    [House Hearing, 117 Congress]
    [From the U.S. Government Publishing Office]

                  RECOVERY UPDATE: STATUS OF FEMA RECOVERY
                   EFFORTS IN PUERTO RICO AND U.S. VIRGIN
                   ISLANDS FIVE YEARS AFTER HURRICANES IRMA
                   AND MARIA
    =======================================================================

                                    (117-58)

                           REMOTELY ATTENDED HEARING

                                   BEFORE THE

                                SUBCOMMITTEE ON
                   ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND
                                EMERGENCY MANAGEMENT

                                     OF THE

                                  COMMITTEE ON
                       TRANSPORTATION AND INFRASTRUCTURE
                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED SEVENTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                               SEPTEMBER 15, 2022

                                   __________

                           Printed for the use of the
                 Committee on Transportation and Infrastructure

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

         Available online at: https://www.govinfo.gov/committee/house-
         transportation?path=/browsecommittee/chamber/house/committee/
                                 transportation

                                     __________

                      U.S. GOVERNMENT PUBLISHING OFFICE
    63-335 PDF                   WASHINGTON : 2026
    =======================================================================
                COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

      PETER A. DeFAZIO, Oregon, Chair
    SAM GRAVES, Missouri                 ELEANOR HOLMES NORTON,
    ERIC A. ``RICK'' CRAWFORD, Arkansas    District of Columbia
    BOB GIBBS, Ohio                      EDDIE BERNICE JOHNSON, Texas
    DANIEL WEBSTER, Florida              RICK LARSEN, Washington
    THOMAS MASSIE, Kentucky              GRACE F. NAPOLITANO, California
    SCOTT PERRY, Pennsylvania            STEVE COHEN, Tennessee
    RODNEY DAVIS, Illinois               ALBIO SIRES, New Jersey
    JOHN KATKO, New York                 JOHN GARAMENDI, California
    BRIAN BABIN, Texas                   HENRY C. ``HANK'' JOHNSON, Jr.,
    GARRET GRAVES, Louisiana             Georgia
    DAVID ROUZER, North Carolina         ANDRE CARSON, Indiana
    MIKE BOST, Illinois                  DINA TITUS, Nevada
    RANDY K. WEBER, Sr., Texas           SEAN PATRICK MALONEY, New York
    DOUG LaMALFA, California             JARED HUFFMAN, California
    BRUCE WESTERMAN, Arkansas            JULIA BROWNLEY, California
    BRIAN J. MAST, Florida               FREDERICA S. WILSON, Florida
    MIKE GALLAGHER, Wisconsin            DONALD M. PAYNE, Jr., New Jersey
    BRIAN K. FITZPATRICK, Pennsylvania   ALAN S. LOWENTHAL, California
    JENNIFFER GONZALEZ-COLON,            MARK DeSAULNIER, California
      Puerto Rico                        STEPHEN F. LYNCH, Massachusetts
    TROY BALDERSON, Ohio                 SALUD O. CARBAJAL, California
    PETE STAUBER, Minnesota              ANTHONY G. BROWN, Maryland
    TIM BURCHETT, Tennessee              TOM MALINOWSKI, New Jersey
    DUSTY JOHNSON, South Dakota          GREG STANTON, Arizona
    JEFFERSON VAN DREW, New Jersey       COLIN Z. ALLRED, Texas
    MICHAEL GUEST, Mississippi           SHARICE DAVIDS, Kansas, Vice Chair
    TROY E. NEHLS, Texas                 JESUS G. ``CHUY'' GARCIA, Illinois
    NANCY MACE, South Carolina           CHRIS PAPPAS, New Hampshire
    NICOLE MALLIOTAKIS, New York         CONOR LAMB, Pennsylvania
    BETH VAN DUYNE, Texas                SETH MOULTON, Massachusetts
    CARLOS A. GIMENEZ, Florida           JAKE AUCHINCLOSS, Massachusetts
    MICHELLE STEEL, California           CAROLYN BOURDEAUX, Georgia
    Vacancy                              KAIALI`I KAHELE, Hawaii
                                         MARILYN STRICKLAND, Washington
                                         NIKEMA WILLIAMS, Georgia
                                         MARIE NEWMAN, Illinois
                                         TROY A. CARTER, Louisiana
                                         SHEILA CHERFILUS-McCORMICK,
                                         Florida
                                    ------                                7

          Subcommittee on Economic Development, Public Buildings, and
                              Emergency Management

         DINA TITUS, Nevada, Chair
    DANIEL WEBSTER, Florida              ELEANOR HOLMES NORTON,
    THOMAS MASSIE, Kentucky                District of Columbia
    JENNIFFER GONZALEZ-COLON,            SHARICE DAVIDS, Kansas
      Puerto Rico                        CHRIS PAPPAS, New Hampshire, Vice
    MICHAEL GUEST, Mississippi           Chair
    BETH VAN DUYNE, Texas                GRACE F. NAPOLITANO, California
    CARLOS A. GIMENEZ, Florida           JOHN GARAMENDI, California
    SAM GRAVES, Missouri (Ex Officio)    TROY A. CARTER, Louisiana
                                         PETER A. DeFAZIO, Oregon (Ex
                                         Officio)

                                    CONTENTS

                                                                       Page

    Summary of Subject Matter........................................     v

                     STATEMENTS OF MEMBERS OF THE COMMITTEE

    Hon. Dina Titus, a Representative in Congress from the State of
      Nevada, and Chair, Subcommittee on Economic Development, Public
      Buildings, and Emergency Management, opening statement.........     1
        Prepared statement...........................................     3
    Hon. Daniel Webster, a Representative in Congress from the State
      of Florida, and Ranking Member, Subcommittee on Economic
      Development, Public Buildings, and Emergency Management,
      opening statement..............................................     4
        Prepared statement...........................................     5
    Hon. Sam Graves, a Representative in Congress from the State of
      Missouri, and Ranking Member, Committee on Transportation and
      Infrastructure, prepared statement.............................    83

                                   WITNESSES
                                    Panel 1

    Anne Bink, Associate Administrator, Office of Response and
      Recovery, Federal Emergency Management Agency, oral statement..     5
        Prepared statement...........................................     7

                                    Panel 2

    Chris P. Currie, Director, Homeland Security and Justice, U.S.
      Government Accountability Office, oral statement...............    20
        Prepared statement...........................................    22
    Adrienne L. Williams-Octalien, Director, Office of Disaster
      Recovery, U.S. Virgin Islands, oral statement..................    34
        Prepared statement...........................................    37
    Hon. Manuel Laboy, Executive Director, Central Office for
      Recovery, Reconstruction, and Resiliency, Puerto Rico, oral
      statement......................................................    39
        Prepared statement...........................................    40
    Shay Bahramirad, Ph.D., Senior Vice President of Engineering,
      Asset Management, and Capital Programs, LUMA Energy, oral
      statement......................................................    52
        Prepared statement...........................................    53
    Josue A. Colon-Ortiz, Executive Director, Puerto Rico Electric
      Power Authority, oral statement................................    59
        Prepared statement...........................................    61

                           SUBMISSIONS FOR THE RECORD

    Statement of Dawn Bauman, CAE, Senior Vice President, Government
      and Public Affairs, Community Associations Institute, Submitted
      for the Record by Hon. Dina Titus..............................    83

                                    APPENDIX

    Questions to Anne Bink, Associate Administrator, Office of
      Response and Recovery, Federal Emergency Management Agency,
      from:
        Hon. Dina Titus..............................................    87
        Hon. Sharice Davids..........................................    93
        Hon. Daniel Webster..........................................    94
        Hon. Jenniffer Gonzalez-Colon................................    95
    Questions to Chris P. Currie, Director, Homeland Security and
      Justice, U.S. Government Accountability Office, from:
        Hon. Dina Titus..............................................   101
        Hon. Sharice Davids..........................................   102
        Hon. Jenniffer Gonzalez-Colon................................   103
    Questions to Adrienne L. Williams-Octalien, Director, Office of
      Disaster Recovery, U.S. Virgin Islands, from:
        Hon. Dina Titus..............................................   105
        Hon. Sharice Davids..........................................   106
        Hon. Daniel Webster..........................................   106
    Questions to Hon. Manuel Laboy, Executive Director, Central
      Office for Recovery, Reconstruction, and Resiliency, Puerto
      Rico, from:
        Hon. Dina Titus..............................................   107
        Hon. Sharice Davids..........................................   107
        Hon. Jenniffer Gonzalez-Colon................................   107
    Questions to Shay Bahramirad, Ph.D., Senior Vice President of
      Engineering, Asset Management, and Capital Programs, LUMA
      Energy, from:
        Hon. Sharice Davids..........................................   108
        Hon. Jenniffer Gonzalez-Colon................................   110
    Questions to Josue A. Colon-Ortiz, Executive Director, Puerto
      Rico Electric Power Authority, from:
        Hon. Dina Titus..............................................   113
        Hon. Sharice Davids..........................................   113
        Hon. Jenniffer Gonzalez-Colon................................   113

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                               September 12, 2022

        SUMMARY OF SUBJECT MATTER

        TO:      LMembers, Subcommittee on Economic Development,
    Public Buildings, and Emergency Management
        FROM:  LSubcommittee Staff
        RE:      LSubcommittee Hearing on ``Recovery Update: Status
    of FEMA Recovery Efforts in Puerto Rico and U.S. Virgin Islands
    5 Years After Hurricanes Irma and Maria''
    _______________________________________________________________________

                                    PURPOSE

        The Subcommittee on Economic Development, Public Buildings,
    and Emergency Management will meet on Thursday, September 15,
    2022, at 10:00 a.m. EDT in 2167 Rayburn House Office Building
    and via Zoom for a hearing titled, ``Recovery Update: Status of
    FEMA Recovery Efforts in Puerto Rico and U.S. Virgin Islands 5
    Years After Hurricanes Irma and Maria.'' The subcommittee will
    hear testimony from two panels. The first panel will feature
    Anne Bink, Associate Administrator of the Federal Emergency
    Management Agency (FEMA) Office of Response and Recovery. The
    second panel will include Chris Currie, Director of the
    Government Accountability Office (GAO) Office of Homeland
    Security and Justice; Adrienne Williams, Director of the U.S.
    Virgin Islands (USVI) Office of Disaster Recovery (ODR); Manuel
    Laboy, Executive Director of the Puerto Rico Central Office for
    Recovery, Reconstruction, and Resiliency (COR3); Shay
    Bahramirad, Senior Vice President of LUMA Energy; and Josue
    Colon, Executive Director of the Puerto Rico Electric Power
    Authority (PREPA).

                                   BACKGROUND

        The Commonwealth of Puerto Rico and the USVI were
    devastated by Hurricanes Irma and Maria on September 6, 2017,
    and September 20, 2017, respectively. In Puerto Rico the storms
    damaged the entire power grid and triggered the longest
    blackout in U.S. history (11 months), left 43 percent of
    wastewater treatment plants inoperable, 97 percent of roads
    impassable, and 95 percent of Puerto Ricans without drinking
    water, damaged 28 percent of health centers, required 90
    percent of households to apply for individual assistance, and
    tragically caused 3,000 fatalities.\1\ In the USVI the storms
    destroyed 70 percent of the buildings on the main island of St.
    Croix, damaged the entire power grid and communication
    networks, and damaged or destroyed large swaths of critical
    infrastructure such as roads.\2\
    ---------------------------------------------------------------------------
        \1\ RAND. Hurricanes Irma and Maria: Impact and Aftermath. 2020.
    Available at: https://www.rand.org/hsrd/hsoac/projects/puerto-rico-
    recovery/hurricanes-irma-and-maria.html
        \2\ USDA. USDA Tracks Recovery Following Hurricanes Irma & Maria.
    2022. Available at: https://recovery.fema.gov/funding-in-action/
    mariaPR7#::text=Maria%20damaged%20or
    %20destroyed%2070,hit%20Puerto%20Rico%20since%201928.
    ---------------------------------------------------------------------------
        Given the extraordinary level of infrastructure damage
    caused by Hurricane Maria, and the territories' difficult
    financial position, the use of alternative procedures,
    authorized by Section 428 of the Robert T. Stafford Disaster
    Relief and Emergency Assistance Act (Stafford Act, P.L. 93-288,
    as amended), was added to the presidential disaster
    declarations made for the territories.\3\ The alternative
    procedures authority was considered the best option for the
    territories since it enables recipients more flexibility to
    rebuild facilities to meet current needs and build in
    mitigation; thus, outdated infrastructure could be updated and
    designed for long-term resiliency.\4\ When utilizing
    alternative procedures, a fixed cost estimate for each project
    must be agreed upon by the recipient and FEMA before work
    begins.\5\ If the actual cost of a project exceeds the fixed
    cost estimate the recipient is responsible for the overrun.\6\
    ---------------------------------------------------------------------------
        \3\ GAO. FEMA Made Progress in Approving Projects, But Should
    Identify and Assess Risks to the Recovery, GAO-21-264. May 2021.
    Available at: https://www.gao.gov/assets/gao-21-264.pdf. & FEMA. 2017
    Hurricane Season FEMA After-Action Report. July 12, 2017, Available at:
    https://www.fema.gov/sites/default/files/2020-08/fema_hurricane-season-
    after-action-report_2017.pdf
        \4\ Id.
        \5\ Id.
        \6\ Id.
    ---------------------------------------------------------------------------
        Additionally, Congress included Section 20601 in the
    Bipartisan Budget Act of 2018 (BBA 2018) to provide additional
    assistance for the recovery efforts in Puerto Rico and the
    USVI. BBA 2018 authorized FEMA to restore disaster damaged
    facilities or systems that provide critical services to
    industry standard without regard for pre-disaster condition.\7\
    Officials in both Puerto Rico and the USVI have reported to the
    committee that the implementation of BBA has significantly
    aided the recovery process.
    ---------------------------------------------------------------------------
        \7\ FEMA. Implementing Section 20601 of the 2018 Bipartisan Budget
    Act through the Public Assistance Program. September 2018. Available
    at: https://www.fema.gov/sites/default/files/2020-05/
    Section_20601_BBA_FP-104-009-5.pdf.
    ---------------------------------------------------------------------------

    LIQUIDITY CONSTRAINTS AND FUNDING PROCEDURES IN PUERTO RICO AND THE
                        USVI

        Liquidity constraints have persistently hampered hurricane
    recovery efforts in Puerto Rico.\8\ FEMA Public Assistance (PA)
    is a reimbursement-based program.\9\ In general, only after
    applicants pay eligible costs may they request reimbursement
    from PA funds obligated by FEMA.\10\ For this reason,
    applicants need to have initial, non-FEMA funds available to
    cover the costs of project application and management,
    architecture and engineering services, and construction
    contracting before they can receive reimbursement.\11\
    ---------------------------------------------------------------------------
        \8\ GAO. Puerto Rico Recovery: FEMA Made Progress in Approving
    Projects, But Should Identify and Assess Risks to the Recovery, GAO-21-
    264. May 19, 2021. Available at: https://www.gao.gov/products/gao-21-
    264 & NPR. How Puerto Rico's Debt Created A Perfect Storm Before The
    Storm. May 2, 2018. Available at: https://www.npr.org/2018/05/02/
    607032585/how-puerto-ricos-debt-created-a-perfect-storm-before-the-
    storm.
        \9\ CRS. The Status of Puerto Rico's Recovery and Ongoing
    Challenges Following Hurricanes Irma and Maria: FEMA, SBA, and HUD
    Assistance. November 13, 2020. Available at: https://www.crs.gov/
    Reports/R46609.
        \10\ Id.
        \11\ Id.
    ---------------------------------------------------------------------------
        COR3 currently manages reimbursement in Puerto Rico.\12\
    However, Commonwealth agencies, municipalities, and private
    nonprofits often do not have financial reserves and access to
    initial capital to launch projects.\13\ The Commonwealth's
    fiscal crisis has exacerbated these liquidity constraints.\14\
    ---------------------------------------------------------------------------
        \12\ COR3. COR3 Disaster Recovery Federal Funds Management Guide.
    June 2022. Available at: https://recovery.pr.gov/documents/
    CH7_Payment_and_Cash_Management_V3_
    Final_Version_6_13_2022_signed.pdf.
        \13\ Id., and COR3. Seventh Congressional Status Report. January
    31, 2022. Available at: Microsoft Word--Seventh Congressional Report
    (2-1-2022) Rev PRP-Clean.docx.
        \14\ GAO. Puerto Rico Recovery: FEMA Made Progress in Approving
    Projects, But Should Identify and Assess Risks to the Recovery, GAO-21-
    264. May 19, 2021. Available at: https://www.gao.gov/products/gao-21-
    264.
    ---------------------------------------------------------------------------
        FEMA and COR3 have implemented several measures to address
    this issue, including a Working Capital Advance program for
    municipalities and selected FEMA Accelerated Awards Strategy
    (FAASt) Applicants,\15\ and making available limited cash
    advances for immediate cash needs.\16\ Despite these efforts,
    some stakeholders and COR3 acknowledge that liquidity
    constraints and reimbursement delays continue to burden
    applicants and delay project implementation.\17\
    ---------------------------------------------------------------------------
        \15\ Id. and COR3. Seventh Congressional Status Report. January 31,
    2022. Available at: Microsoft Word--Seventh Congressional Report (2-1-
    2022) Rev PRP-Clean.docx.
        \16\ COR3. COR3 Disaster Recovery Federal Funds Management Guide.
    June 2022. Available at: https://recovery.pr.gov/documents/
    CH7_Payment_and_Cash_Management_V3_
    Final_Version_6_13_2022_signed.pdf.
        \17\ Center for Investigative Journalism. Municipal Response to
    Disasters in Puerto Rico Cost Candidates Their Re-elections. February
    22, 2021. Available at: https://periodismoinvestigativo.com/2021/02/
    municipal-response-to-disasters-in-puerto-rico-cost-candidates-their-
    re-elections/.
    ---------------------------------------------------------------------------
        Hurricanes Irma and Maria also hit the USVI amid ongoing
    fiscal instability.\18\ The demands of response and decline in
    tourism and related industries exacerbated the USVI's fiscal
    challenges; some estimates show that public revenues were
    halved following the hurricanes.\19\ Pre and post-disaster
    fiscal challenges have delayed PA project progress since
    applicants have struggled to access initial funding before
    receiving reimbursement.\20\ Additionally, applicants report
    struggling with reimbursement delays that jeopardize project
    advancement after initial launch, ``tremendously impact[ing]
    timely payment to vendors.'' \21\ Delays in payments to
    contractors may also jeopardize an applicants' credibility.\22\
    This, in turn, may lead to price increases as vendors mitigate
    the risk of payment delays and inconsistent revenue by
    increasing the price of project bids.\23\
    ---------------------------------------------------------------------------
        \18\ CRS. Economic and Fiscal Conditions in the U.S. Virgin
    Islands. February 13, 2020. Available at: https://www.crs.gov/Reports/
    R45235.
        \19\ Id.
        \20\ ODR. USVI Recovery Leaders: Summit Report. 2021. Available at:
    https://www.usviodr.com/wp-content/uploads/2022/05/FINAL-2021-USVI-
    Recovery-Leaders-Summit-Report-RS-1.pdf.
        \21\ Id.
        \22\ Id.
        \23\ Id.
    ---------------------------------------------------------------------------
        To alleviate these liquidity constraints, FEMA and ODR have
    launched several initiatives, including the following:
         LIn February 2021, FEMA lifted certain
    restrictions placed upon ODR's management of the PA
    reimbursement process that sometimes delay disbursement,
    including FEMA approval of reimbursement requests.\24\
    ---------------------------------------------------------------------------
        \24\ ODR. FEMA Lifts Manual Drawdown Restriction for Reimbursement
    of Recovery Project Spending. February 3, 2021. Available at: https://
    www.usviodr.com/fema-lifts-manual-drawdown-restriction-for-
    reimbursement-of-recovery-project-spending/.
    ---------------------------------------------------------------------------
         LOn August 16, 2022, ODR announced the launch of
    the Public Assistance Advance Funding program, which is to
    provide up to $50,000 to private nonprofit organizations to
    ensure the launch and progress of stalled recovery projects
    funded through FEMA PA.\25\
    ---------------------------------------------------------------------------
        \25\ ODR. ODR Announces New Program Giving Non-Profits Access to
    Funding for Stalled Recovery Projects. August 16, 2022. Available at:
    https://www.usviodr.com/odr-announces-new-program-giving-non-profits-
    access-to-funding-for-stalled-recovery-projects/.
    ---------------------------------------------------------------------------
         LIn October 2021, ODR reported that FEMA modified
    policies to enable applicants to draw down funds upon receiving
    an invoice, as opposed to once they have already paid for the
    invoiced costs.\26\
    ---------------------------------------------------------------------------
        \26\ ODR. USVI Recovery Leaders: Summit Report. 2021. Available at:
    https://www.usviodr.com/wp-content/uploads/2022/05/FINAL-2021-USVI-
    Recovery-Leaders-Summit-Report-RS-1.pdf.
    ---------------------------------------------------------------------------

    THE BIPARTISAN BUDGET ACT OF 2018, BUILDING CODE COMPLIANCE, AND
                        MODERNIZATION

        BBA 2018 authorized the reconstruction of critical
    disaster-damaged facilities to industry standards, regardless
    of pre-disaster condition, using PA Alternative Procedures,
    which limits applicants to awards determined using fixed cost
    estimates.\27\ PA was additionally authorized for components or
    facilities unaffected by the hurricanes that required upgrade
    or repair so the broader facility or system improvements could
    comply with industry standards.\28\ These provisions addressed
    Stafford Act limitations on the use of PA to rebuild to a more
    resilient standard, given the declining, unmaintained condition
    of some facilities in the territories.\29\
    ---------------------------------------------------------------------------
        \27\ CRS. The Status of Puerto Rico's Recovery and Ongoing
    Challenges Following Hurricanes Irma and Maria: FEMA, SBA, and HUD
    Assistance. November 13, 2020. Available At: https://www.crs.gov/
    Reports/R46609.
        \28\ Section 20601(2) of the BBA of 2018 (P.L. 115-123).
        \29\ Disaster Recovery Reform Act of 2018 (DRRA; Division D of P.L.
    115-254).
    ---------------------------------------------------------------------------
        The Government Accountability Office (GAO) found that both
    COR3 and FEMA officials reported challenges and confusion in
    implementing Section 20601 of BBA 2018 through early 2019.\30\
    Different views between COR3 and FEMA on the application and
    scope of this provision has repeatedly raised congressional and
    stakeholder concern.\31\ In April 2019, then-COR3 Secretary
    Omar Marrero testified before Congress that FEMA's ``efforts to
    limit the applicability of BBA'' delayed recovery and reduced
    the awards available to critical facilities.\32\ In September
    2019, FEMA released guidance clarifying the implementation of
    BBA 2018, which addressed some confusion.\33\
    ---------------------------------------------------------------------------
        \30\ GAO. Emergency Management: FEMA Has Made Progress, but
    Challenges and Future Risks Highlight Imperative for Future
    Improvements, GAO-19-594T. June 12, 2019. Available at: https://
    www.gao.gov/products/gao-19-617t and GAO. Puerto Rico Disaster
    Recovery: FEMA Actions Needed to Strengthen Project Cost Estimation and
    Awareness of Program Guidance, GAO-20-221. February 2020. https://
    www.gao.gov/assets/710/704282.pdf.
        \31\ Testimony by Rep. Lucille Roybal-Allard, U.S. Congress, House
    Appropriations Subcommittee on Homeland Security, Hearing on Disaster
    Recoveries for 2017 and 2018, hearings, 116th Congress, March 12, 2019.
    And testimony by GAO Representative Chris Currie, House Homeland
    Security Committee, U.S. Congress, House Committee on Homeland
    Security, Subcommittee on Emergency Preparedness, Response, and
    Recovery, Road to Recovery: Puerto Rico and the U.S. Virgin Islands
    After Hurricanes Irma and Maria, 116th Congress, July 11, 2019.
        \32\ Testimony by Omar Marrero, Executive Director of COR3, U.S.
    Congress, House Natural Resources Committee, The Status of the
    ``Rebuilding and Privatization of the Puerto Rico Electric Power
    Authority'', hearing, 116th Congress, April 9, 2019.
        \33\ GAO. Puerto Rico Disaster Recovery: FEMA Actions Needed to
    Strengthen Project Cost Estimation and Awareness of Program Guidance,
    GAO-20-221. February 2020. Available at: https://www.gao.gov/products/
    gao-20-221.
    ---------------------------------------------------------------------------

    IMPLEMENTATION OF THE FAAST PROGRAM IN PUERTO RICO

        FEMA and COR3 have demonstrated significant progress in PA
    obligations over the past three years.\34\ FEMA recently
    announced that it had approved 10,000, or 95 percent, of PA
    projects for Puerto Rico's hurricane recovery.\35\ However,
    COR3 and FEMA data reflect that much of the reconstruction has
    yet to be completed, and in many cases, has not begun.
    ---------------------------------------------------------------------------
        \34\ GAO. Puerto Rico Recovery: FEMA Made Progress in Approving
    Projects, But Should Identify and Assess Risks to the Recovery, GAO-21-
    264. Available at: https://www.gao.gov/products/gao-21-264 and CRS. The
    Status of Puerto Rico's Recovery and Ongoing Challenges Following
    Hurricanes Irma and Maria: FEMA, SBA, and HUD Assistance. November 13,
    2020. Available at: https://www.crs.gov/Reports/R46609.
        \35\ FEMA. FEMA Approves its 10,000th Projects Hurricane Maria
    Recovery Project. August 3, 2022. Available at: https://www.fema.gov/
    press-release/20220803/fema-approves-its-10000th-projects-hurricane-
    maria-recovery-project.
    ---------------------------------------------------------------------------
        In early 2020, FEMA and COR3 launched a new variation of PA
    called the FEMA Accelerated Awards Strategy (FAASt) to expedite
    obligations for four Commonwealth agencies in Puerto Rico.\36\
    These agencies are the Puerto Rico Electric Power Authority
    (PREPA), the Puerto Rico Aqueduct and Sewer Authority (PRASA),
    the Puerto Rico Department of Education (PRDE), and Puerto Rico
    Public Housing Administration (PRPHA). Under the FAASt
    structure FEMA and COR3 obligated aggregated awards for each
    agency based on samples of damaged sites and estimated costs.
    These obligations serve as a total ``recovery budget'' for each
    agency's hurricane recovery costs across the territory, but do
    not represent FEMA approval of the individual projects that
    need to be completed by those agencies with the obligations.
    Since FAASt awards represent most PA obligated funds for
    hurricane recovery ($15.6 billion of approximately $21.3
    billion in permanent work obligations for hurricane
    recovery),\37\ the process of approving individual projects
    entails significant work for FEMA, COR3, and FAASt applicants.
    ---------------------------------------------------------------------------
        \36\ FEMA. FEMA Accelerated Awards Strategy (FAASt). June 2, 2022.
    Available at: https://www.fema.gov/about/reports-and-data/faast.
        \37\ Id.
    ---------------------------------------------------------------------------
        According to COR3, the FAASt program was designed in part
    to mitigate the applicants' ``lack of technical expertise to
    make decisions when designing their projects and the need to
    balance the assumption of risk'' and to ``allo[w] critical
    infrastructure projects to be grouped together in order to
    expedite recovery work'' thereby moving the recovery
    forward.\38\ The program also enables applicants to access
    funds to contract for architecture and engineering services for
    individual projects.\39\
    ---------------------------------------------------------------------------
        \38\ COR3. Seventh Congressional Status Report. January 31, 2022.
    Available at: Microsoft Word--Seventh Congressional Report (2-1-2022)
    Rev PRP-Clean.docx and COR3. FEMA Accelerated Awards Strategy (FAASt)
    Projects Execution. 2022. Available at: https://recovery.pr.gov/en/
    road-to-recovery/pa-faast.
        \39\ Id.
    ---------------------------------------------------------------------------
        News media reports indicate that many individual PA
    projects may exceed cost estimates.\40\ If individual FAASt
    projects incur such cost overruns, the overall FAASt
    obligations could prove insufficient to support the work of
    reconstructing territory-wide critical services (utilities,
    water/wastewater, education system, and public housing).
    ---------------------------------------------------------------------------
        \40\ Center for Investigative Journalism. Major recovery projects
    to be paid for with recovery funds moving at snail's pace. September
    16, 2021. https://periodismoinvestigativo.com/2021/09/major-recovery-
    projects-to-be-paid-for-with-recovery-funds-moving-at-snails-pace/ and
    Center for Investigative Journalism. Retrasado y con alza en los costos
    de construccion el centro de salud de Vieques. January 21, 2022.
    Available at: https://periodismoinvestigativo.com/2022/01/retrasado-y-
    con-alza-en-los-costos-de-construccion-el-centro-de-salud-de-vieques/.
    ---------------------------------------------------------------------------

    PA ALTERNATIVE PROCEDURES AND COST ESTIMATES IN THE USVI

        The USVI opted not to group their alternative procedure
    projects into agency-wide obligations like Puerto Rico has done
    with the FAASt program. Therefore, each permanent work project
    using alternative procedures authorities receives an individual
    obligation.
        BBA 2018 authorized applicants in the USVI to receive PA to
    cover the costs of reconstructing eligible facilities to
    industry standards ``without regard to the pre-disaster
    condition of the facility or system.'' However, in its most
    recent annual recovery status report, ODR raised repeated
    concerns that FEMA's interpretation of BBA 2018 does not
    capture congressional intent ``to repair all eligible damages
    both pre- and post-disaster, to remedy pre-disaster conditions
    and even to replace undamaged building components to achieve
    industry standards.'' \41\ ODR reports that FEMA's narrow
    interpretation of BBA 2018 has impeded the territory's ability
    to receive assistance sufficient to reconstruct eligible
    facilities to industry standards.\42\
    ---------------------------------------------------------------------------
        \41\ ODR. Annual Progress Report. September 2021. Available at:
    https://www.usviodr.com/wp-content/uploads/2021/12/
    DisasterRecovery2021.pdf.
        \42\ Id.
    ---------------------------------------------------------------------------
        Additionally, ODR has raised concerns that FEMA's Building
    Cost Index does not accurately estimate the high cost of
    construction in the USVI, nor the rising costs of construction
    attributed to inflation.\43\ ODR reports that this oversight
    ``could cost the Territory many hundreds of millions of dollars
    if not corrected and will cause longer term major construction
    projects to have inadequate funding.'' \44\
    ---------------------------------------------------------------------------
        \43\ Id.
        \44\ Id.
    ---------------------------------------------------------------------------

    CONTRACTING AND SUBCONTRACTING IN PUERTO RICO AND THE USVI

        It is anticipated that Puerto Rico will encounter a
    shortage of local contractors when completing reconstruction
    work.\45\ To complete recovery projects costing $10 billion per
    year, Puerto Rico may need up to 32,000 additional workers and
    shortfalls among licensed engineers and other building industry
    professionals, as well as grant writers and managers are
    expected.\46\ It has been reported that the scale of federal
    funds delivered to Puerto Rico is ``likely to fundamentally
    change the economy in terms of labor, materials, and
    equipment,'' \47\ and it is estimated that approximately 75
    percent of the workers required for recovery will come from
    outside of Puerto Rico.\48\
    ---------------------------------------------------------------------------
        \45\ RAND. Building Back Locally: Supporting Puerto Rico's
    Municipalities in Post-Hurricane Reconstruction. 2020. Available at:
    https://www.rand.org/pubs/research_reports/RR3041.html.
        \46\ RAND. Building Back Locally: Supporting Puerto Rico's
    Municipalities in Post-Hurricane Reconstruction. 2020. Available at:
    https://www.rand.org/pubs/research_reports/RR3041.html.
        \47\ RAND. Forecasting Public Recovery Expenditures' Effect on
    Construction Prices and the Demand for Construction Labor. 2022.
    Available at: https://www.rand.org/pubs/research_reports/RRA1116-
    4.html.
        \48\ Id.
    ---------------------------------------------------------------------------
        In 2019 the GAO found that shortages among local and
    territory government personnel in the USVI exacerbated the
    difficulties of hurricane recovery.\49\ Both FEMA and USVI
    staff have additionally reported shortfalls among several key
    industries critical to executing recovery projects, including
    architecture and engineering firms.\50\
    ---------------------------------------------------------------------------
        \49\ GAO. U.S. Virgin Islands Recovery: Additional Actions Could
    Strengthen FEMA's Key Disaster Recovery Efforts, GAO-20-54. November
    2019. Available at: https://www.gao.gov/assets/gao-20-54.pdf.
        \50\ ODR. USVI Recovery Leaders: Summit Report. 2021. Available at:
    https://www.usviodr.com/wp-content/uploads/2022/05/FINAL-2021-USVI-
    Recovery-Leaders-Summit-Report-RS-1.pdf.
    ---------------------------------------------------------------------------

                                   CONCLUSION

        Five years after the devastation Hurricanes Irma and Maria
    brought to Puerto Rico and the USVI progress has been made in
    the recovery efforts. However, many challenges remain. This
    hearing will provide the subcommittee an opportunity to hear
    directly from federal and territory officials on the remaining
    challenges in Puerto Rico and the USVI and lessons Congress
    might learn from the disaster recoveries.

                                  WITNESS LIST

         LAnne Bink, Associate Administrator, Office of
    Response and Recovery, Federal Emergency Management Agency
    (FEMA)
         LChris Currie, Director, Office of Homeland
    Security and Justice, Government Accountability Office
         LAdrienne Williams, Director, Office of Disaster
    Recovery, U.S. Virgin Islands
         LManuel Laboy, Executive Director, Office for
    Recovery, Reconstruction, and Resiliency, Puerto Rico
         LShay Bahramirad, Senior Vice President, LUMA
    Energy
         LJosue Colon, Executive Director, Puerto Rico
    Electric Power Authority

      RECOVERY UPDATE: STATUS OF FEMA RECOVERY EFFORTS IN PUERTO RICO AND
         U.S. VIRGIN ISLANDS FIVE YEARS AFTER HURRICANES IRMA AND MARIA

                                  ----------

                          THURSDAY, SEPTEMBER 15, 2022

                      House of Representatives,
          Subcommittee on Economic Development, Public
                   Buildings, and Emergency Management,
                Committee on Transportation and Infrastructure,
                                                        Washington, DC.
        The subcommittee met, pursuant to call, at 10:07 a.m., in
    room 2167 Rayburn House Office Building and via Zoom, Hon. Dina
    Titus (Chair of the subcommittee) presiding.
        Members present in person: Ms. Titus, Mr. Carter of
    Louisiana, Mr. Webster of Florida, Miss Gonzalez-Colon, and Mr.
    Guest.
        Members present remotely: Ms. Norton, Ms. Davids of Kansas,
    and Mr. Garcia of Illinois.
        Ms. Titus. The meeting will please come to order.
        I want to, first, ask unanimous consent to declare a recess
    at any time during the hearing if it is necessary. Without
    objection, so ordered.
        I also ask unanimous consent that Members not on the
    subcommittee be permitted--why am I hearing this echo?
        I am sorry. OK. I also ask unanimous consent that Members
    not on the subcommittee be permitted to sit with the
    subcommittee at today's hearing and ask questions. Without
    objection, so ordered.
        As a reminder, please keep your microphone muted--which we
    weren't doing apparently--unless speaking. Should I hear any
    inadvertent background noise, I will request that the Member
    please mute their microphone.
        To insert a document into the record, please have your
    staff email it to DocumentsT&I@mail.house.gov.
        First, let me thank our witnesses for being here today to
    discuss the Federal disaster recovery in Puerto Rico and the
    U.S. Virgin Islands as the 5-year anniversary of Hurricane Irma
    and Maria are upon us.
        Before we start, though, I would like to recognize and
    welcome a former colleague of mine and friend, Governor
    Pierluisi, who is here from Puerto Rico. Thank you so much for
    being here. If you feel like interjecting anything, you are
    more than welcome to join us at the table.
        Governor Pierluisi. Madam Chair and Mr. Ranking Member, I
    will just say that I thank the committee for holding this
    oversight hearing on the status of the recovery and
    reconstruction of Puerto Rico's infrastructure as a result of
    both Irma and Maria. And so, I look forward to being here for
    part of the hearing, and I thank as well the Biden-Harris
    administration, FEMA in particular, for their support, for the
    support Puerto Rico is getting in the context of the pending or
    ongoing reconstruction.
        So, thank you, ma'am.
        Ms. Titus. Thank you for being here. You are always
    welcome. It is nice to see you.
        Governor Pierluisi. Likewise.
        Ms. Titus. These hurricanes, Irma and Maria, absolutely
    devastated Puerto Rico and the Virgin Islands. They ravaged the
    islands' infrastructure, the electric grids were wiped out,
    roads were made impassable, critical water infrastructure was
    severely damaged, schools were just wiped away, and thousands
    of homes were destroyed. The Territorywide destruction was
    unprecedented and it posed major challenges for disaster
    response and recovery.
        When Irma and Maria struck, these two islands did not have
    the necessary funds available to support a major disaster
    recovery. As we all know, FEMA's recovery model is centered on
    reimbursement. It is nearly impossible to kick-start a swift
    and efficient recovery without access to capital within the
    existing model. So, the scale of destruction, paired with
    liquidity constraints, created an unprecedented challenge for
    the islands and FEMA.
        The people of Puerto Rico and the Virgin Islands are
    entitled to the same quality of critical infrastructure
    available to the mainland. This includes access to
    transportation, education, healthcare, reliable electricity,
    and clean drinking water.
        So, while this recovery poses many difficulties, it is
    essential that we face the challenges head-on and be sure that
    these facilities are put back in place.
        A second challenge for the recovery effort was Federal
    underinvestment in the islands' public infrastructure prior to
    the storms. Most public infrastructure already required
    significant improvements. Consequently, it was quickly
    determined that FEMA should not use its traditional Public
    Assistance authorities to build back to status quo ante.
    Instead, FEMA, Puerto Rico, and the U.S. Virgin Islands agreed
    to utilize a new authority provided by section 428 of the
    Stafford Act. This is known as alternative procedures, and it
    would allow the Territories to build back better and be more
    resilient in the face of any future storms.
        It is important to note, however, that to use these
    alternate procedures, FEMA and the impacted applicant must
    determine the value of the damage and develop a fixed-cost
    estimate for each project. If the actual cost of the project
    exceeds the fixed-cost estimate, the applicant is responsible
    for the cost overruns.
        It is critical that the estimates are correct from the
    beginning so construction can begin swiftly once project funds
    are obligated. Challenges posed by continued liquidity
    constraints in the Territories, the global pandemic, and
    inflation, however, have caused many concerns that it may not
    be possible to complete these projects at their estimated cost.
        I hope we can talk about the potential overruns with
    witnesses today and how we are going to address that challenge.
        I am encouraged to hear from the disaster recovery leaders
    in Puerto Rico and the U.S. Virgin Islands that their
    relationship with FEMA has improved in recent years, and the
    pace of recovery is increasing. There has been some success in
    obligating funds for projects, but unfortunately little
    reconstruction work has actually begun. We would like to hear
    about that as well.
        Reconstruction marks a new phase of recovery on the
    islands. I look forward to discussing the challenges and the
    solutions with the outstanding witnesses we have here today so
    that we can ensure that the future of these recoveries faces
    fewer roadblocks than they had in the past.
        I am committed to remaining an active partner in this
    recovery until the very last repair project is completed, and I
    expect FEMA to commit to us to doing the same.
        The people of Puerto Rico and the U.S. Virgin Islands have
    displayed incredible resilience for the past 5 years, and
    patience, I might add. So, I thank our witnesses for being here
    today, and I look forward to discussing lessons learned and how
    we can improve the process, not just for these two areas, but
    any place in the future where something similar might occur.
        [Ms. Titus' prepared statement follows:]

      Prepared Statement of Hon. Dina Titus, a Representative in Congress
         from the State of Nevada, and Chair, Subcommittee on Economic
            Development, Public Buildings, and Emergency Management
        I'd like to thank our witnesses for being here today to discuss the
    federal disaster recovery in Puerto Rico and the U.S. Virgin Islands at
    the five-year anniversary of Hurricanes Irma and Maria.
        These hurricanes absolutely devastated Puerto Rico and the Virgin
    Islands. They ravaged the islands' infrastructure--the electric grids
    were wiped out, roads were made impassable, critical water
    infrastructure severely damaged, and thousands of homes were destroyed.
    The territory-wide destruction was unprecedented and posed major
    challenges for disaster response and recovery.
        When Irma and Maria struck, Puerto Rico and the Virgin Islands did
    not have the necessary funds available to support a major disaster
    recovery. The Federal Emergency Management Agency's (FEMA) recovery
    model is centered upon reimbursement. It is near impossible to
    kickstart a swift and efficient recovery without access to capital
    within the existing model. The scale of the destruction paired with
    liquidity constraints created an unprecedented challenge for the
    islands and FEMA.
        The people of Puerto Rico and the Virgin Islands are entitled to
    the same quality of critical infrastructure available on the mainland.
    This includes access to transportation, education, health care,
    reliable electricity, and clean drinking water. So, while this recovery
    poses many difficulties--it is essential that we face challenges head
    on.
        A second challenge this recovery encountered was federal
    underinvestment in the island's public infrastructure prior to the
    storms. Most public infrastructure already required significant
    improvements. Consequently, it was quickly determined that FEMA should
    not use its traditional public assistance authorities to build back
    what previously existed. Instead, FEMA, Puerto Rico, and the USVI
    agreed to utilize new authorities provided by Section 428 of the
    Stafford Act, known as alternative procedures, which would allow the
    territories to build back better and more resilient.
        However, it is important to note that to use alternative
    procedures, FEMA and the impacted applicant must determine the value of
    disaster damage and develop a fixed cost estimate for each project. If
    the actual cost of any project exceeds the fixed cost estimate the
    applicant is responsible for cost over runs. It is critical that the
    estimates are correct, and construction can begin swiftly once project
    funds are obligated. However, challenges posed by continued liquidity
    constraints in the territories, the global pandemic, and inflation have
    created many concerns that it may not be possible to complete projects
    at their estimated cost. I hope to frankly discuss these potential
    overruns with the witnesses today.
        I am encouraged to hear from disaster recovery leaders in Puerto
    Rico and the Virgin Islands that their relationship with FEMA has
    improved in recent years and the pace of recovery has increased. There
    has been particular success obligating projects. However, very little
    reconstruction work has actually begun.
        Reconstruction marks a new phase of recovery on the islands. I look
    forward to discussing potential challenges and solutions with the
    witnesses regarding reconstruction, so we ensure the future of these
    recoveries faces fewer roadblocks than the past.
        I am committed to remaining an active partner in this recovery
    until the last repair project is complete. I expect FEMA to commit to
    do the same.
        The people of Puerto Rico and the Virgin Islands have displayed
    incredible resilience these past five years. I thank our witnesses for
    being here today and look forward to discussing lessons learned and how
    we can make the remainder of this recovery a success.

        Ms. Titus. With that, I would like to ask our ranking
    member for his opening statement, Mr. Webster.
        Mr. Webster of Florida. Thank you, Chair. Thank you to the
    witnesses for being here today.
        It has been 5 years since Hurricanes Maria and Irma hit
    Puerto Rico and the U.S. Virgin Islands. I look forward to
    hearing from our witnesses today on what the recovery process
    has looked like, what successes and challenges they have faced,
    and lessons learned that we would be able to apply across
    disaster recovery efforts.
        This is a unique opportunity to examine how our efforts to
    cut redtape and streamline processes have been implemented by
    FEMA. Time is money. The longer it takes for communities to
    rebuild, the higher the costs to both those communities and to
    the taxpayer.
        At times it seems like after Congress removes redtape, more
    redtape kind of appears. And FEMA is kind of the perpetrator of
    that. We simply can't afford to continue doing things the way
    we have done them before and expect some kind of different
    results.
        For example, in the Sandy Recovery Improvement Act, we
    created section 428, a choice for a streamlined, faster process
    or to use the old paperwork-intensive process for rebuilding
    the infrastructure. The 428 authority was intended to speed up
    the process by basing assistance on certified cost estimates.
    The idea was to reduce costs by shortening the rebuilding time,
    cutting administrative costs, and arriving faster at a more
    definitive dollar amount for a project. Yet by many accounts,
    the 428 process is looking more like the old cumbersome
    process, removing any incentives to use it.
        The 428 authority and similar reforms have been key tools
    in the recovery efforts in Puerto Rico and the U.S. Virgin
    Islands. Understanding how these reforms are working--or not
    working--will help us know what action to take.
        A complicated recovery process not only hurts communities
    hit by disaster, it also increases costs to the taxpayer,
    especially given the impact high inflation rates are now having
    on the costs of materials and labor.
        I look forward to hearing the testimony from our witnesses
    today. And thank you, Chair, for allowing this hearing. And I
    yield back.
        [Mr. Webster of Florida's prepared statement follows:]

    Prepared Statement of Hon. Daniel Webster, a Representative in Congress
    from the State of Florida, and Ranking Member, Subcommittee on Economic
            Development, Public Buildings, and Emergency Management
        Thank you, Chair Titus, and thank you to our witnesses for being
    here today.
        It has been 5 years since hurricanes Maria and Irma hit Puerto Rico
    and the U.S. Virgin Islands.
        I look forward to hearing from our witnesses today on what the
    recovery process has looked like, what successes and challenges they
    have faced, and lessons learned that we could apply across disaster
    recovery efforts. This is a unique opportunity to examine how our
    efforts to cut red tape and streamline processes have been implemented
    by FEMA.
        Time is money--the longer it takes communities to rebuild, the
    higher the costs to both those communities and to the federal taxpayer.
        At times it seems after Congress removes red tape, more red tape is
    created by FEMA, and we simply cannot afford to continue doing things
    the same way and expect different results. For example, in the Sandy
    Recovery Improvement Act, we created section 428 of the Stafford Act
    intended to give States a choice for a streamlined, faster process or
    to use the old, paperwork-intensive process for rebuilding
    infrastructure. 428 authority was intended to speed up the process by
    basing assistance on certified cost estimates.
        The idea was to reduce costs by shortening the rebuilding time,
    cutting administrative costs, and arriving faster at a more definitive
    dollar amount for a project. Yet, by many accounts the 428 process is
    looking more like the old, cumbersome process, removing any incentives
    to use it. 428 authority and similar reforms have been key tools in the
    recovery efforts in Puerto Rico and the U.S. Virgin Islands.
        Understanding how these reforms are working--or not working--will
    help us know what action to take. A complicated recovery process not
    only hurts communities hit by disaster, it also increases costs to the
    taxpayer, especially given the impact high inflation rates are having
    on the costs of materials and labor.
        I look forward to hearing the testimony of our witnesses today.
        Thank you, Chair Titus. I yield back.

        Ms. Titus. Thank you, Mr. Webster.
        We will now turn to our witnesses. We will be hearing
    testimony from two panels today. Each panel will be followed by
    questions from the Members.
        I would now like to welcome the witness on our first panel.
    This is Anne Bink, who is the Associate Administrator for the
    Office of Response and Recovery at FEMA. We thank you for
    joining us today. We all look forward to hearing your
    testimony.
        Without objection, our witness' full statement will be
    included in the record. Since your written testimony has been
    made part of the record, the subcommittee requests that you
    limit your oral testimony to 5 minutes.
        Ms. Bink, welcome, and please proceed.

