 
existing response system and it is very unique in that it 
affects eight States, four Federal regions, the coordination 
aspect, the mutual aid aspects are daunting. The numbers are 
impressive. You will have very large populations that will move 
to areas that have the problems even just mentioned of going to 
areas where they need service, things are up and running but 
they do not have the capacity.
    You will have to bring in large capacities into areas, the 
Memphis area and the eastern Arkansas area particularly. And 
this is going to be the site of the 2011 national level 
exercise which will be interesting to see.
    But are we prepared? You will see a lot of unmet needs for 
quite a period of time, and it is a good example of the issue, 
I think, just to pick one example of that I think reinforces 
the point that we all are making.
    If you look at collapsed building response and you look at 
the number of people who would be impacted and you run that out 
using the resources needed using FEMA's own standards for 
search and rescue, urban search and rescue teams, we have 20 
search and rescue teams. You would need for immediate response 
10 times that.
    So is the answer training 10 times more national search and 
rescue teams or is the answer providing capabilities locally 
and maybe training volunteers for light rescue from people who 
are not trapped under collapsed multi-story buildings but are 
trapped under furniture or a beam or whatever else where 
crowbars and jacks and hand tools would work?
    The next step up is the local volunteer fire departments 
will have some local rescue capability. The next step up is 
mutual aid from nearby counties and nearby States.
    So the issue is with the core of expertise and the 
knowledge that we have, how do we leverage that to meet these 
needs?
    There are many things that come out of that the people 
really are not looking at the ongoing public health needs. When 
you move a million people who have heart problems, diabetes 
problems, other issues and they have left their medications, 
and you are dealing with hundreds of thousands of people like 
this in shelters, who is providing that resource?
    I think some of the preparedness work that FEMA has done 
outlines these issues. I do not know if we are at the point of 
really looking at creative ways to solve some of the problems. 
Tendency says this is really hard stuff so we are not going to 
deal with it.
    Senator Pryor. A lot of that area in northeast Arkansas and 
the Boothill of Missouri is rural. But you have two pretty good 
size urban centers there with Memphis and St. Louis.
    Mr. Harrald. Memphis would be the major impact area.
    Senator Pryor. Just one thing I would worry about are the 
bridges over the Mississippi River depending on how bad this 
thing is.
    Mr. Harrald. Well, the role of infrastructure in that large 
area, both the transportation infrastructure and the power 
industry, the point that Dr. Flynn was just talking about, 
about micro-energy is a potential solution because the long-
term recovery of electrical power if you have an earthquake in 
that area in January or February it is one thing living in the 
streets in Haiti or even in the springtime or summer in Chile 
but not so much in February in northeast Arkansas.
    So providing shelters to very large numbers of people is 
going to be a very difficult issue.
    Mr. Jordan. Two years ago our June workshop focused on the 
New Madrid fault and FEMA graciously organized it for us, 
organized the scenario for us. And the Memphis Chamber 
leadership participated and they have developed a new business 
group to promote the resilience of the region more effectively.
    That being said, with every disaster there are always 
unanticipated consequences. So again one of the things that we 
think needs to happen ahead of time is to raise awareness 
through preparation, drills, training, public awareness, things 
like that.
    We will support a number of different unintended things 
that came out as a result of the workshop. For example, with an 
earthquake you might have a situation where people are going to 
be more interested in sheltering in place.
    We are figuring out crazy things like how do we get more 
helicopters into the region. Things like that.
    So there are going to be a number of curve balls. Again it 
comes to this idea of a distributed network solution. We need 
to figure out who needs a big connected event that will work.
    Senator Pryor. Does the proximity of the Little Rock Air 
Force Base help?
    Mr. Jordan. Absolutely.
    Senator Pryor. And they have the lift capacity with the C-
130s there.
    Mr. Jordan. Very much so.
    Mr. Flynn. I think that the trends overall are not good. We 
rely so heavily on State and local capability for managing 
these events, and States and locals are clearly under enormous 
stress. So their capacity to meet the day-to-day is challenged.
    So meeting a catastrophic event obviously stresses that 
system because we are increasingly living in more urbanized 
settings and more dependent on aging infrastructure. When 
things go wrong, they go very wrong, not because of what mother 
nature did but largely because of how we are living.
    So yes, I very much worry about our infrastructure which is 
already under strain by age, high use, and low maintenance 
increasingly and what its vulnerabilities are.
    I will just point back to one of the areas where we are 
better prepared for earthquakes is Los Angeles. But just 
imagine sort of the nightmare scenario, there is an earthquake 
that essentially turns Terminal Island into essentially mush. 
It liquefies the island because it is all fill and it fills up 
the harbor.
    Fifty percent of all the energy west of the Rockies 
Mountains comes from the port of Long Beach, the southern part 
of their port complex. Of that, right today there are about 7 
days of refined fuels in the entire southern California 
economy.
    So 28 million people basically depend upon 7 days of fuel 
that is available. That is with people having on average a half 
a tank of gas. That is what is at the filling stations and on-
site with refineries.
    So you disrupt that port, the crude cannot come in. The 
refineries go idle. You are literally out of gas and there is 
only one pipeline that connects the southern California region 
to the national pipe grid and the feed fuel to Phoenix.
    So the challenges are enormous when we think about these 
events because we are so dependent on infrastructure and 
particularly in these urbanized areas. We are not doing as much 
as we should on mapping out these risks and thinking about 
contingencies.
    That seems like an impossible scenario here. But there are 
basic things clearly that we can do. We need some salvage 
capability to open a harbor quickly. We need to know how to do 
that and that is civil infrastructure largely.
    But there are no salvage ships on the West Coast. The 
nearest one is in Pearl Harbor. If the Navy wanted to get one 
today, they would probably have to get it from Singapore or 
from Pusan, Korea, to begin the process of moving something out 
of the way.
    So those kinds of problems are still there, and of course, 
that scenario could be a terrorist one as well and again that 
can bring you back to both the national security issue as well 
as the natural hazard issue that create an incentive for 
investing more on not just preventing but being able to respond 
and recover, and then that has deterrent value.
    So natural disasters we cannot prevent. So there is a lot 
of opportunity to think about this differently. We are still 
pretty compartmentalized, when we are looking at dollars and 
how we can approach it.
    Senator Pryor. Well, we could go on and on about this. I 
have several pages of questions and probably what I will do is 
submit a few to you all in writing along with some of the other 
senators who could not be here today.
    I really want to thank you all for being here. I am just 
glad that somebody is paying attention to all of this, and I am 
hoping that your work and the work of many others around the 
country will lead to better preparedness so that we can change 
the green line on that chart and change some lines on a lot of 
other charts as well.
    Anyway, thank you all for being here, and what we will do 
is leave the record open for 15 days. That is our custom here 
in the Subcommittee. Leave it open for 15 days and we may get 
you some more questions in writing and we would appreciate your 
response on those.
    And like I said, some of those may come from other 
Subcommittee Members as well. Thank you all for being here and 
we will adjourn.
    [Whereupon, at 2:02 p.m., the Subcommittee was adjourned.]



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