      TESTIMONY OF ANNE BINK, ASSOCIATE ADMINISTRATOR, OFFICE OF
       RESPONSE AND RECOVERY, FEDERAL EMERGENCY MANAGEMENT AGENCY

        Ms. Bink. Thank you.
        Chair Titus, Ranking Member Webster, and members of the
    subcommittee, thank you for the opportunity to testify about
    FEMA's support of the recovery of Puerto Rico and the U.S.
    Virgin Islands from Hurricanes Irma and Maria.
        As you have stated, in less than 2 weeks, in September
    2017, the islands were devastated. Lives were lost, homes were
    destroyed, the power grid and water systems collapsed,
    healthcare facilities shut down, and communities were uprooted.
        Hurricane Maria was the strongest storm to hit St. Croix
    and Puerto Rico in nearly a century. There were critical
    immediate needs, and beyond those needs lay a difficult road to
    recovery.
        For FEMA and the Biden-Harris administration, continued
    recovery efforts from these storms is a top priority, and the
    Agency's investment of resources, with the generous support of
    Congress, has been reflective of this commitment.
        A few weeks ago, Puerto Rico reached the milestone of
    10,000 obligated Public Assistance projects, a total investment
    of nearly $28 billion. This includes the largest ever public
    infrastructure project obligated by FEMA at nearly $9.5 billion
    for the Puerto Rico Electric Power Authority, or PREPA, which
    will rebuild the power grid and build it back better. We have
    also provided $1.5 billion in assistance to nearly half a
    million residents.
        In the U.S. Virgin Islands, FEMA is making similarly
    historic investments in public infrastructure. FEMA has
    obligated over $4 billion across 1,400 projects. And this
    includes $1.4 billion to restore the energy grid, nearly $1
    billion for housing, and $134 million for transportation.
        FEMA continues to work with the USVI to reach an agreement
    on project scopes and expects infrastructure assistance to
    total $12 billion. This investment will result in significantly
    modernized public health and education sectors and completely
    rebuild--in a more resilient fashion--large portions of the
    power, water, and wastewater systems.
        Five years after the hurricanes, over 1,000 FEMA employees
    remain on the ground and dedicated to these recovery missions,
    over 90 percent of whom are local hires.
        Notwithstanding this historic commitment, much work remains
    to be done. This work will lead to a more resilient and better
    community infrastructure. For example, the Roberto Clemente
    Stadium in the municipality of Carolina in Puerto Rico. More
    than a landmark, the baseball stadium plays an important role
    in the municipality's economy. It impacts local business owners
    and other sectors like transportation, tourism, and
    hospitality. This project is nearly complete with the help of
    over $18.4 million in FEMA funds.
        In the USVI, FEMA is focused on supporting the vision to
    transform its infrastructure to better withstand future storms.
    Recently, FEMA approved over $200 million to replace the now
    demolished Arthur A. Richards School. This new school will help
    ensure students can attend a state-of-the-art facility that is
    more resilient to future storms.
        More than $463 million has been obligated to support
    healthcare facilities, including the Charles Harwood Medical
    Clinic and the Roy Lester Schneider Hospital. We are also
    providing historic levels of mitigation assistance which will
    greatly enhance resiliency further in the future.
        Puerto Rico has access to roughly $3 billion in hazard
    mitigation grant program funding, which is the maximum
    authorized by the Stafford Act, and the U.S. Virgin Islands has
    access to roughly $960 million.
        FEMA is ensuring we are prepared to support residents in
    communities of the Caribbean. At this very moment, we have
    responders on the ground and commodities pre-positioned in
    anticipation of Tropical Storm Fiona.
        Compared to 2017, we now have 9 times the water, 10 times
    the meals, and 3 times the number of generators on the island.
        Consistent with the goals of FEMA's strategic plan, we are
    ensuring equity, resilience, and readiness are at the heart of
    what we do. We are committed to supporting preparedness and
    resilient recovery, and we are doing so through on-the-ground
    technical assistance with our local hires who bring invaluable
    knowledge of the communities they serve.
        We also continue to implement policies to advance our
    strategic plan. One such example is around equitable policy
    changes. Many homeowners and renters in the past lacked the
    paperwork required to qualify for some FEMA benefits in the
    past. Under Administrator Criswell's leadership, FEMA has
    expanded the types of ownership and occupancy documentation
    that we can accept, to include self-certification as a last
    resort. Since implementing this policy, more than 100,000
    individuals received assistance that would have otherwise been
    denied.
        All our efforts have to be balanced against dual
    imperatives: ensuring that our assistance is provided as
    quickly as possible and ensuring that these resources benefit
    the people and the communities that need them most. The
    governments of Puerto Rico and the U.S. Virgin Islands have
    made great progress in their ability to manage historic levels
    of Federal funding and advance recovery for the residents.
        In closing, when I began leading the Office of Response and
    Recovery, one of my very first field visits was to Puerto Rico
    and the U.S. Virgin Islands, where I observed firsthand the
    achievements of our team on the ground as well as the
    challenges that lie ahead.
        Last fall, FEMA participated in a recovery summit with USVI
    officials, which provided valuable outcomes. And we are going
    to continue to build on that as we will host our second annual
    USVI recovery summit in the fall.
        Similarly, just last month, I also spent a week at a summit
    with Puerto Rico's top recovery officials and our senior
    leadership team, where we continued to work toward solutions to
    advance our collective recovery efforts. We are firmly
    committed to an expedited recovery to enhance resilience
    against all future hazards.
        Thank you, and I look forward to your questions.
        [Ms. Bink's prepared statement follows:]

      Prepared Statement of Anne Bink, Associate Administrator, Office of
           Response and Recovery, Federal Emergency Management Agency
        Chair Titus, Ranking Member Webster, and Members of the
    Subcommittee, thank you for the opportunity to testify today about the
    Federal Emergency Management Agency's (FEMA) efforts in support of the
    recovery of Puerto Rico and the U.S. Virgin Islands from Hurricanes
    Irma and Maria.
        In less than two weeks in September 2017, Puerto Rico and the U.S.
    Virgin Islands were severely impacted by two major hurricanes--Irma and
    Maria--that devastated the Caribbean. On September 7, 2017, Hurricane
    Irma first struck St. Thomas and St. John, then tracked near
    northeastern Puerto Rico, causing widespread power outages and
    straining infrastructure across the islands. Less than two weeks later,
    Hurricane Maria struck St. Croix, and then made landfall in Puerto
    Rico. The devastation was of historic proportions. As a result of these
    hurricanes, many lives were lost, homes were destroyed, the power grid
    and water systems collapsed, health care facilities were shut down, and
    communities were uprooted. Hurricane Maria was the strongest storm to
    hit St. Croix and Puerto Rico in nearly a century. There were critical
    immediate needs--and beyond those needs lay a difficult road to
    recovery. A road that we continue to travel today.
        For FEMA and the Biden-Harris Administration, continued recovery
    efforts from these storms for Puerto Rico and the U.S. Virgin Islands
    remains a top priority, and the Agency's investment of resources, with
    the generous support of Congress, has been reflective of this
    commitment.
                         Historic Levels of Assistance
        For Puerto Rico, a few weeks ago, FEMA reached the milestone of
    10,000 obligated Public Assistance projects, a total investment of
    nearly $28 billion. Of this investment, the largest ever public
    infrastructure project was obligated at nearly $9.5 billion to the
    Puerto Rico Electric Power Authority (PREPA), which will not just
    rebuild Puerto Rico's power grid, but will build it back better. FEMA
    funds are helping to rebuild roads, hospitals, schools, and water
    facilities to enable recovery and enhance resilience in communities
    across Puerto Rico. We have also provided $1.5 billion in assistance to
    nearly half a million residents and continue to coordinate interagency
    recovery efforts, such as with the Department of Housing and Urban
    Development, which has awarded over $20 billion in Community
    Development Block Grant Disaster Recovery Funds, thanks to the
    tremendous bipartisan support of Congress.
        In the U.S. Virgin Islands, FEMA is making similarly historic
    investments in public infrastructure. FEMA has obligated over $4
    billion across 1,400 projects. This includes $1.4 billion to restore
    the energy grid, $993 million for housing, and $134 million for
    transportation. FEMA continues to work with the Territory to reach an
    agreement on capped-fixed subgrants and expects infrastructure
    assistance to total over $12 billion. This investment will result in
    significantly modernized public health and education sectors and
    completely rebuild--in a more resilient fashion--large portions of the
    power, water, and wastewater systems.
        Five years after the hurricanes, 850 FEMA employees remain on the
    ground and dedicated to Puerto Rico and the U.S. Virgin Islands
    recovery missions, ninety percent of which are local hires. We actively
    partner with the Puerto Rico Central Office of Recovery,
    Reconstruction, and Resiliency (COR3), the Puerto Rico Emergency
    Management Bureau (PREMB), and key critical infrastructure partners
    such as PREPA, and the Puerto Rico Aqueduct and Sewer Authority
    (PRASA), and regularly troubleshoot complex challenges to generate
    innovative solutions. FEMA also has an active partnership with the U.S.
    Virgin Islands Office of Disaster Recovery, Virgin Islands Territorial
    Emergency Management Agency (VITEMA), Water and Power Authority (WAPA),
    Housing Finance Authority (VIHFA), and Waste Management Authority
    (WMA).
        At every step of the way, FEMA is working with these partners to
    ensure recovery is progressing and we are innovating to address
    emerging challenges. Most recently, we have worked with Puerto Rico to
    address supply chain constraints through an approval of almost $600
    million to purchase long-lead items that are needed to rebuild the
    power grid. This allows for the advance purchase of materials that take
    time to arrive on the island, so they are available once reconstruction
    work begins. Working closely with the Government of the U.S. Virgin
    Islands and staff from this Committee, we have re-evaluated our
    approach to implementing the Bipartisan Budget Act of 2018 to ensure we
    are resiliently rebuilding the islands' infrastructure to the latest
    industry standards. This has resulted in our decision to build 56 brand
    new medical facilities and schools. Finally, to address liquidity
    challenges associated with local jurisdictions undertaking large scale
    construction projects, we worked with Puerto Rico to implement a
    Working Capital Advance program for municipalities. Recently, PRASA
    projects were added to the program, which allows for an advance in
    funds to begin project execution across the island. These, and many
    other innovative practices, continue to define Puerto Rico's and U.S.
    Virgin Islands' historic mission.
        As if the recovery mission were not challenging enough on its own,
    our FEMA staff and the residents of Puerto Rico and the U.S. Virgin
    Islands persevered through the January 2020 Puerto Rican earthquakes--
    which registered as much as 6.4 in magnitude--and the COVID-19 pandemic
    that surged just a couple months later. To date, FEMA has obligated
    over $740 million to support earthquake recovery and almost $300
    million to support the islands' response to COVID-19. Despite these
    additional challenges, our dedicated FEMA recovery workforce
    collaborated with its partners to approve a record number of projects.
                              Building Back Better
        Notwithstanding this historic obligation of funds, much work
    remains to be done to rebuild the infrastructure of these islands. In
    Puerto Rico, the Government of Puerto Rico reports 2,260 recovery
    projects are currently under construction and another 945 have been
    completed. In the Virgin Islands, the Territory reports that 89
    recovery projects are currently under construction. These projects are
    more than just statistics, they are the foundation of what we expect
    will be more resilient and better community infrastructure. One such
    project is the Roberto Clemente Stadium in the Puerto Rican
    municipality of Carolina. More than a landmark, the baseball stadium
    plays an important role in the municipality's economy as it impacts
    local merchants, business owners, and other sectors like
    transportation, tourism, and hospitality. The stadium also serves as a
    collection center during disasters and as a mass vaccination and COVID-
    19 testing site. Repairs to the field, replacement of seating and the
    electric system, among others, are about ninety percent complete with
    the help of over $18.4 million in FEMA funds.
        Similarly, FEMA funded the replacement of Puerto Rico's main water
    testing facility located in Caguas. Operated and maintained by PRASA,
    this project was developed under FEMA's Accelerated Awards Strategy
    (FAASt), where a sampling methodology was used to streamline
    inspections. Of the $3.7 billion obligated to PRASA under FAASt, about
    $30 million corresponds to the water testing lab, which processes and
    analyzes the purity of drinking water and provides adequate wastewater
    treatment in Puerto Rico. The new laboratory is being rebuilt using
    current codes and standards and is about thirty-five percent complete.
        In the U.S. Virgin Islands, FEMA is focusing on supporting the
    Territory's vision to transform its infrastructure to better withstand
    future storms. Recently, FEMA approved a $209 million replacement for
    the now demolished Arthur A. Richards Jr. High School. The new school
    will help ensure K-through-8 students can get back into classrooms at a
    state-of-the-art facility that is more resilient to future storms and
    breaks the cycle of disaster, damage, and reconstruction. More than
    $463 million has been obligated to health care facilities in the
    Territory. FEMA has approved the replacement of four medical facilities
    in the U.S. Virgin Islands. St. Croix facilities include the Charles
    Harwood Medical Clinic and Juan F. Luis Hospital, and St. Thomas sites
    include Charlotte Kimelman Cancer Institute and Roy Lester Schneider
    Hospital.
        We are not just strengthening damaged infrastructure; we are also
    providing historic levels of mitigation assistance in areas undamaged
    by the storms. We have committed over $2.4 billion for projects and
    obligated over $132 million in project costs and $49 million in
    management costs in Puerto Rico through the Hazard Mitigation Grant
    Program since Hurricane Maria. In responding to this disaster, Puerto
    Rico has submitted over $4 billion worth of projects. Building code
    enforcement is one of the most significant projects on the island and
    will help eliminate informal construction. FEMA has obligated more than
    $54 million so far for this project, which will enhance Puerto Rico's
    recovery for generations, making the island safer and stronger. In
    addition, nearly $5 million has been obligated to review and update
    Hazard Mitigation plans in all 78 municipalities. Puerto Rico has
    access to roughly $3 billion in Hazard Mitigation Grant Program
    funding, the maximum authorized by the Stafford Act, and the Virgin
    Islands has access to roughly $960 million in Hazard Mitigation Grant
    Program funding. Working closely with the Governments of Puerto Rico
    and the Virgin Islands, we are focused on leveraging this funding for
    the benefit of all residents and communities.
        FEMA is not just providing historic levels of funding and building
    back facilities in a more resilient manner--in line with the
    Administration's priorities--we are ensuring equity is at the center of
    this recovery. We have re-designed and re-issued program guidance and
    trainings to make sure they are available in Spanish, ensuring our
    communications and programs are more accessible and responsive within
    affected communities. In both Puerto Rico and U.S. Virgin Islands, as
    indicated, ninety percent of FEMA staff involved in the recovery
    missions are local--they know their communities and operate with a high
    degree of cultural and social awareness. Consistent with the goals of
    FEMA's 2022-2026 Strategic Plan, we are actively working to ensure
    recovery projects are completed in compliance with federal laws and
    executive orders on civil rights & civil liberties, and environmental
    justice to provide services in an equitable and fair manner. For
    example, when recently reviewing a proposed mitigation project to
    address flooding, our team observed land acquisition activities within
    the project that could unintentionally increase flood risks for
    surrounding low-income communities. The team worked with the applicant
    to ensure necessary steps were put in place so the project would not
    adversely affect homes within those nearby communities.
                         Preparedness for What May Come
        Building a stronger infrastructure than what previously existed
    before Hurricanes Irma and Maria is just one aspect of resilience. FEMA
    is also ensuring we and the Government of Puerto Rico and Territory
    governments are prepared to support their residents to withstand future
    storms. Climate change is impacting the islands, occasioning higher sea
    levels and more intense storms. Recognizing the challenges of moving
    emergency supplies to Puerto Rico and the U.S. Virgin Islands after a
    storm, we have pre-positioned much greater inventories on the islands.
    For example, compared to on-island supplies in Puerto Rico in 2017,
    today we have twice the number of generators, nine times the water, ten
    times the meals, and eight times the number of tarps. Having these
    resources pre-positioned will significantly enhance our ability to
    render assistance quickly when future storms impact the islands.
        When the next storm hits, we will also be better able to assist
    previously underserved populations in Puerto Rico and the U.S. Virgin
    Islands. For instance, in 2017, many homeowners had difficulty proving
    they owned homes that had been handed down informally through the
    years. Under Administrator Criswell's leadership, FEMA expanded the
    types of ownership documentation we can accept, including documents
    like receipts for major repairs or improvements, court documents,
    public officials' letters, mobile home park letters, and even applicant
    self-certification for mobile homes and travel trailers as a last
    resort. We have also changed the way we calculate the threshold for
    property losses to qualify for our Direct Housing program. Our goal is
    to ensure equitable damage evaluations regardless of the amount of
    damage to the home. Changing the calculation of the threshold from a
    fixed dollar floor of $17,000 to a simpler $12 per square foot will
    result in families receiving assistance who would not have been
    considered for direct housing in the past. This change has resulted in
    more than 5,000 additional survivors receiving Direct Housing
    assistance so far.
        All our efforts have to be balanced against dual imperatives:
    ensuring that our assistance is provided as quickly and effectively as
    possible, while simultaneously ensuring that we are watchful stewards
    of taxpayer dollars so that these resources benefit the people and
    communities that need them. The governments of Puerto Rico and the U.S.
    Virgin Islands have made great progress in their ability to manage
    historic levels of federal funding. For instance, Puerto Rico and the
    U.S. Virgin Islands have made significant improvements in lowering
    their improper payment rates, which currently stand at 0.079 percent
    and 1.13 percent respectively. This stewardship is essential to a
    successful financial recovery and the intended use of taxpayer dollars.
        In closing, the continuing recovery of Puerto Rico and the U.S.
    Virgin Islands from Hurricanes Irma and Maria, paired with preparations
    for future disasters, are of paramount importance to FEMA, and to me
    personally. When I became the head of the Office of Response and
    Recovery, one of my very first trips was to Puerto Rico and the U.S.
    Virgin Islands where I observed firsthand the achievements of our team
    on the ground, as well as the challenges that lie ahead. Just last
    month, I spent a week at a very productive summit of our senior
    leadership staff working on Puerto Rico recovery initiatives, along
    with top recovery officials from the island. We are firmly committed to
    delivering the quickest and most efficient recovery services to Puerto
    Rico and the U.S. Virgin Islands, while enhancing the islands'
    resilience against all future hazards.
        Thank you, and I look forward to your questions.

        Ms. Titus. Thank you very much.
        We will now move on to the Members' questions. Each Member
    will be recognized for 5 minutes, and I will start by
    recognizing myself.
        Thank you for that testimony. I would like to go back to
    something I mentioned in the opening statement, and that is the
    concern about cost increases, whether it is due to inflation or
    the pandemic or problems with having the funds in the islands.
        Can you address what those problems are, and tell us how
    the projects that are under that alternative procedure and
    FAASt [FEMA Accelerated Awards Strategy] will be able to
    continue if they don't have the money and if the estimates
    aren't adequate to reach the current costs?
        Ms. Bink. Absolutely. I appreciate the question and share
    the concerns you raised. We are in a dynamic environment, and
    one of the reasons alternate procedures was a valuable approach
    is because we built in not only inflationary cost increases
    into estimates, but also future price factor, which was
    designed specifically and only for Puerto Rico and the Virgin
    Islands under the BBA [Bipartisan Budget Act] authority that
    was provided to us. And that really has resulted in estimates
    that we believe will meet the needs of the recovery scope going
    forward.
        There is flexibility within those 428 projects, as we call
    them, to balance underruns with overruns should different
    estimates and bids come in at different levels, but we are
    mindful of that and we continue to address the challenges we
    see in the broader landscape.
        One example is around supply chain. We have worked with
    Puerto Rico's government on a project, which this is the first
    time we have done this, where we have developed a project of
    $650 million to support equipment and supplies that have longer
    lead times. So that when shovels are ready to go into the
    ground, that equipment is available to support the grid build
    back and resilience efforts.
        So, that is a $650 million project we have worked with
    Puerto Rico to obligate. That is just one example, but we will
    continue to monitor the landscape. And if conditions reveal
    needs that we have not yet addressed, we will work to address
    those within our authorities.
        Ms. Titus. So, you think there is some alternative to just
    not appropriating the money or forcing the local governments to
    have to make up the difference?
        Ms. Bink. That is right. And we will closely monitor the
    progress as we move forward. The things like developing
    projects for those longer lead time materials and equipment is
    a big step forward, because the best defense against
    inflationary increases and other supply chain disruptions is to
    get those shovels in the ground.
        And we have seen tremendous progress in that regard, as I
    am sure you will hear more about from Puerto Rico officials,
    recovery officials: 2,200 projects in construction now and
    about 1,000 complete. That is excellent progress, and we are
    looking forward to building upon that with our close
    relationship of our teams on the ground.
        Ms. Titus. I appreciate that. I wonder if you can tell us
    why it has taken so long, what your insights are? And in the
    last Congress, your predecessor was asked if FEMA was a long-
    term agency or a short-term. And he said, well, I would make
    the case that we are a response agency and short term.
        Well, I don't know. Is 5 years short term or long term? Is
    the glass half empty or half full? I wonder if FEMA is
    committed to the long-term recovery.
        Ms. Bink. Chair Titus, I sit before you today confirming
    our commitment to the long-term recovery of Puerto Rico and the
    U.S. Virgin Islands. Since the storm hit, we have not left. We
    still have over 1,000 FEMA employees, many of which are
    survivors from the storms themselves, that remain on the island
    and committed to the recovery and resilience of the islands. It
    is our number one priority, and I stand behind it.
        Ms. Titus. Would you address why it has taken so long?
        Ms. Bink. Absolutely. Yes. There is no doubt that starting
    with a new process under the BBA and developing projects that
    are of such significance and magnitude, given the scope of the
    damage, created challenges. We did, through the authorities
    granted through the BBA, were able to obligate, in historic
    short timeframes, a large magnitude of funding for Puerto Rico.
    And that was not without its challenges given how new it was.
        That was also through an earthquake, COVID-19 disruptions,
    and the fact that, if you take the power sector in Puerto Rico
    as an object lesson, over 80 percent of the transmission and
    distribution network was damaged or destroyed from Maria. That
    is a large volume and a very concentrated level of damage that
    had been unprecedented.
        So, yes, there were challenges. I believe we are in a
    position now to really hit the gas and keep moving in getting
    those shovels in the ground to progress the recovery of the
    islands.
        Ms. Titus. Thank you very much.
        Ms. Bink. Thank you.
        Mr. Webster of Florida. Thank you, Chair.
        Associate Administrator Bink, a goal of disaster funding is
    to help States rebuild the infrastructure following a disaster.
    Recognizing the benefits to taxpayer mitigation, Congress
    authorized funding to ensure States could build in mitigation
    as they rebuild existing infrastructure. However, mitigation is
    different than funding completely new and duplicative
    infrastructure.
        For example, I understand that despite the U.S. Virgin
    Islands existing liquid propane gas system, FEMA may be pushing
    for USVI to transition to solar in rebuilding.
        What is FEMA's role and policies on funding new systems
    rather than fixing the ones that exist?
        Ms. Bink. Ranking Member, thank you very much for the
    question. Our role is as an enabler. When FEMA is doing our
    job, we are doing the job of ensuring that the goals of Puerto
    Rico and the Virgin Islands and all of our recipients across
    the board are meeting their objectives. We are there to support
    their projects and their resilience efforts to meet the goals
    that they have in the future and ensure that their spending is
    in alignment with all of our program requirements so they can
    maintain that funding and maintain that progress.
        So, we are agnostic to the goals themselves. We support
    those goals as the recipients move toward more resiliency and a
    speedy recovery.
        Mr. Webster of Florida. So, the idea of heading out in the
    direction of rebuilding the existing infrastructure, is that
    something that can be totally modified?
        Ms. Bink. I am happy to look into the specifics of the
    projects you are speaking of, and I can work with my team and
    yours to give more detail on the specifics there to work on
    that.
        Mr. Webster of Florida. OK. So, funding from other agencies
    like HUD have also been provided for these recovery efforts.
    However, there are concerns that FEMA's process is not
    streamlined in a way that would maximize the efficient use of
    these funds. For example, FEMA requires that HUD funding that
    may be used to support the State's cost share must be accounted
    for by project rather than a faster approach of combining
    calculations across multiple projects.
        Is this the case? If so, why is FEMA requiring this?
        Ms. Bink. The complexity is certainly an issue that, as a
    New York State recovery official, I had experienced related to
    multiple funding streams. And in this role, it is a priority of
    mine to ensure that we are reducing complexity wherever we can.
        One example is related to implementing a flexible match
    concept within each of those 428 projects. We have worked with
    Puerto Rico to, within those large infrastructure projects,
    like the $9.5 billion PREPA project, working to provide a
    flexible structure so that part of the work needs to meet not
    only FEMA requirements but also HUD requirements, which, as you
    pointed out, can differ.
        That flexibility will streamline the process and save
    valuable time as Puerto Rico continues its recovery. It is
    something we have also discussed with the U.S. Virgin Islands
    and will continue to work to streamline and simplify the
    application of multiple funding streams as they apply to FEMA
    projects.
        Mr. Webster of Florida. So, the idea of working together is
    not anathema; you are pursuing it--OK.
        Ms. Bink. Yes. Absolutely. And as part of the summit with
    USVI, I just discussed with the Office of Disaster Recovery
    potentially bringing in HUD too, so we can have those critical
    discussions at the leadership level and make sure we are all
    leveraging all flexibilities within our authorities to the
    maximum extent.
        Mr. Webster of Florida. Thank you very much. I yield back.
        Ms. Bink. Thank you.
        Ms. Titus. Thank you, Mr. Webster.
        Now, Ms. Holmes Norton.
        Ms. Norton. Thank you, Chairwoman Titus.
        Associate Administrator Bink, the U.S. Virgin Islands
    Office of Disaster Recovery reports that FEMA's building cost
    index reflects the high cost of construction in the Virgin
    Islands and could leave the long-term construction projects
    without adequate funding.
        How does FEMA account for inflation and supply chain
    challenges when calculating construction costs for years' long
    projects?
        Ms. Bink. Thank you for the question. There are multiple
    ways in which we address the inflationary factors and supply
    chain concerns as we move forward. And when project estimates
    are developed for alternative projects, not only the future
    price factor, which is unique to the U.S. Virgin Islands and
    Puerto Rico, what we are really looking at the future needs
    when it comes to funding to support the work under those
    projects as time elapses. There are also inflationary factors
    that are built in to those projects.
        Beyond that, once the values are set, funding can be
    redistributed within each of those larger alternative projects
    for underruns and overruns as bids are put out and those
    numbers come back.
        So, there are many factors and many flexibilities within
    the 428 structure that address supply chain and future
    inflationary cost concerns.
        Ms. Norton. Well, in light of the Office of Disaster
    Recovery's concerns, will FEMA undertake a review of the cost
    estimate models in the building cost index?
        Ms. Bink. So, we are certainly looking at our building cost
    index modeling, and we know there are challenges there. I have
    just spoken with the Office of Disaster Recovery about it this
    morning. We will continue those discussions, and we will
    continue to monitor the impacts of inflationary factors and
    supply chain considerations in the future as bids do come in
    for construction and shovels start to hit the ground.
        Ms. Norton. FEMA's Accelerated Awards Strategy expedites
    obligations by aggregating awards for individual projects to be
    completed by a local governmental agency and to one overall
    what it calls recovery budget. However, the individual projects
    apparently still need to be approved by FEMA.
        What steps will FEMA take to expedite the approval process
    for individual projects?
        Ms. Bink. So, that is a great question, and it is squarely
    within the scope of the review we are doing of the Consolidated
    Resource Center 5-year review right now. We have taken a deep
    dive into our process. It has been about 5 years since it has
    been implemented, and we are looking at things we can improve
    and things we can streamline to ensure that, when project
    scopes are submitted, that they are quickly reviewed and
    adjudicated so that the work can begin.
        Again, we know the best defense against inflation, supply
    chain concerns is really to get to that construction point. And
    that is our laser focus, and that is the support we are
    providing on the ground through our joint recovery offices, and
    it is what we will do centrally through CRC improvements.
        Ms. Norton. Thank you very much, Ms. Bink.
        And I yield back.
        Ms. Titus. Thank you.
        We will now go to someone who is very much involved in this
    issue who brings it up at every hearing and who has done a
    great job of informing us and staying on top of it, Miss
    Gonzalez-Colon.
        Miss Gonzalez-Colon. Thank you, Madam Chair. And I want to
    say thank you to you and the ranking member for actually having
    this hearing and allowing Puerto Rico to have so many witnesses
    in the two panels we have today. I think it is important we are
    just reaching the 5-year anniversary and there are many
    questions still in the air about that recovery process.
        Having said that, I also want to say that FEMA has done a
    great job during the last years trying to expedite. There are
    still a lot of things to do, and that is the reason I think
    this hearing is so important, seeing what are those areas where
    we need some improvement. Because on one side, I know local
    agencies are submitting documents and sometimes they are
    waiting for too long to get approved or having another second
    sub.
        So, in that sense, it has been 5 years, I think, but it
    could have been yesterday as well. And the hit that Puerto Rico
    and the U.S. Virgin Islands took was historic and life changing
    for many of us. Whole lifetimes of work, even the pride of 80
    years of progress just shut down in a night.
        Over 3 million left without power, communications,
    transportation, but the people of Puerto Rico did not fall
    apart, and I think that is the great message, that we came
    together just to survive.
        In that sense, the extended lack of essential services
    meant thousands of deaths in Puerto Rico. And my colleagues--
    and I need to say this--came with me to the island and
    responded with funding for recovery, a lot of Members. I will
    say more than 100 Members of Congress came together and
    traveled to Puerto Rico, alongside with Cabinet officials, to
    make all the funding that was approved. And staff from FEMA and
    other agencies have been working hard from the start, but has
    been too slow to see some effects.
        And in that sense, major obligations for primary
    infrastructure rebuilding really began only late in 2020. My
    constituents are frustrated with the lack of progress, and the
    biggest symbol is the continued instability of the electrical
    grid.
        They hear about over $4 billion approved for repairs of
    damage or almost $10 billion obligated for permanent
    rebuilding, but they are still getting frequent interruptions,
    lines going offline, substations on fire, lines failing, and
    that is the reality we face in Puerto Rico right now.
        Today, with a tropical storm approaching, the social
    networks are filling with anxiety about, again, being months
    without power, and that is the reality Puerto Ricans are
    living.
        So, the people ask, where is all the aid that has been
    approved by Congress? What has been done or is being done? And
    when will people see the results, at least in the electric
    grid? I hope we can get some of those answers today. And there
    is much more to be done, apply lessons learned, and to commit
    to doing better going forward, but we are here today to listen.
        And I've got some questions for you, and one of them,
    Administrator Bink, is, of the $9.5 billion obligated for long-
    term power grid recovery in Puerto Rico, how much has been
    applied for?
        Ms. Bink. So, right now, with the $9.5 billion, we are
    seeing significant--we have over 40 projects that have been
    approved in scopes of work. That work is continuing at rapid--
    --
        Miss Gonzalez-Colon [interrupting]. But how much of the
    $9.5 billion is being applied for?
        Ms. Bink. So, the $9.5 billion will be completely utilized
    at the end, meaning that the $9.5 billion is the amount. And
    this is what makes the 428 program so valuable for the island.
    And this, again, is the largest infrastructure project ever
    obligated by FEMA, which makes this a once-in-a-lifetime
    opportunity----
        Miss Gonzalez-Colon [interrupting]. Yes. But my question,
    Administrator, I know the money is going to be used, but my
    question, right now, how much of the money has been applied for
    even by PREPA, by LUMA, or whoever is going to be managing the
    electrical grid?
        You just told me that you just approved 40 of those
    projects. So, what is the percentage of share of the whole $9.5
    billion?
        Ms. Bink. So, what I can do is provide you the detail
    after. I don't have the specific numbers right upfront----
        Miss Gonzalez-Colon [interrupting]. Perfect. I prefer that
    you give me the specifics.
        Ms. Bink. Absolutely. And COR3 and PREPA and LUMA will have
    the specifics on the project. What I can say----
        Miss Gonzalez-Colon [interrupting]. That is going to be the
    second panel. I want FEMA to give me the numbers of what you
    have been approved, what has been submitted, applied, and
    approved by FEMA, and how much has been disbursed. What is the
    expected number for now? You don't have that number right now?
        Ms. Bink. Well, the key that I wanted to raise was that the
    $9.5 billion will be the amount spent by Puerto Rico. That
    number will be the ultimate spending, because any funds that
    are not used to support rebuild will be supporting resilience.
        Miss Gonzalez-Colon. I know, but that is not the question I
    am asking.
        Ms. Bink. Yes.
        Miss Gonzalez-Colon. So, if you can provide--I know my time
    expired--if you can provide us how much has been applied, how
    much has been approved, how many projects, and what is the
    percentage of share of the $9.5 billion.
        Ms. Bink. Absolutely.
        Miss Gonzalez-Colon. I yield back.
        Ms. Titus. You can continue.
        Miss Gonzalez-Colon. Thank you.
        How many of those electrical grid projects have been
    applied and approved from all sources? Because we are talking
    here about FAASt, but there is also regular disbursement. And I
    would love to know how much will be the total of that amount,
    between the Federal programs that have been approved for just
    the electrical grid. I am not going to the municipalities. Just
    for the electrical grid.
        Ms. Bink. So, overall for public utilities for Maria, the
    number of amount obligated is $13.2 billion, 265 projects,
    overall. So, that is where a lot of the scopes, including that
    largest project ever, will be specified, scoped out, and then
    the shovels will continue to hit the ground. So, that is the
    overall scope of all public utility projects.
        Miss Gonzalez-Colon. We knew that. I mean, we were the ones
    who approved the funding. So, my question, again, is, sometimes
    agencies on the island claim that FEMA has been slow approving
    the projects that have been submitted. So, I have you here and
    that is the reason I am asking the question of how much has
    been applied for? That is one thing. How much has been
    obligated? How much has been disbursed? And separating the
    accounts that money is coming from. FAASt is one thing and the
    other one was the regular disaster funds.
        So, knowing that, who is responsible for applying and
    certifying those projects, and who is responsible for receiving
    and accounting for it? Is it FEMA? Is it going to be COR3? Is
    it going to be LUMA? Is it going to be PREPA?
        Ms. Bink. So, that is part of what we are doing on the
    ground. So, we obligate the funding and the recipient, in this
    case, would be the Puerto Rico government, determines the
    scopes within those larger projects and then submits those
    scopes of work for approval from FEMA. That is typically----
        Miss Gonzalez-Colon [interrupting]. But we are talking
    electrical grid. We are not talking about the rest of the----
        Ms. Bink [interrupting]. All projects. All projects. And if
    there are subrecipients, they would move through the recipient,
    which is COR3, in this case, with Mr. Laboy serving as the
    Governor's authorized representative.
        So, at that point, we review those scopes, we approve, and
    then the bids and the construction proceeds.
        Miss Gonzalez-Colon. How much has been disbursed right now
    for electrical grid purposes?
        Ms. Bink. So, for public utilities, low. Low amount has
    been disbursed, about $40 million at this point. But again----
        Miss Gonzalez-Colon [interposing]. $40 million.
        Ms. Bink [continuing]. That is against the overall public
    utility category F spending. But, again, there is a lot of
    detail that goes into that and a lot of work happening to
    develop those scopes of work. It is the focus of what we are
    doing with our technical support on the island, which, again,
    goes beyond what we typically do for disaster recovery
    development of projects.
        Miss Gonzalez-Colon. I am not questioning that. I am just
    saying that $40 million that has been disbursed for electrical
    grid--it's been 5 years. And I know a lot of the equipment that
    is going to be purchased is not over the counter in a store
    that you just can grab them and put in the electrical. I know
    many of those scopes of work need plans either from LUMA,
    either from PREPA.
        My concern, and the numbers that I would love for you to
    provide to this committee, is how much has been applied
    specifically--I know the government of Puerto Rico and the
    Governor, who I recognize is here, has been very eager in
    working together with the Department of Energy, to what intent
    the money is going to be used: is it for renewables, is it
    going to the transmission, is it going to be the plants, is it
    going to the illumination? But our concern, the people of the
    island, is how much of those funds are being applied,
    obligated, disbursed?
        And in that plan's scope that you were just mentioning, how
    many projects are in the pipeline? Because if we are going to
    be waiting 5 more years to get that money done, then the
    inflation is another big area that we need to tackle, because
    many of those projects maybe projected today are going to be
    without resources.
        And I want to say thank you, Madam Chair, for providing me
    with extra time.
        Ms. Titus. Well, maybe Ms. Bink can get together with you
    afterwards or something and to help you with some of those
    numbers.
        Ms. Bink. We are happy to provide that.
        I do want to say one other thing, though. In our role and
    our coordination with the Department of Energy and the Puerto
    Rican government, we are in lockstep in working toward the
    PR100 goals and the 2050 plan for renewable energy, getting to
    that 100 percent by 2050.
        That takes time and that can take work, and that is where
    you see--while the start could have been faster, we are
    starting to see that pivot toward more work, more shovels in
    the ground. And really that work to develop the resilience
    infrastructure in the island is a once-in-a-lifetime
    opportunity. And while it takes time to get there, we think it
    is time well spent, because the island will be more resilient,
    more independent from an energy perspective going forward.
        Ms. Titus. Thank you. I have heard you mention several
    times shovel ready, but I have learned over the years from
    engineers that you really have to be pencil ready. And so, I am
    sure a lot of what you are working on has involved pretty
    elaborate pencil-ready projects before you get to the shovels.
        Isn't FEMA engaged with that stage of the process?
        Ms. Bink. Absolutely. We are really engaged in all steps.
    Having joint recovery offices onsite, on island, that is an
    extra step in our technical assistance that you don't typically
    see. The other thing we are consistently doing is looking for
    opportunities to expand our technical assistance within the
    authorities granted, or, in some cases, moving beyond that,
    requesting additional authorities.
        Just last week, we did submit a proposed legislation that
    would offer further technical assistance to the U.S. Virgin
    Islands. That would address supply chain concerns, potentially
    provide additional support to the USVI to achieve their long-
    term goals. And we will bring more detail on that to the
    committees and the relevant committees as we move forward, but
    we are always thinking about what can we do on the ground to
    move these projects forward and to completion, and what can we
    do to build in resilience in every opportunity we have.
        Ms. Titus. Thank you.
        Now, Mr. Garcia, I recognize you.
        Mr. Garcia of Illinois. Thank you, Madam Chair, for having
    this most important hearing.
        To Ms. Bink, we have received important concerns from local
    groups in Puerto Rico about how the reconstruction of the
    electrical grid and other projects funded with Public
    Assistance funds are not complying with climate policies
    promoted by this administration. Specifically, in the Puerto
    Rican government 10-year plan for reconstruction of the grid,
    two methane gas and other carbon-emitting projects are proposed
    and there is no mention of renewable energy projects such as
    rooftop solar microgrids. Nevertheless, FEMA has issued an
    environmental ``finding of no significant impact'' decision on
    this 10-year plan, stating that the environmental impact of
    projects is to be seen in a case-by-case basis.
        Thus, my first question: Can you explain to us how FEMA is
    ensuring that Federal funds for reconstruction are being used
    in ways that do not violate Federal laws or policies to attend
    climate change and promote resilient communities?
        Ms. Bink. It is a great question. And what you are seeing
    right now is the start of the projects and the rebuilding work.
    The scopes related to resilience take time to develop and are
    and will be in alignment with the PR100 goals that were
    undertaken jointly with the government of Puerto Rico, as well
    as the Department of Energy. So, those scopes related to
    resilience portions of projects take a while.
        I experienced this in New York State when I was the
    recovery official working on 428s for Sandy projects. And it is
    true here. The resilience work will take time, but the goals
    will align ultimately with those set forth by Puerto Rico and
    the U.S. Virgin Islands to meet their needs. We will make sure
    we enable projects that bring them where they want to be.
        Mr. Garcia of Illinois. So, you don't see any violation of
    laws or policies that have been championed by the
    administration?
        Ms. Bink. So, I am not familiar with the specifics there. I
    can certainly go back to my team and provide further detail,
    but not to my knowledge. Thank you.
        Mr. Garcia of Illinois. Thank you. My next question: What
    are the processes to evaluate the projects proposed by the
    government of Puerto Rico as to their climate sustainability?
        Ms. Bink. So, we are an enabler in the sense that we want
    to ensure that the projects that the government brings forth to
    us to implement are aligned with FEMA requirements and
    standards, and that their goals for resiliency are met on their
    terms--what they are looking to do, how they are looking to do
    it--and ensuring that all our rules, policies, and laws are
    followed in the process. So, we are there to enable their
    recovery on their terms.
        Mr. Garcia of Illinois. And my last question: What
    affirmative steps have been made or taken to make sure that
    funds are not wasted or misused in building back a fossil fuel
    infrastructure that is outdated and goes against the logic of
    building back better?
        Ms. Bink. Well, one of the key capacity builders in the
    grid is ensuring that it can take on renewable energy sources
    and drive those long-term resilient actions. So, as the
    rebuilding occurs within the grid, it will set the baseline and
    the ability to then bring in renewable sources of energy and
    cleaner sources of energy, which is part of the plan, as I
    understand it, from Puerto Rico recovery officials.
        Mr. Garcia of Illinois. Thank you for that.
        No further questions, Madam Chair. I yield back.
        Ms. Titus. Thank you, Mr. Garcia.
        That concludes our first panel. We thank you, Ms. Bink, for
    providing us with information. And we would ask you to get back
    to the Members who had questions that you said you could get
    additional information for. So, thank you very much.
        We now call up panel 2. There seems to be a lot of
    questions about the electric grid. I think some of these
    members of this panel may be able to address those.
        It was pointed out to me that Ms. Bink has to leave to go
    back to get ready for the tropical storm that is coming to
    Puerto Rico. Seems kind of poetic.
        Thank you all very much for being here. We have Chris
    Currie, who is the Director of Homeland Security and Justice
    with the Government Accountability Office.
        We have Adrienne Williams-Octalien, who is the director of
    the Office of Disaster Recovery for the U.S. Virgin Islands.
    And I would point out that we have talked to Stacey Plaskett
    for her input into some of these questions. She is very
    concerned about this. So, thank you for being here.
        Manuel Laboy, who is executive director for the Central
    Office for Recovery, Reconstruction, and Resiliency in Puerto
    Rico.
        Shay Bahramirad, who is the senior vice president from LUMA
    Energy.
        And then Josue Colon-Ortiz, who is the executive director
    of the Puerto Rico Electric Power Authority.
        So, we thank you and we look forward to hearing your
    testimony.
        Without objection, our witnesses' full statements will be
    included in the record. And so, for that reason, we would ask
    that you keep your oral testimony to 5 minutes.
        So, we will start with you, Mr. Currie. You may proceed.

     TESTIMONY OF CHRIS P. CURRIE, DIRECTOR, HOMELAND SECURITY AND
      JUSTICE, U.S. GOVERNMENT ACCOUNTABILITY OFFICE; ADRIENNE L.
    WILLIAMS-OCTALIEN, DIRECTOR, OFFICE OF DISASTER RECOVERY, U.S.
    VIRGIN ISLANDS; HON. MANUEL LABOY, EXECUTIVE DIRECTOR, CENTRAL
      OFFICE FOR RECOVERY, RECONSTRUCTION, AND RESILIENCY, PUERTO
        RICO; SHAY BAHRAMIRAD, Ph.D., SENIOR VICE PRESIDENT OF
       ENGINEERING, ASSET MANAGEMENT, AND CAPITAL PROGRAMS, LUMA
     ENERGY; AND JOSUE A. COLON-ORTIZ, EXECUTIVE DIRECTOR, PUERTO
                     RICO ELECTRIC POWER AUTHORITY

        Mr. Currie. Thank you, Chair Titus, Ranking Member Webster,
    other members of the committee. It is a pleasure to be here to
    talk about all of our work that we have done over the last 5
    years on the recoveries in Puerto Rico and the USVI. And I just
    want to say, I think it is great that you have both places
    represented here today because the challenges in the Virgin
    Islands are no less severe than are in Puerto Rico too.
        So, the recoveries from these disasters are definitely the
    most complicated and likely most expensive in the country's
    history, and not just because of the scale of the damage, but
    also the complexity of the situation in both places
    financially.
        Most members on this committee have had disasters in your
    jurisdictions and you know what it is like to manage these
    programs. Federal programs can be very complicated, lengthy,
    and very frustrating to navigate, even for the most routine
    disasters and especially for large complicated ones.
        I want to be clear that, in my view, the recovery in both
    places is not where it needs to be and is not moving as fast as
    it should be. The best way I can talk about this is through
    numbers.
        Most of the Federal dollars actually spent so far are for
    earlier response and emergency repair work, not permanent
    repairs. And rebuilding of key infrastructure like schools,
    hospital buildings, and other things still has a long way to
    go.
        You heard in the first panel about obligated dollars. To be
    clear, obligation, according to FEMA itself, is an agreement to
    spend money now or in the future. Project obligations are not
    construction. They are not shovels in the ground.
        In Puerto Rico, FEMA has obligated over $21 billion for
    Public Assistance projects, this permanent work I have talked
    about. However, only $407 million, that is 2 percent, has
    actually been spent. In the VI, they have obligated $2 billion
    for permanent projects and they have spent about $617 million.
    That is a little bit better at 31 percent. They still have a
    long way to go, too.
        The FEMA money is the largest pot, but Federal funds in
    other agencies are delayed, too. Congress appropriated about
    $20 billion for HUD funds to Puerto Rico, and as of last month,
    $900 million had been spent. That is 4.5 percent. The sum of
    $1.9 billion was appropriated to VI for HUD and $250 million
    has been spent, and that is 11 percent.
        These billions in unspent dollars, as we talk about them,
    are a huge scope and they represent thousands of projects. But
    to make this a little bit more real, my written testimony
    includes pictures, for example, of a school that we have been
    to outside of San Juan several times over the course of several
    years. That school now looks worse than it did after Hurricane
    Maria.
        To me, the photo tells the story of the numerous recovery
    challenges that we faced. I think it would be hard to imagine a
    school in the suburbs of DC or another large city that was
    sitting overgrown and dilapidated for 5 years. And I point this
    out, not to blame anyone, but to be clear on the status of the
    recovery.
        There are thousands of Federal, Commonwealth, and municipal
    folks working hard on the recovery, and FEMA has also done a
    number of things to try to address problems and address some of
    our recommendations. For example, we found in the past that
    constantly changing policy and guidance for these projects has
    led to problems in both locations in estimating costs and
    delays in agreeing to project scope and obligations.
        FEMA has worked with both places, both islands, to improve
    this area and has implemented several steps to streamline these
    processes. And we have heard during our recent visits just a
    couple months ago that communication and coordination with FEMA
    in Puerto Rico, particularly, has been improved.
        However, while there has been progress, I think we are
    entering a really difficult phase. This doesn't get easier the
    further we get into it. Our ongoing work on Puerto Rico has
    identified a number of challenges, I think many of which are
    likely to affect the Virgin Islands in the same way or maybe
    even worse.
        For example, many municipalities still lack the staff, the
    experience, and the knowledge of Federal procurement rules and
    policies. And this is really important right now because
    thousands of contracts, literally thousands are going to be
    awarded in the coming years for projects. It is critical
    because these processes can determine whether these costs are
    reimbursed by FEMA or not. If they are not followed, oftentimes
    they won't be reimbursed. There are still also many
    disagreements about project scopes that can lead to delays in
    starting them.
        Inflation, as has been already discussed, is also a huge
    concern. While some inflation was factored into these projects,
    like Ms. Bink talked about, that was done 2 or 3 years ago.
    Nobody could have possibly understood what was going to happen
    this year with inflation, and I think this is going to have a
    huge impact on estimated projects as we go.
        And lastly, I will just point out for the sake of time,
    there are also concerns about the supply chain and needed
    supplies. This is going to be a key part of this, too.
        And let me just end by saying, I think it is important to
    understand that these Federal dollars are not just critical for
    rebuilding damaged projects; this is critical for the economy
    of Puerto Rico for the years to come. It is a huge part of
    their expected GDP, and I think it is very important that we
    continue to monitor them.
        Thank you very much.
        [Mr. Currie's prepared statement follows:]

    Prepared Statement of Chris P. Currie, Director, Homeland Security and
                 Justice, U.S. Government Accountability Office
        Chair Titus, Ranking Member Webster, and Members of the
    Subcommittee:
        Thank you for the opportunity to provide an update on our work on
    the Federal Emergency Management Agency's (FEMA) disaster recovery
    efforts in Puerto Rico and the U.S. Virgin Islands (USVI) as we mark
    the 5-year anniversary of hurricanes Irma and Maria.
        In a 14-day span in September 2017, these two hurricanes struck
    Puerto Rico and the USVI, causing severe damage to critical
    infrastructure estimated in the hundreds of billions of dollars in
    Puerto Rico and in the tens of billions of dollars for the USVI (see
    fig. 1).\1\ According to a July 2022 analysis conducted by National
    Oceanic and Atmospheric Administration, Hurricane Maria is the third
    costliest hurricane in U.S. history, while Hurricane Irma ranks
    sixth.\2\
    ---------------------------------------------------------------------------
        \1\ In its recovery plan, the Government of Puerto Rico estimated
    that the territory would need $132 billion from 2018 through 2028 to
    repair and reconstruct the infrastructure damaged by the hurricanes,
    while a 2018 report from the USVI Hurricane Recovery and Resilience
    Task Force estimated that the hurricanes caused approximately $10.7
    billion in total damages across the USVI.
        \2\ National Oceanic and Atmospheric Administration, National
    Centers for Environmental Information, ``Costliest U.S. Tropical
    Cyclones'', accessed September 6, 2022, (Washington, D.C.: July 11,
    2022) https://www.ncei.noaa.gov/access/billions/dcmi.pdf.
    ---------------------------------------------------------------------------

    Figure 1: Path of Hurricanes Irma and Maria through Puerto Rico and the
                              U.S. Virgin Islands
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

           Source: GAO analysis of National Oceanic and Atmospheric
                      Administration; Map Resources (map).
                                 GAO-22-106211

        Notably, the hurricanes devastated Puerto Rico's electrical system.
    It took roughly 11 months to restore power to all of the customers in
    Puerto Rico, the longest blackout in U.S. history. In the USVI, its
    Hurricane Recovery and Resilience Task Force concluded that the storms
    damaged more than half of the territory's housing units as well as its
    hospitals, schools, and water and wastewater facilities.\3\
    ---------------------------------------------------------------------------
        \3\ In addition to the 2017 hurricanes, Puerto Rico also
    experienced a series of earthquakes in December 2019 and January 2020,
    with strong aftershocks felt through July 2020. Additionally, both
    Puerto Rico and the USVI experienced the effects of the COVID-19
    pandemic.
    ---------------------------------------------------------------------------
        FEMA, a component of the Department of Homeland Security, is the
    lead federal agency responsible for assisting states, as well as
    territories like Puerto Rico and the USVI, with disaster recovery
    efforts.\4\ Among other responsibilities, FEMA awards and administers
    various disaster recovery and mitigation grant programs, such as the
    Public Assistance program and the Hazard Mitigation Grant Program, in
    partnership with state or territorial governments.
    ---------------------------------------------------------------------------
        \4\ See 6 U.S.C. Sec.  313.
    ---------------------------------------------------------------------------
        My testimony today discusses our prior work on disaster recovery
    efforts in Puerto Rico and in the USVI since hurricanes Irma and Maria
    in 2017, as well as preliminary observations from our ongoing work
    related to Puerto Rico, including:
        1.  actions FEMA has taken to address recommendations we made in
    prior reports to improve FEMA's disaster recovery efforts in Puerto
    Rico and the USVI;
        2.  the status of FEMA's Public Assistance and Hazard Mitigation
    Grant Program funding in Puerto Rico and the USVI, as of August 2022;
    and
        3.  potential challenges FEMA and Puerto Rico face with ongoing
    disaster recovery efforts and any actions to address them.

        My statement is based on products we issued in from November 2019
    to May 2021 as well as data and preliminary observations from an
    ongoing review of FEMA's disaster recovery efforts in Puerto Rico. To
    conduct our prior work, we reviewed federal laws related to emergency
    management, analyzed FEMA data and documentation, and interviewed
    relevant agency officials. More detailed information on the scope and
    methodology for our prior work can be found in the issued reports cited
    throughout this statement.\5\
    ---------------------------------------------------------------------------
        \5\ For a complete list of our previous work in this area and on
    other related topics, see the Related GAO Products page at the end of
    this statement. [Editor's note: See https://docs.house.gov/meetings/PW/
    PW13/20220915/115108/HHRG-117-PW13-Wstate-CurrieC-20220915.PDF pgs. 23-
    26.]
    ---------------------------------------------------------------------------
        To develop our preliminary observations from ongoing work, we
    obtained and analyzed Puerto Rico and USVI obligation and expenditure
    data as of August 2022 from FEMA's Emergency Management Mission
    Integrated Environment; Integrated Financial Management Information
    System; as well as the Puerto Rico Central Office of Recovery,
    Reconstruction, and Resiliency Transparency Portal. To assess data
    reliability, we reviewed existing information about these systems,
    submitted questions to data users and managers responsible for these
    data, and conducted basic tests on the data such as checking for
    duplicate records or missing values. We determined these data to be
    sufficiently reliable for the purposes of this statement. Moreover, we
    conducted site visits to Puerto Rico in March 2022 and July 2022 to
    meet with federal, territorial, and local government officials as well
    as nongovernmental organizations to discuss their observations on
    disaster recovery efforts and associated challenges, and to observe
    disaster-damaged areas (see fig. 2).

    Figure 2: Status of Recovery Project at Berwind Intermediate School in
                San Juan, Puerto Rico, March 2019 and March 2022
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

     LEFT: School with internal mold and water damages caused by Hurricane
                         Maria observed in March 2019.
     RIGHT: School observed in March 2022 awaiting repairs. According to a
      FEMA official, a construction crew removed doors, windows, and some
                walls due to asbestos and lead in the building.
                           Source: GAO. GAO-22-106211

        Over the course of these site visits, we interviewed officials from
    FEMA, the government of Puerto Rico's Central Office of Recovery,
    Reconstruction, and Resiliency (COR3), and four municipalities in
    Puerto Rico.\6\ In addition, we interviewed a private operator of a
    Puerto Rico government agency and two nongovernmental organizations
    that have monitored the progress of Puerto Rico's disaster recovery
    efforts from hurricanes Irma and Maria. Outside of our site visits, we
    interviewed one Puerto Rico government agency in June 2022 and three
    additional Puerto Rico government agencies in August 2022. The
    information from our site visits and interviews are not generalizable
    but provide important insights into the ongoing disaster recovery
    efforts in Puerto Rico.
    ---------------------------------------------------------------------------
        \6\ COR3 is an office established after the 2017 hurricanes to
    guide recovery investment and policy and to serve as a focal point for
    managing Puerto Rico's recovery.
    ---------------------------------------------------------------------------
        We conducted the work on which this statement is based in
    accordance with generally accepted government auditing standards. Those
    standards require that we plan and perform the audit to obtain
    sufficient, appropriate evidence to provide a reasonable basis for our
    findings and conclusions based on our audit objectives. We believe that
    the evidence obtained provides a reasonable basis for our findings and
    conclusions based on our audit objectives.
                                   Background
    FEMA's Public Assistance Program
        FEMA's Public Assistance program provides grant funding to state,
    territorial, local, and tribal governments, as well as to certain types
    of private nonprofit organizations, to assist with responding to and
    recovering from presidentially-declared major disasters or
    emergencies.\7\ As shown in figure 3, FEMA categorizes Public
    Assistance grant funds broadly as ``emergency work'' or ``permanent
    work.'' Within these broad categories are separate subcategories. In
    addition to the emergency work and permanent work categories, the
    program includes category Z, which represents indirect costs, direct
    administrative costs, and any other administrative expenses associated
    with a specific project.
    ---------------------------------------------------------------------------
        \7\ In accordance with the Robert T. Stafford Disaster Relief and
    Emergency Assistance Act (Stafford Act), as amended, the President of
    the United States may declare that a major disaster or emergency exists
    in response to a governor's or tribal chief executive's request if the
    disaster is of such severity and magnitude that effective response is
    beyond the capabilities of a state, tribe, or local government and
    federal assistance is necessary. See 42 U.S.C. Sec. Sec.  5170-5172.
    The Public Assistance program represents the largest share of the
    Disaster Relief Fund, which is the primary source of federal disaster
    assistance for state and local governments when a disaster is declared.
    ---------------------------------------------------------------------------

       Figure 3: Federal Emergency Management Agency's Public Assistance
                           Program Categories of Work
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

     \a\ The Disaster Recovery Reform Act of 2018 amends the definition of
     Category Z management costs. See Pub. L. No. 115-254, Sec.  1215, 132
            Stat. 3186, 3449 (codified at 42 U.S.C. Sec.  5165b(a)).

        FEMA's Public Assistance program also provides grant funding for
    cost-effective hazard mitigation measures to reduce or eliminate the
    long-term risk to people and property from future natural and man-made
    disasters and their effects.\8\ For example, a community that had a
    fire station damaged by a disaster could use Public Assistance grant
    funding to repair the facility and incorporate additional measures such
    as installing hurricane shutters over the windows to mitigate the
    potential for future damage.
    ---------------------------------------------------------------------------
        \8\ FEMA may fund hazard mitigation measures related to the damaged
    facilities receiving Public Assistance grant funding pursuant to
    section 406 of the Stafford Act, as amended. 42 U.S.C. Sec.  5172; 44
    C.F.R. Sec.  206.226.
    ---------------------------------------------------------------------------
        FEMA, the state or territorial government (the recipient), and
    local or territorial entities (the subrecipient) work together to
    develop projects under the Public Assistance program. After a project
    has completed FEMA's review process and is approved, FEMA obligates
    funding for the project by placing money into an account where the
    recipient has the authority to draw down--or expend--funding to pay the
    subrecipient for eligible work upon completion.\9\
    ---------------------------------------------------------------------------
        \9\ An obligation is a definite commitment that creates a legal
    liability of the government for the payment of goods and services
    ordered or received. For the purposes of this statement, obligations
    represent the amount of grant funding FEMA provided through the Public
    Assistance program and the Hazard Mitigation Grant Program for specific
    projects in Puerto Rico and the USVI. An expenditure is an amount paid
    by federal agencies, by cash or cash equivalent, during the fiscal year
    to liquidate government obligations. For the purposes of this
    statement, an expenditure represents the actual spending by the
    government of Puerto Rico government or the USVI government of money
    obligated by the federal government.
    ---------------------------------------------------------------------------
        Figure 4 shows images of a Public Assistance-funded water tank
    project we visited in Humacao, Puerto Rico in February 2020 (image on
    left) and again in March 2022.

        Figure 4: Status of Federal Emergency Management Agency Public
      Assistance-Funded Buena Vista Arriba Water Storage Tank in Humacao,
                   Puerto Rico, February 2020 and March 2022
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

      LEFT: Damaged water tank from winds of Hurricane Maria observed in
                                 February 2020.
    RIGHT: Largely repaired water tank observed in March 2022. Source: GAO.
                                 GAO-22-106211

        The Sandy Recovery Improvement Act of 2013 authorized the use of
    alternative procedures in administering the Public Assistance program,
    thereby providing new flexibilities to FEMA, states, territories, and
    local governments for debris removal, infrastructure repair, and
    rebuilding projects using funds from this program.\10\ Unlike the
    standard Public Assistance program where FEMA will reimburse the actual
    costs of a project, the Public Assistance alternative procedures allow
    awards for permanent work projects to be made based on fixed-cost
    estimates to provide financial incentives for the timely and cost-
    effective completion of work.
    ---------------------------------------------------------------------------
        \10\ The Sandy Recovery Improvement Act of 2013 amended the
    Stafford Act by adding Section 428, which authorized FEMA to approve
    Public Assistance program projects under the alternative procedures
    provided by that section for any presidentially-declared major disaster
    or emergency. This section further authorized FEMA to carry out the
    alternative procedures as a pilot program until FEMA promulgates
    regulations to implement this section. Pub. L. No. 113-2, div. B, Sec.
    1102(2), 127 Stat. 39, amending Pub. L. No. 93-288, tit. IV, Sec.  428
    (codified at 42 U.S.C. Sec.  5189f). The stated goals of the
    alternative procedures are to reduce the costs to the federal
    government, increase flexibility in the administration of the Public
    Assistance program, expedite the provision of assistance under the
    program, and provide financial incentives for recipients of the program
    for the timely and cost-effective completion of projects.
    ---------------------------------------------------------------------------
        Under these procedures, if the actual cost of the project exceeds
    the fixed-cost estimate agreed upon by FEMA and the recipient, the
    recipient or subrecipient is responsible for the additional costs at
    the time of the closeout process.\11\ However, if the actual cost of
    completing eligible work for a project is below the estimate, the
    recipient may use the remaining funds for additional cost-effective
    hazard mitigation measures to increase the resilience of public
    infrastructure.\12\ In addition, these funds may be used for activities
    that improve the recipient's or subrecipient's future Public Assistance
    operations or planning.
    ---------------------------------------------------------------------------
        \11\ Closeout is the step is where the grant process ends. In order
    to complete a closeout, award recipients submit the final financial and
    programmatic reports. According to the OMB Uniform Grants Guidance
    Sec. 200.343, the recipient must submit all financial, performance, and
    other reports required under the grant within 90 days after the grant
    award expires or is terminated. The awarding agency will review these
    reports to ensure compliance will all the grant terms and conditions as
    well as to make sure recipients spent all the funds appropriately.
        \12\ Section 20601 of the Bipartisan Budget Act of 2018 also
    authorizes FEMA, when using the alternative procedures, to provide
    assistance to fund the replacement or restoration of disaster-damaged
    infrastructure that provide critical services without regard to pre-
    disaster condition. Bipartisan Budget Act of 2018, Pub. L. No.115-123,
    Sec.  20601(1), 132 Stat. 64 (2018). Critical services include public
    infrastructure in the following sectors: power, water, sewer,
    wastewater treatment, communications, education, and emergency medical
    care. See 42 U.S.C. Sec.  5172(a)(3)(B). The Act also authorizes FEMA
    to fund the repair or replacement of undamaged components of critical
    services infrastructure when necessary to restore the function of the
    facility or system to industry standards. Section 20601 applies only to
    assistance provided through the Public Assistance alternative
    procedures program for the duration of the recovery for the major
    disasters declared in Puerto Rico and the USVI following hurricanes
    Irma and Maria. Further, the Additional Supplemental Appropriations for
    Disaster Relief Act of 2019 provides additional direction to FEMA in
    the implementation of section 20601. See Pub. L. No. 116-20, tit. VI,
    Sec.  601, 133 Stat. 871, 882 (2019). Specifically, it directs FEMA to
    ``include the costs associated with addressing pre-disaster condition,
    undamaged components, codes and standards, and industry standards in
    the cost of repair'' when calculating whether a facility should be
    repaired or replaced.
    ---------------------------------------------------------------------------
        In October 2017, Puerto Rico requested, and FEMA approved, the use
    of the alternative procedures program for all large-project funding for
    Public Assistance permanent work projects in categories C through
    G.\13\ Although FEMA had approved alternative procedure grants in 30
    states as of April 2018, in these cases, it used alternative procedures
    on a project-by-project basis. Puerto Rico's recovery from the 2017
    hurricanes is the first recovery to use alternative procedures for all
    large permanent work projects. On January 23, 2020, FEMA made the use
    of Public Assistance alternative procedures optional for the repair of
    non-critical service facilities in Puerto Rico damaged by Hurricane
    Maria; however, it still requires large projects for critical service
    facilities to use Public Assistance alternative procedures.
    ---------------------------------------------------------------------------
        \13\ According to a November 2017 amendment to Puerto Rico's major
    disaster declaration, due to the extraordinary level of infrastructure
    damage caused by Hurricane Maria, as well as the financial status of
    Puerto Rico, officials chose to use the alternative procedures for all
    large-project funding for Public Assistance categories C through G
    pursuant to section 428 of the Stafford Act. Puerto Rico; Amendment No.
    5 to Notice of a Major Disaster Declaration, 82 Fed. Reg. 53,514 (Nov.
    16, 2017). For fiscal year 2022, the large project threshold was any
    amount over $139,800.
    ---------------------------------------------------------------------------
        In July 2018, FEMA approved a request from the Governor of the USVI
    to transition to using the Public Assistance alternative procedures
    program for permanent work in the territory. In addition to the
    alternative procedures process, the USVI may pursue the use of the
    standard Public Assistance program on a project-by-project basis.
    FEMA's Hazard Mitigation Grant Program
        FEMA's Hazard Mitigation Grant Program provides grant funding for
    long-term mitigation solutions to reduce the risk of loss of life and
    property from future disasters. Unlike mitigation measures funded
    through the Public Assistance program to further protect disaster-
    damaged infrastructure, the Hazard Mitigation Grant Program may fund
    measures for systems, facilities, or properties that were not damaged
    in the disaster. For example, program funding can be used to construct
    floodwater control measures that did not exist prior to the disaster,
    or to update existing hazard mitigation plans to accurately reflect
    current mitigation goals.
        FEMA Has Taken Steps to Address Recommendations to Improve the
                        Management of Its Grant Programs
        In prior reports, we made recommendations to improve FEMA's
    management of its recovery grant programs in Puerto Rico and the USVI,
    including those related to (1) the development of fixed-cost estimates
    under the Public Assistance alternative procedures, (2) the
    availability and clarity of guidance for FEMA's Public Assistance
    program and the Hazard Mitigation Grant Program, and (3) the
    identification, assessment, and management of risks to recovery in
    Puerto Rico. In response, FEMA has taken steps to address these
    recommendations, as discussed below.
        Developing Fixed-Cost Estimates. In November 2019 and February
    2020, we reported on the development of fixed-cost estimates for
    permanent work projects under the alternative procedures in the USVI
    and Puerto Rico, respectively. We reported in November 2019 that FEMA
    and USVI officials stated that developing accurate fixed-cost estimates
    for permanent work projects under the alternative procedures posed
    challenges.\14\ Specifically, USVI officials told us that developing
    fixed-cost estimates that accurately forecast the future costs of
    completing large, complex permanent work projects in the remote island
    territory was difficult given the unique circumstances that influence
    construction costs in the USVI, such as the limited availability of
    local resources and the need to import construction materials and
    labor.
    ---------------------------------------------------------------------------
        \14\ GAO, U.S. Virgin Islands Recovery: Additional Actions Could
    Strengthen FEMA's Key Disaster Recovery Efforts, GAO-20-54 (Washington,
    D.C.: Nov. 19, 2019).
    ---------------------------------------------------------------------------
        To address this issue, in May 2019, FEMA approved a USVI-specific
    cost factor to incorporate into FEMA's process for developing fixed-
    cost estimates on an interim basis. The factor aims to ensure that FEMA
    captures actual costs of implementing permanent work projects in the
    territory. Given the uncertainty around these fixed-cost estimates,
    USVI officials told us the territory would need to balance the
    potential flexibilities provided by the alternative procedures program
    with the financial risk posed by cost overruns when deciding whether to
    use the alternative procedures or the standard Public Assistance
    program for any given permanent work project.
        For Puerto Rico, in February 2020, we also reported that, given the
    importance of reaching mutual agreement on fixed cost estimates for
    projects under the alternative procedures, FEMA and Puerto Rico had
    taken a deliberative approach to establishing the data and procedures
    to use in developing these fixed cost estimates.\15\ This included,
    among other things, adapting the way FEMA estimates costs to the
    specific post-disaster economic conditions in the territory, including
    developing exceptions to FEMA's cost estimating guidance. In July 2019,
    FEMA approved two exceptions: (1) a cost factor to account for local
    labor, equipment, and material costs in Puerto Rico, and (2) a future
    price factor and price curve to account for anticipated rises in
    construction costs over time due to the massive influx of disaster
    recovery funds, coupled with limited material and labor resources in
    Puerto Rico.
    ---------------------------------------------------------------------------
        \15\ GAO, Puerto Rico Disaster Recovery: FEMA Actions Needed to
    Strengthen Project Cost Estimation and Awareness of Program Guidance,
    GAO-20-221 (Washington, D.C.: Feb. 5, 2020).
    ---------------------------------------------------------------------------
        At the time, we found that FEMA adapted its Public Assistance cost
    estimating guidance to accurately reflect costs in Puerto Rico but that
    it could improve the guidance to further enhance its reliability.
    Specifically, we found that FEMA's guidance substantially or fully met
    best practices for nine of the 12 steps included in the GAO Cost
    Estimating and Assessment Guide; however, FEMA could improve the
    guidance in three areas, including analyzing risks and future
    uncertainties that could affect these estimates.\16\ We recommended
    that FEMA revise its cost estimating guidance for Puerto Rico to fully
    align with all 12 steps. In response, FEMA addressed this
    recommendation by, among other things, developing a job aid to provide
    additional guidance on cost estimating procedures to further align its
    Public Assistance program guidance with the steps outlined in our
    guide.
    ---------------------------------------------------------------------------
        \16\ GAO, GAO Cost Estimating and Assessment Guide Best Practices
    for Developing and Managing Capital Program Costs, GAO-09-3SP
    (Washington, D.C.: Mar. 2, 2009).
    ---------------------------------------------------------------------------
        We are continuing to monitor the use of fixed-cost estimates for
    permanent recovery projects in our ongoing work.
        Availability and Clarity of FEMA's Guidance. In November 2019, we
    reported that the USVI and FEMA established structures for overseeing
    recovery efforts and had issued numerous useful documents and guidance
    for implementing its recovery programs.\17\ For example, FEMA's
    consolidated standard operating procedures for the Public Assistance
    program provided FEMA officials across all disasters nationwide with a
    common understanding of the expectations and requirements for managing
    projects. However, we found that FEMA did not have similar consolidated
    standard operating procedures for the Hazard Mitigation Grant Program,
    which were located across multiple guidance documents. Nor did the
    existing Hazard Mitigation Grant Program documents provide a concise
    roadmap that outlined roles and responsibilities, key tasks and
    milestones, and performance measures for FEMA officials to use when
    monitoring and closing out individual program projects for any given
    disaster.
    ---------------------------------------------------------------------------
        \17\ GAO-20-54.
    ---------------------------------------------------------------------------
        To further strengthen its existing program guidance and management,
    we recommended that FEMA assess the need for an agency-wide
    consolidated standard operating procedures document for the Hazard
    Mitigation Grant Program. In response, FEMA published a new webpage in
    February 2021 to consolidate the program's guidance in one location for
    easy reference and in January 2022, issued additional guidance for FEMA
    personnel's use in managing its hazard mitigation programs to address
    the recommendation.
        In addition, we reported in February 2020 that FEMA had developed
    Public Assistance policies and guidance to respond to complex recovery
    conditions in Puerto Rico, which FEMA officials said they provided
    throughout the Public Assistance project development process.\18\
    However, Puerto Rico government officials we spoke with stated that
    they were not always certain about how to proceed in accordance with
    FEMA policy because they did not consistently understand what guidance
    was in effect. We also found that pertinent guidance may not be shared
    with key recovery partners and that FEMA did not maintain a repository
    of Public Assistance guidance available to all recovery partners that
    included current applicable guidance.
    ---------------------------------------------------------------------------
        \18\ GAO-20-221.
    ---------------------------------------------------------------------------
        Without real time access to current applicable guidance, recovery
    partners risked using guidance that has been revised or replaced.
    Therefore, we recommended that FEMA develop a repository for all
    current applicable Public Assistance policies and guidance for Puerto
    Rico and make it available to all recovery partners, including
    subrecipients. FEMA addressed this recommendation by making Public
    Assistance policies and guidance documents accessible to Puerto Rico
    recovery partners, including subrecipients, through its internal Public
    Assistance application management system.
        Risks to Recovery Projects. In May 2021, we reported that although
    the number of Public Assistance projects developed and obligated for
    Puerto Rico's recovery had increased, FEMA had not comprehensively
    identified or assessed the risks that could affect the success of the
    remainder of the recovery, or identified potential actions to manage
    them.\19\ These risks included (1) delays related to a lack of
    subrecipient staff expertise to develop projects for obligation and (2)
    difficulties providing initial construction funding for projects due to
    financial austerity measures put in place related to the government of
    Puerto Rico's default on debt beginning in August 2015.
    ---------------------------------------------------------------------------
        \19\ GAO, Puerto Rico Recovery: FEMA Made Progress in Approving
    Projects, But Should Identify and Assess Risks to the Recovery, GAO-21-
    264 (Washington, D.C.: May 19, 2021).
    ---------------------------------------------------------------------------
        While Puerto Rico-based FEMA officials and Puerto Rico government
    officials identified risks that could affect continued progress of
    recovery efforts, we found that FEMA headquarters officials had not
    comprehensively identified and assessed such risks or identified
    potential actions to manage or monitor them. As of February 2021, FEMA
    headquarters was in the early stages of implementing an enterprise risk
    management framework to identify and assess risks to its mission, as
    required by the Office of Management and Budget. However, it was too
    soon to tell if FEMA would use this framework to comprehensively
    identify, assess, and monitor risks to Puerto Rico's recovery.
        Nonetheless, the time that had elapsed since the 2017 hurricanes
    and the work remaining highlighted the need for urgent and diligent
    action to help ensure the success of Puerto Rico's remaining recovery
    efforts. Therefore, we recommended that, in coordination with the
    government of Puerto Rico and relevant federal agencies, FEMA identify
    and assess the risks to the remainder of Puerto Rico's recovery,
    including internal and external factors, such as Puerto Rico's capacity
    to carry out projects. Further, we recommended that FEMA identify
    potential actions to manage the risks to the remainder of Puerto Rico's
    recovery and continuously monitor risks.
        In response, FEMA has taken steps toward addressing these
    recommendations by setting risk assessment related goals for FEMA
    personnel involved in the process, drafting a risk assessment plan for
    Puerto Rico's disaster recovery, and developing plans to review the
    plan with Puerto Rico government officials before adoption in January
    2023.
        We will monitor FEMA's further actions to identify, assess, and
    manage risks to recovery in Puerto Rico through our ongoing work.
     FEMA Has Obligated Over $32 billion for Recovery Efforts and About $1
      Billion Has Been Expended on Public Assistance Long-Term Rebuilding
                                    Projects
        FEMA has obligated a combined total of about $32.2 billion in grant
    funds for Public Assistance projects and approximately $304.8 million
    for the Hazard Mitigation Grant Program in Puerto Rico and the USVI in
    response to hurricanes Irma and Maria as of August 2022. In turn, the
    governments of Puerto Rico and the USVI have expended approximately
    $7.7 billion of the Public Assistance obligations and about $39 million
    in Hazard Mitigation Grant Program obligations as of August 2022. About
    $1 billion of the Public Assistance expenditures were for permanent
    work projects that support long-term rebuilding projects, such as
    rebuilding schools, the power grid, water systems, and other damaged
    infrastructure.
        Public Assistance obligations in Puerto Rico. As shown in figure 5,
    FEMA obligated approximately $28 billion in Public Assistance funding
    to Puerto Rico related to the 2017 hurricanes as of August 2022. This
    funding includes approximately $5.4 billion (19 percent) for emergency
    work (categories A and B), about $21.2 billion (76 percent) for
    permanent work (categories C through G), and about $1.4 billion (5
    percent) in management and administrative costs (category Z).\20\
    ---------------------------------------------------------------------------
        \20\ These totals do not include FEMA's Public Assistance
    obligations in response to the series of earthquakes Puerto Rico
    experienced starting in December 2019 or to COVID-19. As of August
    2022, FEMA's Public Assistance obligations in response to the
    earthquakes totaled about $739.5 million, while obligations related to
    COVID-19 response were approximately $194.6 million.
    ---------------------------------------------------------------------------

     Figure 5: Federal Emergency Management Agency Public Assistance Grant
        Funding Obligated to Puerto Rico by Category, as of August 2022
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

      Source: Federal Emergency Management Agency's Emergency Management
                 Mission Integrated Environment. GAO-22-106211

        Public Assistance expenditures in Puerto Rico. The government of
    Puerto Rico has expended about $5.3 billion--about 19 percent--of the
    approximately $28 billion in Public Assistance obligations as of August
    2022. However, expenditures for emergency work projects constitute a
    large majority of expended Public Assistance funding in Puerto Rico.
    Specifically, as of August 2022, emergency work projects account for 81
    percent of the expended amount while permanent work projects account
    for 8 percent of the total (see figure 6).

    Figure 6: Federal Emergency Management Agency (FEMA) Public Assistance
    Grant Funding Expended by the Government of Puerto Rico by Category, as
                                 of August 2022
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

         Source: FEMA via the Puerto Rico Central Office for Recovery,
       Reconstruction, and Resiliency Transparency Portal. GAO-22-106211

        We will continue to monitor Public Assistance obligations and
    expenditures for Puerto Rico through our ongoing work.
        Public Assistance obligations in the USVI. FEMA's obligations
    related to the 2017 hurricanes for Public Assistance projects in the
    USVI were approximately $4.2 billion as of August 2022. As figure 7
    shows, FEMA's Public Assistance obligations as of August 2022 include
    approximately $1.8 billion (43 percent) for emergency work (categories
    A and B), about $1.9 billion (44 percent) for permanent work in
    categories C through G, and $533.5 million (13 percent) in management
    and administrative costs (category Z).

     Figure 7: Federal Emergency Management Agency Public Assistance Grant
    Funding Obligated to the U.S. Virgin Islands by Category, as of August
    2022

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

      Source: Federal Emergency Management Agency's Emergency Management
                 Mission Integrated Environment. GAO-22-106211

        Public Assistance expenditures in the USVI. The USVI government has
    expended about $2.4 billion--about 57 percent--of the approximately
    $4.2 billion in Public Assistance obligations as of August 2022. About
    66 percent of total Public Assistance expenditures in the USVI went
    toward emergency work projects while 26 percent went toward permanent
    work projects (see fig. 8).\21\
    ---------------------------------------------------------------------------
        \21\ The remaining Public Assistance expenditures in the USVI in
    response to the 2017 went toward management and administrative costs.
    ---------------------------------------------------------------------------

     Figure 8: Federal Emergency Management Agency Public Assistance Grant
    Funding Expended by the U.S. Virgin Islands Government by Category, as
                                 of August 2022

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

      Source: Federal Emergency Management Agency's Integrated Financial
                  Management Information System. GAO-22-106211

        Hazard Mitigation Grant Program obligations and expenditures in
    Puerto Rico and the USVI. FEMA has obligated a combined total of about
    $304.8 million in funding for Hazard Mitigation Grant Program projects
    in both Puerto Rico and the USVI in response to hurricanes Irma and
    Maria.
        Specifically, in Puerto Rico, FEMA has obligated approximately
    $162.7 million as of August 2022 to 200 Hazard Mitigation Grant Program
    projects specifically in response to Hurricane Maria, and the
    government of Puerto Rico has expended about $21.2 million--or 13
    percent--of total obligations. For Hurricane Irma, FEMA has obligated
    about $3.9 million to six projects related to Hurricane Irma, while the
    government of Puerto Rico has expended approximately $252,000, which
    represents about 6 percent of total obligations, as of August 2022.
        In the USVI, FEMA has obligated approximately $138.2 million in
    Hazard Mitigation Grant Program funding to projects in response to the
    2017 hurricanes while the USVI government has expended about $17.6
    million of these obligations as of August 2022.
        With our ongoing work, we will continue to obtain updated Hazard
    Mitigation Grant Program obligation and expenditure data for Puerto
    Rico to track the progress of disaster recovery efforts.
    Puerto Rico Faces Potential Challenges to Ongoing Recovery Efforts and
      FEMA Is Communicating Regularly with Stakeholders to Discuss Issues
        In our ongoing work, officials from the agencies and organizations
    we have interviewed thus far have described potential challenges to the
    continuing disaster recovery efforts in Puerto Rico. In addition, our
    preliminarily observations indicate that FEMA communicates regularly
    with government of Puerto Rico agencies about the implementation of
    Public Assistance and Hazard Mitigation Grant Program projects and has
    taken actions, such as providing trainings, to help address some of
    these issues.
    FEMA, Puerto Rico Government Agencies, and Other Puerto Rico
            Stakeholders Cited Potential Challenges to Ongoing Recovery
            Efforts
        In our ongoing work, officials we have interviewed from FEMA and
    selected Puerto Rico government agencies, Puerto Rico municipalities, a
    private operator of a Puerto Rico government agency, and
    nongovernmental organizations have identified potential challenges to
    Puerto Rico's disaster recovery efforts. These potential challenges
    include: (1) the limited institutional knowledge and capacity in Puerto
    Rico to manage disaster recovery programs; (2) difficulties between
    FEMA and grant applicants reaching agreement on scopes of work for
    projects; (3) increases in project costs due to inflation; and (4)
    difficulties procuring resources such as goods and services for the
    construction of projects.
        Limited institutional knowledge for managing FEMA's grant programs.
    Preliminary observations from our ongoing work indicate that Puerto
    Rico faces challenges with building up institutional knowledge to
    manage FEMA grant awards and projects. In particular, officials from
    COR3 stated that COR3 found that some local governments--commonly known
    as municipalities--had relatively little knowledge of the federal
    procurement process or the use of Public Assistance funding for the
    administrative and management costs of projects. Specifically, in
    COR3's February 2021 analysis of its survey to identify the capacities
    of municipalities, it found that 31 municipalities did not have
    extensive knowledge of federal regulations and needed to obtain better
    knowledge in the area to meet federal requirements for recovery project
    contracting and purchasing.\22\
    ---------------------------------------------------------------------------
        \22\ As a condition of receiving reimbursement for contractor costs
    relating to FEMA's federal assistance programs, FEMA award recipients
    and subrecipients must comply with all applicable federal laws,
    regulations, and executive orders, including federal procurement
    standards found at 2 C.F.R. Sec. Sec.  200.317-200.327.
    ---------------------------------------------------------------------------
        Difficulties reaching agreement on project scopes of work. Among
    the Puerto Rico government agencies and municipalities that we have
    interviewed thus far, some officials have described challenges with
    reaching agreement with FEMA on the scope of work for Public Assistance
    projects they are submitting to FEMA for approval. For example,
    officials from a municipality we interviewed stated that getting
    approval from FEMA to add improvements to a project above its pre-
    disaster design has been difficult and time consuming.\23\ In addition,
    officials from a private operator of a Puerto Rico government agency
    told us that they have had disagreements with FEMA on making repairs
    beyond the damages sustained during Hurricane Maria. Specifically, the
    private operator and FEMA disagree on which aspects of the agency's
    proposed project the Public Assistance funding will cover. FEMA
    officials note that there are nuances involved in developing a complex
    project and ensuring it is eligible under federal laws and regulations.
    ---------------------------------------------------------------------------
        \23\ An Improved Project is a project that incorporates
    improvements or changes to the pre-disaster design that are not
    required by eligible codes or standards. Federal Emergency Management
    Agency. Public Assistance Program and Policy Guide, FP 104-009-2
    Version 4 (June 1, 2020).
    ---------------------------------------------------------------------------
        Increases in project costs due to inflation. Based on preliminary
    observations in our ongoing work, officials in Puerto Rico we have
    interviewed are concerned that inflation will lead to an increase in
    the cost of executing projects and exceed FEMA's obligations for some
    projects. For example, officials from a municipality stated that the
    fixed cost estimates developed under Public Assistance alternative
    procedures no longer reflects the current costs of basic supplies, such
    as concrete, needed for their projects. Furthermore, officials from a
    nongovernmental organization stated that they were concerned with the
    capability of municipalities--already facing financial hardships--to
    afford the increased cost of projects due to inflation. Officials from
    this nongovernmental organization added that since FEMA's Public
    Assistance is a reimbursement program, grant recipients--such as
    municipalities--need to pay for the cost of a project upfront before
    FEMA can reimburse them. These officials also emphasized that with
    Public Assistance alternative procedures, if the costs of a project
    exceeds the fixed cost estimate, the grant recipient would have to pay
    the difference.
        Additionally, officials from some Puerto Rico government agencies
    that received obligations through the FEMA's Accelerated Awards
    Strategy (FAASt) approach expressed concerns about inflation increasing
    the overall cost of their projects and making the fixed-cost estimate
    they agreed to no longer accurate.\24\ For example, officials from a
    Puerto Rico government agency stated that some of its projects have
    doubled in cost from the original estimate. Furthermore, officials from
    another Puerto Rico government agency stated that they were unsure if
    the obligation amount estimated using FAASt would adequately cover the
    cost of their projects due to cost increases they ascribe to inflation.
    According to FEMA officials, Public Assistance fixed cost estimates
    accounted for some inflation; however, they told us that they are
    monitoring for cases of project cost increases that exceed 50 percent
    of the original fixed cost estimate.
    ---------------------------------------------------------------------------
        \24\ FAASt allows selected Puerto Rico state agencies such as
    Puerto Rico's Electric Power Authority, Aqueduct and Sewer Authority,
    Department of Education, and the Public Housing Administration to use a
    sample of the information needed to extrapolate costs and develop a
    fixed cost estimate for Public Assistance permanent work projects. See
    GAO-21-264 for more details.
    ---------------------------------------------------------------------------
        Difficulties procuring resources to begin construction on projects.
    According to officials from FEMA and Puerto Rico government agencies,
    we have interviewed for our ongoing work, procuring resources such as
    contractors and equipment needed to begin construction of projects can
    be challenging.\25\ For example, FEMA officials we spoke with stated
    that municipalities have particular difficulty procuring specialized
    personnel such as engineers and construction contractors because they
    have to compete with government agencies and larger corporations for
    the same resources. Furthermore, officials from a Puerto Rico
    government agency we interviewed specified that delays in the global
    supply chain have affected Puerto Rico. These officials told us that
    obtaining parts and materials needed to start construction on a project
    can sometimes take up to 24 months.
    ---------------------------------------------------------------------------
        \25\ In May 2021, we reported that Puerto Rico would likely face
    risks finding labor to handle the sheer number of projects that need to
    be constructed. According to FEMA officials, this is because thousands
    of projects will be going on simultaneously and will likely put a
    strain on Puerto Rico's capacity to procure labor, equipment, and
    materials to start construction. See GAO-21-264.
    ---------------------------------------------------------------------------
    FEMA Communicates Regularly with Puerto Rico Stakeholders about
            Disaster Recovery Efforts
        According to FEMA, Puerto Rico government agencies, and municipal
    officials we interviewed thus far, communication between FEMA and
    Puerto Rico stakeholders generally occurs frequently through formal and
    informal means. For example, preliminary observations from our ongoing
    work indicates that FEMA holds weekly and monthly meetings with COR3
    and other government agencies, such as the Puerto Rico Electric Power
    Authority. These meetings include discussions with FEMA officials on
    the status of projects and related grant funding or construction
    issues. Officials from one Puerto Rico government agency told us that
    through these meetings, they are able to ask FEMA officials for help on
    specific topics related to their Public Assistance projects, such as
    FEMA's Environmental and Historic Preservation review process.\26\
    These officials stated that they meet with FEMA and COR3 officials up
    to three times a week and have informal communications daily with FEMA
    and COR3 officials. Further, officials from some of the municipalities
    that we have spoken to also stated that they have constructive
    relationships with their FEMA Program Delivery Managers and that
    communication with them has improved since the beginning of the
    disaster recovery.\27\
    ---------------------------------------------------------------------------
        \26\ According to FEMA, an Environmental and Historic Preservation
    review includes FEMA reviewing each Public Assistance project to ensure
    the work complies with applicable federal laws and implementing
    regulations, and applicable executive orders to protect the environment
    and preserve the U.S.'s historic and archeological resources. Federal
    Emergency Management Agency. Public Assistance Program and Policy
    Guide, FP 104-009-2 Version 4 (June 1, 2020).
        \27\ According to FEMA, Program Delivery Managers serve as the
    primary point of contract for applicants, providing customer service
    and programmatic guidance throughout the grant process.
    ---------------------------------------------------------------------------
        In addition, both FEMA and COR3 have provided municipalities with
    trainings and technical assistance. For example, in February 2021, FEMA
    and COR3 hosted a virtual training for municipal staff on the
    processing of acquisitions and contracting which all 78 municipalities
    attended. More recently, from December 2021 to June 2022, FEMA
    delivered multiple 3-day grants management training for municipalities.
    These trainings covered topics such as the lifecycle of grants, project
    management, administrative requirements, and the procurement process.
        Our ongoing work will continue to explore the challenges to the
    disaster recovery efforts in Puerto Rico as well as potential solutions
    to these challenges. We will also continue to identify steps FEMA is
    taking to help address them. We plan to issue a final report next year.
        Chair Titus, Ranking Member Webster, and Members of the
    Subcommittee, this completes my prepared statement. I would be pleased
    to respond to any questions that you may have at this time.

        Ms. Titus. Ms. Williams-Octalien.
        Ms. Williams-Octalien. Good morning, Chairwoman Titus and
    Ranking Member Webster, members of the committee. I am Adrienne
    Williams-Octalien, director of the Office of Disaster Recovery
    in the U.S. Virgin Islands. Thank you for holding this hearing
    and for the opportunity to provide testimony on the status of
    the Virgin Islands recovery 5 years after the devastating
    storms.
        Hurricanes Irma and Maria brought a tremendous amount of
    damage to the Virgin Islands, but also provided opportunity to
    rebuild an aged infrastructure. While there has been
    significant progress in advancing the efforts, the Territory
    remains in a fragile state. The accomplishments to date have
    been achieved despite significant challenges related to Federal
    bureaucratic processes and a global pandemic, which exacerbated
    the already acknowledged complexity of recovering from back-to-
    back category 5 storms.
        With damages estimated to be over $11 billion, which is
    nearly three times the annual gross domestic product, the
    Territory anticipates receiving $8 billion to $10 billion from
    Federal programs over the next 5 years to aid in the recovery.
        To date, $5.6 billion of the anticipated $8 billion has
    been obligated to the Territory; $2.7 billion of those funds
    have been expended. With a portfolio of only 1,500 projects, at
    least 783 hurricane recovery projects have been completed to
    date, and 500 are underway.
        Progress has not come without its challenges. In requiring
    the Territory to submit reimbursement requests to FEMA for
    approval before gaining authorization to draw funds, the
    Territory was placed in 2019 under manual draw. This created a
    significant delay in getting payments out to vendors.
        In February 2021, FEMA lifted the manual draw requirements
    for reimbursement spending in the Territory. This decision
    demonstrated FEMA's confidence in the Territory's ability to
    manage its Federal recovery dollars.
        The geographical makeup and fiscal constraints of the
    Territory creates a set of unique circumstances not experienced
    in Anytown, USA. In many instances, these challenges have
    pushed FEMA into uncharted waters and forced the development of
    innovative approaches to disaster recovery practices.
        Congress recognized these distinct challenges and in 2018
    passed the Bipartisan Budget Act. The BBA allowed for the
    rebuilding of critical facilities to prevailing industry
    standards. To date, a total of 92 projects have been requested
    for replacement through FEMA, 46 of which have been approved,
    to include 17 educational facilities and 8 healthcare
    facilities. Additionally, FEMA has approved the replacement of
    the wastewater system and potable water systems for the island
    of St. Croix, paving the way for similar considerations for St.
    Thomas and St. John.
        The benefits of the BBA cannot be underscored enough. It
    has created the genesis for the transformation of a resilient
    Virgin Islands. Although the BBA provided tremendous
    opportunities for the Territory, unfortunately, it took FEMA
    almost a year to release the associated policy guidance to
    enable the implementation of the laws as Congress intended.
    These provisions created a complete metamorphosis of how FEMA
    administers its Public Assistance program.
        In its initial stages, the Territory had concerns that the
    FEMA policies were not aligned with Congress' intent. It was
    not until the October 2021 FEMA/USVI BBA Summit, held with
    Governor Albert Bryan, Jr., Delegate to Congress Stacey
    Plaskett, and, of course, members of the Appropriations
    Committee and FEMA leadership, that key policy decisions were
    made to align more with the intent of Congress. This discussion
    yielded the obligation of funding for reconstruction of the
    first school and addressed questions that impacted funding for
    healthcare facilities.
        We are, however, still experiencing challenges with the
    agreement of fixed-cost offers. The Territory has requested a
    second summit to address lingering issues related to cost
    development, to ensure that we are maximizing assistance and
    proper application of the BBA provisions.
        As you may be aware, the Territory is not in a position to
    provide upfront funding projects; therefore, it is critical
    that obligations are in line with actual costs. Many of these
    projects will be in construction over the next 5 to 7 years.
    With the cost of inflation and supply chain issues that are
    currently being experienced, the Territory is at great risk for
    cost overruns for section 428 projects.
        The Territory has found it necessary to leverage multiple
    Federal resources for a project to be feasible. The layering of
    Federal funding is very challenging as agencies become
    Territorial with governing regulations. This inevitably results
    in contractors including the cost of time and money in bids and
    has the unintended consequence of driving the cost of the
    recovery up.
        The Territory continues to advocate for waiver of the local
    match requirement. Under the current situation, the USVI is
    dedicating $500 million of its HUD CDBG-DR funds to cover the
    non-Federal share of the FEMA Public Assistance projects. This,
    however, requires the laborious task of having each project
    reviewed by another Federal agency, again, delaying payment to
    contractors.
        The request to waive the match is well within the line of
    the Insular Areas Act. However, multiple requests have been
    denied by FEMA as recently as June 2022. The Territory simply
    does not have the resources to cover local match requirements,
    and even with the allocation of the CDBG-DR funds, additional
    funds may be necessary.
        Lastly, capacity issues are not limited to the Territory.
    Federal agencies are also experiencing the impact of the lack
    of experienced personnel to assist with the reviewing of
    recovery funds. Timelines associated with reviewing projects
    tend to span months before responses are received. As disasters
    become more prevalent, it is prudent that we remove the
    complexities so we can get the resources to the people who need
    them most.
        The Territory is continuing to lead efforts to rebuild a
    resilient public infrastructure and positively transform our
    Territory for generations to come.
        I would like to thank Delegate to Congress Stacey Plaskett,
    the Department of the Interior, FEMA, HUD, and all of our local
    and Federal partners for their continued support.
        On behalf of Governor Albert Bryan, Jr., and the people of
    the Virgin Islands, I would again like to thank you and this
    body for your support and commitment to the U.S. Virgin
    Islands' recovery and its quest to build a resilient Virgin
    Islands.
        Thank you.
        [Ms. Williams-Octalien's prepared statement follows:]

     Prepared Statement of Adrienne L. Williams-Octalien, Director, Office
                   of Disaster Recovery, U.S. Virgin Islands
        Good morning, Chairman Peter DeFazio, Ranking Member Sam Graves,
    and Members of the Committee on Transportation and Infrastructure
    Subcommittee on Economic Development, Public Buildings, and Emergency
    Management. I am Adrienne L. Williams-Octalien, Director of the Office
    of Disaster Recovery in the U.S. Virgin Islands. Thank you for holding
    this hearing and for the opportunity to provide testimony on the status
    of the Virgin Islands recovery five years after the devastating 2017
    hurricane season.
        Hurricanes Irma and Maria brought a tremendous amount of damage to
    the Virgin Islands but also provided the opportunity to rebuild an aged
    infrastructure and create resiliency. While there has been significant
    progress in advancing recovery efforts, the Territory remains in a
    fragile state. There is work left to be done on many of our critical
    facilities, including hospitals and schools, but the rebuilding efforts
    are in full swing. The accomplishments to date have been achieved
    despite significant challenges related to federal bureaucratic
    processes and a global pandemic, which exacerbated the already
    acknowledged complexity of recovering from back-to-back Category 5
    storms.
        With damages estimated to be over $11B, which is, nearly three
    times the annual gross domestic product, the Territory anticipates
    receiving $8-$10B through various federal programs over the next five
    years to aid in the recovery. To date, $5.6B of the anticipated $8B has
    been obligated to the Territory. $2.7B of those funds have been
    expended. The Territory anticipates receiving this funding from four
    main federal programs, including the FEMA-Public Assistance and Hazard
    Mitigation Grant Programs, HUD-Community Development Block Grant-
    Disaster Recovery Program and Federal Highway Emergency Relief Program,
    along with other disaster-related funds from various federal entities.
        With a portfolio of over 1,500 projects, at least 783 hurricane
    recovery projects have been completed to date and over 500 are
    underway. Progress has not come without its challenges. In October
    2019, the Territory was placed on manual draw after the results of a
    2018 audit. This required the Territory to submit reimbursement
    requests to FEMA for approval before gaining authorization to draw
    funds. This created a significant delay in getting payments out to
    vendors. In February 2021, FEMA lifted the manual draw requirement for
    reimbursement spending in the Territory. The decision demonstrated
    FEMA's confidence in the Territory's ability to manage its federal
    recovery dollars.
        The geographical makeup and fiscal constraints of the Territory
    creates a set of unique circumstances not experienced in Any Town, USA.
    In many instances, these challenges have pushed FEMA into unchartered
    waters and forced the development of innovative approaches to disaster
    recovery practices.
        Congress recognized these distinct challenges and in 2018, passed
    the Bipartisan Budget Act (BBA). The BBA allowed for the rebuilding of
    critical facilities to prevailing industry standards. To date, a total
    of 92 projects have been requested for replacement through FEMA--46 of
    which have been approved to include 17 educational facilities and eight
    healthcare facilities. Additionally, FEMA has approved the replacement
    of the wastewater system and potable water systems for the island of
    St. Croix, paving the way for similar considerations for St. Thomas and
    St. John.
        The benefits of the BBA cannot be underscored enough. It has
    created the genesis for the transformation of a resilient Virgin
    Islands. Although the BBA provided tremendous opportunities for the
    Territory, unfortunately, it took FEMA almost a year to release the
    associated policy guidance to enable the implementation of the laws as
    Congress intended. These provisions created a complete metamorphosis of
    how FEMA administers its Public Assistance Program. In its initial
    stages, the Territory had concerns that the FEMA policies were not
    aligned with Congress' intent. It was not until the October 2021 FEMA/
    USVI BBA Summit, held with Governor Albert Bryan Jr., Delegate to
    Congress Stacey Plaskett, staff of the Appropriations Committee and
    FEMA leadership, that key policy decisions were made to align more with
    the intent of Congress. This discussion yielded the obligation of
    funding for the reconstruction of the first school and addressed
    questions that impacted funding for healthcare facilities.
        It is highly encouraged that timelines are mandated for federal
    agencies to issue guidelines for any programmatic authorities granted
    through congressional legislation. The time that it takes to deliver
    these policies negatively affects the impact of the intended
    legislation on jurisdictions.
        We are, however, still experiencing challenges with agreement on
    fixed cost offers. The Territory has requested a second summit to
    address lingering issues related to cost development to ensure that we
    are maximizing assistance and proper application of BBA provisions as
    well as gaining clarification on the appeal process for BBA decisions.
        As you may be aware, the Territory is not in a position to provide
    upfront funding for projects. Therefore, it is critical that
    obligations are in-line with actual costs. Many of these projects will
    be in construction over the next 5-7 years. With the cost of inflation
    and supply chain issues that are currently being experienced, the
    Territory is at great risk for cost overruns for 428-fixed cost
    projects.
        This risk is further heightened by the lack of workforce to support
    the rebuilding efforts. According to the findings in the RAND Report
    commissioned in 2019 by FEMA, if every able body in the Territory were
    working, an additional 5,000 employees would still be required
    (Culbertson et al., 2020). The Territory has engaged in a number of
    workforce training initiatives and recruitment fairs but undoubtedly,
    the workforce demand will heighten as early as 2023.
        This phenomenon also impacts the limited pool of contractors that
    are able to access required bonding for large projects. The Territory
    has already begun to see the manifestation of this challenge as
    solicitations for projects are being issued multiple times due to a
    lack of interest by contractors. It will be necessary to attract off-
    island contractors to support the volume of projects that is
    anticipated for the next 3-5 years. However, off-island contractors who
    are not familiar with the federal requirements and burdensome
    administrative processes often grow impatient with the time it takes to
    process payments.
        The Territory has found it necessary to leverage multiple federal
    resources for a project to be feasible. The layering of federal funding
    is very challenging as agencies become territorial with governing
    regulations. This inevitably results in contractors including the cost
    of time and money in bids and has the unintended consequence of driving
    the cost of the recovery up. The Territory continues to advocate for a
    waiver of the local match requirement. Under the current situation, the
    USVI is dedicating $500M of its HUD CDBG-DR funds to cover the non-
    federal share of the FEMA Public Assistance projects. This, however,
    requires the laborious task of having each project reviewed by another
    federal agency, again delaying payment to contractors. If the 10% cost
    share is waived, the USVI can instead redirect these funds to help
    rebuild homes damaged by the hurricanes and address other critical
    needs.
        The request to waive the match is well in line with the Insular
    Areas Act. However, multiple requests have been denied by FEMA, as
    recently as June 2022. The Territory does not have resources to cover
    local match requirements and even with the allocation of the CDBG-DR
    funds, additional funds may still be necessary.
        Despite the many challenges of the recovery, the Territory is still
    focused on ensuring that vendors and contractors are paid in a timely
    manner. This is evidenced by the 2019 petition made to FEMA to allow
    the Territory to pay on invoice, thereby negating the need to provide
    proof of payment before drawing reimbursement funds. This eliminated
    the Territory from seeking loans, lines of credit and other financing
    mechanisms to commence projects.
        Disaster recovery is never fast enough. However, the bureaucratic
    processes that govern the spending of funds frustrate as opposed to
    facilitate recovery efforts. To address these concerns, Congress may
    consider action that identifies one federal agency to review recovery
    projects for compliance with shared regulations and prioritize the
    rules and requirements of the primary federal funding source.
        It is clear that new flexibilities afforded to programs but
    executed through the old FEMA model do not meet the level of intended
    success. The timelines associated with the obligation and expenditure
    of federal funds are frustrating at best and we should collectively
    develop an approach to revamp how recoveries are funded. We need to
    explore closing the gap between FEMA and HUD funding becoming available
    to disaster-stricken areas this allows for comprehensive recovery
    planning and execution. In addition, novel solutions for acquiring
    skilled workers to support recovery efforts from the continental U.S.
    and other regions of the Caribbean is crucial. Legislation that allows
    workforce from neighboring Caribbean islands to come to the Territory
    to accelerate rebuilding efforts is warranted.
        Lastly, capacity issues are not only limited to the Territory.
    Federal agencies are also experiencing the impact of the lack of
    experienced personnel to assist with the reviewing of recovery
    projects. Timelines associated with reviewing projects tend to span
    months before responses are received. As disasters become more
    prevalent, it is prudent that we remove the complexities so we can get
    the resources to the people who need them the most.
        The Territory is continuing to lead efforts to rebuild a resilient
    public infrastructure and positively transform our Territory for
    generations to come. Moving through the complexity of federal
    requirements across multiple funding sources and ensuring that projects
    are funded, monitored, and compliant is an arduous task, but it can be
    done with our combined support. I would like to thank Delegate to
    Congress Stacey Plaskett, the Department of Interior, FEMA, HUD and all
    of our local and federal partners for their continued support. On
    behalf of Governor Albert Bryan Jr. and the people of the Virgin
    Islands, I would like to once again thank the members of this body for
    your support and commitment to the U.S. Virgin Island's Recovery and
    its quest to ``Build a Legacy of Resilience.'' I remain available to
    answer any questions you may have.

        Ms. Titus. Thank you.
        Now, Mr. Laboy.
        Mr. Laboy. Thank you, Chairwoman Titus, Ranking Member
    Webster, for the chance to be here today to talk about the
    status of Puerto Rico's recovery 5 years after Hurricanes Irma
    and Maria. My name is Manuel Laboy, and I serve as the
    Governor's authorized representative and as the director of the
    Central Office for Recovery, Reconstruction, and Resiliency for
    Puerto Rico, also known as COR3.
        My remarks today will first describe the dire circumstances
    under which Puerto Rico was devastated by back-to-back
    hurricanes and our efforts in the early years to get our heads
    above water. Then, I will discuss the last couple of years when
    Puerto Rico's recovery began to take off and make real
    progress.
        When Hurricanes Irma and Maria hit Puerto Rico in September
    2017, we were already in crisis. Puerto Rico had just entered
    bankruptcy. It was illiquid and had no access to capital
    markets. Much of Puerto Rico's infrastructure was beyond its
    useful life and in a state of deterioration.
        From 2017 until 2020, our recovery was devoted to emergency
    work and temporary measures. During this phase, FEMA programs
    and processes went through several major shifts during this
    time, including institution of a new delivery model, an
    amendment to the disaster declaration that requires the use of
    fixed-cost estimates for large projects and implementation of
    the FEMA Accelerated Awards Strategy, known as FAASt, designed
    to expedite the obligation of funding for the energy, water and
    sewer, and public schools infrastructure. During this period,
    Puerto Rico also suffered two additional major disasters.
    First, the earthquakes, and then COVID-19.
        By the end of 2020, $4 billion for emergency work had been
    disbursed and $13.5 billion for permanent work obligated to
    repair, restore, and replace damaged facilities by Hurricane
    Maria. The last 2 years have seen great collaboration with our
    Federal partners, primarily FEMA. We have moved the recovery
    forward into the permanent work phase, which requires the
    development of scopes of work, the design and engineering
    projects, procurement of construction contracts and,
    ultimately, construction, while FEMA continues to obligate
    permanent work funding reaching a total of $21.4 billion of
    Federal share to date.
        To accelerate the reconstruction, we requested FEMA to take
    certain actions to remove obstacles, and FEMA has worked with
    us to do so, including lifting a 2019 agreement that imposed
    conditions on the island before request for reimbursements
    could be granted and the provision of Working Capital Advances,
    which have been immensely helpful in allowing us to increase
    permanent work disbursements and advance the execution of large
    projects led by the municipalities, the Puerto Rico Electric
    Power Authority, and the Puerto Rico Aqueduct and Sewer
    Authority.
        In the last 2 years, FEMA and Puerto Rico have achieved so
    much. Over 5,600 projects are under execution, including 1,700
    in the design, engineering, and permitting step and about 2,200
    projects in the construction phase. Projects include roads and
    bridges, schools and hospitals, water and sewer, ports,
    recreation and sports facilities, and power generation and
    electrical grid. The latter is fundamental for the integration
    of renewable energy technology.
        From 370 permanent work projects completed by the end of
    2021, today that number is over 1,100. Equally critical, Puerto
    Rico has submitted all closeout packages for the Hurricane Irma
    disaster and over 600 packages for Hurricane Maria, and has
    continued to undergo FEMA's Validate as You Go process, passing
    with flying colors.
        Since 2021, the amount of permanent work disbursed has
    increased by $543 million compared to $153 million disbursed
    between 2017 and 2020.
        In terms of the Hazard Mitigation Grants Program, COR3 has
    successfully submitted over $4 billion in application packages
    to FEMA, including renewable energy and climate adaptation
    related projects.
        Just 2 weeks ago, FEMA Administrator Deanne Criswell came
    to visit Puerto Rico and expressed how pleased she was with the
    collaboration taking place and the work getting done on the
    island. It has been a difficult journey, and even though we are
    tackling recent challenges, such as cost increases and
    availability of skilled labor, Puerto Rico is on the road to
    recovery and resiliency.
        Since 2017, COR3 has provided critical technical assistance
    to all of our subrecipients to obtain funding and to execute
    work in compliance with Federal and State requirements. We
    deeply appreciate FEMA's full support and recent efforts to
    simplify its recovery processes and look forward to additional
    steps it may take to continue increasing administrative
    efficiencies. We are confident that the momentum gained for
    advancing the reconstruction will not diminish; on the
    contrary, will accelerate in 2023 and beyond.
        Again, we thank you for the opportunity to be here to share
    this with you today.
        [Mr. Laboy's prepared statement follows:]

     Prepared Statement of Hon. Manuel Laboy, Executive Director, Central
        Office for Recovery, Reconstruction, and Resiliency, Puerto Rico
        Chairman DeFazio, Ranking Member Graves, and Members of the
    Committee:
        Thank you for the opportunity to appear before you today on behalf
    of the American Citizens of Puerto Rico to discuss our recovery from
    Hurricanes Irma and Maria. In the five years following the devastation
    of these two hurricanes, we have made significant progress towards
    building back our Island. This progress is, in part, the result of the
    tremendous and often bipartisan support we have received from this
    Committee and Congress more broadly.
          Puerto Rico's Challenges Prior to Hurricanes Irma and Maria
        As has been well documented, before Hurricanes Irma and Maria made
    landfall on the Island, Puerto Rico was already in the middle of a
    financial crisis. In the decade prior, the Government of Puerto Rico
    had amassed unsustainable levels of debt, to a point where credit
    rating agencies implemented a series of downgrades for Puerto Rico-
    Related Bonds at various points between 2012 and 2014, with most of
    those bonds reaching ``junk'' status between February and June of 2014.
    This caused the Government of Puerto Rico and its entities to lose
    access to capital markets which strained Puerto Rico's liquidity
    capabilities.
        On June 30, 2016, President Barack Obama signed into law the Puerto
    Rico Oversight, Management, and Economic Stability Act (``PROMESA''),
    which established a process for restructuring debt and expedited
    procedures for approving critical infrastructure projects in order to
    combat the debt crisis. Through PROMESA, the U.S. Congress also
    established the Financial Oversight and Management Board of Puerto Rico
    (``FOMB'') to help Puerto Rico achieve fiscal responsibility with pro-
    growth fiscal reforms and renew access to capital markets. Essentially,
    FOMB represented the Puerto Rico Government entities having debt in the
    debt restructuring process, but also presented an additional
    bureaucratic layer for execution of the Government's responsibilities.
        In addition to the financial crisis, Puerto Rico was suffering from
    an infrastructure crisis, which made the Island vulnerable to natural
    hazards. Puerto Rico's energy grid, roads, bridges, dams, ports,
    hospitals, water treatment plants, and more had been decaying for years
    mainly due to deferred maintenance. Moreover, the Puerto Rico Electric
    Power Authority (``PREPA'') relied too heavily on expensive oil and was
    plagued by aging infrastructure dating back to the 1960s. Additionally,
    buildings and infrastructure, including residential septic tanks, were
    commonly constructed without permits and thus were not in compliance
    with building codes. Construction was allowed to occur in areas that
    are known to be hazardous, such as areas prone to flooding and
    landslides. Similarly, unmetered water connections and inconsistent
    electricity metering were common, and laws and regulations governing
    these activities were not rigorously enforced.
        In the middle of this financial crisis, Puerto Rico also
    desperately needed to transform its energy grid; modernize the
    telecommunications system; rebuild its water system; and strengthen
    maritime, surface, and air transportations; as well as repair and
    rebuild residential housing, without any financial means to achieve any
    of these critical tasks.
                 Impact of Hurricanes Irma and Maria 2017-2020
        Hurricanes Irma and Maria dealt a devastating blow to Puerto Rico,
    resulting in the largest and most complex disaster response and
    recovery effort in U.S. history. Hurricane Irma skirted the northern
    coast of the Island from September 6-7, 2017 as a Category 5 storm,
    causing extreme flooding, regional power and water outages, and other
    significant impacts. Before response operations had even concluded,
    however, an even more devastating Hurricane Maria slammed into Puerto
    Rico on September 20, making a direct strike as a strong Category 4
    storm and causing widespread devastation and destruction the likes of
    which the Island had never seen.
        Hurricane Maria represented a ``worst case scenario'' for Puerto
    Rico, tracking east-to-west across the Island and leaving no one and no
    thing untouched. Within a matter of hours, 100% of Puerto Rico's
    population, economy, critical infrastructure, social service network,
    healthcare system, and even the government became casualties of the
    storm. Damage to the electrical grid--including downed power lines,
    transmission lines, and poles--was catastrophic. All power was lost
    across the Island as a direct result of the near-total failure of
    PREPA's transmission and distribution infrastructure. This produced a
    cascading effect that impacted critical infrastructure and services
    that relied on power to operate (such as airports, seaports, hospitals,
    water systems, communications networks, hotels, traffic and
    streetlights, etc.). With Puerto Rico's power grid offline, wastewater
    treatment plants were out of service. Some sewage plants were upstream
    from the drinking water supply, so their failure could have increased
    the risk of contamination of drinking water. Water damaged structures
    were exposed to other potential environmental hazards, such as mold, an
    increase in rodents and pests, and chemicals and waste. This obviously
    caused a devastating blow to Puerto Rico's already fragile economy.
        The powerful winds, storm surge, and localized flooding from
    Hurricane Maria caused significant damage or complete destruction of
    over 472,000 housing units across Puerto Rico. This forced hundreds of
    thousands of Island residents to seek shelter in hotels, with friends
    and family, or in congregate shelters. The magnitude of housing losses
    produced a housing emergency throughout the Island due to the
    insufficient remaining housing stock to shelter all of those who had
    lost or had been forced out of their homes. This reality, added to the
    power and water outages, forced tens of thousands of Puerto Rico
    residents to flee to the continental United States, further impacting
    the Island's ability to recovery and rebuild its communities and
    economy.
     Emergency Response, Stabilization, and Transition to Disaster Recovery
        Under the National Response Framework, the Department of Homeland
    Security (``DHS'') is the federal department with primary
    responsibility for coordinating disaster response, and within DHS, the
    Federal Emergency Management Agency (``FEMA'') has lead responsibility.
    The Administrator of FEMA serves as the principal adviser to the
    President and the Secretary of Homeland Security regarding emergency
    management. Due to Hurricane Irma's damages, on September 10, 2017,
    President Donald Trump issued a major disaster declaration for Puerto
    Rico (DR-4336) and FEMA designated nine of Puerto Rico's 78
    municipalities as eligible for FEMA's Individual Assistance, which
    provides relief for immediate needs and housing restoration. Later,
    after Hurricane Maria left island-wide devastation, a second major
    disaster declaration was issued on September 20, 2017 (DR-4339), and
    FEMA extended eligibility for both Public Assistance and Individual
    Assistance to all 78 of Puerto Rico's municipalities. The major
    disaster declarations triggered a variety of federal response and
    recovery programs for Puerto Rico government and nongovernmental
    entities, households, and individuals.
        On November 5, 2017, FEMA published Amendment No. 5 to the initial
    declaration notice for Hurricane Maria. Amendment 5 expanded FEMA's
    funding authority, including the confirmation of availability of
    funding for hazard mitigation measures under Section 404 of the
    Stafford Act, but conditioned this funding on three things, including
    the establishment of a ``grant oversight authority, supported by third-
    party experts, to perform as the grant recipient for Public Assistance
    and Hazard Mitigation funding to ensure sound project management and
    enhanced, centralized control and oversight over the distribution of
    FEMA grant funds.'' In order to establish a centralized entity to lead
    the coordination of the long-term recovery, reconstruction planning,
    and administration of the federal programs for the Government of Puerto
    Rico, the Governor of Puerto Rico, Hon. Ricardo Rossello, issued
    Executive Order 2017-65 (as amended by Executive Order 2017-69). These
    Executive Orders created the Central Recovery & Reconstruction Office
    (``COR3''), to act as the lead agency within the Government of Puerto
    Rico in the coordination, development, and execution of long-term
    recovery and reconstruction efforts.
        As mentioned, Puerto Rico was already going through its share of
    challenges before the storms and the unprecedented devastation
    presented a new set of challenges that would muddle an already
    complicated process under the Public Assistance program. Federal grant
    award regulations allow FEMA to impose additional specific grant award
    conditions under certain circumstances, such as to mitigate risk and
    ensure fiscal accountability of the recipient or subrecipient. In
    normal circumstances under the Public Assistance program, once FEMA
    obligates funds, the recipient can disburse funds according to its own
    management processes, as long as doing so is compliant with federal
    requirements. However, in November 2017, FEMA instituted a manual
    reimbursement process for subrecipients in Puerto Rico for federal
    funds, including Public Assistance funds, to mitigate fiduciary risk
    and decrease the risk of misuse of funds, commonly known as the ``270
    Process.'' This added a significant administrative step to the process
    and required Puerto Rico to submit funding drawdown requests on behalf
    of municipalities and state agencies to FEMA for approval.
    Additionally, the drawdown requests had to include supporting
    documentation to certify the amount being requested for drawdown was
    eligible, allowable, reasonable, and in compliance with federal
    procurement regulations. In 2019, the 270 Process ended, transferring
    the disbursement responsibility to COR3 via a FEMA-State Agreement, but
    imposing additional restrictions, terms and conditions related to the
    disbursements process to be managed by COR3.
        In addition, the Public Assistance program is generally a
    reimbursement program which requires the recipient and subrecipients to
    have enough liquidity to expend funds first, i.e. the ability to
    procure and pay for contractors and then submit proof of the incurred
    expenses for reimbursement, something Puerto Rico completely lacked. In
    past large recovery efforts, including those managed by recipients in
    the States of Louisiana, Mississippi, Texas, and Florida following
    major hurricanes in 2004, 2005, and 2008, there was greater flexibility
    with respect to recipients' authority to provide advance funding to
    subrecipients. During these older events, the applicable financial
    management regulations contained in 44 C.F.R. Part 13 allowed
    ``advances to Subrecipients in the amount of 50 percent of the funds
    obligated by FEMA under Public Assistance subgrants.''
        However, 2 C.F.R. Part 200 superseded 44 C.F.R. Part 13 and applies
    to disasters declared after December 26, 2014, so including Puerto
    Rico's recovery from Hurricanes Irma and Maria. The newly issued
    regulations made it more difficult to provide the fiscal support that
    subrecipients in Puerto Rico needed in order to begin the substantial
    recovery effort. Specifically, 2 C.F.R. 200.305(b)(1) provides that,
    ``Advance payments to a non-Federal entity must be limited to the
    minimum amounts needed and be timed to be in accordance with the
    actual, immediate cash requirements of the non-Federal entity in
    carrying out the purpose of the approved program or project.'' The Cash
    Management Improvement Act of 1990, 31 U.S.C. Sec. Sec.  6501-6508, and
    its implementing regulations at 31 C.F.R. Part 205 also alludes to a
    minimum amount to meet immediate cash needs.
        To make matters worse, Puerto Rico insurance companies received
    $8.5 billion in insurance claims. On average, customers received about
    60 percent of the amounts they submitted on their claims. Nearly 18
    months after the hurricane, there were still about 11,000 unpaid
    claims. As part of its Public Assistance program, FEMA must ensure that
    the assistance provided does not duplicate assistance from another
    source, including insurance. This uncertainty as to whether benefits
    would be duplicated exacerbated Puerto Rico's ability to quicken its
    recovery efforts. Further, FEMA requires that subrecipients pursue all
    available resources, which put subrecipients in Puerto Rico in a
    position to make difficult decisions regarding whether to accept
    insurance settlement offers to cover necessary critical expenses, or
    continue fighting with insurance companies who had far greater
    resources at their disposal and none of the time constraints.
        Moreover, in 2019 FEMA introduced a new Public Assistance delivery
    model (the ``National Delivery Model''). While, in the broadest sense,
    Puerto Rico supported the implementation of the National Delivery
    Model, there were concerns that the model had never before been used on
    a disaster where Section 428 alternative procedures \1\ governed nearly
    all of the disaster grant funding. Additionally, because it was
    different from the delivery model Puerto Rico had been using since
    September 2017, it was yet another change in procedures, which raised
    concerns over impacts to the already glacial pace of recovery on the
    Island. However, we adapted and continued the recovery as directed.
    ---------------------------------------------------------------------------
        \1\ Under Stafford Act Sec.  428, Public Assistance Alternative
    Procedures, FEMA may award fixed cost grants for large permanent work
    projects, rather than on an actual cost basis. See Public Assistance
    Alternative Procedures (Section 428) Guide for Permanent Work, FEMA-
    4339-DR-PR (Feb. 10, 2020).
    ---------------------------------------------------------------------------
        In mid-2019, in an effort to expedite the permanent work funding
    obligation process, FEMA implemented its FEMA Accelerated Award
    Strategy (``FAASt''), a novel approach never applied in any prior
    disaster recovery managed by FEMA, under which it uses a Statistical
    Sampling Methodology to arrive at fixed cost estimates for groups of
    critical infrastructure projects (energy, sewer and aqueduct, and
    public schools), rather than requiring inspections and cost estimating
    for each individual project. While this allowed FEMA to expedite
    obligation and amounted to a master recovery budget for each FAASt
    subrecipient, it did not authorize any related construction, and
    required that all projects needed to be formulated through FEMA's
    National Delivery Model by submitting detailed scopes of work for
    environmental and historic preservation compliance, and to request
    additional funding on a project-base for hazard mitigation measures.
        Compounding Puerto Rico's challenges, the Island suffered two
    additional major disasters while in the throws of recovery from
    Hurricanes Irma and Maria--major earthquakes that shocked the Island
    beginning in late 2019 and lasting over six months and the COVID-19
    Pandemic.
        Despite these challenges, with the help of the Federal Government,
    Puerto Rico worked diligently to pull itself out of the literal and
    figurative darkness that the 2017 Hurricanes had cast over the Island.
    By the end of 2020, 1,416 emergency work projects (Categories A & B)
    had been obligated for $4.95 billion, of which $3.9 billion had been
    disbursed. During this time, permanent work projects (FEMA Categories C
    through G) were slow to develop. Through 2020, 4,649 projects were
    obligated, the majority of which over 80% were small projects, and only
    $153.3 million had been disbursed (See Figure 1 in Appendix). The
    Puerto Rico Energy Power Authority (``PREPA'') and the Puerto Rico
    Department of Education (``PRDE'') funds under FAASt were obligated in
    September 2020 (followed by the Puerto Rico Aqueduct and Sewer
    Authority (``PRASA'') in January 2021). But, 2020 would be a turning
    point, as the Island moved out of response and into recovery.
                  COR3's Strategic Plan for Recovery 2021-2022
        With the majority of emergency work complete, Puerto Rico's
    disaster response transitioned to disaster recovery, with its primary
    focus on the formulation and execution of permanent work projects
    (which are captured under FEMA Categories C through G). By its nature,
    long-term infrastructure recovery is a slower process, as it requires
    the development of scopes of work, the design and engineering of
    projects, procurement of construction contracts, and ultimately
    construction. All indications, however, show significant momentum since
    2021. For example, from 2017 to 2020, COR3 disbursed $3.9 million in
    FEMA Public Assistance for emergency work (Categories A & B) and just
    $153.3 million in for permanent work (Categories C through G). But,
    from 2021 through the present, COR3 has disbursed an additional $386.8
    million for emergency work (Categories A & B) and another $543.4
    million for permanent work (Categories C through G). These numbers
    demonstrate the marked shift from response to recovery. (See Figures 2
    and 3 in Appendix).
        Our relationship with FEMA and other Federal partners has
    strengthened tremendously as we have worked together to resolve early
    obstacles and lift restrictions that previously hindered progress. For
    example, the Government of Puerto Rico requested, and FEMA agreed, to
    release a 2019 agreement that imposed significant conditions on the
    Island before requests for reimbursements could be granted. FEMA also
    approved the provision of working capital advances, which have been
    immensely helpful in providing subrecipients the liquidity necessary to
    begin permanent work projects.
        Puerto Rico has now submitted all close out packages for the
    Hurricane Irma disaster and 638 closeout packages for Hurricane Maria,
    including three for permanent work. Puerto Rico continues to undergo
    FEMA's Validate-as-You-Go (``VAYGo'') process and is passing with
    flying colors. Just two weeks ago, FEMA Administrator Deanne Criswell
    came to visit Puerto Rico and expressed how pleased she was with the
    collaboration taking place and the work getting done on the Island,
    noting:

            Puerto Rico has a unique opportunity to not only rebuild, but
            to build back better. The historic assistance provided by FEMA
            presents Puerto Ricans with the opportunity to meet their goal
            of a strong infrastructure prepared to mitigate future damage.
            As an agency, we remain committed to advancing equity and
            combating climate change, while increasing preparedness and
            resilience in the face of future natural and man-made
            disasters.\2\
    ---------------------------------------------------------------------------
        \2\ FEMA Release NR-544, ``FEMA Administrator Reaffirms
    Collaboration with Local Government in Reconstruction Efforts,'' (Aug.
    31, 2022), available as of Sept. 12, 2022 at https://www.fema.gov/
    press-release/20220831/fema-administrator-reaffirms-collaboration-
    local-government-reconstruction
    ---------------------------------------------------------------------------
      Summary of Recent Progress and Updates to Administration of Programs
        As of June 2022, 1,700 permanent work projects (damaged elements)
    related to Hurricane Maria were in the engineering/design and
    permitting stage ($2 billion), and 2,144 were in full construction mode
    across the island ($1.3 billion), including the reconstruction of the
    power grid and generation plants, water and aqueduct installations,
    roads and bridges, schools and hospitals, and recreational and sport
    facilities, adding resilience to hundreds of communities. Additionally,
    1,176 projects have been completed at a cost of $200,563,062 compared
    to 370 in 2021 and very few in 2020. (See Figure 5). We still have much
    to do, the estimate of repairs needed is over $30 billion to support
    the execution of over 8,000 Project Worksheets (PW's) and 14,000
    damaged elements for Hurricane Maria alone for permanent work, but as
    noted above, funding disbursed in 2022 doubled amounts disbursed in
    2021--Puerto Rico is on the right track. Additionally, COR3 has
    disbursed approximately $326 million in funding for the earthquake
    disaster and approximately $117 million for emergency measures to
    combat the COVID-19 pandemic.
        In addition, under FAASt, FEMA has obligated a federal share of
    $9.5 billion for PREPA, $3.7 billion for PRASA, and $2.1 billion for
    the Department of Education. These subrecipients have collectively
    submitted 90 scopes of work for validation by FEMA and $222.8 million
    has been disbursed. Notably, the projects that will be executed under
    FAASt by PREPA will be critical for renewable energy integration to
    ensure sustainability and resiliency in future disasters. (See Figure 4
    in Appendix).
        COR3 has also worked to educate and support our subrecipients, to
    build capacity through training events over the last year, and will
    continue these efforts. The training provided is based on a customized
    approach focused on project execution, grants management, procurement,
    maximization of eligible scope of work, project management, and
    compliance from project formulation to closeout.
        Efforts to Increase Support of Recovery by Providing Access to
                               Necessary Capital
        As discussed earlier, a major obstacle to recovery in Puerto Rico
    is access to working capital, especially for large infrastructure and
    construction projects. As we transition to the recovery phase where
    these projects are an even greater focus, a successful plan to address
    these issues is of the utmost importance. Puerto Rico has therefore
    developed and is now working to implement several strategies to provide
    the necessary support for these projects.
        To address liquidity constraints, on June 15, 2022, COR3 released a
    new funding support program available to its subrecipients, implemented
    specifically to provide a mechanism to advance the federal share of
    funds for approved permanent work projects under FEMA's Public
    Assistance related to Hurricane Maria and the earthquake disaster. The
    program was introduced officially through revision to COR3's guidance
    document, the Disaster Recovery Federal Funds Management Guide
    (``DRFFMG''), in the form of a new Chapter 7, Payment and Cash
    Management Policy. This new and improved advance program is officially
    known as the Working Capital Advance (``WCA'') Program and is already
    demonstrating significant support for the recovery effort.
        The WCA Program is available for all Puerto Rico municipalities,
    PRASA, and PREPA for large permanent work projects. Subrecipients who
    request a WCA in compliance with the policy requirements are eligible
    to receive a one-time payment equal to 25% of the obligated federal
    share of the associated project. To date, COR3 has approved WCAs for
    238 total projects which includes support for projects being
    administered by 38 different municipalities, PREPA, and PRASA. The WCAs
    account for $325 million in advanced funding that will be critical in
    these subrecipients' ability to move forward with the projects. COR3 is
    in the process of expanding the WCA Program to PRDE and to the Puerto
    Rico Public Housing Administration, as well as to the Hazard Mitigation
    Grants Program (``HMGP'').
     Greater Flexibilities for Cash Management and Reimbursement Processes
        COR3 is also encouraged by the continuing close collaboration with
    FEMA regarding COR3's administration of the Public Assistance program
    and implementation of payment processes for subrecipients. When the
    manual drawdown process was lifted for Puerto Rico in 2019, FEMA
    imposed multiple new conditions and requirements on Puerto Rico's
    recovery efforts and specifically regarding the payment process
    implemented by COR3 (the ``2019 Agreement''). In April 2021, Puerto
    Rico sought termination of the 2019 Agreement, as COR3 had successfully
    met all the federal terms and conditions for two years. Puerto Rico
    believed it was time to end these special restrictions and allow Puerto
    Rico to receive equal treatment to the other jurisdictions serving as
    recipients across the CONUS. Puerto Rico's request was approved on
    September 22, 2021. The elimination of these additional restrictions
    allowed Puerto Rico the necessary flexibility to expedite the
    processing of reimbursement requests and the disbursements of federal
    funds to subrecipients.
        The elimination of the 2019 Agreement has also created
    flexibilities that have been incorporated into the COR3 Cash Management
    Policies, transforming the processes around reimbursements and
    advances. Under the new reimbursement policy, disbursements for
    reconstruction projects under development by municipalities, government
    agencies, and non-profit organizations are being expedited,
    significantly reducing the average number of days from 240 to 60 days.
    Similarly, new processes around requests for advances for immediate
    expenses are currently being processed in an average of 21 days rather
    than 150 days, as was before. These changes, coupled with the WCA
    Program, enable much greater support of permanent work projects and
    help provide the resources necessary for all projects to progress more
    efficiently.
        Another positive step in our recovery is the significant progress
    toward usage of Community Development Block Grant-Disaster Recovery
    (``CDBG-DR'') grant funds for the non-federal cost share on approved
    FEMA projects. On January 3, 2020, a Memorandum of Understanding
    (``MOU'') was signed by FEMA and HUD to work together to facilitate
    Puerto Rico's recovery and mitigation activities. This collaboration
    includes joint-guidance on the flexible application of CDBG-DR grants
    as resources for the cost share for FEMA-funded projects. Since then,
    the Puerto Rico Department of Housing (``PRDOH''), the administrators
    of CDBG-DR funds allocated to Puerto Rico, and COR3 have continued to
    coordinate on the design, development, and implementation of the FEMA
    PA Flexible Match Methodology Guidelines (``Guidelines'') as published
    on October 14, 2020.
        COR3 and PRDOH have also submitted a joint petition to FEMA
    discussing the implementation procedure of the Disaster Flexible Match
    (``DFM'') approach. The DFM proposes a funding strategy for the FEMA
    Public Assistance program that eliminates the need for eligible
    applicants to comply with CDBG-DR requirements under each individual
    project to receive its non-federal share, but rather applying for match
    payments based on the total cost share corresponding to selected FEMA
    projects for a specific disaster, thereby reducing additional
    administrative burdens to the recipient and the participating
    subrecipients/applicants. Leveraged together, COR3's FEMA Public
    Assistance and PRDOH's CDBG-DR programs ensure that subrecipients
    receive the greatest, and most efficient benefit from federal recovery
    funding while rebuilding in smarter, more resilient ways.
            Significant Progress and Status of Closeout of Disasters
        Puerto Rico's commitment to effective and efficient recovery
    efforts is demonstrated by the rate at which it has been able to
    reconcile and close FEMA Public Assistance projects prepared for
    Hurricane Irma. Beginning in 2021, COR3 made a commitment to prioritize
    closeout of projects. In 2022, COR3 achieved the submission of all
    closeout packages for all Hurricane Irma projects. Puerto Rico is very
    proud of this achievement. Although many project closeouts remain for
    other disasters, more progress has been made during the past 12 months
    than in the previous four years combined, another testament to the
    administrative efficiency achieved using the greater flexibilities and
    control that FEMA is now allowing for COR3.
        Regarding Hurricane Maria, FEMA has approved a time extension to
    submit all closeout packages related to Emergency Work Categories (A &
    B) project worksheets to December 31, 2022. As of September 9, 2022,
    COR3 has submitted to FEMA 184 large projects, and 454 small projects
    for closeout, representing a project funding amount of $360.7 million.
    COR3 is working diligently to submit the remaining Category A & B
    projects by the approved deadline.
        COR3 established a work plan to close all permanent work projects
    that have been completed. We have submitted to FEMA the first three
    projects and have currently assigned an additional 31 projects for a
    total amount of $24.7 million. We will keep submitting these projects
    to FEMA in the coming months.
                  Hazard Mitigation Grants Program (``HMGP'')
        One of COR3's priorities since 2021 has been to maximize mitigation
    efforts, for which FEMA made available $3.999 billion to Puerto Rico
    under HMGP, which includes $999 million for the non-federal share
    portion, implemented under the Global Match Strategy with Community
    Development Block Grant Mitigation (``CDBG-MIT'') funds. The program's
    primary purpose is to ensure that critical mitigation measures are
    adapted to reduce the risk of loss of life and property from future
    disasters are taken during the reconstruction process following a
    disaster. To ensure this, Puerto Rico's main focus under this program
    is to promote resilience and climate change adaptation via projects
    such as localized flood control, coastal erosion, soil stabilization,
    coral reef protection, ocean energy and structural/wind retrofits.
        Furthermore, since 2021 COR3 has made substantial internal
    investments including staffing up significantly from a staff of 5 to
    30, as well as engaged the services of two experienced contracting
    firms, following a competitive procurement, to support in the process
    of reviewing and formulating HMGP proposals.
        Currently, COR3 has made huge strides in the project formulation
    phase, as it has 74 projects approved for a total investment of $2.3
    billion. Among these projects that provide resiliency measures are the
    Department of Health's CDT Generators, to ensure critical health
    facilities' services remain uninterrupted in the case of a power
    outage. Another project, the Planning Board's Code Enforcement Project
    ($144 million, approved project, 80% completed), is creating stricter
    and more uniform enforcement of code construction compliance, which
    will result in a more resilient construction industry that in turn
    allows for quicker disaster reconstruction activities. (See excel table
    for additional details.) COR3 has also submitted an additional 225
    projects under evaluation by FEMA, which will have a total cost of $1.7
    billion, such as such as the Ocean Thermal Energy Conversion Facility,
    which will provide the Southeast of Puerto Rico a source of renewable
    energy that is generated 24/7 by converting ocean water into energy, as
    well as combat climate change.
        In addition, COR3 will soon launch its Road to Resilience dashboard
    in its Transparency Portal mapping all HMGP projects and continue its
    full transparency campaign. (See Appendix.)
        The Government of Puerto Rico would like to appreciate FEMA's
    collaboration with COR3 in approving an extension for the 2021 deadline
    to October 2022.
             Lessons Learned and Opportunities to Support Recovery
        It has been a difficult journey, but Puerto Rico is on the road to
    recovery and resilience. As we reflect on the last five years, there
    have been many lessons learned. We know that complicated bureaucratic
    processes and repeated rule changes slow the process, and that
    sometimes new ideas intended to move things forward cannot realize
    those goals when they are required to be implemented under existing
    rules. We appreciate FEMA's recent efforts to simplify its Public
    Assistance process and look forward to additional steps it may take to
    reduce the burden on applicants going forward. Although 2022 appears to
    be a major milestone in Puerto Rico's recovery, there is much ground to
    be made up after years of delays. Even so, we remain exceptionally
    hopeful for the future and we look forward to continuing to build and
    nurture the collaborative relationship that we now have with our
    federal partners.
          Additional Support of, and Flexibilities for, Capped Grants
        One of the lessons learned is that attempts to expedite funding and
    simplify processes are only as effective as the framework in which they
    are implemented. Two examples of this are FEMA's Public Assistance
    Alternative Procedures (``PAAP'') Program under Stafford Act Sec.  428
    and FAASt.
        The DHS-Office of Inspector General (``OIG'') released a Report in
    July 2022 outlining its assessment of FEMA's PAAP.\3\ In comparing
    obligation times for over fifteen thousand large projects, the OIG
    determined that FEMA took, on average, more than twice as long to
    obligate funds for the PAAP projects (845 days) as compared to standard
    Section 406 projects (411 days). The OIG further found that FEMA's
    funding obligation times increased significantly for projects in Puerto
    Rico and the U.S. Virgin Islands, when compared to projects for
    mainland events.
    ---------------------------------------------------------------------------
        \3\ OIG Audit Report OIG-22-51, Assessment of FEMA's Public
    Assistance Alternative Procedures Program (July 13, 2022), available as
    of Sept. 12, 2022 at https://www.oig.dhs.gov/sites/default/files/
    assets/2022-07/OIG-22-51-July22.pdf
    ---------------------------------------------------------------------------
        Similarly, while significant funds have been obligated for Puerto
    Rico's critical infrastructure under FAASt, this obligation has
    effectively established master recovery budgets but without expedited
    project execution. Each project must still work its way through FEMA's
    lengthy Public Assistance process before obligated funding can be
    disbursed.
        While the PAAP Program and FAASt were well intended, their
    effectiveness is limited by the complicated framework under which they
    must be implemented. Moreover, because this was the first time FEMA
    implemented FAASt, the guidelines to develop individual projects to
    capture the recovery scopes of work to be implemented has changed
    multiple times.
                     Limitations of a Reimbursement Program
        Additionally, although authorization and support for the WCA has
    been helpful and effective, unfortunately it came late in the process.
    There is no doubt that Puerto Rico would have been in a much better
    place if advances for permanent projects and more flexible means of
    supporting distressed subrecipients were allowed similar to the State
    of Louisiana's recovery when it experienced two successive extreme
    events, Hurricanes Rita and Katrina, in 2005. Deficiencies under this
    disaster affected Puerto Rico as we were denied these benefits which
    would have accelerated the commencement of reconstruction of bridges,
    roads, schools, hospitals, electric grid, wastewater treatment plants,
    among many others.
        As has been the case following prior large events that have
    impacted other locations, when a catastrophic event impacts an already
    distressed recipient or subrecipient, the solution is to develop
    proactive and innovative strategies to provide better support, not
    impose even greater restrictions. Puerto Rico has proven that it can
    emerge and thrive even when faced with great adversity, and we hope we
    can now move forward as a most-trusted partner in recovery.
                 Support for Additional Time Extension Requests
        Due to the limitations of wide-scale construction on an island,
    time extensions are required for the remaining permanent recovery work
    to be completed. Currently, Puerto Rico has 9,186 time extension
    requests pending with FEMA. Historically, FEMA has set relatively short
    time extensions that are unrealistic and can lead to heightened
    frustrations on the part of our subrecipients. Often, by the time a
    response is received from FEMA, the requested extension date has passed
    and additional extension is often needed; it's a circle of aggravation
    that is unnecessary at this stage in the recovery effort when so many
    permanent work projects are facing ``extenuating circumstances'' \4\
    and eligible for additional extension. We ask that you support and
    encourage FEMA to grant these time extensions, recognizing that
    although the road to recovery has been long, it has been a
    collaborative process that has moved forward at a remarkable pace
    despite major unprecedented storms, earthquakes, and a global pandemic.
    ---------------------------------------------------------------------------
        \4\ Pursuant to 44 CFR Sec.  206.204, the recipient is authorized
    to grant initial extension of projects, with additional extension under
    the authority of the applicable FEMA Regional Administrator and subject
    to justification including ``extenuating circumstances'' beyond the
    control of the subrecipient or recipient.
    ---------------------------------------------------------------------------
                               Close-Out Concerns
        Although Puerto Rico has much recovery ahead, successful closeout
    of projects begins now. While the Hurricane Irma closeout process has
    been successful, closeout efficiencies could be improved if there were
    clearer guidance on the documentation required for each category of
    work. We ask that Congress support this effort by ensuring FEMA has
    adequate staffing to take on the monumental task of closing this
    massive project.
                            Insurance Considerations
        Looking forward to post-construction, subrecipients in Puerto Rico
    have struggled through delays caused by implementation of FEMA's post-
    construction insurance requirements. As a condition of receiving FEMA
    Public Assistance, applicants must obtain and maintain insurance
    coverage for the facility receiving Federal assistance for the type of
    hazard. Coverage must, at a minimum, be equal to eligible project
    costs. This is often referred to as the ``obtain and maintain'' or
    ``O&M'' requirement. We have requested FEMA not to require O&M for
    ``Canopy-style'' structures, since these are roofed but not walled
    structures and therefore not identified as ``buildings.'' To meet the
    definition of building, a facility must have two or more outside rigid
    walls. This simple change in policy implementation would save Puerto
    Rico millions in unnecessary insurance and prevent unnecessary denials
    and confusion in a future disaster event.
                                     VAYGo
        For purposes of adequately tracking compliance with applicable
    policies, laws, and regulations, FEMA implemented the Validate As You
    Go (``VAYGo'') pilot program to test Public Assistance and certain
    other disaster grant expenditures for Hurricanes Harvey, Irma, and
    Maria in response to appropriations act provisions and Office of
    Management and Budget guidance that agencies implement additional
    measures to identify and address improper payments for disaster
    programs expending more than $10 million in any one fiscal year. As
    part of VAYGo, FEMA reviews project documentation for a sample of funds
    as they are drawn down by recipients and conducts testing to verify
    whether the project funding was appropriately expended by the
    subrecipient. One goal of VAYGo is to identify potential problems
    earlier, allowing FEMA and recipients--including PA recipients--to
    correct or mitigate issues earlier in the process instead of waiting
    until grant closeout. According to FEMA, the primary goal of VAYGo is
    to test for ineligible costs, which can serve as a gateway for the
    agency to be on notice of issues of fraud, waste, or abuse in the PA
    program. For FEMA's VAYGo team to successfully report a recipient's
    expenditure of Federal funding has been proper, all documentation
    associated with the expended amount must be available for review by the
    VAYGO team.
        In 2019, FEMA implemented the VAYGo program in Puerto Rico. To
    date, we have participated in three VAYGo reviews for fiscal years
    2018, 2019 and 2020 and have taken significant strides with
    subrecipients to validate most of the sampled disbursements. It should
    be noted that VAYGo reviews for fiscal year 2019 mostly correspond to
    disbursements done directly by FEMA (as per the manual drawdown process
    that was previously discussed), while the entirety of the 2020 VAYGo
    process took into account that COR3 manages the reimbursement process.
    FEMA has informed us that VAYGo has been indefinitely suspended,
    however, its previous ``findings'' remain unresolved and could possibly
    present potential for major delay to an otherwise successful financial
    closeout.
        COR3 and FEMA have agreed to go through a remediation phase to
    resolve the limited questioned costs. However, we were informed by FEMA
    that it intends on sending a final debt/collection letter to COR3 by
    the end of September. Upon COR3's request, remediation efforts are
    being coordinated with FEMA, as COR3 finalizes its submission of
    documents. Notably, the amount owed for Hurricane Irma is $2 million
    and corresponds to projects that have been closed by COR3 and some also
    by FEMA. COR3 believes that a more collaborative process with FEMA will
    allow the avoidance of re-opening projects for which FEMA has completed
    closeout. Such a process would certainly defeat the closeout purpose if
    after closeout Puerto Rico has to perform an additional review due to
    VAYGo.
                                 Expediting EHP
        According to the Public Assistance Program and Policy Guide (PAPPG)
    (FP 104-009-02), the FEMA must review each Public Assistance project to
    ensure the work complies with applicable federal Environmental and
    Historic Preservation (EHP) laws and their implementing regulations,
    and applicable Executive Orders. At the same time, we should look for
    ways to expedite review process and obligate as many projects as
    possible in this fifth anniversary of 4339-DR-PR.
                                   Conclusion
        Our mission at COR3 as recipient of FEMA Public Assistance and HMGP
    funds, and our inherent responsibility over compliance and transparency
    of the federal funds flowing to subrecipients, is to provide all
    required technical assistance to the subrecipients of Puerto Rico in
    furtherance of the execution of the approved recovery and
    reconstruction projects, which will allow for a better, more resilient
    Puerto Rico. Effective completion of this work will support a much more
    stable infrastructure system and create better economic opportunities
    for our citizens, all of which are goals that we are confident are
    shared by FEMA, this Congress, and the rest of the federal government.
        On behalf of the entire COR3 team, we thank Congress and the U.S.
    Government, especially FEMA Leadership, for its continued support
    towards a better life for everyone in Puerto Rico. Puerto Rico
    appreciates the attention and focus Congress is bringing to these
    important issues, and we look forward to working with Congress to
    evaluate and address the lessons we have learned, and continue to
    learn, from these unprecedented events.

                                    Figure 1

        Compared to the first 3 years after Hurricanes Irma and Maria,
    since 2021 Puerto Rico has moved from emergency work projects to
    permanent work projects.
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                                    Figure 2

        COR3 has worked diligently in increasing the speed of disbursements
    for emergency work. Since 2021, for the first time since the recovery
    began, disbursements have outnumbered obligations for Cat A-B projects.
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
                                   __________

                                    Figure 3

        As we move toward permanent work projects, we have seen a
    significant increase in obligated permanent work projects as well as
    disbursements. Since 2021 disbursements have increased by over 70%.
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    * In 2020 the FAASt obligations paved way to $13,500M in C-G projects.
     This amount should be considered a construction budget rather than an
                                  obligation.

                                    Figure 4

        Prior to 2021 Puerto Rico had no permanent work projects underway
    for PREPA, PRASA and Department of Education, since 2021 and the
    inception of FAASt, Puerto Rico now has 29 approved permanent projects
    for PREPA, 9 for PRASA and are awaiting validation from FEMA to
    commence school repairs. This has been a significant step toward the
    island's recovery.
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
                                   __________

                                    Figure 5

        Road to Recovery
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Ms. Titus. Thank you very much, Mr. Laboy.
        And Ms. Bahramirad--will you say it for me?
        Ms. Bahramirad. Good morning. It is Shay Bahramirad.
        Ms. Titus. Well, I was pretty close.
        Ms. Bahramirad. Thank you. Chair Titus and subcommittee
    Ranking Member Webster, and members of the committee, my name
    is Dr. Shay Bahramirad, and I am the senior vice president of
    engineering, asset management, and capital programs with LUMA
    Energy, and the president-elect of the Institute of Electrical
    and Electronics Engineers Power and Energy Society. Thank you
    for the invitation to appear this morning to discuss one of the
    most important and urgent matters for the people of Puerto
    Rico: the transformation of Puerto Rico's electric power
    system.
        All of us at LUMA, the over 3,000 men and women who work
    very hard every day in rain and shine to repair and rebuild the
    energy system in Puerto Rico, are determined to overcome the
    profound operational and infrastructure challenges we inherited
    from the past utility operator. Our goal is clear. We will,
    over the coming months and years, build a more reliable, more
    resilient, and cleaner energy future for the 1.5 million
    customers we are fortunate to serve.
        It is important to fully understand the scope of the
    operational failures that have plagued Puerto Rico and the
    amazing people who call this beautiful island their home. As we
    have documented through photographic evidence provided to the
    committee, the transmission and distribution system LUMA
    inherited was weakened by years, if not decades, of poor
    design, little to no maintenance, lack of proper inspection,
    and other profound failures that continue to impact the overall
    stability and reliability of the system.
        The pictures we provided to you not only highlight the
    stark reality we have faced, but they help reinforce the
    importance of the work that our LUMA teams are undertaking
    every day to repair, rebuild, and restore the electric grid to
    a modern level.
        Since our first day of assuming operation in June of last
    year, we have implemented an operational approach that is
    grounded by data, science, and sound engineering, and is
    aligned with industry standards and best practices.
        Guided by this approach, our team has done more to move
    Puerto Rico's energy transformation forward in 15 months than
    what was accomplished in the past 10 years, most notably,
    connecting more than 28,000 customers to solar. That is more
    solar connection made in a year than was accomplished in the
    prior decade.
        Improving customer service by, as an example, decreasing
    average call wait time to approximately 3 minutes versus more
    than 10 minutes under PREPA; improving work safety and training
    procedures for operations, many of which didn't exist prior to
    LUMA; replacing over 3,800 failing and broken poles; replacing
    over 12,000 streetlights; clearing hazardous vegetation from
    100 percent of substations; and helping reduce the number of
    outages that an average customer experienced in a year by 30
    percent.
        With respect to moving forward FEMA infrastructure
    projects, we have initiated 225 projects with FEMA,
    representing more than $5 billion in federally funded projects.
    Those include the approval of 29 projects that will address
    critical infrastructure to reduce outages and increase the
    reliability and stability of the electric system. We have also
    started the construction of 14 FEMA projects, including 5
    initial streetlight projects with LUMA's $1 billion Community
    Streetlight Initiative. To put these numbers into context, we
    have moved forward more FEMA projects in 15 months than what
    was ever done the last 5 years under the prior operator.
        Most importantly, it is critical for the committee to hear
    this: Current and future FEMA projects will be guided by
    science, data, and engineering. They will be built in a matter
    that is fiscally sound and with appropriate oversight that
    serves the interest of Puerto Rican people and all taxpayers.
        While we are proud of the progress we have made, there is
    no doubt that public concerns over operational challenges such
    as outage duration still exist. We have heard those concerns
    clearly, and we are determined to act. For example, we recently
    launched the Outage Reduction and Response Initiative to build
    the progress we have made, reduce the impact of outage
    duration, and improve our response time when those outages
    occur.
        Lastly, given the tragic legacy of Hurricane Maria, LUMA
    has spent the last year preparing and training to respond to
    such emergencies. We have worked very closely with FEMA and our
    other partners, and greatly appreciate the support of FEMA and
    all our agency and Government partners.
        In closing, I would like to thank the committee for the
    opportunity to be here. To be clear, LUMA is absolutely
    committed to Puerto Rico's energy future, a better energy
    future that moves Puerto Rico forward, a better energy future
    that is more reliable and cleaner, a better energy future that
    serves the daily needs of the people of Puerto Rico. No matter
    what comes next, all of us at LUMA will not be distracted from
    this mission. And over the coming months and years, we will
    build a better energy future that will proudly serve the people
    of Puerto Rico for generations to come.
        Thank you all for your time.
        [Ms. Bahramirad's prepared statement follows:]

    Prepared Statement of Shay Bahramirad, Ph.D., Senior Vice President of
        Engineering, Asset Management, and Capital Programs, LUMA Energy
                                I. Introduction
        Chairman DeFazio, Ranking Member Graves, Subcommittee Chair Titus,
    and Subcommittee Ranking Member Webster, and members of the Committee:
        Thank you for the invitation to appear this morning to discuss one
    of the most important and urgent matters for the people of Puerto Rico:
    the transformation of Puerto Rico's electric grid system.
        All of us at LUMA, the over 3,000 men and women who work hard every
    day, are determined to overcome the profound challenges we inherited
    and build a more reliable, more resilient, and cleaner energy future
    for the 1.5 million customers we are fortunate to serve.
        Throughout this testimony, we will provide the members of this
    committee with key facts and information regarding the electric grid's
    condition prior to our commencement of operations on the island; LUMA's
    commitment to complete repairs in a more detailed and permanent manner;
    the nature of customer service improvements; as well as our
    accomplishments in areas where significant challenges still exists.
        We will also discuss the status of reconstruction projects that
    have been submitted to FEMA; hurricane preparedness and emergency
    response planning; as well as our new Outage Reduction and Response
    Initiative (``ORRI'').
        Lastly, all of us at LUMA fully embrace the profound responsibility
    we have been entrusted with to address and redress the many operational
    and fiscal failures of the past operator, PREPA, that have so deeply
    impacted the people of Puerto Rico since Hurricane Maria and before.
    With the support of FEMA, the Puerto Rican government, and other
    partners, we will build an energy future that the people of Puerto Rico
    deserve and of which they can be proud.
           II. Historical Perspective of Puerto Rico's Electric Grid
        To understand the dynamics surrounding our mission to transform
    Puerto Rico's transmission and distribution system (``T&D'') one must
    first start to analyze the electric grid's condition prior to LUMA
    beginning operations on the island. As has been documented publicly,
    Puerto Rico's electrical grid suffered from years and decades of
    neglect and mismanagement under the past utility operator. These
    profound operational failures severely impact all areas of the energy
    system and represent an ongoing challenge that LUMA remains determined
    to confront and overcome.
        With respect to the state of infrastructure that LUMA inherited 15
    months ago, the following are just some examples of the conditions that
    were faced:
          Poor Substations: 30% of transmission and distribution
    substations, key nodes in the electric grid, were estimated to require
    safety and hazard mitigation to reach remediation.
          Poor T&D Assets: An estimated 20% of transmission and
    distribution line assets, including poles and wires, required safety
    and hazard mitigation to reach remediation.
          Public Safety Hazards: Approximately 50,000 streetlights,
    more than 10% of all of the streetlights on the island, were estimated
    to be physical and public safety hazards.
          Lack of Sound Engineering & Planning: Processes for
    engineering functions such as distribution planning, transmission
    planning, protection and coordination were lacking and not following
    industry standards. For example, a proper simulation model for the
    Island's transmission system did not exist to properly design the
    system.
          Antiquated EMS: The Energy Management System (EMS), a
    primary technology to facilitate the stable grid operations, had been
    purchased in the mid-1990s, poorly maintained and was no longer
    supported by the vendor. We found that PREPA had procured spare parts
    from eBay.
          Lack of Safety Requirements: The entire ground and air
    fleet used for utility operations did not meet U.S. Department of
    Transportation safety requirements.
          Lack of Critical Maintenance: Recommended baseline
    maintenance of transmission and substation assets were not completed,
    and manufacturers' guidelines were not followed.
          Poor Vegetation Management: Vegetation management was
    often delayed by PREPA, and vegetation was present and evident when
    visiting substations.
          Lasting Impact of Hurricane Maria: Hurricane Maria
    accelerated this deterioration and highlighted the flaws in legacy
    design, operation, and maintenance activities. Some customers didn't
    have power for more than a year after Hurricane Maria, which is
    unacceptable.

        The above-referenced facts, while significant in scope and impact,
    do not come close to fully capturing the truly weakened and
    deteriorated state of the electric grid. As LUMA has documented through
    photographic evidence that has been provided to the Committee, the T&D
    system inherited by LUMA was weakened by years, if not decades, of poor
    design, maintenance, lack of proper inspections, and other profound
    failures that continue to impact the stability and reliability of the
    energy system.
        As a measure of the fragile and weakened nature of the energy grid,
    Puerto Rico has experienced a number of large-scale outage events since
    2016--five of which preceded a similar large outage event on April 6th
    of 2022:
          September 21, 2016--Due to fire at Aguirre Power
    Generating Plant
          April 12, 2018--Due to vegetation
          April 18, 2018--Due to transmission repairs
          January 7, 2020--Due to earthquake on the island
          July 28th, 2020--Due to vegetation / equipment failure

        Each of these events noted above affected more than 500,000
    customers and restoration efforts lasted for longer than three days.
    This history of such events underscores how deeply fragile and severely
    vulnerable Puerto Rico's electric grid and critical infrastructure has
    been because of the failures of the past operator and reinforces the
    need for LUMA to remain focused on the fundamental improvements needed
    to modernize and transform the energy system.
        In order to ensure greater transparency and efficiency, the legal
    framework for the electric sector in Puerto Rico establishes clear
    roles for different participants in the electric sector. Generators,
    including PREPA and independent producers, are responsible for
    operation and maintenance of the power plants, while LUMA is
    responsible for the operation of the transmission and distribution
    system as well as overall system coordination, planning and analysis.
    All of LUMA's customers are critically dependent on the performance of
    PREPA's power plants that make up over 70% of the generation fleet to
    meet expected customer demand.
          As a result of PREPA's poor and declining generation
    plant reliability, the Puerto Rico electrical system had less than the
    minimum required reserve margin during 33 percent of the time during
    the past year.
          Though the minimum industry benchmark target standard for
    planning is that generation should result in load being shed, or
    customers losing power, 0.1 days per year, a resource adequacy analysis
    found that in Puerto Rico, the expectation is for it occur over 8.81
    days per year, which is 88 times higher than the planning standard for
    North American utilities.
          +  The potential for load shed from lack of generation in
    California made national news.
          +  Meanwhile, generation has caused load shed on 30 separate days
    since LUMA commenced service.
       III. LUMA's Commitment To Complete Repairs in a More Detailed and
                                Permanent Manner
        Given the need to address these past infrastructure failures and
    overall fragility of the energy grid, LUMA takes very seriously the
    need to improve the reliability and resiliency of Puerto Rico's
    transmission and distribution system. Accordingly, we have implemented
    a markedly different approach that is grounded in data, rigorous
    engineering, sound planning aligned with industry standards, and
    transparency about the progress being conducted and the challenges that
    are being faced. Given this approach, and in spite of the challenges we
    have faced, LUMA has made substantial progress across key areas,
    including:
          Improving Reliability (Reducing the Number of Outages
    Experienced):
          +  The System Average Interruption Frequency Index (``SAIFI''),
    or the number of outages that an average customer experiences in a
    year, has been reduced by 30% (improvement from a PREPA baseline of
    10.6 to 7.6).
          +  What this means is that instead of an average customer
    experiencing 10.6 outages in a year, they're experiencing 7.6.
          +  15% fewer substation events than in PREPA's last year.
          +  Restored and re-energized two transmission lines that were out
    since Hurricane Maria, and two additional lines that were out since
    before Hurricane Maria, representing 43 miles of transmission lines.
          +  Restored and re-energized 5 substations that had been out
    since Hurricane Maria.
          +  Restored and re-energized 496 pieces of equipment, including
    in substations and on the transmission and distribution systems.
          Empowering the Growth of Solar/Clean Energy/Renewables:
          +  Before LUMA began operations, there was a severe backlog of
    customers applying for inclusion in PREPA's solar net-metering program.
              We have successfully reduced this backlog and have
    now integrated more than 28,000 customers to the program, which
    represents more than double the number of customers than before.
              In a little over a year, LUMA added more customers to
    the residential solar program than PREPA ever did over a full decade.
    Average time for approval of interconnection has dropped to under 30
    days and over 70% of customers are interconnected within 30 days.
          +  Completed studies to support the interconnection of 844 MW of
    renewable utility-scale generation and completed solar hosting capacity
    analyses.
          +  Completed cutting-edge optimization analysis to identify
    locations in the system with zero network upgrade cost for affordable
    and economical renewable energy integration.
          +  We have gone from approximately 450 distributed generation
    interconnections monthly to approximately 2,100 interconnections.
          +  Reenergized transmission line that connected a 27 MW wind farm
    to the system that was out of service since Hurricane Maria.
          Improving Customer Service:
          +  2 million customers have been provided support by LUMA,
    through 2.5 million calls, 350K+ e-mails, 430K+ DMs on social media.
          +  The average wait time of customers on the phone decreased from
    more than 10 minutes while under PREPA to approximately 3 minutes under
    LUMA.
          +  The rate of call abandonment declined from more than 50% with
    PREPA to 15% under LUMA.
          +  560,000+ downloads of MiLUMA application.
          Improving Workplace Safety & Trainings:
          +  Developed procedures to support the operation of
    interconnected generation resources, the reliable dispatch of power,
    black start \1\ and restoration, as well as numerous other critical
    operations. These procedures did not exist prior to our arrival as
    operator of the T&D system.
    ---------------------------------------------------------------------------
        \1\ Black start refers to restarting the grid after an island-wide
    blackout. The other procedures referenced above are related to managing
    energy generation to provide reliable power.
    ---------------------------------------------------------------------------
          +  We have renewed the service fleet with 1,200 new or repaired
    vehicles, fully compliant with safety and transportation requirements.
          +  Graduated the first class of Puerto Rican electric line
    workers from LUMA Technical College, with subsequent graduating classes
    during the last year.
          +  Total recordable injury rate went from 8.63 under PREPA to
    2.88 under LUMA.
          +  Injury severity rate declined from 62.9 under PREPA to 11.64
    under LUMA.
               IV. Status of FEMA Funded Reconstruction Projects
        When LUMA assumed operations of Puerto Rico's transmission and
    distribution system, one of our highest priorities was to work together
    with FEMA, the Puerto Rico Energy Bureau, the Puerto Rico Public-
    Private Partnership Authority, the Central Office for Recovery,
    Reconstruction and Resiliency and PREPA to develop and advance a series
    of federally funded infrastructure improvement projects to transform
    and modernize Puerto Rico's energy system.
        In 15 months, LUMA has advanced FEMA projects in Puerto Rico at a
    historic pace--a stark comparison to the previous five years under the
    prior operator.
    A. FEMA Reconstruction Projects
        As of September 8, 2022, LUMA has initiated 225 projects with FEMA
    \2\, representing more than $5 billion worth of federally funded
    projects. In contrast, only 35 project submissions had even been made
    before LUMA assumed operations on June 1, 2021.
    ---------------------------------------------------------------------------
        \2\ At the time of our latest filing to the Puerto Rico Energy
    Bureau (``PREB''): the number of initiated projects stood at 206. Of
    those, 204 projects have a FEMA FAAST number and two were awaiting
    confirmation.
    ---------------------------------------------------------------------------
          Obligated FEMA Projects: LUMA has received, to date, FEMA
    approval for 29 critical infrastructure projects \3\ including:
    ---------------------------------------------------------------------------
        \3\ At the time of our latest filing to the PREB: 19 projects had
    received FEMA approval. This represents $756.5 million and includes the
    equipment and materials for projects.
    ---------------------------------------------------------------------------
          +  Over 21 distribution projects that will address critical
    infrastructure, such as streetlights and pole replacement, targeting
    the municipalities of San Juan, Arecibo, Mayaguez, Caguas, Bayamon and
    Carolina to reduce outages and increase the reliability of the electric
    system.
          +  Three transmission reconstruction projects targeting Line
    2200, Line 13300 and Line 6700 that will help improve the critical
    energy infrastructure that delivers energy across the island.
          +  Five substation modernization projects that will address the
    critical role played by substations in helping deliver energy to
    communities across Puerto Rico beginning in the municipalities of
    Catano, Vieques, Culebra, Manati and Costa Sur.
          FEMA Projects Under Construction: LUMA has started
    construction on 14 FEMA funded projects across Puerto Rico including:
          +  Five initial streetlight projects as part of LUMA's $1 billion
    Community Streetlight Initiative in the municipalities of Guanica,
    Lajas, Aguada, Maunabo and Luquillo--in less than three months, LUMA
    has installed over 12,000 streetlights.
          +  One critical transmission line repair project to reduce the
    potential for future outages.
          +  Eight distribution pole replacement projects to increase the
    reliability and resiliency of the electric grid.

        In addition to the projects initiated, approved, and under
    construction, LUMA has also taken the following FEMA-related actions:
          LUMA has submitted a critical EMS (emergency management
    system) project to FEMA for approval, which is the first phase of
    transforming the system operations control center with state-of-the-art
    technology and software to modernize the way Puerto Rico's energy grid
    is monitored and managed.
          Received approval for $656M to procure long-lead
    material, mainly grid equipment including breakers, transformers, and
    reclosers.
          Developed four proposals of Hazard Mitigation for non-
    damaged infrastructure that COR3 is reviewing before submission to
    FEMA, which would represent $900 million for deployment of
    technologies, including an advanced metering infrastructure, an
    advanced microgrid project, and mobile microgrids to enable renewable
    energy and make communities resilient.
          Taken in totality, over the coming months and years,
    FEMA-funded projects that are being directed by LUMA will not only
    represent the largest capital energy program in Puerto Rico's history,
    it will represent the largest ever funded by the federal government to
    repair and rebuild an electric system across any state and/or
    territory. As a result, LUMA is excited by the significant progress
    that has been made to date that will, as more FEMA projects begin
    construction, strengthen and transform the long-term future of Puerto
    Rico's energy grid.
    B. Working Closely with FEMA on Emergency Preparedness
        In addition to moving forward critical federally funded
    infrastructure projects, LUMA continues to prioritize emergency
    preparedness and taking the necessary steps and actions to be able to
    respond to hurricanes and other emergencies.
        Given the historic impact of Hurricane Maria and the lasting
    effects it has had on the people of Puerto Rico, LUMA has made
    preparing for emergency events, like hurricanes, a daily and year-round
    priority.
        As part of our emergency preparedness efforts, we have worked
    closely with FEMA, PREMB and ESF 12 and other partners to establish and
    adopt industry emergency preparedness standards. Among the actions we
    have taken include the following:
          Establish Emergency Response Plan: In May, LUMA submitted
    its 2022 Emergency Response Plan (ERP) to the Puerto Rico Energy Bureau
    as part of its continuous effort to plan, prepare for and respond to
    the major emergencies and the 2022 hurricane season.
          +  LUMA's 2022 ERP outlines the actions LUMA takes in an
    emergency event and helps direct the company's response, recovery and
    restoration efforts.
          +  More specifically, the ERP addresses how LUMA responds to any
    emergency, including hurricanes, earthquakes or any other major event
    that impacts the electric power system.
          Adopt Industry Best Practices: The LUMA ERP follows
    industry best practices for emergency response and follows the National
    Incident Management System as established by the Federal Emergency
    Management Agency (FEMA).
          +  The National Incident Management System framework establishes
    a standardized Incident Command System (ICS) which is used across
    industries and is the basis for LUMA's ERP.
          Emergency Preparedness, Training & Readiness: LUMA has
    undertaken extensive efforts to improve preparedness, training, and
    readiness, including:
          +  Emergency Preparedness:
              Three emergency preparedness tabletop exercises
    completed with FEMA and DOE/ESF 12/PREPA/PREMB and other local
    stakeholders.
              Procuring and maintaining a fleet of 1,800 vehicles
    available to support emergency response efforts.
              Installing equipment in the LUMA Emergency Operations
    Center and purchasing supplies for emergency operations.
          +  Emergency Training:
              Completing more than 8,000 hours of ICS training.
              Completing an Emergency Operations Center mock drill
    based on Category 4 Hurricane making landfall on May 12, 2022, with 75
    attendees.
          +  Emergency Readiness:
              To date, LUMA maintains a total on-hand inventory of
    T&D equipment and materials available for daily operations and
    emergencies amounting to $130 million including:
              +  21,000 poles
              +  17 million feet of cables
              +  3,200 transformers
              +  58,000 LED luminaries
              +  154,000 insulators
              +  1,800 switches/breakers
              +  29,000 crossarms
          As part of our more than 3,000 employees, LUMA has 1,300
    transmission and distribution workers across Puerto Rico who are
    trained and available to respond to serious emergencies, in addition to
    resources from contractors and mutual aid.
          We also have established mutual aid agreements with the
    Caribbean Electric Utility Services Corporation (CARILEC), Edison
    Electric Institute (EEI) and the American Public Power Association
    (APPA) for response to critical events in cases where additional
    resources for restoration and response become necessary.
          We have also been working with US DOE on development of a
    Storm Damage Prediction Tool for estimating material needs. The Storm
    Damage Prediction Tool helps forecast storm damage to transmission and
    distribution infrastructure.
             V. New Outage Reduction and Response Initiative (ORRI)
        All of us at LUMA share our customers' frustration with outages and
    the reliability of Puerto Rico's fragile electric system, which has
    suffered from years--if not decades--of mismanagement and neglect.
        To address these sincere concerns, LUMA has undertaken a series of
    additional actions to build on the progress we have made, reduce the
    impact of outage events, and improve our response when such outages
    occur.
        The new initiative launched by LUMA, named the Outage Reduction and
    Response Initiative (ORRI), is part of an increased operational
    activity designed to reduce customer outage duration by 55 million
    Customer Minute Interruptions (CMI) in the next 90 days--which will
    represent a 20% improvement for highly impacted customers.
        The seven key organizational and operational actions that define
    ORRI include:
          Establishing a New LUMA Outage Reduction Task Force that
    will Lead ORRI and the Operational Effort to Reduce Outages Across the
    System.
          Increasing Outage Response Crews and Resources.
          Enhancing Vegetation Management to Target Critical Areas.
          Installing New Automated Devices to Reduce the Number of
    Customers Impacted.
          Increasing Inspections of Critical Substations and Lines
    that Serve Essential Services Like Hospitals and Work with these
    Facilities to Assess Status of Back-up Generation and Resiliency.
          Expanding Aerial Patrols of Key Lines with Thermal
    Imaging to Identify and Repair Potential Failure Points.
          Accelerating Inspections of Substations to Identify and
    Address Issues.

        Since the new initiative was launched on August 24, 2022, LUMA
    teams have already accomplished the following:
          Formed the Outage Reduction & Response Initiative task
    force, which includes a cross-functional LUMA team who have initiated
    an action plan designed to improve outage response and address the root
    cause of outages.
          Increased utility and vegetation crew numbers by
    onboarding 201 additional highly trained utility workers to help
    improve overall outage response and target areas for reliability
    improvement.
          Installed 24 new automation devices in San Juan, Ponce
    and Humacao, which are innovative devices used to detect outages within
    milliseconds, shorten outage duration and reduce the number of
    customers that experience an outage.
          Cleared hazardous vegetation from 69 miles of critical
    lines identified as impacting frequent outages, in addition to the 700
    miles cleared of vegetation this year across transmission and
    distribution powerlines.
          Completed critical aerial inspections and thermal imaging
    of 262 miles of key lines using special thermography equipment used to
    inspect key equipment.
          Completed inspections and performed thermal imaging of 16
    critical substations.
          Launched essential services outreach to hospitals and the
    hospital association to determine areas impacting their energy
    reliability and discuss the status of their backup generation.

        Over the coming weeks and months, LUMA will continue to take
    additional actions and expand on current programs and efforts in order
    to improve the reliability of the energy grid. While we are transparent
    about the fact that challenges in the reliability of the energy grid
    will remain given the years and decades of neglect it has suffered,
    LUMA will focus with greater urgency on the goal of addressing the root
    cause of outages and advancing projects that will improve the
    reliability and resiliency of the island's electric system.
                                 VI. Conclusion
        Looking forward, it is more important than ever that all of us work
    together to achieve what the Puerto Rican people deserve given the many
    hardships they have suffered from poor financial and operational
    stewardship under the past operator: a better energy future that moves
    Puerto Rico forward. In the face of ongoing challenges, all of us at
    LUMA--the more than 3,000 women and men of our workforce--remain more
    committed than ever to this goal.
        We believe that the energy future we are building in Puerto Rico
    will, over the coming months and years, close the chapter on the
    failures of the past operator and usher in a new era in which the
    energy grid is not only more reliable and more resilient, but serves
    the energy needs of Puerto Rico for generations to come.

                                                            Attachments

        The following attachments are retained in committee files and are
    available online at https://docs.house.gov/meetings/PW/PW13/20220915/
    115108/HHRG-117-PW13-Wstate-BahramiradS-20220915.pdf, beginning on page
    12:
          FEMA Projects
          +  9/12/22--FEMA Project Progress
          Progress Summary
          +  6/30/22--A Year of Progress
          Fuel Cost Adjustment
          +  Fuel Cost Adjustment Bill Insert
          Pre-LUMA System and Facility Conditions Deck
          Videos
          +  LUMA Progress Videos

        Ms. Titus. Thank you, Doctor. I hope as an engineer you
    appreciated my previous comment about pencil ready and not just
    shovel ready.
        Ms. Bahramirad. Indeed, I did, Congresswoman.
        Ms. Titus. Thank you.
        Mr. Colon?
        Mr. Colon-Ortiz. Good morning, Chairman DeFazio, Chairman
    Titus, Ranking Member Graves, and members of the committee, and
    also to our Congresswoman Gonzalez-Colon for allowing me to
    testify before you today. My name is Josue Colon, and I was
    appointed as executive director of PREPA in September 29 of
    last year.
        PREPA is a public power corporation of the government of
    Puerto Rico and the sole provider of electric power on the
    island. Our system consists of generation, transmission, and
    distribution systems including six main powerplants in four
    locations that generate and transfer base load power throughout
    the electrical grid.
        In addition to these main powerplants, PREPA owns and
    operates simple cycle combustion turbines as well as
    hydroelectric stations around the island. Approximately 70
    percent of the power generating capacity of Puerto Rico is
    located along the southern coast of the island, whereas
    approximately 50 percent of the electric power consumption is
    located in the northeastern coast in the San Juan metropolitan
    area.
        PREPA relies on our transmission lines that traverse the
    island, generally running south to north over mountainous
    terrain, to deliver electricity to almost 1 million customers
    in the San Juan metropolitan area. Therefore, even a small
    disruption in the transmission lines can cause a loss of power
    to a large segment of the population of Puerto Rico.
        On the morning of September 20, 2017, 14 days after the
    passage of Hurricane Irma and before PREPA could finish power
    restoration work required as a result of that hurricane,
    Hurricane Maria directly impacted Puerto Rico, causing a total
    blackout. Emergency power restoration efforts after Hurricane
    Maria lasted more than 1 year. PREPA received the help and
    support of the Federal Government, several utilities from the
    mainland, and also contractors. FEMA ultimately awarded more
    than $1.9 billion in Public Assistance for emergency work, for
    which PREPA is grateful.
        When these extreme storms moved across Puerto Rico, PREPA's
    grid was already vulnerable due to the bankruptcy process that
    was initiated during the summer of 2014. Our fiscal situation
    was the worst-case scenario under which any electric utility
    could face two category 5 hurricanes in a period of 2 weeks.
    After these hurricanes, conditions were further aggravated by
    the devastating 2020 earthquakes and also by the pandemic of
    COVID-19.
        PREPA is now in the permanent reconstruction phase of
    recovery. Our partnership with FEMA and other Federal partners
    has led to some tremendous progress. In September 2020, FEMA
    announced the FEMA Accelerated Awards Strategy, or FAASt,
    process and guidance, which allows critical infrastructure
    projects to be grouped together in order to expedite the energy
    grid work in Puerto Rico. This provides a faster and more
    flexible process for the application of Federal funds needed to
    increase the reliability and resiliency of Puerto Rico
    infrastructure.
        Through FAASt, FEMA has obligated over $9.5 billion in
    Public Assistance for permanent reconstruction work. This
    amount represents 90 percent of the total estimated cost of the
    permanent works and is complemented with a cost share of 10
    percent amounting to more than $1 billion that will be covered
    by local funds from the government of Puerto Rico and CDBG-DR
    funds.
        So far, 38 scopes of work have been submitted to FEMA for
    approval, and close to $183 million will be disbursed to PREPA
    in the near future. This funding will be used to rebuild
    substations, distribution and transmission lines, and repair or
    replace generation assets for suitable and reliable power for
    the long-term future.
        In addition to FEMA 428 funds, FEMA obligated approximately
    $1.5 billion in Federal funds under the Hazard Mitigation Grant
    Program or FEMA 404 funds for permanent work on the electrical
    generation and water infrastructure. FEMA's support of PREPA
    recovery has been invaluable to our people, but it has not been
    without challenges. PREPA's path ahead will be focused on
    ensuring the proper expenditure of its Federal grants that will
    be used to create a modern, reliable, efficient, and resilient
    energy system.
        Our goal is to ensure, through the partnership with our
    transmission and distribution system operator, that we will
    build an electric system that can adequately withstand any
    future storm. Such a monumental rebuilding project will take
    time. We ask that this committee continue to support Puerto
    Rico and FEMA in this long-term endeavor.
        PREPA continues to strive for the full obligation and
    execution of its recovery and reconstruction projects to
    achieve a resilient, stable energy system that our 3.2 million
    U.S. citizens living in Puerto Rico can depend on. The use of
    those Federal funds will promote economic opportunity for our
    citizens, goals that we are confident are shared by FEMA, this
    Congress, and the rest of the Federal Government.
        Those are my words. Thank you.
        [Mr. Colon-Ortiz's prepared statement follows:]

    Prepared Statement of Josue A. Colon-Ortiz, Executive Director, Puerto
                         Rico Electric Power Authority
                               I. Acknowledgments
        Good morning, Chairman DeFazio, Ranking Member Graves, members of
    the Committee, and our Resident Commissioner Congresswoman Gonzalez.
    Thank you for the opportunity to appear before you today to discuss the
    Puerto Rico Electric Power Authority's experience regarding the
    recovery and reconstruction of Puerto Rico's electric system in the
    aftermath of Hurricanes Irma and Maria. My name is Josue A. Colon
    Ortiz. I am an engineer and the Executive Director of the Puerto Rico
    Electric Power Authority, since September 29, 2021.
        The Puerto Rico Electric Power Authority (referred to as ``PREPA''
    in Puerto Rico) is a public corporation and governmental entity of the
    Commonwealth of Puerto Rico, created pursuant to Law 83 of May 2, 1941,
    with the duty of providing electric power in a reliable manner,
    contributing to the general welfare and the sustainable future of
    Puerto Rico, and maximizing the benefits and minimizing the social,
    environmental, and economic impacts.
        PREPA is the sole provider of electric power in Puerto Rico,
    including the islands of Vieques and Culebra. Our system consists of
    generation, transmission, and distribution systems including six main
    power plants in four locations that generate and transfer base load
    power throughout the electrical grid. In addition to these main power
    plants, PREPA owns and operates simple cycle gas turbine stations in
    the cities of Mayaguez and Arecibo, 18 peaking units located in remote
    sites, as well as hydroelectric stations located around the main
    Island. For various reasons, including geographical factors and major
    changes to industrial, commercial, and residential population
    distribution since the system was originally established, approximately
    70% of the power generating capacity of Puerto Rico is located along
    the Southern coast of the main Island, while approximately 50% of the
    electric power consumption is in the Northeastern coast, especially in
    the San Juan metropolitan area. As currently configured, PREPA relies
    on its transmission lines that traverse the Island, generally running
    South to North over mountainous terrain, to deliver electricity to
    almost 1 million residents in the San Juan metropolitan area.
    Therefore, even a small disruption in the transmission lines can cause
    a loss of power to a large segment of the population of Puerto Rico,
    the primary business and commercial center of the main island, most of
    the governmental offices and buildings, the airport, and the Port of
    San Juan.
                                 II. Background
        Puerto Rico is an archipelago of the Antilles located between the
    Caribbean Sea and the Atlantic Ocean, essentially in the typical path
    of storms and hurricanes that form just off the West coast of Africa
    and move West Northwest along the Atlantic Ocean towards the
    continental United States. It is very common for these storms and
    hurricanes to first reach the Antilles at the Caribbean Sea. The best
    example of Puerto Rico's exposure to the path of major weather
    disturbances is the hurricane map of Figure 1 in Annex 1 which shows
    recorded storms and hurricanes that crossed or impacted the archipelago
    since 1852.
        The most recent recorded major hurricanes affecting Puerto Rico
    occurred in 2017. During the evening of September 6, 2017, Hurricane
    Irma passed about 50 nautical miles to the north coast of Puerto Rico
    as a category 5 hurricane. Figure 2 in Annex 1 shows the closest
    location of Hurricane Irma from the coast of Puerto Rico.
        As can be seen in the radar image of Figure 2, Hurricane Irma
    affected almost all of Puerto Rico. According to the National Hurricane
    Center Tropical Cyclone Report, Hurricane Irma, September 24, 2021 \1\,
    Hurricane Irma had the following characteristics when it passed near
    Puerto Rico:
    ---------------------------------------------------------------------------
        \1\ https://www.nhc.noaa.gov/data/tcr/AL112017_Irma.pdf.
    ---------------------------------------------------------------------------
          The highest wind speed reported in Puerto Rico was about
    55 miles per hour with gusts of 74 miles per hour at San Juan. Tropical
    storm force winds were experienced across all of Puerto Rico.
          Heavy rains were experienced across all of Puerto Rico.
    Maximum inundation levels of 1 to 2 feet above ground level occurred
    along the coast of Puerto Rico, with the city of Arecibo being the
    location with the highest water level.

        These tropical storm force winds and heavy rains impacted Puerto
    Rico's electrical infrastructure causing interruptions of the power
    service to almost all customers in the archipelago. The Puerto Rico
    Electric Power Authority or PREPA started the emergency restoration
    works just after the passage of Hurricane Irma, which lasted more than
    two weeks.
        On the morning of September 20, 2017, fourteen days after the
    passage of Hurricane Irma and before PREPA could finish the power
    restoration work required as a result of Hurricane Irma, Hurricane
    Maria directly impacted Puerto Rico. According to the National
    Hurricane Center's Tropical Cyclone Report, Hurricane Maria, February
    14, 2019 \2\, ``Maria's center crossed the southeast coast of Puerto
    Rico near Yabucoa around 1015 UTC (6:15 A.M., local time), and the
    hurricane's maximum winds at that time were near 135 knots (155 miles
    per hour), i.e., just below the threshold of category 5 intensity. The
    hurricane's center crossed the island, roughly diagonally from
    southeast to northwest, for several hours and emerged into the Atlantic
    around 1800 UTC (2:00 P.M., local time). By that time, Maria had
    weakened after interacting with the land mass of Puerto Rico and its
    maximum winds were estimated to be 95 knots (109 miles per hour).''
    Figure 3 in Annex 1 shows the landfall of Hurricane Maria on the
    southeast coast of Puerto Rico.
    ---------------------------------------------------------------------------
        \2\ https://www.nhc.noaa.gov/data/tcr/AL152017_Maria.pdf
    ---------------------------------------------------------------------------
        The Hurricane Maria Report mentioned above also stated, among
    others, that:
          In Puerto Rico, winds of category 5 intensity were almost
    certainly felt at some elevated locations on the island.
          Maximum flood levels of 6 to 9 ft above ground level were
    registered along the coasts of Humacao, Naguabo, and Ceiba
    municipalities, levels of 3 to 5 ft occurred along the coast of
    Northeastern Puerto Rico, especially in the municipalities of Ceiba and
    Fajardo, and levels of 2 to 4 ft occurred along much of the northern
    coast of Puerto Rico.
          Heavy rainfall occurred in Puerto Rico, where one
    location had a storm total of nearly 38 inches, river discharges at
    many locations in the island were at record or near record levels, and
    severe flooding and mud slides affected most of the island, with the
    most significant flooding associated with the La Plata River.

        These extreme weather conditions devastated Puerto Rico, including
    its electrical infrastructure, causing a total blackout of the system,
    and interrupting the power service to all customers in Puerto Rico. The
    emergency power service restoration efforts after the passage of
    Hurricane Maria lasted more than one year, including areas that did not
    have power due to the passage of Hurricane Irma. A collapsed
    transmission and distribution system (T&D System), no power, no water,
    no communications, airports, and most of our main and secondary roads
    closed due to the debris and damages, were some of the dire
    circumstances under which our recovery and reconstruction process
    began, with help and support of the U.S. Federal Government and several
    utilities and contractors from the mainland in conducting these
    efforts. However, the road to the permanent reconstruction of the
    transmission and distribution of power is still in its initial stages.
                           III. Disaster Declarations
        On September 10, 2017, the Commonwealth of Puerto Rico received a
    Presidential declaration of a major disaster (FEMA-4336-DR) due to the
    passage of Hurricane Irma, under the authority of the Robert T.
    Stafford Disaster Relief and Emergency Assistance Act (the ``Stafford
    Act''). For this disaster, the Federal Emergency Management Agency or
    FEMA obligated approximately $17.5 million in Categories A and B funds
    for the reconstruction of the electrical infrastructure, of which PREPA
    has received reimbursements of about $15.1 million.
        Due to the passage of Hurricane Maria, the Commonwealth of Puerto
    Rico received a Presidential declaration of a major disaster (FEMA-
    4339-DR) on September 20, 2017, under the authority of the Stafford
    Act. For this disaster, FEMA obligated approximately $1.9 billion in
    Categories A and B funds for the reconstruction of the electrical
    infrastructure, of which PREPA has received reimbursements of about
    $1.6 billion.
        The President separately declared emergencies and major disasters
    for both Hurricanes Irma and Maria. This created some initial confusion
    at first identifying and assigning damage to each storm separately.
    FEMA's eventual decision to put all Hurricane Irma work under Hurricane
    Maria helped tremendously streamline and bypass this confusion.
    IV. Reconstruction of Puerto Rico's Electrical and Water Infrastructure
        In September 2017, Hurricanes Irma and Maria decimated PREPA's
    electrical grid, causing an island-wide blackout. The transmission and
    distribution network infrastructure suffered the most damage: over
    2,700 transmission poles or structures were damaged, and 92% of
    inspected substations were affected, with 41% of substations suffering
    major damage.\3\ About 75% of the distribution system circuits were
    damaged, while certain generation units also suffered significant
    damage.\4\
    ---------------------------------------------------------------------------
        \3\ PREPA Central Office for Recovery, Reconstruction and
    Resiliency, Energy System Modernization Plan.
        \4\ Puerto Rico Energy Resiliency Working Group, Build Back Better.
    ---------------------------------------------------------------------------
        Furthermore, PREPA's water assets, including its irrigation
    systems, dams, reservoirs, and hydroelectric plants, suffered damage
    due mostly to Hurricane Maria. In particular, the Patillas and
    Guajataca dams suffered structural damage, and all reservoirs
    accumulated significant amounts of sediment. In addition, debris that
    typically is dragged by heavy rains affected other components of the
    hydroelectric system.
        It is important to note that PREPA serves a unique population.
    Puerto Rico has been identified as a disadvantaged community by the
    Justice 40 Climate and Economic Justice Screening Tool. Unemployment
    and poverty are above the 90th percentile for many communities. Unlike
    the continental United States, there are no alternative power options
    for critical facilities in Puerto Rico. All schools, hospitals,
    communications, and emergency providers rely daily on the ability of
    PREPA's lines to deliver sufficient power to provide those critical
    services necessary to save lives, protect public health and safety, and
    protect the improved property across the Island from mold.
        Particularly vulnerable is the capital of San Juan with an
    estimated population of over 300,000. As discussed above, the San Juan
    metropolitan area receives the energy mainly from the power plants on
    the South coast of the main island. The northeastern portion of the
    Island around the San Juan area is growing the most rapidly in
    population and is the most vulnerable to power outages due to the
    current concentration of generation on the southern portion of the
    island. Until the permanent hurricane restoration work is completed, or
    at least substantially advanced, the San Juan metropolitan area will
    remain vulnerable to reoccurring power outages.
        Further, most of the Island's medical facilities are also found in
    this vulnerable region. But the need for reliable power is a safety
    concern beyond just producing power for critical facilities.
    Streetlights need to stay lit, residents need to bathe children and
    cook food, and businesses need to be able to open their doors and
    provide services and commodities. Power is the lifeline to recovery and
    basic human needs.
        When these extreme storms moved across Puerto Rico, PREPA's grid
    was already vulnerable due mainly to its fiscal challenges and the
    unique design characteristics as I mentioned earlier.
                        V. Bankruptcy Impact on Recovery
        During the summer of 2017, and two months before the passage of
    Hurricanes Irma and Maria, PREPA started a bankruptcy process under
    Title III of the Puerto Rico Oversight, Management, and Economic
    Stability Act of 2016 (``PROMESA''), which was enacted by the Federal
    Government to oversee Puerto Rico's debt restructuring.
        Pursuant to PROMESA, the Puerto Rico Fiscal Oversight and
    Management Board (``FOMB'') provides oversight and is charged with
    approving the Fiscal Plan required under PROMESA. The entity
    responsible for drafting that Fiscal Plan is the Fiscal Agency and
    Financial Advisory Authority (or its acronym in Spanish, ``AAFAF'').
    AAFAF is an executive agency of the Government of Puerto Rico.
        Our fiscal situation was, without a doubt, the worst-case scenario
    under which any electric utility could face two category 5 hurricanes
    in a period of two weeks.
                     VI. Other Disasters Impact on Recovery
        As the U.S. Federal Government is well aware, after these
    disastrous hurricanes, conditions were further aggravated by two (2)
    additional Presidentially declared major disasters: the 2020 seismic
    activity that impacted the Southern region of Puerto Rico, including
    important PREPA generation assets in the area where most of our
    Island's energy generation takes place, and the global pandemic, health
    crisis and consequential economic issues caused by COVID-19.
        PREPA's situation was not isolated, as other infrastructure of the
    Commonwealth of Puerto Rico, which was also under the PROMESA Title III
    process, was severely damaged, like roads, highways, bridges, and water
    supply facilities. The typical FEMA Public Assistance program
    contemplates individual assessments, estimates, and scope of work for
    individual projects--a process in our case proved to be incredibly slow
    due to the extensive damage not only to PREPA but to all infrastructure
    across the Island.
        Given these scenarios, the U.S. Federal Government amended the FEMA
    policy procedures to provide a speedier and more flexible process for
    the application of federal funds to execute the permanent works needed
    to increase the reliability and resiliency of Puerto Rico's essential
    infrastructure. In 2020, FEMA announced the FEMA Accelerated Awards
    Strategy or ``FAASt'' process, which allows critical infrastructure
    projects to be grouped together to expedite the energy grid work in
    Puerto Rico.
        In addition to approving the FAASt process, the U.S. Federal
    Government provided additional support by increasing the federal cost
    share for the Hurricane Maria disaster FEMA-4339-DR from 75% to 90%.
    Federal funds available for permanent work have a cost-sharing
    structure, which requires the applicant for federal funding to use its
    own funds for part of the project. Typically, FEMA provides 75% of the
    investment and the remaining 25% is provided by the local government.
    Increasing the federal contribution to 90% resulted in a decrease of
    the local share that the Commonwealth of Puerto Rico, including PREPA,
    must cover for the reconstruction projects to 10%. In the process of
    allocating federal funds for the reconstruction of the Puerto Rico
    power grid, PREPA was able to cover part of its 10% cost-share with
    funds from the Community Development Block Grant (``CDBG'') Program
    \5\, specifically the Disaster Recovery grant or CDBG-DR funds.
    ---------------------------------------------------------------------------
        \5\ The CDBG Program is managed by the U.S. Department of Housing
    and Urban Development (HUD).
    ---------------------------------------------------------------------------
        While FEMA prepared the FAASt process, in the summer of 2019, PREPA
    began formulating initial scopes of works for permanent work necessary
    for the reconstruction of the electrical system of Puerto Rico as a
    result of the damages suffered by Hurricanes Irma and Maria. On
    September 24, 2020, FEMA obligated about $9.5 billion in FEMA 428 \6\
    funds for PREPA, which in turn submitted its work plan along with eight
    initial scopes of work to FEMA, on December 7, 2020. Then, on March 26,
    2021, the Puerto Rico Energy Bureau (Energy Bureau) issued a Resolution
    and Order conditioning that all projects to be executed with federal
    funds shall be submitted for Energy Bureau's approval.
    ---------------------------------------------------------------------------
        \6\ Under Stafford Act Sec.  428, Public Assistance Alternative
    Procedures, FEMA may award fixed cost grants for large permanent work
    projects, rather than on an actual cost basis. See Public Assistance
    Alternative Procedures (Section 428) Guide for Permanent Work, FEMA-
    4339-DR-PR (Feb. 10, 2020), https://devrecovery.pr.gov/tp3/documents/
    PAAP_Guide_for_Permanent_
    Work_DR_4339_PR_V3_2_10_2020_FINAL_508.pdf.
    ---------------------------------------------------------------------------
        The Energy Bureau, as Puerto Rico's electric system regulator for
    all energy-related matters, has been deeply involved in the
    reconstruction process. Before formally submitting a project for the
    consideration of FEMA and the Central Office for Recovery,
    Reconstruction, and Resiliency (``COR3''), PREPA must obtain regulatory
    approval from the Energy Bureau to ensure consistency with applicable
    laws and regulations. This requirement applies to the request for all
    federal funding for development projects in the energy sector.
    Transformation of PREPA
        Considering the vulnerable position that the electric power
    transmission and distribution system was before the storm events, and
    the devastating blow it took during the hurricanes, Puerto Rico
    embarked on a process to transform PREPA from a vertically organized
    utility into a corporation composed of different subsidiaries,
    facilitating the participation of the private sector in the operations
    and maintenance of the electrical infrastructure in Puerto Rico. This
    transformation's goal is to increase the resiliency and reliability of
    Puerto Rico's power system and maximize the use of modern and new
    technology to deliver a lower costing electricity service to all
    customers in Puerto Rico. As a first step, the Government of Puerto
    Rico entered into an operation and maintenance contract with LUMA
    Energy, LLC (``LUMA''), which became the Operator of PREPA's
    transmission and distribution system on June 1, 2021.
        Before this transition, PREPA had already prepared a total of 73
    initial scopes of work, 68 for the transmission and distribution system
    and other facilities and five in the areas of generation,
    hydroelectric, dams, reservoirs, and irrigation systems. As of that
    date, there were already 46 scopes of work approved by the Energy
    Bureau and with assigned FEMA numbers of placeholders to continue the
    formulation process for obligation, 41 for the transmission and
    distribution system, and five for generation and water assets.
        PREPA has continued developing scopes of work and undertaken the
    required actions to conduct repairs, rehabilitation, mitigation, and
    permanent works in its generation system and water assets. This has
    been accomplished with the support of the U.S. Federal Government,
    provided through the different federal funding programs made available
    to Puerto Rico. Regarding the transmission and distribution system and
    other facilities, since June 1, 2021, PREPA has delegated to LUMA, the
    responsibility of developing the repairs, reconstruction,
    rehabilitation, and modernization of such systems, including following
    the processes of project formulation and reimbursement requests.
         VII. Federal Funds for Reconstruction and Rehabilitation Works
        The devastation caused by Hurricanes Irma and Maria in Puerto Rico,
    only a couple of weeks apart, paved the way for a historic obligation
    of federal funds from the Public Assistance program to Puerto Rico
    under FEMA's Public Assistance Alternative Procedures, commonly known
    as FEMA 428 funds. Of these funds, over $9.5 billion are destined for
    the reconstruction works related to PREPA's electrical and water
    infrastructure. This amount, which represents 90% of the total
    estimated cost of the permanent works to be executed, is complemented
    by a cost share of 10% amounting to more than $1 billion. The 10% cost
    share program under Community Development Block Grant Section Energy
    Grid Rehabilitation and Reconstruction Cost Share Program (ER1),
    estimated cost of the permanent works to be executed, is complemented
    with a cost share of 10% to be covered partially with funds CDBG-DR
    Program up to $500 million and funds from the commonwealth of Puerto
    Rico.
        The permanent works total cost was initially estimated at
    approximately $10,704.76 million. Subtracting an estimated insurance
    contribution of $193.75 million from this amount results in a total
    estimated cost of $10,511.01 million, of which 90% equals approximately
    $9,459.91 million and the remaining 10% approximately $1,051.10
    million.
        Specifically, this funding will be used to rebuild the electrical
    infrastructure and repair or replace essential components of the
    electrical system that are to be hardened and modernized, for more
    resiliency and for providing sustainable and reliable power for the
    long-term future of Puerto Rico.
        Given the above, the total amount of assigned federal and local
    funds to execute permanent works under the Public Assistance program is
    approximately $10.5 billion. PREPA estimates that its insurers will
    contribute nearly $194 million to the works under this program, for a
    final estimated investment of approximately $10.7 billion. From the
    insurance contribution of $193.75 million, approximately $184.06
    million are allocated to the transmission and distribution system and
    other facilities, and about $9.69 million are allocated to the
    Guajataca dam repair project of the generation system and water assets
    area. It is noted that claims to the insurance companies are still in
    process and, thus, these amounts are subject to changes.
        In addition to the FEMA 428 Funds, FEMA obligated approximately
    $1.5 billion in federal funds under the Hazard Mitigation Grant Program
    (HMGP) or FEMA 404 funds for conducting permanent works on the
    electrical generation and water infrastructure.
        Therefore, currently, there is a total of approximately $12.2
    billion assigned for the reconstruction of PREPA's electrical system
    and water infrastructure in FEMA 428, FEMA 404, insurance, and local
    funds. The following chart shows the initial allocation of these funds:

    ----------------------------------------------------------------------------------------------------------------
                                                                                 FEMA 428     FEMA 404      Total
                       Asset                               Operator           --------------------------------------
                                                                               in millions  in millions  in millions
    ----------------------------------------------------------------------------------------------------------------
    Buildings.................................   LUMA........................     $ 125.09                  $ 125.09
    Substations...............................   LUMA........................       781.89                    781.89
    Distribution..............................   LUMA........................     5,499.84                  5,499.84
    Transmission..............................   LUMA........................     2,642.13                  2,642.13
    Generation................................   PREPA.......................       108.95       853.20       962.15
    IT/Telecomms..............................   LUMA........................       685.93                    685.93
    Dams, Irrigation and Reservoirs...........   PREPA.......................       860.93       658.53     1,519.46
    ----------------------------------------------------------------------------------------------------------------
                                                                               $ 10,704.76   $ 1,511.73  $ 12,216.49
                                                                              --------------------------------------
                    Insurance reduction......................................     $ 193.75                  $ 193.75
                    Local Share..............................................   $ 1,051.10                $ 1,051.10
                                                                              --------------------------------------
                      Federal Share..........................................   $ 9,459.91   $ 1,511.73  $ 10,971.64
    ----------------------------------------------------------------------------------------------------------------

        Currently, PREPA is allocating approximately $1.2 billion for
    permanent works on the generation system and water assets, which
    results in about $8.2 billion of FEMA 428 funds for works on the
    transmission and distribution system and other facilities. The latter
    federal funds, when added to the estimated insurance contribution of
    $184 million and the local cost share of $913 million result in a
    current total of about $9 billion of funds for projects for the
    transmission and distribution system and other facilities. The
    following chart provides a summary of the current allocation:

    ----------------------------------------------------------------------------------------------------------------
                                                                                 FEMA 428     FEMA 404      Total
                       Asset                               Operator           --------------------------------------
                                                                               in millions  in millions  in millions
    ----------------------------------------------------------------------------------------------------------------
    Transmission, Distribution, and Other        LUMA........................   $ 9,313.21                $ 9,313.21
     Facilities.
    Generation................................   PREPA.......................       502.70       853.20     1,355.90
    Dams, Irrigation and Reservoirs...........   PREPA.......................       888.85       658.53     1,547.38
    ----------------------------------------------------------------------------------------------------------------
                                                                               $ 10,704.76   $ 1,511.73  $ 12,216.49
                                                                              --------------------------------------
                    Insurance reduction......................................     $ 193.75                  $ 193.75
                    Local Share..............................................   $ 1,051.10                $ 1,051.10
                                                                              --------------------------------------
                      Federal Share..........................................   $ 9,459.91   $ 1,511.73  $ 10,971.64
    ----------------------------------------------------------------------------------------------------------------

        The current allocation responds to the need of repairing Puerto
    Rico's generation system and water assets to assure a reliable, safe,
    and resilient energy and water supply. In particular, the current
    limitations on the dependable generation available to supply the energy
    demand in Puerto Rico are confirmed by the need to run emergency
    generating units, including the new mobile generators at the Palo Seco
    power plant, after the earthquakes of January 2020 and last year's
    major load shedding events caused by the lack of generation capacity.
    In addition to the FEMA 428 and FEMA 404 funds assigned to the
    generation system and water assets, PREPA applied to the Puerto Rico
    Department of Housing for the assignment of approximately $300 million
    in CDBG-DR funds for the retrofit of PREPA's hydroelectric generating
    units. This, under Section Electrical Power Reliability and Resilience
    Program (ER2) of CDBG electrical system optimization action plan.
        Annex 2 of this document includes a detailed list of fifty-seven
    (57) projects to be developed on the generation system and water
    infrastructure, of which a summary follows \7\:
    ---------------------------------------------------------------------------
        \7\ The shown quantities are estimates and the numbers are rounded.

    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                  Projects Amounts (Millions)                                                      Quantity of Projects
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        Water      Generation                                                     Water   Generation
                       Funds Type                       Assets       System        Total                 Funds Type               Assets    System     Total
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    FEMA 428 \(1)\.................................     $ 888.85     $ 502.70   $ 1,391.55   FEMA 428..........................       18          20      38
    FEMA 404.......................................       658.53       853.20     1,511.73   FEMA 404..........................        2           2       4
    CDBG-DR........................................         0.00       300.00       300.00   CDBG-DR...........................        -          15      15
                                                    ----------------------------------------                                    ----------------------------
      Total........................................   $ 1,547.38   $ 1,655.90   $ 3,203.28   Total.............................       20          37      57
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    \(1)\ The quantities shown for this funds type include FEMA 428
    funds, the insurance contribution, and the cost share.

        Under the Public Assistance program, to date, FEMA has obligated
    approximately $182 million through the FAASt process, approving eleven
    (11) Project Worksheets or PWs submitted by PREPA for repairs to its
    power generation plants at Aguirre, Costa Sur, Palo Seco, San Juan,
    Mayaguez, and Cambalache. These 11 projects group 65 scopes of work
    approved by the Energy Bureau for the repair of PREPA's generating
    units. PREPA completed 1 of these 11 projects and has requested
    reimbursement for an amount of $18 million, of which $15.9 million were
    received in reimbursements. In addition, PREPA is in an advanced stage
    of construction works in other three of the 11 projects. The three
    projects that PREPA has in an advanced stage are in the San Juan power
    plant (PWs 10615 and 10608), that total $62.4 million and are over 60%
    of completion; and Cambalache Power Plant Permanent Repairs (PW 10607)
    that total an amount of $2 million in which PREPA has an 85% of
    completion of the total work. For these three PWs, PREPA has already
    submitted the request for reimbursement to COR3.

                                                11 Approved Project work sheet (PW) for Generating Units Repairs
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       Project                                    Percentage
                 PW#                   Location      Project Title   #SOW   Fund       Asset         Formulation       FEMA         Date of           of
                                                                                                        Status       Approval      Completion     Completion
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    10571........................  Aguirre........  FAASt Aguirre       4    428  Generation.....  Approved.......   3,031,265  Apr-23.........          19%
                                                     Power Plant
                                                     Infrastructure
                                                     Projects 001.
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    10568........................  Aguirre........  FAASt Aguirre       4    428  Generation.....  Approved.......  14,937,046  Aug-23.........          43%
                                                     Power Plant
                                                     002 Units 1 &
                                                     2 Projects.
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    10622........................  CC.............  FAASt Aguirre       5    428  Generation.....  Approved.......   5,405,870  Jun-23.........          17%
                                                     Power Plant
                                                     003 Combined
                                                     Cycle.
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    10615........................  San Juan.......  FAASt San Juan     12    428  Generation.....  Approved.......  60,080,016  Mar-24.........          60%
                                                     001--Units 5 &
                                                     6.
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    10608........................  San Juan.......  FAASt San Juan      9    428  Generation.....  Approved.......   2,368,247  Jan-23.........          67%
                                                     Power Plant--
                                                     Auxiliary
                                                     Infrastructure.
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    10702........................  Costa Sur......  FAASt Costa Sur    20    428  Generation.....  Approved.......  42,299,739  Oct-24.........          20%
                                                     Permanent
                                                     Repairs 5 & 6.
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    10694........................  Costa Sur......  FAASt Costa Sur     2    428  Generation.....  Approved.......   1,250,000  Nov-22.........          16%
                                                     Permanent
                                                     Repairs.
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    10606........................  Palo Seco......  FAASt Palos        11    428  Generation.....  Approved.......  28,774,423  Jan-24.........          36%
                                                     Seco Steam
                                                     Plant Unit 3-4.
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    10609........................  Palo Seco......  FAASt Palo Seco     2    428  Generation.....  Approved.......   3,495,578  Jun-24.........          20%
                                                     Steam Plant
                                                     Permanent
                                                     Repairs.
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    10607........................  Cambalache.....  FAASt               4    428  Generation.....  Approved.......   2,038,588  Jun-24.........          85%
                                                     Cambalache
                                                     Power Plant
                                                     Permanent
                                                     Repairs.
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    10455........................  Mayaguez.......  FAASt Mayaguez      1    428  Generation.....  Approved.......  18,192,583  Jul-22.........         100%
                                                     Hydro-Gas
                                                     Power Plant
                                                     Permanent
                                                     Repairs.
    --------------------------------------------------------------------------------------------------------------------------------------------------------

        PREPA will submit for FEMA approval 4 additional Project Worksheets
    amounting approximately $176.35 million, which group 37 scopes of work
    for the repair of the generating units 7, 8, and 10 in San Juan and
    unit 1 at Cambalache, once it gets the approval of 6 scopes of work
    that are currently under the reconsideration of the Energy Bureau, as
    the regulator already approved 31 from the total of 37 scopes of work
    that make up the 4 Project Worksheets. The Energy Bureau denied the six
    scopes of work mentioned above in its resolution and order on June 4,
    2022. After that order, PREPA submitted two reconsideration motions
    requesting the approval of these six scopes of work for the repairs of
    generating units. Currently, PREPA continues assessing the condition of
    its power plants to prepare additional scopes of work to complete the
    repairs of all its generating units.
        In the case of the water assets projects, PREPA already received
    approval from the Energy Bureau and FEMA for eighteen (18) initial
    scopes of work and two (2) application packages for approximately
    $1,547.38 million that are currently in the architecture and
    engineering phase, which is required by FEMA before approving the
    corresponding Projects Worksheets of this type of project.
        It is noted that FEMA obligated a Project Worksheet amounting
    approximately $486 million for architecture and engineering design
    services to be utilized in the development of detailed scope of works
    to be submitted to FEMA for approval. PREPA is using these funds to
    procure architecture and engineering design services to develop
    detailed scopes of work for its dams, hydroelectric system, and
    irrigation systems. Once the architecture and engineering phase is
    complete, PREPA will submit the resulting documents to FEMA for the
    approval of the construction Project Worksheets. In the case of the
    water assets projects, the Project Worksheets will amount to nearly
    $889 million in FEMA 428 funds and $658.53 million in Hazard Mitigation
    Grant Program or FEMA 404 funds.
        Regarding the approved FEMA 404 funds for new generation amounting
    $853.20 million, PREPA submitted a reallocation strategy of such funds
    for the Energy Bureau's approval on August 2, 2022. Annex 3 of this
    document includes, among other motions, a copy of PREPA's motion
    requesting the Energy Bureau's approval, which is currently under
    evaluation provided by the Energy Bureau. This Annex also includes
    PREPA's motions requesting the Energy Bureau's approval for the repair
    of generating units and conversion to natural gas. Out of the $853.20
    million, $280.82 million are currently assigned for emergency-
    generation or simple cycle combustion turbines, $5 million for
    engineering studies of a new combined cycle in the North of Puerto
    Rico, and $567.38 million for the new combined cycle project.
        After analyzing the development of these projects considering the
    current needs of Puerto Rico's power system, PREPA determined to
    redistribute the available FEMA 404 funds, in particular the $572.38
    million approved by FEMA, as follows:

    ------------------------------------------------------------------------
                                                             Estimated Cost
                    FEMA 404 Funds Purpose                 -----------------
                                                               in millions
    ------------------------------------------------------------------------
    Emergency Generation Peaker Units.....................          $ 490.00
    Costa Sur and Yabucoa Black-Start Units...............            190.00
    Fuel Conversion of San Juan Units 7 to 10.............            138.50
    Small-scale residential PV with storage...............             34.70
                                                           -----------------
      Total...............................................          $ 853.20
    ------------------------------------------------------------------------

        The feasibility studies of the current projects for the new
    generation mainly resulted in that, even though a new combined cycle at
    San Juan or Palo Seco power plants is feasible and recommended from an
    engineering point of view, this construction is a long-term project, as
    it will take about ten (10) years to be completed. In addition, the
    original estimated cost of $572.38 million was calculated in 2020
    dollars and, when updated to reflect 2023 dollars and inflation,
    resulting in approximately $723.6 million. This means that there are
    insufficient funds to develop the combined cycle project, as there is a
    deficiency of $151.22 million. Given PREPA's current power generation
    struggles, and that the development of the combined cycle project is a
    long-term effort, PREPA must execute short- and medium-term measures to
    improve the existing thermal generation assets.
        Considering the constraints described above, PREPA found that, even
    though the construction of the combined cycle in the North is feasible
    and beneficial for the electrical system, there are not enough funds
    for completing the project and there are more imperative actions to be
    taken on the short- and medium-term, for which the combined cycle
    project approved funds can be used. These actions include those needed
    to keep the existing thermal generating units operational and in
    service to supply the energy demand in Puerto Rico, support the
    reliable and safe integration of renewable energy, and provide the
    energy needed during the restoration of the electrical service after
    major events. It is essential that the generating units' operation
    comply with all environmental regulations.
        Therefore, PREPA submitted to the Energy Bureau that the combined
    cycle project would be delayed until sufficient funds are available and
    its assigned funds of $572.38 million would be allocated to the above-
    mentioned projects:
          Emergency Generation Peaker Units--This generation
    project is the second one approved by FEMA to be funded with FEMA 404
    funds. The original project estimate was $280.82 million in 2020
    dollars, but considering inflation, the estimate of executing this
    project is a minimum of $490 million. Hence, it is needed to add funds
    to this project for executing it.
          Costa Sur and Yabucoa Black-Start Units--Currently, this
    project is defined under the Public Assistance program with an original
    FEMA 428 funds assignment of $90.4 million. However, this estimate was
    updated to account for the inflation and the recent disruption in the
    supply chain, resulting in a new estimate of $190 million. Hence, it is
    needed to add funds to this project for execution. This project was
    previously approved by the Energy Bureau.
          Fuel Conversion of San Juan Units 7 to 10--This project
    has the main purpose of keeping the steam units in the San Juan Power
    Plant operational and in service, burning natural gas as their main
    fuel. The fuel conversion of these units will allow them to achieve
    environmental compliance with the Sulfur Dioxide (SO2) State
    Implementation Plan in the Non-Attainment area of San Juan and the
    Mercury and Air Toxics Standards (MATS) rule. On February 11, 2022,
    PREPA submitted this project for the evaluation of the Energy Bureau.
          Small-scale residential PV with storage--PREPA intends to
    invest the remainder of the $572.38 million after executing the
    projects detailed above, if any, on the installation of PV plus storage
    systems behind the meter of customers located at those sectors where
    the power service was restored last after Hurricane Maria. Currently,
    the remaining amount is estimated at about $34.7 million.

        This amount does not consider what could potentially be hundreds of
    millions of dollars in additional funding for hazard mitigation
    measures as allowed by the Public Assistance program under the Stafford
    Act, and such measures will be part of each project's scope of work to
    be developed. While the Public Assistance program or FEMA 428 is
    focused on attending to damages caused by a disaster, FEMA 404 funding
    is used to provide protection to undamaged parts of a facility or to
    prevent or reduce damages caused by future disasters.

    ----------------------------------------------------------------------------------------------------------------
              Project Number                Project Title             Asset          Approved Amount    Reimbursed
    ----------------------------------------------------------------------------------------------------------------
    4339-0010.........................  Simple Gas Turbines.  Generation..........       280,822,500         268,437
    4339-0012.........................  Early Warning System  Dams................       100,000,000               -
    4339-0008.........................  North Generation....  Generation..........       572,377,050         363,095
    4339-0010.........................  Patillas Dams.......  Dams................       558,530,000               -
    ----------------------------------------------------------------------------------------------------------------
                                                                                     $ 1,511,729,550       $ 631,532
    ----------------------------------------------------------------------------------------------------------------

        Furthermore, PREPA is completing the formulation of the following
    projects related to the 2020 earthquakes, mostly focused on one of
    PREPA's most important generation power plant known as Costa Sur, which
    are sure to positively impact the generation-side of PREPA's
    operations:

    ----------------------------------------------------------------------------------------------------------------
                                                                                         Approved
            Project Number           Project Title        Asset       Estimated Cost      Amount        Reimbursed
    ----------------------------------------------------------------------------------------------------------------
    171513.......................  Costa Sur Work    Generation.....       3,444,365       3,444,365               -
                                    Completed.
    171515.......................  Costa Sur         Generation.....       3,623,083         529,036               -
                                    Buildings.
    171512.......................  Costa Sur Tanks.  Generation.....       5,071,207       5,660,599               -
    171517.......................  Costa Sur         Generation.....       6,700,000          66,576          59,919
                                    Discharge
                                    Channel.
    ----------------------------------------------------------------------------------------------------------------
                                                                        $ 18,838,655     $ 9,700,577        $ 59,919
    ----------------------------------------------------------------------------------------------------------------

    ----------------------------------------------------------------------------------------------------------------
                                                                   Project      Approved     Pending     Reimbursed
                                                      Scopes of     Amount      Funding      Funding   -------------
                  Permanent Work Assets                 Works   ---------------------------------------
                                                                 in millions  in millions  in millions   in millions
    ----------------------------------------------------------------------------------------------------------------
    New Generation Units............................          4        943.6        853.2         90.4           0.3
    Aguirre Power Plant.............................          3         29.5           18         11.5           0.7
    Aguirre Combined Cycle..........................          1          5.3          5.4         -0.1
    San Juan Power Plant............................          4        133.5         62.4         71.1
    Costa Sur Power Plant...........................          2         40.8         40.8            0           0.3
    Palo Seco Power Plant...........................          4         96.3         32.3           64           0.8
    Cambalache Power Plant..........................          2         38.5            2         36.5
    Mayaguez Power Plant............................          1         18.2         18.2            0          15.9
    Repairs to Peaking Units--Islandwide............          1         50.2            0         50.2
    Hydroelectric Units--Islandwide.................         15          300            0          300
    Dams, Reservoirs, Irrigation Channels...........         20       1547.4            0       1547.4
                                                     ---------------------------------------------------------------
                                                             57       3203.3       1032.3         2171            18
    ----------------------------------------------------------------------------------------------------------------

                                VIII. Path Ahead
        PREPA's path ahead will be focused on ensuring the proper
    expenditure of its Federal grants that will be used to create a modern,
    sustainable, reliable, efficient, and resilient energy system. Our goal
    is to ensure, through the partnership with LUMA, that we are building
    an electric system that can adequately withstand any future storm. It
    is imperative that we provide the people of Puerto Rico with a more
    reliable system that has fewer and shorter outages, if any, and at a
    reasonable cost.
        We believe that doing so, will jumpstart a long-term revitalization
    of the Puerto Rican economy. Reliable power means more investment in
    the Island and support for economic development.
        We recognize, however, that taking on such a monumental rebuilding
    project will take time. We ask that this Committee continue to support
    Puerto Rico and FEMA in this long-term endeavor. FEMA should be
    encouraged to continue to make timely, reasonable, and flexible
    decisions to support this unique recovery.
        Regarding PREPA's renewable energy initiatives, 18 solar
    photovoltaic (``PV'') projects, totaling 844.47 MW, have been submitted
    by PREPA for regulatory approval. In addition to reaching the execution
    of 18 solar PV PPOAs amounting to 844.47 MW, PREPA executed two (2)
    contracts for energy service storage agreements (``ESSA'') totaling 100
    MW each, for a four-hour duration utility-scale battery energy storage
    project that is co-located and operationally integrated with two of the
    solar PV PPOA's for Incentive Tax Credit (ITC) compliance. PREPA is
    currently negotiating six (6) additional ESSAs, which are currently
    under review by LUMA. The illustrations and tables in Annex 4 provides
    further details regarding PREPA's renewable energy initiatives.

                                 IX. Conclusion
        PREPA continues to strive for the full obligation and execution of
    its recovery and reconstruction projects, which will allow for a
    better, more resilient Puerto Rico and ultimately achieve a stable
    energy system that our 3.2 million U.S. citizens living in Puerto Rico
    can depend on. The use of federal funds will not only reduce costs but
    will create better economic opportunities for our people, all of which
    are goals that we are confident are shared by FEMA, this Congress, and
    the rest of the federal government.

        Ms. Titus. Thank you very much, Mr. Colon.
        We will now begin with questions. I will recognize each
    Member for 5 minutes of questions. I will start by asking
    questions first myself.
        I have heard a lot of references to inflation and the
    impact of inflation on getting equipment, on the supply chain,
    on the cost today, but I haven't heard so much about the
    pandemic. I think we need to acknowledge--I think, Mr. Currie,
    you asked: Who could have anticipated this level of inflation?
        Who could have anticipated the pandemic? We need to
    acknowledge that the pandemic has contributed to the inflation,
    and also, having to manage two disasters at the same time, one
    in healthcare and one, infrastructure, certainly caused the
    problem. So, when you talk about what has contributed maybe to
    the length of time or the inability to get this done more,
    well, expeditiously, I guess, let's be sure we keep that in
    mind and don't just blame it on inflation.
        The purpose of the hearing is to really come with something
    substantive that Congress can do to make the situation better.
    And some of you have mentioned things--Ms. Williams-Octalien, I
    think you said that you were concerned about the waiver of the
    local match requirement in areas where the devastation is so
    great and you don't have that underpinning of a good fiscal
    system anyway. That is one thing that we ought to look at.
        Another thing was, you mentioned the lack of qualified
    personnel to oversee some of these projects. What could we do
    to help with that?
        Another thing was, in addition to section 428 and the
    problems that causes because of the estimates maybe being
    overrun, is there anything that we can do to address the
    reimbursement-based assistance program for recipients or
    applicants with few financial resources?
        I would just ask you all to give us something specific that
    we can take back and look at legislation or regulation or
    something we can actually accomplish aside from what the Agency
    is trying to do and those things that I mentioned from your
    testimony.
        You want to start?
        Ms. Williams-Octalien. Thank you for the question, Madam
    Chair. I think one of the first things that we have been
    looking at is the issues relative to capacity and the ability
    to have contractors and personnel to be able to do the work in
    a Territory. FEMA commissioned a RAND study that said that if
    every able-bodied Virgin Islander was engaged in the recovery,
    we would need 5,000 more workers in order to get this done.
        One of the areas that we are looking at is our neighboring
    Caribbean islands, where we have resources there that may be
    able to come to the Territory but, of course, they would need
    legislation because they are countries of their own. But
    creating those opportunities for our neighboring Caribbean
    residents to come to the Virgin Islands to be able to assist
    with the recovery is an area that we believe can get some
    attention and provide some relief.
        Mr. Laboy. Thank you.
        From our perspective, I would like to highlight three
    particular items. It has been mentioned, the low level of
    disbursements and that there is a reality that the Federal
    regulation limits advances. We have to remind everyone that our
    recovery, once FEMA obligates funds, is based on reimbursement.
        So, Puerto Rico, for example, we have a huge challenge in
    terms of accessing cash. Let's use as an example the
    municipalities. They have thousands of large projects that are
    based on reimbursement. If they don't have the cash, they
    cannot do the work; therefore, they cannot come to COR3 and ask
    for reimbursement. Same thing with the public corporations.
    That has been a major issue because it is limited by
    regulation.
        And let me give you another important aspect of that. FEMA
    adopted 2 CFR in 2014, and that is the limitation before that.
    The regulation previously adopted allowed for 50 percent
    advancements after obligations. So, imagine Puerto Rico being
    under bankruptcy, no cash, no access to capital, how will we be
    able to push forward permanent work projects if there is no
    cash, and then you have to rely on reimbursements?
        That is the reason why we came up with this creative
    program called Working Capital Advance. It was instituted 2
    months ago. It was first in place for municipalities, then
    expanded to the power authority, and then to the water
    authority, and soon will be expanded to the Puerto Rico
    Department of Education, and then public housing.
        That is the reason why you have seen a major increase in
    disbursements, because in the last 2 months, we have been
    advancing 25 percent of the obligated money by FEMA.
        The second ask, I will say, is that we mentioned the match,
    the global flexible match, for Public Assistance. Although FEMA
    has granted us to apply the global match for the FAASt
    projects, which is a major advancement, there is a restriction
    in the Stafford Act that has been integrated as a limitation to
    apply global match for the whole recovery. Therefore, that
    could be an opportunity to go back to the Stafford Act and take
    a look at that.
        And number three, the FAASt implementation. I think the
    FAASt was a novel, great idea to accelerate the obligation of
    funds, the availability of a budget, to have certainty. And it
    was approved, remember, in September 2020. This is for PREPA,
    for the Department of Education, also obligated in September
    2020; and for PRASA, the water authority, January 2021; and for
    public housing, January 2022.
        But the implementation of the FAASt is one of the greatest
    lessons learned, because I think it was stated before that you
    have to go back individual project by project and resubmit that
    to FEMA. And FEMA has to make sure that it complies with the
    environmental and historic preservation statutes at the Federal
    level and also look at opportunities for hazard mitigation
    measures.
        I have to say that in the last 6 months there has been a
    major improvement in the FAASt implementation, but at the
    beginning, it was very, very challenging. I will give you an
    idea. Last year, zero projects were approved for the energy
    reconstruction. Today, actually, we have 47, and we expect to
    have 100 before the end of the year. So, that is a major
    improvement, but at the beginning, it was very challenging.
        And the last comment I want to make is about capacity. I
    think that the gentleman from GAO mentioned something very
    important. We recognized that when we enter in COR3 in 2021,
    January, that is why we dedicated a lot of resources and time
    for 2021, for the most part, and part of 2022, to increase
    capacity through the municipalities, the agencies, and the NGOs
    that are receiving money from FEMA for their repairs.
        I will tell you this, in the beginning, there was a risk. I
    will admit that. But 20 months later, the capacity has been
    increasing dramatically in a good way. We feel very confident
    that now the municipalities can execute, and they have the full
    support of COR3 because we provide the technical assistance to
    ensure that the procurement is done right, that the projects
    are executed, and that they comply with all the Federal FEMA
    requirements.
        Thank you.
        Ms. Titus. Thank you.
        Mr. Webster?
        Mr. Webster of Florida. Yes. Thank you, Chair.
        Mr. Currie, of the work you have done reviewing the
    recovery efforts, are there any key provisions or lessons that
    have been learned that could be used in future responses and
    recovery in other disasters?
        Mr. Currie. Yes, sir. First of all, the situation in Puerto
    Rico and USVI is so unique, just given their fiscal situation
    when the disasters hit, that other than some of the other
    Territories in the Pacific, I am not sure I can draw a parallel
    to other States. Because one of the biggest challenges, Mr.
    Laboy just summarized it extremely well, is that, unlike
    Florida or Nevada or Mississippi or any other State, when there
    is a disaster, they have the ability to front the funds through
    loans or bonds or things like that, so they can do debris
    removal, start the repairs and things like that, and then get
    reimbursement later.
        I think the biggest lesson learned for me with this is
    that, first of all, maybe not rolling out a brandnew program
    that even FEMA itself or the Federal Government hasn't tested
    in a disaster like this. I think that was the biggest
    challenge. I think upfront, there were a lot of mismatched
    expectations, and I think both Puerto Rico and Virgin Islands
    were under the assumption that these section 428 disbursements
    were going to be funds that would be provided once they got to
    some sort of agreement. That has not been the case.
        It is just a promise of funding, and as Mr. Laboy said,
    even though you got to those agreements, there is a back and
    forth that is going to go on for many more years about
    individual projects. So, I think the question has come up of,
    should we have just used that process to begin with instead of
    putting all that work upfront to come to some of these upfront
    cost estimates? So, that is one lesson learned.
        Mr. Webster of Florida. Thank you very much.
        Director Williams-Octalien, the USVI Water and Power
    Authority has received a significant amount of funding since
    the 2017 hurricanes. However, it seems that they have planned a
    transition to solar energy, despite outstanding obligations for
    the existing liquid propane gas system.
        What is the USVI doing to ensure existing obligations are
    met and that Federal funding is being used to support
    rebuilding that will integrate into the existing power
    capabilities?
        Ms. Williams-Octalien. Thank you for that question. The
    Water and Power Authority has developed a transformational plan
    that includes the various sources of energy in trying to move
    our archaic dependency on fossil fuel into more renewables. We
    have utilized all of the Federal funding sources, including the
    Public Assistance to its mitigation, as well as the Hazard
    Mitigation Grant Program, and also the CDBG funding program,
    recovery program, in order to transform. It is a combination of
    developing composite poles, undergrounding, microgrid projects,
    battery energy projects, as well as the new generation projects
    that we have had that will transform the Water and Power
    Authority to more efficient fuels.
        So, we have developed this overall plan that is working
    together with the Water and Power Authority. The first project
    that is really going to impact us is a new generation project
    of the powerplant on the island of St. Thomas that we are
    expecting the batteries to come online in the first quarter of
    next year, allowing to impact not only our energy reliability
    in the Virgin Islands, but also our effectiveness in terms of
    keeping the power on and keeping the cost down.
        You may be aware, the Virgin Islands has some of the
    highest energy costs in the Territory, so the recovery funds
    have been chartered and directed towards making sure that we
    address not only reliability, but cost in shift--being able to
    load shift from--to our end battery energy solutions, as well
    as moving back and forth in terms of keeping the power on in
    the Territory.
        Ms. Titus. Thank you, Mr. Webster.
        Ms. Norton?
        Ms. Norton. Thank you, Madam Chair.
        Mr. Laboy, although FEMA approved 95 percent of Public
    Assistance projects for Puerto Rico's recovery, after 5 years,
    much of this reconstruction has yet to be completed and, in
    many cases, not even yet begun.
        What are the challenges that hinder reconstruction efforts,
    and what is COR3 doing to ensure timely progress on approved
    projects?
        Mr. Laboy. Thank you. When we started this role in 2021
    January, FEMA had obligated about $13.5 billion worth of
    permanent projects. And they continue to obligate permanent
    work funds until today. That number went from $13.5 billion to
    close to $22 billion in about 20 months.
        The challenge that we saw at that point, it was that there
    was already enough money obligated, and we wanted to get these
    projects going to get into construction. But the reality is
    that, once the project is obligated, there are multiple steps
    that the municipality or the agency needs to take into account
    in order to see that project into construction. In the case of
    the FAASt projects, PREPA, PRASA, and the Department of
    Education, they need to develop scopes of work.
        I think that there was this expectation in 2020 that when
    FEMA obligated the funds for PREPA and the Department of
    Education, the next day there would be projects, shovels in the
    ground. That was never the case because that obligation never
    authorized construction. It was just a budget. Then, PREPA and
    the Department of Education, and later PRASA, have to go
    project by project, submit scopes of work to FEMA to go through
    the whole, entire process evaluation, and then get the approval
    so then they can go to construction.
        In the case of the municipalities, in the beginning, we saw
    certain gaps for capacity. We addressed those gaps because we
    did a lot of training, and we provided a lot of technical
    assistance and tools, and then started to see much progress on
    the municipalities' projects. Then again, the cash strap, the
    cash limitation. That is why we were able to implement the
    Working Capital Advance, and for the last 2 months, it has been
    a total success, because most of the funds that we have been
    able to disburse for permanent work, the majority have been
    disbursed for the last 2 months because of the Working Capital
    Advance.
        There is also another challenge that we saw, is that for
    the section 428, the fixed-cost estimate, aside from the rising
    cost of construction and the inflation impact, the reality is
    that they provide an opportunity to do things differently, to
    actually build back better, to provide opportunities to submit
    improved projects or even alternate projects. The issue is
    that, every time you want to do that, you have to go back to
    FEMA. So, in every instance, the way you look at it, for the
    most part, you have to go back to FEMA to get an approval,
    whether you are versioning the project worksheet, whether you
    are changing the scope of work, whether you are improving the
    project, whether you are proposing an alternate project, or in
    the case of the FAASt, every time that you develop a project,
    you have to submit a scope of work.
        In the case of the energy infrastructure, it is even more
    complicated, because they need the approval of the independent
    energy regulator. So, before even going to FEMA, after 2020,
    every project, even today, has to go to the Puerto Rico Energy
    Bureau, get their blessing, and after that, then, develop the
    scope of work, submit it to FEMA, and then from FEMA, get the
    approval for construction.
        Now, the good news is that we have overcome basically
    almost all of those challenges since 2021. That is why we are
    very optimistic that there is really a paveway for the road to
    recovery because of the number of projects that we have in
    construction, the projects that have been completed, and the
    projects we expect to be in construction in the years to come.
        So, certainly, there are still challenges. I will say that
    the rising cost is something that we need to monitor closely,
    number one. Number two, the availability of skilled labor, it
    is very important; and then keep addressing the cash gap. Once
    we do all those three, I think that the future looks even more
    optimistic, from our point of view. But I will say that the
    contrast has been really 180 degrees in the right direction.
        The support has been there from FEMA. I will say that we
    are very appreciative about the support, and that is why we are
    seeing this progress. But there is a lot of work that remains
    to be done to continue this momentum.
        Ms. Norton. I must say, Madam Chair, that this process
    needs to be streamlined.
        But my time has expired, and I yield back.
        Ms. Titus. Thank you. I think you are exactly right.
        Miss Gonzalez-Colon?
        Miss Gonzalez-Colon. Thank you, Madam Chair.
        I want to begin by something Mr. Laboy just brought, the
    suggestion about Stafford Act amendments. And to that end, I
    have H.R. 2017 before this committee, which includes an
    extension of the global match and other measures to ease these
    procedures. And I think this bill, after being in the Virgin
    Islands, being in Puerto Rico, and managing decisions for the
    last 5 years, between FEMA and the Government agencies as well,
    it is a way to put this money that has been approved by
    Congress in the right hands to work. So, I encourage--you can
    see it, and we are ready to work with you and this committee to
    try to ease the situation.
        So, having said that, there is another issue regarding
    opportunities, and that is the Working Capital Advance that
    will allow the government of Puerto Rico to use it for FAASt
    projects, specifically for schools and public housing on the
    island as well. So, those are opportunities that if we can--of
    course, that is a question to FEMA that we are going to be
    submitting in writing to see if we can have that Working
    Capital Advance and manage the reimbursement situation. We have
    got a hospital that Congress allocated funding to Vieques that
    has not been built because of the lack of funds, and the island
    is still waiting for that.
        But I want to make my questions now to LUMA. Last April, we
    were in a total blackout due to equipment malfunction. And
    since then, we have repeated interruptions on the island,
    sometimes involving hundreds of thousands of customers being
    without power, including me, right. Just to make that clear, I
    go to my house every weekend, and I am one of the people that
    suffers this directly, and I don't have a generator.
        So, this situation is not involving disasters, and that is
    my main concern. People in Puerto Rico always expect those
    interruptions to happen during May to September, to November,
    due to the hurricane season. So, you must have known the
    condition of the grid when you took over, and honestly, we
    don't see improvement.
        I read your numbers and your briefing today to this
    committee. And actually, you brought more information than ever
    before LUMA has said to the public in Puerto Rico regarding the
    electric grid on the island. And you were hired, actually, to
    fix the problem.
        So, my question to you would be: What is the estimated time
    for the grid to be up to date and ready to be considered up to
    current standards? And how much of that will rely on FEMA
    funding?
        Ms. Bahramirad. Congresswoman, that is an excellent
    question. I would answer that it has already improved. Since we
    took over, as I mentioned in my testimony, the design of the
    system was extremely poor. The foundational standards and the
    models that every utility around the country, they have it in
    order to scope the projects right, never existed. So, we had to
    go out. And as I stated, scoping the project needs to be done
    per data, sound engineering, and science. And that is something
    that we have taken seriously.
        Miss Gonzalez-Colon. And what is the estimated time to have
    the system up to standards?
        Ms. Bahramirad. Yes. So, as of in the past 15 months, the
    system reliability has improved by 30 percent.
        Miss Gonzalez-Colon. So sorry to interrupt. I have just got
    1 minute. If I can know, what is going to be the specific time
    that Puerto Rico will have an updated system? Can you have that
    number?
        Ms. Bahramirad. This is a journey, Congresswoman. As----
        Miss Gonzalez-Colon [interrupting]. One year? Two years?
    Five years? Ten years?
        Ms. Bahramirad. The importance of FEMA projects is that it
    is going to help continuing and building on the progress that
    has been made. As I stated, the frequency of the outages has
    improved by 30 percent, and the projects in the pipeline----
        Miss Gonzalez-Colon [interrupting]. You are an engineer,
    right?
        Ms. Bahramirad. I am. I have a Ph.D. in electric power
    systems.
        Miss Gonzalez-Colon. So, you do plans for the future. My
    question here is: What is the timeline for having the power
    grid on the island fixed? That is the simple question. Is it 1
    year? Two years? How many months?
        I know that you rely on Federal funding to make part of
    that progress. Do you have that timeline?
        Ms. Bahramirad. In the upcoming months and years, I can
    commit to you that the reliability of the system is going to
    be----
        Miss Gonzalez-Colon [interrupting]. So, you don't have that
    data that I am asking for?
        Ms. Bahramirad. What I can share with you is that the
    number of projects that are currently in the pipeline of FEMA,
    and every single one of them is going to improve the
    reliability of the system.
        Miss Gonzalez-Colon. OK. We don't have a timeline of when
    the system is going to be ready. I just want that answered.
        How many personnel are in the field right now actually
    rebuilding the grid?
        Ms. Bahramirad. So, we have 3,428 employees at LUMA, and
    over 1,300 of them work in the field. But this is a team sport.
    The people in the field that work from substations,
    restoration, and commissioning transmission and distribution,
    they get supported by dispatchers, by the operation control
    center and others, and they work very hard to restore the
    system.
        Miss Gonzalez-Colon. So, if we--I mean, if you have the
    personnel there, and right now we are in hurricane season as we
    speak, my question is: How long will it take for you to use the
    mutual agreements LUMA may have at this time--if there is a
    hurricane this weekend, how long will it take for you to bring
    people to the island to fix this?
        Ms. Bahramirad. There has been a lot done in terms of
    preparation for hurricanes that I am very happy to share with
    you. I have been very closely monitoring what has been going on
    today, and as you might have heard, Tropical Storm Fiona, the
    current maximum sustained wind of 50 miles per hour is----
        Miss Gonzalez-Colon [interrupting]. Sorry. I know that. I
    don't have enough time. My question is: The mutual assistance
    agreements that you have in place, when are they going to be
    arriving to the island, and with whom do you have mutual
    assistance agreements right now?
        Ms. Bahramirad. Oh, we have a number of mutual agreements
    in place. We have established an agreement with Caribbean
    Electric Utility Services Corporation, Edison Electric
    Institute, and American Public Power Association. I have been
    in calls with every single one of them making sure that there
    is a process in place. And if an issue happens, they are going
    to be providing support and assistance as part of the process.
        Miss Gonzalez-Colon. What is the deployment time for them
    to reach the island?
        Ms. Bahramirad. So, it depends on the forecast of the
    hurricane. We make calls to those mutual assistance agencies,
    and we inform them. I can tell you that today, our team in the
    morning, they have made those calls. And depending on how the
    storm or hurricane approaches the island, we will inform them,
    in collaboration with PREMB and FEMA, ESF 12, COR3 and a number
    of other governmental agencies.
        In addition to that, there are 120 assets and units
    deployed as part of our preparedness commitment to the island,
    and it is ready for the line workers to be flown to the island
    and help with the restoration of the system.
        Miss Gonzalez-Colon. Ma'am, I know my time has expired. I
    will submit a lot of questions for the record, and we should
    know why we should have LUMA continuing in charge of the grid.
    I am really concerned about the outages in the island, even
    when there is no disaster onsite. So, I am really concerned
    about that.
        Thank you, Madam Chair. I yield back.
        Ms. Titus. Thank you. I am sure there will be a number of
    questions submitted to the record, and we will pass them on to
    you all. I appreciate the answers.
        I have allowed almost everybody to go over the 5 minutes
    because this information is so important. And rather than
    stopping you and coming back and doing a second round, I think
    it makes sense just to get the answers as we go.
        We will now go to Mr. Garcia.
        Mr. Garcia of Illinois. Thank you, Madam Chair.
        This is a question for Director Currie. A number of low-
    income households are forced to move from their communities in
    order to receive reconstruction aid due to the lack of
    mitigation projects in hazard areas. Even if flooding never
    occurred before, during, or after the hurricanes, too many are
    denied help to rebuild their homes, and no mitigation
    alternatives are given.
        My first question is this: In your opinion, has FEMA taken
    the needed steps to consistently integrate hazard mitigation
    into its recovery process, and has there been effective
    planning on the project together with other agencies such as
    HUD to effectively attend to the needs of the most vulnerable
    populations in Puerto Rico?
        Mr. Currie. Quick answer is, no, I don't think enough
    mitigation has been incorporated into the programs. And part of
    that is because of the way the programs were managed in the
    past. Most of these programs were designed to rebuild
    infrastructure the way it was before, not to build past current
    condition for the future. So, I think they have gotten better
    over the last 5 years or so, but there is a long way to go.
        And then, to answer your second question about low-income
    communities, I mean, one of the things we have reported on is
    that FEMA and HUD and others all have not done a very good job
    of considering the impact of these programs, specifically on
    these communities and how the capacity of these communities
    impacts the recovery. And we have made several recommendations
    to try to get these agencies to think a little bit more about
    the impact and how these programs can be targeted to help these
    communities.
        Because every community is different. I think some
    communities have a huge level of capacity and a lot of
    resources to manage recovery and a lot of staff, and others
    don't. And that is not just the case in Puerto Rico and VI, but
    that is the case in certain parts of the States as well.
        Mr. Garcia of Illinois. Thank you for your candid answer,
    disappointing as it may be.
        My second question is a two part. Has the GAO developed and
    published the Disaster Resilience Framework to support analysis
    of Federal opportunities to facilitate and promote resilience
    to natural disasters, part 1? And part 2 is, has it been
    applied to Puerto Rico and with what conclusions?
        Mr. Currie. Yes, sir. The answer to the first question is
    yes. We have issued a Disaster Resilience Framework, and the
    idea behind that is that we think that resilience should be
    built in by decisions by policymakers at all levels throughout
    the process, including before, during, and after a disaster.
    These disasters are terrible, but they also damage a lot of
    infrastructure and provide an opportunity to rebuild that.
    There really would be no other way you could get this much
    funding at one time. So, it is a tremendous opportunity. So,
    yes, we have done that, sir.
        And I am sorry, your second question, again?
        Mr. Garcia of Illinois. The second part was: Have these
    lessons been applied to Puerto Rico and with what conclusions?
        Mr. Currie. Well, I think Congress went a long way in doing
    this in the BBA and trying to build this into the recovery from
    the very beginning, recognizing that we weren't just going to
    be able to rebuild the way things were. We needed to rebuild
    past preexisting condition. However, I just don't think,
    because of some of the complexity and the bureaucracy of these
    processes, it has been easy to incorporate resilience into the
    recovery thus far.
        So, one of my biggest concerns is that, to speed up
    recovery, we are going to bypass some of the resilience
    measures that we could build in, which are a lot more
    complicated to implement.
        Mr. Garcia of Illinois. Thank you.
        And cognizant of my time, I want to switch gears and ask
    Executive Director Laboy the following question regarding
    Vieques. The hospital is taking too long to build back. People
    are dying or having to abandon their communities due to the
    lack of specialized medical care in Vieques, and now even in
    Fajardo. And the provisional infirmary that has been put up in
    place is crassly insufficient.
        What are the main obstacles to advance the reconstruction
    of the hospital, and has COR3 identified other more effective
    ways to provide medical service to the people of Vieques while
    the hospital is built back completely? And if not, what is
    hindering you from doing so?
        Mr. Laboy. Thank you, Congressman Garcia. That is an
    excellent question.
        The first thing is that FEMA obligated the funds for the
    Vieques hospital early in January 2020. And sadly, the
    municipal leadership at the time probably had some challenges
    of how to move forward with the processes that need to be in
    place after the funds are obligated.
        The good news is that when Governor Pierluisi took office
    in January 2021, about the same time that I also entered COR3,
    it was clear that the hospital was going to be a top priority.
    So, we devised a strategy to do the conceptual design of the
    hospital, present it to FEMA, get the approval from FEMA, and
    from there, also secure funding. At that point, the obligation
    was about $39 million for the Federal share. After we were able
    to proceed with the adjustments of insurance, it was actually
    increased to $43 million.
        We worked together with the State agency that dedicates its
    efforts on infrastructure projects, and together, the good news
    is that the old facility was demolished, finally. Actually, it
    was demolished about 1 or 2 months ago. And now, the design-
    build or the request for proposals to finish the design for the
    new hospital and also to construct the new hospital is already
    published, and we are receiving the different proposals from
    the contractors.
        So, it will be awarded according to the Federal procurement
    that applies to this, and then secure the final permitting, and
    then begin construction. It is right now running on schedule.
    And it is expected that it finally will begin construction at
    the end of December this year maybe, but most likely it will be
    early January 2023. And it is going to be built in phases, and
    the last phase should be operational before the end of 2024.
        The obstacle I will say that something related to Mr.
    Currie. I think that once the funds were obligated to the
    municipality of Vieques, I think that there was a gap in terms
    of execution, the capacity to execute on the municipal side.
    Once it changed administration, the new major was able to work
    together with COR3, work together with the Pierluisi
    administration, and things have been turned around positively.
    Now, it is going to be a reality. Construction is going to
    start very soon, and we hope that by 2024, the people of
    Vieques will have what has been deserved, which is access to
    healthcare.
        If I may, Chairman Titus, one question that Congresswoman
    Gonzalez-Colon mentioned about the plans for the grid. For the
    record, LUMA and PREPA have to submit to FEMA and COR3 every
    quarter 90-day plans for the projects, and they also submitted
    a 5-year plan to FEMA and COR3. So, there is a 5-year plan for
    projects associated with the reconstruction of the grid.
        Mr. Garcia of Illinois. And, Mr. Laboy, with the services
    until the hospital is built and operational?
        Mr. Laboy. That is something that has been delegated to the
    Department of Health. It is a top priority, and they have right
    now a plan, an executed plan, that while the hospital is being
    built and hopefully before 2024, it is going to be operational;
    in parallel, the Department of Health has to secure the
    services for healthcare in the municipality of Vieques and also
    Culebra, because Culebra also benefits from these services. So,
    it has been appointed to the Department of Health to ensure
    that it happens.
        Mr. Garcia of Illinois. Madam Chair, thank you for your
    indulgence. I yield back.
        Ms. Titus. Thank you, Mr. Garcia.
        Well, thank you to our witnesses. We have heard that you
    just can't build back to the way it was. It makes no sense.
    With climate change, there is not going to be fewer hurricanes.
    We can expect there may be more, so to build back to the old
    standards just won't do. We have got to build back better and
    take that mitigation into consideration.
        Also, we heard a lot about the renewable energy moving to
    cleaner energy as part of this administration's emphasis.
    Another part of the administration's agenda is an across-
    Government emphasis on justice. And that can be economic
    justice, can be environmental justice, can be social justice.
    So, as we look at building back, we need to keep that always in
    the forefront to be sure that it is built back with
    consideration of environmental justice so some areas don't
    benefit and others are left behind.
        Well, we thank you very much. This has been very
    interesting and something that we needed to do.
        Thank you, Miss Gonzalez-Colon, for helping us with this.
        I would like to ask unanimous consent that the record of
    today's hearing remain open until such time as our witnesses
    have provided answers to questions that will be submitted in
    writing.
        I also ask unanimous consent that the record remain open
    for 15 days for any additional comments and information
    submitted by the Members or by the witnesses that you would
    like to have included in the record.
        Without objection, so ordered.
        And the subcommittee stands adjourned.
        [Whereupon, at 12:05 p.m., the subcommittee was adjourned.]

                           Submissions for the Record

                                  ----------

      Prepared Statement of Hon. Sam Graves, a Representative in Congress
         from the State of Missouri, and Ranking Member, Committee on
                       Transportation and Infrastructure
        Thank you, Chair Titus.
        This hearing is timely, given we are now 5 years out from the
    devastation that struck Puerto Rico and the U.S. Virgin Islands with
    hurricanes Maria and Irma.
        As FEMA's committee of primary jurisdiction, we have worked over
    the years on a bipartisan basis to improve our Nation's emergency
    management system.
        While there have been reforms and improvements to FEMA processes,
    there is still a lot that needs to happen to speed up recovery from
    disasters and build in mitigation.
        I look forward to hearing the updates from our witnesses, including
    progress and challenges, and your suggestions on how we can better
    streamline and speed up the process.
        I look forward to hearing from our witnesses today.
        Thank you, Chair Titus. I yield back.

     Statement of Dawn Bauman, CAE, Senior Vice President, Government and
      Public Affairs, Community Associations Institute, Submitted for the
                           Record by Hon. Dina Titus
     About Community Associations Institute and the Community Association
                                 Housing Model
        CAI is the only international membership organization dedicated to
    inspiring professionalism, effective leadership, and responsible
    citizenship in homeowner associations, condominium associations, and
    housing cooperatives. At CAI, we believe homeowner and condominium
    associations and housing cooperatives (collectively, community
    associations) should strive to exceed the expectations of their
    residents. We work toward this goal by identifying and meeting the
    evolving needs of the professionals and volunteers who serve
    associations, by being a trusted forum for the collaborative exchange
    of knowledge and information, and by helping our members learn,
    achieve, and excel.
        CAI and its 64 chapters provide education, tools, and resources to
    the volunteers who govern community associations and the professionals
    who support them. CAI's 43,000 members include community association
    volunteer leaders (homeowners), community managers, association
    management firms, and other professionals who provide products and
    services to associations. CAI's vision is reflected in community
    associations that are preferred places to call home.
        The community association housing model is prevalent across the
    nation and is a growing component of the national housing stock.
    According to the Foundation for Community Association Research, 74
    million individuals have chosen to make one of America's 355,000
    community associations their home.\1\ Residents are attracted to
    community associations for many reasons including access to amenities,
    proximity to schools, and a stronger sense of community. All community
    association homeowners pay regular assessments to fund the governance
    activities of their association.\2\
    ---------------------------------------------------------------------------
        \1\ Foundation for Community Association Research: Statistical
    Review 2020-2021. Available at https://foundation.caionline.org/wp-
    content/uploads/2021/07/2021StatsReview_Web.pdf.
        \2\ All community associations have three defining characteristics:
    (1) membership is mandatory and automatic for all owners; (2) certain
    legal documents bind all owners to be governed by the community
    association; and (3) mandatory lien-based assessments are levied on
    each owner to fund association operations and services. There are three
    basic forms of community associations: condominiums, cooperatives, and
    planned communities.
    ---------------------------------------------------------------------------
                  Community Associations and Disaster Recovery
        In the wake of a major natural disaster, many community association
    homeowners discover their neighborhood is not eligible for the full
    measure of federal disaster response and recovery resources. Rules
    governing the Federal Emergency Management Agency's (FEMA) Public
    Assistance Program and Individuals and Households Assistance Program
    are designed to support disaster recovery in traditional, non-community
    association neighborhoods. This disparity forces association homeowners
    to absorb significant debris removal costs and prevents the use of
    Individuals and Households Assistance for repairs to essential common
    elements in condominium and cooperative buildings. In areas of our
    nation where housing laws, practices, and traditions vary from those
    anticipated by Stafford Act programs, federal disaster assistance can
    be delayed or inaccessible. CAI supports updating the Stafford Act's
    Public Assistance Program and the Individuals and Households Assistance
    Program to effectively reach our fellow citizens where they live. This
    is all the more critical when housing systems differ from those
    contemplated or accommodated by policymakers when the Stafford Act was
    enacted and its implementing regulations were written.
        Community associations are a new model of housing for our nation,
    evolving and growing over the past 30 years. Because the community
    association housing model was not anticipated by policymakers when
    first designing disaster assistance programs, association homeowners in
    all states and territories of the US., and the District of Columbia
    face large special assessments as their community association seeks
    funds to recover from natural disasters.
        Community associations lack the resources of a municipal
    government, and the sole source of funds are association residents.
    Community association insurance products frequently contain exclusions
    and special conditions regarding debris removal. Policy exclusions and
    limits can lead to lower insurance claims, leaving condominium
    homeowners to fund disaster debris removal and repairs to essential
    common elements like roofs, HVAC systems, and elevator machinery. Non-
    association homeowners do not receive a special tax assessment from
    their municipal government to fund debris removal costs. Non-
    association homeowners may use Individuals and Households Assistance to
    fund uninsured repairs to their home's roof, HVAC system, and utility
    access points. These disaster recovery program disparities extend the
    misery of a natural disaster for community association residents and
    increase recovery costs for community association disaster victims.
             H.R. 5298, The Disaster Assistance Equity Act of 2021
        Rep. Jerry Nadler and Rep. David Rouzer introduced H.R. 5298, the
    Disaster Assistance Equity Act of 2021, to address the disparities in
    federal disaster assistance available to community association
    residents compared to non-association residents. H.R. 5298 allows
    municipal governments to be reimbursed by FEMA for debris removal
    activities in planned communities when a State or local government
    finds that disaster debris in a planned community threatens life,
    public health and safety, or the economic recovery of the community.
    H.R. 5298 further allows condominium and cooperative homeowners to use
    Individuals and Households Assistance to fund repairs to essential
    building elements damaged by a major natural disaster.
        H.R. 5298 enjoys bipartisan support because the legislation treats
    disaster victims fairly. The legislation allows all disaster victims
    access to essential services on an equal basis. H.R. 5298 also enjoys
    bipartisan support based on the growth of the community association
    housing model--the places we choose to live are changing. Federal
    disaster response and recovery statutes must accommodate this change.
        Had H.R. 5298 been law when hurricanes Irma and Maria struck Puerto
    Rico and the U.S. Virgin Islands, community association residents--
    condominium association homeowners and residents in particular--could
    have funded a portion of the difference between insurance claims and
    repair costs with Individuals and Households Program repair assistance.
    As it was, condominium associations and homeowners faced significant
    gaps between insurance claims payments and amounts required to restore
    their homes to habitable status.\3\ H.R. 5298 would have allowed
    condominium homeowners to reduce the gap between insurance claims and
    amounts necessary to repair condominium buildings. Condominiums in San
    Juan, Puerto Rico remain in various states of disrepair, which can lead
    to threats to human life and health and depress the economic recovery
    of the region.\4\
    ---------------------------------------------------------------------------
        \3\ Francis Robles and Patricia Mazzei, ``After Disasters, Puerto
    Ricans Are Left with $1.6 Billion in Unpaid Insurance Claims,'' The New
    York Times, February 6, 2020. Available at https://www.nytimes.com/
    2020/02/06/us/puerto-rico-insurance-tsunami.html
        \4\ Jack Hanks, ``Surfside condo collapse should be a lesson for
    Puerto Rico'' Orlando Sentinel, July 06, 2021. Available at https://
    www.orlandosentinel.com/opinion/guest-commentary/os-op-condo-collapse-
    lessons-for-puerto-rico-20210706-ndlrjwmi4jhj5fuhu7ypbfwqka-story.html
    ---------------------------------------------------------------------------
        CAI urges Congress to enact H.R. 5298. Providing all homeowners
    access to the same disaster benefits notwithstanding differences in
    housing traditions and forms is not special treatment--it's the right
    thing to do.
                                    Appendix

                                  ----------

     Questions from Hon. Dina Titus to Anne Bink, Associate Administrator,
      Office of Response and Recovery, Federal Emergency Management Agency

        Question 1. It has been 5 years since Hurricane Maria and Irma
    struck Puerto Rico and the U.S. Virgin Islands. Although FEMA has
    obligated billions of recovery funds to both locations, very little
    construction has started and full recovery remains a distant goal.
        Although FEMA is primarily responsible for approving funding for
    obligation, what actions, if any, has FEMA taken to assist the
    governments of Puerto Rico and the U.S. Virgin Islands with the
    disbursement of funding?
        Answer. The Federal Emergency Management Agency (FEMA) is aware of
    the liquidity issues affecting the Government of Puerto Rico and is
    working to obligate projects as quickly as possible. FEMA is
    coordinating with the Central Office for Recovery, Reconstruction and
    Resiliency (COR3) to expedite the implementation of projects. This
    assists the Commonwealth with expediting its Requests for Proposal/
    contracts process.
        FEMA is supportive of COR3's Working Capital Advance program, which
    aims to provide the liquidity that sub applicants need to execute
    contracts and begin construction work. The Working Capital Advance
    program originally sought to provide municipalities with a 25 percent
    advance of FEMA obligated funds for permanent projects, the program
    will now provide up to 50 percent of working capital per project, based
    on need, for immediate liquidity to advance recovery forward.
        According to COR3, approximately 2,132 recovery projects are under
    construction and roughly 1,190 are complete. Some of the most
    vulnerable municipalities have the largest funding amounts obligated
    and reconstruction activities in their communities are underway.
    Several roads in Barranquitas, Jayuya, Orocovis, and other mountain
    towns are already repaired or rebuilt, providing residents with safe
    access routes.
        Loiza, one of the most disadvantaged towns on the island, has
    completed projects like parks and community centers. These community
    centers and recreational spaces are the cornerstones of many of the
    island's neighborhoods. The Juan F. ``Cheo'' Lopez Baseball Park in
    Camuy, a town in central Puerto Rico, held its first night game in four
    years with the help of FEMA's obligation, which included funds to
    repair its lighting system. More than 1,000 families in the remote
    towns of Hormigueros and Aibonito now have repaired basketball courts
    with an allocation of over $2.2 million for several facilities. The
    Felix Millan stadium in Yabucoa has been demolished. The bid proposal
    request for the construction of the new stadium is expected to occur
    between January and March 2023. More than a baseball stadium, this
    facility is a local icon and the flagship of the municipality.
        Once funds are obligated, those funds are available to COR3 to
    manage and provide to subrecipients, as appropriate. COR3 is solely
    responsible for ensuring that reimbursements for recovery projects meet
    the statutory, regulatory, and programmatic requirements established by
    FEMA. As the unprecedented recovery continues, FEMA is providing a
    historic level of support to Puerto Rico, both financially and in the
    form of technical guidance. Through continuous interaction and
    communication with COR3 and subrecipients, FEMA can clarify
    documentation requirements and conditions to help avoid delays and
    ensure project formulation processes can move forward. Likewise, FEMA,
    through its Office of Chief Counsel and in close coordination with the
    Procurement Disaster Assistance Team, has provided detailed procurement
    compliance review to COR3 as part of its technical compliance
    assistance. The intent behind this type of review is that projects meet
    not only federal contracting requirements, but state and local ones as
    well.
        FEMA and its federal partners will continue to provide technical
    assistance to COR3 and all subrecipients to ensure recovery continues
    to move forward. To this end, FEMA has an active multi-year interagency
    funding agreement with the U.S. Department of Energy (DOE). Under this
    agreement, DOE--together with FEMA--is providing technical assistance
    to the Commonwealth to identify, review, and prioritize electric grid
    solutions. Through this collaboration, the focus is on increasing grid
    resilience for Puerto Rico communities in line with the Government's
    goal of reaching 100 percent renewable electricity in the next 25
    years. Known as PR100, the overall community-driven study is led in
    close collaboration with DOE. PR100 also aims to improve power sector
    resilience and increase access to more affordable energy and cleaner
    air. The Puerto Rico Technical Coordination Team and the PR100 Advisory
    Group meet monthly to discuss progress and next steps related to this
    unprecedented study. FEMA remains committed to continue working closely
    with the Government of Puerto Rico to advance long-term recovery.
    Response Regarding U.S. Virgin Islands (USVI) Recovery:
        FEMA is aware of the liquidity issues affecting the Government of
    the Virgin Islands and is working to obligate projects as quickly as
    possible. FEMA is coordinating with the Office of Disaster Recovery
    (ODR) and Virgin Islands Territorial Emergency Management Agency
    (VITEMA) to expedite the implementation of projects. This assists the
    territory with expediting their Requests for Proposals/contracts
    process. Once funds are obligated, those funds are available to the
    Grantee to manage and provide to subrecipients, as appropriate.
          Public Assistance: As of September 15, 2022, FEMA has
    obligated $4.3 billion and the Territory has expended/drawn down nearly
    $2.4 billion.
          Hazard Mitigation Grant Program (HMGP): FEMA has
    obligated $138.2 million. The Territory has expended $18.4 million of
    HMGP funding as of September 14.
          +  FEMA has designated another $324.6 million in HMGP funding for
    phase 2 project construction and strategic funds management to assist
    the territory.

        Much of the funding obligated under HMGP is phased to provide
    funding for engineering design; upon phase 1 completion of design, FEMA
    reviews the scope and cost to provide approval to proceed to
    construction. Due to Territorial contracting processes and availability
    of contractors, many of the engineering designs have longer-than-usual
    timelines. FEMA has supported the Territory in expediting the phase 1
    engineering required for many complex projects including supporting the
    Territory's consolidation of engineering design for transportation and
    drainage projects under the Department of Public Works. In contrast to
    the aforementioned process in Puerto Rico, ODR provides Territorial
    disbursement packages to FEMA for review, these include sub-recipient
    invoices. FEMA provides concurrence to the Territory to allow
    reimbursement of project costs in a timely manner.
        To assist in expediting the project scoping and implementation,
    FEMA meets at a minimum twice weekly with the Territory to provide
    guidance and technical assistance. For large priority projects (428
    Public Assistance Alternative Procedures), FEMA and VITEMA have
    established a bi-weekly project management meeting to address questions
    and track the development of the projects. In addition, for projects
    with funding that would be derived from FEMA and its federal partners
    such as U.S. Department of Housing and Urban Development and United
    States Army Corps of Engineers, the FEMA Interagency Recovery
    Coordination office coordinates with the other agencies in support of
    the Territory to assist in expediting project actions. We also continue
    to meet with the Territory to assist in moving projects forward
    including collaboration with the USVI Department of Natural Resources
    to support the territorial sub applicants.

        Question 2. Municipalities and agencies in Puerto Rico have raised
    concerns about costs increases due to inflation. This is of particular
    concern for projects with fixed costs estimates under Public Assistance
    alternative procedures and FAASt. Some officials have noted that they
    will not be able to repair all damages originally identified.
        2.a.  Please explain the extent of cost overruns that FEMA has
    observed for launched FAASt projects in Puerto Rico. What actions may
    FEMA take if actual costs of FAASt projects consistently exceed
    estimates on which FEMA awards are based?
        Answer. To date, FEMA has not seen any examples of project cost
    overruns for the FEMA Accelerated Awards Strategy (FAASt) projects in
    Puerto Rico. FEMA continues to work with the Government of Puerto Rico
    to address any concerns they may have regarding cost overruns.
        FEMA recognized early on that inflation, supply chain, and job
    market issues would have major impacts on the recovery in Puerto Rico
    and USVI. As a result, FEMA includes cost factors in every fixed cost
    estimate for all Public Assistance Section 428 projects. This includes
    a specific adjustment for inflation over the length of the project, and
    a separate adjustment called the Future Price Factor (FPF) to account
    for anticipated changes to labor, materials, and equipment costs
    associated with the anticipated shock to Puerto Rico's and USVI's
    construction industry over the time. These factors are regularly
    updated based on changing conditions, and each fixed cost estimate is
    developed and mutually agreed upon by the Recipient, Subrecipient, and
    FEMA. Additionally, as part of the flexibility of Section 428 projects,
    the Government of Puerto Rico (Recipient) or Subrecipient may use all
    or part of the excess funds to cover overruns on other Section 428
    projects under the same applicant.
        Once an agreement is reached, adjustments to the fixed-cost
    estimate are limited to insurance adjustments, adjustments for approved
    Scope of Work changes associated with Section 406 Hazard Mitigation
    proposals or the outcome of a Bipartisan Budget Act (BBA)-related
    appeal.

        2.b.  Please explain the extent the concern for cost overruns has
    delayed the obligation of alternative procedure projects in the USVI.
        Answer. To date, FEMA has not seen any examples of project cost
    overruns for Section 428 projects in the USVI. However, FEMA has been
    informed of instances where obligated amounts exceeded the public
    requests for proposals, with the difference serving to benefit the
    subrecipient. FEMA continues to work with the USVI to address any
    concerns they may have regarding cost overruns.
        FEMA recognized early on that inflation, supply chain, and job
    market issues would have major impacts on the recovery in Puerto Rico
    and USVI. As a result, FEMA includes cost factors in every fixed cost
    estimate for all Public Assistance Section 428 projects. This includes
    a specific adjustment for inflation over the length of the project, and
    a separate adjustment called the FPF to account for anticipated changes
    to labor, materials, and equipment costs associated with the
    anticipated shock to Puerto Rico's and the US Virgin Islands'
    construction industry over the time. These factors are regularly
    updated based on changing conditions, and each fixed cost estimate is
    developed and mutually agreed upon by the Recipient, Subrecipient, and
    FEMA. Additionally, as part of the flexibility of Section 428 projects,
    the USVI may use all or part of the excess funds to cover overruns
    within each 428 project.
        In addition, FEMA and the USVI have agreed to engage in a Dispute
    Resolution process to address any disagreements in the Section 428
    project's Scope of Work and/or Cost, prior to the fixed cost estimate
    being accepted.

        2.c.  In FEMA's estimate, has the required use of Alternative
    Procedures for most large-scale recovery projects in Puerto Rico proved
    successful?
        Answer. Alternative Procedures provides applicants with the most
    flexibility in order to successfully recover, including applicants in
    Puerto Rico recovering from Hurricanes Irma and Maria. This
    flexibility, when paired with historic investments in FEMA Public
    Assistance funding for Puerto Rico's recovery--including the largest
    permanent work project ever obligated ($9.5 billion)--will drive a
    successful recovery for Puerto Rico.

        2.d.  Would FEMA again require the use of Alternative Procedures
    for large-scale projects for a major disaster, particularly those with
    severity comparable to Hurricane Maria?
        Answer. Regardless of the size of an incident, FEMA continues to
    encourage all applicants as the first option to consider Section 428
    Alternative Procedures for all large permanent work projects in order
    to simplify the delivery of assistance and ensure the ability of
    Applicants to drive their own recovery. Under this process, Section 428
    Alternative Procedures are considered for all large Permanent Work
    Projects. This ensures Applicants have awareness of the opportunities
    and benefits provided by the Alternative Procedures, including:
    flexibility in meeting post-disaster recovery needs, as opposed to
    being limited to rebuilding back to what existed prior to the disaster;
    ability to share funds across all Alternative Procedures Permanent Work
    Projects; ability to retain and use excess funds to reduce risk and
    improve future disaster operations (subject to timely closeout); and
    eligibility for cost-effective hazard mitigation on Replacement
    Projects. Applicants will be able to agree to a fixed cost estimate or
    choose to pursue funding under standard, actual cost procedures.

        2.e.  Hurricane Fiona likely caused additional damage to some 428
    projects for which funds have already been obligated. How will FEMA
    work with COR3 and applicants to adjust the scope of work for these
    projects? Will FEMA consider adjusting the obligations for these
    projects if necessary?
        Answer. FEMA and the COR3 are developing an action plan to address
    Hurricane-related disaster damage caused by Hurricane Fiona to
    facilities that were previously damaged by Hurricane Maria or by the
    earthquakes and had repair work funded under Section 428 of the Robert
    T. Stafford Relief and Emergency Assistance Act (Stafford Act). While
    FEMA cannot adjust the scopes of work or funding amounts for Section
    428 projects obligated under previous disasters, FEMA is making sure
    that the Applicants receive additional funding to address the damages
    specifically caused by Hurricane Fiona as long as this work is also
    eligible for Public Assistance. The Puerto Rico Joint Field Office and
    Joint Recovery Office will continue to provide a coordinated effort to
    address challenges as appropriate.

        Question 3. While progress has been made to obligate funds for PA
    projects in Puerto Rico and the US Virgin Islands very little
    reconstruction work has begun. The territories and RAND have expressed
    concern regarding the shortage of contractors available in the
    territories compared to the number of recovery projects.
        To what extent, and in what industries, has FEMA observed
    shortfalls in local industry and contractor availability critical to
    the completion of federally funded recovery projects?
        What specific actions, if any, could FEMA take to mitigate the
    severity of these shortfalls?
        Answer. There is a limited pool of professional services available
    in Puerto Rico and USVI, including engineering, architecture, and
    construction services. While there are a few larger construction
    companies, the labor pool is also extremely limited, with contractors/
    subcontractors vying for the same persons to perform work.
        There are more than 2,450 projects under construction across Puerto
    Rico and the US Virgin Islands. FEMA bases any observations on
    information provided by the Governments of Puerto Rico and USVI and
    studies like the mentioned RAND report. The RAND report indicates a
    projected shortfall of about 40,000 construction workers, particularly
    foremen, plumbers, and electricians.\1\ While this issue falls under
    the purview of the Governments of Puerto Rico and USVI, FEMA
    participates in discussions with government and industry stakeholders,
    including the Puerto Rico Department of Commerce, to identify ways to
    help the Government of Puerto Rico address this challenge.
    ---------------------------------------------------------------------------
        \1\ Strong, Aaron, Jeffrey B. Wenger, Isaac M. Opper, Drew M.
    Anderson, Kathryn A. Edwards, Kyle Siler-Evans, Jessie Coe, and R. J.
    Briggs, Future Price Forecasting in the Wake of Large-Scale Disasters:
    The Case of Puerto Rico After Hurricane Maria. Homeland Security
    Operational Analysis Center operated by the RAND Corporation, 2022.
    https://www.rand.org/pubs/research_briefs/RBA1116-4.html.

        Question 4. How has FEMA's interpretation of the authorities in the
    BBA changed since its implementation in 2018? Congress intended that
    this authority to enable FEMA to approve alternative procedure projects
    without consideration for pre-disaster damage.
        Is this consistent with FEMA's current interpretation of their
    authority?
        Would FEMA recommend Congress provide authorities like what was
    included in the Bipartisan Budget Act of 2018 to expedite the recovery
    of future catastrophic disasters?
        Answer. FEMA interprets and uses the authority provided by section
    20601 of the BBA as broadly as possible to support the recovery in USVI
    and Puerto Rico. FEMA first put out FEMA Recovery Policy FP-104-009-5,
    Implementing Section 20601 of the 2018 BBA Through the Public
    Assistance Program, in September 2018, then, after Congress further
    amended the provision in 2019, FEMA updated and released version 2 of
    the policy in September 2019. Version 2 further expanded on the
    flexibilities provided in section 20601 and explicitly stated that FEMA
    would maximize the supplemental assistance made available through this
    special authority to improve recovery outcomes for Puerto Rico and
    USVI.
        Given the state of the infrastructure, particularly the electrical
    grids, in Puerto Rico and the U.S. Virgin Islands prior to the
    catastrophic impacts of Hurricanes Irma and Maria, section 20601 of the
    BBA was critical to allow FEMA to support the restoration of critical
    facilities and systems in these territories in a resilient manner.
        FEMA does not believe that any amendments to its Public Assistance
    authorities are necessary to expedite recovery from future events. If
    that changes, we will work with Congress to pursue any such amendment.

        Question 5. Does FEMA recommend Congress provide the agency any
    additional authorities to aid the recovery in Puerto Rico following
    Hurricane Fiona. For example, does FEMA recommend that Congress expand
    BBA authorities?
        Answer. FEMA believes its current Public Assistance authorities are
    sufficient to support a resilient recovery from Hurricane Fiona in
    Puerto Rico. If that changes, we will work with Congress to pursue any
    such amendment.

        Question 6. USVI recovery is often overshadowed by the recovery in
    Puerto Rico. What are the unique challenges that USVI faces and what
    steps are needed to address them?
        Answer. FEMA acknowledges that the needs in the USVI are unique and
    separate from those in Puerto Rico. For example:
          The United States Census reported that the 2020
    population of the USVI (spread across all the islands) was 87,146. The
    total cost estimate for the USVI is $14.3 billion, of which only $4.2
    billion is already obligated (31 percent). Per capita, that breaks down
    to $164,000 per person in the USVI (for comparison, Puerto Rico's per
    capita cost estimate is $11,000).
          According to the Bureau of Economic Analysis, the 2020
    Gross Domestic Product (GDP) of the USVI was only $4.2 billion.
          The GDP of Puerto Rico, a measure of its overall economy
    and capacity to recover, is larger than approximately a dozen states.
    In addition, the USVI reports a lack of project management capacity.
    Individual government agencies, such as the Office of Disaster Recovery
    or the Housing Finance Authority manage grants and various funding
    streams. However, due to the lack of project management capacity, there
    are delays to major infrastructure improvements. Additionally, capacity
    remains a challenge across government agencies. For instance, The
    Department of Public Works, or Waste Management Authority are tasked
    with their day-to-day responsibilities while also implementing
    additional disaster-related projects.

        To this end, the USVI has enlisted the services of consultants to
    assist in the recovery from Hurricanes Irma and Maria.

        Question 7. The Governor Juan F. Luis Hospital is a critical
    hospital in the U.S. Virgin Islands and FEMA had determined that it
    should be replaced (a process known as `determination of prudence for
    replacement'). What is the status of construction and replacement for
    this hospital?
        Answer. The proposed replacement cost estimate and schedule for
    this hospital are being formulated. Several outstanding items have
    recently been agreed to, including number of rooms, size of rooms and
    specific industry standards to upgrade the facility. The current
    challenge is the length of time the applicant anticipates it will take
    to complete the construction. Updates to construction schedules/
    timelines have been ongoing, and FEMA continues to review and validate
    submitted scope of work and costs. We expect to see an updated
    construction schedule in October 2022, and upon review completion the
    FEMA-validated estimate will be provided to the Juan F. Luis Hospital
    for consideration.

        Question 8. In 2020, RAND estimated that USVI faced a shortage of
    more than 5,000 workers needed to efficiently implement recovery
    efforts. What assistance, if any, do you think may FEMA provide to the
    USVI to mitigate this shortfall?
        What authorities, if any, should Congress consider to ensure the
    availability of a qualified, sufficient workforce to execute recovery
    in the USVI?
        Answer. FEMA cannot provide direct workforce assistance to the
    USVI. However, management costs are provided to the Recipient and
    Subrecipients that can be used to secure technical assistance to
    support USVI in identifying and securing an additional qualified
    workforce.
        Should Congress request Technical Drafting Assistance on
    legislative proposals, FEMA would be happy to provide it.

        Question 9. USVI stakeholders report that ``[a]s more projects are
    put out to bid, it is becoming a frequent occurrence for bids to exceed
    the obligated project costs for FEMA funding.'' Has FEMA and/or ODR
    observed consistent, significant cost shortfalls in FEMA PA awards as
    projects are put to bid?
        Answer. To date, FEMA has not seen any examples of project cost
    overruns for Section 428 projects in the USVI. However, FEMA has been
    informed of instances where obligated amounts exceeded the public
    requests for proposals, with the difference serving to benefit the
    subrecipient. FEMA continues to work with the USVI to address any
    concerns they may have regarding cost overruns.

        Question 10. To date, how much money has been obligated for
    Alternative Procedures projects in the Virgin Islands? How much of the
    obligated funds has been disbursed?
        Answer. As of September 15, 2022, FEMA has obligated $870 million
    in Alternative Procedures 428 projects to the USVI. A total of $7.4
    million have been disbursed/drawn down, with $862.9 million remaining
    available to be disbursed/drawn down by USVI.

        Question 11. How many Fixed-Cost Estimates have been completed in
    the Virgin Islands by now, and how many need to be completed?
        Answer. As of September 15, 2022, 127 Fixed-Cost Estimates have
    been accepted for a total of $870 million. There are 77 Fixed-Cost
    Estimates remaining to be accepted, representing approximately $6.8
    billion.

        Question 12. What is the status of the request of the Virgin
    Islands for adjustment of the Future Price Factor to be incorporated
    into Fixed-Cost Estimates to ensure that the actual costs of permanent
    rebuilding on the islands are captured?
        Answer. FEMA completed the study to develop an FPF in July 2019.
    Following the study, FEMA has incorporated the FPF into its Fixed Cost
    Estimates. Recognizing that future price conditions change, the FPF is
    updated quarterly.

        Question 13. Why did FEMA reverse its previous approval of
    permanent rebuilding projects for roads in the Virgin Islands? The
    revisiting of projects already approved has slowed the recovery
    locally.
        Answer. As FEMA's Public Assistance program is, generally, a
    reimbursement program, each project needs to be reviewed for
    eligibility individually and FEMA is unable to issue blanket approvals
    and did not do so for USVI. Upon reviewing the submissions, there were
    39 road projects that were determined to be eligible (approximately
    $60MM in funding) and 41 road projects that were determined to be
    ineligible.

        Question 14. In its most recent annual report, ODR raised concerns
    that the most recent Building Cost Index reflected construction costs
    rising by more than 17%, with no corresponding increase in FEMA's cost
    estimating model for the USVI. Has FEMA observed such cost increases,
    and what specific actions has FEMA taken to update cost estimate models
    to ensure that PA awards accurately estimate the specificities of local
    costs in USVI and inflation?
        Answer. In anticipation of impacts to the local economy and
    fluctuations in labor, material, and equipment costs, FEMA provides a
    quarterly update of the FPF that utilizes data received from several
    sources, including the USVI Bureau of Economic Research and the USVI
    Department of Labor, resulting in a City Cost Index (CCI). The CCI for
    the USVI, allocated to each island, is applied to projects as a
    percentage which increases project costs in anticipation of potential
    cost overruns.

        Question 15. What, if any, actions may FEMA take in the case that
    Applicants in USVI report significant, widespread cost overruns?
        Answer. FEMA recognized early on that inflation, supply chain, and
    job market issues would have major impacts on the recovery in Puerto
    Rico and USVI. As a result, FEMA includes cost factors in every fixed
    cost estimate for all Public Assistance Section 428 projects. This
    includes a specific adjustment for inflation over the length of the
    project, and a separate adjustment called the FPF to account for
    anticipated changes to labor, materials, and equipment costs associated
    with the anticipated shock to Puerto Rico and USVI's construction
    industry over the time. These factors are updated quarterly based on
    changing conditions, and each fixed cost estimate is developed and
    mutually agreed upon by the Recipient, Subrecipient, and FEMA.
    Additionally, as part of the flexibility of Section 428 projects, the
    Government of Puerto Rico (Recipient) or Subrecipient may use all or
    part of the excess funds to cover overruns on other Section 428
    projects under the same applicant.

        Question 16. Will FEMA approve campus-wide prudent replacements
    under circumstances which involve a mix of badly damaged buildings, and
    damaged but repairable buildings, within a single campus of a critical
    facility like a school or a hospital?
        Answer. FEMA may not approve campus-wide prudent replacements. In
    adherence to FEMA policy (per BBA Policy FP-104-009-5 V2), each
    facility/building is considered individually unless it is part of a
    system (electric, water, communications).

        Question 17. In part due to its experience in the islands following
    Hurricanes Irma and Maria, FEMA has decided not to use the Sheltering
    and Temporary Essential Power (STEP) Program during future disaster
    recovery efforts. How does FEMA plan to address emergency sheltering
    needs in the event of future major disasters in communities that face
    challenges and circumstances like those in Puerto Rico and the Virgin
    Islands after Hurricanes Maria and Irma?
        Answer. FEMA may provide financial and direct assistance for
    disaster-caused housing needs not covered by insurance or provided by
    any other source as part of the Housing Assistance provision of the
    Individuals and Households Program. Financial housing assistance is
    funding provided to eligible applicants for temporary lodging expenses,
    rental of temporary housing or repair or replacement of a damaged
    primary residence. Direct housing assistance may also be provided as
    Direct Temporary Housing Assistance in the form of transportable
    temporary housing units (recreational vehicle or manufactured housing
    unit), Multi-Family Lease and Repair, and Direct Lease and Permanent
    Housing Construction.
        FEMA also provides technical assistance for the development of
    sheltering plans with our state, Tribal, and territorial partners. As
    part of this pre-incident support, FEMA Individual Assistance staff in
    the Region 2 Caribbean Area Division are based in Puerto Rico and USVI
    to support mass care planning. For example, USVI has the USVI Mass Care
    Pandemic Implementation Plan that identifies sheltering methods and
    prioritization for certain types and levels of events. And Puerto Rico
    has developed a Mass Care Annex, which includes details on how Puerto
    Rico implements congregate sheltering missions and captures lessons
    learned and best practices.

        Question 18. What specific actions has FEMA taken to ensure
    sufficient emergency housing will be available if needed?
        Answer. Puerto Rico and USVI face unique housing challenges due to
    their geographic location. In addition to the strategies previously
    mentioned, FEMA took the below actions prior to the 2022 hurricane
    season to help to meet survivor needs and provide assistance more
    effectively and consistently:
          Established informed and consistent Enhanced Applicant
    Services to provide proactive and targeted case work for disaster
    survivors. This will help to ensure that survivors in Puerto Rico and
    USVI can navigate the recovery process, maximize assistance from FEMA,
    and are provided with necessary referrals for additional unmet needs
    from other partners and disaster case management.
          Established Direct Housing Implementation Teams comprised
    of employees with experience implementing direct housing missions to
    ensure timely and consistent implementation of direct temporary housing
    for disaster survivors. The teams are ready and operational for
    deployment in the 2022 hurricane season. These teams will also help to
    ensure disaster survivors are provided with disaster case management
    services earlier in their recovery through the modern Disaster Case
    Management approach. In disasters where these teams have been deployed,
    the time to award for State, Tribal, and Territorial Federal awards has
    been significantly decreased.

        Sheltering support available prior to an incident includes
    technical assistance and training to strengthen and enhance
    jurisdictional capacity to support sheltering activities. Available
    technical assistance from FEMA includes:
          An analysis of mass care operations, incorporating best
    practices and lessons learned into preparedness activities.
          Advising shelter operators of applicable laws such as the
    Americans with Disabilities Act.
          Developing of contracts, pre-scripted mission
    assignments, agreements, and other mechanisms to provide resources,
    programs, and services for sheltering during disaster response
    activities.

        Also, the National Mass Care Strategy provides a unified approach
    to the delivery of mass care services by establishing common goals,
    fostering inclusive collaborative planning and identifying resource
    needs to build a national mass care capacity that engages the whole
    community, including underserved and vulnerable populations. Part of
    the National Mass Care Strategy outlines sheltering activities that
    include identifying facilities, providing life sustaining and essential
    services, and supporting the closing of shelters and placement of
    shelter residents into longer-term housing solutions. These activities
    include:
          Congregate shelters to include schools, churches,
    community centers and armories.
          Non-congregate shelters to include hotels, cruise ships,
    dormitories, converted buildings, staying with friends and family or
    other facilities with private sleeping spaces.

          Questions from Hon. Sharice Davids to Anne Bink, Associate
       Administrator, Office of Response and Recovery, Federal Emergency
                               Management Agency

        Question 1. It is my understanding that some number of recovery
    projects are experiencing delays in receiving funding. Some of these
    projects were submitted more than a year ago. These projects could
    provide critical energy resiliency for hospitals, grocery stores,
    hotels, food distribution centers, and hotels--all of which are
    essential in the wake of natural disasters like hurricanes and
    earthquakes. In your estimation, what is causing the delay in approving
    and administering funding for these projects, and what can the Federal
    government do to speed up these projects?
        Answer. The repair or replacement of facilities (e.g., sewer
    replacement, hospital replacement) are technical and complex. FEMA
    continually analyzes its processes to be as efficient and effective as
    possible. Once an applicant submits the Scope of Work for a specific
    project, the typical turnaround time for funds to be approved is on
    average, 70 days.
        In USVI, FEMA's Interagency Recovery Coordination has strengthened
    the long-term recovery with stronger coordination and collaboration
    among multiple federal partners. Economic Development Agency continues
    to provide workshops and webinars in collaboration with national and
    local agencies, business, and nonprofit organization. The IRC group, in
    partnership with Small Business Administration, Virgin Island Economic
    Development Authority, and Small Business Development Center, hosted a
    workshop to present information on the Surety Bond Guarantee Program.
    This resulted in a significant increase in issuance of surety bonds
    from August 2021 to May 2022--resulting in a net increase of more than
    $7 million in Surety Bond Guarantees issued. In Puerto Rico, the FAASt,
    has helped to streamline recovery by allowing critical infrastructure
    projects to be grouped together to expedite energy grid work in Puerto
    Rico. FEMA has provided, and will continue to provide, technical
    assistance to applicants and sub applicants to help accelerate these
    projects.

        Question 2. Are there any legislative changes that we could make to
    improve this process?
        Answer. FEMA does not believe that any amendments to its Public
    Assistance authorities are necessary for expediting recovery from
    future events. If that changes, we will work with Congress to pursue
    any such amendment.

          Questions from Hon. Daniel Webster to Anne Bink, Associate
       Administrator, Office of Response and Recovery, Federal Emergency
                               Management Agency

        Question 1. A key goal of disaster funding is to help States
    rebuild their infrastructure following a disaster. Recognizing the
    benefit to the taxpayer of mitigation, Congress authorized funding to
    ensure States could build in mitigation as they rebuild existing
    infrastructure \2\. However, mitigation is different than funding
    completely new and duplicative infrastructure. Building in mitigation
    is building back existing infrastructure to more resilient standards.
    For example, despite the United States Virgin Islands' (USVI) existing
    Liquid Propane Gas (LPG) system, FEMA may be pushing for USVI to
    transition to solar in the rebuilding.
    ---------------------------------------------------------------------------
        \2\ See 42 U.S.C. Sec. 5133; 42 U.S.C. Sec. 5172; 42 U.S.C.
    Sec. 5189f; 42 U.S.C. Sec. 5170c
    ---------------------------------------------------------------------------
        1.a.  Is FEMA encouraging USVI and any other grantees to convert to
    solar or any other energy source than what they had existing prior to
    disaster? If so, how and please provide citations to authorities on
    which such actions are based.
        Answer. FEMA's role is to support the priorities of USVI and guide
    them on how they can leverage FEMA funding. FEMA is coordinating with
    the USVI on its territory-wide mitigation strategy to establish
    alternate generation, including solar and wind power, to reduce
    dependency on fossil fuel, diversify power generation and resilience,
    and to lower costs to the consumers who pay some of the highest
    electrical rates in the world. The authorities allowing FEMA to fund
    these types of actions are found in sections 404 and 406 of the
    Stafford Act and codified under 44 CFR Sec. Sec.  206.226(e) and
    206.434(d). Under the HMGP, FEMA includes the funding of microgrids as
    an approved mitigation action. A microgrid is a self-sufficient energy
    system that serves a discrete geographic footprint, such as a college
    campus, hospital complex, business center or neighborhood. Within
    microgrids are one or more kinds of power generation technologies (e.g.
    solar panels, wind turbines, combined heat and power, generators) in
    addition to energy storage, typically from batteries.

        1.b.  What is FEMA's role and what are its policies on funding new
    systems rather than rebuilding and fixing the ones that exist? Please
    provide copies of relevant policies.
        Answer. FEMA's Public Assistance Program provides several options
    for restoring disaster-damaged infrastructure. If an applicant
    determines that the public welfare is not best served by restoring the
    function of a damaged facility, it may decide to replace it with a
    different facility. This is called an Alternate Project. In other
    cases, an applicant may decide it wants to make improvements to a
    facility beyond repairing the disaster damage. This could include
    replacing the facility with a new facility that serves the same
    function (e.g., replacing a damaged elementary school with a new
    elementary school). This is called an Improved Project. In both cases,
    these are decisions the applicant and FEMA make to serve the
    community's needs. Eligible funding in both cases is capped based on
    what it would have cost to repair the disaster damage (44 CFR Sec.
    206.203(d), FEMA Public Assistance Program and Policy Guide (PAPPG
    Version 3.1 Chapter 2.VII).
        In some cases, the damage to a facility is so extensive that FEMA
    and the applicant work together to determine whether it could be
    eligible for replacement instead of repair. This is referred to as the
    repair vs. replacement determination (50 percent Rule, 44 CFR Sec.
    206.226(f)). However, even if replacement is determined to be the more
    prudent approach, the applicant can still choose to repair the
    facility, but FEMA will limit the eligible cost to the estimated cost
    to repair or replace, whichever is less.
        In other instances, federal/state/local laws would prohibit
    substantial work from taking place in disaster-prone areas or a
    facility may be subject to repetitive heavy damage. In those cases,
    FEMA may approve a relocation out of the disaster damaged area, which
    would typically involve reconstructing the facility in an alternate
    location (44 CFR Sec.  206.226(g);), PAPPG Version 3.1 Chapter 2.VII).

        1.c.  What funding has FEMA provided to USVI for new solar systems?
    Were these systems damaged by the hurricanes or are they new systems?
    If new, did FEMA assess the necessity of new systems given existing
    power generation capability?
        Answer. FEMA has obligated over $10.5 million for the design phase
    (Architectural/Engineering (A/E) obligations) for three new microgrids
    under the USVI Disaster Declaration for Hurricane Maria (FEMA-4340-DR-
    VI).
    1. STX St Croix: DR 4340-0063: $4,486,720 A/E Obligated; 100 percent
            Federal Share under HMGP (404)
        The first of these three microgrids is located on St Croix. The
    purpose of the Western St. Croix Microgrid Project is to provide a
    stable and resilient alternative energy source to the western portion
    of St. Croix. The microgrid will be designed and constructed to operate
    with the existing Water and Power Authority grid, including an 18
    megawatt (MW) solar power generation photovoltaic plant and a 20MWh
    battery energy storage system (BESS). The estimated project cost is
    approximately $130 Million.
    2. STT St Thomas: DR 4340-0064: $4,352,634 A/E Obligated; 100 percent
            Federal Share under HMGP (404)
        The second microgrid located in St Thomas includes wind turbine
    power generation. The purpose of the St. Thomas Bovoni Eastern BESS &
    Microgrid project is to provide an alternative energy source to a
    portion of southeastern St. Thomas, currently only serviced by the
    Randolph Harley Power Plant. The proposed HMGP project will include the
    construction and installation of a 9.9 MW wind power generation plant
    and battery energy storage system. This system would cost approximately
    $116 million, of which FEMA's HMGP anticipates funding approximately
    $59 million of this microgrid; the wind turbines would be funded
    through a partnership between USVI Water and Power Authority and a
    corporate partner.
    3. STJ St John Microgrid: $1.8 million A/E Obligated; 90/10 percent
            cost share (approx. $1.62 M Federal Share) under Public
            Assistance 406 funding
        A third microgrid on St John is also approved for design. This
    microgrid will be funded under section 406 of the Stafford Act, under
    the Public Assistance Program section 406 hazard mitigation, to include
    a solar array for power generation. This project is currently approved
    for design and is projected to cost $15 million. The hybrid microgrid
    would consist of the installation of two previously approved 4-MW
    stand-alone generators, two 2-MW solar arrays, and two 2-MW / 8-MW
    lithium-ion battery energy storage system (BESS). The microgrid would
    mitigate future similar damage by ensuring continued power and reducing
    damage experienced to critical facilities due to a loss of power during
    and after similar natural disasters. In a July 6, 2020 response letter,
    FEMA granted approval for the Architectural and Engineering component
    of the project.

     Questions from Hon. Jenniffer Gonzalez-Colon to Anne Bink, Associate
       Administrator, Office of Response and Recovery, Federal Emergency
                               Management Agency

    Power Grid:

        Question 1. FEMA has allocated $9.5 Billion in Federal Funding for
    the rebuilding and upgrading of the Puerto Rico Electric Grid, and is
    working with the Department of Energy in the PR100 study to determine
    the best way to achieve 100% renewables goal.
        1.a.  What can you tell us briefly about the status of FAASt
    funding, and the timelines involved?
        Answer. In 2020, FEMA announced the FAASt, which allows critical
    infrastructure projects to be grouped together in order to expedite
    energy grid work in Puerto Rico. As one of the largest and most complex
    disasters in FEMA history, Hurricane Maria provided an opportunity to
    implement FEMA's FAASt to help streamline recovery projects.
        Due to the volume of inspections and the time required to finalize
    cost estimates for the disaster-damaged assets of the Puerto Rico
    Electric Power Authority (PREPA), FEMA and COR3 agreed to use a
    Statistical Sampling Methodology to arrive at fixed cost estimates.
        This led to the obligation of four FAASt projects. $9.4 billion for
    PREPA, $3.6 billion for the Puerto Rico Aqueduct and Sewer Authority,
    $2 billion for the Puerto Rico Department of Education, and $554
    million for the Puerto Rico Public Housing Administration.
        The FAASt approach provides a recovery budget from which Applicants
    can plan their long-term recovery. Unlike the standard procedures that
    govern Public Assistance projects, in which the awards are based on the
    costs of the actual work undertaken, the FAASt approach allowed for the
    acceptance of an initial Fixed Cost Estimate, where the awards were
    capped based on up-front and mutually agreed-to estimates of the cost
    of the work to be done. This approach reduces costs, encourages timely
    completion of Public Assistance projects, and allows Applicants to
    complete projects on basis of need rather than pre-disaster design.
    FEMA is currently working with COR3 and the Government of Puerto Rico
    to look for opportunities of improvement in the post-award processing
    of the recovery projects' scopes of work and the addition of mitigation
    funds.
        The FAASt project obligation for the energy sector required PREPA
    to submit a workplan to COR3 and FEMA within 90 days of project
    obligation and provide an update every 90 days thereafter. The plan
    requires a list of projects to be submitted to FEMA for evaluation
    along with the Subrecipient's priorities. The initial plan and the
    subsequent updates have been presented in a timely manner. FEMA has
    provided, and will continue to provide, technical assistance to help
    expedite recovery.

        1.b.  Have the Action Plans and the quarterly reviews been
    presented in a timely manner?
        Answer. Yes, the action plans and quarterly reviews have been
    presented in a timely manner.

        1.c.  How many projects have been submitted? How much funding do
    they represent?
        Answer. As of September 15, 2022, a total of 77 Scopes of Work have
    been sent from PREPA/LUMA Energy (LUMA) to FEMA. Of the 77 submitted,
    45 have already been approved, representing roughly $1.3 billion. The
    32 Scopes of Work that have not yet been approved are either under
    review by FEMA or require additional information from PREPA/LUMA so
    that the project can be processed. The funding can vary on these
    projects until a complete Scope of Work is provided and the project is
    signed.
        These scopes of work are part of FEMA's FAASt, where FEMA obligated
    a $9.5 billion budget from which PREPA can plan its recovery projects.
    This funding does not include the additional funding available for
    hazard mitigation. Once an energy FAASt subproject is approved, the
    funds that correspond to that scope of work are transferred from the
    original ``donor'' project, which is the $9.5 billion obligation, to
    the subproject.

        1.d.  Is LUMA in any way involved in determination of use of this
    funding?
        Answer. Yes, PREPA authorized LUMA, its Operator, to act as its
    agent in connection with any federal funding requests related to the
    Transmission and Distribution System submitted to FEMA. Though LUMA is
    very involved, the ultimate responsibility on energy grid projects lies
    with PREPA as the Subrecipient. This is related to all FEMA funding
    streams to be used for grid recovery, rebuilding, or mitigation, not
    just FAASt projects.

        1.e.  Counting not just the FAASt funding but also all FEMA funding
    streams to be used for grid recovery or rebuilding or mitigation: How
    many electric grid projects have been submitted, obligated, approved,
    and disbursed for? What is the total amount under each stage as of
    today?
        Answer. In total, 137 electric grid projects have been obligated
    for PREPA for over $11.4 billion (including just over $1.9 billion in
    emergency protective measures during the initial response after
    Hurricane Maria in 2017 and 2018). As of September 15, 2022, according
    to COR3's Transparency Portal, COR3 has disbursed over $1.67 billion to
    PREPA.
        Each project approved by FEMA must have the prior approval of the
    Puerto Rico Energy Bureau, which at the same time must be consistent
    with the Puerto Rico Integrated Resource Plan.

    Energy Policy:

        Question 2. Groups in the Island and mainland have demanded that
    FEMA deny funding to anything that is not distributed renewables, or
    even that Congress should command that.
        Is it within the purview of FEMA to impose energy policy directly
    or through denial of funding?
        Is it wise to micromanage this from DC, or should that be subject
    to Puerto Rico's resources plan, and following the science?
        Answer. The use of non-renewable energy sources is not a factor in
    determining eligibility for FEMA's Public Assistance Program funding
    for the repair and restoration of disaster-damaged facilities.

        Question 3. Are there any FEMA funds obligated or allocated to
    Puerto Rico at any risk of being clawed back or of being lost because
    the work is not done? If so, we would require specifics of which are
    most time critical.
        Answer. There are no funds from FEMA that are currently obligated
    or allocated to Puerto Rico, which are at risk of being lost because
    the work was not complete. In September 2022, FEMA approved another
    extension for the Period of Performance for all Permanent Work Projects
    for Maria until March 20, 2023. Time Extensions for Emergency Work (Cat
    A & B) projects are reviewed on a case by case basis. The only
    conditions in which funds may be at risk is if the entity fails to
    comply with the US Constitution, federal statutes, regulations, or the
    terms and conditions of the federal award.

    Small Projects:

        Question 4. Mayors in towns in Puerto Rico bring up a need for
    enabling communities to attend to immediate needs for so-called ``small
    projects'' that can be managed through simplified procedures. Today
    that is a project under $124,000 which with rising costs is now too
    easily exceeded.
        Does the agency support HR 5641, the SPEED Recovery Act, recently
    passed in the House, that increases to $1 million the threshold for
    eligibility for assistance for what qualifies as a small project under
    the Stafford Act?
        Answer. Simplifying the Public Assistance Program is an Agency
    priority. To that end, on August 3, 2022, FEMA published a final rule
    raising the small project threshold to $1 million, to be adjusted for
    inflation annually thereafter. Subsequently, on October 10, 2022 the
    SPEED Recovery Act was enacted into law, also directing FEMA to raise
    the small project threshold to $1 million.

        Question 5. Not just with the electricity issue, but with every
    other area of rebuilding: There is concern that with inflation, supply
    chain and job market issues that have developed in the past 3 years,
    the estimates upon which obligations were made may no longer suffice
    for completion of the work for which they were approved.
        How is this to be addressed, how should it be addressed, how CAN it
    be addressed?
        Are we stuck with ``this is what you have, do what you can?'' Or
    will it be required to change the rebuilding plans and potentially
    delay even more the start of work?
        Answer. FEMA recognizes that inflation, supply chain, and job
    market issues would have major impacts on the recovery in Puerto Rico
    and USVI. As a result, FEMA includes cost factors in every fixed cost
    estimate for all Section 428 projects. This includes a specific
    adjustment for inflation over the length of the project, and a separate
    adjustment called the FPF to account for anticipated changes to labor,
    materials, and equipment costs associated with the anticipated shock to
    Puerto Rico's and USVI's construction industry over the time. These
    factors are updated quarterly based on changing conditions, and each
    fixed cost estimate is developed and mutually agreed upon by the
    Recipient, Subrecipient, and FEMA. Additionally, as part of the
    flexibility of Section 428 projects, the Government of Puerto Rico
    (Recipient) or Subrecipient may use all or part of the excess funds to
    cover overruns on other Section 428 projects under the same applicant.

        Question 6. Mayors in rural Puerto Rico continue to address us
    questions about rebuilding of local road and bridge infrastructure. I
    want to ask the agency to provide a substantive, municipality by
    municipality report on FEMA-funded road and bridge reconstruction:
    location, funding, status, obligation date.
        Answer. A municipality-by-municipality report is attached. For
    supplemental information please check out the COR3 website: Puerto Rico
    Disaster Recovery Transparency Portal--COR3 (pr.gov).
        [Editor's note: The municipality-by-municipality report is retained
    in committee files.]

    Payments and Chargebacks:

        Question 7. When FEMA makes a mistake in granting aid, and reverts
    the decision then requires the grant to be given back, how do we deal
    with a victim who is unable to pay back, when they may have already
    spent the aid to rebuild? HR 539, by Mr. Graves of Louisiana and Ms.
    Gonzalez-Colon, is pending in the Senate and designed to prevent that.
        What steps is FEMA taking to ensure that decisions on approval of
    both public and individual assistance is done both promptly and
    accurately?
        Answer. FEMA is required to take action to identify and recover
    improper payments, whether made in error or obtained by fraud. FEMA
    employs a deliberate process to recover payments where disaster
    assistance was given to applicants who were not eligible for some or
    all the money they received. This process was developed to minimize the
    burden on the applicant to the greatest extent possible.
        If/when FEMA determines assistance was given to applicants who were
    not eligible for some or all of the money received, FEMA program staff
    notifies the applicant in writing and with a phone call of their
    potential debt and their right to appeal the decision. After the
    applicant exhausts their appeal rights, or the period to appeal the
    debt expires, a debt is then officially established. The applicant then
    receives a letter from the FEMA Finance Center to provide information
    on next steps available to them and their repayment options. These next
    steps include requesting payment arrangements, compromise, and/or a
    waiver of the debt. FEMA may compromise the value of the debt, up to
    the full amount, when it determines it cannot collect the debt because
    of an applicant's inability pay. FEMA considers special factors like
    the applicant's age, income and health in making its determination. If
    the applicant does not qualify for a full compromise, FEMA will review
    an applicant's waiver request. Where an overpayment was based on FEMA's
    error and there was no fault by the applicant, FEMA will grant a waiver
    where collection of the debt would be against equity and good
    conscience.

        Question 8.a. There is a perception in Puerto Rico recovery that
    different parties move slowly out of not daring to act without absolute
    certainty that FEMA approves and will not change a decision, or not
    being sure if the BBA 2018 provisions for ``building back better''
    really extend to the sites being inspected.
        Answer. The majority of FEMA assistance is provided via automated
    processes, based on information provided by individuals when they
    register for assistance, and checked against eligibility criteria. Some
    forms of assistance do require manual review and processing. Staff that
    process these forms of assistance receive training, undergo quality
    control reviews, have automated pop ups and error checks in the
    processing system and have access to various technical assistance and
    support groups to help prevent errors.

        Question 8.b. How can we make it easier for those on the front line
    to feel sure that their decisions will stand?
        Answer. The Office of Response and Recovery's Field Operations
    Directorate is working on building a workforce readiness cycle that
    accounts for sustained increases in operational tempo. Part of this
    initiative includes a focus on improved training and qualification,
    which will help FEMA employees feel more prepared for deployment to
    disaster sites.
        Every recovery is unique, and FEMA works closely with survivors on
    a case-by-case basis for individual assistance, and a project-by-
    project basis for public assistance, to ensure needs are met and
    recovery is supported. Should Congress request Technical Drafting
    Assistance on bills like HR539, FEMA would be happy to provide it.

    GAO Reports:

        Question 9.a. GAO reported that workforce-related issues impacted
    the quality of recovery services. In January 2022, GAO identified
    factors limiting FEMA's workforce readiness of high turnover rates,
    burnout due to increased pace of disasters, and low morale have made it
    challenging for FEMA's workforce to implement the COVID-19 funeral
    assistance program.
        How has FEMA addressed these findings?
        How can Congress help the Agency do so better?
        Answer. FEMA is working on multiple initiatives to address the
    findings of the Government Accountability Office (GAO) report. The
    Office of Response and Recovery's Field Operations Directorate is
    leading the charge on building a workforce readiness cycle that
    accounts for sustained increases in operational tempo. More
    specifically, this initiative is focusing on ensuring effective
    recruitment and retention, improved training and qualification,
    predictable deployment and demobilization, and support for our
    workforce with adequate rest/reset periods during and between
    deployments for development and retention.
        Additionally, as part of the FEMA Administrator's Annual Planning
    Guidance, Individual Assistance is implementing a workforce
    modernization strategy. This work focuses on increasing the staff to
    meet the demand for most minor to moderate disasters without the need
    for just in time augmentation staffing solutions. On an annual basis,
    80 percent of disasters are classified as a Type II or Type III event.
        Despite its challenges, COVID-19 Funeral Assistance was an
    extraordinary form of assistance provided during an unprecedented
    pandemic. FEMA developed a specific structure to implement COVID-19
    Funeral Assistance which required additional requirements for the
    workforce and additional training. As a result of this work, FEMA has
    been able to provide $2.8B to more than 551,000 individuals for COVID-
    19 Funeral Assistance.
        FEMA continues to identify opportunities and resources necessary to
    invest both in our workforce and technology advancements necessary to
    serve our survivors.

        Question 9.b. In a report on recovery efforts in Puerto Rico of May
    2021, GAO made two recommendations: (1) That FEMA should, in
    coordination with the Government of Puerto Rico and other federal
    agencies, identify and assess risks to the remainder of the recovery,
    including internal and external factors such as capacity to carry out
    projects. For example, taking into consideration if we have the
    resources to start and finish projects within a time limit or if more
    time is needed. (2) That FEMA should identify potential actions to
    manage risks to the remainder of Puerto Rico's recovery and
    continuously monitor risks.
        Same questions: what follow-up has there been to these
    recommendations?
        How can Congress help the Agency do better?
        Answer. GAO recommended that the FEMA Administrator, in
    coordination with the Government of Puerto Rico and relevant federal
    agencies:
          Recommendation 1: Identify and assess the risks to the
    remainder of Puerto Rico's recovery, including internal and external
    factors, such as Puerto Rico's capacity to carry out projects.
              FEMA's Response: FEMA concurred with this recommendation and
            in March 2021, FEMA Region 2, in coordination with the Federal
            Disaster Recovery Coordinator and the Government of Puerto
            Rico, started a formal risk assessment process modeled after
            FEMA's enterprise risk management framework. FEMA also
            coordinated with relevant federal agencies, as appropriate,
            while continuing the risk assessment process to identify and
            assess the risks to the remainder of Puerto Rico's recovery,
            including internal and external factors.
              Status: FEMA leadership from Region 2, Headquarters, and the
            Joint Recovery Office, met with COR3 leadership for a weeklong
            summit. During this conference, FEMA introduced the Risk
            Framework Plan and updated implementation deadlines outlined in
            Region 2's ``Interim Milestones'' within the approved September
            2022 Estimated Completion Date (ECD) extension memo request.
            The ECD for this work is March 31, 2023.

          Recommendation 2: Identify potential actions to manage
    the risks to the remainder of Puerto Rico's recovery and continuously
    monitor risks.
              FEMA's Response: FEMA concurred with this recommendation, and
            through its risk assessment process FEMA Region 2 identified
            potential actions to manage risks to the remainder of Puerto
            Rico's recovery. FEMA Region 2 will also develop a process to
            ensure continuous monitoring of risks.
              Current Status: FEMA continues to collaborate with the
            Government of Puerto Rico to provide viable solutions to risks
            identified in the Risk Framework Plan and develop a plan for
            consistent updates to monitor risk. The ECD for this work is
            March 31, 2023.

        FEMA has identified the following Interim Milestones in the
    execution of the Framework:

    ------------------------------------------------------------------------
                Interim Milestones                Estimated Completion Date
    ------------------------------------------------------------------------
    1. Risk management Stakeholder Meeting      August 30, 2022--Complete.
     with COR3.
    2. Plan Management Efforts: Update all      October 30, 2022--Complete.
     deadlines in draft.
    3. Adopt Plan and Continuous Update         January 30, 2023.
     Schedule.
    ------------------------------------------------------------------------

        During the next quarter, Region 2 will conduct working sessions
    with COR3 to finalize the Framework, coordinate and monitor the
    execution of mitigation strategies.

        Question 10. A complaint we have received is that there are times
    when denials of assistance are caused by some incomplete documentation
    at an early stage of the process, but that is not notified until after
    the denial.
        How can we update processes so that when there are necessary
    documents missing, they are requested it immediately, instead of
    waiting until late in the process?
        Answer. FEMA continually reviews our policy and processes to remove
    barriers to FEMA programs through a people-first approach. As part of
    this effort, FEMA implemented policy and procedural changes that
    reduced administrative burden, enhanced access to disaster assistance
    and expanded eligibility for marginalized and underserved populations.
    Some of these key changes included re-evaluating automated third party
    data matching verification for identity, utilizing past disaster data
    from FEMA's system of record to verify occupancy and ownership,
    authorized inspectors to view and approve occupancy and ownership
    verification documentation, expanded the forms of documentation to
    prove ownership and occupancy, and allowed as a last resort self-
    certification of occupancy and ownership for mobile homes and travel
    trailers and self-certification of ownership for heirship properties.
        In addition to these changes, FEMA is also working to make further
    enhancements to the determination process as part of the next update to
    FEMA's Individual Assistance Program and Policy Guide. FEMA anticipates
    that this Guide will be sent out for public comment in Spring 2023. As
    part of FEMA's ongoing efforts to remove barriers and improve the
    service provided to survivors, FEMA also established informed and
    consistent Enhanced Applicant Services to provide proactive and
    targeted case work for disaster survivors for the 2022 Hurricane
    Season. This ensures that survivors can navigate the recovery process,
    maximize assistance from FEMA and be provided with necessary referrals
    for additional unmet needs from other partners.

        Question 11. Should Congress work towards creating a ``one stop''
    process for disaster response and recovery? So that individuals and
    entities governments can submit all their information just once, in one
    format, be told right then if it is all in order, and not have to keep
    submitting different applications with different information and
    different timelines to different agencies?
        What would be possible obstacles to such an action?
        Answer. Should Congress wish to propose such language, FEMA would
    be happy to provide technical drafting assistance. For example, FEMA
    has provided technical drafting assistance on H.R. 8416, the Disaster
    Survivors Fairness Act, since it was introduced in the House in July
    2022. Possible obstacles to legislation creating a ``one stop'' process
    is that Congress has authorized many different types of programs
    responsive to response and recovery from a disaster, and such
    authorities drive different information and documentation requirements.
        Additionally, FEMA is working to simplify programs and reduce
    barriers to improve customer experience and deliver simple, seamless,
    and secure delivery of federal assistance. In part, this includes work
    to simplify the registration process through simple, plain language,
    needs-based forms to apply for assistance.

        Question 12. As we speak, we are watching out for a tropical storm
    which could leave large segments of isolated populations without
    electric power, especially the case in our rural areas.
        A concern that has been raised about procurement requirements is if
    the technological advancements may be faster than the process for
    including some technologies in the agencies' approved lists, or the
    items that ARE in the approved lists may not be available at the time
    of need. For example light portable solar power capabilities, flexible
    panels and such to power communications equipment.
        Can we count on DHS and FEMA to enable local first responders and
    local governments the capability of purchasing state-of-the-art solar
    power products that would be available but may not be in the pre-
    approved list, if they meet the performance requirements, the made in
    America requirements and so forth?
        Answer. Yes. When contracting for Presidentially declared
    emergencies and disasters, FEMA follows Federal Acquisition Regulation
    Part 18 and either sets aside procurements for local area businesses or
    includes an evaluation preference whenever possible and practicable.
        Additionally, The Stafford Act ensures local businesses are given
    preference during emergencies, and provides for local area set-asides
    to ensure that contractors in disaster areas are given preferences to
    federal contracts in response to a major disaster or emergency. FEMA's
    Office of the Chief Component Procurement Officer is committed to using
    local firms in disaster areas to the maximum extent practicable. As set
    forth in FAR 26.204, 42 U.S.C. 5150(b)(1) requires that, subsequent to
    any Presidential declaration of a major disaster or emergency, any
    expenditure of Federal funds, under an emergency response contract not
    awarded to a local firm, must be justified in writing in the contract
    file.

     Questions from Hon. Dina Titus to Chris P. Currie, Director, Homeland
          Security and Justice, U.S. Government Accountability Office

        Question 1. Liquidity constraints among Public Assistance Program
    Applicants in the U.S. Virgin Islands and Puerto Rico have been a
    longstanding concern.
        1.a.  What specific actions has FEMA taken to ensure that funding
    is available to Applicants to launch obligated projects? What
    additional actions could FEMA take towards this end?
        Answer. In our body of work on disaster recovery in the U.S. Virgin
    Islands (USVI) and Puerto Rico, we have identified difficulties in
    providing initial construction funding for projects due to funding
    liquidity constraints and FEMA's actions to address them. Specifically,
    in our May 2021 report, we identified risks that could affect
    construction of recovery projects in Puerto Rico due to financial
    austerity measures its government put in place beginning in August
    2015.\1\ To address these risks, we recommended in our May 2021 report
    that, in coordination with the government of Puerto Rico and relevant
    federal agencies, FEMA identify and assess the risks to the remainder
    of Puerto Rico's recovery, including internal and external factors,
    such as Puerto Rico's capacity to carry out projects. In addition, we
    recommended that FEMA identify potential actions to manage the risks to
    the remainder of Puerto Rico's recovery and continuously monitor risks.
    ---------------------------------------------------------------------------
        \1\ GAO, Puerto Rico Recovery: FEMA Made Progress in Approving
    Projects, But Should Identify and Assess Risks to the Recovery, GAO-21-
    264 (Washington, D.C.: May 19, 2021).
    ---------------------------------------------------------------------------
        In response, the U.S. Department of Homeland Security (DHS)
    reported that FEMA, in coordination with the government of Puerto Rico,
    started a formal risk assessment process modeled after FEMA's
    enterprise risk management framework. FEMA reported that it completed
    its risk assessment process in November 2021. The agency has also taken
    additional steps toward addressing these recommendations by drafting a
    risk assessment plan for Puerto Rico's disaster recovery and developing
    plans to review it with Puerto Rico government officials before its
    anticipated adoption in January 2023. Further, FEMA has set risk
    assessment related goals for FEMA personnel involved in the grant
    funding process for Puerto Rico. As part of our ongoing work, we plan
    to identify and report on FEMA's actions to address challenges to
    providing initial construction funding for recovery projects in Puerto
    Rico.
        In addition, we reported in May 2021, that to help address
    challenges and expedite obligations, FEMA implemented changes to the
    Public Assistance program in Puerto Rico by instituting a new award
    strategy, known as FEMA's Accelerated Award Strategy (FAASt), for
    certain recipients (August 2019). FAASt allows these recipients to use
    a sample of the information needed to extrapolate costs and develop a
    fixed cost estimate for permanent work projects. This is different from
    the non-accelerated approach where the costs for each damaged site are
    calculated to create the fixed cost estimates.
        Using the accelerated award strategy, FEMA approved $10.7 billion,
    $4.2 billion, and $2.35 billion in fixed cost estimates for Puerto
    Rico's Electric Power Authority, Aqueduct and Sewer Authority, and
    Department of Education, respectively, and obligated $9.46 billion,
    $3.66 billion, and $2.06 billion in federal share, respectively as of
    January 15, 2021. Under this approach, the obligation of the fixed cost
    estimate works as a recovery budget rather than authorization for
    construction of projects. Puerto Rico agencies must still submit
    documentation to FEMA for review and approval of individual projects.
    This is different from the non-accelerated approach where projects are
    approved along with the obligation of funds.
        In our ongoing work, our preliminary observations are that the
    FAASt process has permitted obligation drawdowns for architecture and
    engineering studies and design work prior to the construction of
    projects. This allows for the reimbursement of grant subrecipients
    earlier in the grant process and affords the opportunity for
    subrecipients to reuse funds in subsequent phases of recovery. We plan
    to monitor and report on FAASt funding obligations and disbursements
    for recovery projects as part of our ongoing work.

        1.b.  What authorities, if any, should Congress consider to address
    the strains that FEMA's reimbursement-based assistance model places on
    Applicants with few financial resources?
        Answer. We have not specifically examined this issue; however, our
    body of work on disaster recovery has identified opportunities for
    Congress to streamline the appropriation of disaster recovery funding--
    specifically the Department of Housing and Urban Development's (HUD)
    Community Development Block Grant Disaster Recovery (CDBG-DR) funding.
    In March 2019, we reported that, due to the lack of permanent statutory
    authority, CDBG-DR appropriations require HUD to customize grantee
    requirements for each disaster in Federal Register notices--a time-
    consuming process that has delayed the disbursement of funds.\2\ The ad
    hoc nature of CDBG-DR has created challenges for CDBG-DR grantees, such
    as lags in accessing funding and varying requirements. CDBG-DR grantees
    have also experienced administrative challenges not related to the lack
    of permanent statutory authority, such as challenges with grantee
    capacity, procurement, and improper payments. HUD officials, at the
    time, said that permanently authorizing CDBG-DR would allow HUD to
    issue permanent regulations for disaster recovery.
    ---------------------------------------------------------------------------
        \2\ GAO, Disaster Recovery: Better Monitoring of Block Grant Funds
    Is Needed, GAO-19-232 (Washington, D.C.: Mar. 25, 2019).
    ---------------------------------------------------------------------------
        We recommended that Congress should consider legislation
    establishing permanent statutory authority for a disaster assistance
    program administered by HUD or another agency that responds to unmet
    needs in a timely manner and directing the applicable agency to issue
    implementing regulations. A bill introduced and passed by the House of
    Representatives in the 116th Congress, HR 3702, would have permanently
    authorized the CDBG-DR program. However, after referral to the relevant
    Senate committee, the bill did not advance.

       Questions from Hon. Sharice Davids to Chris P. Currie, Director,
      Homeland Security and Justice, U.S. Government Accountability Office

        Question 1. It is my understanding that some number of recovery
    projects are experiencing delays in receiving funding. Some of these
    projects were submitted more than a year ago. These projects could
    provide critical energy resiliency for hospitals, grocery stores,
    hotels, food distribution centers, and hotels--all of which are
    essential in the wake of natural disasters like hurricanes and
    earthquakes.
        1.a.  In your estimation, what is causing the delay in approving
    and administering funding for these projects, and what can the Federal
    government do to speed up these projects?
        Answer. Our body of work on disaster recovery in the USVI and
    Puerto Rico has identified several factors related to recovery project
    approval and the obligation of funds that could contribute to delays in
    construction. In May 2021, we reported that grant subrecipients' in
    Puerto Rico lack of expertise to develop Public Assistance projects had
    resulted in the need for additional coordination with FEMA officials or
    hiring contractors, which could delay the process.\3\ At the time, we
    said that this could specifically affect projects being developed by
    Puerto Rico's Electric Power Authority, Aqueduct and Sewer Authority,
    and Department of Education under FEMA's Accelerated Award Strategy
    (FAASt) procedures that had been obligated and required completion
    within 5 years. Additionally, FEMA officials told us that this lack of
    expertise could also affect grant subrecipients' ability to incorporate
    mitigation and resilience efforts into Public Assistance projects or
    Hazard Mitigation Grant Program projects.
    ---------------------------------------------------------------------------
        \3\ GAO-21-264
    ---------------------------------------------------------------------------
        Further, we reported that Puerto Rico's fiscal condition at the
    time made it difficult for grant subrecipients to provide initial
    funding to begin construction on projects. Because the Public
    Assistance grant program is a reimbursement program and grant
    subrecipients must provide initial funding for projects before seeking
    reimbursement, many projects had been approved and obligated, but work
    on the projects had not started. To begin construction, we reported
    that grant subrecipients could use other federal funding sources, such
    as HUD's Community Development Block Grant Disaster Recovery (CDBG-DR)
    funds, or request advance payments from Puerto Rico's Central Office of
    Recovery, Reconstruction, and Resiliency (COR3) to access initial
    funding for a project. However, FEMA and Puerto Rico officials said
    these options were unlikely to fully address the need for funding. In
    addition, officials said that even after funds had become available,
    Puerto Rico would likely face risks finding the capacity to handle the
    sheer number of projects needing construction due to the simultaneous
    need to procure labor, equipment, and materials to start construction.
        As we mentioned in our September 2022 testimony based on our
    preliminary observations from our ongoing work, another contributing
    factor to delays in approving funds includes difficulties between FEMA
    and grant applicants in reaching agreement on scopes of work for Public
    Assistance projects. For example, grant subrecipients stated that they
    have experienced challenges getting approval from FEMA to make
    improvements to a project beyond damages sustained from Hurricane Maria
    and having them covered by Public Assistance funding.
        Our body of work has not included an examination or recommendations
    related to how the federal government can speed up disaster related
    projects; however, as part of our ongoing work, we plan to identify and
    assess the actions FEMA is taking to address challenges to Puerto
    Rico's disaster recovery.

        1.b.  Are there any legislative changes that we could make to
    improve this process?
        Answer. We have not identified any legislative additions or changes
    that Congress should consider to improve FEMA's obligation process for
    Public Assistance and Hazard Mitigation Grant Program projects.

       Questions from Hon. Jenniffer Gonzalez-Colon to Chris P. Currie,
    Director, Homeland Security and Justice, U.S. Government Accountability
                                     Office

        Question 1. Not just with the electricity issue, but with every
    other area of rebuilding: There is concern that with inflation, supply
    chain and job market issues that have developed in the past 3 years,
    the estimates upon which obligations were made may no longer suffice
    for completion of the work for which they were approved.
        1.a.  How are such considerations addressed today?
        Answer. As part of our ongoing work, our review includes meeting
    with FEMA and Puerto Rico officials to obtain their perspective on
    challenges to recovery, such as rise of inflation and supply chain
    issues affecting the fixed cost estimates developed under Public
    Assistance alternative procedures. Further, we plan to identify and
    report on FEMA's actions to address these challenges. As we stated in
    our September 2022 testimony, Puerto Rico agency officials that we have
    interviewed thus far have stated concerns that inflation will increase
    the cost of executing projects and exceed FEMA's grant obligations for
    some projects. In addition, some grant subrecipients we have
    interviewed have said that they have started to see increases in the
    cost of some basic supplies, such as concrete. FEMA officials have told
    us that Public Assistance fixed cost estimates accounted for escalation
    in costs, but they are monitoring for cases of project cost increases
    that exceed 50 percent of the original fixed-cost estimate.
        Further, as mentioned in our September 2022 testimony, FEMA is
    developing a risk management plan to monitor and mitigate risks to
    recovery in the USVI and Puerto Rico, such as insufficient construction
    supplies in Puerto Rico for grant subrecipients to complete recovery
    projects. According to FEMA officials, they anticipate adoption of this
    plan in January 2023.

        1.b.  Is there a better way this could be addressed? What can
    Congress do? How do we prevent the recovery from falling short?
        Answer. Our prior work has not included an examination or
    recommendations related to the impact of inflation on obligations based
    on fixed cost estimates under the Public Assistance Alternative
    Procedures; however, as part of our ongoing work, we plan to identify
    and assess the actions FEMA is taking to address challenges to Puerto
    Rico's disaster recovery.

        1.c.  Puerto Rico municipalities and even state government offices
    do not have the cash flow or the credit to support a reimbursement-
    based process. Is there an alternative that still safeguards taxpayer
    funds?
        Answer. We have not specifically examined alternative approaches to
    FEMA's reimbursement-based process for Public Assistance projects.
    However, in our ongoing work, our preliminary observations are that
    FEMA has allowed certain flexibilities to disburse funding for certain
    aspects of a Public Assistance project. Specifically, our preliminary
    observations are that FEMA's Accelerated Award Strategy (FAASt) process
    has permitted obligation drawdowns for architecture and engineering
    studies and design work prior to the construction of projects. This
    allows for the reimbursement of grant subrecipients earlier in the
    grant process and affords the opportunity for subrecipients to reuse
    funds in subsequent phases of recovery. Additionally, according to FEMA
    and COR3 officials we spoke with, COR3 disburses all Public Assistance
    funds for small projects that FEMA has obligated directly to the
    subrecipient (effective August 3, 2022, the threshold of small projects
    was increased from $132,800 to $1,000,000 for unobligated projects for
    major disasters and emergencies declared on or after March 13,
    2020).\4\
    ---------------------------------------------------------------------------
        \4\ See 87 Fed. Reg. 47359 (Aug 3, 2022).

    ---------------------------------------------------------------------------
    GAO Reports:

        Question 2.a. GAO reported that workforce-related issues impacted
    the quality of recovery services. In January 2022, GAO identified
    factors limiting FEMA's workforce readiness of high turnover rates,
    burnout due to increased pace of disasters, and low morale have made it
    challenging for FEMA's workforce to implement the COVID-19 funeral
    assistance program.
        2.a.i.  How has FEMA addressed these findings?
        Answer. The increased frequency and cost of disasters and FEMA's
    support of numerous efforts outside of its normal core responsibilities
    present challenges to FEMA's workforce. Some of FEMA's key workforce
    challenges related to turnover, burnout, and morale, along with the
    steps FEMA has taken to address them are listed below:
          Staffing shortages. As we stated in our January 2022
    testimony, FEMA has faced a number of staffing challenges that can
    affect the agency's ability to achieve its mission to help people
    before, during, and after disasters. While our current recommendations
    do not directly address these challenges, we have ongoing work
    examining FEMA's hiring and staffing processes. We expect to report on
    this work in spring 2023.
          Workplace culture and morale. In recent years, there have
    been concerns about FEMA's workplace culture and climate, specifically
    regarding harassment and discrimination, which can affect workforce
    morale and retention.\5\ In December 2020, FEMA issued its first action
    plan for culture improvement, which has since been incorporated into
    other strategic planning efforts. Since issuing this plan, FEMA has
    taken various steps to implement its culture improvement efforts. For
    example, FEMA's senior leaders held town halls to address FEMA's
    culture improvement initiatives and engaged with FEMA's employee groups
    to discuss how they can help build employee engagement. To ensure
    continuity and to determine the effectiveness of its efforts, we
    recommended that FEMA designate an individual or entity responsible for
    oversight, and establish goals and measures for its cultural
    improvement efforts.\6\ FEMA concurred with this recommendation,
    stating that it plans to address these recommendations through its
    Diversity, Equity, Inclusion, and Accessibility Strategic Plan, which
    is currently being drafted.
    ---------------------------------------------------------------------------
        \5\ In 2018, FEMA began an investigation into allegations of
    harassment and misconduct by a senior executive within the agency. In
    2019, FEMA commissioned a survey from the RAND Corporation to estimate
    the prevalence of harassment and discrimination. In its 2020 report,
    the RAND Corporation estimated that 29 percent of FEMA employees
    experienced discrimination or harassment related to sex, gender, or
    race/ethnicity in the previous year. See RAND Corporation, Harassment
    and Discrimination on the Basis of Gender and Race/Ethnicity in the
    FEMA Workforce (2020).
        \6\ GAO, FEMA Workforce: Additional Actions Needed to Help Prevent
    and Respond to Discrimination and Harassment, GAO-23-105243
    (Washington, D.C.: Oct. 20, 2022).

        2.a.ii.  How can Congress help the Agency do so better?
        Answer. Our body of work on this issue has not identified any
    actions Congress should consider taking in relation to employee
    turnover, burnout, or morale. However, to further explore these issues,
    we are currently conducting work related to FEMA's recruitment and
    hiring.

        Question 2.b. In a report on recovery efforts in Puerto Rico of May
    2021, GAO made two recommendations: (1) That FEMA should, in
    coordination with the Government of Puerto Rico and other federal
    agencies, identify and assess risks to the remainder of the recovery,
    including internal and external factors such as capacity to carry out
    projects. For example, taking into consideration if we have the
    resources to start and finish projects within a time limit or if more
    time is needed; and (2) that FEMA should identify potential actions to
    manage risks to the remainder of Puerto Rico's recovery and
    continuously monitor risks.
        2.b.i.  Same questions: what follow-up has there been to these
    recommendations?
        Answer. In response to our May 2021 report, DHS reported that FEMA,
    in coordination with the government of Puerto Rico, started a formal
    risk assessment process modeled after FEMA's enterprise risk management
    framework. FEMA will also identify potential actions to manage risks to
    the remainder of Puerto Rico's recovery through its risk assessment
    process, and will develop a process to ensure continuous monitoring of
    risks.
        In November 2021, FEMA reported that it completed its risk
    assessment process,\7\ and based on this assessment, is developing a
    risk management plan that summarizes the risk management process and
    mitigation measures FEMA will implement to address the assessment
    findings. According to DHS, once completed, this plan will identify
    potential actions to manage risks to the remainder of Puerto Rico's
    recovery, and FEMA Region 2 will develop a process to ensure continuous
    monitoring of risks. This plan is currently in draft form, and FEMA
    expects its adoption in January 2023. According to FEMA, the agency is
    in the process of collaborating with its partners to review and assess
    solutions to the risks identified in the plan.
    ---------------------------------------------------------------------------
        \7\ This risk assessment process included an environmental scan to
    assess the degree to which the Agency already had a risk framework,
    establishment of working groups across FEMA (including headquarters and
    Region II), validation of risks, and a prioritization of risks, among
    other actions.

        2.b.ii.  How can Congress help the Agency do better?
        Answer. Our body of work on this issue has not identified any
    actions Congress should consider to assist the agency in its mission in
    Puerto Rico.

        Question 3. Should Congress work towards creating a ``one stop''
    process for disaster response and recovery? So that individuals and
    entities governments can submit all their information just once, in one
    format, be told right then if it is all in order, and not have to keep
    submitting different applications with different information and
    different timelines to different agencies?
        What would be possible obstacles to such an action?
        Answer. We have not specifically examined cross-agency
    collaboration and requirements for parallel applications submitted by
    individuals and government entities. In our ongoing work, we plan to
    examine and report on challenges grant recipient face obtaining
    approval for and starting construction on disaster recovery projects,
    which may include information on FEMA's application processes for
    Public Assistance and Hazard Mitigation Grant Program funds.
    Additionally, we have ongoing work examining the federal government's
    approach to disaster recovery, and actions Congress or federal agencies
    can take to provide a more efficient and effective approach to disaster
    recovery. We expect to issue our report in mid-November 2022.

        Question 4. Passed in committee and before the Senate are HR 2020
    to require the Office of Management and Budget to make available
    quarterly reports on the flow and use of recovery funds; and HR 2016
    plans for streamlining and consolidating information collection and
    preliminary damage assessments. Are these measures that would be of use
    in improving recovery processes?
        Answer. We have not specifically examined the potential effects of
    these bills on disaster recovery processes nor has our body of work on
    disaster recovery grants provided related recommendations. As part of
    our ongoing work, we plan to identify and report what actions FEMA has
    taken since fiscal year 2021 to address challenges and risks to
    providing initial construction funding for projects, which may include
    information on challenges and outcomes related development of fixed
    cost estimates under FEMA's Public Assistance Alternative Procedures.
        Generally, we would support a bill that streamlines the federal
    disaster funding processes and any regulatory requirements across
    agencies and which provides additional oversight and transparency. Our
    ongoing work may include information on reforms the federal government
    can make to its disaster recovery. Specifically, we are currently
    examining the federal government's approach to disaster recovery and
    actions Congress or federal agencies can take to provide a more
    efficient and effective approach to disaster recovery. We expect to
    issue our report in mid-November 2022.

       Questions from Hon. Dina Titus to Adrienne L. Williams-Octalien,
           Director, Office of Disaster Recovery, U.S. Virgin Islands

        Question 1. Liquidity constraints among Public Assistance Program
    Applicants in the U.S. Virgin Islands and Puerto Rico have been a
    longstanding concern.
        1.a.  What specific actions has FEMA taken to ensure that funding
    is available to Applicants to launch obligated projects? What
    additional actions could FEMA take towards this end?

        1.b.  What authorities, if any, should Congress consider to address
    the strains that FEMA's reimbursement-based assistance model places on
    Applicants with few financial resources?

        Question 2. Are there any ways in which FEMA is not making full use
    of the additional statutory authorities provided to expand the scope of
    rebuilding in Puerto Rico and the Virgin Islands under the Bipartisan
    Budget Act of 2018 and the Disaster Relief Act of 2019?

        Question 3. What are the new recovery challenges today that
    Congress has not been made aware of previously? For example, how are
    inflation and supply chain and labor shortages affecting your recovery?

        Question 4. FEMA Administrator Criswell visited the USVI in August
    2022. What topline messages did the USVI government convey in
    Administrator Criswell's visit about the status of recovery efforts or
    about how FEMA can better assist USVI in recovery efforts? Did FEMA
    commit to working with the USVI to address those topline messages?

        Question 5. Do you believe the authorities provided in the BBA
    should be expanded to include roads? If the BBA covered roads what
    impact would this have to the recovery in USVI?

        Question 6. Due to liquidity constraints in USVI it is Congress's
    understanding that the majority of USVI's CDBG-DR funding will be
    directed to cover the non-federal cost-share for FEMA PA projects. What
    community development projects might have USVI used this money for if
    the federal cost share for FEMA projects was raised to 100%?
        Answers to Questions 1-6. Answers were not received at the time of
    publication. If answers arrive after publication, they will be made
    available online at the House of Representatives Document Repository at
    https://docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=115108.

      Question from Hon. Sharice Davids to Adrienne L. Williams-Octalien,
           Director, Office of Disaster Recovery, U.S. Virgin Islands

        Question 1. It is my understanding that some number of recovery
    projects are experiencing delays in receiving funding. Some of these
    projects were submitted more than a year ago. These projects could
    provide critical energy resiliency for hospitals, grocery stores,
    hotels, food distribution centers, and hotels--all of which are
    essential in the wake of natural disasters like hurricanes and
    earthquakes. In your estimation, what is causing the delay in approving
    and administering funding for these projects, and what can the Federal
    government do to speed up these projects? Are there any legislative
    changes that we could make to improve this process?
        Answer. An answer was not received at the time of publication. If
    an answer arrives after publication, it will be made available online
    at the House of Representatives Document Repository at https://
    docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=115108.

     Questions from Hon. Daniel Webster to Adrienne L. Williams-Octalien,
           Director, Office of Disaster Recovery, U.S. Virgin Islands

        Question 1. The USVI Water and Power Authority (WAPA) has received
    a significant amount of funding since the 2017 hurricanes. However, it
    seems the USVI is planning to transition to solar energy despite
    outstanding obligations for the existing Liquid Propane Gas (LPG)
    system.
        1.a.  What is the USVI doing to ensure existing obligations for LPG
    are met?

        1.b.  How is the USVI using Federal funding to support rebuilding
    and repairing USVI's existing power capability?

        1.c.  Are effects important from the standpoint of disaster
    mitigation, for example, the effects on floodplains, considered in the
    event of new solar development? Please explain.
        Answers to Questions 1.a., 1.b., & 1.c. Answers were not received
    at the time of publication. If answers arrive after publication, they
    will be made available online at the House of Representatives Document
    Repository at https://docs.house.gov/Committee/Calendar/
    ByEvent.aspx?EventID=115108.

        Questions from Hon. Dina Titus to Hon. Manuel Laboy, Executive
    Director, Central Office for Recovery, Reconstruction, and Resiliency,
                                  Puerto Rico

        Question 1. Liquidity constraints among Public Assistance Program
    Applicants in Puerto Rico have been a longstanding concern.
        1.a.  What specific actions has FEMA taken to ensure that funding
    is available to Applicants to launch obligated projects? What
    additional actions could FEMA take towards this end?

        1.b.  What authorities, if any, should Congress consider to address
    the strains that FEMA's reimbursement-based assistance model places on
    Applicants with few financial resources?

        Question 2. Are there any ways in which FEMA is not making full use
    of the additional statutory authorities provided to expand the scope of
    rebuilding in Puerto Rico under the Bipartisan Budget Act of 2018 and
    the Disaster Relief Act of 2019?

        Question 3. FAASt awards account for nearly $16 billion in PA
    obligations, for four Applicants. However, COR3 data reflects
    disbursement of $200 million (1.3%) for these Applicants' hurricane
    recovery projects.
        3.a.  What accounts for this disparity, and what actions, if any,
    can COR 3 or FEMA take to expedite these critical projects?

        3.b.  What actions have FEMA and the government of Puerto Rico
    taken in recognition of cash flow limitations that may be limiting
    these disbursements, particularly as the Public Assistance program is
    generally reimbursable only?
        Answers to Questions 1-3. Answers were not received at the time of
    publication. If answers arrive after publication, they will be made
    available online at the House of Representatives Document Repository at
    https://docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=115108.

       Question from Hon. Sharice Davids to Hon. Manuel Laboy, Executive
    Director, Central Office for Recovery, Reconstruction, and Resiliency,
                                  Puerto Rico

        Question 1. It is my understanding that some number of recovery
    projects are experiencing delays in receiving funding. Some of these
    projects were submitted more than a year ago. These projects could
    provide critical energy resiliency for hospitals, grocery stores,
    hotels, food distribution centers, and hotels--all of which are
    essential in the wake of natural disasters like hurricanes and
    earthquakes. In your estimation, what is causing the delay in approving
    and administering funding for these projects, and what can the Federal
    government do to speed up these projects? Are there any legislative
    changes that we could make to improve this process?
        Answer. An answer was not received at the time of publication. If
    an answer arrives after publication, it will be made available online
    at the House of Representatives Document Repository at https://
    docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=115108.

      Questions from Hon. Jenniffer Gonzalez-Colon to Hon. Manuel Laboy,
     Executive Director, Central Office for Recovery, Reconstruction, and
                            Resiliency, Puerto Rico

        Question 1. There is concern that with inflation, supply chain and
    job market issues that have developed in the past 3 years, the
    estimates on which obligations were made may no longer suffice for
    completion of the work for which they were approved.
        1.a.  How is this to be addressed, how should it be addressed?

        1.b.  Puerto Rico municipalities and even state government offices
    do not have the cash flow or the credit to support a reimbursement-
    based process. Is there an alternative that still safeguards taxpayer
    funds?

        Question 2. Factions in the Island have demanded that FEMA deny
    funding to anything that is not distributed renewables, or even that
    Congress should command it. Is it wise to micromanage this from DC, or
    should that be subject to Puerto Rico's resources plan, and the needs
    determined on the ground?

        Question 3. For a long-time during recovery there have been
    complaints about contractors or providers not receiving payment in a
    timely fashion. Has there been an improvement in the promptness of
    processing payment for contractors of municipalities and other
    subrecipients? Can you quantify the rate of this improvement?

        Question 4. The first draft fiscal restructuring plan for PREPA was
    rejected earlier this year and is being worked on as we speak. How does
    the completion or not of that fiscal restructuring affect or not affect
    the recovery plans in the long term?
        Answers to Questions 1-4. Answers were not received at the time of
    publication. If answers arrive after publication, they will be made
    available online at the House of Representatives Document Repository at
    https://docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=115108.

     Questions from Hon. Sharice Davids to Shay Bahramirad, Ph.D., Senior
    Vice President of Engineering, Asset Management, and Capital Programs,
                                  LUMA Energy

        Question 1. It is my understanding that some number of recovery
    projects are experiencing delays in receiving funding. Some of these
    projects were submitted more than a year ago. These projects could
    provide critical energy resiliency for hospitals, grocery stores,
    hotels, food distribution centers, and hotels--all of which are
    essential in the wake of natural disasters like hurricanes and
    earthquakes. In your estimation, what is causing the delay in approving
    and administering funding for these projects, and what can the Federal
    government do to speed up these projects? Are there any legislative
    changes that we could make to improve this process?
        Answer. As stated in our testimony, when LUMA assumed operations of
    Puerto Rico's transmission and distribution system, one of our highest
    priorities was to work together with FEMA, the Puerto Rico Energy
    Bureau, the Puerto Rico Public-Private Partnership Authority, the
    Central Office for Recovery, Reconstruction and Resiliency (``COR3'')
    and PREPA to develop and advance a series of federally funded
    infrastructure improvement projects to transform and modernize Puerto
    Rico's energy system.
        In 16 months, LUMA has advanced FEMA projects in Puerto Rico at a
    historic pace--a stark comparison to the previous five years under the
    prior operator.
    A. FEMA Reconstruction Projects
        As of October 15, 2022, LUMA has initiated 239 projects with FEMA
    \1\, representing more than $6 billion worth of federally funded
    projects. In contrast, only 35 project submissions for T&D repairs
    related to Hurricane Maria had even been made before LUMA assumed
    operations on June 1, 2021.
    ---------------------------------------------------------------------------
        \1\ At the time of our latest filing to the Puerto Rico Energy
    Bureau (``PREB''): the number of initiated projects stood at 206. Of
    those, 204 projects have a FEMA FAAST number and two were awaiting
    confirmation.
    ---------------------------------------------------------------------------
          Obligated FEMA Projects: LUMA has received, to date, FEMA
    approval for 37 critical infrastructure projects \2\ including:
    ---------------------------------------------------------------------------
        \2\ At the time of our latest filing to the PREB: 19 projects had
    received FEMA approval. This represents $756.5 million and includes the
    equipment and materials for projects.
    ---------------------------------------------------------------------------
          +  27 distribution projects that will address critical
    infrastructure, such as streetlights and pole replacement, targeting
    the municipalities of San Juan, Arecibo, Mayaguez, Caguas, Bayamon and
    Carolina to reduce outages and increase the reliability of the electric
    system.
          +  Four transmission reconstruction projects, including those
    targeting Line 2200, Line 13300 and Line 6700 that will help improve
    the critical energy infrastructure that delivers energy across the
    island.
          +  Five substation modernization projects that will address the
    critical role played by substations in helping deliver energy to
    communities across Puerto Rico beginning in the municipalities of
    Catano, Vieques, Culebra, Manati and Costa Sur.
          +  A critical EMS (emergency management system) project to FEMA,
    which is the first phase of transforming the system operations control
    center with state-of-the-art technology and software to modernize the
    way Puerto Rico's energy grid is monitored and managed.
          FEMA Projects Under Construction: LUMA has started
    construction on 18 FEMA funded projects across Puerto Rico including:
          +  Five initial streetlight projects as part of LUMA's $1 billion
    Community Streetlight Initiative in the municipalities of Guanica,
    Lajas, Aguada, Maunabo and Luquillo--in less than three months, LUMA
    has installed over 12,000 streetlights.
          +  One critical transmission line repair project to reduce the
    potential for future outages.
          +  Twelve distribution pole replacement projects to increase the
    reliability and resiliency of the electric grid.

        In addition to the projects initiated, approved, and under
    construction, LUMA has also taken the following FEMA-related actions:
          Received approval for $656 million to procure long-lead
    material, mainly grid equipment including breakers, transformers, and
    reclosers.
          Developed four proposals of Hazard Mitigation for non-
    damaged infrastructure that COR3 is reviewing before submission to
    FEMA, which would represent $900 million for the deployment of
    technologies, including an advanced metering infrastructure, an
    advanced microgrid project, and mobile microgrids to enable renewable
    energy and make communities resilient.

        Taken in totality, over the coming months and years, FEMA-funded
    projects that are being directed by LUMA will not only represent the
    largest capital energy program in Puerto Rico's history, but it will
    also represent the largest ever funded by the federal government to
    repair and rebuild an electric system across any state and/or
    territory. As a result, LUMA is excited by the significant progress
    that has been made to date that will, as more FEMA projects begin
    construction, strengthen and transform the long-term future of Puerto
    Rico's energy grid.
    B. Working Closely with FEMA on Emergency Preparedness
        In addition to moving forward with critical federally funded
    infrastructure projects, LUMA continues to prioritize emergency
    preparedness and taking the necessary steps and actions to be able to
    respond to hurricanes and other emergencies.
        Given the historic impact of Hurricane Maria and the lasting
    effects it has had on the people of Puerto Rico, LUMA has made
    preparing for emergency events, like hurricanes, a daily and year-round
    priority. As part of our emergency preparedness efforts, we have worked
    closely with FEMA, PREMB and ESF 12 and other partners to establish and
    adopt industry emergency preparedness standards. Among the actions we
    have taken include the following:
          Establish Emergency Response Plan: In May 2022, LUMA
    submitted its 2022 Emergency Response Plan (ERP) to the Puerto Rico
    Energy Bureau as part of its continuous effort to plan, prepare for and
    respond to the major emergencies and the 2022 hurricane season.
          +  LUMA's 2022 ERP outlines the actions LUMA takes in an
    emergency event and helps direct the company's response, recovery, and
    restoration efforts.
          +  More specifically, the ERP addresses how LUMA responds to any
    emergency, including hurricanes, earthquakes or any other major event
    that impacts the electric power system.
          Adopt Industry Best Practices: The LUMA ERP follows
    industry best practices for emergency response and follows the National
    Incident Management System as established by the Federal Emergency
    Management Agency (FEMA).
          +  The National Incident Management System framework establishes
    a standardized Incident Command System (ICS) which is used across
    industries and is the basis for LUMA's ERP.
          Emergency Preparedness, Training & Readiness: LUMA has
    undertaken extensive efforts to improve preparedness, training, and
    readiness, including:
          +  Emergency Preparedness:
              Three emergency preparedness tabletop exercises were
    completed with FEMA and DOE/ESF 12/PREPA/PREMB and other local
    stakeholders.
              Procuring and maintaining a fleet of 1,800 vehicles
    available to support emergency response efforts.
              Installing equipment in the LUMA Emergency Operations
    Center and purchasing supplies for emergency operations.
          +  Emergency Training:
              Completing more than 8,000 hours of ICS training.
              Completing an Emergency Operations Center mock drill
    based on Category 4 Hurricane making landfall on May 12, 2022, with 75
    attendees.
          +  Emergency Readiness:
              To date, LUMA maintains a total on-hand inventory of
    T&D equipment and materials available for daily operations and
    emergencies amounting to $130 million including:
              +  21,000 poles
              +  17 million feet of cables
              +  3,200 transformers
              +  58,000 LED luminaries
              +  154,000 insulators
              +  1,800 switches/breakers
              +  29,000 crossarms
          As part of our more than 3,000 employees, LUMA has 1,300
    transmission and distribution workers across Puerto Rico who are
    trained and available to respond to serious emergencies, in addition to
    resources from contractors and mutual aid.
          We have established mutual aid agreements with the
    Caribbean Electric Utility Services Corporation (CARILEC), Edison
    Electric Institute (EEI) and the American Public Power Association
    (APPA) for response to critical events in cases where additional
    resources for restoration and response become necessary.
          We have also been working with US DOE on the development
    of a Storm Damage Prediction Tool for estimating material needs. The
    Storm Damage Prediction Tool helps forecast storm damage to
    transmission and distribution infrastructure.
    C. FEMA Process Improvements
        The topic of FEMA project delays was a main conversation driver at
    the September 15 hearing. The information provided by other witnesses
    was very illustrative of the current challenges faced by the Government
    of Puerto Rico regarding project deliveries.
        As discussed during the hearing, a major obstacle to recovery in
    Puerto Rico is the inability to quickly access working capital. This is
    of particular importance to large infrastructure and construction
    projects.
        As an example, the Public Assistance program is generally
    structured as a reimbursement program that requires the recipient and
    subrecipients to have enough liquidity at hand to begin expensing
    funds, an issue Puerto Rico also faced following the hurricanes of
    2017.
        In past disaster events, including those managed by recipients in
    the States of Louisiana, Mississippi, Texas, and Florida following
    major hurricanes in 2004, 2005, and 2008, there was greater flexibility
    with respect to recipients' authority to provide advance funding to
    subrecipients. During these older events, the applicable financial
    management regulations contained in 44 C.F.R. Part 13 allowed
    ``advances to Subrecipients in the amount of 50 percent of the funds
    obligated by FEMA under Public Assistance subgrants.''
        However, changes in federal regulations made it more difficult to
    provide the financial support that subrecipients in Puerto Rico needed
    to begin the substantial recovery effort. Specifically, 2 C.F.R.
    200.305(b)(1) provides that, ``Advance payments to a non-Federal entity
    must be limited to the minimum amounts needed and be timed to be in
    accordance with the actual, immediate cash requirements of the non-
    Federal entity in carrying out the purpose of the approved program or
    project.''
        Although the introduction of the FEMA Accelerated Award Strategy
    (``FAASt'') has allowed FEMA to expedite the obligation of funds, it
    did not authorize any related construction and required that all
    projects needed to be formulated through FEMA's National Delivery Model
    by submitting detailed scopes of work for environmental and historic
    preservation compliance, and to request additional funding on a
    project-basis for hazard mitigation measures.
        Furthermore, COR3 has recently released a new funding support
    program available to subrecipients, implemented specifically to provide
    a mechanism to advance the federal share of funds for approved
    permanent work projects under FEMA's Public Assistance related to
    Hurricane Maria and the earthquake disaster.
    D Potential Avenues of Support from Congress
        According to COR3, Puerto Rico currently has 9,186 time extension
    requests pending with FEMA. Historically, FEMA has set relatively short
    time extensions that are unrealistic. Congressional support encouraging
    FEMA to grant longer time extension requests would go a long way to
    provide stability to subrecipients and all stakeholders.
        Furthermore, according to the Public Assistance Program and Policy
    Guide (PAPPG) (FP 104-009-02), FEMA must review each Public Assistance
    project to ensure the work complies with applicable federal
    Environmental and Historic Preservation (EHP) laws and their
    implementing regulations, and applicable Executive Orders. Congress
    should explore alternatives to expedite the review process and obligate
    as many projects as possible in light of the fifth anniversary of the
    hurricanes of 2017.

    Questions from Hon. Jenniffer Gonzalez-Colon to Shay Bahramirad, Ph.D.,
      Senior Vice President of Engineering, Asset Management, and Capital
                             Programs, LUMA Energy

        Question 1. FEMA has allocated $9.5 Billion in Federal Funding for
    the rebuilding and upgrading of the Puerto Rico Electric Grid, and is
    working with the Department of Energy in the PR100 study to determine
    the best way to achieve 100% renewables goal.
        1.a.  What can you tell us briefly about the status of FAASt
    funding, and the timelines involved?
        Answer. The Puerto Rico Energy Power Authority (``PREPA'') funds
    under FAASt were obligated in September 2020. According to information
    provided by COR3, under FAASt, FEMA has obligated a federal share of
    $9.5 billion for PREPA, $3.7 billion for PRASA, and $2.1 billion for
    the Department of Education:

            These subrecipients have collectively submitted 90 scopes of
            work for validation by FEMA and $222.8 million has been
            disbursed. Notably, the projects that will be executed under
            FAASt by PREPA will be critical for renewable energy
            integration to ensure sustainability and resiliency in future
            disasters. (See Figure 4 in Appendix).

        LUMA is currently focused on preparing Detailed SOW and cost
    estimates for T&D projects that currently have both PREB approval and
    FEMA project numbers.
        Please see LUMA's September 16, 2022, submission to PREB \3\ for
    tables that show the current set of projects, by asset category, along
    with the estimated timing for Detailed SOWs submittals to COR3 and
    FEMA.
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        The estimation of project submission timing noted in the September
    16th submission is based on the best information available to LUMA at
    the time of filing our latest PREB report. LUMA is focused on meeting
    or exceeding the project submission estimates listed in the table
    below.

        1.b.  Have the Action Plans and the quarterly reviews been
    presented in a timely manner? Please document.
        Answer. LUMA has regularly presented plans to stakeholders
    including PREB, COR3, and FEMA. Since LUMA has commenced service, we
    have submitted an update to the ten-year infrastructure plan,
    originally filed on July 6, 2021. Additionally, on May of 2022, we
    submitted a five-year plan to stakeholders.
        For the 10-year infrastructure plan, we submit 90-day plan updates
    at 90-day intervals. Since LUMA began operations in June 2021, we have
    submitted 90-day plan updates on: September 21, 2021, December 21,
    2021, March 18, 2022, June 17, 2022, and September 16, 2022.

        1.c.  How many projects have been submitted? How much funding do
    they represent? Please provide a breakdown.
        Answer. As of October 15, 2022, LUMA has initiated 239 projects
    with FEMA \4\, representing more than $6 billion worth of federally
    funded projects. In contrast, only 35 T&D project submissions had even
    been made before LUMA assumed operations on June 1, 2021.
    ---------------------------------------------------------------------------
        \4\ At the time of our latest filing to the Puerto Rico Energy
    Bureau (``PREB''): the number of initiated projects stood at 206. Of
    those, 204 projects have a FEMA FAAST number and two were awaiting
    confirmation.

        1.d.  Is LUMA in any way involved in determination of use of this
    funding?
        Answer. Yes, with the support of stakeholders including COR3 and
    FEMA, LUMA develops scopes of work (``SOWs'') for the use of FAASt
    program, which is aimed to rebuild the transmission and distribution
    grid. These SOWs are submitted to PREB who ensures the projects are in
    compliance with the 10-year plan and the Integrated Resource Plan. In
    addition, LUMA has been identifying funding opportunities including
    from FEMA, the Department of Energy, and the Department of Housing and
    Urban Development to support the increased adoption of renewable energy
    and energy efficient technologies that can enhance the resiliency,
    sustainability, and affordability of energy in Puerto Rico.

        Question 2. Counting not just the FAASt funding but also all FEMA
    funding streams to be used for grid recovery or rebuilding or
    mitigation:
        How many electric grid projects, whatever the funding source, have
    been submitted, obligated, approved, and disbursed for? What is the
    total amount under each stage as of today? Please provide a breakdown.
        Answer. As of October 15, 2022, 239 projects have been initiated in
    the FEMA process. Their approval would lead to $5.3 billion \5\ from
    the FAAST program, and an incremental $750M from the Hazard Mitigation
    program.
    ---------------------------------------------------------------------------
        \5\ The 239 initiated projects represent over $6 billion in funds
    if including funding from the Hazard Mitigation Program.
    ---------------------------------------------------------------------------
        Of those 239 projects, 37 have been obligated by FEMA to fund their
    execution. Those projects represent $220 million of spending and an
    additional $655 million has been obligated by FEMA to advance long lead
    material. An additional forty projects are awaiting obligation
    determinations by FEMA. These projects represent an additional $1.4
    billion in spending. The remaining 162 are in the initiated stage and
    represent $4.4 billion in spending.
        Additionally, LUMA develops SOWs under Sections 404 and 406 to
    support further hazard mitigation, hardening, resilience, and
    sustainability objectives. For example, LUMA has proposed several
    technology and sustainability focused projects for submission to FEMA
    under Section 404--Hazard Mitigation to further enable renewable energy
    and energy efficiency. Each of the following projects represent
    opportunities to transform and modernize the electric grid and were
    initially proposed in March and May of 2022:
    1.  AMI Deployment
        AMI is the foundation of a clean energy grid, including residential
    energy generation (e.g., solar panels and batteries) and electric
    vehicles, by providing visibility to customers and the utility about
    the availability of electricity and energy usage, which can improve
    both reliability, energy efficiency, and customer choice.
    2.  Energy Storage for Resilience
        This entails the deployment of 100 MW of battery energy storage in
    five locations to integrate additional renewable generation and enhance
    resilience.
    3.  Vieques and Culebra Submarine Cable
        Deploying a new submarine cable in a looped fashion would meet
    reliability and resilience goals.
    4.  Vieques and Culebra Microgrid
        A microgrid that would provide incremental resilience and
    sustainability for the close to 10,000 residents who live in smaller
    islands within Puerto Rico. This would include advanced control
    capabilities, sensors, and switching capabilities. The microgrid will
    allow us to move towards a demonstration of 100% renewable islands.
    5.  Two Community Microgrids
        These additional microgrid projects would serve communities that
    would benefit from enhanced resilience, sustainability, and equity.
    This would serve as the start of a microgrid program pipeline that
    could be deployed in additional communities. Incorporates community
    involvement in design.
    6.  Mobile Microgrids
        These mobile microgrids will support the rapid increase of service
    in the case of a disruptive event, enhancing community resilience.

        Overall, approval of these projects would significantly support
    Puerto Rico's sustainability and resilience goals and achieve much
    needed grid modernization for the island. In addition to specific
    technologies, LUMA utilizes data-driven, engineering-based designs that
    leverage industry best practices to enable energy efficiency and
    increase hosting capacity to support the integration of affordable
    renewable energy.

        Question 3. Who will own title to the goods and equipment, such as
    tools and vehicles, acquired by LUMA using the FEMA funding, for the
    reconstruction of the electric grid: LUMA Energy or PREPA?
        Answer. The goods and equipment will be owned by PREPA.

        Question 4. What is the planned rebuilding timeline? Provide an
    outline of projected milestone dates for submissions, designs, starts
    of work and expected completions per the presented Action Plans. Not of
    past progress: of future goals that are to be reached, what are the
    programmed milestones on the way, and the time projection (year,
    quarter) for that in the plan.
        Answer. LUMA submitted a 5-year Plan to FEMA and COR3 which
    provides an overview of LUMA's current project portfolio for
    Transmission, Distribution, Substations, and Building's asset
    categories.
        This plan includes a summary and timing for projects to be
    initiated in each of the next five years, the number of detailed SOWs
    to be submitted to COR3 and FEMA for review, the targeted construction
    starts for each project and the completion date for each.
        Moreover, LUMA continually submits Project Plans to FEMA, COR3 and
    PREB every 90 Days which outlines LUMA's activities over the previous
    period and focus areas during the upcoming period.
        This document captures an overview of the key next steps and
    progress made on FEMA-funded projects for the Puerto Rico electrical
    system.his plan also includes target dates for upcoming FEMA
    submissions and construction start milestones for FEMA projects. deg.or
    reference, please review LUMA's submission to PREB on September 16,
    2022.\6\
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        Thank you for the opportunity to provide additional insight into
    LUMA's work to rebuild Puerto Rico's energy grid.

       Question from Hon. Dina Titus to Josue A. Colon-Ortiz, Executive
                 Director, Puerto Rico Electric Power Authority

        Question 1. The Puerto Rico Electric Power Authority (PREPA)
    received a FAASt award in September 2020 for approximately $9.5
    billion. In April 2022, FEMA reported that PREPA had not submitted
    individual transmission and distribution projects and had submitted
    ``only 5'' detailed scopes of work for substation and generation
    projects--a necessary step before work may begin.
        What is the current status of PREPA's project approvals? What, if
    any, actions has FEMA taken to help expedite PREPA's project approvals?
        Answer. An answer was not received at the time of publication. If
    an answer arrives after publication, it will be made available online
    at the House of Representatives Document Repository at https://
    docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=115108.

     Question from Hon. Sharice Davids to Josue A. Colon-Ortiz, Executive
                 Director, Puerto Rico Electric Power Authority

        Question 1. It is my understanding that some number of recovery
    projects are experiencing delays in receiving funding. Some of these
    projects were submitted more than a year ago. These projects could
    provide critical energy resiliency for hospitals, grocery stores,
    hotels, food distribution centers, and hotels--all of which are
    essential in the wake of natural disasters like hurricanes and
    earthquakes. In your estimation, what is causing the delay in approving
    and administering funding for these projects, and what can the Federal
    government do to speed up these projects? Are there any legislative
    changes that we could make to improve this process?
        Answer. An answer was not received at the time of publication. If
    an answer arrives after publication, it will be made available online
    at the House of Representatives Document Repository at https://
    docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=115108.

     Questions from Hon. Jenniffer Gonzalez-Colon to Josue A. Colon-Ortiz,
            Executive Director, Puerto Rico Electric Power Authority

        Question 1. There is concern that with inflation, supply chain and
    job market issues that have developed in the past 3 years, the
    estimates on which obligations were made may no longer suffice for
    completion of the work for which they were approved.
        How is this to be addressed, how should it be addressed?

        Question 2. Factions in the Island have demanded that FEMA deny
    funding to anything that is not distributed renewables, or even that
    Congress should command it. Is it wise to micromanage this from DC, or
    should that be subject to Puerto Rico's resources plan, and the needs
    determined on the ground?

        Question 3. The first draft fiscal restructuring plan for PREPA was
    rejected earlier this year and is being worked on as we speak. How does
    the completion or not of that fiscal restructuring affect or not affect
    the recovery plans in the long term?

        Question 4. FEMA has allocated $9.5 Billion in Federal Funding for
    the rebuilding and upgrading of the Puerto Rico Electric Grid, and is
    working with the Department of Energy in the PR100 study to determine
    the best way to achieve 100% renewables goal.
        4.a.  What can you tell us briefly about the status of FAASt
    funding, and the timelines involved?

        4.b.  Have the Action Plans and the quarterly reviews been
    presented in a timely manner? Please provide documentation.

        4.c.  How many projects have been submitted? How much funding do
    they represent? Please provide a breakdown.

        4.d.  Is LUMA in any way involved in determination of use of this
    funding?

        Question 5. Counting not just the FAASt funding but also all FEMA
    funding streams to be used for grid recovery or rebuilding or
    mitigation:
        How many electric grid projects, whatever the funding source, have
    been submitted, obligated, approved, and disbursed for? What is the
    total amount under each stage as of today? Please provide a breakdown.

        Question 6. What is the planned rebuilding timeline? Provide a
    breakdown of projected/expected milestone dates (year, quarter) for
    starts and completions per the presented Action Plans.

        Question 7. Who will own title to the goods and equipment, such as
    tools and vehicles, acquired by LUMA using the FEMA funding, for the
    reconstruction of the electric grid: LUMA Energy or PREPA?
        Answers to Questions 1-7. Answers were not received at the time of
    publication. If answers arrive after publication, they will be made
    available online at the House of Representatives Document Repository at
    https://docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=115108.

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